CIA 1 Comparison of Indian financial system with Russia

Name: Manas Shah

Class: 2BBA B
Roll No: 2321228
Subject: Financial Institutions Market and Services

Submitted to: Dr. Roopa MB

Nationalization of Banks
India
1. Financial Inclusion: One of the primary goals of nationalizing banks in India in 1969
was to promote financial inclusion. The government aimed to ensure that banking
services reached rural and underserved areas, fostering economic development.
2. Control of Credit Flow: Nationalization allowed the government to have a more direct
role in controlling credit flow to key sectors of the economy, such as agriculture, small
and medium enterprises (SMEs), and priority sectors, aligning with the national
development agenda.
3. Stability and Confidence: The move was intended to instill confidence among
depositors and prevent bank failures. By having government backing, depositors were
more likely to trust the banking system, contributing to financial stability.

Russia

1. Post-Soviet Transition: In the case of Russia, the nationalization of banks has been
closely linked to the broader economic transition after the dissolution of the Soviet
Union. The government took control of many assets, including banks, as part of the
transition to a market-oriented economy.

2. Stabilization of Financial System: Nationalization was often used as a tool to stabilize the
financial system during times of economic crisis. The government intervention aimed to prevent
the collapse of key financial institutions and maintain overall economic stability.

3. State Control in Strategic Sectors: In some cases, nationalization in Russia has been driven
by the desire to maintain state control in strategic sectors, including banking. This control is
often seen as a way to safeguard national interests and prevent undue influence from external
entities.

Central Banks

India

1. Monetary Policy: The Reserve Bank of India (RBI) is India's central bank, responsible
for formulating and implementing monetary policy. By controlling key interest rates and
 managing money supply, the RBI aims to achieve price stability, promote economic
growth, and ensure the availability of credit.
2. Currency Issuance: The RBI has the sole authority to issue and manage the Indian
Rupee. It plays a crucial role in maintaining the integrity and stability of the currency.

Russia

1. Monetary Policy: The Central Bank of Russia (CBR) is responsible for formulating and
implementing monetary policy in the country. Similar to the RBI, the CBR aims to
maintain price stability and support economic growth through effective monetary policy
tools.
2. Financial Stability: The CBR plays a crucial role in ensuring the stability of the Russian
financial system. It supervises and regulates banks, monitors financial markets, and takes
measures to prevent systemic risks.

Monetary Policy

India

1. Inflation Targeting: Both the RBI and the CBR follow inflation targeting as a key
objective of their monetary policies. They aim to maintain price stability by keeping
inflation within a target range.
2. Policy Interest Rates: Both central banks use policy interest rates as a primary tool to
influence monetary conditions. The RBI uses the repo rate, and the CBR uses the key
rate.

Russia

1. Inflation target : Russia's inflation target is set by the CBR, and it also primarily focuses on
consumer inflation.

2. Policy Interest Rates: The RBI sets the repo rate, which is the rate at which it lends to
commercial banks. Changes in the repo rate influence borrowing costs and, subsequently,
economic activity.
The CBR sets the key rate, which serves a similar purpose to the repo rate in influencing
borrowing costs and overall economic conditions.
Fintech

India

1. Regulatory Authorities:
Reserve Bank of India (RBI): The RBI plays a central role in regulating and overseeing the
fintech sector in India. It issues guidelines and frameworks to ensure the safety and security of
digital financial services.

2. Payment and Settlement systems : The RBI has introduced various policies to regulate
digital payment systems, including guidelines for mobile wallets, Unified Payments
Interface (UPI), and other electronic payment methods.

Russia

1. Regulatory Authorities:
 Bank of Russia: The Bank of Russia is the primary regulatory authority overseeing the
financial sector, including fintech. It issues regulations and guidelines to ensure the
stability and security of financial services.
2.Digital Financial Assets: Russia has introduced a legal framework for digital financial assets,
including cryptocurrencies. The law provides a regulatory basis for the issuance and circulation
of digital assets.

2. Exim Policy

India

1. Foreign Trade Policy (FTP):

India's Exim policy is primarily governed by the Foreign Trade Policy, which outlines the
objectives, strategies, and measures for promoting trade.

2. Export Promotion Schemes: India has various export promotion schemes and
incentives, such as the Merchandise Exports from India Scheme (MEIS) and the Export
Promotion Capital Goods (EPCG) Scheme, to boost exports.

Russia

1. Customs Code of the Customs Union:

Russia, being a member of the Eurasian Economic Union (EAEU), follows the Customs Code of
the Customs Union, which outlines trade regulations within the EAEU member countries.
 2. Export Support Measures:
Russia implements export support measures, including financial support, insurance, and
guarantees, to promote and facilitate exports.

