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Richard Schwartz: Looking at the next three years, given the fast
pace of change, what are you preparing for in your own business-
es that you think is going to happen, both in terms of foreign
investment and domestic institutional investment.
Sachin Samant: India has had an excellent run of macro results
for the last three years with low oil prices and therefore low
current account, low fiscal deficit and low inflation. We offered a
positive real rate of interest for a reasonably long period of time
“I think we all agree that in 1992 when SEBI
came in, that was a trigger point. It’s almost
like BC and AD.”
ATUL BADKAR, EDELWEISS
and foreign investors can come in without too much difficulty.
Add to that a fast growing economy and abundant inflows of
liquidity, the results are there to see.
Demonetisation has also led to a formalisation of savings and
a lot of money has flowed from land and gold into financial
products. Local mutual funds have grown in the 30% range year-
on-year. For such a large industry such
growth year-on-year for two consecu-
tive years is substantial. Although oil
prices are a bit of a worry in the short
term, we see promising figures in
automobiles and cement among other
segments. Indian corporate earnings
will start looking up and therefore
investment will still keep coming in. I
think on the foreign investor side, the
liquidity position will probably taper
to some extent, but India will remain
a relatively attractive investment
destination.
So from the perspective of both FPIs
and domestic money, we as custodians
need to be prepared for ever larger
volumes.
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there is place for new entrants in this market.
Richard Schwartz: Okay, so consolidation is not for today, but
eventually, as Viraj says, it will come. From what you’ve heard so
far and what you hear from international investors looking get into
India, is there anything else that you are expecting or looking for
SEBI and the regulators to do to facilitate FPI investment?
Viraj Kulkani: One set of custodians who have been wanting to
come to the market and have not been able to make it because
of the regulations are the global custodians who are not directly
involved here with a physical presence.
Richard Schwartz: What are they waiting for?
Viraj Kulkani: What they are expecting is a regulation to be
passed by the Central Bank which enables differentiated banks
to come in. Otherwise you end up needing a banking license to
offer all of the products other than what these specialist provid-
ers do. This is already under consideration.
The second thing that will really make a difference is interop-
erability between the clearing corporations. Once that comes it
will make a visible difference. We need to create more visibility
about the things which are happening out there.
Hans Prakash: We have been able to
adapt accordingly to ensure that we
are able to cater to the various classes
of custome