India’s economic progress is not going down well with some disturbance-happy countries, especially China and Pakistan. However, some friendly countries of India are also sometimes found involved in this anti-India campaign. Overall, global market forces have become active today which are trying their best to influence India’s economic progress. Efforts are being made by these powers to disintegrate the social fabric of India as well as to attack the cultural unity of India, so that by creating a hole in the social harmony of India, India will be affected not only in the economic field but also politically. can also be destabilized.
Despite the above mentioned circumstances, some companies from countries like China and global market forces keep trying to influence the Indian banking system, insurance system and stock market. Recently, a Chinese company named Vivo has improperly transferred a huge amount of money from India to its head office in China. The said amount has been transferred through money laundering without paying tax on this huge amount. Its working system is described as follows.
Vivo, a Chinese company which manufactures smart phones, has illegally transferred 50 percent of its total turnover i.e. an amount of Rs 62,476 crore to its head office in China. This company has not paid tax on this amount while evading tax as per Indian rules. The Enforcement Directorate has started a detailed investigation into the embezzlement of this huge amount and has also arrested some key officials of this company. The Enforcement Directorate has blocked 119 accounts of the company, an amount of Rs 495 crore is deposited in these accounts. Vivo company has established 23 subsidiaries in India. Vivo Company is of the view that since some of its subsidiary companies were showing loss, tax has not been paid by adjusting the profit of Vivo Company against the loss shown by these companies. Whereas many types of irregularities have been found in the establishment of these subsidiary companies also. Foreign powers are thus hurting India’s economic interests by not paying tax as per the law of the country on profits earned while doing business in India.
Similarly, in the month of April 2023, the Enforcement Directorate had taken action to confiscate the amount of Rs 5,551 crore of another Chinese company named Xiaomi, because this company had not properly followed the rules related to foreign exchange. .
There are 45 foreign banks operating in India, while the number of government sector, private sector banks, payments banks and small finance banks is 137. But, foreign banks contribute only about 5 percent to the total deposits of all banks in India and only 3.8 percent to the total loans of all banks in India. Foreign banks are not able to compete with Indian public sector and private sector banks. Due to the vigilance of the Reserve Bank of India, foreign banks have to do their banking business following the strict rules applicable in India, which these banks may not like. As a result of this and failure to expand its business, Citibank was forced to sell its consumer banking business to Axis Bank of India in the year 2022-23. In the year 2021, South Africa’s Bank First Rand had closed its business in India and in the year 2016, Royal Bank of Scotland had also closed its business in India. In the year 2015-16, HSBC had closed many of its branches in India. In 2012, Barclays, a British bank, ended its retail business in India.
In fact, today India’s banking, insurance and stock market sectors have reached a very strong position. The biggest reason for this is that these three sectors are dominated by Indian banking institutions, Indian insurance institutions and Indian investors respectively. Even if foreign institutional investors withdraw foreign investments from the Indian stock market, the adverse impact on the Indian stock market appears to be almost negligible because Indian institutional investors and various Indian mutual funds compensate the amount withdrawn from the Indian stock market by foreign investors. They immediately increase their investment in the stock market. Otherwise, global market forces leave no stone unturned to influence the Indian stock market and bring it down.
Similarly, in the field of banking today, the share of India’s public sector and private sector banks is more than 95 percent and in the field of insurance, the share of India’s public sector and private sector insurance companies is about 90 percent. Secondly, India limits the stake of foreign companies in Indian banking companies to 24 percent, however, in Indian insurance companies, foreign companies can make foreign investment up to 74 percent. Thirdly, the Reserve Bank of India’s strict enforcement of corporate governance rules by various financial institutions also plays an effective role in controlling foreign banks and insurance companies.
Global market forces including countries like China continuously make efforts to destabilize India’s financial sector, but due to the alertness of the regulatory institutions of Indian banking, insurance and stock market, global market forces including foreign financial institutions are able to influence all these three sectors. I have failed.
Retired Deputy General Manager
state Bank of India