The Financial Stability Development Council (FSDC) may come up with a common repository for all financial assets of an individual within a year’s time, a move which officials said will simplify the way people invest and keep track of their assets. The facility would let an individual access information on asset classes he has exposure to through a single window ? like a bank account.
In his interim budget speech, finance minister P Chidambaram underlined the need ?to create one record for all financial assets of every individual? as one of the steps envisaged to deepen the financial markets. The assets include fixed deposits in banks, post office savings accounts, mutual fund investments, equity investment through demat accounts and investments in other securities such as bonds, debentures, commodities and currency.
The FSDC, which is headed by the finance minister and comprises heads of various financial and market regulators, including the RBI governor and the Sebi chairman, is looking at plans for a common repository of information on every individual’s financial assets as well as a common depository for the same. While the former would provide a collated record on all the financial holdings of a person, the latter will actually be a common account for all financial holdings of an individual.
Government officials said implementing a common repository scheme is a relatively an easier task compared to setting up common depositories. ?The FSDC sub-committee is looking at implementing common repositories in a year’s time. This will provide information on a person’s investment in equities, mutual funds, bonds, insurance schemes and other securities,? a senior finance ministry official told FE.
However, information on bank fixed deposits and post office savings accounts will not be included in the repositories. ?Record-keeping in our banking and post office system is largely outdated. The entire system needs to be modernized and over-hauled before they can be integrated into a common platform. And that will take a lot of time,? the official added.
Apart from the sub-committee headed by RBI governor Raghuram Rajan, another inter-regulatory sub-committee called the inter-regulatory technical group is also looking at the issue of common repositories. Officials said all the different regulators like RBI, Sebi, Irda, NSDL will have to integrate their systems before the repositories can become a reality.
As for an actual account for all the assets of a person, officials said that will take a lot more time. ?A common depository will essentially be a single-bank account where all assets can be put in. This kind of an overhaul of the banking system will be so big that it may even require parliamentary approval,? the official said. The person did not give any timeline as to when a common depository scheme can be implemented.
?The FSDC knows this will be difficult. Getting mutual funds, fixed deposits, savings accounts, equities and other financial securities under one account is a big challenge. A common repository is only the first step to achieving that.?