Indian financial system well protected, regulated, says Economic Affairs Secretary Ajay Seth

2023-05-08 14:01:56

India’s financial system remains protected from “daunting” global challenges but there is a need for constant vigil, economic affairs secretary Ajay Seth said on Monday.

Briefing reporters regarding the outcome of the 27th meeting of the Financial Stability and Development Council (FSDC), headed by finance minister Nirmala Sitharaman, Seth said, “We see that the global financial situation is daunting, but at the same time, the Indian economy and financial sector is well protected and well regulated. But of course, we have to be cautious and be on our toes.”

Asked if the spill over of the collapse of Silicon Valley Bank and Signature Bank in the US and liquidity pressure faced by Credit Suisse was deliberated on at the meeting, Seth said it was not specifically discussed but insisted “there’s no spill-over coming.” The council also discussed robust “early warning indicators” to flag stress, external or internal, and the economy’s preparedness to deal with them, he added.

G-sec market
On the government securities market, it discussed how through the use of technology, a seamless experience can be provided to potential investors–whether they come through the RBI infrastructure route or market regulator Sebi.

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Special drive for unclaimed deposits
In the meeting, Sitharaman called for a special drive to help people get their unclaimed deposits across all financial segments, including bank deposits, shares and dividends, mutual funds, and insurance. The council comprises chiefs of key financial sector regulators, apart from top finance ministry functionaries.

Data showed regarding ₹35,000 crore of unclaimed deposits in regarding 102.4 million accounts as of February 2023 were transferred to the Reserve Bank of India (RBI) by state-run banks alone. These are basically bank deposits that have not been operated for 10 years or more.

Fin stability, compliance burden
The minister advised the council to take appropriate and timely measures to mitigate any vulnerability, given that maintaining financial stability is a shared responsibility of the government and the regulators. She said regulators must adopt a focused approach to reduce the compliance burden further and ensure a streamlined and efficient regulatory environment. The minister will review the progress on this front with each regulator in June 2023.

Sitharaman also called on the regulators to ramp up cyber-security preparedness to protect sensitive financial data and help safeguard the stability and resilience of the financial ecosystem.

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