Govt keen on IFC for Mumbai

The government is keen on moving ahead with the implementation of the Percy Mistry report on making Mumbai an international financial centre (IFC) and move towards full capital account convertibility.

Prime Minister Manmohan Singh recently called for a high-level meeting of top officials from the RBI and the finance ministry, which was also attended by representatives from the financial services industry.

The meeting discussed possible ways of moving towards implementation of the Percy Mistry report.

"There is a difference between the RBI and New Delhi's viewpoint on the Mistry report. The RBI may have a view, but there's a need to arrive at a consensus,'' said Nimesh Kampani, chairman, JM Financial Group.

The central bank is in favour of a cautious and gradual approach to financial sector reforms rather than a big-bang approach, as advocated by the Percy Mistry Committee report on making Mumbai an international financial centre.

The 15-member High-Powered Expert Committee (HPEC) on making Mumbai an IFC was set up following an announcement in the Budget 2005-06.

The panel submitted its report to the finance ministry in April this year, though the chairman of the committee, Percy Mistry, resigned before the report's completion.

The committee has recommended full capital account convertibility by the 2008-end, abolition of securities transaction tax and stamp duties, pruning of public debt and no restriction on foreign investment in sovereign bonds.

It had also suggested that the government pare its stake in financial institutions by 2015. It has also recommended imposition of goods and service tax on financial services and creation of a currency spot market and a rupee-settled exchange-traded currency derivatives market.

"Most of the answers to make Mumbai an international financial centre are there in the Mistry report. Hopefully, with the next government (after the elections) with more powers will be able to implement the recommendations,'' said Dominic Price, managing director and senior country officer, India and Sri Lanka, JP Morgan India.