FINANCE CONTINUUM 2018

Disruptive Innovation, Transformation and Changing

Regulations: Paradigm Shift in the Indian Financial Sector

4th August 2018, F.C. Kohli Auditorium, IIT Bombay

 About Continuum
CONTINUUM, the rolling seminar series, is a premier event at the
Shailesh J. Mehta School of Management - IIT Bombay, which
encompasses various management domains viz. Consulting,
Finance, Human Resources, Marketing, Operations, Technology,
and Systems.
These seminars aim to cover the latest trends in management by
inviting eminent speakers from business and academia. The
Continuum seminars include interactive talks, panel discussions
involving eminent speakers and workshops for hands-on
learning. Each of these seminars focuses on issues and
challenges faced by a specific management function and aims at
drawing insights from the knowledge and experience of the
speakers. The seminars are well attended by delegates from
different organizations, distinguished alumni of the school,
students from other business schools, as well as students from
other departments of IIT Bombay.
Visit us at https://sites.google.com/a/sjmsom.in/continuums/ for
more information.
About Finesse Club
Finesse, the Finance Club of SJMSOM, IIT Bombay, is a student-driven initiative
that collaborates with both the corporate and academia from the financial
sector to provide a platform for students to improve their quantitative and
analytical thinking abilities. The core ideology of Finesse is to cultivate interest
in finance as an academic discipline as well as promote it as a career option of
choice within the student community.
The club also provides a platform for the finance enthusiasts to interact with
Industry stalwarts to learn and grow from their rich corporate experiences,
thus providing a platform to students to keep pace with the latest trends
across the Financial Services. Throughout the academic year, the club carries
out various activities to build the competencies of the students. Some of them
are:
• Organizing sessions on live trading and investment awareness
• Organizing guest lectures by Industry experts and alumni
• Conducting various Inter B-School competitions
• Releasing newsletters/magazines to keep students updated about latest
trends across the Financial services sector and the National Economy
• Discussion and knowledge sharing sessions on contemporary issues in
finance
 About Finance Continuum
This rapidly evolving economic world, need finance
teams to shift from generating data to producing
insights and for CFOs to translate numbers into
opportunities. Disruptive events can cause significant
transformations in both the finance team and the
business. Leaders of the financial services sector
know that they and their teams must continuously
learn, grow and acquire greater competencies to
survive and excel. Having a plan to modernize the
finance function is important under normal growth
cycles, but when disruption occurs, having a more
mature finance team isn’t merely important—it's
critical. To stay ahead of the curve, managers need to
explore the trends impacting finance today.
Speakers at Finance Continuum 2017
The following dignitaries participated in the Finance Continuum 2017 on 20th August 2017 at SJMSOM, IIT
Bombay
• Mr. Sanjiv Saraff
• Mr. Kapil Krishan
• Mr. Arvind Ganesh
• Mr. Amit Soni
• Ms. Aparna Nirgude
• Mr. Shamit Verma
Finance Continuum 2017
The landscape of Indian economy has been undergoing a fundamental shift due to many
forces ranging from demographical and social changes to shift in global economic power
centers and ongoing economic reforms. But technological breakthroughs are one force
that is particularly disruptive affecting the role, structure and competitive environment
of the financial institutions. An innovative financial arena, which is more than capable
of providing support to the domestic industry, both in times of global economic
prosperity and slowdowns, is a necessity. Based on this context, last year’s Continuum
was on:
“The changing landscape of the Indian Economy in the context of rapid
technological changes, evolution of financial services sector and the
economic reforms”
Finance Continuum 2017 was graced by distinguished speakers from the industry who
took out time from their hectic schedules and interacted with the students, imparting
their knowledge and experience thereby accelerating our learning curves.
Senior VP - Investment Banking, ICICI Securities
CFO, Manappuram Finance
Head- Client management and operations, IDFC BANK
Group Head- Analytics, Piramal Group
CRO, SBI Mutual Funds
Executive Director, Morgan Stanley
 Finance Continuum 2018
The Finance Continuum 2018 will be organized on 4th August 2018 with a theme that reflects the current trends and challenges
faced by leaders in the financial sector. The central theme for this year’s continuum is the following:

