BANKING AFFAIRS

Detailed explanation-1: -Explanation: The government’s intention to set up a Public Debt Management Agency (PDMA) is not only required for the development of the bond market in the country, but it would also prevent leakages of public funds.

Detailed explanation-2: -PDMC has the following advisory functions to the Government.” Manage Central Government’s liabilities including NSSF, contingent liabilities. Monitor cash balances of the Government, improve cash forecasting and promote efficient cash management practices.

Detailed explanation-3: -Why needed? With establishing PDMA, Government seeks to divest the RBI of its dual and often conflicting roles as the banker and manager of the Central Government’s borrowing. It will also facilitate in better planning and management of domestic and foreign market borrowings of Central Governemnt.

Detailed explanation-4: -In 2015, the Finance Ministry under Arun Jaitley was ready to bring legislative changes required to form the Public Debt Management Agency (PDMA), an independent body which would plan and manage the central government’s borrowings.

Detailed explanation-5: -The Reserve Bank manages public debt on behalf of the Central and the State Governments. It involves issue of new rupee loans, payment of interest and repayment of these loans and other operational matters such as debt certificates and their registration.