Table of contents for Mumbai, an international financial centre : High Powered Export Committee report.

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Contents
Executive Summary xi
1. International Financial Services (IFS) and Centres (IFCs) in Perspective, xi.¿2. Implications for
India and Mumbai, xii.¿3. The difference between BPO and IFS, xiii.¿4. What are International
Financial Centres (IFCs) and Services (IFS)?, xiv.¿5. Growth and globalisation drive India¿s
demand for IFS, xvi.¿6. India¿s competitive advantages in creating an IFC, xvii.¿7. Financial
regime governance: policy and regulation, xviii.¿8. Reorienting the financial system towards IFS
provision: A temporal roadmap for reform, xxii.¿9. Urban infrastructure and governance in
Mumbai, xxvi.¿10. The choice, xxviii.
1. The Emergence of IFCs: A brief history 1
1. Meeting cross-border trade, investment and other needs, 1.¿2. Evolution of international
financial services (IFS) and centres (IFCs), 1.¿3. The first round of globalisation: circa 1860¿1914,
2.¿4. An interregnum, the second round of globalisation (1945¿71), and beyond, 3.¿5. The
¿take-off¿ of second round globalisation after 1980, 5.¿6. Classification of IFCs, 6.¿7. Why did
Tokyo and Frankfurt not emerge as credible GFCs?, 8.¿8. The Race to establish more IFCs around
the world, 10.¿9. Implications for India and need for Mumbai to emerge as an IFC, 11.
2. 21st Century IFS provided by IFCs 17
1. Fund Raising in IFCs: What is involved? Who does it and how?, 17.¿2. Asset management and
global portfolio diversification, 21.¿3. Personal wealth management, 21.¿4. Global transfer
pricing, 23.¿5. Global tax management and cross-border tax optimization, 24.¿6. Global/regional
corporate treasury management, 25.¿7. Global and regional risk management and insurance/reinsurance
operations, 26.¿8. Global/Regional exchange trading of securities, commodities and
derivatives in financial instruments and indices in commodities, 27.¿9. Financial egineering and
architecture for large complex projects, 30.¿10. Cross-border mergers and acquisitions (M&A),
30.¿11. Financing for public-private partnerships (PPP), 30.
3. Case studies: London, New York, Singapore, Dubai 33
1. Summary overview, 33.¿2. A closer look at the City of London, 35.¿3. New York/Chicago as the
GFC for the Americas and theWorld, 40.¿4. Singapore as the ASEAN/Asian GFC, 43.¿5. Dubai
as a RFC for the Middle East and South Asia, 46.
4. Domestic and Offshore demand for International Financial Services (IFS) in India 49
1. Implications of a large, rapidly growing home market for IFS, 49.¿2. India¿s growing integration
with the world, 50.¿3. The impact of globalisation on IFS demand and on IFCs, 54.¿4.
Estimates for IFS consumption by India, 57.¿5. Projections for IFS consumption by India, 58.¿6.
Implications for India¿s aspirations to create an IFC in Mumbai, 62.¿7. IFS customers outside
India as a market for an IFC in Mumbai, 63.¿8. International comparisons, 64.
5. Augmenting IFS provision via BPO 65
1. How does an IFC produce IFS?, 65.¿2. An outsourcing approach to IFS provision and
IFC development: Possibilities, opportunities and pitfalls, 67.¿3. A BPO opportunity: Asset
management inMumbai based on algorithmic trading, 68.¿4. IFS subcomponents amenable
to outsourcing, 71.¿5. Making progress along two paths: IFC Evolution and BPO, 72.¿6.
Conclusion, 73.
6.Market deficiencies inMumbai that inhibit the provision of IFS 75
1. The context in which Mumbai must develop and evolve as an IFC, 75.¿2. Inadequate currency
and bond markets (BCD Nexus), 76.¿3. Missing currency & derivatives markets: An illustration,
79.¿4. The market weakness of institutional investors, 82.¿5. A cross-country comparison, 84.
viii REPORT OF THE HPEC ON MAKING MUMBAI A REGIONAL FINANCIAL CENTER
7. The macroeconomic fallout of an IFC 85
1. Introduction, 85.¿2. Implications for fiscal policy & deficit reduction, 86.¿3. Financing public
