In a note detailing the terms of reference of the committee, the ministry has acknowledged that the current policy on capital account convertibility is constraining the emergence of Mumbai as a financial centre.
The committee members include Percy S Mistry, chairman, Oxford International group, A K Purwar, chairman, State Bank of India, K V Kamath, managing director & CEO, ICICI Bank, M Balachandran, chairman, Bank of India, Aditya Puri, managing director, HDFC Bank, C B Bhave, chairman, National Securities Depository Ltd, Ravi Narain, managing director, National Stock Exchange.
Bharat Doshi, CFO, Mahindra & Mahindra , P J Nayak, chairman, UTI Bank, Nimesh Kampani, chairman, JM Morgan Stanley and the managing directors of Sundaram Finance and LIC Mutual Fund.
The committee has been asked to identify the features of an RFC and the current state of Mumbai as a national financial centre and list out the measures that should be adopted to transform Mumbai from being a national financial centre to an RFC in each of the financial sub-sectors-equity, bond, forex and commodity markets.
The committee will also examine the nature of financial services that could be permitted to be undertaken in the RFC, the desirable sequencing of permitting such services and the appropriate regulatory frameworks in each of the financial sub-sectors consistent with the progress made in achieving full capital account convertibility.
The ministry of finance notification said India has made significant strides in the financial sector in the past decade. This raises questions about how Mumbai can play a bigger role in the global market for financial services.
Mumbai accounts for a major part of the banking services and almost all banks, including those with headquarters in other cities, have their foreign exchange and debt market dealing centres in Mumbai.
The city is also the hub of the equity market and is becoming so for commodities too. The committee's mandate also includes an assessment of the safeguards that should be incorporated in the policy framework, along with the scope and structure desirable for such a centre.
It will submit its recommendations within six months of its first meeting. A phased action plan, including specific actions required by different agencies covering institutions, infrastructure, legal, taxation issues etc, for the development of Mumbai as an RFC will also be outlined.