Finly August 2018 by FINLY

FINLY| AUGUST 2018 | Finstreet | SIMSR

From the Editor’s Desk

Dear Readers, We at Finstreet are proud to introduce the August edition of our monthly magazine, Finly, for the academic year 2018-19. Our cover story inspects the 1 year of the Goods and Services Tax and its future outlook. Next in line, is the Eco Section, which covers in detail about what emerging markets are and have taken classic cases to explain the depth of such markets. In the sector analysis, the authors inspect the NBFC industry, with in-depth analysis of how it fares vis-à-vis a traditional bank. This month's Fintech Funda is about the story behind UPI and its surge lately. We are fortunate to have Dhaval Patel, the outgoing student of PG-Operations to pen down his journey of MBA in the Alumni Section. Pranav Mathur, Aarohi Biyani and Shravani Mohile have penned their experiences of their summer internship at ARCESIUM, which I am sure will definitely be useful for juniors for getting a feel of the type of companies that come to campus and the stay of their internship at any company in the future. In the end, we have introduced a new section called “Know Your Finance”, which contains information, breaking down some useful concepts in Finance, which would help any aspiring finance student to take baby steps in building the concepts as well as confidence in the subject. I am thankful to Prof. (Dr.) Pankaj Trivedi (Course Coordinator, PGDM Core and Faculty Coordinator, Finstreet) for providing the much required mentoring, support and backing to the Finly team. I would also like to thank our new sponsors, White Knight Ventures, for an enriching collaboration. We hope to continue the partnership for a very long time. We have received an overwhelming response for this month's Call for Articles competition, with a total of 41 entries and I thank each and every participant for their sincere efforts and participation. This month's winner's and runner-up articles are a recommended read. I thank all our readers and faculty members for their constant love and support. Your reviews and feedbacks are much appreciated. Team Finly has always been a strong set of focused individuals who put in a lot of efforts and dedication to stitch together this magazine and I can't thank enough for their constant support and initiative. HAPPY READING!!! R Prasanth, PGDM – FINANCE, 2017-2019, K.J. SIMSR

Team FINLY

FINLY| AUGUST 2018 | Finstreet | SIMSR

Table of Contents

Cover Story

2 Years

“GST is not only the victory of integrity but it is also a celebration of honesty. Earlier, in the case of taxation and allied affairs in the country, there were rampant complaints of Inspector Raj. In the GST scheme, information technology has replaced the inspector.” said, Prime Minister Narendra Modi, in his show “Mann ki Baat” on GST completing 1 year. In this cover story, we would be making an effort to summarize the journey of GST throughout the year, which includes the positives, the negatives & discrepancies and the future road ahead for GST. These 3 topics would be covered from the viewpoint of economy, states, corporates and the consumers.

Before we move ahead with the aforementioned points, let us revisit the important objectives as to why GST was introduced in the first place. One of the most significant reforms in the field of indirect taxes in India, the landmark GST was introduced on the 1st of July 2017. Its objective was to harmonize the tax system of the country through the integration of most of the central and state indirect taxes and to eliminate the cascading effects of taxation. The other objectives included ensuring the availability of input tax credit across the value chain, making a unified law involving all the tax bases, laws and administration procedures across the country, decreasing the unhealthy competition among the states due to unequal taxes and revenues, subsume

Cover Story

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indirect taxes at Centre and State Level under a single tax. Positive Impact of GST The fundamental prerequisite for the implementation of GST was that the states and the centre had to pool in their constitutional powers of tax and share the responsibility to oversee and govern implementation of GST in India. This called for a constitutional amendment and one of the most important outcomes of this was the creation of the G ST C o u n c i l , w h i c h i s a n a p t d e m o n st rat i o n o f co - o p e rat i ve federalism. The Economic Survey 2017-18 reports, released in January 2018 reveals some findings for the Indian Economy postGST implementation. It reports there has been a 50% increase in the number of indirect taxpayers, a total of 1 Crore taxpayers had been registered under revenue collections till 24th January 2018. The distribution of GST among states is closely linked to the size of the economies. Some of the major decisions taken by the GST Council can be summarized as â&#x20AC;&#x201C; decrease in the tax rates, extension of due dates in filing returns, postponement of reverse charge applicable on procurements from persons unregistered in the GST domain, quarterly return filing for small taxpayers, restoration of export incentives, relaxation in respect of compliances relating to refunds, etc. The Government and tax department

