Even as the government's grand plan to transform Mumbai into an International Financial Centre (IFC) is moving at a snail's pace, Sir Evelyn de Rothschild—the legendary banker and chairman of the India-focused private investment corporation EL Rothschild Ltd—said the factor that can prevent this vision from becoming a reality would not be lack of finance, but the city's pathetic infrastructure.
In an exclusive interview with FE on the sidelines of IISS-Citi India Global Forum, Rothschild - who is from a banking dynasty which is over two-and-a-half century old with interests in several sectors in many countries—also noted that while American, Swiss and British banks have posted huge losses due to their sub prime exposure, Indian banks are on a "very stable footing" financially thanks to their conservative approach.
Though Hong Kong and Dubai have made rapid strides as an IFC, Rothschild - who as chairman and CEO of the international investment bank NM Rothschild and Sons Ltd for close to three decades during which he managed to increase the total assets of the business from £400m in 1976 to £4.6b in 2003 - said "I don't think India is late in trying to develop Mumbai as an IFC."
"We all have to be in Mumbai for financial reasons regarding investment and banking. But it is sad they (the authorities) have not done as much as they could have on improving the infrastructure," he said. Noting the improvements on the city's airport, Rothschild, however, said the authorities have to build flyovers and roads to improve traffic movement. "With the increase in traffic, they have to clear away a lot of the slum areas and improve the living quality and help the place to be a real IFC," he said.
Though the restrictive regulations in India have helped the country's banks to behave in a more balanced manner, he said "borrowing money and controlling investment is something that has to be educated for the people working in the business. Pointing to interesting times ahead for the banking sector, Rothschild said he expects public sector banks to become more realistic in their approach as the sector sees more mergers and acquisitions. While he was pleased with the growing presence of foreign banks in India, Rothschild stressed that the crucial issue is whether the government would "allow foreign banks to be more active or will they still control them."
Reiterating that infrastructure is a