Disruptive Innovation, Transformation and Changing Regulations: Paradigm Shift in the

Indian Financial Sector

India's financial sector is undergoing rapid expansion across asset classes, currencies and geographies on a real-time basis. Amidst the mixture of
transformational financial and economic decisions, India has once again taken the baton for initiating reformations and taking up initiatives to support the
large economy and to keep in pace with technological penetration across all the sectors. India, sustaining its position as the fastest growing economy in
the world, is an evidence of the sound policies but at the same time, major hiccups in the form of impulsive moves such as the demonetization can cause
a major setback for the largely unorganized labor force of the country. India has the right intent and resources for creating phenomenal transformations in
its financial sector, that largely consists of banking and financial services, given there is a good ecosystem for political consensus in the country. There is an
acute need for tight policy making and vigilant regulation by the central government institutions especially when India is witnessing frequent declaration
of bad loans and incidents of fraud and misconduct by major banks. The repercussions of having badly reputed banking systems are taking a toll on FDI
which reported the least growth in 5 years and weakening of rupee past Rs68/USD mark for the first time.
India has taken measures to check the health of its financial sectors through legal measures like the FRDI Bill (Financial Resolution and Deposit Insurance),
IBC code (Insolvency and Bankruptcy code) for resolution of failures of commercial and cooperative banks, insurance companies, mutual funds and
stockbroking companies and other financial service providers. There is also a positive nod towards privatization of PSUs like Air India, LIC proposal to take
over IDBI bank can mean a new path for government focussing its resources for healthcare, education, and social welfare schemes. However, due to the
dire need and urgency of these measures being implemented, we do need to ‘revolutionize' our economy. Financial institutions make huge investments in
technological advancements to stay competitive and grow their customer base and it is time for the government to adopt technology to promote
transparency, prevent biased decision making and pave a path towards accountable and uncorrupted governance. Some of these disruptive technologies
like blockchain, AI are being adopted by state governments like the Telangana, Andhra Pradesh, and West Bengal. Fintech institutions are riding the
technology wave and are being increasingly acquired or consulted by banks over technology companies like the Infosys, TCS, etc. When countries like Japan
and Taiwan have embraced cryptocurrency, India has always been a cautious player indicating that India has always taken a stance to allow technological
perforation that can affect the risk tolerance of domestic investors and public. Instead, India has created success stories by implementing complex policies
like GST which can be relatively simplified using technology. The GST collection continues rising and is expected to reach one lakh crore a month is a proof
to the case!
 SUB THEMES
Dealing with banking stress: Asset Restructuring Companies at the crossroads of making a paradigm shift

