Finance Minister P. Chidambaram, on Thursday, asked all regulators to take preventive measures and counter steps to buffer the economy from the impact of tapering of Quantitative Easing (QE) by the U.S. Federal Reserve.
According to an official statement issued here, Mr. Chidambaram, while speaking at the Eighth meeting of the Financial Stability and Development Council (FSDC), said the opportunity available due to the postponement of the reversal of the monetary policies in advanced economies should be utilised to further address the macroeconomic imbalances.
Tapering, which refers to gradual withdrawal of the $85 billion a month bond purchase programme, was deferred by the U.S. Federal Reserve in September.
The tapering, whenever it takes place, will have a bearing on global economy. It will impact fund flows to emerging economies, including India.
The meeting was attended among others by RBI Governor Raghuram Rajan, Finance Secretary R. S.Gujral, Secretary, Department of Economic Affairs, Arvind Mayaram, Secretary, Financial Services, Rajiv Takru, Secretary, Revenue, Sumit Bose, SEBI Chairman U. K. Sinha and other senior regulators and officials.
The Council deliberated on the implementation of the recommendations of the FSLRC; impact of tapering off of the Quantitative Easing (QE) in the U.S. and preventive measures to be taken; steps to be taken by regulators/government to facilitate the ‘Corporate Distress Resolution Mechanism’ as laid-out in the Companies Act, 2013.
The Council took stock of the progress in examining the report of the FSLRC, in pursuance to the decisions taken in the seventh meeting of the FSDC held on June 3. Based on the deliberations, it has been decided that all the financial sector regulators will finalise an action plan for implementation of all the FSLRC principles relating to regulatory governance, transparency and improved operational efficiency that do not require legislative action.
As regards legislative recommendations, it was decided to analyse the public comments and feedback to further fine tune the draft Indian Financial Code. It was also decided that action should be taken for finalising the roadmap for creation of new institutions such as resolution corporation, PDMA, FSAT and FDMC.
The Council also discussed the corporate distress redressal mechanism laid out under the Companies Act, 2013, and identified the role of regulators/government to implement these provisions to prevent, as also to take remedial measures on corporate distress.