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Finance Continuum


Finance Continuum 2017 was organized on 20th August 2017 with a theme reflecting the theme reflecting the current trends and challenges faced by finance professionals. The Continuum saw a series of lectures centred on the theme:


“The changing landscape of the Indian Economy in the context of rapid technological changes, evolution of financial services sector and the economic reforms”


Following luminaries participated for delivering lectures at Technology Continuum 2017 on August 20th, 2017 at SJMSOM, IIT Bombay:

Ø  Sanjiv Saraff, Senior VP - Investment Banking, ICICI Securities

Ø  Kapil Krishan, CFO, Manappuram Finance

Ø  Arvind Ganesh, Head- Client management and wholesale branch operations, IDFC BANK

Ø  Amit Soni, Group Head- Analytics, Piramal Group

Ø  Aparna Nirgude, CRO, SBI Mutual Funds

Ø  Shamit verma, Executive Driector, Technical Architect, Morgan Stanley

Ø  Venkatesh S, Associate Director, IMAP India

Listed below are the some of the suggestive and non-restrictive sub-themes for discussion: 



Effect of GST on India Inc.

GST is being called as the biggest tax-reform since independence. It will cut both transaction cost and double taxation. India Inc hailed the forthcoming rollout of the GST, and said the sweeping tax reform will give huge momentum to the country's economy and tempt global businesses to invest here. The nationwide Goods and Services Tax (GST) will overhaul India's convoluted indirect taxation system and unify the over USD 2 trillion economy with 1.3 billion people into a single market.

"The medium-term impact of GST on macroeconomic indicators is expected to be extremely positive. Inflation will be reduced as cascading of taxes will be eliminated. Tax revenues of the government would go up with expanded tax net, and fiscal deficit would remain under control. Further, exports would emerge as more competitive in global markets, while FDI is likely to be encouraged," CII Director General Chandrajit Banerjee said. Assocham President Sandeep Jajodia said “India would move many notches up the global ease of doing ladder by this single, but the most important tax reform in the country.”

The government on 19 May finalized the tax rates for the services sector. Ninety percent of the services were placed in the 18% bracket, which in absolute terms is a marginal increase, but is expected to reduce complexity in transaction and improve ease in availing of input credit. Out of all services, 63 have been put in a negative list, which are exempt from tax. In 2016-17, service tax collection jumped to Rs2.54 trillion from Rs2.11 trillion a year ago.Similarly, in mutual funds, the total expense ratio (TER) charged for managing funds and distributor commissions etc., would increase by 4-5 basis points. TER for mutual funds varies between 1.25% and 2.75%.

Contrary to gloomy predictions, the roll-out of the goods and services tax (GST) has been a much smoother affair and the industry has adapted to it without major hassles. The gap between the country’s existing indirect tax base and those registered on the GST Network has almost vanished, indicating that even large sections of small businesses that had the option of composition scheme decided to join the GST bandwagon.

Evolution of Financial Markets in India in near Future

Economic development of the nation is completely depended on its financial structure. Both in long run and short run, the financial system and its efficiency dictates the success of the nation in terms of economic growth. The larger, the proportion of financial assets to real assets, the greater the scope of economic growth. Investments which are considered as the core of financial structure are a pre-condition of economic growth. This apart, to sustain growth, continued investment in the growth process is essential. As finance is an important input in the growth process, it has a crucial role to play in the development off economy. The increasing rate of saving is correlated with the increase in the proportion of savings held in the form of financial assets relative to tangible assets.

Based on reasonably standard and agreed criteria, India does not rank very high in its overall score of financial development. However, it is relatively well placed in terms of development of nonbanking financial services and financial markets. Within the financial markets, India fairs well in development of its foreign exchange markets and derivatives markets. Some of the sub-indicators in which India ranks well are regulation of securities exchanges and currency stability.

Advisory services of private wealth management services & financial institutions could face challenges to sustain their traditional approach of distributing wealth products since customers would like to have customized offerings. With the emergence of big data and computer technology, companies would prefer to use ‘intelligent computers’ due to higher efficiency and minimal chances of error.

With the vast economic growth and commendable nature of financial inclusion, it can be expected that middle class population will grow significantly over next few years. Also, their risk-averseness will decrease simultaneously and Indian capital market and money market will have immense significance and new opportunities in near future.

