Innovative steps like the introduction of exchange traded interest rate derivatives — such as interest rate swaps (IRS) — are also proposed in the survey. “Introduce standardised credit default swaps that can be traded on exchanges, subject to stricter-than-normal limits on eligible participants,” the survey suggests.

The survey also talks about aligning voting rights in banks with equity holdings. Moreover, it urges greater public holding in the equity of public sector banks with the objective of maintaining social control of management. Further, it says: “Allow trading of directed credit obligations among banks and other financial institutions. This will allow and encourage the development of financial institutions that can specialise in and exploit economies of scale and scope in unbanked or low-banked areas and sectors.”

To do away with the current rigidity in interest rates of small saving instruments (which don’t decline in tandem with the fall in interest rates within the economy), the survey advocates linking small savings rates to government debt instruments or bank deposit rates of similar maturity.