Moily calls financial crisis a 'Credit Tsunami'

New Delhi, May 21 (ANI): Calling a financial crisis a 'Credit Tsunami', Union Law Minister Veerappa Moily has emphasised the need for a comprehensive legal mechanism to avoid a repeat of global financial crisis.

Addressing the Round Table on "Legal security of business transactions, investments and financial instruments-New Challenges of the Global Crisis" in St. Petersburg, Moily said: " The question today is not about the global financial crisis, but is about making suitable enforcing legal mechanism at the domestic and at international level, and to institutionalize the same to avoid any further credit tsunami.'

He further said that India was on a trajectory of fast and inclusive growth, with a focus on quality.

"Since the global financial crisis disturbed the nations and turtled their financial position, the global financial crisis has become a credit tsunami," Moily said in reference to the global crisis that began with the US subprime crisis before spilling over into Euro zone, and then across the world.

He noted the collapse of Lehman Brothers in September 2008 and subsequent fall of Wall Street which led to volatile stock markets and currency fluctuations in many countries in Asia.

"Asian products and services are also global, and slow down in wealthy countries means increased chances of a slow down in Asia and the risk of job losses and associated problems such as social unrest," he said.

"Lack of transparency, uniform accounting standards, stringent securities protection law, legal provisions to control the real-estate transactions and proper collateral security system were the factors in global economic meltdown of 2008," he added.

"Fortunately, India is the least hit by recession as far as internal financial disturbances are concerned and probably most important reason for this is that India's 95 per cent of debt is financed internally," he said.

Because of global recession, Indian economy, which was projected, to grow at approximately nine per cent saw a little slow down. However, he said , now it has been projected to grow approximately at the rate of nine per cent by 2012.

Emphasising that India is the seventh largest and second most populous and fourth largest economy in the world, Moily said: ". A series of ambitious economic reforms aimed at deregulating the economy and stimulating foreign investment has moved India firmly in to the front runners of the rapidly growing Asia Pacific Region and unleashed the latent strength of a complex and rapidly changing nation."

"India's time tested institutions offer foreign investors a transparent environment that guarantees the security of their long term investment. These include a free and vibrant press, an independent judiciary, a sophisticated state of art legal and accounting system and a user friendly intellectual infrastructure," he added.

He expressed the hope that the Regional Conference would stimulate innovative ideas to boost cross border trade, which would enable India to emerge as a preferred destination for international investments," he added. (ANI)