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Mistry report not only for Mumbai

Asit Ranjan Mishra & Prashant K Sahu  |  New Delhi 

The finance ministry may not focus only on Mumbai while initiating crucial financial sector reforms for developing an International Financial Centre (IFC) in India.
"The government is not going to create an IFC. It will only implement enabling capital market reforms. If Karnataka or Gujarat provide first-grade infrastructure, Bangalore or Surat can become IFCs. If Mumbai gets its act together, it also can become an IFC," a senior finance ministry official told Business Standard.
The IFC committee, headed by Percy Mistry, which submitted its report earlier this year, suggested a fast upgrade of Mumbai's infrastructure. It, however, opposed locating the IFC in a special economic zone.
"The committee is more concerned about how and whether these large urban governance challenges in Mumbai will be met than achieving the necessary transformation in Indian financial policies and practices to accommodate an IFC," the report said.
However, officials in the finance ministry say the focus of the report is not Mumbai but capital market reforms for creating an IFC. "The basic thrust of the committee's report is what is holding things back for developing an IFC in India. It is more about financial sector reforms than issues related to Mumbai. If you amend the SEBI Act or the RBI Act, it does not apply only to Mumbai, it applies to all cities," the official added.
When asked if the government was open to having an IFC in a location other than Mumbai, the official said, "There is no question of being open. We don't decide. Let's say on a hypothetical note that it was decided that there should be a flourishing exchange for foreign currency derivatives. If the Bangalore Stock Exchange wants to offer this product, who can prevent it from doing so?"
The Mistry committee suggested full capital account convertibility, an "exit strategy" for the government's withdrawal from the ownership of financial firms and establishing a currency trading exchange, among other measures.
The finance ministry is expected to start evaluating the report by the end of this month after receiving comments from various stakeholders.

First Published: Mon, September 24 2007. 00:00 IST