The development of Global financial hubs is inevitable for bringing about growth and efficiency in the financial sector.

1. Proceedings Report: National Summit on “Financial Services – A Key Driver for Economic Growth” Date: 19th February 2014 Venue: GIFT One Tower, GIFT City, Gandhinagar Event Partners Organizing Partner National Partner Knowledge Partner:
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Contents
Foreword ....................................................................................................................................................... 3
Introduction .................................................................................................................................................. 5
Session Theme: “What do we need to do in order to make India A Global Financial Hub of the World” ... 5
Business Session: Need for Global Financial Hub for Efficient Financial Services ........................................ 5
Session Details .............................................................................................................................................. 6 Opening Remarks by Chairman of the Session: Mr. Sudhir Mankad, Chairman, GIFT City................... 6 Theme Presentation by Mr. Utkarsh Palnitkar, Partner, Head of Advisory Services, KPMG ................. 6 Theme Presentation by Mr. Shailesh Vaidya, President, IMC: “Need for Global Financial Hub” .......... 7 Mr. Ramakant Jha, Managing Director and Group CEO, GIFT City: “Development of India’s first Global Financial Hub at GIFT City” ........................................................................................................ 9
Plenary Session 1 ........................................................................................................................................ 10 Opening Remarks – Dr. Varesh Sinha, IAS, Chief Secretary, Government of Gujarat ......................... 11 Address on the Concept of Global Financial Hub – Shri Hari Sankaran, VC & MD, IL&FS ................... 12 Handing over of Allotment Letters by the Hon’ble Chief Minister, Government of Gujarat ............... 12 Address by Chief Guest, Shri Narendra Modi, Hon’ble Chief Minister, Government of Gujarat ......... 15 Vote of Thanks – Dr. Hasmukh Adhia, IAS, Additional Chief secretary, Finance, Government of Gujarat ................................................................................................................................................ 16
Plenary Session 2: Global Financial Hub – A Way Forward......................................................................... 17 Ms. Chanda Kochhar, MD & CEO, ICICI Bank Ltd. ............................................................................... 17 Mr. S.S. Mundra, Chairman & MD, Bank of Baroda ............................................................................ 18 Mr. Aditya Puri, MD, HDFC Bank ......................................................................................................... 20 Mr. G. Srinivasan, CMD, The New India Assurance Company Ltd. ...................................................... 20 Mr. A.K. Roy, Chairman cum Managing Director, General Insurance Corporation of India ............... 21 Mr. Arun Agarwal, Chairman, Insurance Committee, IMC ................................................................. 22 Mr. Asit Bhatia - Managing Director and Co-Head of Global Corporate and Investment Banking, Bank of America, N.A. ......................................................................................................................... 23
Summing up and Vote of Thanks: Dr. Hasmukh Adhia, IAS, Additional Chief Secretary, Finance, Government of Gujarat ............................................................................................................................... 24
Findings…………………………………………………………………………………………………………………………………………………24

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Foreword
Dear All, Vibrant Gujarat 2015: National Summit on “Financial Services: A Key Driver for Economic Growth” Until very recently, cities like London and New York were the nuclei of financial services and have been serving as “Global Financial Hubs (“GFHs”) to the world. However, the rapid development of technology, enhanced cross border capital movement, increasingly global clientele and primarily the emergence of China as a global manufacturing hub and India as a key IT service provider, has given birth to several other financial hubs. The likes of Tokyo, Hong Kong, Dubai and Singapore have shown that opportunities exist for the establishment of new global and regional financial hubs. The development of Global financial hubs is inevitable for bringing about growth and efficiency in the financial sector. Narrowing down on India, the rapid growth in the economy over the past couple of decades has led to a demand for a robust financial market with easy access to capital and rapid transaction of money. Needless to mention, the growth of Indian financial sector, with a total asset size of the USD 1.5 trillion and employment base of more than 4 million people, is strongly correlated to the growth of Indian economy. The economy has witnessed increased private sector activity including expansion of foreign banks, insurance companies, mutual funds, venture capitals and other investment institutions, resoundingly reflected in the pace of our growth.
Geographically, Indian firms are now spreading far beyond the US and EU by establishing a direct presence or acquiring companies in China, Australia, ASEAN, Central Asia, Africa and the Middle East. In

