On 9th June 1992 Janakiraman Committee was officially constructed by the Reserve Bank of India to safeguard fund transfers in the mutual funds as well as the public sector market. The security provisions of banks and other financial organizations were made stricter. The recommendations of the RBI stipulated an ordinance to enhance the transaction mechanisms by eliminating the existing loopholes in fund transfers involving PSU (Public Sector Undertaking) bonds. The purpose of the Janakiraman Committee was to introduce the latest alternative techniques that will monitor the transfer of accounts. The Janakiraman Committee members list included all the Indian banks as well as international banks that function in the country. PSUs, mutual funds, and even brokers also represented the council. The Janakiraman Committee submitted two interim reports regarding the provisions for securing funds. In the report, the Committee acknowledged the secretarial support of IDBI and SHCIL. It also recognized the benevolence of D. Basu who was the Deputy Manager of State Bank of India at that time, K. N. Atmaramani, the contemporary G. M. of UTI, and R. H. Patil, Director of IDBI. All of them contributed to the final approval of the draft. 

Purpose of Janakiraman Committee 

The primary purpose of the Janakiraman Committee was to secure fund transfers involving PSU bonds and subsequent units. Apart from this general cause, there involved specific rigid policies which we will discuss in the list below:

  • The platform for trading must be transparent. There must be vivid comparisons among relevant stocks which will assist a buyer or seller to make informed decisions. Offers that are subject to market performance must be communicated to the audience in due time. 
  • Account settlement ought to be smooth and steady. There should be no hindrance in completing a particular transaction. All the related procedures must be explained and executed in a simple interface. 
  • Reconciliations must be recorded. All transactions involving a specific account must be displayed in a sort of dashboard. 
  • The market for PSU bonds must acknowledge that organizational players must consistently control the market. 
  • Another central purpose of the Janakiraman Committee is to design a mechanism that will suo moto notify the parental organization about large volume transactions or deformities in fund transfers. There should be monitoring of the existing systems throughout the day. 
  • The most vital purpose of the Janakiraman Committee was to devise an ultimate system that will be ideal for executing global transactions whenever the market will be active. To realize this there was an immense change in the existing technology. The Committee strived toward achieving the perfect modality without unnecessarily investing huge sums of money. Also, the trial and error checks were facilitated as such so that they do not disturb the transactions in between. 
  • The new system had to be incorporated without tampering with the advantageous aspects of the existing one. Therefore, the Janakiraman Committee acknowledged the infrastructural upsides of the computing and communication sectors. Although they made sure that this viewpoint does not achieve their goal by compromising the effectiveness of the new system. 
  • All the above-mentioned instruments must be implemented only up to the extent to which it does not affect the liquidity of the PSU bonds. 

Janakiraman Committee Report 

All the sections of the report issued by the Janakiraman Committee 1992 have attempted to find out the loopholes in the existing security system and at the same time recommend modifications to fix the most basic threats. The digital copies of all the national depositories were to be covered up for security reasons. The desire to build the ‘ideal’ model made the Committee design security measures for the interim to annihilate the roots of malpractice. The Reserve Bank of India provided sufficient liberty to the members so that Janakiraman Committee 1992 could track the improvements in the new organized and regulated transaction models of the PSU bonds, banks, and other financial institutions. The report also called for the formation of a separate Supervisory Board to monitor the financial activities to and fro. 

Conclusion 

The ex-Deputy Governor of the RBI, Mr. R Janakiraman headed a committee in 1992 that investigated the prevalent malpractices involving fund transfers of PSU units and other banking affairs of that time. The Janakiraman Committee members list included prominent foreign banking institutions apart from all the national banks. It also included brokers and mutual fund managers.