debt differently, 88.¿4. The mutuality of interests in modernising debt management and having
an IFC, 91.¿5. Implications for monetary policy, 94.¿6. Outlook for the current account deficit,
96.¿7. Macro-stability for an IFC, 97.¿8. The incompatibility of capital controls in a 21st century
IFC, 98.¿9. Full capital convertibility and an IFC in Mumbai, 100.
8. Financial Regime Governance: Its role in an IFC and a comparative perspective 103
1. The intrinsic value of regulation for IFS production, 103.¿2. Three levels of international
competition on regulation and law, 105.¿3. Where does India stand? An illustrative bird¿s eye
view, 106.¿4. The overall legal regime governing finance, 110.¿5. Summary of cross-country
comparisons, 114.
9.What are the limitations of financial regime governance? 115
1. Where do we stand? An IFS ¿ Market _ Players matrix, 115.¿2. A pragmatic view of key areas
for progress, 118.¿3. Lessons from applying competition policy in the real economy, 118.¿4.
Artificial segmentation of the financial services industry, 123.¿5. Barriers to financial innovation,
125.
10.Why does financial regime governance have these limitations? 131
1. Why is the pace of financial innovation slow?, 131.¿2. Proximate underlying reasons that are not
as transparent, 133.¿3. Deeper sources of dysfunction, 136.¿4. What impedesMumbai from
becoming an IFC? A summary, 139.
11. Reforming financial regime governance 141
1. A shift toward principles-based regulation, 141.¿2. Reducing the artificial segmentation of
financial firms, products, services and markets, 143.¿3. Creating an environment conducive to exit,
150.¿4. Retail vs. wholesale markets, 150.¿5. The role of exchange-traded vs. OTC derivatives in
the BCD nexus, 152.¿6. Regulatory impact assessments, 154.¿7. Strengthening the legal system
supporting an IFC, 154.
12. Tax policy for an IFC inMumbai 157
1. Does India need an IFC or a Tax Haven?, 157.¿2. Tax policy forMumbai as an IFC: and, by
implication, for India, 160.¿3. A modern income tax, 161.¿4. Taxation of financial transactions,
163.¿5. A Goods and Services Tax (GST) in Finance, 165.¿6. Mumbai as an IFC: Tax Implications
for Maharashtra and Mumbai, 166.¿7. Interfacing tax policy and administration with the financial
industry, 167.¿8. Stability of tax policy, 167.¿9. Where India Stands on taxes: An international
comparison, 169.
13. A perspective onMumbai¿s strengths 171
1. Human capital needs for IFS, 172.¿2. Democracy, Rule-of-Law and the Legal System, 176.
14. Urban infrastructure and governance 179
1. The importance of high quality urban infrastructure for an IFC, 179.¿2. Problems of cost,
182.¿3. Cross-country comparison, 182.¿4. Difficulties in Mumbai from an IFC perspective,
183.¿5. Improving urban governance in Mumbai, 184.
15. The HPEC¿s recommendations 187
1. The general macroeconomic environment, 188.¿2. Further Financial System Liberalisation and
Reform, 193.¿3. The challenge of urban infrastructure and governance in Mumbai, 206.
Selected Bibliography 211
A. The Committee 219
B. Comparing existing IFCs againstMumbai 221
Contents ix
C. Comparing emerging IFCs againstMumbai 225
D. Chronology of events associated with the effort by Benchmark AssetManagement
Company (BAMC) to start an Exchange Traded Fund (ETF) on Gold 229
E. Activities of various financial firms in the areas of operation at an IFC: Wall chart 231
1. Fund raising, 231.¿2. Asset management, 233.¿3. Personal wealth management, 236.¿4. Global
tax management, 236.¿5. Risk management, 236.¿6. Financial markets, 238.¿7. Securities
markets, 241.¿8. Mergers and aquisitions, 242.¿9. Leasing and Structured finance, 242.¿10.
Project financing, 243.¿11. PPP Financing, 243.¿12. Insurance and reinsurance, 243.
F. Abbreviations 245

Library of Congress Subject Headings for this publication:

Finance -- India -- Bombay.
International finance.
Financial institutions -- India -- Bombay.
Financial services industry -- India -- Bombay.