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the process of undertaking & managing outbound investments, Indian companies require a range of international financial services for which they are approaching established GFHs such as New York, London, Singapore, etc. It is, thus, imperative for India to emerge as a Global Financial Hub to cater to the ever increasing domestic demand and benefit from the internationalization of financial services. The evolution of a city into a global financial hub is dependent on a large number of internal and external factors. A primary distinguishing factor of a GFH such as London or New York is the magnitude of financial activity and transactions that take place within its borders. Other factors contributing towards the establishment of a GFH include: high quality, reliable and sustainable physical and ICT infrastructure; skilled manpower; fair and transparent legal system; free flow of capital among others. As a part of Vibrant Gujarat Global Investors Summit, 2015, Finance Department, Government of Gujarat organized a seminar on “Financial Services – A Key Driver for Economic Growth” The Summit was organized with the aim of recognizing the prerequisites and need for India to transform itself and emerge as a Global Financial Hub. It intends to pave way and provide a direction for the development of financial services as a key driver for economic growth. The Summit brought together senior government officials from centre and state, policy makers, representatives from leading international and national financial institutions and private players from banking, insurance, asset management, global portfolio diversification, exchanges, mergers and acquisitions, corporate treasury management operations, consultants, etc. The proceeding of the Summit including important highlights of the discussion is placed herewith for ready reference. I am sure you will find the deliberations and outcome of the event very enriching and I hope that they would pave way for developing a world class Global Financial Hub in India. Best Wishes, R. K. Jha (Managing Director and Group CEO, GIFT City)

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Introduction
Over the last few decades, some of the GFHs like New York and London have shown tremendous contribution to the economies of their respective nations. The share of jobs provided by these GFHs has also increased phenomenally. In 2013, the finance and insurance sectors employed more than 350,000 people in London, around a third of UK employment in these sectors. In case of New York, the Wall Street itself employed over 200,000 people. Moreover, banks in the United States hold total assets amounting to about 85 percent of the country’s gross domestic product. In Britain, the banks hold almost 400 percent more money than its GDP, mainly because of the huge volume of international business taking place there. The growth in the Indian economy has also witnessed the emergence of a robust and nimble financial services sector in the country. As a key driver of economic growth, the financial services sector is bound to witness significant growth as the Indian economy continues to grow in the future. To capitalize on the mounting domestic demand and increasing volume of borderless financial transactions, it is an opportune time for India to emerge as a GFH and place itself in the Ivy League of the financial nations. GIFT City, through its offerings, would build an ecosystem to service institutions like Banks, Exchanges, Insurance companies, etc., out of its facility. These will be supported by state-of- the-art internal infrastructure encompassing all basic urban infrastructure elements along with an excellent external connectivity, ICT infrastructure and suitable social infrastructure essentials. In the above context, Finance Department, Government of Gujarat organized a National Summit on “Financial Services: A Key for Economic Growth” in Gandhinagar on 19th February, 2014. This seminar was one in the series of seminars on various focus sectors being organized by Government of Gujarat as part of Vibrant Gujarat 2015 Summit, for which GIFT was the Organizing Partner, FICCI and IMC were the National partners, iNDEXTb was the Event partner and KPMG was the Knowledge Partner. This report documents the key discussions held during the Seminar. Session Theme: “What do we need to do in order to make India A Global Financial Hub of the World”
Business Session: Need for Global Financial Hub for Efficient Financial Services
The seminar was organized with the objective of bringing together leaders of Banking and Insurance companies and senior government officials from Centre and State to facilitate development of pragmatic rules, procedures and facilities which would expedite the development of envisaged GFH in the country.

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Recognizing the need for a GFH in India, the State government of Gujarat has initiated the set up of a world class centre for the financial services industry, the Gujarat International Finance Tec-City (GIFT City). GIFT City aims to cater to India's large financial services potential by offering global firms state-of- the-art infrastructure and facilities and aspires to attract top talent in the country by providing high standard of living and an enhanced quality of life. Session Details Opening Remarks by Chairman of the Session: Mr. Sudhir Mankad, Chairman, GIFT City
Mr. Sudhir Mankad initiated the Summit by presenting the Opening Remarks. He commented that for very long, Mumbai was seen as the financial capital of the country and even though most of the businessmen there were of Gujarat origin. In the last 50 years, Gujarat has achieved a remarkable progress in various fields like manufacturing, chemicals, automobiles, diamonds, agriculture, etc. Hence, when Gujarat is on such a progressive road, it is imperative that Gujarati businessmen use the business infrastructure of the state and not go anywhere else. Gujarat is an emerging financial hub and with the presence of GIFT City, business can be conducted more smoothly and effectively. He mentioned that GIFT City will help connect Financial and IT sector personnel from across the globe and provide a common platform to operate from. Theme Presentation by Mr. Utkarsh Palnitkar, Partner, Head of Advisory Services, KPMG
Mr. Utkarsh Palnitkar presented the Theme address. He mentioned that a Financial Hub is no different from a cluster, which has the capacity to attract both capital and fuel the growth of an economy. As in case of any cluster, the cycle commences with the presence of one anchor player/ investor like an institution and blossoms when it expands horizontally with the appearance of firms which produce complimentary products and services.
He mentioned that from a financial cluster point of view, there are primarily three factors which decide or impact its success, as also observed in the earliest clusters of New York and London. These are: pool of money to lend and invest, robust and supportive framework such as legal, regulatory, technological and infrastructural and, high-quality human resources. Another distinguishing factor in case of London is

