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Financial sector regulators have decided to remain vigilant and prepared to deal with any eventuality from global uncertainties, including the UK’s referendum to leave the European Union.
The issue was discussed on Tuesday at the meeting of the Financial Stability and Development Council (FSDC), chaired by Finance Minister Arun Jaitley.
The FSDC noted that uncertainty in the global economy and high volatility in financial markets are prominent risks confronting the emerging market economies but said that India appears to be much better placed to deal with such issues.
“Members agreed on the need to continue to be in a state of preparedness for managing any external sector vulnerabilities, including those emerging from Brexit and its consequences,” said a Finance Ministry release after the meeting.
Chief Economic Adviser to the Finance Ministry Arvind Subramanian also gave an overview of the state of macro-economy.
Meanwhile, the Finance Minister underlined the need to improve the overall performance of banks and increasing private sector investment as key challenges for the economy.
“The major challenges before the government include a strategy to improve the overall performance of public sector banks, to make stalled projects functional and economically viable and to increase private sector investment,” he said at the meeting.
The meeting was attended by Reserve Bank of India Governor Raghuram Rajan; SEBI Chairman UK Sinha; insurance regulator TS Vijayan, and PFRDA Chairman Hemant Contractor as well as senior Finance Ministry officials, including Finance Secretary Ashok Lavasa and Economic Affairs Secretary Shaktikanta Das.
“The Council also discussed issues relating to developing a comprehensive framework for identification of systemically important financial institutions across all sub-sectors of financial sector,” said the release, adding that the rising non-performing assets of banks were also discussed.
On the issue of maturity of concessional swaps of 2013 against Foreign Currency Non-Resident deposits during September-December 2016, the FSDC took stock of the steps taken by the RBI.
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