The Centre, along with financial sector regulators, has underlined the need for evolving a system of early warning indicators for the economy. The government has simultaneously asserted that the Indian economy and financial sector are well protected and that there is no spillover effect from the failure of American banks.

These issues were deliberated on in a meeting of the Financial Stability and Development Council (FSDC) chaired by Finance Minister Nirmala Sitharaman on Monday. A significant consensus was reached in the meeting to run a special drive to help people get unclaimed deposits, shares, and dividends.

Briefing reporters after the meeting, Economic Affairs Secretary Ajay Seth said an early warning system for the whole economy would possibly be in line with the RBI’s indicators to identify stress for banks.

“This is one set of indicators. There has to be a wide set of indicators that capture information from the financial markets, global markets, and the economy. It is evolving a system to get a sense of stress. The idea is to get the stress identified much earlier, before it becomes prominent and reaches a difficult situation,” he said.

Talking about the strength of the financial sector, especially in the wake of issues related to some banks in the US, he said: “We see that the global financial situation is daunting, but, at the same time, the Indian economy and financial sector are well protected and well regulated. Of course we have to be cautious and be on our toes.”  Asked if the spillover of the failures of Silicon Valley Bank and Signature Bank and the liquidity pressure faced by Credit Suisse were discussed, he said it was not specifically brought up, but there is no spillover.

Also read: More dominos waiting to fall in the US banking business: Aswath Damodaran

Special Drive

During the meeting, the Finance Minister advised all regulators to conduct a special drive to facilitate the settlement of unclaimed deposits and claims in the financial sector across all segments, such as banking deposits, shares and dividends, mutual funds, insurance, etc. Seth said that special efforts will be made in those cases where nominee details are available but the nominees are not aware. “Each regulator should take action so that nominee details are available. To reach out so that contact details are available and those claims are settled,” Seth said.

G Sec

Seth also informed that the effort is to have a seamless experience in G Sec with the use of technology. “With the use of technology, how can a seamless experience be provided to potential investors, whether they come through the RBI infrastructure, which is the market infrastructure route, or the SEBI infrastructure route. This was hitherto not possible, but today, with the use of technology, it is possible,” he said.