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Banking Crisis- India an Option for NRIS
Saturday, December 20, 2008

In the wake of the global financial crisis and other uncertainties, banks in developed markets across Europe and the US are making strong and definitive cuts throughout their organisations, including at the senior management levels. As a result, we are seeing a significant spike in the numbers of some of the top financial executives in the world looking to come to hubs across Asia (Hong Kong, Singapore), the Middle East (Dubai, Doha) and India (Mumbai, New Delhi). Is this a temporary reaction, or does it signal the potential for a further boost of Asia’s financial hubs? And what will the impact on India’s banking system be over the long term?

The roots of the current crisis stem largely from the ”irrational exuberance” of the financial services industry during the boom times which has impacted the real estate, investment banking and consumer banking sectors quite hard.  Fortunately, in India, the measures taken by regulators helped to protect the country from much of the negative impact, by preventing “risky” financial instruments such as collateralised debt obligations (CDOs), from being traded here. The effects of the current crisis seem to be more “perception driven” rather than based on real structural flaws in the financial system and therefore India is expected to bounce back more strongly during an economic turnaround. In the meantime, most projections including the latest data from the Government anticipate the country will maintain at least a seven percent GDP growth rate in this fiscal year.

The relative robustness of India’s banking system has given its banks the luxury of being able to be very selective when choosing talent, especially to fill the more niche roles or to support the rollout of exotic product lines. Both MNC and local banks are more than happy to selectively look at talent from Singapore, Hong Kong, London and New York who have experience in areas such as capital markets, credit structuring , etc., and thus understand the more complex and sophisticated products within financial services. In these specific scenarios , the current crisis presents a unique opportunity to find top quality talent with the “right skills” at a reasonable cost.  There is also a symbiosis between the demand and supply of expat talent in real estate , as shopping malls and other high-end development projects require people who can oversee them while ensuring the highest quality standards.

Similarly, the limited talent pool of actuarial and underwriting professionals in India opens doors for professionals from outside of India’s insurance space. Jobs that involve cultivating or expanding local relations, however, will still be reserved for indigenous talent, as will roles within various MNC banks that have been in India for a considerable period of time and therefore have a significant pipeline of talent that has been trained locally while also working at an international level.

For professionals coming from financial institutions that have been severely impacted by the “financial meltdown,” the potential “hirer” understands the value that these individuals bring to the table and are not adversely impacted by the possible stigma of coming from a failed organisation . This approach is helping Indian banks target the right set of otherwise displaced people from all around the globe.

There is a large Non-Resident Indian (NRI) population working in the financial sector abroad. This very well regarded and skilled talent pool has tremendous experience with blue-blooded investment banks and institutions across the globe who are now finding India to be a very attractive destination both from a professional and personal standpoint. Professionally, roles in India pose unique challenges because of the country’s aggressive growth rate. Additionally , compensation has scaled to new heights and India now offers NRIs cost of living packages that allow them to live comparable lifestyles to what they have enjoyed overseas. Personally, India offers NRIs the chance to be closer to their ageing parents and family. Those with children also see it as an opportunity to expose them to the Indian culture, “value systems” and understand their roots. From the banks’ perspective, NRIs are an attractive option because they are likely to remain in India for five to ten years versus foreign expats who are more likely to migrate back West once the situation stabilises in those markets.

With developed markets suffering from the hangover of the credit bubble’s burst, India , once looked down upon for its lack of sophistication in financial products, is now well-poised to cull the best expat talent for niche positions, as well as top NRIs looking to return. Most large Indian financial institutions stand to capitalise the most from the changing tides and to internationalise through either strategic hiring, expansion, or acquisitions. While the investment banking space as a whole is unlikely to go back to where it was at least in the “short term” with the right mix of “expat” and NRI talent, it is possible that India will be able to ride the turbulent waves of this crisis to become a truly regional or even global financial centre for the future.

 

 

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