NEW DELHI: The disruption in the economy, rising pressure on financial institutions and ensuring recovery from financial uncertainty were the primary points of concern deliberated upon by the Financial Stability and Development Council (FSDC) on Thursday. The panel, which is chaired by Finance Minister Nirmala Sitharaman, was meeting for the first time since the Covid-19 outbreak.
“The Council noted that the COVID-19 Pandemic crisis poses a serious threat to the stability of the global financial system as the ultimate impact of the crisis and the timing of recovery is uncertain at this point of time, “ the Finance Ministry said in a statement.
The meeting holds importance since most of rating agencies and economists have declared that India has entered its worst recession post-independence and that it is likely to take at least two-three years for the Indian economy to return to the pre-pandemic status.
The council members also agreed that there was a need to keep a continuous vigil, on the part of the government and all regulators, on financial conditions that could expose financial vulnerabilities in the medium and long-term.
The meeting was also attended by Minister of State for Finance and Corporate Affairs Anurag Thakur and the top officials of the finance and corporate affairs ministries.
They were joined by Reserve Bank of India governor Shaktikanta Das, Ajay Tyagi, chairperson, Securities and Exchange Board of India (SEBI), Subhash Chandra Khuntia, Chairperson, Insurance Regulatory and Development Authority of India (IRDAI) and M S Sahoo, Chairperson, Insolvency and Bankruptcy Board of India (IBBI), among other authorities from important regulatory bodies.
According to sources in the finance ministry, almost every regulator expressed concern over the recovery of the economy, which they feel will be worse than anticipated.
“The sentiment was negative. Despite the policy measures announced almost everyone agreed that economic recovery will be longer than anticipated. Another concern it the health of financial institutions,” the official added.