FSDC stresses on vigilance, reforms amid global uncertainty & AI boom

The committee reviewed macro-financial stability amid increasing geopolitical uncertainties, the artificial intelligence boom (AI) and a sharp rise in global bond yields.

In a statement, the finance ministry said the FSDC deliberated on strengthening the domestic investment ecosystem, enhancing capital flows and deepening financial sector reforms.

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"The Council recognised the need for proactive efforts to mitigate potential risks to financial stability while adopting adequate safeguards for the financial system's resilience," the statement noted, adding that the members decided to strengthen inter-regulatory coordination for the wider development of the financial sector.

The meeting was also attended by Reserve Bank of India governor Sanjay Malhotra, Securities and Exchange Board of India chairman Tuhin Pandey, insurance regulator Ajay Seth and other senior officials.

The council also reviewed the cyber resilience of the Indian financial sector and took note of the Financial Sector Cyber Security Strategy (FSCSS) formulated by an inter-ministerial group comprising financial sector regulators and cybersecurity agencies.

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"The implementation of the FSCSS is expected to strengthen the overall resilience of the Indian financial sector," the statement said, adding that the discussions also covered India's preparedness to protect the critical information infrastructure and resilience of protection systems and improving cybersecurity preparedness of regional rural banks.

In its statement, the finance ministry stated that considering the importance of regulatory improvisation and digital modernisation in the financial sector, the FSDC also discussed measures towards promoting innovation in the fintech sector and exploring the prospects of tokenisation of financial assets and other real-world assets.

The FSDC additionally discussed issues relating to formulating a strategy for implementing past decisions and budget announcements, including strengthening the domestic investment ecosystem and improving resource flow for investment, including in the GIFT-IFSC.

Other issues deliberated included the simplification and digitalisation of know your customer (KYC) processes, alongside digital onboarding for non-resident Indians and foreign portfolio investors.