The document discusses the liberalization of financial markets in India and its impact. It covers 1) the gradual liberalization process in India, both domestically and internationally, 2) how liberalization is improving financing and cash management options for businesses while also making the economy more vulnerable to global developments, and 3) opportunities for the services sector, including for Belgian exporters of services, in various high-growth categories of India's imports.

1. The Indian tiger widens its territory:
Robert Rühl
Head of Business Economics
Economics Department
Brussels
12 November 2009

2. 10/11/2009 16:45
The Indian tiger widens its territory:
How liberalisation of financial markets will affect your business
Content
•1. Liberalisation of financial markets
•2. Impact on macro economic developments
•3. Impact on your business environment
•4. Opportunities for the services sector
•5. ING Vysya Bank
•With thanks to Deepali Bhargava, Economist ING Vysya Bank, Mumbai

3. Base case – fragile and erratic global recovery
October 2009 – Page 2
Since WW2 ‘V’- shaped recoveries have
been the norm…
…and we have seen policy stimulus of
unprecedented scale…
BUT there are huge uncertainties about the
private sector’s ability to take up the
running:
1. Credit creation is still dysfunctional
2. Household deleveraging to continue
3. Creditor nations are reluctant to spend
4. Fiscal and monetary consolidation
further volatility and subdued trend growth
in economic activity and risk asset prices

4. GDP growth in India will likely manage
the 6% handle
• Revival in manufacturing growth
• Strong growth in services
• Partly offsets the monsoons damage,
GDP will likely register a growth of 6%
in FY10
• Budget policy less stimulative
• RBI will exit its accommodative
monetary policy only after sustained
pick up in credit, investment and GDP
Rate hike expected in Q1 2010
• Bond yields will likely stay elevated
October 2009 – Page 3

5. 10/11/2009 16:45
Liberalisation process (domestic)
Gradual approach to liberalise financial markets.
Domestic money and capital markets Market for short term investment
instruments is deepening, as
instruments like FRN become more
RBI steadily deregulated interest rates, widely available
currently only on savings deposits,
some export credits and loans under - RBI working towards world class
Rs.200,000 to SME's and priority payment and settlement system.
sectors Important for management receivables
New products introduced by foreign
banks; consumer-durables financing, - 48% of Indian population access to
electronic banking, currency and financial services. Compared with 59%
interest-rate swaps, cash management in Sri Lanka and 97% in Germany
systems and custodial services

6. 10/11/2009 16:45
Liberalisation process (international)
Current account transactions - Liberalised
- Companies exploring global liquidity
management solutions
Capital flows - Last items for capital flows 2009-2013
- Bank loans - Easing capital norms ECB and NRI
deposits will boost capital flows
- Portfolio investments
- ECB rules eased for companies in SEZ,
- Foreign direct investments non-banking, infrastructure projects
- Still certain limitations FDI
- New norms on indirect foreign
shareholding
Government decided to take a break - Plans to liberalise the regime for foreign
banks are on hold indefinitely

7. Capital flows, Current account balance and international reserve
6
accumulation India
100 Current Account Balance
80 Increase international
reserves
60 Private capital flows
US$ bn
40
20
0
-20
-40
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Fiscal years
Source: IIF

8. 10/11/2009 16:45
INR guided by global risk appetite
• Improving global risk appetite
• Integration in intern capital markets
(Gross external assets plus liabilities in
% of GDP: 68% in 2006; 48% in 2000)
• Relatively high domestic interest rates
• Global liquidity will chase markets with
relatively robust fundamentals like India
• The recent drop in INR may have been
accounted for by domestic reasons –
drought and swine flu scare.
• Purchase of 200bn tons of gold from
IMF at USD 6.7 bn( 5% of Int. reserves),
indicates interest reserve diversification
• USD/INR: 12 m 44.00

