Financial Stability Council Charts Cybersecurity and KYC Reform in 29th Meeting

The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, chaired the 29th meeting of the Financial Stability and Development Council (FSDC) in Mumbai on June 10, 2025. The high-level conclave brought together key financial sector regulators and policymakers to deliberate on the country's financial stability, regulatory enhancements, and citizen-centric reforms.

Focus on Financial Sector Resilience and Cybersecurity

The Council gave high priority to the issue of cyber threats facing the Indian financial sector. Taking cognizance of insights from the Financial Sector Assessment Programme (FSAP) 2024-25 and current cybersecurity regulations, the FSDC initiated discussions on developing a dedicated cybersecurity strategy tailored specifically for the financial sector. This move aims to bolster resilience against rising cyberattacks and systemic vulnerabilities in an increasingly digital economy.

The proposal includes developing a sector-specific cyber-resilience framework, harmonising protocols across regulatory bodies, and implementing real-time coordination and threat intelligence sharing among stakeholders such as the Reserve Bank of India (RBI), SEBI, IRDAI, PFRDA, and CERT-In.

Key Reform Measures and Budget Announcements

The Council reviewed progress on previous decisions and key budgetary provisions. It outlined a strategy for rapid and coordinated implementation of the following initiatives:

• Framework for Responsive Regulation: Regulators were urged to evaluate and revise existing frameworks to ensure agility and responsiveness in a dynamically changing financial landscape.

• Reduction of Unclaimed Assets: Emphasis was placed on reducing unclaimed financial assets such as bank deposits, dividends, shares, post office accounts, insurance and pension funds. Smt. Sitharaman instructed all departments and regulators to initiate special district-level camps, in collaboration with banks and financial institutions, to trace and return funds to rightful owners.

• Unified and Digital KYC Norms: The Council recommended common Know Your Customer (KYC) norms across institutions, and the simplification and digitisation of the KYC process, especially for Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), and Overseas Citizens of India (OCIs). This is expected to streamline onboarding and access to India's capital markets.

• Investment and Factoring Services: The Council explored financing flow trends and proposed a renewed push to increase India’s investment ratio, including via greater use of account aggregator networks and expanded access to factoring services for MSMEs.

Emphasis on Citizen-Centric Financial Services

Finance Minister Sitharaman strongly emphasised the need for the financial ecosystem to offer seamless experiences for citizens. She stressed the importance of intuitive, hassle-free processes in areas like KYC and fund recovery.

In particular, she called upon regulatory bodies such as the RBI, SEBI, Ministry of Corporate Affairs (MCA), IRDAI, and PFRDA to coordinate with financial institutions to accelerate the refund of unclaimed assets, putting the interest of common citizens at the forefront of policy implementation.

Inter-Regulatory Coordination and Vigilance

The Council recognised the evolving nature of the global and domestic financial environment and reaffirmed its commitment to vigilant oversight and coordinated action. Members acknowledged the importance of inter-regulatory cooperation to preempt and mitigate systemic risks and maintain long-term financial stability.

The FSDC took note of the initiatives undertaken by its Sub-Committee chaired by RBI Governor Shri Sanjay Malhotra and appreciated progress made by various agencies in implementing past decisions.

Attendance of Key Stakeholders

The meeting was attended by senior financial and economic policy officials including:

• Shri Pankaj Choudhary, Union Minister of State for Finance

• Shri Ajay Seth, Finance Secretary

• Shri Nagaraju Maddirala, Secretary, Department of Financial Services

• Ms. Deepti Gaur Mukerjee, Secretary, Ministry of Corporate Affairs

• Shri Arvind Shrivastava, Secretary, Department of Revenue

• Dr. V. Anantha Nageswaran, Chief Economic Adviser

• Shri Tuhin Kanta Pandey, Chairperson, SEBI

• Shri K. Rajaraman, Chairperson, IFSCA

• Shri Parmod Kumar Arora (IRDAI), Ms. Mamta Shankar (PFRDA), Dr. Bhushan Kumar Sinha (IBBI), and Dr. Sanjay Bahl (CERT-In)

• Shri Chanchal Sarkar, Secretary of the FSDC

Forward Outlook

The 29th FSDC meeting reflects the Indian government’s commitment to fostering a financially inclusive, cyber-secure, and resilient ecosystem. As India continues to strengthen its regulatory framework and reduce frictions in citizen-facing financial services, the steps taken during this meeting are expected to have far-reaching impact on economic governance and trust in the financial system.