Non-performing Assets are a major problem currently crippling the Indian banking system with India ranked 5th worst in the world following only the
troubled economies of Europe. According to the RBI’s financial stability report of December 2017, the NPAs form 10.2 % of all assets. This number is expected
to increase to over 11% by September 2018 according to another RBI report.
NPAs started bloating up in the banking sector when RBI make the disclosures more stringent in early 2014. Following these tighter regulations, and the
need for making prompt provisions, older practices like lone restructuring and evergreening of loans could be checked and the actual number of NPAs
started emerging. Another reason of the sudden rise in the NPA was that many big loans that were given to companies during the high growth period of
2004-2009 failed to take off and help businesses when the global economy slowed down following recession in 2008.
To counter this problem banking industry is facing, many major decisions have been taken with varying amounts of success. The Insolvency & Bankruptcy
Code is still in its nascent stages and its results so far have shown more encouraging results than the SARFAESI Act. The government has also planned to
spend Rs. 88,000 crores for the recapitalization of the PSU banks. The RBI has also stepped up its vigil on NPAs and has further tightened the disclosure
requirements of NPAs.
In this context, one of the recent development is the setting up of asset restructuring companies(ARCs) to deal with the NPAs.Though they have their origins
in SARFAESI Act, their prominence has increased in the recent past due to the increased problems of NPAs. An Asset Reconstruction Company is a specialized
financial institution that buys the NPAs or bad assets from banks and financial institutions so that the latter can clean up their balance sheets. Or in other
words, ARCs are in the business of buying bad loans from banks. ARCs clean up the balance sheets of banks when the latter sells these to the ARCs. This
helps banks to concentrate on normal banking activities. Banks rather than going after the defaulters by wasting their time and effort can sell the bad assets
to the ARCs at a mutually agreed value. Recently the government has announced that the PSBs will set up their own ARCs to help speed up the recovery
process of their bad loans.
Since ARCs are still at an inceptive phase in the country, some challenges persist which have to be resolved for the sector to work efficiently. One of the
major challenges is the limited funds available with the ARCs in comparison to the huge NPA market. Also, even if funds were available, the price expectation
difference between the ARCs and the seller banks and the long drawn out process of consensus on an acceptable valuation. Another challenge is to
aggressively aggregate loans from all other creditors who have complicated and deep-rooted inter-creditor issues. ARCs are also required to set up the
managerial & technical expertise to revive the acquired asset. Given the urgency of resolving the NPA problem, setting up efficient and sustainable ARCs
can help expedite the process of early resolutions.
 Emerging trend in Real Estate financing: Need of REIT & its prospective implication in India
Globally, the real estate sector has seen a notable shift from private sector to public markets. Countries such as USA, Japan, Singapore and Australia have
been frontrunners in raising equity capital in the real estate sector. The Indian government has introduced Public Private Partnership model for attracting
domestic and foreign investment into the real estate sector for stimulating the economy.
The Security Exchange Board of India (SEBI) introduced Infrastructure Investment Trust (InvIT) regulations and infrastructure projects in 2014 to alleviate
the burden on banking system by allowing capital to be available for the infrastructure sector.
In 2007, SEBI introduced the first draft for REIT regulations which was finally enacted in 2014. REIT or Real Estate Investment Trust is a company that owns
and operates income-producing real estate such as office, apartment buildings, warehouses, shopping malls, hotels, etc. REIT, as an investment vehicle,
allows individual investors to earn income produced through ownership of REIT's shares which will be listed and traded in the market after Initial Public
Offering (IPO). SEBI has devised guidelines for eligibility of sponsor, investment conditions, policies and requirements for distribution of shares and dividends
to promote investor interest and protect them from fraudulent prospects. Though SEBI has already approved FDIs in REITs in India, there are no REIT listed
in India as of today. There are definite challenges such as real estate regulation, tax structuring and investment in undisputed properties.
REITs can provide several advantages to investors as well as real estate business. Retail investors can invest with minimum capital and easy entry and exit
options while mutual funds and pension funds can diversify their portfolio for long-term investment. For the real estate sector, REITs and InvITs are capital
raising avenues through equity capital for investing in new projects and paying their debts. In terms of corporate governance, REITs improve transparency
and professionalism in the sector which can be a huge boost for identifying illegal asset ownership, land mafia and many other fraudulent activities that are
rampant in India.

Economic policies of the government and its impact on Indian economy and Financial markets in an
election year
Before the Lok Sabha election, in the election year, the ruling government typically increases its spending. However, this only increases inflation rather than
economic growth. Over the past 30 years, it has been observed that the economic activity in the country reduced in the election year even though the
government increased its spending. The investors and businessmen postpone key decisions like investments until they have the clarity about the stance of
the future government. At the same time, the rate of industrial credit also decreases as lesser businesses want to take loans just before the election which
impacts the financial sector of the economy. The private investment further decreases as some businesses like constructions fund political party to gain the
advantage in longer term instead of using the capital for increasing the production or consumption capacity.
It is also observed from past years that the government wants to gain the appreciation of the people who can help them win the election. In line with
this, it is observed that the government spending during the election years is more towards the primary sector as it employs the majority of the
population. According to a 2007 research paper by Harvard University, the farm loans dispersed by state banks are 5-10 percent point higher in the
election year than the non-election years. The manufacturing sector is mostly ignored by the government at the same time.
The government also spends more in the state where they do not have a clear majority as to appeal to the masses in that region and acquire their
support.
In many cases, government intervention in an election year is designed to cater to special interest groups rather than to provide a boost to the overall
economy. According to a world bank study, politicians manipulate fiscal policies before elections to provide targeted favors to specific interest groups,
possibly in exchange for campaign support.
The findings suggest that government spending is usually opportunistic ahead of elections but it is not focused on increasing private investment, rather
those are politically motivated. The spike in spending fails to lift the economy and instead stokes the fires of inflation.

