The Center, together with financial sector regulators, has stressed the need to develop a system of early warning indicators for the economy. The government has simultaneously asserted that India’s economy and financial sector are well protected and that the failure of US banks has no spillover effects.
These issues were discussed at a meeting of the Financial Stability and Development Council (FSDC) chaired by Finance Minister Nirmala Sitharaman on Monday. Significant consensus was reached at the meeting to run a special campaign to help people get unclaimed deposits, shares and dividends.
Briefing reporters after the meeting, Economic Affairs Secretary Ajay Seth said an economy-wide early warning system would possibly be in line with RBI indicators for identifying stress for banks.
“This is a set of indicators. There has to be a broad set of indicators that capture information from financial markets, global markets and the economy. A system for having a sense of stress is evolving. The idea is to identify stress much earlier, before it becomes prominent and leads to a difficult situation,” he said.
Speaking about the strength of the financial sector, especially following the problems related to some banks in the US, he said: “We see that the global financial situation is grim, but, at the same time, the Indian economy and financial sector they are well protected and well regulated. Of course, we have to be cautious and vigilant.” Asked if the side effects of the Silicon Valley Bank and Signature Bank bankruptcies and the liquidity pressure Credit Suisse faces were discussed, he said they weren’t specifically mentioned, but there are no side effects.
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During the meeting, the Finance Minister advised all regulators to conduct a special campaign to facilitate the settlement of unclaimed deposits and claims in the financial sector in all segments such as bank deposits, shares and dividends, mutual funds, insurance, etc Seth said special efforts will be made in those cases where the details of the nominees are available but the nominees are not aware. “Each regulator should take steps to make details of the nominees available. Reach out so contact details are available and those claims are resolved,” Seth said.
Seth also reported that the effort is to have a smooth experience in G Sec with the use of technology. “With the use of technology, how can you provide a seamless experience for potential investors, whether they come through the RBI infrastructure, which is the market infrastructure route, or the SEBI infrastructure route? This was not possible until now, but today, with the use of technology, it is possible,” he said.