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M. Somasekhar

HYDERABAD, May 17

WITH the Insurance Regulatory Development Authority (IRDA) shifting its operations to Hyderabad, development activity at the planned `Financial District' is gathering momentum.

In an area of just over 100 acres, close to the Hitech City, infrastructure to attract banking, insurance and all allied services such as audit, legal, processing has been proposed to be set up.

IRDA has already taken five acres of land and a MoU has been inked with the Andhra Pradesh Industrial Infrastructure Corporation (APIIC), a couple of months ago.

Simultaneously, an Institute for Insurance and Risk Management (IIRM), a joint venture between IRDA, the Andhra Pradesh Industrial Investment Corporation (APIIC) and a group of financial institutions has been signed.

These developments have given a fillip to the `Financial District', which initially did not get much response. An agreement has also been signed with the Malaysian Insurance Institute (MII), currently the largest such organisation in Asia for collaboration with IIRM, according to Mr S. Vijayaraghavan of the Sathguru Management Consultants (SMC). For setting up IIRM, an initial corpus of $ 5 million is to be created with funds from IRDA and other promoters, which could include insurance companies, he told Business Line.

SMC is one of the consultants working closely with APIIC and the State Government, the main promoters of the `Financial District', in conceptualising the facilities, Mr Vijayaraghavan said.

Elaborating on the kind of facilities to be developed at the `Financial District', Mr Vijayaraghavan said quality office space for employees and documents, technology needs, customer service needs and human resource development facilities would be the right mix.

As per the present suggestions, two-thirds of the available space is to be allocated to big players for customisation, based on their needs.

For example, financial sector bigwigs such as the State Bank of India or ICICI could be given land so that they can create suitable infrastructure facilities, he said.

Other major infrastructure space that has been proposed includes a couple of towers for housing common facilities, a golf course nearby and communications connectivity.

Nearly six-seven public sector banks have evinced keen interest in the ` Financial district', he said.

APIIC and the consultants have held a series of meetings with corporate banks, IT companies, infrastructure providers and other key players for the development of the project.

The big fallout of the initiative could be employment opportunities for the youth in the emerging insurance sector as well as the support areas such as call centres, legal, audit etc, he said.

The total business potential in the financial services sector is estimated to be of the order of $50 billion, but lack of infrastructure is proving to be a major drawback. The banking services business alone was estimated to be $30 billion and was growing at 20 per cent annually, he said.

Some of these personal banking services include front-end banking, which is becoming virtual with ATMs, credit cards etc.

The mutual fund sector, with over 35 players, again was a $10-billion market, while other allied services totalled another $10 billion, he said.

Mr Vijayaraghavan cited the example of Singapore, which has created infrastructure and successfully attracted foreign players in the insurance and banking sectors.

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