Impact of increased protectionism, trade wars and rising crude prices on Global Economy

The increased trade war between the two biggest economies of the world, US and China are being considered a major threat to the world economy. The
trade war with the imposition of the tariff on imported goods is only going to become severe with the danger to investments, not only in these countries
but in other countries as well. There have been indications of restriction on investment by China in the US.
This will be followed by a similar response by China as well. In the world of globalization, a company looks for a location which gives them the most
strategic advantage in terms of reduced cost and accessibility. Now the companies will have to relocate their factories, affecting not only the organizations
but also the economy of the country because of reduced employment and taxes. China is the major supplier of cheap products to the US which is sold
worldwide and is also a manufacturing hub for a lot of global companies. The trade was will affect the entire world as the price of the products will increase
leading to reduced saving and growth.
At the same time, rising crude oil prices are disturbing the world economic activities. Crude is regarded as the most important pillar of the global economy
and directly affects the growth of an economy, especially for oil-dependent countries. The effect of this is not in one direction. It has a direct effect on
companies as crude is the raw material for sectors such as refining, logistics, chemical, airline etc.
 The increasing crude price decreases their margin and makes their business less profitable. Crude is important for all the companies as an increase in
crude price increase the transportation cost. With the rise in the cost for the company, the company increases the price of the goods leading to inflation.
The worker demands increase in wages leading to further increase in the price of the goods by the companies. This process leads to increase in inflation
in the country and reduces the growth of the economy.

Indian Mutual Fund industry: Challenging the status quo & setting the growth path

The asset management industry has grown enormously in the last couple of decades with the AUM increasing 20 times from 47,000 crores in 1994 to 8.25
Lakh crores in 2014. At the same time, the industry expanded rapidly in terms of no. of companies, products and schemes. The industry is still very young
and has huge opportunity to grow. But, despite this tremendous growth, the industry is still not able to free itself from the constraints and faces some
challenges that need to be discussed and tackled to create a path for growth for the industry for it to reach its true potential.
The share of asset management industry has remained very low in the total household savings, garnering lesser than 3% of the total household savings. It is
neither growing at a desirable pace. Even after being a consistent provider of inflation beating return, the industry is outpaced by other investment
alternatives like Gold, Real Estate etc. There is an opportunity for the industry to provide more relevant product, price it better and educate investors about
the various cost benefits and position the product better in the overcrowded space.
The industry has also not seen much changes in the investor mix. Usually, the same kind of investors invests in mutual funds. Hence, there is an opportunity
to provide different products for the need of all the types of investors to tap the saving from different geographies and demographics. The asset management
industry has curtailed itself in the smaller blanket of the mutual fund industry, providing a bunch of products. The industry needs to challenge this status
quo, providing much more products for every investor's need like ETF whose share in India is very less when compared to other developed economies. The
distribution channel also needs to be focused on the products. The distributor eagerly waits for the industry to provide a product that meets the need of the
investor, instead of understanding the need of the investor and guiding the industry towards product development.
The asset management industry needs to challenge its status quo and provide products for the needs of varied investors. This way the industry will be able
to increase the volume and create the greater return for all the stakeholders. It needs to observe the global trends and take a cue from them for providing
wider product basket. If only these challenges are tackled, the industry will grow to its true potential.
 Insurance regulation and technology: A rapid transformation underway?

