New Delhi: Finance Minister P Chidambaram on Friday said the ministry has moved the Cabinet note for setting up of a Debt Management Office (DMO), which will handle the government's borrowing programme.
"The Paper (for setting up of DMO) has gone to Cabinet," he told reporters in New Delhi. At present, both the government's debt and fresh borrowings are managed by the central bank. The government is in the process of setting up of a DMO, aimed at separating RBI's role as the decider of interest rate in the market and at the same time being the banker to the government.
In 2011-12 budget, the then Finance Minister Pranab Mukherjee had said that he proposed to introduce the Public Debt Management Agency of India Bill in the next financial year. Earlier, the government had set up a Middle Office in the Finance Ministry on debt management, but had never taken away those responsibilities from RBI.