Lok Sabha Question No. 1114 (UNSTARRED), answered on 2016-07-22
Subject: Competitiveness of Indian Financial Sector
Ministry: FINANCE
Asked by: NANABHAU FALGUNRAO PATOLE

## MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA

## UNSTARRED QUESTION NO. 1114

## TO BE ANSWERED ON JULY 22, 2016 / ASHADHA 31, 1938 (SAKA)

'Competitiveness of Indian Financial Sector'

## QUESTION

## 1114:  SHRI NANA PATOLE

## Will the Minister of FINANCE be pleased to state:

- (a) whether  the  Government  appointed  Standing  Council  of  Experts  to  assess  and  make recommendations on global competitiveness of the Indian financial sector, has submitted its  report,  if  so,  the  details  thereof  along  with  the  main  recommendations  made  by  the Council;
- (b) whether the Government has accepted  all recommendations of the panel;
- (c) if so, the details thereof and if not, the reasons therefor; and
- (d) the further steps taken by the Government in this regard and the likely benefits of these recommendations after their implementation?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ARJUN RAM MEGHWAL)

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- (a)      Standing  Council  of  Experts  on  Indian  Financial  Sector  has  submitted  its  first  report recommending  policy  proposals  for  improving  the  international  competitiveness  of  currency, equity  and  commodity  derivatives  markets  of  India.  The  main  recommendations  made  by  the Council are Annexed.
- (b)  &  (C)  The  report  has  been  circulated  among  all  financial  sector  regulators  and  concerned Government agencies to examine and take necessary action.

(d)  Improving the competitiveness of the Indian financial sector will drive Indian exchanges and Indian  financial  firms  towards  becoming  more  efficient  in  producing  and  delivering  financial services. These productivity gains will feed back to all users of Indian finance, both domestic and foreign.

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## Annex referred to in part (a) of the Lok Sabha unstarred question no. 1114 to be answered on July 22, 2016

- (i) For foreign participants, eliminate the regulatory uncertainty regarding the Singapore and Mauritius tax treaties.
- (ii) Rationalize  Know  your  customer  (KYC)  and  compliance  requirements  for  nonresident  participants  in  line  with  Customer  Due  Diligence  (CDD)  requirements under Financial Action Task Force (FATF).
- (iii) Allow access to all foreign participants that meet the FATF CDD requirements.
- (iv) Eliminate  the  regulatory  uncertainty  about  availing  treaty  benefits  under  the proposed General Anti Avoidance Rules (GAAR).
- (v) Remove  regulatory  constraints  on  banks  and  Mutual  Funds  to  participate  in commodity derivatives.
- (vi) Remove regulatory restrictions on domestic Financial Insittutions's participation in equity derivatives.
- (vii) Devolve  margins,  position  limits,  trading  time,  product  innovation  etc.  linked decisions to exchanges, with suitable monitoring by Securities and Exchange Board of India.
- (viii) Enhance regulatory capacity and resources at Forward Markets Commission (FMC)
- (ix) Focus on implementing Goods and Services Tax (GST)
- (x) Rationalise stamp duty by amending the  Indian Stamp Act,

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