conducted several workshops and issued GST related FAQs, handbooks, advisories and updates to reduce the information gap. For the first time, tax administration used social media sites to clarify issues for the taxpayers. Streamlining the process of starting new businesses resulted in a jump in India's ranking by thirty places to break into the top 100 in the WorldBank's Ease of Doing Business Report 2018, which reflects reform measures on a wide range of indicators such as tax and insolvency reforms. GST lead to a gradual shift of businesses from unorganized to unorganized sector. Many of the firms operating in the unorganized part of the economy make profits largely due to tax evasion and noncompliance with regulatory norms, which allows them to offer products at comparatively lower prices. However, in the GST-era, it will be a struggle for survival for such firms because they will be faced with taxes, lower margins and a sharp spike in the cost of compliance. Some firms in the unorganized sector may find their profits curtailed. GST revenue of all states combined will grow at a Compound Annual Growth rate (CAGR) of 16.6% in Fiscal Year 2018 over the Fiscal year 2016, according to India Ratings. It may result in the prosperous or increased revenue for the states in the near future. The Goods and Services Tax (GST) Council in its 24th meeting decided to implement a nationwide e-Way Bill system for interstate movement of goods.

Cover Story

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The logistics industry is looking at a substantial reduction in documentation w h i l e t ra n s i t i n g . I n t h e p a st , transporters had to prepare documents for each state they passed through while delivering goods. Under GST, however, one e-way bill is sufficient for a single consignment passing across several states. For example, to move goods from Kerala to Gujarat, taxpayers only need to generate one e-way bill, even though the goods must pass through several states before reaching their destination. E-way implementation over the years should result in a decline in transit time due to the elimination of multiple checkpoints and consolidation of warehouses. This will aid large companies that operate across India and offset some of the cost advantages that regional and small firms, usually those in the unorganized sector, enjoy. Most of the essential goods such as

unprocessed cereals (rice, wheat etc.), milk, fresh vegetables, fish, meat, atta, besan, maida, vegetable oil, fresh fruits, contraceptives, eggs, natural honey, bread, bindi, stamp, judicial documents, printed books, bangles, and handloom products are exempt from GST. Food Items: Most food items have been conscientiously kept under 0% to 5% tax bracket to keep the inflation in check. For apparels the tax rates have cut down to 12% from the existing 18% while as for footwear the tax slab has become 18% for footwear above Rs. 500 and 5% for footwear below Rs. 500 Cab Fare: Taxi rides have become fractionally cheaper, as the tax rate has come down to 5% from 6% for cab bookings made online. Train/Airline Fare: Train fare remains largely unaffected as the tax has increased from 4.5% to a marginal increment of 5%. In the case of airlines, the economy class has a 5% tax, whereas business class has

The chart above shows the GST Revenue earned by the Government. The average revenue has been roughly around Rs.90, 000Cr. with signs showing an increase in revenue in the recent months.

Cover Story

seen a hike to 12%. DTH/Entertainment Services: A unified tax of 18% will now be maintained on DTH services. For other entertainment avenues like Movie Tickets, tickets under Rs. 100 will see a tax of 18%, while tickets Rs.100 will see 28% tax levied. Miscellaneous Goods in the 28% Tax Slab: Luxury Goods, White Goods (Airconditioners, dishwashers etc.), Tobacco and aerated drinks etc. fall in the 28% slab. Though there were earlier 178 items in this bracket, with the new revisions per the 23rd GST Council meeting, there now remain only 50 items in this bracket. Challenges Faced Industry faced various challenges due to GST which includes · New and unique concepts of complex documentation · High tax rates for certain goods and

FINLY| August 2016 | Finstreet | SIMSR

services ·C omplex treatment of common transactions. We will go through the negative impacts based on the nation's economy followed by particular industries and then the consumers. The provisions are an attempt to regulate prices, a practice that has no place in a free economy. Market forces will ensure that prices remain competitive. The industry believes that while the Government's intention cannot be questioned, it is difficult for businesses to implement complex pricing decisions immediately after there is a change in tax rates. Moreover, lack of clear instructions on the manner in which reduced prices are to be set is causing doubt and apprehension in industry. While the Government has in principle been encouraging a trust-based approach in implementing most tax and regulatory procedures, an overarching anti-