Impact of Insolvency and Bankruptcy Code on India Banking Industry

Fitch Ratings in its reports says that implementation of The Insolvency and Bankruptcy Code(IBC) will give increased power to the Reserve Bank of India (RBI) to clean up asset quality, and to intervene in banks at an earlier stage when risks build, represents an important positive step toward ensuring a healthy banking system in the future.

Resolution under IBC would mean rate of recoveries would be higher than what banks were experiencing so far under the much more protracted routes of NPA recoveries along with ensuring creation of a repository of unfaltering defaulters and will result in time bound settlement of solvency.

The bill also proposes the following activities like usage of existing infrastructure of debt recovery and NCL tribunals, to settle individual and corporate insolvency, creation and training a new class of insolvency professionals who will specialize in assisting sick companies and, setting up an Insolvency and Bankruptcy Board of India, to step in as a regulator of these information utilities and professionals.

The bill allows introduction of third-party insolvency professionals (IP) as intermediaries to oversee the insolvency resolution process(IRP), replacing the debtor's existing management and operate the company as a going concern upon initiation of an IRP which gives creditors overriding authority to approve terms of any restructuring package; and limit duration of IRP to maximum of 270 days, after which a company will be automatically liquidated.

These features are positive for Indian banks because they will act as an incentive for corporate borrowers to avoid loan default and improve the recovery of assets, in addition to increasing banks' influence over the restructuring process, the mandated replacement of the existing management during the process should act as a key disincentive for debtors to default in the first place. Moreover, the limited timeframe strengthens the banks' bargaining power over delinquent borrowers.

From Fintech to TechFin: The Regulatory Challenges of Data-Driven Finance

Financial technology (‘FinTech’) is transforming finance and challenging its regulation at an unprecedented rate. Two major trends stand out in the current period of FinTech development. The first is the speed of change driven by the commoditization of technology, Big Data analytics, machine learning and artificial intelligence. The second is the increasing number and variety of new entrants into the financial sector, including pre-existing technology and ecommerce companies.

These firms (loosely termed ‘TechFins’) may be characterised by their capacity to leverage the data gathered in their primary business into financial services. In other words, TechFins represent an Uber moment in finance. This shift from financial intermediary (FinTech) to data intermediary (TechFin) raises implications for incumbent financial services firms, FinTech start-ups and regulators.

As a result of their continuing evolution, TechFins create many challenges for society and regulators alike. The impact of artificial intelligence and data analytics on individuals and the financial system is uncertain and, from a financial regulatory perspective, a potential source of risk Data correlations, if not tested for causation, raise the risk of false predictions. If the algorithm is wrong at a systematic level113 the data advantage of TechFin firms may be at risk. Furthermore, as soon as the TechFin firm has reached a certain size, the insolvency of the TechFin may impair firms linked to it.

TechFins should be held to similar standards to licensed entities to avoid discriminatory practices towards the public. Indeed, within the financial services industry, the law often protects certain values by disallowing discrimination based on certain factors, which we term protected factors. Yet the efficiency of these stipulations may be threatened by data analytics. Hence this sea change of move from FinTech to TechFin calls for analysis to underpin regulatory approaches with a view to balancing the competing interests of innovation, development, financial stability and consumer protection.

How do Developments in the field of financial technology help overcome limitations and explore opportunities in the financial services sector in India?

The opportunities that are created by the technology in finance are unnumbered. The competitive technological drivers like Fintech Start-ups, Uberization of financial services, Blockchain, Digital becoming the mainstream, advances in robotics and AI, Public Cloud becoming the dominant infrastructure model, Internet of things and multitudinous technological innovations that are underway will help overcome the limitations that are inevitable in the current scenario of Financial Services.

For example, in India, the banking sector has made rapid advances with automated teller machines, internet and mobile banking, payment wallets, and other advancements which have made significant improvements to consumer experience and have also helped banks widen their reach. India has witnessed rapid growth in mobile adoption and today more than 70% of the population hold a mobile phone. In the latest trend where more and more people are using mobile wallets (e-wallets), mobile phone service providers or e-commerce companies like Paytm are introducing innovative methods of bringing the people with no bank account into formal economy. The ‘Digital India’ initiative, coupled with a payments infrastructure, is laying the cornerstone for a digital economy, keeping in mind the increasing willingness of people to use the internet, and the rising data traffic in the country.

