Emerging risks may pose challenges to Indian financial system, says FSDC sub-panel

The Reserve Bank of India (RBI)-led Financial Stability and Development Council subcommittee (FSDC-SC) reaffirmed its commitment to keep a close watch on emerging challenges, including those from heightened trade uncertainty and persisting geopolitical frictions, RBI stated in a circular.

The FSDC-SC held its second meeting on Thursday to review major developments in the financial sector on the global and domestic macroeconomic front. Amid the ongoing geopolitical tensions, the panel, chaired by RBI Governor Sanjay Malhotra, discussed how various prevailing risk factors could impact financial stability, particularly for those linked to global trade uncertainty.

It also took stock of regulatory matters, including the ongoing work to simplify the Know Your Customer (KYC) processes and special financial inclusion drives. "It also deliberated upon the National Strategy for Financial Inclusion (NSFI) 2025-30. The sub-committee also reviewed the functioning of State-Level Coordination Committees (SLCCs) in states and Union Territories, and activities of various technical groups,” an RBI circular stated.

The sub-committee reaffirmed its commitment to improving financial sector flexibility through closer inter-regulatory coordination. It also underlined the need to remain alert to emerging risks that could pose challenges to the Indian financial system. "The FSDC-SC reaffirmed its commitment to continue its focus on improving financial sector resilience through inter-regulatory coordination and keeping a close watch on emerging challenges, including those from heightened trade uncertainty and persisting geopolitical frictions," it added.

Securities and Exchange Board of India chairman Tuhin Kanta Pandey, Insurance Regulatory and Development Authority of India chairman Ajay Seth, Pension Fund Regulatory and Development Authority chairperson S. Raman, and Insolvency and Bankruptcy Board of India chairperson Ravi Mittal attended the meeting.