Covid-19 pandemic has hit economy hard across the world

Union Finance Minister Nirmala Sitharaman on Thursday chaired the 22nd meeting of the Financial Stability and Development Council (FSDC) and reviewed the current global and domestic macroeconomic situation, financial stability and vulnerabilities issues, major issues likely to be faced by banks and other financial institutions in the country.

Attended by RBI Governor Shaktikanta Das and other top officials of the Finance Ministry, Sitharaman also reviewed regulatory and policy responses, liquidity and solvency related issues of NBFCs/HFCs/MFIs. Besides, market volatility, domestic resource mobilisation and capital flows issues were also discussed by the Council.

At the meet, it was 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.

“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 the government and all regulators on the financial conditions that could expose financial vulnerabilities in the medium and long-term,” FSDC noted

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

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.

The Council also reviewed the action taken by members on the decision taken by FSDC earlier.