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the presence of the International Court of Arbitration. An ensemble of these factors in turn is attracting business in these hubs. The common theme which emerges in these two GFHs, is the same theme resurgent in the emerging financial center of Dubai, Singapore and Hong Kong.
Talking about India, the economy has been experiencing a tremendous growth, which has also fueled the demand for a sound financial sector providing access to capital and other financial products. With high FII inflows, expanding middle class, double digit growth in derivatives market as well as credit off take, and increasing number of IPOs, FPOs and M&A activities, India is poised to emerge as a leading financial center.
However, there are several challenges that need to be addressed. Though already strong in human capital, India needs to focus on skill development as well as providing a higher quality of life to attract international and domestic skilled professionals. We have already made our mark in the world in terms of ICT. Given financial firms are early adopters of technology; our technology acumen needs to be focused towards enabling a faster and easier transmission mechanism to make markets more efficient. In this context a highly noteworthy step is the initiative from Government of Gujarat, “GIFT City”, which aspires to cater to India’s large financial services potential by offering global firms world-class infrastructure and facilities. And it is only a matter of time that we will see GIFT City and thence India emerging as a Global Financial Hub. Theme Presentation by Mr. Shailesh Vaidya, President, IMC: “Need for Global Financial Hub”
Mr. Vaidya began his note by extending a warm welcome to all the dignitaries and congratulated the Hon’ble Chief Minister Shri. Narendra Modi and the Government of Gujarat for organizing the National Summit on Financial Services: A Key driver for Economic Growth. He believes that this is an opportune time to organize such a Summit when India aspires to be an economic superpower and is on the way of emerging as the third largest economy after USA and China. Without a doubt, Gujarat, as it is today, is due to the vision and ability of Hon’ble Chief Minister Shri. Narendra Modi to cumulatively make the government officials and people work together. He said that what India is to Asia, Gujarat is to India. It is a role model state for the rest of the country and complimented the state government for getting

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together over 250 top Executives of the financial sector. Gujarat Government’s endeavor to establish GIFT City as a Global Financial Hub has been received very well the world over.
Further talking about Indian Merchants’ Chamber (“IMC”), which was institutionalized 107 years back, he mentioned, is today the apex body of trade, commerce and industry in the region. It represents interests of many diverse sectors including banking and financial services. IMC plays an effective advocacy role and assists in formulating proactive policy and reforms. IMC’s theme for this year is “sustainable development” and in this respect, financial inclusion is particularly important.
India today certainly has all the ingredients to become a Global Financial Hub. These include: a young population, widespread banking network, vibrant financial services sector, throbbing capital market, a functional democracy, large English speaking population and pool of skilled manpower, well defined legal infrastructure, innovative corporate sector, huge FOREX and inward remittances, low cost of operations, etc. Not only domestically, but Indian firms have showcased huge success overseas too, particularly in the USA. India has one of Asia’s most developed and sophisticated stock markets and an apex bank like RBI. There exists immense opportunity in expanding the scope of international financial services in India and as Indian financial sector continues to grow and mature, we could easily consider serving the financial needs of an international clientele and provide financial services to a borderless world. Growing share in the world trade and cross border investment is making unprecedented domestic demand for a need of GFH within the country. According to a study, if by 2015 India fails to move rapidly on the trajectory of economic reforms and internationalized financial services, India could lose up to USD 48 billion every year. There exists, however, certain institutional deficits in the Indian financial sector which increase the cost of international transactions thereby hampering the growth of the sector which need to be addressed immediately.
To bolster the growth of the financial sector including insurance, IMC has been regularly organizing international annual conferences. One of the recent ones concluded that India has the capability, the opportunity and the need to create an international hub for reinsurance which will flag our presence in

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the domain of financial sector and our position as an economic superpower. IMC has initiated a dialogue between the reinsurance community and key players in the insurance space with the Chairman and members of the Parliamentary Standing Committee on Finance. He concluded by saying that we have all that it takes for a nation to emerge as a Global Financial Hub complimented with a young demographic profile which needs to be trained and tapped. Mr. Ramakant Jha, Managing Director and Group CEO, GIFT City: “Development of India’s first Global Financial Hub at GIFT City”
Mr. Jha began his address by reiterating that there are three major components which contribute in the making of a Global Financial Hub: domestic demand for financial services, pragmatic policies and infrastructure & facilities. What the Gujarat Government has attempted is to cover the third component, i.e., infrastructure at par with other Global Financial Hubs. This is with the intention of bringing various components of financial services together and provides economy of agglomeration. GIFT City in this regard, is the first such attempt in the country. It is first of its kind in scale (~ 90 million square feet of real estate)1, scope and quality targeting the financial services and IT/ ITeS sector. It is being built under the public private partnership of Government of Gujarat and IL&FS. It also intends to create 0.5 million direct and 0.5 million indirect jobs. He pointed towards various advantages of GIFT City. They are listed below:
 Globally benchmarked International Finance centre
 Multi service SEZ with processing and non – processing areas
 Strategic location (15-20 minutes from Ahmedabad international airport)
 State of the art infrastructure including robust ICT network
 Integrated residential area with walk to work benefit
 Social infrastructure encompassing facilities like schools, entertainment malls, hotels, leisure, etc
a. West India Hospitality, ITUAL, Sterling Addlife India and Narsee Monjee Educational Trust school will have their establishments in GIFT City
1 Size is almost three times of Bandra – Kurla Complex, Mumbai

