Regulating the three Rs

On the face of it, the dispute between the US-based Chartered Financial Analyst (CFA) Institute and the Institute of Chartered Financial Analysts of India (ICFAI) is a simple trademark one, with a bit of a twist. While the CFA is a 60-year-old body with a presence in 134 countries, the ICFAI was the first to launch a programme in the country, in 1985, to train and certify financial analysts when few had heard of the American CFA institute. As is increasingly the case with such trademark disputes in India in which a foreign holder of a global trademark has claimed that its ownership right is being violated, the courts have ruled in its favour. In August last year, the Delhi High Court directed that the ICFAI would have to drop the letters CFA from its name by the end of the academic year, that is by May 2007. Normally, matters would have come to an end there, with perhaps an appeal to the Supreme Court. But the ICFAI filed a case with the Guwahati High Court, alleging that the CFA institute was running its course without the approval of either the University Grants Commission (UGC) or the All India Council for Technical Education (AICTE). The Guwahati High Court directed the AICTE to look into the matter, and the latter""unsurprisingly, considering its own turn was at issue""reacted by asking the institute to stop operations in India with immediate effect.

This has jeopardised the prospects of 7,000 students in the country who are registered with the CFA. But the more important issue is the regulatory rights conferred upon both the UGC and the AICTE, based on the belief that education is too important a subject to be left ungoverned and buyers of educational services suffer from information asymmetry. The quality of various MBA institutes certified by the AICTE is enough to make it clear the certification doesn't count for much. The Indian School of Business in Hyderabad, which has been set up in association with the Kellogg School of Management and The Wharton School, chose not to apply for AICTE certification, but most employers in the country think the course is good enough to offer ISB graduates some of the highest salaries commanded by MBAs. Similarly, if Harvard University does come into the country, once the government opens the doors to foreign universities, and chooses not to get a UGC certificate, surely no one will argue that a Harvard degree is inferior to that given by a UGC-recognised university. It is precisely for this reason that the draft policy on foreign universities envisages that certain universities such as Harvard will not be asked to get approval from the UGC and other such bodies. If the ISB can operate without regulatory approval, why not the CFA?

If it is true that AICTE or UGC certification is in itself no guarantee of quality, can there be a system whereby unsuspecting students can be protected from getting duped by doubtful institutions with high-sounding names? One way can be through ratings supervised by an institution like AICTE which are widely disseminated. Plus, institutions can be mandated to reveal their placement records. The National Assessment and Accreditation Council, established under the UGC, already does an exercise implicit in its name. A combination of several ratings or certificates can help a student to separate the wheat from the chaff if he really wants to. If a student or his parent is willing to put his money on an institution whose name he considers good enough without an official stamp, then he should be free to do so.