rediff.com
News APP

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  gplay

Rediff.com  » Business » Global reform? Indian regulatory model ideal
This article was first published 15 years ago

Global reform? Indian regulatory model ideal

May 5, 2009 14:01 IST

Image: Reserve Bank of India Governor Duvvuri Subbarao.
Photographs: Vijay Mathur/Reuters

As nations across the world make reshaping the financial services industry a key priority in their efforts to put the global economy back on track, they are likely to take a leaf out of the regulatory models of countries like India, an Accenture report has said.

"The regulatory models of Canada, India and Spain may become more widely adopted. Canada's banks largely escaped exposure to toxic assets due to the higher liquidity reserves required by their charters. India and Spain, which also require high levels of liquidity reserves, have also emerged strong," the global consulting firm said in a report.

Text: PTI

Global reform? Indian regulatory model ideal

Image: People walk past the Lehman Brothers headquarters in New York.
Photographs: Chip East/Reuters

The Brazilian, Chinese and Indian banks are better capitalised than most banks in the developed nations of the United States, the United Kingdom, Europe and Australia, it said.

Looking ahead, Accenture said trends like "rethinking regulation" are likely to emerge as countries resort to recapitalise some institutions, organise mergers of stronger and weaker companies and step up regulatory oversight.

Global reform? Indian regulatory model ideal

Image: US President Barack Obama meets India's Prime Minister Manmohan Singh during a bilateral meeting at the G20 Summit in London.
Photographs: Jason Reed/Reuters

Referring to an increased role being played by emerging nations in the world economy, the report said advanced economies, like the Group of 7, recognise that involvement of developing countries in discussing the restructuring of the regulatory framework is vital to a successful effort in tackling the global meltdown.

"We are witnessing a shift in the informal management of the international economy from the G-7 countries to the broader G-20 forum. While macroeconomic policy coordination will likely continue to be centered in the G-7 group, it is clear that responsibility for addressing systemic issues such as financial market regulation is transitioning to the G-20," the Accenture report said.

Global reform? Indian regulatory model ideal

Image: Tiger Woods hits onto the seventh green during practice for the World Golf Championships -- Accenture Match Play golf Championship in Marana, Arizona.
Photographs: John Gress/Reuters

An uptick in mergers and acquisitions, particularly within domestic markets, is also expected in the coming months, Accenture said.

Stronger banks will look to expand market share (using government cash infusions in some cases), and weaker banks will be forced into mergers, acquisitions or receiverships.

Financial companies from emerging countries would be among the busiest in M&A activities, it added.