The Hindu : Business : Roadmap for banking reforms soon: Chidambaram

Online edition of India's National Newspaper
Friday, Jan 07, 2005

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Roadmap for banking reforms soon: Chidambaram

NEW DELHI, JAN. 6. Favouring financial sector reforms to foster high 8 per cent growth, the Government said today it would shortly set up a regulator for the pension sector and announce the roadmap for banking reforms, which includes allowing 74 per cent FDI in private banks.

"We can have 8 per cent growth. The question is how to create a financial sector which can foster 8 per cent growth,'' the Finance Minister, P. Chidambaram, said at a conference organised by IRADe-IIEF (Integrated Research and Action for Development and Invest India Economic Foundation) here today.

Stressing on better risk management, he said, ``with insurance and derivatives, risks are controlled, which increases the viability of projects and foster higher investment rate. This in turn leads to higher GDP growth.''

Referring to the Common Minimum Programme, he said there was a need to strengthen the financial sector regulators and run them professionally to foster competition.

Observing that the Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority (IRDA) have brought about tremendous energy in the financial sector, he said, "Pension Fund Regulatory and Development Authority will be set up within a few weeks. With SEBI and IRDA, the PFRDA will more or less complete the financial architecture.''

Mr. Chidambaram said most of the earlier reforms had been carried out on a "trial and error'' basis and that "I will ask SEBI, IRDA and PFRDA to adopt the best practices.''

Commenting on the suggestion that the country could have a super regulator like Financial Services Authority of the U.K., Mr. Chidambaram said India was perhaps too vast a country to have a single regulator but it was necessary to strengthen the existing regulators and ensure that they work together.

On banking sector reforms, Mr. Chidambaram said a roadmap would be unveiled within a few days. "Because of the tsunami, we lost some time (7-10 days).'' Mr. Chidambaram had earlier said that the roadmap for banking reforms, including hike in FDI in private banks from 49 to 74 per cent, would be announced by December end. — PTI

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