The Ministry of Finance said the flow of household savings to financial markets could pose risks.

New Delhi: The Ministry of Finance informed the Parliament that transferring household deposits from banks to market-linked financial products for higher returns may expose households to significant market risks and that due to insufficient assessment of risk and financial literacy, they may face financial losses during market correction or during market correction.

The Ministry of Finance, under the leadership of the Ministry of Finance, said in a written request to the Standing Committee of the Parliament, requesting grants, “The decline in financial savings presents challenges to the banking industry in maintaining liquidity”, adding that the withdrawal of household savings from banks will undermine the bank’s access to cheap funds, which will lead to higher costs, which will increase the cost of the bank, which will be a cost of funds.

Key Suggestions

The recommendations made by the committee in a report filed in Parliament on Wednesday called for proactive solution to liquidity issues, enhance customer appeal, especially in underserved areas, and leverage technology to achieve operational efficiency so that banks can mitigate the impact of the CASA (CASA (Contemporary Account Savings)) ratio.

Foreign Direct Investment Insurance
Regarding the issue of 100% Foreign Direct Investment (FDI) on the Insurance Sector Budget Announcement, the Commission stressed the need for some safeguards to address concerns such as profit remittances, which is what foreign investors refer to sending income back to their home country rather than restoring their home country in India, rather than within the measurement range of domestic companies and labor force, thus reducing measures for occupational safety. Despite highlighting other issues such as focusing on high-profit policies and ignoring rural and weaker parts, the Commission recommends “fully and stereotypedly dealing with the downside of FDI in the insurance sector in India”.

Complaints and remedies
While noting that the number of complaints received by the RBI Comprehensive Ombudsman Program has grown at a CAGR of nearly 50% over the past two years to approximately 934,000 in 2023-24, the commission said mechanisms should be adopted to address complaints across multiple sectors.
Jan Dhan Account
The committee proposed to ensure that the cases of accounts opened under the program are not active, not dormant or fraudulent, and recommended strict verification of account details and periodic reviews of account activity.

“The discrepancy should be thoroughly investigated and accounts that are inactive or considered fraudulent for prolonged periods of time,” it said.