In order to boost the Indian financial sector, Finance Ministry has prepared a reforms agenda for the new government aimed at freeing up the financial sector which will put the country back on a high-growth trajectory. The Ministry’s draft includes proposals such as new monetary policy framework, a revamp of the stock and commodities markets, and implementation of recommendations made by the Financial Sector Legislative Reforms Commission (FSLRC). FSLRC had earlier suggested a uniform Indian Financial Code and limiting RBI's role to regulating banking operations, payment systems, monetary policy management and consumer protection.
Finance Ministry is also of the view that Commodities futures markets should be able to support price discovery of various commodities particularly in country's large farm sector. Therefore, it pitched for complete revamp of commodities and stock markets to deepen them. Further, the Finance Ministry has also sought for stricter measures to deal with non-performing loans. Ministry is of the view that recovery efforts will not make much progress unless banks' books are cleaned up and some innovative ideas are in the works to achieve this.
Gross NPAs of public sector banks rose to 4.44% of advances at the end of March as compared to 2.32% in the year ago. Delays in implementation of project due to hurdles like land and environment clearances during the past few years contributed to the rise in NPAs, particularly in the infrastructure sector. The ministry also recommended the new government to take realistic decision on Urjat Patel report on inflation targeting. The RBI’s panel led by Deputy Governor Urjit Patel has outlined inflation-targeting as part of the monetary policy framework and suggested central bank to bring down retail inflation to 6% by January 2016.