FM wants action on common demat account, uniform KYC

The Financial Stability and Development Council (FSDC), chaired by Finance Minister Arun Jaitley, met on Friday and discussed a number of issues. It met for the first time since last June.

The issues discussed included the non-legislative recommendations of the Financial Sector Legislative Reforms Commission (FSLRC) and the economic situation, abroad and at home.

Jaitley told the gathered financial regulators that action on a single demat account and uniform Know Your Customer (KYC) norms should be expedited.

A common repository facility or single demat account, as envisaged by the FSLRC, would provide a common account aggregation facility for people, to get details of their financial assets such as bank accounts, stocks, insurance policies, mutual funds and other financial instruments, at one place.

The meeting was attended by Reserve Bank of India (RBI) governor Raghuram Rajan, Finance Secretary Rajiv Mehrishi, Chief Economic Advisor Arvind Subramanian, Securities and Exchange Board of India chairman U K Sinha,  Insurance Regulatory and Development Authority of India chairman T S Vijayan,  Forward Markets Commission chairman Ramesh Abhishek and Pension Fund Regulatory and Development Authority head, Hemant G Contractor. Other senior officials were present.

They discussed the progress on implementation of decisions taken on development of the corporate bond market and how to improve its width and depth.

It was observed that “macro-economic vulnerabilities have been reduced significantly in recent months, on the back of various policy initiatives taken by the government, improvement in growth, declining inflation, recovery in external sector and political stability,” according to an official statement.

The Council was also apprised of the progress made by the task force set up for creating a Resolution Corporation, Public Debt Management Agency, Financial Data Management Centre and Financial Sector Appellate Tribunal.

Jaitley launched a portal for monitoring the progress of regulators on implementation of the FSLRC’s non-legislative recommendations. In a FSDC sub-committee meeting last month, chaired by the RBI governor, capital requirements of banks and measures to deepen the bond markets were discussed. The panel had also deliberated upon matters related to account aggregation facilities and measures to deepen the credit default swap market.

RBI informed the Council about the measures being taken at banks for timely detection of fraud. The council took note of the developments and the suggestions made.