Cover Story

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profiteering provision under GST law without the clear notification on explicit rules for its implementation could lead to l a c k o f t r u st b e t we e n t h e Government and businesses at this point. The situation is likely to worsen with the recent issuance in Real Estate and FMCG firms. Most countries levy the GST at a single rate whereas, in India, The government has made it complex by adding layers of classification as described in the below table. Also, a distinction has been made on the basis of the mode of supply of products; like e-commerce transactions having a separate set of compliance, which is unheard of around the world. The Government proposes to levy the GST on advances received for supply of goods along similar lines as applicable for services under the erstwhile regime. Large business firms are reluctant to make purchases from small unregistered vendors on account of additional compliance-related requirements. While measures have been taken to help taxpayers deal with return filing, there is still no clarity on compliance-related requirements in the long run. Holistically, for the service sector, implementation of GST-related compliance requirements have been onerous. Telecom, banking, and insurance sector are now required to seek registration in every state where

they have a presence. Furthermore, the industry is facing practical issues with provisions in this regard, e.g., regarding the validity period and generation of eWay bills in 'bill-to' and 'ship-to' cases. It has now been announced that the e-Way Bill for interstate transactions will be implemented from 1 April 2018 and for intra-state transactions thereafter. This will give industry sufficient time to prepare for the transition. Another issue is an outcome of the GST is the need for industry players to conduct internal re-alignment in order to achieve tax efficacy. Road Ahead After looking at positives and negatives now we should plan further on GST for the upcoming year. The major concentration of Government should be 路Simplification 路Easy of Process 路Fair Traceability 路Efficient IT infrastructure Global Aspects Pruning of Tax Rates: Government should reduce the number of the slab and can have an intermediate between 12% and 18% and reduce the 28% to 22% around. Hence simplifying the categorization of the goods and services and improving the process. This will further increase the ease

Process Improvement:

The improved process can be with realtime uploading of the documents and hence saving the hours and linking the credit to invoice and reduce reconciliation work. The entire process is online, hence, it becomes necessary for the government to have a strong digital backbone and work with IT houses to develop better IT strategy. Expanding the Tax Base: The main idea behind GST was to have a single tax on all goods and services, but, certain products like petroleum products, alcohol, and immovable property are outside the GST net. With the inputs of these goods and sectors being subjected to GST and output being tax leveraged, the tax structure appears to be inefficient and complicated, hence we can expect the government to take steps for these left out products from GST.

·1 % GST rate for manufacturers & traders ·Composition tax of 1% on turnover of taxable goods (turnover of exempted goods to be excluded)

·Those supplying goods and services (services not exceeding Rs 5 lakhs in total) eligible for compositions scheme.

·Composition Returns, GSTR-4 due date for the period July to September extended to 24th December 2017

·Composition dealers cannot make interstate sales. Input tax benefit not allowed

·GST Rate for manufacturers and traders under composition scheme is 1 % *.

·Reduced from 28% to 18% W.e.f. 15th Nov 2017 – Shampoo, Perfume, tiles, watches

·Reduced from 28% to 12% – Wet GST Council Updates: Changes in Composition Scheme · Composition scheme limit to be increased to Rs 1.5 crore (can be extended to Rs 2 crore later)

grinders, tanks

·Reduced from 18% to 12% – Condensed milk, refined sugar, diabetic food

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·Reduced from 12% to 5% – Desiccated coconut, idli dosa batter, coir products

·Reduced from 5% to Nil – Duar meal, khandsari sugar, dried vegetables

·For Restaurants within hotels, and room tariff less than Rs. 7,500 the GST rate is 5%. Also, the credit of ITC paid on inward supplies cannot be taken

·For Restaurants within hotels, and room tariff greater than Rs. 7,500 the GST rate is 18% and credit of ITC paid on inward supplies can be availed

and Service Tax regime in order to benefit both governments as well as the consumer. In reality, that extra revenue is the government is going to generate will not come from the consumers' pocket but from the elimination of the cascading effects of taxation and the reduction in the tax slabs. With a lot of scope for improvement in the entire scheme of things, and with the election year on-going, it would be a big challenge for the government to realize the dream of “one-nation, one-tax”.

·Outdoor catering continues to be charged at 18% with the availability of ITC on inward supplies Conclusion Economists see it as one of the largest Tax reform since independence. Many have criticized GST as a new name for various old taxes collected as one. Since the mechanism is still complicated, it cannot completely eliminate tax evasion. Introduction of GST has also made Indian products competitive in the domestic and international markets. Because of its transparent character, it would be easier to administer. The system holds a great promise in terms of sustainable growth for the Indian economy. GST, with end-to-end IT-enabled tax mechanism, is expected to bring buoyancy to government's revenue. It is expected that the malicious activity of tax theft will go away under the Goods

Article of the Month - Winner

WILL INDIA SURVIVE THE TRADE WAR?

