Finance Minister Pranab today met financial sector regulators, including RBI Governor D Subbarao and SEBI chairman CB Bhave, to work out a framework for the Financial Stability and Development Council (FSDC), a body which will deal with inter-regulatory issues.
"They (Finance Ministry) have asked for reaction from all the regulators which we have given in writing earlier. Today the Finance Minster held a meeting to discuss our reaction on the discussion paper," RBI Governor D Subbarao told reporters after the meeting.
The RBI is believed to have expressed reservations on the proposal saying that the Council, which will be akin to a super-regulator, might dilute its autonomy.
Besides Subbarao and Bhave, the meeting was attended by IRDA Chairman J Hari Narayan and PFRDA Chairman Yogesh Agarwal. Finance Secretary Ashok Chawla was also present.
In the Union Budget, Mukherjee had proposed to set up FSDC with the explicit intention of strengthening and institutionalising the mechanism for maintaining financial stability.
The Minister recently at New York had said, "Without prejudice to the autonomy of regulators, the Council would undertake macro prudential supervision of the economy, including functioning of large financial conglomerates, and address inter-regulatory coordination issues. It will also focus on financial literacy and financial inclusion."
Today's meeting, according to Subbarao, "was very constructive. We gave our suggestion. He (the Minister) said he will consider them and the finance ministry will respond."