The document summarizes Percy Mistry's doubts about Mumbai emerging as an international financial center (IFC). It outlines 11 reasons for his skepticism, including a lack of commitment to financial system reforms, little progress implementing recommendations to improve Mumbai's financial infrastructure, an imbalanced financial system, and the deteriorating conditions in Mumbai due to poor infrastructure, pollution, and sociocultural issues. For Mumbai to truly function as an IFC, significant reforms would be needed across its financial markets and regulations as well as improvements to the city itself.

2. INTRODUCTION
• Mumbai is the commercial and entertainment
capital of India, it is also one of the world's top
10 centers of commerce in terms of global
financial flow, generating 5% of India's
GDP, and accounting for 25% of industrial
output .
• Mumbai is home to important financial
institutions such as the Reserve Bank of
India, the Bombay Stock Exchange, the National
Stock Exchange of India, the SEBI and the
corporate headquarters of numerous Indian
companies and multinational corporations.

3.  It houses some of India's premier scientific and
nuclear institutes
like BARC, NPCL, IREL, TIFR, AERB, AECI, an
d the Department of Atomic Energy.
 Mumbai's business opportunities, as well as its
potential to offer a higher standard of
living, attract migrants from all over India and, in
turn, make the city of many communities
and cultures.

4. CONCEPT RELATED TO TOPIC
What is an International Financial Centre?
An international financial centre is a place where financial
institutions from many different jurisdictions come together to
carry out financial intermediation of an international dimension.
Characteristics of an International Financial Centre
include:
 A centre from which international financial business can be
conducted profitably, easily and efficiently.

5.  A centre with skilled management and intellectual talent
covering Business, Finance and interdependent services such as
legal and accounting, to provide multi-disciplined teams that
facilitate large cross borders transactions in the shortest possible
time frame.
 A centre with deep liquid and sophisticated capital market and
world competitive tax and regulatory regimes with foreign
investment and offshore business flow.
 A centre that can add significant value to financial services
provided from it, through a workforce that can respond
promptly and in an innovative manner.

6.  A centre with the World’s best telecommunications and
IT capacity and imbued with plentiful, well
educated, multilingual workforce.
 A centre where all facets of financial services: senior
traders, regional headquarters, treasury
operations, data processing, support functions and call
centers, can be located efficiently.
 A centre with convivial and alluring environment for
business

7. PREREQUISITE FOR BUILDING AN IFC
The Government should formulate specific policies
to promote the efficient functioning of the financial
system in the following manner :
a.Policies concerning financial infrastructure
b. Policies concerning financial intermediation
c. Policies concerning the regulatory regime

8. PRESENT SCENARIO
• Mumbai is the prime economic engine of India.
Mumbai and its surrounding regions contribute
to one-fifth of GDP.
• The Bombay port handles 46 per cent of the
foreign trade and Bombay pays one-third of the
income-tax of the nation.
• Out of the tax revenue generated by the four
metros, Mumbai contributed to about 50 per
cent.

9.  The Indian debt market ranks third in Asia, after
Japan and South Korea in terms of issued amount.
 Mumbai accounts for a significant share in
deposits mobilization (14 per cent of total deposits)
and deployment of credit (21 per cent of total
credit) of scheduled commercial banks.
 In terms of banking sector's transactions in
clearance of cheques, Mumbai's share is as much
as three-fourths of the total clearances.

10.  Mumbai's presence is overwhelming both in
money market and the foreign exchange market
transactions.
 Mumbai, being a home to the National Stock
Exchange and Bombay Stock Exchange, dominates
the turnover and total market capitalization of the
India stock markets.
 The present of a large number of financial markets
players such as foreign institutional investors
(FIIs), term lending institutions, merchant
bankers, broking houses and so on, makes
Mumbai a favourable place for an IFC.

11.  Nearly 80 per cent of mutual funds are registered
in Mumbai. Practically, all FII investments and
over 90 per cent of merchant banking transactions
happen in Mumbai.
 The headquarters of a large number of regulatory
agencies including the Reserve Bank of India and
Securities and Exchange Board of India are
located in the city.
 Mumbai is truly an agglomeration of the right
skills and the right framework for integrated
delivery of financial services.

12.  The city has a large population of highly skilled
English speaking employees and a reputation for
attracting the best managerial relent.
 A significant number of MBAs, chartered
accountants, legal advisers and research
professionals are based in the city.

13. DISCUSSION RELATED TO ARTICLE
Percy s Mistry is chairman of expert group of
Mumbai as an IFC and author of the MIFC
report, published in Reforms 20 20.
MIFC Report point out that MIFC would be
useless if India did not:
a) improve the sophistication of its financial
system
b) make Mumbai a ‘global city’ similar to
Singapore, London and New York.

14. Mistry doubts about MIFC emerging due to 11
reasons :
1. Lack of commitment to financial system
reform:
There is no commitment by central, state or
municipal governments to implement what was
advocated. Reforms are necessary for India’s
financial system to meet the increasingly
sophisticated needs of its real economy.
2. Little progress in implementing MIFC report:
About 80% of the recommendations made in MIFC
report have been ignored.

15. 3. Financial system /market regulation and
supervision by RBI remains antediluvian; stuck in
command – control, micro–management mode:
The 2008 debacle has convinced India’s knowledge-
proof legislators, policy makers, regulators and public
that it is safer to have a primitive, micro-
managed, state-controlled, financial system, with
credit directed by MoF/RBI.
4. Imbalanced financial system:
India’s financial system is lop-sided in a way that
would disable MIFC. It is subjected to locally and
globally induced volatility co-exists with an
infirm, undeveloped debt market.

16. 5. No bond market:
No IFC can function without a wide/deep domestic
bond market at its core which it plugs into the global
debt market. In India, 85% of the paper in the bond
market is issued by government of India and its
instrumentalities.
6. No ancillary supporting currency, Derivative &
commodity markets:
The report noted that bond markets do not function if
unaccompanied by markets for
currencies, derivatives, insurance, pensions and
commodities.

17. 7. Inefficient risk/term financing:
Indian policy-makers seem unaware that the absence
of a bond market accompanied by ancillary markets
disables India’s ability to finance infrastructure.
8. The Relentless Degeneration and Diminution of
Mumbai:
Mumbai is a city in which political violence have
been legitimized by convection, despite their
criminality. Local politics is killing the goose laying
golden eggs for so long.

18. 9. Urban-rural transfers:
Mumbai has corrupt state politicians enriching
themselves through an unholy nexus with slum
landlords, builders and property developers.
10. Collapsing infrastructure:
The city is unpleasant and unlivable. It has
pollution, privation and public filth that should not be
tolerated in any civilized country. That is hardly
conductive to the emergence of an IFC.
11. Cultural suffocation:
The multi-ethnicity and multiculturalism that made
Mumbai what it was, is now under daily attack and
suffers mindless cultural suffocation.

19. CONCLUSION
Economic Renewal of Mumbai City is in the
realm of possibility. It will require a concerted and
co-ordinate effort of the Government, the Private
Sector and its citizens to remove the obstacles to
foster development and towards making Mumbai a
nationally and internationally desirable destination
for business and investment.