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'India to seek reform of global financial firms'

With barely two weeks left for the crucial G-20 meet, Manmohan Singh said India would seek reform of international financial institutions to prevent global financial crisis.

business Updated: Nov 03, 2008 17:19 IST

With barely two weeks left for the crucial G-20 meet, India on Monday said it would seek reform of international financial institutions to prevent global financial crisis, which is sending shock waves around the world.

"We will seek reform of the international financial institutions, and improved regulation and supervision to prevent recurrence of such crises," Prime Minister Manmohan Singh said at a meeting with captains of Indian industry in New Delhi.

Singh said his government was working closely with other countries to ensure coordinated policy action and increased development cooperation for the containment of this crisis.

The United States has called a meeting of the G-20 on Financial Markets and the World Economy in Washington on November 15 to discuss the global financial crisis and work out a joint strategy to deal with the emerging situation.

Among other things, the summit will discuss the effects of the current crisis on emerging economies and developed nations.

After attending a meeting with Finance Minister P Chidambaram to devise a strategy for India's position on G-20 meeting last week, former RBI Governor C Rangarajan had said the summit was a high-level meeting that will discuss possible changes in the international financial architecture.

Besides the US, the members of the G-20 include India, Australia, Brazil, Canada, China, France, Germany, Italy, Japan, Russia, and the UK. The global financial meltdown triggered by the sub-prime mortgage crisis in the US has already resulted in the failure of 16 banks in the US and rescue of several others across Europe.

The ripple effects of this crisis are being felt in the emerging economies, including India, which has been witnessing a liquidity crunch, besides sharp erosion in value of stocks at bourses.

In order to deal with the financial meltdown, the US has already come out with about USD 700-billion bailout package but the efforts have failed to restore investors' confidence as stock markets continued to move southward.

Meanwhile, India has already succeeded in getting its voice heard louder in the International Monetary Fund.

India's quota is slated to go up from 1.91 per cent to 2.44 per cent in the world body.

As such, India's voting rights are also scheduled to increase from 1.88 per cent to 2.34 per cent, enabling it to have a greater say in the functioning of the fund.

Besides Rangarajan, country's top financial brains including RBI Governor D Subbarao, RBI Deputy Governor Rakesh Mohan, plan panel Deputy Chairman Montek Singh Ahluwalia, SEBI Chairman C B Bhave, Finance Secretary Arun Ramanathan, Finance Commission Chairman Vijay Kelkar among others attended the meeting with Chidambaram last week.