Financial Stability and Development Council (FSDC)

The Union Budget speech of 26 February 2010 announced the Council. It said the financial crisis of 2008-09 had changed banking and financial markets worldwide. The Government had decided to set up an apex-level council. The aim was to strengthen and institutionalise how financial stability is maintained.

What was the Council asked to do?

• Monitor macro prudential supervision of the economy.
• Watch the working of large financial conglomerates.
• Address inter-regulatory coordination issues.
• Focus on financial literacy and financial inclusion.

Did the Council take power from regulators?

No. The speech said the Council would work without prejudice to the autonomy of regulators.

How did the plan reach a notification?

Arthapedia says the Finance Minister met regulators and ministry officials on 12 October 2010. The meeting was about creating the Council. Arthapedia adds that the ministry had circulated a discussion paper to all stakeholders. The Council was notified on 30 December 2010.

Is the Rajan report linked to FSDC?

The FSLRC report says one of its recommendations is in keeping with the Raghuram Rajan report. It says that report led to the establishment of FSDC by the Ministry of Finance. The Budget speech itself does not name the Rajan report.

PIB’s note of 3 May 2013 lists six issues in the Council’s mandate.

Which issues are in the mandate?

• Financial stability.
• Financial sector development.
• Inter-regulatory coordination.
• Financial literacy.
• Financial inclusion.
• Macro prudential supervision of the economy, including the functioning of large financial conglomerates.

DEA’s chart adds India’s international interface with bodies such as FATF and FSB. It also adds any other matter referred by a member or the chairperson.

Is “growth” part of the mandate?

No. The sources use the words financial sector development.

How does FSDC act on a problem?

Any member of the Council can propose an agenda item. The Council and its Sub-Committee deliberate on it. They then suggest taking appropriate steps, as required.

Which ministry does FSDC sit under?

DEA’s Financial Stability and Cyber Security Division works as the secretariat for FSDC. DEA is a department of the Ministry of Finance.

The Union Finance Minister is the chair. The table follows the member list on DEA’s chart.

The chart also lists the Chairman of IBBI with a hash mark.

How has the list changed since 2013?

• PIB’s 2013 note names four regulators: RBI, SEBI, IRDAI and PFRDA.
• DEA’s chart now adds the IFSCA Chairman, the IBBI Chairman (marked #), two Ministers of State and the Secretaries of DoR, MCA and MeitY.
• Arthapedia says the Forward Markets Commission joined in December 2013.
• The Forward Markets Commission is not on DEA’s current chart.

Who chairs it now?

Finance Minister Nirmala Sitharaman chaired the 27th, 28th and 29th meetings. She was still the Finance Minister on 8 October 2026.

PIB says FSDC was constituted by a Government of India notification dated 30 December 2010. DEA’s chart says it was established in December 2010.

What was HLCCFM?

• It was the High Level Coordination Committee on Financial Markets.
• Arthapedia says it was a forum for inter-regulatory issues.
• The RBI Governor chaired it. Members included the SEBI Chairman and the Economic Affairs Secretary.
• Arthapedia says it began with a demi-official letter of 24 May 1992.
• Arthapedia says it was an informal body with limits.

What limits did Arthapedia name?

It names three gaps. There were no formal instruments. There were no clear specifications of its powers. There was no empowered secretariat to follow up its decisions.

Which body replaced HLCCFM?

The two government sources differ. Arthapedia says FSDC replaced HLCCFM. DEA’s chart says the Sub-Committee was established in December 2010, replacing HLCCFM. Both name HLCCFM as the body that was replaced.

What else does Arthapedia add?

• A technical committee under HLCCFM, for RBI-regulated entities, had a Financial Conglomerate Monitoring Mechanism since 2004.
• It gives 31 December 2010 as the date of the first meeting.
• It says the Raghuram Rajan report suggested a statutory Financial Sector Oversight Agency for macro prudential supervision.

The Council has a Sub-Committee chaired by the RBI Governor. Arthapedia says it discusses and decides on issues of financial sector development and stability. These include inter-regulatory coordination.

How often does the Sub-Committee meet?

The Council’s 29th meeting was in June 2025. The Sub-Committee’s 32nd was in September 2025.