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 Urban mobility is more public oriented including BRTS/ MRTS/ Roads to serve a minimum of 2 million trips2
 Uninterrupted power supply (efficiency of 99.99%, i.e., almost 0% outage)
 Next generation waste and water management along with district cooling
a. GIFT City will run on the principle of zero discharge and automated solid waste management
 Single Window Clearance
The concept of GIFT City leverages on the need for a consolidated and agglomerated infrastructure for the growth of financial services. It brings together various stakeholders of the industry at one place. He concluded by inviting the industry to GIFT City and help in transforming India into a Global Financial Hub. This was followed by a video presentation on GIFT City and presenting of mementos to the dignitaries.
Plenary Session 1
Session Theme: What do we need to do in order to make India A Global Financial Hub of the World?”
The dignitaries present on the dais were: Shri Narendra Modi, Hon’ble Chief Minister, Gujarat, Shri Nitinbhai Patel, Minister for Finance, Health, Medical Education, Family Welfare and Transport,
2 GIFT is expected to create almost 1 million jobs

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Government of Gujarat, Shri Saurabhbhai Patel, Minister of Energy & Petrochemicals, Mines & Minerals, Cottage Industry, Salt Industry, Printing, Stationery, Planning, Tourism, Civil Aviation and Labor & Employment, Government of Gujarat, Dr. Varesh Sinha, IAS, Chief Secretary, Government of Gujarat, Shri G R Aloria, IAS, Additional Chief Secretary, Department of Urban Development and Urban Housing, Government of Gujarat, Mr. Sudhir Mankad, Chairman, GIFT City and Mr. Shailesh Vaidya, President, IMC. Shri Ramakant Jha, Managing Director & MD, GIFT City welcomed Hon’ble CM Shri Narendra Modi, Shri Nitinbhai Patel and Shri Saurabhbhai Patel. Opening Remarks – Dr. Varesh Sinha, IAS, Chief Secretary, Government of Gujarat
Dr. Varesh Sinha in his opening remarks welcomed Hon’ble CM Shri Narendra Modi and all other dignitaries present. The importance of the Financial Services sector in India’s economic growth was highlighted. It was mentioned that lack of conducive policies and world class financial hubs in the country have hindered the Indian Banking and Insurance institutions in acquiring global status. It is also because of these constraints that the Indian banking institutions are forced to setup their offshore banking services in foreign shores. Citing Mckinsey’s report on Financial Services sector in India, it was emphasized that if India expands and invests in creating International Financial hubs, the contribution made by the financial services in India’s GDP can significantly grow by 15 to 20 %. This also has the potential of creating around 10-11 million jobs in the country by 2020. The vision of Gujarat’s Hon’ble CM Shri Narendra Modi in developing a world class Global Financial Hub at GIFT City, Gandhinagar is to tap the enormous potential that financial sector offers. It was expressed that GIFT City will provide a conducive environment to the financial institutions for doing business along with providing quality lifestyle to the residents. This will eventually result in accelerated economic growth of the state and country.

