mARCH 2012 www.lawyer-monthly.com Legal Focus

intervention. An indication of the growing importance of CDR’s may be gauged from the fact that there was nearly 60% rise in the number of cases referred to the CDR cell in the first half of FY 2011-12 as compared to the previous year.

Q

The banking industry has come under renewed stress over recent months, mostly due to the exposure to sovereign debt of several European countries and increasing

regulatory

pressures. Global financial markets have partly recovered from their downfall, with monetary policy in major economies seeing

significant

developments as governments attempt to stabilise their economic outlook. what do you think the future holds for the banking industry?

The present climate of heightened global uncertainty is a result of an aftershock of the great meltdown of 2008. India’s banking sector continues to remain robust and although the ongoing crisis in Europe has adversely affected capital inflows and demand for Indian exports, it is expected that Indian banks will not be materially affected, as they do not have any significant presence in the affected European countries. Although they do have a limited presence in Belgium, France and Germany, Indian banks have virtually no bond exposure to these countries. The RBI releases a half-yearly financial stability report; and the highlights at the end of 2011 were that our financial system remains sound and our bank’s capital adequacy remains above requirements even under severe stress tests. However, the global slowdown and lack of demand has not been unmarked.

The poorer global growth prospects and sovereign debt crisis in Europe have heightened external sector vulnerability. At the same time, domestic growth has weakened, while inflation has remained high.

We have already seen that the RBI’s

overall policy has been one of optimism and liberalisation to prepare the market for better times ahead. The RBI is currently exploring avenues of further liberalisation through fresh issuance of licences, increasing the presence of both domestic and foreign banks in the private sector. The RBI has also introduced new risk assessment tools for systemic risks and systemic liquidity indications, together with the proposed implementation of regulatory standards in excess of the global benchmark of BASEL III. Once the proposed regulations are implemented, the Indian banking sector should be further equipped to withstand a volatile global market.

Q

Please give me an overview of yourself, your firm and your involvement in the Banking industry.

Founded in 1911, Khaitan & Co (“the Firm”) is one of India’s oldest and most recognized full service law firms with over 300 fee earners. The Firm combines a rich heritage of hundred years with modern cutting-edge legal practices and offers full-service legal solutions under one roof to its clients in India and overseas with practice areas ranging from Banking and Finance, Litigation, Corporate/M&A, Tax (both direct and indirect taxes), Infrastructure and Project Finance, Competition Law & Policy, Private Equity Investments, Capital Markets, Intellectual Property, Employment & Labour Laws, Technology, Media & Telecom and Employment Laws, Environment Laws

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and Insurance Laws. The Firm’s clients include business and financial enterprises, large business houses, banks, financial institutions, government bodies, educational and charitable trusts, cultural institutions, individuals, estates and trusts.

The Banking and Finance group at the

Firm is particularly strong with a team comprising of partners who have significant international and domestic experience and has been involved in some of the leading financing transactions in India in the recent past. The Firm represents a range of domestic and international banks, business houses and private equity funds in financing transactions, including structured lending, domestic syndicated financings, external commercial borrowings, corporate debt restructurings, project financing, acquisition financing and derivatives. LM

Contact:

Shishir Mehta Khaitan & Co One Indiabulls Centre 13th Floor, Tower 1 841 Senapati Bapat Marg Mumbai, India

Tel:+91 22 6636 5000 Email: mumbai@khaitanco.com

Bangalore | Kolkata| Mumbai | New Delhi