Prof.
J.D. Agarwal, Chairman & Director, Indian Institute
of Finance, Delhi while delivering Professor K.S. Mathur Memorial
Lecture on Financial Developments in the World Economy at
University of Rajasthan, Jaipur said that the present complacency
which exists in the capital markets needs to be handled carefully.
India
is fortunate to have buoyancy in the stock markets recently
when its sensex has touched 6000 points yesterday. However,
in India the Capital market is yet to recover feels said Prof.
Agarwal.
Prof.
Agarwal advocated the need to improve the institutional framework
in which financial markets operate i.e. improving supervision
and accounting practices of financial systems world wide,
adoption of codes of conduct of fiscal, monetary and financial
policies, introducing transparency, introducing sound principles
of corporate governance as well as governance, improving information
related to financial markets, strengthening prudential regulation
and adopting minimum international standards in these areas.
According
to him, self regulation and respect of law (domestic and international)
should be the key factor. The standards adopted in the industrialized
countries and developing countries may vary according to the
conditions prevailing in those countries. He also stressed
that there should be adequate representation of developing
countries in evolving the international standards and codes
of conduct.
However,
he strongly feels that special focus needs to be given to
risk management, intended non-performing assets of banks,
and capital adequacy issues of banks and financial institutions.
Excessive portfolio investment of banks either in foreign
exchange or in stock markets needs to be viewed seriously
to avoid serious nature of scams which shake the investor’s
confidence cautions Dr. Agarwal.
