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New Delhi, Nov 21: official explained.
A separate agency would eliminate these conflicts, enabling the central bank to focus on monetary policy and modify the short-term interest rate to stabilise the domestic business cycle, while the debt manager acts as the ‘investment banker’ for the government, selling bonds and engaging in other portfolio management tasks in close coordination with its client, the budget division in the ministry of finance.
NTMA would also act as a single centralised database of onshore and offshore liabilities of the government and help reduce financial repression on financial firms such as banks who are mandated to buy government bonds. Banks are now required to invest at least 24% of their total deposits in government securities.
The working group that prepared the draft Bill has proposed that NTMA be set up in Delhi, with flexibility to open branches in other parts of the country. Most advanced countries have a separate debt management office and emerging economies like Brazil, Argentina and South Africa have adopted this practice.
Investment manager
• NTMA proposed to have functional autonomy
• To manage debt, cash and liabilities of Centre & states
• Centre to have 51% equity, with states sharing the rest
•To issue bonds linked to Re, forex and inflation ...
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