Government think tank Niti Aayog has advocated setting up a separate debt management office to manage the Union government's borrowings and finances, saying it is an idea whose time has come. At present, Reserve Bank of India manages the borrowings and finances of central government and separation of this function will dilute the central bank's role in the country's financial sector. \u201cI think the national debt office, the independent debt office, is something whose time may have come,\u201d said Rajiv Kumar, Vice Chairman of Niti Aayog. Addressing a seminar jointly organised by EGrow Foundation and Niti Aayog in New Delhi on Thursday, Rajiv Kumar, however, clarified that he will not preempt any policy announcements. He said the Union government will have to take a call in July after the elections. In the interim budget, the government has estimated that it will need to borrow Rs 7 lakh crore in the next fiscal to meet its expenditure, a big part of which will go towards interest payment of the earlier loans. The Union government's total debt has been estimated at over Rs 82 lakh crore at the end of last year, forcing it to borrow an average of Rs 6-7 lakh crore every year for interest payments alone. Ninety five per cent of the government's total budgeted borrowings goes towards interest payment without reducing the principal amount, raising the cost of capital. \u201cIt is important for this office (Public Debt Management Office) to be separate. You can pay much more attention than what's been done today, and that will help the government in bringing down the cost of its debt,\u201d added Rajiv Kumar. Niti Aayog Vice Chairman also advocated formation of larger banks in the country through merger and acquisition saying that India's largest bank State Bank of India is at the 60th\u00a0position in the world as several smaller economies have bigger banks than SBI. \u201cThe fragmentation in the banking sector, that is something that PJ Nayak committee has not tackled, that in my view keeps the cost of capital very high, that makes it very difficult for our companies to compete,\u201d he added. He said the government has taken several steps in the last four and a half years to cleanse the banking system which was saddled by bad loans or NPAs when NDA government came to power in May 2014. \u201cThe era of phone banking (undue influence) is gone. Now banks are required to do a lot of due diligence,\u201d said the Vice Chairman of Niti Aayog who have often been at the forefront of articulating the Modi government's economic policies.