Seminar talk by Mr. Satyakam Patnaik, Sr. Vice President (Wealth Management), National Bank of RAS Al Khaimah, Dubai
November 16, 2010
Seminar talk by Mr. Satyabrata Mishra, Head- Global Demand Management, Covidien
December 1, 2010

National Finance Conclave 2010

KIIT School of Management (KSOM), a constituent school of the sprawling KIIT University, Bhubaneswar today organized a National Finance Conclave on “Inclusive Growth: Role of Financial Sector”.

The Conclave discussed the challenges before the country in ensuring that its growth story covers all strata of society and the role financial sector can play in such inclusive growth. It also attempted to bring out emerging issues in the financial sector and ways to deal with them.

The Conclave was inaugurated by the Dr. K C Chakrabarty, Deputy Governor, RBI and Dr. K G Karmakar, MD, NABARD in the presence of Prof. Ashok S Kolaskar, Vice Chancellor, KIIT University and Prof. Ashok Sar, Dean, KIIT School of Management.

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The inaugural ceremony saw a large number of participants including Executives from Corporate and Public Sectors, Academicians, Students and Faculty Members completely filling up the KSOM auditorium.

Among the other eminent speakers who attended the Conclave and shared their rich insights were corporate leaders like Mr. Debashish Mohanty, Country Head, UTI MF, Mr. Supriyo K Choudhury, GM, SBI, Mr. Sukanta Nag, Executive VP, CARE Ratings and Mr. Tridev Khandelwal, Associate Director, SR Batliboi & Associates and S M Sinha, GM, UCO Bank.

Kicking off the Inaugural Session, Vice Chancellor, KIIT University, Dr. Ashok Kolaskar spoke about the praiseworthy role that KIIT and Kalinga Institute of Social Sciences (KISS) have been playing in promoting the cause of education, especially amongst the underprivileged. He urged the participants to visit the KIIT and KISS campuses to see the work that is being done and provide suggestions on what can be done better. He said Management education is not just about learning theories but to find ways to easily incorporate the theories into what the organization needs to do every day. To make KIIT a platform for such constructive discussions is the main aim of organizing this Conclave, said Prof. Kolaskar.

In his Inaugural speech, Dr. K C Chakrabarty, Deputy Governor, RBI stressed on making financial services accessible to the masses and especially to those in the villages, by decreasing the cost of delivery. He said that “Technology” can become a vital means to make financial services accessible. However, he also added that unless proper “Management Science” is applied, Technology alone may not be effective. While highlighting the role that several entities including Micro Finance Institutions (MFIs) play in delivering financial services, he said true financial inclusion can’t be achieved unless ‘Mainstream’ financial services are made accessible.

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Underlining the role of education in promoting social inclusion, Dr. K G Karmakar, MD, NABARD lauded KISS for its efforts to make this “inclusion” a reality. He said in future as much as half of India’s population would reside in urban areas and therefore it’s necessary that the remaining half that would be the primary producer of food is able to feed hundred percent of the urban half, through improvements in productivity. He underlined several activities that NABARD has been carrying out to help achieve this. He added that providing “Economic Connectivity” to all sections of the society is a much greater challenge than just providing financial inclusion. He urged the participants present and the society at large to play an active role in promoting greater inclusion.

The Conclave had three sessions, besides the inaugural session. While the inaugural session focused on the need of inclusive growth for bringing economic stability and attracting investors, the first session discussed the role of Banking and Financial Services in financial growth. Other two sessions touched upon issues like Capital Markets and Inclusive Growth and Inclusiveness in Financial Reporting and International Standards.

Summary of the Talks by the Eminent Invited Speakers

Session 1: Financial Growth: Role of Banking & Financial Services

Mr. Supriyo Choudhury, GM, SBI

Mr. S M Sinha, GM, UCO Bank

Session 2: Capital Markets & Inclusive Growth

Mr. Debashish Mohanty, Country Head, UTI MF

Mr. Sukanta Nag, Executive VP, CARE Rating

Session 3 – Inclusiveness in Financial Reporting and International Standards

Mr. Tridev Khandelwal, Associate Director, SR Batliboi & Associates

Mr. Supriyo Choudhury, GM, SBI

The first session of the conclave kick started with address by Mr. Supriyo Choudhury, GM, SBI, providing an overview of India’s robust economic performance. Then he talked about the phase-wise (1960-1990, 1990-2005 and 2005 onwards) transformation in the banking sector during the last decade and finally how SBI has contributed to the financial growth of the country.

He said India has become a laboratory for converting rapid headline economic growth into a broader and more sustainable development that can reverse the income disparities that threaten to squander globalization’s gains and give rise to protectionism and isolationism.  He added that for financial inclusion, banks have to leverage technology. Financial inclusion also demands greater integration of network of banks, exchanges, insurance companies, fund houses and other financial bodies to facilitate and benefit from cross selling.

He concluded by saying that financial growth will reduce transaction costs, reduce economic vulnerabilities and alleviate poverty. Simpler KYC norms, technological innovation are utmost important for financial inclusion.