Five IFS with two global policies

1.If India implements Stringent Cybersecurity standards

1. India could adopt stringent cybersecurity standards to safeguard its digital infrastructure
and sensitive information.
2. In response, Russia might collaborate with India to establish joint cybersecurity
initiatives, promoting global norms for cyber defense and fostering international
cooperation against cyber threats.
2. If Russia Advocates for Global Nuclear Disarmament:

1.
Russia could actively advocate for global nuclear disarmament, emphasizing arms control
agreements and reduction of nuclear arsenals.

2. In support, India might engage in diplomatic efforts to endorse and contribute to

international initiatives focused on nuclear disarmament and non-proliferation.

3. If India Promotes Sustainable Agriculture Practices:

1.
India could promote sustainable agriculture practices, emphasizing organic farming, water
conservation, and environmentally friendly agricultural policies.

2.
In response, Russia might collaborate with India to advocate for global policies that address food
security through sustainable agricultural practices and resource-efficient farming.

4. If Russia Champions Space Exploration Collaboration:

1. Russia could champion collaborative efforts in space exploration, encouraging

international partnerships for scientific research and space missions.
2.
In tandem, India might actively participate in global space exploration initiatives, contributing
technological expertise and promoting peaceful and inclusive use of outer space.

5. If India and Russia Jointly Address Climate Change Adaption:

 1. India and Russia could jointly develop policies for climate change adaptation, focusing
on resilience-building, sustainable development, and international cooperation.
2. In alignment, Russia might work with India to advocate for global policies addressing
climate change impacts, emphasizing adaptation strategies and supporting vulnerable
regions.

Policy Framework:

India

India's policy framework encompasses a range of strategies across economic, foreign, and social
domains. On the economic front, India has embraced liberalization policies since the early 1990s,
focusing on market-oriented reforms, reduction of trade barriers, and increased foreign direct
investment (FDI). Initiatives like "Make in India" have been introduced to promote
manufacturing and bolster the industrial sector, while the implementation of the Goods and
Services Tax (GST) aims to create a unified tax structure throughout the country. In the realm of
foreign policy, India has historically followed a non-aligned stance, though recent years have
seen increased engagement with various geopolitical alliances. The "Act East" policy emphasizes
strengthening ties with East Asian nations, and the "Neighborhood First" policy concentrates on
building strong diplomatic and economic relations with neighboring countries. Social policies in
India include extensive welfare programs like MGNREGA, Ayushman Bharat, and Swachh
Bharat Mission, alongside educational initiatives and programs promoting women's
empowerment.

Russia

In Russia, the policy framework is characterized by a focus on economic diversification and

national projects addressing key socio-economic challenges. Economic policies include import
substitution strategies to reduce dependence on foreign goods and stimulate domestic industries.
The country actively participates in regional economic integration within the Eurasian Economic
Union (EAEU). In foreign policy, Russia prioritizes strategic partnerships with countries like
China and India, emphasizing a multi-polar world order. Security and defense cooperation,
particularly within the Collective Security Treaty Organization (CSTO), is a key aspect of
Russia's global engagement. Social policies in Russia involve national projects targeting
healthcare improvements, educational investments, and family support programs. The country
places emphasis on innovation and technological advancements, investing in research and
development to foster economic growth.
 Suggestions for Economic Growth

India

For India, fostering economic growth requires a multi-faceted approach. Firstly, substantial
investment in critical infrastructure projects, spanning transportation, energy, and digital
connectivity, will enhance productivity and facilitate economic activities. Efforts to improve the
ease of doing business by simplifying regulatory procedures and reducing bureaucratic hurdles
should be continued. Furthermore, emphasis on skill development and education is vital to create
a workforce aligned with emerging industries. Promoting financial inclusion through expanded
banking services and digital financial solutions ensures broader access to capital. Diversifying
exports by supporting sectors with high growth potential and actively participating in
international trade agreements will contribute to economic resilience. Accelerating the adoption
of digital technologies across sectors will drive efficiency, innovation, and competitiveness.
Lastly, integrating sustainable development practices into economic policies will ensure long-
term viability by addressing environmental challenges.

Russia
In the case of Russia, economic growth hinges on diversifying the economy beyond reliance on
oil and gas. Measures to improve the investment climate, including increased transparency and
legal predictability, are crucial for attracting both domestic and foreign investment. Support for
small and medium-sized enterprises (SMEs) through access to finance and regulatory
simplification will foster entrepreneurship and innovation. Investment in research and
development is paramount to stimulate technological innovation and propel high-tech industries
forward. Strengthening education and skills development programs is necessary to equip the
workforce for emerging technologies. Integration with global markets through active
participation in international trade agreements will enhance competitiveness. Continued
investment in infrastructure projects, particularly in connectivity and logistics, will improve
overall economic efficiency. Financial sector reforms should be prioritized to enhance the
efficiency and resilience of the financial system.

In both countries, a holistic and adaptive approach that addresses structural challenges,
encourages innovation, and creates a conducive environment for investment is essential.
Collaboration between the public and private sectors, alongside stakeholder engagement, will be
critical for successful implementation of these policies.
Thank you