Jatin Mahajan IIM Lucknow 2018-20

“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win!” – Donald Trump, Twitter post (March 2, 2018) “This (import tariffs) act is typical trade bullying… it seriously jeopardises the global industrial chain and hinders the pace of global economic recovery” – China's Ministry of Commerce (July 6, 2018) “I'm ready to go to 500 (extend tariffs to USD 500 Bn imports from China) … We have been ripped off by China for a long time, and I told that to President Xi. I could go through every country”

– Donald Trump, CNBC interview (July 20, 2018) Ever since news of the US import tariffs on Chinese goods hit the stands, every tradeparticipating nation has hung on tenterhooks. Scores of analysts have published countless reports measuring, predicting or analysing the impact of the impending trade war on major world economies. In India's case, a quick search through Google will give the impression that the impact of the US-China trade war will be indirect and largely minimal. This is primarily because the trade volume in question is roughly 4% of the US-China trade and hence has limited binding on other markets. While this notion may be true, it is pertinent to know that India's largest export market is America and its

Article of the Month - Winner

largest import partner is China. The fact that both these countries are embroiled in a hefty trade war has serious considerations for India. THE SHORT ROAD AHEAD With the two largest economies closing their borders to trade, opportunities open up for emerging economies, including India, to take the centre stage. Most prominently, India can move to fill the void in China's Soybean demand that was previously catered by the US. From the high of 36,000 tonnes last year to near zero currently, the US Soybean exports to China have dropped drastically. The situation gets all the more promising as the Chinese government has dropped tariffs on Indian Soybean imports from 3% to zero. However, a question arises if India will be as nimble as Brazil, whose Soybean exports to China have already risen by 33%. Similarly, India could address the US market by exporting products where it has an edge. Economist Upasna Bhardwaj from Kotak Mahindra Bank sums it up neatly in an interview with Livemint - â&#x20AC;&#x153;India can become more competitive in segments such as textile, garments, gems and jewellery.â&#x20AC;? Yet another indirect benefit of the trade war that some spectators are vouching for is the softening of crude prices if China rejects the US shale in retaliation to the tariffs. Such a softening relief can benefit the Indian economy by easing pressure on rising interest rates and depreciating INR.

However, the picture turns murky when we consider Indian metal manufacturing. India represents 2% each of steel and aluminium imports to America, and tariffs on both will hit domestic metal players as global prices will rise consistently. Further, there is a high possibility that India finds itself at the centre of steel dumping led by trade diversion from previous US steel exporters. THE BIGGER PICTURE Trade wars have never brought fortune to any nation. While they have direct repercussions on participating economies, the more pernicious effects are felt globally. For India, it's not just a matter of facing tariffs, but also the deeper implications on manufacturing capital outflow, depreciating the currency and rising inflation. Firstly, with rising tariffs, manufacturers across the globe will face the brunt of high import costs. For instance, many countries will be under pressure as their raw materials are utilized in the Chinese exports to America. Similarly, the Chinese tariffs on US aircraft will hurt Indian manufacturers who provide steel & aluminium as raw materials. The overall situation will push manufacturers to tread on paper-thin margins forcing a slowdown in global output. The second big consideration is the tightening of monetary policy by the US Federal Reserve. Already on course to hike interest rates to pre-recession levels of 2008, the Fed may be hard-pressed to accelerate its pace given rising consumer prices. If the interest rates peak faster than expected, India will definitely face

Article of the Month - Winner

capital outflows as American investors will chase higher returns back home. Already, the returns on government securities have declined for the last seven months in light of US yields shooting up from ~1.5% per annum to over 2.8% now. Trade wars generally follow sharp currency volatility. As countries involved in the trade wars raise import tariffs, they are also on the lookout for boosting exports by weakening their c u r r e n c y. A g l o b a l c u r r e n c y depreciation will impact the INR negatively, which already has plunged 7% this year. According to Prakash Sakpal, an economist at ING, the INR could reduce to as low as ₹72.80 to USD within the next year. The fourth important concern for India is the case of rising inflation. Rising manufacturing costs will translate to an increase in consumer prices. Already pressured to arrest a decline in the INR and evade capital flowing outside the country, the RBI will be forced to raise rates sharply. Consequently, domestic producers will be squeezed from both sides – high import tariffs leading to stiff margins and higher interest rates hitting financial support. A worst-case scenario could see domestic companies filing for corporate bankruptcies as an outcome of the trade war. INDIA'S OPTIONS Whichever country India sides with, it inevitably faces 20% tariffs. At the moment, India has played safe and followed the route of its European

counterparts in extending retaliatory tariffs to the US. Although, it has simultaneously offered to increase its American import of aircrafts, and oil and gas purchases. With regards to China, it has shown considerable muscle in standing tall to China with respect to the Doklam plateau problem. This balanced diplomatic approach should be exercised going ahead – much more significantly in bringing the contesting parties for sustainable resolutions at the WTO level. After all, it is the strength of WTO that is critical in facilitating rule-based global trade & minimising disruptions arising out of any future trade wars for any country, including India.

