1. Government Role

1. Allow the financial sector intermediaries to function on commercial principles. Designate specialist institutions to perform the developmental role with systems for government support.

2. Bring down government ownership in banks, financial institutions and insurance companies. Make prudential norms stringent and supervision tight.

3. Allow mergers between players and exit of inefficient players.

4. Promote competition from private players in all areas including insurance.

1. Rapidly develop debt and equity markets.

2. Reduce pre-emption of provident and insurance funds by the Government and reform the institutional framework to enable these long-term funds to fund infrastructure projects.

3. Invest in infrastructure projects.

4. Mandate investments by PFs, Insurance companies in the equity markets.

5. Government to create significant profitable investment opportunities for the retail investor.

6. Have FIs manage equity portfolios on commercial principles.

7. Abolish BIFR.

8. Allow private money management funds.

9. Encourage private equity flow into the infrastructure sector by implementing tariff reforms and strengthening regulatory framework.

10. Increase the flow of funds in the financial system by unlocking of real assets.

11. Create a strong mutual fund industry for channelising retail savings.

4. Inefficiencies in the Financial System

1. Sell doubtful NPAs to an Asset Reconstruction Company (ARC).

2. Strengthen prudential norms for assets classification and tighten regulatory and disclosure requirements.

3. Increase capital adequacy norms and if need be have banks raise equity from the market.

4. Enhance powers of financial intermediaries with respect to asset recovery.

5. Introduce commercial principles for lending by financial sector intermediaries.

6. Strengthen legal system for recovery of dues from NPAs.

7. Improve lending environment.

8. Introduce training at the relevant levels.

9. Increase disclosure requirements of corporates and align Indian accounting standards with the international norms.

10. Regulate based on the activity being undertaken rather than the form of organisation.

B. CAPITAL MARKET

1. Debt Markets

1. Widen investor base through broadbanding of pension/provident fund and insurance industries.

2. Liberalise investment norms and encourage active management of contractual funds.

3. Initiate steps to retail GOI securities through primary dealers, NBFC and Bank networks.

4. Provide hedging opportunities to facilitate market making by primary dealers.

5. Facilitate introduction of interest rate swaps and bond futures.

6. Allow short selling/borrowing of securities.

7. Make repos applicable across wider range of securities.

8. Make the trading and settlement process efficient through the setting up of depository for fixed income securities.

9. Establish nationwide access to trading infrastructure at affordable costs.

10. Encourage Debt Securitisation.

11. Introduce tax incentives like indexation benefits on long term capital gains in fixed income securities (currently only available through income schemes of mutual funds).

12. Encourage Foreign Institutional Investors in debt market.

13. Rationalise tax and regulatory norms across players/instruments.

14. Mandate registration of all market intermediaries.

15. Mandate compliance with uniform valuation procedures by all players.

16. Introduce standard disclosure and reporting norms for all trades.

17. Make listing and credit rating of private placement compulsory as per public issuances and introduce guidelines for issue documentation, post-issue reporting and disclosure.

2. Equity Markets

1. Encourage book building (involves close dialogue with prospective institutional investors) and auctions (which can be done over computer systems to thousands of market participants) whereby the IPO does not come to the market with a stated offer price.

2. Give a strong thrust to the government divestment program.

3. Divest PSU stocks at marked down prices.

4. Improve disclosure norms.

5. Mandate market making.

6. Introduce rolling settlements and compulsory dematerialisation of securities.

7. Amend the SCRA to allow for derivatives trading.

8. Encourage individual investment accounts for high income/high net worth individuals/corporates.

9. Ease entry for FIIs / foreign venture capital funds.

10. Amend taxation norms on capital losses.

11. Remove restrictions on lending against shares by the banks.

12. Amend taxation norms on borrowings against shares.

13. Encourage retail investment in the markets through mutual funds.

3. Mutual Funds

1. Empower mutual funds that meet defined criteria to manage retirement funds in the economy.

2. Increase capital adequacy in proportion to the assets managed and reintroduce minimum corpus criteria for mutual fund entry.

3. Prescribe stringent norms for intermediaries.

4. Encourage development of fund supermarkets.

5. Prescribe regulations on investing in unlisted companies including intragroup companies.

6. Introduce " Fund of Funds " concept.

7. Mandate active investor education and stringent disclosure norms.

8. Make valuation norms uniform.

9. Strengthen the role of trustees.

10. Amend money market mutual fund regulations.

11. Impose strict penalties on sponsors not fulfilling their commitments.

12. Appoint Ombudsmen.

13. Strengthen Unit Trust of India.

1. Suggestions to vitalise the Real sector

1. Reduction in excise duty, growth in agricultural income through farm reforms and higher spending on infrastructure would generate demand for consumer goods.

2. Entry of organised sector in areas reserved for small scale units and investments in infrastructure would enable Indian industry to become export competitive.

3. Alignment of import tariffs to WTO committed levels, institutionalisation of effective anti-dumping investigation cells, encouragement of investments in infrastructure, contemporary technology and consolidation would enable Indian industry to become more competitive and meet threat from imports.

4. Mergers and acquisitions and policies which enable winding up of sick units would strengthen Indian industry.

5. Encouragement of creation and use of technology upgradation funds for different industries would improve the productivity and efficiency of local manufacturers.

6. Flexible labour policies can catalyse investment and lead to creation of millions of new jobs.
7. Liberalisation of the agricultural sector with respect to pricing of farm produce, product movements, imports and exports would energise growth and employment in the economy.