Govt to set up financial stability and development council

As part of wall-fencing against any possible financial crisis in the country, the government on Friday proposed setting up a high-level panel for maintaining financial stability.

"The financial crisis of 2008-09 has fundamentally changed the structure of banking and financial markets the world over," said Finance Minister Pranab Mukherjee in the Lok Sabha while presenting Budget for 2010-11.

"With a view to strengthen and institutionalise the mechanism for maintaining financial stability, the government has decided to set up an apex-level Financial Stability and Development Council (FSDC)," he said.

Without prejudice to the autonomy of regulators, the council would monitor macro prudential supervision of the economy, including the functioning of large financial conglomerates, and address inter-regulatory coordination issues, he said.

The Council will also focus on financial literacy and financial inclusion, he said.

Laying emphasis on financial inclusion, the Finance Minister further said to reach the benefits of banking services to the 'Aam Aadmi', the Reserve Bank of India had set up a high level committee on the Lead Bank Scheme.

"After careful assessment of the recommendations of this Committee, and in further consultation with the RBI, it has been decided to provide appropriate banking facilities to habitations having population in excess of 2000 by March, 2012," Mukherjee said.

It is also proposed to extend insurance and other services to the targeted beneficiaries, he said.

These services will be provided using the business correspondent and other models with appropriate technology back up, he said.

By this arrangement, it is proposed to cover 60,000 habitations, he added.