Mr. S M Sinha, GM, UCO Bank

Mr. Sinha started the talk with the importance of financial literacy & discussed how it is a pillar of an adequate financial policy. He also spoke about his organization’s role in achieving financial inclusion.

He stressed that lack of literacy in general and financial literacy in particular is a major hurdle. He said that banks should look at the empowerment of credit counseling centres to boost financial inclusion. Banks have to expand their reach to the vulnerable sections of the society.

He further added that financial services need to reach those who are not generally considered well-off but do have the investment capabilities. Such groups are not aware of the potential of investment in their own lives. Therefore, an educative drive is necessary to make such people realize the power of being a contributor in the financial system. This way the GDP of the country will get a fillip and the goal of inclusiveness can be achieved.

He mentioned that UCO Bank is the convener of the State Level Bankers Committee (SLBC) in Orissa. All the 188 branches in Orissa are CBS enabled. It is the lead bank in seven districts in Orissa.

Mr. Debashish Mohanty, Country Head, UTI MF

Mr. Mohanty started the discussion by saying “Financial Inclusion is a dream”. He said that we have just begun scratching the surface.

While highlighting the problems for the capital market, he said that the mindset of Indians pose a major hurdle. They lack knowledge of financial products and can get confused by a multitude of choices. Fear of competition, entry barriers in capital market are the other issues.

He added that in India, MFs lack a proper framework and because of FII money flowing in, “Inclusiveness” is pushed to the backburner. Indian households are among highest savers in the world but less than 1 per cent of the population participates in capital markets. Given a savings rate of 28 per cent (2007-08) and the fact that more than 50 per cent of household savings continue to be in relatively unproductive assets, opportunities lie in driving these savings into the financial system and channelising them into productive investments. Through financial inclusion, capital markets can actually generate productive investments.

He said that out of 116 crore population of India, 70 crore are cell phone users, 8.5 crore are PAN card holders, 2.5 crore have demat accounts, 2 crore pay income tax, but only 1crore are investors. In contrast, developed countries like US have 66% of its population investing in the capital market.

He also added that capital market requires conscious efforts to identify the respective target segments and enhance penetration through financial education, product innovation, diversification, customization and simplification. Innovation, credit counseling, financial education and proper segment identification constitute the possible strategies to achieve this. A well-developed capital market creates a sustainable low-cost distribution mechanism for distributing multiple financial products and services across the country. India has sophisticated products and professionals with vast business potential and what is needed is proper financial integration and efforts by capital market players to assume new roles and responsibilities.

Mr. Sukanta Nag, Executive VP, CARE Rating

Mr. Nag started the talk with how banks and MFIs are performing towards financial inclusion. Then he spoke about Credit Rating and benefits of it.

Defining Financial Inclusion as the “process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost”, he said that bringing the entire nation in the main stream of society is possible through creating awareness, enabling income generating activities, reducing income disparity and providing education & infrastructure.

In his opinion Micro Finance Institutions (MFIs) are ahead of banks in tapping rural market but high costs, over indebtedness, high interest rates are some serious concerns.

He outlined some of the benefits of Credit rating which includes increased funding options as credit ratings are widely recognised by banks, financial institutions and other investors, faster processing of loan applications by banks/FIs, assistance in capability assessment by existing/prospective clients, improved credibility and favourable trade terms with suppliers & customers, meeting of regulatory requirements and assistance in self-assessment.

He concluded by saying that sustainable development is a must. A strong credit appraisal system with a blend of high level integrity & commitment is required. Responsibility lies with all sorts of lenders and all facilitators in the process.

Mr. Tridev Khandelwal, Associate Director, SR Batliboi & Associates

Mr. Tridev Khandelwal said that convergence to International Financial Reporting System (IFRS) is a milestone towards inclusiveness. He added that financial convergence is incomplete without global convergence and IFRS is the new language in accounting that will open a window of opportunities.

He further added that IFRS will focus on two important parameters: Fair Value and Balance Sheet. He highlighted the opportunities that IFRS will provide: One language and therefore enhanced comparability and understanding, easier access to global capital markets, lower cost of capital, better career opportunities for Indian CAs and a boon to our KPO/BPO industry.

He said there are several misconceptions about IFRS: Indian GAAP is very closely aligned with IFRS and there would not be any impact on the financial statements; Indian GAAP will be scrapped when IFRS gets implemented and all tax laws like Income-tax, Sales-tax etc will be on IFRS; IFRS always has a negative impact on financial statements; it is an Accounting Project-Other functions like production, IT, tax etc are not required; it is an extension of current accounting responsibilities – no dedicated staff required; IFRS does not involve significant costs.

Some of the key changes, he said, that India will have to deal with while implementing IFRS include greater focus on Balance Sheet and not on P/L account, contractual obligations needing revision and some of the performance indicators such as Debt to Equity Ratio and Fixed Asset Turnover looking different.

He said that SEBI, RBI, IRDA and NACAS are working constantly on achieving the smooth IFRS transition within targeted timelines. IASB has developed a separate set of standards for SMEs after considering the need to have a uniform platform. IFRS for SME’s provide high quality and internationally respected set of accounting standards for SME’s.

 

 

 

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