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One direction
Domestic investment will help accelerate the growth of Indian capital markets, already buoyed by
sustained foreign institutional interest.
T
he potential India offers investors, both local and foreign,
is well recognised. One securities services provider sums
it up succinctly: “India is one of the fastest growing econ-
omies in the world and has great business opportunities with the
policy drive of the Indian government. The India SENSEX Stock
Market Index reached an all-time high of 31,430.32 in June 2017.
There have been continuous efforts by the regulator to facilitate
capital-raising by alternative investment funds (AIFs) and the
custody industry has clearly benefitted from this. Assets under
custody (AuC) have grown 14% to USD 1,039,988 million in the
calendar year 2016 alone. All this has led to increased service
standards and reduced costs for clients.”
In a commemorative compendium of interviews published in
February by Edelweiss Group, a wide range of policy makers,
corporate figures and money managers offer their opinions on
why this potential remains undented. Among these is Mark Mo-
FIGURE 1: SERVICE AREA SCORES
Service area Average
2017 Average
2016 Difference
Relationship Management and Client Service 6.57 6.34 0.23
Cost and Value Delivered 6.33 6.33 0.00
Settlement and Cash Management 6.54 6.48 0.06
Asset Servicing 6.49 6.34 0.15
Special Operational Requirements 6.49 6.38 0.11
Operational Reporting 6.46 6.39 0.07
Technology 6.31 6.28 0.03
Fund and Unit Accounting and Valuation 6.43 6.58 -0.15
Trustee and Administration Services 6.38 6.30 0.08
Reputation and Asset Safety 6.58 6.57 0.01
OVERALL WEIGHTED AVERAGES 6.48 6.39 0.09
“The very high standards set in the inaugural
survey of 2015 have again been maintained.”
FIGURE 2 : RELATIVE PRIORITY SCORES
bius, executive chairman, Templeton Emerging Markets Group,
Singapore. “There is no question that India has the potential to
get into double-digit growth in very short order,” says Mobius.
The key will be for the government to enhance regulations with
regard to investments… this applies not only to foreign invest-
ments, but domestic investments.”
The participation of local investment will be crucial in achiev-
ing this growth potential. Sunil Singhania, CIO, Equity Invest-
ments, Reliance Nippon Life Asset Management acknowledges
that capital markets in India are “quite buoyant”, but adds,
“there has to be a realisation that we need to encourage indi-
viduals to invest in financial savings and government should pro-
mote penetration of financial assets. We also need to strengthen
our local institutions.”
Market changes
Given the broad front of economic and societal reform being
pursued by the present Indian government under Prime Minis-
ter Narendra Modi, securities market changes are not, on their
own, the most headline-grabbing aspects of the programme.
Service providers have themselves identified several innova-
tions that will affect the investment climate. Broadly speaking,
an increase in the number of Initial Public Offerings (IPOs) has
led to a corresponding increase in AUC, while the Mutual Fund
segment too has grown significantly.
Service area Priority 1
or 2 (%) Rank
2017 Rank 2016 Priority
6-10 (%)
Reputation and Asset Safety 38.27 1 2 23.46
Relationship Management and Client
Service 33.95 2 3 22.84
Cost and Value Delivered 32.10 3 4 25.93
Settlement and Cash Management 25.31 4 1 22.84
Trustee and Administration Services 16.67 5 10 23.46
Technology 10.49 6 7 40.74
Asset Servicing 9.88 7 5 30.25
Fund and Unit Accounting and
Valuation 9.26 8 6 49.38
Operational Reporting 4.32 9 8 61.11
Special Operational Requirements 0.62 10 9 65.43
OVERALL WEIGHTED AVERAGES 6.48 6.39 0.09
The replacement of the old FII regulations by the FPI Reg-
ulations enabling all categories of Foreign Portfolio Investors
(FPIs) access to Indian Capital Markets, though initiated in
June 2014, is now producing tangible results. “During 2016,
a number of FPI-related initiatives were undertaken by the
Summer 2017
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