BofA-Merrill fears India reform delays

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India should not be complacent in its push for financial sector reforms in the wake of its successful handling of the global economic meltdown, a top Bank of America-Merrill Lynch executive said on Monday.

"One thing that does worry me is that the conservative nature of Indian regulation would make this longer than it would have otherwise done," said Kevan Watts, who heads the combined Indian operations of Bank of America and Merrill Lynch.

"The danger is India will rest on laurels of navigating the financial crisis well," he told the Reuters India Investment Summit in Mumbai.

The global financial meltdown has dampened Indian appetite for financial liberalisation, especially as limits on foreign banks and active regulation of the financial sector were seen as sheltering it from the worst of the downturn.

Watts, who has spent nearly three decades with Merrill Lynch and has been in India for about 18 months, said volatility in foreign capital flows into the domestic share market was worrying, but taxing them was not a solution.

He said India should instead encourage more domestic participation into its equity markets to counter the impact of foreign investment flows.