Core elements of the global banking industry are moving to India

FINANCIAL CENTRES, like delicate plants, thrive in the right conditions. Those include a vibrant private sector, banks that direct capital based on the prospect for profit, analysts with direct access to companies and investors, openness to foreign people and institutions, and business-friendly, consistent laws. For good measure, throw in the cultural amenities that attract the sorts of employees who could choose to live anywhere.

India is not such a place. Its laws are many and perplexing; its domestic markets, inefficient and politicised. Though saving is unrewarding, capital is still costly for entrepreneurs. International firms are mostly limited to cross-border activities. It often scores badly on quality of life.

So it is hardly surprising that although tiny Hong Kong and Singapore are globally renowned centres of finance, Mumbai, India’s financial capital, features low on most rankings. But the country is nonetheless becoming an essential hub for international banks. India is often their second-largest place of employment after their home country, and becoming ever more important for their innovation efforts.

India has long received other countries’ outsourced jobs. Some of those are unsophisticated, such as answering phones or processing forms. Many, however, rely on Indian universities’ remarkable...



via The Economist: Finance and economics Business Feeds

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