Technology has the potential to reshape the insurance industry. It promises not only to change the ways in which consumers buy insurance products, but it
will also change the types of insurance they buy and whom they buy insurance from. It will change the way that insurers choose their customers, the way
claims are processed, and the way losses are assessed.
Technology even has the potential to reduce risky behavior and make everyone safer. Of course, the insurance industry has always embraced technology,
since the first undersea cables revolutionized international commerce. However, with the rise of the internet, the smartphone, and social media, we are
seeing a renaissance of technological innovation in the insurance industry.
Technology such as big data and sensors allows insurers to assess the risk more accurately. This means that insurers using technology to cherry-pick the
lowest risk customers will receive fewer claims and be more profitable than those who do not.
Assessing risk more accurately will, of course, increase premiums for customers assessed as high risk and this raises several concerns.
• Firstly, insurers will need to ensure that their algorithms are fair and accurate – that they do not incorrectly identify people as high risk. This is
more difficult than it sounds because big data analytics often produce results that unintentionally reflect social biases.

• Secondly, regulators have expressed concerns that it would be unfair for high risk individuals to be denied insurance or face increased premiums
where risk factors are not wholly within their own control particularly for medical insurance. Hence, it is possible that regulators could feel obliged
to mandate coverage or limit premiums for high-risk individuals.

• Thirdly, there is the concern that insurers could misuse or fail to secure personal data. Insurers could conceivably use big data not just to assess
risk, but also to set prices. For example, by identifying whether policyholders are wealthy or frequently engage in comparison shopping.
Business models where traditional functions are automated also create regulatory challenges and so there is also the question of whether existing insurance
regulations are adequate to regulate the new products and business models made possible by Insurtech.
The greater threat to traditional insurers, however, may come from the technology giants like Google, Facebook, and Amazon. These companies already
have vast amounts of information about their users' lifestyles, consumption habits and preferences which would be invaluable in marketing insurance
products. They are already trusted by consumers, significantly more than they trust insurance companies which can lead to massive changes in the way the
insurance industry functions.
 The outlook for the Banking industry with multiple challenges tied to rising bad loans, regulations
and disruptive models & technologies

In recent years, Indian bank profitability has been hamstrung by rising NPAs and relatively muted client activity. In its recent bi-annual Financial Stability
Report (FSR), the Reserve Bank of India (RBI) has warned that the sector is under severe stress, with mounting bad loans and an increase in bank fraud,
among other issues. The share of gross NPAs in India could increase to 10.2% by March 2018, from about 9.6% in March 2017, according to the report. In
September 2016, gross NPAs were at 9.2%. The RBI has also cautioned that the proportion of NPAs is expected to increase in the near future.
Another major challenge is the surge of cyber threats. The urgency to improve India’s banking system increased further following a massive data breach of
3.2 million debit and credit cards last year. The rising number of fraudulent transactions is another major concern for the Indian banks. What’s adding to the
concerns is that banks often seem reluctant to report these cases even if there are strict regulations in place for such disclosures to be made.
The banking sector has embraced the use of technology to serve its client’s faster and also to do more with less. Technology has changed the accounting
and management system of all banks. And it is now changing the way how banks are delivering services to their customers. However, this technology comes
at a cost, implementing all this technology has been expensive but the rewards are limitless.
With the advent of technology, the digital payments in the country have gotten a major boost. A crucial factor is the strong regulatory push in favor of open
and inclusive banking. The Indian government launched the JAM trinity – Jan Dhan Yojana, Aadhaar, and Mobile – to give a huge boost to financial inclusion,
and the results have not disappointed.
With raising needs for PSU recapitalization and the government maintaining its targets of decreasing fiscal deficit, the government is looking at divesting
their ownership in PSU Banks. The recent example being the LIC share purchase proposal of IDBI Bank. Also, the government has repeatedly signaled that
consolidation of the 20+ PSU banks is something they wish to do in the short to medium term. The issue of corporate governance can also be seen in the
way some of the issues in the private banks have played out in public.
The challenges most banks face in balancing the need to restructure their foundations for the long-term with finding near-term growth are mainly customer
centricity, regulatory recalibration, technology management, mitigating cyber risk and reimagining the workforce. With over 85% of banks citing
implementation of a digital transformation program as a business priority for 2018, investment in technology to drive efficiency, manage evolving risks and
benefit from growth opportunities will be critical for sustainable success. Also, with the global recovery progressing strongly and monetary policy in key
countries poised for a gradual tightening, the outlook for banks' bottom line is now improving.
 Insolvency & Bankruptcy Code - The changing of the power equation between creditor & debtor

