Political India: Engaging America

From The Hindu

CHENNAI: Financial institutions (FIs) with operations in Tamil Nadu have welcomed the idea of creating a financial city near Chennai. Senior executives in leading companies saying the policy is a “commendable and thoughtful measure” and a “very positive outcome” for the State.

The plan was unveiled recently by Deputy Chief Minister M.K. Stalin. Subsequently, Industries Department officials confirmed that the initial phases of the project would focus on back office operations.

“The nexus between the prototypical Tamilian and the financial services industry is a strong one”, says Gopal Srinivasan, Chairman of TVS Capital Funds. The State’s workforce has an inherent propensity for hard work and intelligence and there is a sizeable pool of professionals such as chartered accountants.

“The financial city will position Tamil Nadu more competitively for attracting investment relative to other States,” says Sreeram Iyer, Chief Operating Officer of Standard Chartered Bank. SCB, working with Scope International, currently has back office operations in the State employing around 7,000 people.

Other banks with back office operations in Tamil Nadu include ABN Amro, BNP Paribas and the World Bank.

Lakshmi Narayanan, Vice-Chairman of Cognizant Technology Solutions, says given the imperatives of the global financial crisis and the requirements of the Basle II Accord, “The current focus is now on enterprise risk management. This was not given as much attention earlier. Additionally, as more regulation is rolled out across countries, there will be a greater need for reports generated by companies to meet regulatory requirements. This will lead to an emphasis on back office functions.”

However, there are several key attributes that the financial city project will have to possess in order to attain long-term success. Industry leaders emphasise the “ecosystem” architecture of the city, which will have to go beyond mere physical infrastructure provision to develop “soft” infrastructure. This could imply “attracting talent from other financial centres such as Mumbai.”

In particular, Mr. Iyer suggests: “One important step in attracting global talent, high up in the value chain may be getting more international schools for children.” Mr. Narayanan too emphasises technical and management-related education, building on existing institutions such as the Institute for Financial Management and Research (IFMR), the MBA programme at IIT-Madras and the Great Lakes Institute of Management.

Additionally “industry bodies will have to be created for the banking and insurance sectors,” Mr. Narayanan points out. Just as the National Association of Software and Services Companies (NASSCOM) played a key role in attracting foreign investment to the IT sector, an industry body for finance will be required to bring in funds to the financial city. While CII, FICCI and ASSOCHAM have financial arms, this is only one arm among the several, he explains.

At a broad level the financial city will have to be inclusive rather than exclusive, allowing banks in other regions, such as Punjab National Bank, access to its facilities. Strong communication links and partnership arrangements with other financial centres such as Mumbai, Singapore and Shanghai will be vital.

Ultimately it can even serve as “an opportunity for urban renewal,” Mr. Srinivasan argues. It can be viewed as a means to take forward the larger macro goals of “urban de-densification, re-purposing of land and dealing with the challenge of intra-city congestion.”

Labels: ABN Amro, Cognizant Technology Solutions, financial city, IFMR, IIT, Mumbai, Shanghai, Singapore, Standard Chartered Bank, TVS, World Bank

# posted by Narayan Lakshman @ 7:40 PM