“The future holds tremendous promise,” was the unanimous sentiment at Samiksha, the panel discussion at NITIE deliberating on “INDIAN FINANCIAL SYSTEM – Reflections on reforms and trends.” The latest edition of Samiksha held in the NITIE, Mumbai auditorium on July 23 2005, witnessed an audience from almost all B-Schools across the city coming to hear what the people who mattered had to say.

The event was sponsored by ShareKhan, a leading equity investment advisor in the country. The panel comprised stalwarts Anand Shanbaug (Senior Analyst and Head of Research, HSBC securities), Atin Saha (Director, Private Wealth Management, Deutsche Bank AG), V Ravi (CFO, MMFSL) and moderator Sourav Majumdar (Deputy Executive Editor, Financial Express).

The most interesting feature of the discussion was the perception that foreign banks and the global market watchers had about the health of the Indian marketplace.

The discussion was initiated with a welcome address by Prof AK Pundir (Associate Dean, Placements). Mr Sourav Majumdar who moderated the Samiksha sketched the broad outlines of the issues that would be addressed in the course of presentations and the panel discussion. He voiced his opinions about the development and present state of the Indian financial system, being an observer of the same for the last 15 years. While extremely enthusiastic about the intent and pace of reforms he emphasized the need for a more reliable and ‘high-quality’ regulator for the Indian markets. He said that the future would see a small number of big banks with tremendous ‘balance sheet power’ as a large number of smaller banks, both in the private and public sector will come together.

Mr Atin Saha brought in the dimension of the ever increasing importance of the developing countries in the global market, especially that of Brazil, Russia, India and China or the BRIC nations. He foresaw Asia as the engine for growth and complemented it with facts and figures. He said, “By 2010, Asia will be home to 25 percent of all global corporations, will have 40 percent of all working population and 1/3rd of all international trade.” Delving upon the role of the private banks he said that they will need to follow the ‘Family Office Model’, wherein all matters with financial implications for a client are served by the banker whether custodial or advisory in nature. He also believed that the need for certified financial planners will increase in the future.

Mr Anand Shanbaug, as someone who has analyzed markets across the world in depth and detail maintained that India was arguably the best destination for investment. In his presentation which could well be used as an eye-opener for any skeptical FII, he presented the various figures that established the resilient nature of the Indian economy. He cited the example of the withdrawal of about USD 0.5 bn by FIIs in the months of April and May which had negligible effect on the market metrics largely because domestic activity pumped in close to USD 1 bn during the same period.

Mr V Ravi presented a most comprehensive picture of the economic reforms process in the country. Starting from the scene prior to 1990 he seemed satisfied with the pace and degree of reforms while agreeing with Mr Majumdar that the need for a more enabled regulator is urgent and very essential. He believed that the reforms had been steps in the right direction but the destination is far from reached. “There is reason to be optimistic since there is that much more potential in the Indian markets,” he said. He added that further dilution of government ownership, better corporate governance, reduction in NPAs and transaction costs and demat in stamping are issues that can be used in the design of the future road-map.

In the panel discussion that followed, the issues brought up in the presentations were discussed in detail and questions from the audience were also addressed. In reply to a question on ‘hedge funds’, Mr Shanbaug emphasized the need for ethical business practices and felt that the business of making money has to be free of all legal loopholes. At the end of what was a most engrossing forum the speakers shared a confident optimism at the performance and future of the Indian financial system and expressed their hope that the future business leaders of the country, many of which were part of audience will work to take the reforms process forward.

“I don’t see any reason to worry about an economic downturn in the near future. We are an economy with strong fundamentals and therefore reasonably immune to global trends. Its time to set some things in order and reap the fruits of the good work done so far.” With these words, Mr Shanbaug put to rest the apprehensions of an economy slowdown expressed by some and brought down the curtains on the latest edition of Samiksha organised by NITIE.