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Address on the Concept of Global Financial Hub – Shri Hari Sankaran, VC & MD, IL&FS
Shri Hari Sankaran in his address valued the visionary initiative of Hon’ble CM Shri Narendra Modi in developing a world class financial hub in GIFT City, Gandhinagar. It was mentioned that the GIFT City initiative has helped propel the financial service sector in Gujarat to balance its growth in agriculture and manufacturing sector. Comparing the international and national average of active investors in capital markets, it was highlighted that 24.1 percent of Gujarati households in the state are active investors, which is equivalent to the averages of countries like USA and Canada. The scaling and availability of skilled workforce for the services sector, especially in financial and IT services has helped Gujarat in attracting investments from companies like Tata Consultancy Services Ltd., which has its largest development centre’s in Gandhinagar. Highlighting the fact that GIFT City will comprise of 90 million sq.ft. of world class infrastructure, it will be among one of the densest cities in the world matching the likes of Dubai, Hong Kong and Singapore.
The average banking transactions in the country today costs between INR 2 - 4, which in the case of GIFT City will be only between INR 0.25 - 0.75. GIFT City also offers one of the most advanced and modern ICT platforms that will support big data analytics and data mining needed in the financial services sector. GIFT City’s robust infrastructure guarantees 24 X 7 round the year uninterrupted power supply with reliability rate as high as 99.99 percent per annum. GIFT City already has data networks needed for supporting the back office operations of financial services. Due to the global economic slowdown, GIFT City faced challenges in attracting both national and international investors. However, with the economic revival, many international institutions have shown interest in the GIFT City. Talking about the future plans, it was informed the GIFT City will soon commission an international school, a multi-specialty hospital and a tier-4 data center. He concluded by saying that prospective investors need to look at the value proposition GIFT City has to offer. Handing over of Allotment Letters by the Hon’ble Chief Minister, Government of Gujarat

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Allotment letters were handed over by Hon’ble CM of Gujarat, Shri Narendra Modi to:
1. Mr. Ashish Bhalla, Managing Director, WTC Noida Development Company Pvt. Ltd and Eric Dahl, CEO, World Trade Centre Associations, USA for development of the World Trade Centre in GIFT City.
In his acceptance speech Mr. Ashish Bhalla said WTC Association is privileged to be a part of a visionary project like GIFT City. Highlighting WTCA’s global network in around 100 countries and 330 cities, it was mentioned that the association has helped in enabling trade, nurturing entrepreneurship and catalyzing growth. It was also expressed that WTC’s serve as landmarks for the regions they serve by providing access to markets, finance and venture capital, services and world class infrastructure. He expressed that WTC at Gift City will be an architectural ethos in sync with Gujarat’s cultural and architectural lineage and will be dedicated for financial and allied services. It will also host various services offered by WTCA to the corporate houses and would also promote SMEs.
2. Mr. A N Appaiah, Chief General Manager, SBI, Ahmedabad. Upon acceptance, he said that SBI is proud to be one of the early entries in the prestigious GIFT City and celebrates its close association with Gujarat. He thanked the Hon’ble CM for giving them the opportunity to set up operations in the GIFT City.
3. Mr. Sanjay Baweja, Chief Financial Officer, Tata Communications Ltd. for development of India’s largest Tier IV Data Centre, which will also be the first LEED certified Green Data Centre. He mentioned that Tata Communications Ltd is proud to be associated with the state of the art GIFT City and for the faith entrusted in them to set up their Greenfield operation.

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4. Mr. Kaushal Choksi, Chairman,
iPlex India Pvt Ltd for setting up
outsourcing centre for foreign markets in
GIFT SEZ
5. Mr. Prabodh Thakker, Chairman, Global Insurance Services (India) Ltd for development of Skill
Development & Training Centre for insurance and related services. In his acceptance speech, he mentioned that the company is honored to be a part of the GIFT City and feels that this is a great opportunity for the entire sector, and that everyone should make the most of it. The insurance sector, despite the current global crunch is growing at nearly 15 percent and there is a huge demand for skilled professionals. He hopes that the
effort of Global Insurance Services (India) Ltd at GIFT City shall fulfill this demand.

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Address by Chief Guest, Shri Narendra Modi, Hon’ble Chief Minister, Government of Gujarat
The Hon’ble Chief Minister of Gujarat, Shri Narendra Modi, said that the financial institutions in India have contributed immensely to the country’s economic development. He added that in order to further leverage on the growth of this sector, there has to be an inclusive blend of our natural capacity, talent, financial skills and intellectuals along with robust Information Communication Technology infrastructure. In this era, when the Indian economy is more sensitive to the movements in the global market, we can only perform by having a more sustainable and concrete set of reforms especially for sectors like banking and insurance. Highlighting GIFT City’s modern urban design and robust infrastructure, he said that for a country like India it is imperative to develop new cities that have ultra-modern infrastructure and facilities. In GIFT City, it is estimated that around 2.5-3 lakh people will live and will be able to walk to work. GIFT City envisages becoming a global hub for high-tech financial services. This needs pragmatic institutional framework with policies and rules. The GIFT City project is turning Gujarat’s business acumen and economic-management from a dream to reality.

