New Delhi: Finance Minister P Chidambaram on Tuesday asked regulators to expeditiously introduce a common demat account for financial assets, a move that is expected to benefit investors.
Chairing the Financial Stability and Development Council meeting, attended by all financial regulators, Chidambaram also said that inter-regulatory issues should be resolved in a time bound manner by the FSDC Sub-Committee.
"Priority should be accorded to the steps like common demat account for financial assets which will add considerable benefits to the consumers," he said.
Although the deceleration in growth has been arrested in the second quarter of 2013-14, inflationary pressures and structural bottlenecks are some of the factors weighing down the growth process, Chidambaram said.
The Finance Minister "stressed upon the need for the government and the financial sector regulators to ensure robust growth and manage vulnerabilities", according to an official statement.
Last month, the government lowered the 2012-13 economic growth estimate to decade low of 4.5 percent from 5 percent. The growth in the first half of the current fiscal is estimated at 4.6 percent.
FSDC has taken up many initiatives to further develop the Indian financial sector, like the development of the Corporate Debt market, launch of infrastructure debt funds (IDFs) and issue of new FPI regulations.
It has also pursued the implementation of the report of the FSLRC with the intention that the financial sector stands on sound legal foundations and remains well-regulated, efficient and internationally competitive.
The Council, as per the Finance Ministry statement, made an assessment of the emerging issues relating to financial stability, including preparedness for the impact of US tapering, liquidity crunch and re-pricing of risk.
It said the Council noted the deterioration in the asset quality of banks and its impact on capital adequacy ratios.
It reviewed the steps taken by the government and the Reserve Bank to revitalise the distressed assets and assessed the additional capital requirements of banks under the Basel III norms. The Council apprised of certain management and governance related issues of banks and discussed further remedial measures.
The 9th FSDC was attended by RBI Governor Raghuram Rajan; Sebi Chairman U K Sinha; Irda Chairman T S Vijayan; FMC Chairman Ramesh Abhishek and PFRDA Chairman Anup Wadhawan, besides other senior officials.
The statement said the FSDC discussed the progress on pursuing implementation of recommendations of Financial Sector Legislative Reforms Commission (FSLRC) and assessed external sector vulnerabilities.
RBI apprised the Council of the developments under the aegis of the FSDC Sub-Committee.
FSDC noted the steps taken by the Finance Ministry and the regulators to adopt the governance enhancing principles of the non-legislative recommendations of FSLRC.
It also discussed the ministry's suggestion to improve the rules relating to the Annual Reports of the financial sector regulators for greater transparency and accountability and to make uniform the process followed for the appointment of the Chairman and Members.
The Council also apprised about the status of the constitution of task forces for the establishment of Financial Sector Appellate Tribunal, Public Debt Management Agency, Resolution Corporation and Financial Data Management Centre.
In order to facilitate issue of non-equity regulatory capital instrument by banks, the Council advised Irda and PFRDA to re-examine their norms to enable investment by insurance companies and pension fund managers in the Basel III compliant capital instruments issued by banks.
Referring to the activities of the FSDC Sub-Committee, the Council said that the Working Group on Resolution Regime for Financial Institutions in India has submitted its report to the FSDC Sub-committee last month.