Indian financial industry reforms require a revamp.

Nomination and Nominees

• Inconsistent rules governing nominees across BFSI verticals confuse ordinary savers and benefit those exploiting legal ambiguities.

• A harmonised nomination framework with clarity on nominee rights versus legal heir claims is overdue.

Underdeveloped Corporate Bond Market

• The corporate bond market remains shallow, illiquid, and opaque, affecting business viability.

• The Reserve Bank of India once mandated the National Stock Exchange (NSE) to develop a secondary bond market, but this was ignored.

• Equity trading offers more profit, especially through opaque algorithmic strategies.

• India’s bond market reform is tied to broader regulatory concerns, particularly around transparency in capital flows.

Retirement Planning

• The long-term needs of India’s young professionals, especially those in BFSI, remain unmet.

• Retirement planning in India is mostly routed through annuities, which are costly due to the intermediation margin taken by insurance companies.

• There is a simpler and cheaper alternative: long-dated zero-coupon government securities.

Shadow Banking

• Non-banking financial companies, margin lenders, repo traders, and brokers are offering bank-like services without full regulatory oversight.

• Retail investors are being financed by brokers who offer loans masked as margin funding, with effective interest rates often exceeding 20%.

• The European Union has passed legislation to gather comprehensive data on shadow banking activities.

• India needs a coherent, forward-looking strategy that harmonises rules across verticals, nurtures a deep bond market, innovates in retirement finance, and reins in shadow banking.