FSDC to meet on Aug 16 to take stock of global uncertainty

NEW DELHIL: Amid global uncertainty triggered by the downgrade of the US, a Financial Stability and Development Council sub-committee headed by RBI Governor D Subbarao will meet in Mumbai on Tuesday to take stock of the situation and suggest steps to deal with the problem.

"We will discuss issues including review of financial stability, infrastructure debt funds, repo in corporate bonds, conflict of interest in distribution of financial products, financial literacy and financial inclusion by banks," a Finance Ministry official said.

The Financial Stability Development Council, or FSDC, is an umbrella organisation of all financial sector regulators in the country and is headed by Finance Minister.

The FSDC, which was set up by the government to deal with inter-regulatory issues, has a sub-committee with the Reserve Bank Governor as its chairman.

The third meeting of the sub-committee assumes significance as it is being held in the backdrop of the global crisis, which was aggravated by downgrade of the sovereign credit rating of the US to AA+ from AAA by Standard and Poor's last week.

The panic triggered by the downgrade led to stocks across the world getting battered, as fears of a recession on the lines of the one that occurred in 2008 gripped investors.

Following the downgrade, the RBI came out with a press statement to assure the investors that adequate liquidity would be made available in the forex market to deal with any shortages.

Finance Minister Mukherjee, too, had said there was no need to press the panic button, though he admitted the downgrade will impact some sectors, especially the IT industry.

The downgrade sent markets all over the world, including India, into a tizzy. The Bombay Stock Exchange Sensex tanked by 700 points on Monday, though it recovered later.