Complementing the regulatory push is a market-led pull by FinTech start-ups that have mushroomed across India. The convergence among banks, telecom players and technology start-ups is paving the path for higher integration and innovation. Development in mobile telephony, the government’s increased focus on financial empowerment of the under-banked, and a vibrant entrepreneurial community are together leading to the emergence of a digital finance ecosystem. The young FinTech start-ups have forced mammoth banks to re-think their strategy, re-orient their business model and redesign their technological capability. Higher computing capability and storage capacity have given rise to ‘big data’ analytics, facilitating better risk assessment and trend discovery. The access to wider and richer consumer data has allowed players to extract behavioural insights and develop targeted solutions. The SMAC (social media, mobile, analytics and cloud) and API technologies have allowed different data streams to ‘talk’ to each other in a highly efficient manner. This has led to the amalgamation of multiple services into a common platform, thus creating different use cases for delivery of financial services and a parallel ‘app economy’.

People will no longer have to stand in queues to pay bills or send cash back home. People in remote places will soon be able to replace cash with mobile money for bill payments and remittance. Lakhs of mom-and-pop shops and kirana stores are going to function as micro ATMs where withdrawal, deposit, fund transfer and eKYC can take place, complementing ATMs. With mobile wallets and payments banks starting to target to the online-to-offline business, the era of plastic cards will soon be a thing of the past. Given the high awareness of social media even in the hinterlands of India, FinTech start-ups will use Facebook or WhatsApp in a big way to source customers and enable micro P2P payments for remote populations. The future will also see cryptocurrencies, contactless payments, biometrics and IoT reshape the market in ways one may never have imagined.

With the confluence of finance, technology and innovation, the possibilities are endless, but imagining millions of Indians into the formal financial system has now become much easier.

Effect of latest technological developments like block chain, automation, and analytics on the financial services sector.

Technology is transforming the workflow and processes in the financial services industry, as it continues to disrupt every other aspect of human life. Tasks once handled with paper money, bulky computers, and human interaction are now being completed entirely on digital interfaces. Given how pervasive financial services are across the globe, the disruption occurring throughout the financial services sector is massive. Almost every type of financial activity - from banking to payments to wealth management and more - is being re-imagined by the newly available technology. In this context, we explore the pervasive use of block chain, automation, data analytics and more.

Block Chain: The Reserve Bank of India has successfully tested blockchain technology for trade application. The Reserve Bank’s research arm has worked closely with the regulators, banks, financial institutions and clearing houses during the evaluation process. In the recent white paper by RBI, the central bank has concluded that blockchain is indeed a disruptive technology that can potentially revolutionise the financial industry.

Banks in India have begun using blockchain for transactions but it is still sporadic. ICICI Bank, YES Bank, Kotak Mahindra Bank, and Axis Bank have used it for vendor financing and international trade finance. The adoption of blockchain technology among stock exchanges and trade platforms is also increasing. The potential of blockchain technology to automate trade settlements and transactions can prove to be a huge cost saver for financial institutions.

Successful exploration of blockchain technology by the country’s central bank will also help the growing Indian Bitcoin community. In the recent days, the country has seen a dramatic increase in Bitcoin adoption and the government’s openness to the technology can translate to a lenient regulatory view towards the cryptocurrencies.

Data analytics: The strategic use of data and analytics has been one of the key innovations of new entrants to banking and insurance. Traditionally, bankers would look at credit scores and insurance providers would look at health or driving records. However, as our devices and social lives have become more entwined, innovators are mining the data across devices and social media to provide more customized services. For example, Start-ups like Money tap, iLoan, etc are gleaning the information from social networks etc to get a 3600 view of the credit worthiness of the customer. We must brace ourselves for the disruptive innovation that data analytics will is going to bring in the financial services.

Automation: Traditional jobs like passbook updating, cash deposit, verification of know-your-customer details, salary uploads are also going digital increasing job redundancies. The likes of Axis Bank, ICICI Bank and HDFC Bank are pushing the boundaries of technology by implementing robotics to centralise operations and for quicker turnarounds in things like loan processing and selling financial products to customers. This is reducing the need for a manual worker at the back end. Analytics and artificial intelligence are already being used by banks to do jobs once considered sacred, like underwriting loans. What this means is that human skills, which were considered imperative for basic banking not long ago, may not be required. India is experiencing what banks in advanced countries have been doing for the past many years.