India needs more financial reforms: Ex RBI Dy Guv

Mumbai R Gandhi, former deputy governor, Reserve Bank of India, is of the view that at a time when the country is all set to celebrate 30 years of financial reforms, there is an immediate need to push more financial reforms.

In his opening remarks on 'Recent Reforms in Financial Sector- Issues, Opportunities and Challenges', in a webinar which was held by Enqube Collaboration on May 22, Gandhi said that India is still has more financial reforms to catch up the advanced global financial sector. Hence, he welcomed the recent financial sector reforms and hoped that further reforms will continue. Generally, reforms are triggered by any major shock to the financial sector, change in political ideology or incremental reforms. He also elaborated that IBC, institutional reforms like establishing DFI, NARC, Gold Exchange GST, privatization of two PSBs and one General Insurance Company, increasing the FDI limit in insurance from 49 per cent to 74 per cent in insurance sector are the direct reforms. The reforms in the real estate sector like RERA, assets monetization will have indirect impact on the financial sector too, he said.

Enqube Collaboration, a think tank, which has been organising webinars on banking and finance, NBFC, capital and debt market and IBC. He later dwelt in length on the Act passed for National Bank for Financing Infrastructure and Development. This a very positive development for infrastructure financing even though there were discussion at RBI level right from 2010 as banks' finance for infrastructure found to be inadequate. Earlier, RBI thought of for wholesale investment banking as per Nichiket committee recommendations for Differentiated Banks, which may include differentiated Licensing like universal banking, SFB and payment banks. It goes in the same way as per earlier recommendations which had been made for wholesale and investment banking. The current Act for DFI provides for large capital to scale the size, even though Govt currently starting with an initial capital of Rs 20,000 crore with a capacity to create a portfolio at least Rs 5 lakh crore within a period of three years. The proposed National Bank for Infrastructure and Development can raise further capital from its shareholders and qualified institutional investors to scale up. The Act also provides for the developmental role for this DFI including active bond and derivatives market. The Act has also enablers for establishing more DFIs from the private sector. The Act, for the first time, provides for support for development of long-term non-recourse infrastructure financing in India. Ahwani Bhatia, MD, SBI, said that even as IBC is supposed to be the last resort, it is going to be a game changer in the ongoing financial reforms in the country. He hoped that some recoveries may improve due to IBC. Prof TT Ram Mohan, visiting Professor IIM Ahmedabad, Krishan Sitaraman. Sr Director, Financial Sector Ratings CRISIL, Shachindra Nath, Executive Chairman, YGRO Capital, Harsh Bisht, Partner EY and Neeta Mukherjee, CEO, Assets Care and Reconstruction Enterprise were the panellists.