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Hon’ble Chief Minister emphasizing on Gujarat’s development model said that job creation was the main objective, along with skill development. He urged to also focus on the development of a ‘Talent Pool’ for the financial sector along with the need to develop infrastructural facilities and technologies that are coherent with global economy. Shri Modi said that India has enormous and unique talent in the Gems - Jewelry sector but it is limited only to the low-end jobs of diamond polishing and cutting. In the technology sector too, India has made impact only on lower-end works like outsourcing and BPO. India though has enough intellectual man- power; we still haven’t commercialized on that to deliver high – end services. Emphasizing on India’s big information technology base, Shri Modi said that India can capitalize on opportunities in the cyber technology space by providing real time services for ensuring data security to the entire world. With the vision of providing the financial services sector with high-tech infrastructure, skilled manpower, talent planning, Shri Modi has invited the industry to be partners in GIFT City. Vote of Thanks – Dr. Hasmukh Adhia, IAS, Additional Chief secretary, Finance, Government of Gujarat
Dr. Hasmukh Adhia expressed his deep sense of gratitude to all the Chairmen and CEOs of banks and insurance companies who kindly accepted the invitation from the Chief Secretary to come for the seminar on a very short notice and gave some very useful suggestions. He expressed his concern over certain suggestions regarding regulatory framework being not within the powers of the state but ensured that those suggestions would be presented to the Government of India. He also highlighted the fact that Gujarat has the first Special Economic Zone (SEZ) in the country related to financial sector and welcomed everyone to invest in the SEZ. He also thanked the co-sponsors of the event with a special mention to Mr. Sudhir Mankad, Chairman, GIFT City, and Mr. R.K. Jha, MD, GIFT City for organizing the event. Finally he thanked the Hon’ble Chief Minister of Gujarat, Shri Narendra Modi, for being a part of this event and for sharing his valuable thoughts.

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Plenary Session 2: Global Financial Hub – A Way Forward
Session Chair: Dr. Varesh Sinha, IAS, Chief Secretary, Government of Gujarat Theme 1: Policy changes required by Government of India for Global Financial Hub – Banking Perspective Ms. Chanda Kochhar, MD & CEO, ICICI Bank Ltd.
She highlighted the fact that India has an advantage of a large growing financial market to provide the critical mass to become a global financial hub. Besides, India also has the money to invest within the country which will bring more foreign investment. India has seen globalization of Indian firms which has created the demand for a global financial hub in India.
Amongst various other advantages of India, the nation has a huge young population with the skill set of English language. India is in the initial stage of financial services as KPO’s and BPO’s are already present here related to financial services, and now it is time to take India to the next level and make it a global financial hub.
She pointed that in addition to the infrastructure needed to carry out financial services, there is also a need to deepen the debt market substantially. In order to make India a global financial hub we need to first bring back growth and vibrancy in the domestic economy. The next step is associated with regulation, legal environment and taxation. She pointed out that regulations should promote and allow innovation in financial services, taxation should be such that allows a conducive business environment. Besides, consistency in regulations and taxation policies is equally important. She pointed out that due to non conducive tax policies and regulations, financial services are outsourced from India. There are limitations on lending of foreign currency by Indian branches to business houses due to which these services are also outsourced to foreign branches of the banks present in India. There is a need to bring back the Indian business which was gone offshore related to financial services. This will lead to huge amount of revenue generation, employment generation and vibrancy around financial services within the country.

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She concluded by saying that besides regulation changes, India should now start providing financial services to nearby countries like Sri Lanka, Bangladesh etc. slowly targeting the whole of Asia. Mr. S.S. Mundra, Chairman & MD, Bank of Baroda
Mr. S.S. Mundra began by saying that the need for global financial hub is no more a question of debate, or whether it is relevant or beneficial. He mentioned that when the thought of creating Mumbai as a global financial hub was envisaged, it was estimated that the global financial service sector has a market value of USD 13 billion in India. If the economy grows at the then base rate, this sector has the potential to grow to USD 45 billion by 2015 and if the economy grows at 8-9 percent then the sector will touch USD 70 billion by 2015 and by year 2025 it will reach USD 125 billion. He explained that there are eight imperatives for government to set up such a financial hub:
1) Creation of a world class financial institution – For this, existence of best in class banking systems are a must. He suggested that the government could dilute their holdings in smaller banks and channelize that money to the six largest national banks, which have 44 percent of market share in the Indian banking sector. And operational freedom could be provided to these banks so that they can compete with private sector banks.
2) Authorities need to create a BCD (Bond, Currency and Derivative) nexus - He mentioned that there is no global financial centre which lacks a BCD nexus and its absence in India has stunted the ability to provide a conducive environment to the financial sector. He mentioned that there are 6 deficiencies in this respect:
 Liquid & efficient sovereign bond market with an arbitrage free INR yield count
 Wide range of essential derivatives on INIR interest rate
 Liquid spot market for INR denominated corporate bonds
 Credit derivatives and credit spreads
 Liquid currency market

