FinMin seeking other ministries' comments on shell PDMA

New Delhi: The Finance Ministry is seeking comments of other ministries on creation of a shell public debt management agency (PDMA), an interim arrangement before the launch of a full-fledged agency to manage government debt.

"A draft Cabinet note on shell public debt management agency has been circulated for seeking inter-ministerial comments," sources said.

Shell PDMA would an interim arrangement before an independent agency is set up for managing the government borrowing programme. At present, RBI is handling the government's borrowing programme.

The setting up of PDMA would require amendments to the RBI Act. The agency would be set up after the Cabinet approval, while a full-fledged PDMA would become operational only after amendment into the RBI Act.

When asked if a Bill in this regard is expected in the upcoming Winter Session of Parliament, sources refrained from giving a timeline.

According to sources, the interim arrangement or shell PDMA will also take over the functions of the middle office, which is currently with the ministry.

The middle office looks after formulation of a long-term debt management strategy, fixing roadmap for annual debt issuance and forecasting borrowing requirement and setting up of a comprehensive risk management framework.

The shell PDMA will later outsource back office work of administration and collation of data to either RBI or NSDL, sources said.

The Finance Ministry in Budget had proposed to set up PDMA to manage government debt and also to shift the regulation of government bond from RBI to Sebi. However, due to opposition from RBI, the proposal could not go through.

"Since the RBI has been handling public debt management, the government in consultation with the RBI will prepare a detailed roadmap separating the debt management function and the market infrastructure from the RBI and having a unified financial market," Finance Minister Arun Jaitley had said while initiating the debate on the Finance Bill.

"It is...Being decided to delete the PDMA provisions from the Finance Bill for this financial year," he had said.