Government Likely To Take More Steps For Financial Sector’s Problem, Says NITI Aayog Vice Chairman
“I believe some other steps are now in pipeline for further such adverse impact not to take place,” said Rajiv Kumar.
The government is likely to take more measures to deal with the problem of the financial sector, NITI Aayog vice chairman Rajiv Kumar said on Wednesday.
Speaking at the book release of former Securities and Exchange Board of India chairman UK Sinha, Kumar said this is a very different type of situation that the country facing.
"Credit markets are jammed. It continues despite government's best efforts in the sense of assuring people. I believe some other steps are now in pipeline for further such adverse impact not to take place,” Kumar said.
"This is something that all of us in the government and outside who are interested in India's economic development need to go very deep into it. I don't think there are no easy answers here. I dont think there are shortcut solutions here because what's happening to credit growth, what's happening to bond markets, what's happening to NBFCs (non-banking finance companies)," he added.
The government since August has taken several steps, including liquidity support to housing finance companies, one-time partial credit guarantee to public sector banks for purchase of high-rated pooled assets of non-banking finance companies and mega merger of public sector banks.
Pointing out that there are 92,000 urban and rural credit cooperative in the country, Kumar said it is fragmented and only top 500 are functional.
"I think this requires very deep study. I suppose the research department of (the) RBI would be very well placed to do so. This is time to study this issue much more carefully than what we have done in the past," he said.
Referring to the changes made in the Finance Act, Kumar said, "I am amazed to find SEBI’s financial autonomy is now being challenged and threatened. All the funds and fee it collects has to be put to Consolidated Fund of India. Imagine what it will do the Sebi's autonomy when it will have to ask for the fund from the government".
As per the Finance Act 2019, Securities and Exchange Board of India will have to transfer 75 percent of its surplus from the general fund every year to the Consolidated Fund of India.
An announcement to this effect was made in the Budget via a proposed amendment to SEBI Act 1992.
Kumar pitched for convergence of regulators in the financial sector for effective and efficient regulation.
He said there are 20 regulators are in financial sector space alone.