Before the promulgation of Insolvency and Bankruptcy code in 2016, there were numerous acts to govern the Insolvency and Bankruptcy issues such as Sick
Industrial Companies Act, 1985; SARFAESI Act,2002; the Recovery of Debt Due to Banks and Financial Institutions Act, 1993; Presidency Towns Insolvency
Act, 1909; Companies Act, 1956 and 2003. Due to excessive fragmentation, there was a lack of clarity and certainty of jurisdiction because of which the
above regulations had not yielded satisfactory results.
The IBC, 2016 was designed as a framework that describes the resolution of insolvency for payment of debt in the event of liquidation of a company within
a specific timeframe. It also repeals most of the previous acts, laws or tribunals related to insolvency and bankruptcy. It has been hailed as an equivalent of
GST for protecting the interest of creditors and investors. National Company Law Tribunal (NCLT) is the adjudicating authority; high NPA accounts cases such
as Jaypee Infrastructure Ltd., Bhushan Steel, Electrosteel Steels, etc has been resolved by NCLT through IBC Code.
Due to vagueness in the key provision of the IBC code, bidders and borrowers have taken to challenging the process in civil courts causing the bankruptcy
proceedings to continue to drag beyond the expected timeframe. RBI data shows that corporates undergoing resolution under IBC more than doubles every
two months but the resolution on these cases has been negligible. However, the greater challenge lies in the identifying the rightful candidates for insolvency
in different industries and sector; recognizing the actual cause of NPAs provided they were not caused due to slow global recovery, trade wars, delay in
approvals, uncertainty in international markets, etc. There is a major doubt about the effectiveness of the IBC for the greater good - Is the law being exploited
by declaring NPAs unscrupulously that can adversely affect start-ups and small-scale business or is the law protecting banks from being trapped into large
bad loan provisions and NPAs on the long run?

NBFC Regulations: Evolution, rationalization & challenges ahead

Non-banking finance companies (NBFCs) are companies engaged in the business of loans and advances that form an important and integral part of the Indian
financial system. They play an important role in nation building and financial inclusion by complementing the commercial banking sector in making credit
available to the unbanked segments of society, especially to the micro, small and medium enterprises (MSMEs), which account for the majority of non-
agricultural employment in the country.
In terms of financial assets, NBFCs have recorded a healthy growth of 19% CAGR over the past few years and its share in total credit is expected to grow to
20% by 2020 from 13% in 2015. The factors helping the growth include stress on PSU Banks, latent credit demand picking up, increased consumption, digital
adoption in MSMEs and the distribution reach of NBFCs over traditional banks. With rising disposable incomes by virtue of a rapidly growing GDP and the
7th Pay Commission, consumer finance segment specifically the housing sector is expected to show steady growth.
With the growing importance of data-driven decisions, technology can enable NBFCs to more efficiently serve their customers. Some of the applications
include lending based on data from mobile phone records, the rise of social media scoring, assessing of the customer’s propensity to repay the loans. These
are also referred to as alternative data scoring.
NBFCs can realize the potential value of alternative data by making investments in technology and analytics to leverage both traditional and non-traditional
data sources. This will enable a healthy competition, increase product innovation, and also further the government goal of increasing financial inclusion.
On the regulations front, a comprehensive review of the NBFC regulations was undertaken by the RBI in the year 2014. The revised regulatory was designed
to focus supervisory attention to those NBFCs which genuinely can pose risks to the financial system and bring operational freedom to smaller NBFCs. For
this, the systematic significance was revised from Rs.100 crore to Rs. 500 crore. Capital adequacy norms and credit concentration norms have also been
waived for all NBFCs-ND. These changes alone are expected to bring better operational flexibility to over 11000 NBFCs. This is also expected to NBFCs an
attractive means for private equity (PE) investments. Thorat Committee was set up to come up with regulatory recommendations for corporate governance
in the banking sector which provided few path-breaking suggestions.
Challenges still exist for NBFCs as the financial sector sees a rapid transformation. Owing to the lighter regulations on NBFCs, globally they have been seen
to take up high leverage and sub-credit assets thus risking the health of their assets. Another issue is with respect to the convergence of the regulations of
banks and NBFCs. Though it has improved in the recent iterations to regulations, further convergence is desired. The NBFCs act as a catalyst to the
development of the country and is therefore important to nurture and actively manage their health.

