Sitharaman-led FSDC reviews state of economy
NEW DELHI: Amid growing concerns on the economy, the Financial Stability and Development Council (FSDC) chaired by finance minister Nirmala Sitharaman on Thursday reviewed the global and domestic macroeconomic situation, and issues of financial stability and vulnerability, including those concerning non-bank lenders and credit rating agencies (CRAs).
The meeting was attended by financial regulators and secretaries of the finance ministry.
A finance ministry statement said the FSDC reviewed the action taken by members on the decisions taken earlier and held discussions on proposals for further strengthening of the resolution framework for cyber security of the financial sector.
Speaking to reporters after the meeting, Reserve Bank of India (RBI) governor Shaktikanta Das said the central bank is closely monitoring the situation at scamhit Punjab & Maharashtra Co-operative Bank (PMC Bank) and that a forensic audit is underway. PMC Bank, among the top 10 urban cooperative banks in the country, was placed under an RBI administrator on September 23 for six months due to massive under-reporting of bad loans.
RBI had imposed withdrawal restrictions on account-holders after it found alleged irregularities to the tune of ₹4,355 crore due to diversion of money to infrastructure firm HDIL. On Tuesday, the apex bank enhanced the cash withdrawal limit to ₹50,000 per account, the fourth such increase since PMC Bank was placed under its direct control.
Das also said the RBI has given its suggestions to the government for the changes that need to be made in laws regulating cooperative banks.
Separately, a senior finance ministry official said on condition of anonymity that the banking regulator and the finance ministry discussing amending the Banking Regulation Act to strengthen regulation of cooperative banks. “We are in the process of finalizing the draft that will be opened for consultation, after which we will seek Cabinet nod and the Parliament’s approval towards making changes in the law,” the official explained.
Speaking at the Global Investors’ Meet in Dharamshala on Thursday, Prime Minister Narendra Modi said in today’s global scenario, if India has stood firmly, this is because it has not allowed the fundamentals of the economy to be weakened.