FM meets financial sector regulators to seek budget inputs

Finance Minister Pranab Mukherjee on Friday discussed the economic situation with financial sector regulators, including Reserve Bank of India Governor and Sebi chief, and sought their inputs for the 2011-12 budget that will be unveiled on February 28.

This was the second meeting of the high-level Financial Stability and Development Council (FSDC) within a month.

The first meeting was held on December 31, 2010. "The RBI policy is scheduled on January 25. As a standard practice I have come to review the macroeconomic situation with the Finance Minister", RBI Governor S Subbarao told reporters after the meeting.

The Central Bank is scheduled to hold the quarterly review of its monetary policy later this month in which it is widely expected to raise the key rates by 25-50 basis points to tame inflation that has shot up to 8.43 per cent in December, from 7.48 a month ago.

Besides, Subbarao and officials of the Finance Ministry, the meeting was attended by Securities and Exchange Board of India (SEBI) chairman C B Bhave, Insurance Regulatory and Development Authority (IRDA) chief J Hari Narayan and Pension Fund Regulatory and Development Authority (PFRDA) chairman Yogesh Agarwal.

Mukherjee, sources said, also sought inputs of the regulators on the budget with a view to improving and strengthening the financial sector and pushing the economy on the double-digit growth path.

The proposal to set up FSDC to resolve the inter- regulatory issues was mooted by Mukherjee in his budget speech last year.

The high-level body is expected to deal with issues concerning financial stability, financial sector development, financial literacy, financial inclusion and macro-prudential supervision of the economy, including the functioning of large financial conglomerates.

Besides, the Council will also coordinate the country's international interface with financial sector bodies such as the Financial Action Task Force (FATF) and Financial Stability Board (FSB).