9. 10/11/2009 16:45
Impact on liberalisation process
Suffering from the global crisis but resurgence of capital inflows seen.
- Gradual relaxing, ceilings for ECB debt - Foreign financing of Indian
levels and interest rate levels as well as corporations increased (incl. FDI, Bank
sectoral restriction. loans and investments)
- Foreign and domestic investors interest - External borrowing could grow as well
in domestic equity markets. due to low interest rate levels
Liberalisation of investment caps - Number of companies that have been
- Since 1992 Indian companies listing able to raise ECBs has increased
abroad ADRs and GDRs - End 2008 1591 registered foreign
- Participation in derivatives markets to institutional investors in India
hedge risks - Inflow FDI 0307-0309 USD 77 bn to USD
125 bn . Largest share in services
- Government can still tighten sector 23% (financial and non-financial)
restrictions if the rupee comes under
pressure

10. 10/11/2009 16:45
Impact on your business environment
- Volatility currency rate
- Monetary policy to support currency
rate
- Less freedom domestic policy
- Liberalisation improves
› Cash management options
› Financing options
- Government will keep a finger on the
pulse

11. Indian services sector
• Services sector increased its strength
• Increased openness
• Export of services account for 38% of total Indian exports (2006), ten years ago
16%
• Output and export of computer services and other business services is growing
rapidly, although due to the crisis growth slowed down `
• Mainly computer services exports go to the US, but a rise of exports to EU is
expected
• India is the most specialises economy among world’ s main exporters of services
• A third of FDI in India concerns services
• ING survey among Dutch service sector managers active in India: 15% of their
business is generated by doing business in India. To grow to 15% in 5 years time.

12. Opportunities Indian export of 10/11/2009 16:45
services

13. Indian import of services growth 10/11/2009 16:45
opportunity
Total
US$ 163 bn
Total
US$ 38 bn

14. 10/11/2009 16:45
Focus of Belgium export services
sector on Indian growth area
Belgium export of services to India in 2008 • Current Belgium export of
services fits well with high
Royalties and licenses Not specified
Computer and fees 6% growth categories of Indian
Government Other business
information services
3%
3%
0% services
imports
31%
Communication
4%
• Opportunities for re-export of
Belgian services to India
• Annual growth rate of over
30% of Indian import of
services
• Increasing share of export of
services from Belgium to
Travel India in total Belgium exports
24% Transport
29% is almost certain

15. Conclusions
• Liberalisation offers more opportunities • Service sector in Indian trade becomes
more and more important
• Economy becomes more vulnerable to • Growth rate of import and export of
global developments services will continue to outnumber
growth figurers of trade in goods
• Countries such as Belgium are well
• Gradual approach of liberalisation positioned to profit from this market
process makes sense development

16. ING Vysya Bank Overview
Key statistics Key financials – FYE March, 2009
Shareholders Equity € 262 mn
North Region
Branches: 519* Deposits € 3.83 bn
# of Branches- 50
# of Employees: 6198
Advances € 2.58 bn
Investments € 1.61 bn
East Region Total Assets € 4.9 bn
West Region
# of Branches- 26
# of Branches- 46
Interest Income € 345 mn
Interest Expense € 245 mn
NII € 100 mn
Non Interest Income € 84 mn
CAR 11.68%
Net NPA 1.23%
Credit Deposit Ratio 67.3%
South Region
# of Branches- 397
INR / Euro – 65
* Data as of 30 June, 2009 Branches include extension counters & outlets
th

17. Key Contacts - India
TBA Sanjeev Mittal
Head of Wholesale Banking Head of Client Relationships India
Products Corporate & Investment Banking
Mumbai Mumbai
+91 22 6666 6435 + 91 22 6666 6419
Phani Shankar Phani Shankar
Head of Banks & Financial Head of Financial Markets
Institutions Mumbai
Mumbai +91 22 2499 8134
+ 91 22 2499 8243
Sanjeev Dhand Janak Desai Pratapsingh Nathani
Head of Emerging Corporates Head of Debt Capital Markets
Mumbai Country Head Mumbai
+91 22 6666 6420 +91 22 6666 6443
ING Wholesale Banking
Ramen Ray Mandal V Ravichander
Head of Corporate Finance Head of PCM Sales & Products
Mumbai Mumbai
+91 22 6666 6421 +91 22 2287 5879
Karthik Balachandran (G): +91 80 25005000 Extn:- 2008
Wholesale Banking - European Business Desk India (F): +91 80 2500 5484
ING Vysya Bank Ltd (M): +91 99809 23938
(D): +91 80 25005208 (E): karthikb@ingvysyabank.com

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