Money & Banking

FSDC discusses NBFC liquidity issues

PTI New Delhi | Updated on October 30, 2018

Finance Minister Arun Jaitley chairs the FSDC meeting in New Delhi on Tuesday. PTI

RBI assures adequate fund flow in system

The high level FSDC meeting chaired by Finance Minister Arun Jaitley on Tuesday discussed liquidity issues being faced by the non-banking financial companies, sources said.

Headed by the finance minister, the Financial Stability and Development Council (FSDC) includes Reserve Bank Governor, SEBI Chairman, and heads of other regulators like PFRDA, IRDAI, and also Chairman of the Insolvency and Bankruptcy Board (IBBI).


Reserve Bank Governor Urjit Patel said the liquidity problem in NBFCs is not as severe as is being projected, but assured the government that it would ensure adequate liquidity in the system, sources said after the meeting.

The meeting assumes significance as the FSDC is meeting for the first time after RBI Deputy Governor Viral Acharya raised the issues regarding independence of the central bank.

Unlike in the past, all the four RBI deputy governors attended Tuesday’s FSDC meeting along with Patel.

Sources said the RBI governor informed the government that there is no liquidity crunch in the system, barring certain sectors and assured they are keeping a close watch on the financial sector.

IL&FS crisis

The government, on its part, asked the RBI to prevent spreading of IL&FS crisis to other sectors of the economy, sources added.

Among other things, the issue concerning cyber-security in financial markets also came up for discussion.

Pension fund regulator PFRDA Chairman Hemant Contractor said there was general discussion on the domestic and global economy.

The FSDC was set up to strengthen and institutionalise the mechanism for maintaining financial stability, enhancing inter-regulatory coordination and promoting financial sector development.

The series of loan defaults by the IL&FS has resulted in doubts over financial soundness of the non-banking finance companies. The government last month took over the board of IL&FS and appointed seasoned banker Uday Kotak at the helm to resolve the crisis being faced by the NBFCs.

Published on October 30, 2018

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