The Indian financial sector today once again re-lived its dream of making Mumbai an international financial centre. Stalwarts of the Indian financial sector at the Banking and Finance Summit, 2001, organised by the Tata Consultancy services (TCS), said though the city has already become the financial capital of the country, much is needed to be done in terms of regulation and infrastructure to convert it into an offshore centre.
R H Patil, chairman, Public Sector Disinvestment Commission, government of India, said the metro is strategically placed to become an offshore centre. He said Mumbai has the highest concentration of financial institutions and intermediaries and is also the centre of the capital, forex and money markets in the country. However, initiatives are needed from Maharashtra, the Reserve Bank of India (RBI) and ministry of finance for the city to achieve the qualification of an offshore financial centre. Patil said the state government should reduce the stamp duty and urged the ministry of finance and the RBI to rationalise regulations related to banking sector.
Patil also stressed that all the regulatory authorities of the financial sector should be in Mumbai. "We already have the Securities and Exchange Board of India (Sebi) and the RBI here. For the financial sector to operate more efficiently, we need Insurance Regulatory Development Authority (Irda) should also be in the city."
However, Nasser Munjee, managing director & CEO of IDFC, struck a contrarian note by pointing out that it took Singapore 30 years to become an international financial centre. In this regard, Mumbai, for the present, would do well to focus on building domestic capacities (developing reasonable financial/ telecom infrastructure) for attracting inward investments and that becoming an international financial centre should be a long-term goal.
Aman Mehta, chief executive officer, Hong Kong and Shangahi Banking Corporation Ltd said, in this regard, Mumbai can take lessons from existing offshore financial centres like Hong Kong. "The key lessons of which are: set and maintain high standards in terms of regulation, build on your particular strength and above all remain flexible," Mehta said in his presentation.
Y H Malegam, managing partner, S B Billimoria and Co, said Mumbai needs regulation and not overregulation to achieve the standards of an offshore centre. Malegam said: "Regulators are not insurers. They will just provide the ground rules to the business. There should not be multiplicity of regulations either."
