Five years after the debate on creating an International Finance Centre in Mumbai ended prematurely in the face of a global slowdown in 2008, the issue is back in the limelight with city corporates making a strong pitch.
But, this time round, the demand is for setting up an International Banking Operations Centre (IBOC) in phase I, which would require minimal legal and regulatory changes. Union finance minister P Chidambaram had first mooted the idea in 2005.
The IBOC as envisaged will enable banks and corporate houses to raise and spend foreign exchange in the country. As a resident, one will be able to open and hold a foreign currency account with the IBOC unit or authorised dealer.
Bombay First, an initiative of private businesses that partners with the state government on Mumbai makeover, has written to Chidambaram to develop city as an IBOC to leverage its growth story. The proposal has been endorsed by the empowered committee on Mumbai makeover chaired by state chief secretary Jayant Kumar Banthia. A detailed presentation to chief minister Prithviraj Chavan is on the cards next month.
“Compared to the last decade, Indian corporate and businesses will become major borrowers, fund raisers and depositors over the next decade, and creating an IBOC in Mumbai would be a timely move. This will provide them an advantage to lure business volumes to India, particularly of Indian banks and businesses that would otherwise be booked in New York, London, Dubai, Singapore, etc.,” states the letter sent earlier this month.
“We are also planning to write to the PMO [prime minister’s office] and would like to make a presentation to the Union finance minister.
The state government is fully supportive of this move,” said Narinder Nayar, chairman of Bombay First and member of the empowered committee.
Nayar said statistics reveal that even by a conservative estimate, the income-booking opportunity lost in 2010-11 on basis of interest loss and fees on resident Indian businesses amounts to $1 billion in the absence of an IBOC.