Is Mumbai ready to be a global financial hub or not? This question will be answered by the Union Cabinet shortly.

There are a number of recommendations to enable Mumbai join the league of London, New York and Singapore as one of the premier IFCs of the world, from the high-powered expert committee (HPEC) on making Mumbai an international financial centre (IFC). The report submitted to the FM (finance minister) on Tuesday will be out before the Cabinet shortly.

According to HPEC, the Indian purchases of international financial services (IFS) touched $13 billion in 2005 and are expected to be in the range of $50-70 billion by 2015. Therefore, it has been stated that “if the country does not proceed on establishment of an IFC, the revenues will go to other IFCs”.

In its blueprint for the development of Mumbai into an IFC, the committee has recommended key changes in financial sector governance and public debt management.

The keys for the establishment of the IFC include – moving towards full capital account convertibility within 18-24 months, preparing an exit strategy by the government for withdrawal from ownership of financial firms, gradually reducing equity stake in public sector banks and establishing of a robust derivatives market along with a currency spot market.

Additionally, the opening up of the capital markets to hedge funds and alternative investment vehicles while removing impediments to outsourcing of asset management by banks, insurance companies, mutual funds, pension funds and FIIs are other key recommendations.

According to the panel, six advantages the country has for establishing an IFC such as hinterland advantage, human capital, location, democracy and rule of law, mindshare and strong securities market the give Indiaa superior starting point on the movement towards export of financial services.

The strategy proposed comprises 10 elements including reducing debt-to-GDP ratio and reforming monetary policy, new approaches to public debt financing, a shift from over prescriptive rules-based regulation to principles-based regulation, reforms to taxation of IFS and financial transactions, inducing greater competition and innovation and opening up to IFS support services infrastructure and further liberalization of financial services.

Additionally, the panel has identified development of urban infrastructure in Mumbai as the task where greater emphasis is called for.