Fresh measures for equity market, NBFCs on cards

Our Bureau New Delhi | Updated on May 28, 2020

Photo: Kamal Narang   -  BusinessLine

FSDC meeting reviews financial sector’s health amid pandemic

The Finance Ministry may come out with fresh measures for the equity market and Non-banking Financial Companies (NBFCs) in the coming days. However, details of the likely measures are not known.

“Some policy announcements based on the deliberations in Financial Stability and Development Council (FSDC) meeting on Thursday, are expected soon,” a government source said while adding that various regulators shared views and suggestions with respect to equity markets and NBFCs. Another source said that that no major decision was taken in the meeting.

“Regulators discussed how they could better work together and help their regulated entities survive the economic impact of Covid-19 and lockdown. Some individual regulatory actions may follow in the coming days,” this source added.

Meanwhile, a Finance Ministry statement, issued after the FSDC meeting, said that the meeting emphasised for continuous vigil on the financial conditions. The Council noted that the pandemic 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.

While, decisive monetary and fiscal policy actions aimed at containing the fallout from the pandemic, have stabilised investor sentiment in the short run, there is a need to keep a continuous vigil by government and all regulators on the financial conditions that could expose financial vulnerabilities in the medium and long term.

“The efforts of the government and regulators are focused on avoiding a prolonged period of dislocation in financial markets,” a statement said.

The Council meeting was held via video conferencing under the Chairmanship of Finance Minister Nirmala Sitharaman and attended by RBI Governor Shaktikanta Das, SEBI Chief Ajay Tyagi, IRDA Chief Subhash Khuntia, PFRDA Chief Supratim Bandyopadhyay and Insolvency and Bankruptcy Board of India (IBBI) Chairperson MS Sahoo. Finance Secretary Ajay B Pandey was the top bureaucrat in the meeting.

The meeting reviewed the current global and domestic macro-economic situation, financial stability and vulnerabilities issues, major issues likely to be faced by banks and other financial institutions as also regulatory and policy responses, Liquidity/Solvency of NBFCs/HFCs/MFIs and other related issues. Besides, market volatility, domestic resource mobilisation and capital flows issues were also discussed by the Council.

The Council took note of the initiatives taken by the government and the regulators in the recent months to help revive the economy. The government and the RBI have announced various fiscal and monetary measures to pre-emptively limit the economic damage and would continue to address the liquidity and capital requirements of the financial institutions.

Published on May 28, 2020

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