Redefining the lines: Growing influence of FinTechs on Indian Financial services and the challenges
ahead
Financial technology, better known as FinTech, is an industry that aims to provide banking and other financial services by leveraging technology. The sector
is expected to be worth $45 billion by 2020 growing at an average CAGR of 7.1%. The expected return on investment in FinTech in India is about 29%,
according to a PwC report. A report by Google and BCG estimates that digital payments in India could exceed $500 billion by 2020, from $50 billion in 2016.
The major opportunity areas in FinTech include using existing data & analytics to help get a better understanding of the customers, improving customer
retention by targeting customized products, launching new products based on these insights, increasing customer base and reducing costs among others.
India still has among the largest number of unbanked or underbanked population, along with a strong information technology ecosystem thus offering huge
opportunities for entrepreneurs in this industry.
opportunities for entrepreneurs in this industry.
Many government initiatives have helped in increasing the scope and the reach of FinTech companies to their clients. Jan Dhan Yojana helped in increasing
the number of adults with bank accounts from 53% in 2014 to over 80% in 2017. India Stack helped build a technological framework to entrepreneurs,
innovators, and corporations, allowing for the accelerated growth of FinTech ventures. Aadhar adoption and the creation of JAM system in disbursing of
cash transfers and other benefits has bought a lot of efficiency and transparency in the system. The Introduction of the United Payments Interface (UPI) has
further improved the convenience of mobile transfer of funds.
With new technological advancements, many new innovative solutions are being offered by fintech industry. They include the evolution of P2P lending,
robo-advisory, InsureTech, use of blockchain to maintain ledgers, increased use of biometrics for authentication and use of Internet of Things (IoT) to
determine insurance premiums. Though these are exciting new avenues for FinTech, their adoption, and practical applicability can be slow.
Given the scope and opportunities of the industry, there are still challenges that have to be resolved in order for the industry to grow further and faster.
Many industry experts say that the RBI & SEBI must come up with specific regulations for the FinTech industry. Clarity in regulations will help the sector grow
in the long term and reduce regulatory risks in the industry. Another challenge is the limited available financial infrastructure and utilities in the country.
Though the number of bank account holders has increased hugely in the recent past, the account activity is still low and further formalization of the industry
is needed to get more data and thus generate more insights. Poor cyber and data security is another major challenge for India. Issues like data privacy and
customer protection are gaining importance and proper protections and regulations for them are yet to be developed.

