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Public Debt Management Agency | SBI PO Prelims & Mains Preparation - Bank Exams PDF Download

Introduction

  • It is an interim organization set up by Ministry of Finance & will be elevated to a statutory Public Debt Management Agency (PDMA) in about two years. 
  • Its core purpose is to permit separation of debt management functions from RBI to PDMA in a steady & seamless manner, without causing market disruptions. 
  • PDMC will have 15 expert debt managers from Finance ministry & RBI for the required expertise. 
  • A joint implementation committee chaired by joint secretary (Budget) will supervise the conversion process of PDMC to PDMA.

Public Debt Management Agency | SBI PO Prelims & Mains Preparation - Bank Exams

Main Functions

  • It will only have advisory functions to avoid conflict with statutory functions of the RBI.
  • It will plan government borrowings as well as accomplish its responsibilities.
  • It will further monitor cash balances & create an efficient market for government securities & advice government on matters related to investment, capital market operations, fixing interest rates on small savings etc.
  • It will develop an Integrated Debt Database System (IDMS) as a centralized database for all liabilities of government, on a near real-time basis & undertake necessary elementary work for PDMA.
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Public Debt Management Agency (PDMA)

  • PDMA is a proposed specialized autonomous agency that manages the internal & external liabilities of the central government in a holistic manner.
  • The government has now made clear that PDMA will be formed in two years.

Need For PDMA

  • Currently, the market borrowing is managed by RBI but external debt by central government directly. Forming a debt management agency would combine all debt management functions in a single agency & bring in full management of both the internal & external liabilities.
  • Supervision of government debt, regulation of banks & monetary policy are all interlinked which could be better harmonized by an agency like PDMA.
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