The sub-committee of Financial Stability and Development Council (FSDC), an apex body set up to bring greater coordination among financial market regulators, on Wednesday discussed the falling rupee and other issues impacting the Indian economy.
The council decided to set up a forum for better coordination and sharing of information on collective investment schemes and also expressed concern over rising cases of bad loans in the banking sector.
“It reviewed the potential risks to stability of the domestic financial system,” said the Reserve Bank of India (RBI) in the statement.
D Subbarao, governor, RBI, chaired the meeting, which was attended by chief economic adviser and RBI governor-in-waiting Raghuram Rajan and heads of the other financial sector regulators, at the RBI headquarters in Mumbai.
“The sub-committee expressed concern at the deteriorating asset quality of public sector banks and discussed corrective measures in this regard,” said RBI.
Due to the slowdown in the economy, companies are defaulting on interest payments on their loans, leading to a rise in bad loans.
“The sub-committee resolved to set up a forum for inter-agency coordination and exchange of information about collective investment schemes,” said RBI.
The decision to set up forum for collective investment schemes comes after the rise in the cases of retail investors being cheated by the companies who promised higher returns.