Financial Systems Design

We discuss the need for a clear vision, rationale, and a roadmap to be placed by the RBI for how it sees the draft framework enable the development of this market. We also consider how RBI has made the choice between capital neutrality and capital relief through this framework and how the outcomes from such a choice can have an impact on how securitisation serves the efficient movement of risks within the banking system and also to investors outside the banking system.

In this series of columns, members of a drafting team on the Working Group report on Social Stock Exchange detail important recommendations.

The Social Stock Exchange is envisioned as the venue that will originate pertinent funding structures for NPOs. One of the main hurdles that non-profit organisations (NPOs) face in securing financing from a wide variety of sources is the lack of robust information about their activities. To mitigate this problem, the establishment of a Social Stock Exchange (SSE) will prompt all NPOs that access capital through it, to submit to a minimum reporting standard.

The Covid-19 crisis has, among other things, brought into focus the importance of non-profits and impact-focussed, for-profit, enterprises.

A common minimum reporting standard has been recommended for all fundraising activity through the proposed Social Stock Exchange.

Recently, the Reserve Bank of India has begun licensing a new kind of retail bank, called payments banks, for the hitherto financially excluded.

This problem can be solved by link-ups with large supply chains and networks that disperse risk and place small businesses in a better position to get loans and attract equity investors.

Solving the identity problem is necessary to enable a shift away from a survival mindset and towards a growth mindset

In their book, In Service of the Republic, Vijay Kelkar and Ajay Shah warn against distortions caused by the government and its entities being both player and umpire in various sectors .

The Indian government has set into motion the implementation of several schemes that are aimed at improving both the liability and asset sides of the balance sheets of banks and non-banking financial companies (NBFCs), so that lending to the real economy can increase. The most recently introduced are four schemes.