The Financial Stability and Development Council (FSDC) was established in 2010 to address the need for coordinated efforts among various financial regulators in India. It was first proposed by the Raghuram Rajan Committee in 2008, and its creation gained significance in the aftermath of the global economic crisis, which underscored the importance of regulating the financial sector for stability.

Objectives and Functions:

1. Maintaining Financial Stability: FSDC aims to strengthen and institutionalize mechanisms for maintaining financial stability in India. This involves monitoring and addressing risks that could potentially impact the stability of the financial system.
2. Financial Sector Development: The council is responsible for promoting the development of the financial sector. This includes fostering innovation, efficiency, and competitiveness within the financial markets.
3. Inter-Regulatory Coordination: FSDC facilitates coordination among various financial regulators in the country. This coordination is essential to avoid friction among regulators and ensure a cohesive approach to addressing challenges in the financial sector.
4. Macro-Prudential Regulation: The council engages in macro-prudential supervision of the economy. This involves overseeing the overall health and resilience of the financial system, including the functioning of large financial conglomerates.
5. Financial Literacy and Inclusion: FSDC plays a role in promoting financial literacy and inclusion initiatives. This involves efforts to enhance awareness and understanding of financial products and services among the public.
6. International Coordination: The council coordinates India's international engagement with financial sector bodies such as the Financial Action Task Force (FATF) and the Financial Stability Board (FSB). This ensures alignment with global standards and practices.

Composition:

The Chairperson of FSDC is the Union Finance Minister, and its members include key figures from various regulatory bodies and government departments:

• Governor, Reserve Bank of India (RBI)
• Finance Secretary or Secretary, Department of Economic Affairs (DEA)
• Secretary, Department of Financial Services (DFS)
• Chief Economic Advisor, Ministry of Finance
• Chairman, Securities and Exchange Board of India (SEBI)
• Chairman, Insurance Regulatory and Development Authority (IRDA)
• Chairman, Pension Fund Regulatory and Development Authority (PFRDA)
• Other members as deemed necessary by the Chairperson

The Joint Secretary (Capital Markets), DEA, serves as the Secretary of the Council.

FSDC plays a crucial role in coordinating and addressing challenges in India's financial sector, contributing to both stability and development.