Finance Minister Nirmala Sitharaman on May 8 asked financial sector regulators to be on their toes to ensure that the “daunting challenges” emerging from the global economy don’t affect the stability of India’s financial markets.
Chairing the Financial Stability and Development Council (FSDC), which includes all regulators, Ms. Sitharaman stressed that maintaining financial stability is a shared responsibility and mooted the need to develop “early warning indicators” to identify any likely financial sector stress and take timely corrective action.
“The global financial situation is daunting, but at the same time, the Indian financial sector is well protected. But of course, we have to be cautious and be on our toes,” Economic Affairs Secretary Ajay Seth said after the Council’s parleys.
“The whole range of issues [emanating from the global economy], including the spill over effects and the channels through which some spill overs can come [was discussed]. The Indian financial sector is well-regulated and there’s no spill over coming in,” he asserted.
The Minister called for greater preparedness to ensure cyber security in increasingly digitised segments of the markets. “A much higher level of preparedness is needed for cyber security of all regulated entities, especially that large regulated entities, systematically important financial entities as well as financial market infrastructure,” Mr. Seth pointed out.
With the Council meeting for the first time since the Union Budget for 2023-24, Ms. Sitharaman also asked regulators to put a system in place to facilitate the return of unclaimed financial savings to investors and depositors or their nominees and legal heirs.
To help people reclaim their unclaimed deposits, shares and dividends, regulators were asked to undertake a special drive, especially where nominees’ details are available but the nominees may not be aware of these unclaimed funds. To the extent that nominees’ contact details are available, regulators have been urged to reach out to them and settle those claims at the earliest.
“In case where nominee details are not there, a process has to be put in place as announced in the Budget and be widely publicised,” Mr. Seth said.
The FSDC also discussed steps to simplify and streamline the KYC or Know Your Customer process, based on a report submitted by an expert committee headed by a deputy governor of the Reserve Bank of India with representatives of all regulators as well as the Departments of Revenue and Financial Services.
Regulators were also told to undertake an expeditious review of their legislative frameworks and propose changes wherever required, so that the government may consider those and steer them through Parliament.
A simplified and seamless investing experience was also mooted for retail investors to tap the government securities market with the use of technology, and Mr. Seth said work on this will be undertaken by regulators in a time-bound manner.
