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Government for the Future
Type: Book
ISBN: 978-1-84950-852-0

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Article
Publication date: 1 January 2001

Mukul G. Asher

The main retirement benefit scheme for private sector employees in Malaysia is a 50‐year‐old mandatory savings scheme administered by the Employees Provident Fund (EPF). It had…

974

Abstract

The main retirement benefit scheme for private sector employees in Malaysia is a 50‐year‐old mandatory savings scheme administered by the Employees Provident Fund (EPF). It had accumulated assets equal to 55 per cent of GDP in 1999; making it one of the largest such schemes in the world. Over the past 40 years, it has earned a real rate of return of 3.37 per cent per annum on its portfolio. The key question is whether the EPF can sustain even this moderate rate of return in the aftermath of the 1997 economic crisis and in the era of globalisation. The paper argues that this will require reforms in financial and capital markets, better corporate governance and modest international diversification of the EPF's portfolio. Development of appropriate annuity products will also be required to protect members against the longevity risk.

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Journal of Financial Regulation and Compliance, vol. 9 no. 1
Type: Research Article
ISSN: 1358-1988

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Article
Publication date: 1 July 2006

Mukul G. Asher and Amarendu Nandy

To examine the case for reforming India's current provident and pension fund governance and regulatory structures.

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Purpose

To examine the case for reforming India's current provident and pension fund governance and regulatory structures.

Design/methodology/approach

The paper reviews various components of India's social security system with a view to identifying reform needs in their governance and regulatory structures. It then assesses the new pension system to be supervised and regulated by the proposed Pension Fund Regulatory and Development Authority (PFRDA).

Findings

The paper finds that the current arrangements do not provide sufficient incentives for professionalism and system‐wide perspective essential to meet India's social security challenges. Urgently operationalizing the PFRDA, and modernizing the relevant laws and regulations could greatly assist in meeting India's social security challenges. Modernization of Employees Provident Fund Organization is also essential.

Research limitations/implications

The analysis suggests that the need for greater professionalism and system‐wide perspective should be accorded high priority by India's provident and pension fund organizations. The analysis in the paper is quite aggregative and qualitative. This underscores the need for more robust database and greater focus on empirical evidence‐based policies in this area.

Originality/value

The paper will provide a better appreciation of the governance and regulatory issues involved in reforming India's provident and pension funds. It will also provide a base for other researchers to identify and undertake more detailed analysis of specific aspects such as ways to internationally benchmark administration and compliance costs of provident and pension fund organizations; achieving coordination among PFRDA, banking, insurance, and capital market regulators.

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Journal of Financial Regulation and Compliance, vol. 14 no. 3
Type: Research Article
ISSN: 1358-1988

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Article
Publication date: 27 February 2007

Mukul G. Asher

To argue a case for a paradigm shift in the way urban cooperative banks (UCBs) are managed, governed, and regulated in India to enable them to enhance their contributions to…

1533

Abstract

Purpose

To argue a case for a paradigm shift in the way urban cooperative banks (UCBs) are managed, governed, and regulated in India to enable them to enhance their contributions to achieving greater degree of financial inclusion, and more broad‐based growth.

Design/methodology/approach

The paper first surveys the quantitative importance of the UCBs in India, and their key performance indicators. Various official reports by the country's Central Bank, the Reserve Bank of India (RBI), and other relevant organizations are used extensively. The paper then identifies key areas of reforms, centering primarily on the current business model, governance and regulation practices, and capital adequacy. It then argues for a change in a paradigm shift by the UCBs, and how better governance and regulatory structure can assist this shift.

Findings

The paper finds that if the UCBs are to remain relevant and play a significant developmental role in India, they will require same quality of governance and regulation as well as professionalism and modernization as the mainstream commercial banks. The governance and regulatory structures need to be brought in conformity with India's current and prospective economic structure; and relevant laws modernized. This requires a paradigm shift in the role of UCBs.

Research limitations/implications

The research has been based primarily on secondary sources, particularly various reports by the RBI, the country's Central Bank. Better understanding of the reasons for differences between well‐governed and financially sound UCBs on one hand, and those that are not, requires focused interviews and more searching examination of the operating environment and financial statements of a sample of the UCBs. This could be the next stage of research.

Originality/value

This paper represents a part of public debate on ways of integrating the UCBs into the mainstream banking sector. This is an important public policy issue as even though the UCBs represent relatively small proportion of the total banking assets, they still represent a systemic risk to India's financial system, and without reforming them, broad‐based economic growth would be difficult to achieve.

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Journal of Financial Regulation and Compliance, vol. 15 no. 1
Type: Research Article
ISSN: 1358-1988

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