Divide entire banking sector into three clusters of GROUP A, B & C as per Risk
Ahmedabad: Post Graduate Research Centre For Governance Systems of Gujarat Technological University (GTU) & B. K. School Of Business Management of Gujarat University, jointly organized the two-days 5th international conference on “Governance in Indian Financial Services Sector: Reforms and Remedies” (ICGS-2018). More than 150 Researchers from all over India has submitted their research papers in the conference. The organizing committee members will prepare a detailed report and submit the same to various bodies such as Finance Ministry – G.O.G., and institutions like AMFI, RBI, etc.
On the first day of ICGS-2018, inaugural function was arranged at Senate Hall, Gujarat University, Navrangpura, Ahmedabad. Prof. (Dr.) Himanshu Pandya, Vice Chancellor of Gujarat University, Ahmedabad spoke about various schemes of government and how people benefitted from those schemes. Prof. (Dr.) S. D. Panchal, Registrar (I/C), GTU said that although corruption has been reduced due to e-commerce, there are some challenges like Digital Literacy, creation of Digital infrastructure etc. Great reforms infusing technology in financial sector has brought a lot of convenience. GTU is planning to organise more such conferences under the guidance of Prof. (Dr) Navin Sheth, Vice Chancellor.
Mr. Nayan Parikh (Ex-President, IIM-A Alumni Association), the keynote speaker of the event raised alarming doubts about the existing governance structures of various financial services sectors, such as Mutual Funds, Equity, Forex, Insurance, and Banking. He started his speech by discussing asset management fees structures of Mutual Funds industry in India. Whether an investor make profit or loss is of less importance, the Asset Management Company (Fund House) charges flat 2.5% of commission on the fund value of the account, which should be replaced and have suggested the alternate plan to charge commission on the positive return generated by the fund, say for example if a 1 lakh Rs. of an initial investment in a fund has earned 30000 Rs. in annual return then they shall be allowed to charge 10 percent of the profit they have generated for the client. However, if the fund fails to make profits they shall be entitled to receive a nominal fund management charge of 0.5% to meet their day to day operational expenses. In short, he suggested enforcing a performance-based return policy for the mutual fund industry.
Furthermore, talking in the same direction he jumped on to the discussion related to latest NPA (non-performing assets) issues of recent financial scams of leading public banks. And has advocated that RBI shall work as a guiding body of banks and not the governing body, in case if any public-sector bank finds liquidity issues, it shall be settled amongst the stakeholders of the bank and government shall not offer any bail-out packages in such situations. Lending is a primary function of banks and it’s a risky affair to lend money. Hence, if an investor wants to have safe returns then RBI shall create 3 different grades of banks, GRADE A (Risk-Fee), GRADE B (Moderate Risk), GRADE C (High Risk). If an investor wants to earn higher returns on investments and stronger liquidity, then they may put their money in GRADE C banks. For senior citizens, they may use GRADE A (Risk-Free) banks, which might offer only 2-3% interest on Fix Deposits but their lending practices will be highly safe and stringent. There must be some withdrawal limits (weekly) in each type of banks depending on the type of bank.
Prof. Dr. Dev Raj Adhikari Member-Secretary, University Grants Commission, Nepal said that knowledge has been regarded as critical resources for bringing change in our society. Knowledge is the main source of improving production, productivity and profit. Knowledge transfer is the key to transform our society. Oxford University argues that university research is important for policy of the government. This statement makes it clear how important of higher education is for government, the process of knowledge transfer transformation of society. In India, Financial sector reforms is going on since 2011. The program is largely supported to India’s high growth rate. Moreover technology-driven inclusion has supported growth in financial sector. It is expected that by 2025 India would rise to the 5th largest position in the consumer durable market in the world. The consumer durable market in the India is expected to reach 20.6 billion US dollar by 2020.
Dr. Prateek Kanchan, Director, B. K. School of Business Management, Prof. Bharat C. Dalal, Honorary Director, Centre for Governance Systems, GTU, Dr. Mamta Brahmbhatt, Associate Professor, B.K. School of Business Management, Dr. Ritesh K. Patel, Assistant Professor, Centre for Governance Systems, GTU and Dr. Viral G. Bhatt, Principal of SAL Institute of Management also expressed their opinions.
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