RBI sets up committee to look at household finances in India

The Reserve Bank of India (RBI) on Thursday said it has set up a committee to look at the various facets of household finance in India and to benchmark the country’s position vis-à-vis both peer countries and advanced countries.

The committee will benchmark the current depth of household financial markets in India vis-a-vis those in other major world markets and identify areas of priority for growth and change and characterise and evaluate households’ demands in financial markets for assets such as pensions as well as liabilities such as home loans over the coming decade.

The panel will consider whether, how, and why the financial allocations of Indian households deviate from desirable financial allocation and behaviour, such as why a large portion of household allocation goes to gold. The committee will evaluate the design of new systems and the redesign of existing systems of incentives and regulations to encourage and enable better participation by Indian households in formal financial markets.

Besides, it will also assess the role of new financial technologies and products, such as robo-advising, automatically refinancing mortgages.

The need for such a committee was discussed during the meeting of the sub-committee of Financial Stability and Development Council held on April 26.

The committee will be chaired by Tarun Ramadorai, professor of Financial Economics, University of Oxford, and will have representation from all financial sector regulators in India.