One of the Main functions of Ministry of Finance is entrusted with the mandate of the Department of Financial Services covers the functioning of Banks, Financial Institutions, Insurance Companies and the National Pension System. The Department of Financial Services (DFS) oversees several key programs/initiatives and reforms of the Government concerning the Banking Sector, the Insurance Sector and the Pension Sector in India. Initiatives and reforms relating to Financial Inclusion, Social Security, and Insurance as a Risk Transfer mechanism;
The Department provides policy support to the Public Sector banks (PSBs), Public Sector Insurance Companies (PSICs) and Development Financial Institutions (DFIs) like National Bank for Agriculture and Rural Development (NABARD), Small Industries Development Bank of India (SIDBI), India Infrastructure Finance Company Ltd. (IIFCL), National Housing Bank (NHB), Export-Import Bank of India (EXIM Bank), Industrial Finance Corporation of India (IFCI). It also monitors the performance of these PSBs, PSICs and DFIs and undertakes policy formulation in respect of the Banking and Insurance Sector in India. This Department deals with legislative and policy issues pertaining to the concerned regulatory bodies i.e. the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India (IRDAI) and the Pension Fund Regulatory and Development Authority (PFRDA). DFS also deals with the legislative framework relating to debt recovery. Matters relating to International Banking relations are also dealt by the Department.
CONSTRAINTS AND CHALLENGES
- Specific Role Functions and responsibilities of the Department of Financial Services towards Debt Recovery Tribunals in the country though DRT website hosts only the photographs of the Finance Minister and the Minister of State for Finance. However, it is mentioned under Chapter V of Annual Report for 2019-20.
- Non availability of a single real-time database to monitor the status of securities available to various loans outstanding in the banking system to evaluate the strength of Credit portfolio.
- Compliance Issues faced by Banks and FIs resulting in deviation in procedures and statutory norms.
- Non-Performing Assets in the Scheduled Commercial Banks in the country is a serious threat to economy and requires special attention. Hence there is an immediate need to either create a separate Department to Monitor the bad loans or guide and co-ordinate with the Reserve Bank of India to develop a real-time data of NPA in a Centralized Technology framework.
- Allocation of Business to the Department is confined only to three areas Insurance, Banking and Pension Reforms which requires more specifications and clarity in terms of accountability.
- Establish a robust mechanism to assess the Credit Flow to the key sectors of the economy like farmers and common man so that the correct beneficiaries of Government flagship Schemes are directly benefited without any irregularities or corruption.
- To scientifically evaluate the performance of Debt Recovery Tribunals and take up suitable legal reforms plugging all the technical loopholes in the RDDBFI Act and SARFAESI Act to ensure recovery of dues from the bad loans or non-performing assets due to Banks and Financial Institutions in the country.
- To establish a robust technology framework strengthening the Vigilance and Fraud Detection Mechanism related to Loans and Cyber Crimes.
- Establish a centralized panel of Advocates, Chartered Accountants, Cost Accountants, Civil Engineers, Credit/Concurrent/Statutory/Revenue/Stock Auditors to establish accountability for their services rendered to Banks and Financial Institutions.
- Introduce Customer Services Audit in Banks/FI deploying Artificial Intelligence(AI) solutions to evaluate the constraints faced by Customers.