Mumbai as a Global Financial centre

When the world finally gets out of the economic turmoil, there will be a new global financial nerve centre: Mumbai. No, not an All Fool’s Day prank, but a realistic goal set by the country’s finance ministry, at a time when New York and London have lost their supremacy following the collapse of a number of Western banking giants. “New York and London are facing trouble as global financial centres. Singapore faces the problem of having a large financial services centre with a small economy. Mumbai is the best suited to emerge as a global financial centre, especially because the domestic demand for sophisticated financial services is high,” said a finance ministry official. The ministry will take up 49 recommendations for restructuring the country’s financial regulations once the new government takes office after the general election, the official said. The proposals involve encouraging innovation, introducing new products and strengthening corporate debt market. They include making regulations friendly and based on principles, removing segmentation of financial markets into banking, insurance, capital markets etc and lifting the ceiling on foreign investment in Indian rupee bonds. Economists welcomed selected reforms in the financial sector, but said they should be backed by proper regulation. The global crisis has shaped world opinion against ‘unbridled’ financial innovation as well as exotic and highly complicated products designed by mathematical wizards. However, that does not mean innovation is bad, feels the finance ministry. “Speed driving may cause accidents. Not building highways is not the answer for that. Strict regulation is not necessarily against innovation,” the finance ministry official said.