Friday, July 24, 2009
Initial focus on back office functions at financial city
From The Hindu
CHENNAI: Plans for a financial city announced recently by Deputy Chief Minister M.K.Stalin will initially focus on back office functions, sources close to the project authority said.
The idea of a financial city is based on the fact that workforce in the State has a high level of skill in IT and accounting sectors, with some financial back office functions such as risk analysis for banks and hedge funds already being carried out here.
Speaking to The Hindu, a senior official of the State Industries Department explained that the financial city was initially planned keeping in mind the reforms roadmap for the banking sector that the Reserve Bank of India announced over three years ago. If these reforms progress, Tamil Nadu should be in a position to take advantage of the opportunities that emerge in this sector. While it was expected that the reforms would be revisited in March 2009, “due to the recession that has been put on hold,” the official said.
The official confirmed that the financial city project would nevertheless be taken forward in a “modular, gradual way.” In the first of several phases to be implemented, between 4 and 5 million square feet of workspace will be developed. In addition, work will commence on setting up 2000-3000 housing units. The first phase would also require the construction of “a convention centre, hotels, hospitals and a high-quality school, and subsequent phases would target scaling the project up 4-5 times,” according to the official.
The official suggested that South Chennai would be a likely site for the financial city. “The trade-off between the amount of land available for this project and the distance from the city is an issue,” the official said. The land required has not yet been acquired.
The next step in the project, to be implemented over 2-3 months, will be to conduct discussions with the relevant stakeholders, including banks, mutual funds and insurance companies. If government-owned land is available, then subsequent 3-4 months could see the implementing authority, the Tamil Nadu Industrial Development Corporation (TIDCO), bring on board a consultant to define the requirements and design of the financial city. A “networked” consultant such as Ernst and Young or KPMG may be hired, as this may lead to subsequent benefits in terms of the occupancy of the city.
The project would be structured as a public-private partnership similar to the Tidel Park venture, in which TIDCO owns 25%, the Electronics Corporation of Tamil Nadu owns 4% and banks and other financial institutions own around 50%.
Regarding the broader vision for this project the senior Industries Department officer said, “In the long term we want to position ourselves tactically as being strong in both the manufacturing and services sectors. We will certainly be in competition with other States that are promoting financial centres, but Tamil Nadu is well positioned to overtake states like Karnataka in this area.”
CHENNAI: Plans for a financial city announced recently by Deputy Chief Minister M.K.Stalin will initially focus on back office functions, sources close to the project authority said.
The idea of a financial city is based on the fact that workforce in the State has a high level of skill in IT and accounting sectors, with some financial back office functions such as risk analysis for banks and hedge funds already being carried out here.
Speaking to The Hindu, a senior official of the State Industries Department explained that the financial city was initially planned keeping in mind the reforms roadmap for the banking sector that the Reserve Bank of India announced over three years ago. If these reforms progress, Tamil Nadu should be in a position to take advantage of the opportunities that emerge in this sector. While it was expected that the reforms would be revisited in March 2009, “due to the recession that has been put on hold,” the official said.
The official confirmed that the financial city project would nevertheless be taken forward in a “modular, gradual way.” In the first of several phases to be implemented, between 4 and 5 million square feet of workspace will be developed. In addition, work will commence on setting up 2000-3000 housing units. The first phase would also require the construction of “a convention centre, hotels, hospitals and a high-quality school, and subsequent phases would target scaling the project up 4-5 times,” according to the official.
The official suggested that South Chennai would be a likely site for the financial city. “The trade-off between the amount of land available for this project and the distance from the city is an issue,” the official said. The land required has not yet been acquired.
The next step in the project, to be implemented over 2-3 months, will be to conduct discussions with the relevant stakeholders, including banks, mutual funds and insurance companies. If government-owned land is available, then subsequent 3-4 months could see the implementing authority, the Tamil Nadu Industrial Development Corporation (TIDCO), bring on board a consultant to define the requirements and design of the financial city. A “networked” consultant such as Ernst and Young or KPMG may be hired, as this may lead to subsequent benefits in terms of the occupancy of the city.
The project would be structured as a public-private partnership similar to the Tidel Park venture, in which TIDCO owns 25%, the Electronics Corporation of Tamil Nadu owns 4% and banks and other financial institutions own around 50%.
Regarding the broader vision for this project the senior Industries Department officer said, “In the long term we want to position ourselves tactically as being strong in both the manufacturing and services sectors. We will certainly be in competition with other States that are promoting financial centres, but Tamil Nadu is well positioned to overtake states like Karnataka in this area.”
Labels: Chennai, Ernst and Young, financial city, Industries Department, KPMG, Tidel Park
# posted by Narayan Lakshman @ 5:46 PM 
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