RBI releases Report of Household Finance Committee
Published: Aug 25, 2017
By TIOLCORPLAWS News Service
NEW DELHI, AUG 25, 2017: THE Reserve Bank of India (RBI) has released the "Report of the Household Finance Committee". The Committee was chaired by Dr. Tarun Ramadorai, Professor of Financial Economics, Imperial college London. It had representations from all the financial sector regulators, namely, RBI, Securities and Exchange Board of India, the Insurance Regulatory and Development Authority of India and Pension Fund Regulatory and Development Authority. Highlighting the unique aspects of Indian households' financial decision-making, the Committee has set out several recommendations on enabling better participation by Indian households in formal financial markets.
RBI had set up this Committee to look at various facets of household finance in India, based on the discussions in the Sub Committee of the Financial Stability and Development Council (FSDC-SC) held on April 26, 2016.
The Committee had developed a tailored design blueprint for a regulatory sandbox, based on extensive dialogue with the industry, including incumbents, start-ups, sector experts, and regulators. The Committee had recognized that demand-side considerations were equally relevant and that policy solutions must take into account the vast heterogeneity in household requirements for financial products. For example, a young, low-income household in Patna may face a very different set of risks, and have different demands for financial services than an older, high-income household in Pudukottai. The key focus of the report has therefore been to characterize the demand-side of Indian household finance and to recommend policy that will enable financial innovation to cater to the twin imperatives of customisation and scalability in this critical segment of the economy.