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 Full range of currency derivatives
3) Appropriate regulations – Mr Mundra mentioned that there is a need to place appropriate regulations, which are neither too light nor too hard and the outcomes of which are predictable and fair. Besides, there must be a system of quick regulatory clearances. This is critical for innovation which is the key to success for any global financial hub.
He emphasized that the emergence of a global financial hub in India can happen by adopting either of the two strategies:
a) Phase 1 (2-3 Years): Indian financial system can be consolidated, regulations can be enacted and linkages to the global financial hubs can be strengthened
Phase 2: In phase 2, fully liberalized and deregulated global financial system will start to come in effect
b) By creating a deregulated special territory like DIFC Dubai
4) Core infrastructure needs to be developed - Mr Mundra said that these centres require huge physical infrastructure to run successfully. In global financial hubs, transactions of billions of dollars take place each second and at that time there cannot be any outage of electricity or communication and we must be conscious about it.
5) Openness to foreign entry and favorable policies - As per the World Bank report, India’s rank for doing business is 134th out of 189 countries, and as per Global Financial Centre Index (GFCI), India ranks 66th out of 79 countries. Mr Mundra emphasized that these are fair indications and that the environment, infrastructure and policies all have to move in unison.
6) Avoidance of access taxation- Mr Mundra said that this is applicable on both corporate and individuals and huge sensitivity is required in this direction. The living cost in India is low but it is neutralized by high taxation which is a disincentive.
7) Global financial centres move from rule based supervision to principal based supervision
8) Human Capital- Mr Mundra mentioned that it is an extremely important imperative. Indians have significant presence across global financial centres. But we still don’t have institutions like the London Business School, the London School of Economics etc. and it is important to have institutions like IIT for financial services.
He concluded by saying that if these imperatives are present and work in tandem with each other, India can emerge as a global financial centre.

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Mr. Aditya Puri, MD, HDFC Bank
Mr. Aditya Puri mentioned that for India to have a global financial centre, global financial players must see India as a preferred destination than other countries like Singapore, London, Hong Kong etc.
To have a global financial hub we require human capital which has the knowledge of finance, legal and compliance. Besides, we require world class telecom infrastructure and GIFT City is good example of it. We need state of the art IT systems coupled with capabilities to develop and maintain sophisticated systems that are required by financial centers. We require complete array of financial systems like liquid market, bonds, commodities and derivatives.
He pointed out that for a successful global financial hub there should be presence of global firms and 24 hours trading. India has an advantage as it is the 11th largest economy and there is a huge domestic demand for an in house financial hub.
Besides, there is a strong requirement of wealth management in India. We need global tax management, treasury management, global trading, project finance, merger and acquisitions and demand for these will increase. Currently, we are outsourcing nearly USD 50 billion work related to these services. He explained that there is a need to curb inflation because without that CRR and SLR can’t be brought down which are necessary for derivative markets to run. The country should also have a clear, well defined set of laws and frequent amendments should not take place as these will change the outcome of the investments done by the individuals or corporate. Theme 2: Policy changes required by GoI for Global Financial Hub – Insurance & Re-insurance Perspective Mr. G. Srinivasan, CMD, The New India Assurance Company Ltd.
Mr. G. Srinivasan mentioned that India is an insurance hub for both direct insurance and reinsurance. He pointed out that general insurance has a market of INR 80,000 crore in the current financial year and is expected to reach INR 5,00,000 crore by year 2020. It will continue to grow at a CAGR of 600% in the next 12 years and there is no other sector which will show such unprecedented growth.

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Reinsurance sector also has a positive perspective in the near future as India has a large number of big companies with high net worth and capacity to insure. This is complemented by the huge pool of skilled personnel with extensive experience.
However, there are still some factors which are hampering the growth of insurance sector and stopping India from becoming a global insurance hub. There is a need to simplify the procedures and make the environment conducive for both domestic and foreign companies to operate. Existing technical and physical infrastructure needs to be updated. There is also the need to revisit Indian regulations which are rule based and change them to principal based regulations as they are simple and more effective. He mentioned that there is a need for change in the laws and many of the amendments are in parliament for clearance which must be enacted. Besides, the bond market and debt market should also be strengthened for attracting investment in insurance sector. The Indian legal system is also not as prompt and responsive as other developed countries and enough impetus should be given for the development of talent pool and on education in the insurance sector. In conclusion he said that if we can make these small changes than India can become a global financial hub. Mr. A.K. Roy, Chairman cum Managing Director, General Insurance Corporation of India
Mr. A.K. Roy said that insurance and reinsurance services are an integral part of financial services. He mentioned that India has a supporting talent pool and infrastructure for this sector but lacks the supporting regulatory environment. India lacks laws for reinsurance and as this is a global business and funds flow globally, this sector requires separate laws in order to provide a more business friendly environment to the companies. He explained that to set up financial hubs in reinsurance sector participation from foreign

