The Hindu Business Line : `Lift ceiling on foreign ownership of banks'

INDIA should lift caps on foreign ownership of banks and push ahead with disinvestments in state-owned financial services providers to further liberalise the financial industry, according to Mr Paul Boateng MP, Chief Secretary to the Treasury, UK. This be an important first step towards broadening and deepening relations between the UK and India, he added.

"Political, trade and investment links between the UK and India are flourishing; trade is at record levels. Now is the time to take the next step," said Mr Boateng while calling on the Government to "open Mumbai and other centres to the enervating influence of foreign competition".

"The challenge for the Indian Government, RBI and the industry in Mumbai is to embrace the reality of increasingly open, increasingly integrated global markets and release the potential inherent in the Indian banks, insurance companies and securities houses," said Mr Boateng at the Banking and Finance Summit 2002 on Straight Through Processing (STP) in Converging Financial Markets organised by Tata Consultancy Services (TCS) here.

According to Mr Boateng: "As India strives to sustain 8 per cent growth and reduce poverty ratio by 15 per cent by 2012, the way forward is through domestic reform to create the right climate for an international industry, and liberalisation... ."

On STP, Mr Boateng said it was an innovative adoption of new technology to ease the process of transactions. "STP is, in part, a response to increasing linkages between different financial institutions. Increasing integration means infrastructure must be interoperable and achieve universal high standards... The same technology that is enabling STP is enabling greater integration between national markets. Countries with emergent financial services industries, like India, need to embrace this as a challenge, not reject it as a threat."

Mr G.N. Bajpai, Chairman of the Securities and Exchange Board of India, in his address at the summit said STP was needed to accelerate trade information flow to make T+1 settlement cycles possible. "By early December, Indian exchanges and depositories would adopt STP and we working with the RBI, clearing corporations and depositories to adopt STP for fund transfer in the next two years," he said.

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`Lift ceiling on foreign ownership of banks'