FSDC Flags Geopolitical Uncertainty, AI Boom as Financial Stability Risks

New Delhi, Oct 24 (KNN) The Financial Stability and Development Council (FSDC), chaired by Finance Minister Nirmala Sitharaman, has called for heightened vigilance against risks to India's financial stability amid geopolitical uncertainties, the artificial intelligence (AI) boom and rising global bond yields.

At its 30th meeting in New Delhi on Friday, the council reviewed macro-financial stability and India's preparedness to address emerging risks. Sitharaman called for more frequent meetings at predefined intervals, citing rising geopolitical headwinds and global uncertainty.

The Finance Ministry said the council stressed the need for proactive measures to mitigate potential risks and strengthen financial system resilience.

Cybersecurity and Fintech in Focus

The council discussed fintech innovation, including the potential tokenisation of financial and other real-world assets.

It also reviewed financial-sector cybersecurity preparedness and took note of a Financial Sector Cyber Security Strategy formulated by an inter-ministerial group of regulators and cybersecurity agencies, in coordination with the Department of Economic Affairs (DEA), Department of Financial Services (DFS) and Ministry of Electronics and Information Technology (MeitY).

Discussions covered protection of critical information infrastructure and cybersecurity readiness among regional rural banks.

Digital Infrastructure and Investment

The FSDC reviewed measures to strengthen the domestic investment ecosystem and improve resource flows, including through Gujarat International Finance Tec-City-International Financial Services Centre (GIFT-IFSC).

Other priorities included simplifying and digitising know-your-customer (KYC) processes and digital onboarding for non-resident Indians and foreign portfolio investors.

The council also discussed scaling up digital public infrastructure, particularly the Account Aggregator framework and Unified Lending Interface (ULI), to improve access to finance for micro, small and medium enterprises (MSMEs).

Reducing financial-sector intermediation costs, improving regulatory responsiveness and rationalising credit guarantee schemes were also discussed.

Focus on Unclaimed Financial Assets

Sitharaman urged regulators to expedite the return of unclaimed bank deposits, dividends, shares, post office accounts, insurance proceeds and pension funds to their rightful owners.

The council reviewed progress under the government's ‘Your Money, Your Right’ campaign, which uses district-level initiatives to facilitate refunds, and asked ministries and regulators to step up efforts to ensure timely returns.

The meeting also reviewed the activities of the FSDC sub-committee, chaired by the RBI Governor, and follow-up action on decisions taken at previous meetings.

(KNN Bureau)