Understanding fixed income markets in the Indian context

The Indian fixed income market, one of the largest in Asia, is developing rapidly buoyed by a multitude of factors including new instruments, increased
liquidity, deregulation of interest rates and improved settlement systems. A predominantly institutional market, the key money market players are banks,
financial institutions, insurance companies, mutual funds, primary dealers, and corporates. The largest segment of the Indian Debt market consists of the
Government of India securities where the daily trading volume is more than Rs. 10000 crore, with instrument tenors ranging from short dated Treasury Bills
to long dated securities extending up to 30 years.
The Corporate bond market, though relatively less liquid, is also fast developing with an increased participation from the banks, Financial Institutions, mutual
funds, provident funds, insurance companies and cash-rich corporates. Since most of the participants are triple A-rated and 80 percent of the trade is direct,
there exist minimal settlement risks. While the overall growth figures over the last 25 years have been impressive, these figures are still relatively low
compared to the other, more open capital markets globally.
Across other metrics too, there are several areas in which the Indian fixed income markets could see structural changes for the better, despite stand-alone
growth rates being relatively impressive – for instance, while Indian corporate debt as a percentage of GDP has grown from less than 5% to about 15% of
GDP over the last five years, this figure is considerably less than even a smaller market such as Malaysia, where corporate debt penetration is around 40%
of GDP.
Thus, there is considerable room for growth in corporates accessing the capital markets, more so in an environment where bank non-performing loans have
weighed heavily on Indian bank profitability and capital ratios in recent years. A mix of restrictive rules regarding the issuance, high public sector borrowing
requirements, uncertainties around tax policy and shortcomings in areas such as bankruptcy, the lack of benchmark yield curves, & illiquidity in the secondary
markets, have all weighed on the development of the fixed income markets.

Increased importance of ethics, corporate governance and ensuring compliance in a more

complicated financial world
Many of the recent financial crisis have stemmed, at least in part, from unethical behavior and decisions made by those in the financial industry. Be it greed
or a simply the lack of knowledge and awareness of the ethical standards, the outcome has almost always had adverse consequences for the global financial
health. As a result, investors nowadays have started paying more attention to their financial professionals' ethics, and doing more due diligence to make
sure that the professionals do not only show good results but also operate within the boundaries of the law and established ethical practices. Given this
renewed importance is given to ethics, a financial professional has a responsibility to make sure that the message one sends to his/her clients regarding the
ethical standards is in line with their actual behavior. Ethics many times go beyond regulations and laws and thus have to be continuously developed and
followed by the firms. Regular training, effective supervision and clear guidelines help reduce ambiguity for the professionals, thus improving compliance
and adherence to the ethical standards. Corporate governance is the system of rules, practices, and processes by which a firm is directed and controlled. It
involves balancing the interests of a company's many stakeholders and ensuring that all the functions of an organization are conducted as per law and other
ethical standards. The importance of corporate governance norms has arisen in the recent past due to the of the increased concerns about the non-
compliance of standards of financial reporting and accountability thus causing heavy losses for investors. The collapse of companies like Enron and Xerox
are examples of the absence of good corporate governance norms and point to corrupt practices adopted by the management of these companies.
Corporate governance standards in India are at a nascent stage. But with increased scams, changing ownership structure and growing importance of social
responsibility, many rapid changes in regulations are seen. SEBI has recently notified new corporate governance norms based on the Uday Kotak committee’s
report. They include enhanced roles of audit, reimbursement & risk management panels. They have also notified stricter eligibility criteria for independent
directors, made the disclosure of auditor credentials & fees mandatory and firms are required to disclose how they are using funds raised through
preferential issues & placement to institutions.
 Finance Continuum 2018 Schedule
4th August 2018 - Saturday
Event Start Time End Time
Inauguration Speech 08:45 AM 09:00 AM
Speaker 1 09:00 AM 09:45 AM
Speaker 2 09:45 AM 10:30 AM
Tea Break 10:30 AM 10:45 AM
Speaker 3 10:45 AM 11:30 AM
Speaker 4 11:30 AM 12:15 PM
Corporate Lunch 12:15 PM 01:30 PM
Panel Discussion 01:30 PM 03:30 PM

For further details, kindly Contact:

Daksh Chandra Gupta Charu Goel Piyush Kumar

+91 83 830 39965 +91 99 364 75476 +91 95 131 40700
daksh.gupta@sjmsom.in Charu.goel@sjmsom.in Piyush.kumar@sjmsom.in