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firms is necessary which is only possible when there are favorable policies and regulations. In the end he gave the examples of DIFC and Singapore financial hub and said that we should learn from them and implement their practices in India for the development of financial hub in the country. Mr. Arun Agarwal, Chairman, Insurance Committee, IMC
Mr. Arun Agarwal presented his views on the importance of Reinsurance in India and the need to establish a sound insurance vision for the country as a whole. He mentioned that insurance sector was neither an activator nor a proponent of the financial crisis of 2008. He highlighted some of the differences between the Banking and the Insurance/ Re insurance sector, pointing out that the Insurance industry was not subject to systemic risks; and that the liabilities of Reinsurance companies were much more liquid than that of banks. He then illustrated the following reasons as to why Reinsurance branches are essential for India:
1) Access to global balance sheet of companies
2) Same top notch security as the parent company
3) Chance to leverage the benefits of broad expertise of the parent company
4) Since the parent company is responsible for the liabilities of the branch, there is a reduced chance of default
Mr. Agarwal discussed that there is a strong need to separate regulations for Reinsurance companies in India. The “home regulations” are more important than the “host regulations” and the current collateral requirement scenario in the sector should be revamped. He referred to the way China allowed its domestic insurance companies to invest in 45 countries, while Indian insurance companies are not allowed to invest outside India.
He concluded by saying that India’s insurance vision should encapsulate two critical points which are:
1) Constitution of a modern and transparent framework, coherent with the global Re insurance platform
2) Importance of the regulatory part wherein minimum regulation is made available with maximum supervision

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Theme 3: Policy Changes required by GOI for Global Financial Hub - Foreign Bank Perspective Mr. Asit Bhatia - Managing Director and Co-Head of Global Corporate and Investment Banking, Bank of America, N.A.
Mr. Asit Bhatia indicated that London, New York etc. being the headquarters of Global financial institutions are amongst the major global financial hubs currently and their strength is the market entry that they provide. He referred to the recent survey on upcoming financial hubs, according to which Singapore and Hong Kong emerged as the potential candidates; whereas India did not feature in the list although India has the potential of becoming one. India has a large domestic market, skilled talent pool, favorable time-pools and an efficient equity market but India needs liquid and efficient debt market, large currency market and an efficient insurance and re-insurance market.
He further mentioned the factors that are pivotal in transforming India into a successful financial hub. They are:-
a) The Regulatory Environment needs to be balanced to make the market safe and attractive. Regulators should look at improving the capabilities of domestic financial system, global competitiveness and risks involved in case of financial losses. India should look at failures of financial firms positively
b) Laws need to be fairly predictable and consistent. He implied that in order to attract foreign investors towards India, there should be Consistent Economic Growth and Consistent Policies.
c) Taxes, both at corporate and personal level, need to be in a balanced form to attract foreign investors
d) Openness to foreign entries is an important aspect for any financial hub
Mr. Bhatia emphasized that we need to learn and adopt the best practices from other upcoming financial hubs like Political and Social Stability, Sound Legal System, Responsive Government, Favorable Tax regime, Low regulatory Cost and an Efficient and Modern Infrastructure in order to become a global financial hub.

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Summing up and Vote of Thanks: Dr. Hasmukh Adhia, IAS, Additional Chief Secretary, Finance, Government of Gujarat
Dr. Adhia thanked all the speakers and the participants for being a part of the seminar. He mentioned the following points that need to be focused upon in order to make India a Global Financial Hub:
a) Regulatory Environment in the country needs to be consistent and stable in order to attract investors
b) The Central and State governments need to maintain a fiscal discipline in order to bring stability in the economy
c) Government policies need to stay for a longer period instead of changing in small periods of time, particularly with respect to the debt market.
d) India needs to have robust and efficient infrastructure including Telecom, IT infrastructure and skilled manpower.
All this will not only help the domestic and foreign financial players to enter India, but will also help in bringing back the financial services which are offshored by Indian companies. He thanked the industry representatives for sharing their views in the conference and was hopeful that these recommendations will be helpful in making India a Global Financial Hub. Findings:
 Purchases by Indian households and firms of International Financial Services will be nearly $50 billion by 2015 and could exceed $120 billion by 2025.
 There is a need to develop a Global Financial Hub in India with state of the art infrastructure facilities.
 A successful Financial Hub in India would require pragmatic rules and regulations for hassle free operations of International financial services.
 Special status may be provided to such centers in order to enable them to provide platform for development of international financial services in India.
 The draft rules prepared for operationalizing International Financial Services (IFS) in SEZ should be approved at the earliest in order to enable large scale international operations of Indian and foreign firms from such centers.

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 Companies operating from International Financial Services Centre (IFSC) should be given flexibility for their operations which will help them to compete with other international financial institutions.
 Development of IFSC in India has a potential to create 7 million jobs in India.
 Government of Gujarat’s initiative of developing GIFT City as India’s first Global Financial Hub with 1 million jobs would go a long way in establishing International Financial Services business in India.