• The 32nd meeting was held on 4 September 2025 at RBI, Mumbai.
• The 33rd meeting was held on 14 May 2026 at RBI, Mumbai.
• Governor Sanjay Malhotra chaired both meetings.
• In September 2025 it discussed KYC simplification and special drives for financial inclusion.
• It also discussed the National Strategy for Financial Inclusion 2025-30.
• In May 2026 it reviewed KYC simplification and regulatory impact assessment.

Which technical groups work under it?

Why do the months differ from older notes?

Arthapedia ties the first two groups to a Sub-Committee meeting of 16 August 2011. DEA’s chart gives September and November 2011 as set-up months. This lesson shows DEA’s months.

What does the Inter Regulatory Technical Group do?

Arthapedia says it will meet once every two months. It discusses risks to systemic financial stability. It also gives inputs for Sub-Committee meetings.

Where is the secretariat?

DEA’s Financial Stability and Cyber Security Division has two sections. The Financial Stability Section works as the secretariat for FSDC. The Cyber Security Section deals with cyber security policy for the financial sector.

Who is the Secretary of the Council?

DEA’s chart says the head of that division is the Secretary of the FSDC Council. DEA’s page lists Chanchal C. Sarkar as Advisor and Secretary (FSDC). The release on the 29th meeting names him as Secretary of the FSDC.

What work does the division do?

• It organises Council meetings and prepares the agenda.
• It prepares the Record of Discussions.
• It follows up action points from the meetings.
• It handles work on the groups under the Sub-Committee.
• It supplies DEA’s inputs for the Financial Stability Report.

Was the office run differently before?

Arthapedia says a Joint Secretary in the Capital Markets Division was Secretary of the Council till August 2013. It says an Additional Secretary held the post after that. DEA’s chart gives the current rule.

Does FSDC have its own funds?

PIB said in May 2013 that no funds were separately allocated to the Council for its activities.

The Ministry of Finance constituted the Financial Sector Legislative Reforms Commission (FSLRC) in March 2011. It submitted its report on 22 March 2013. The report came with a draft Indian Financial Code.

What did it propose?

• The existing FSDC would become a statutory agency.
• The agency would have modified functions in systemic risk and development.
• The report says FSDC would be a new statutory agency, unlike its relatively informal existence at present.

What role would FSDC have in a crisis?

The Commission envisages the Ministry of Finance in the leading role in a crisis. The report says FSDC will only play a supporting role there.

How does the report describe the 2010 Council?

It calls FSDC an interim response. It says the Commission was meant to give the long-term institutional answer.

Has FSDC become statutory?

None of the sources used for this lesson shows an Act that makes FSDC statutory.

The Finance Minister chaired all three of the latest Council meetings found.

Which meetings are these?

• 27th meeting: 8 May 2023, Delhi.
• 28th meeting: 21 February 2024, Delhi.
• 29th meeting: 10 June 2025, Mumbai.

The 29th is the latest Council meeting found in the sources used here.

What came up at each meeting?

• 27th: financial sector stability as a shared responsibility, a lower compliance burden and cyber-security preparedness.
• 28th: macro-financial stability, GIFT IFSC, KYC simplification, social stock exchanges and unauthorised lending apps.
• 29th: a cyber-resilience strategy, unclaimed assets, common KYC norms, factoring and account aggregators.

What did Budget 2025-26 say about FSDC?

The Budget of 1 February 2025 announced a mechanism under FSDC. It would evaluate the impact of current financial regulations and subsidiary instructions. A framework would enhance their responsiveness and the development of the financial sector.

Did the Council follow up?

Yes. The 29th meeting discussed a framework by regulators to evaluate and enhance the responsiveness of regulations and subsidiary instructions. The release links this to budget announcements.

What are the common traps?

• NITI Aayog. FSDC’s secretariat is a division of DEA in the Ministry of Finance.
• Growth. The mandate says financial sector development, not growth.
• Two numbering series. The Council had its 29th meeting in June 2025. The Sub-Committee had its 33rd in May 2026.
• The regulator list. The 2013 list has four regulators. DEA’s chart now adds IFSCA (and IBBI, marked #).
• Powers. The Council was set up without prejudice to the autonomy of regulators.
• Chairs. The Union Finance Minister chairs the Council. The RBI Governor chairs the Sub-Committee.
• FSLRC. Its statutory proposal is a proposal in a report.

Who chairs which body?

What did UPSC ask?

UPSC Civil Services Preliminary Examination 2016, General Studies Paper I, asked about FSDC at Q56 in Series A. The official answer key gives option C for that question. Practice question 1 below covers the same topic.