Article of the Month - Runner Up

EFFECT OF MSP HIKE AND FARM LOAN WAIVER Berkshire Hathaway without Buffet

Purva Sarwe IMT Ghaziabad 2017-19

THE MSP MIRAGE India- a land of farmlands, where cows and buffaloes are treated as deities, where a whole day is dedicated to the worship of snakes, but farmers themselves have a low value attached to their lives. So much so that farmers committing suicides has become just another news item in our newspapers and our ears have gone deaf to their 'pleas' rather than 'demands'. In such a situation a seemingly golden move by the government to increase the MSP to 1.5times the current rate raises the hopes and fills the hearts of the affected with joy. But is the move really beneficial, or just another farce is the question to ponder upon. India's GDP figures for 2016-17 suggest that out of a 2.26 lakh crores economy, a whopping 50% of the Indian workforce

that is employed in the agricultural sector is able to contribute to only 18% of the GDP, which is quite a de-motivating figure. Governments have time and again tried to improve the situation by providing loan waivers and setting a minimum support price. Apart from the fact that raising the MSPs would cost the exchequer about 0.2% of the GDP, another highly debated topic is that MSP hike to 50% would mean rising inflation owing to the increased cash in the system. The governments in the past have provided MSPs at rates which would not be able to cover the inflation hence actually reducing the disposable income of the farmers rather than helping them. From 2015 to 2016 the MSP of paddy was increased by 3.6%, however the inflation rose from 4.3% to 5.8% during that period, which shows that increased MSP did not really help the farmers as inflation was greater. It is estimated that the recent

Article of the Month - Runner Up

FINLY| AUGUST 2018 | Finstreet | SIMSR

move of increasing MSP would have an impact on inflation which would be around 0.5 percent, this may force the RBI to increase the interest rates in order to control the inflation in addition to its woes on increased oil prices. Let's not forget the questionable ability of the centre to procure and store the huge quantities of crops so as to use them at later stages. Even if they do manage the herculean task, next ghost to be addressed in the attic would be to provide timely payments to the farmers as most of them are looking for fast cash to meet their day-to-day expenses. Many farmers would rather skip the long queues in order for their produce to get registered with the officials and then wait even longer to get paid. A better option at such a point would be to simply sell off at a lower price to a private trader and get paid immediately. Next issue would be an overproduction of crops owing to gaining an advantage of the increased MSPs and this would, in turn, lead to degradation of the soil quality, increased use of fertilizers and insecticides, surplus present in the market and hence non-optimal utilization of the yield. WHAT CAN THE GOVERNMENT DO? A solution that would seem to stand out and solve the problems of rural agricultural India is waiving off the farm loans. Increased agitation by the farmers and demonstration of their miserable situation has led states to grant loan waivers with Karnataka joining the league recently. Apart from it costing the government a hefty

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amount, the very concept of waiving off a loan seems to be flawed even though the intention it wants to achieve may appear pristine. It offers respite to the defaulter while charging interest rates to the law abider. Moreover, more and more farmers would take up huge amounts of unnecessary loans if they anticipate such a move in the future. It would not only mean high account deficit to the government but would create a wrong impression in the minds of people, however, distressed they may be. Except for being the last resort, this practice yields nothing in the long run as it would not be capable of assisting the farmers in the future in any way. LEARN FROM THE STATES Instead, the government could try and develop other methods of helping out the farmers since neither MSP hike nor loan waiver seems to be the feasible alternative. The Bhavantar Bhugtan Yo j a n a b y t h e M a d hya P ra d e s h government, though not truly successful was a step in this direction. The state government had decided to pay the difference amount of the set MSP of the crop and the price at which the farmer had sold his crop in the mandi, known as the modal price. Through this method, the government did not have to pay the entire MSP and hence less financial burden and nor did it have to handle the procuring and storage of crops. However, the local traders began colluding to bring down the price at which they bought the crops and this stole the very essence of the whole Yojana which was to provide the farmers with at least the MSP.

Article of the Month - Runner Up

FINLY| JULY 2018 | Finstreet | SIMSR

FINLY| AUGUST 2018 | Finstreet | SIMSR

Another different method taken up was by the Telangana government called Rythu Bandhu scheme which would give the land-owning farmers Rs 4,000 per acre in order to meet their production costs. This scheme brought as much anger as appreciation because it was unfair to the tenant farmers and in a situation where it's actually the tenant farmers who undertake all the toil rather than the landowners, it is important that the benefits reach them. FUTURE OUTLOOK These schemes, though not entirely successful, still reflect a changing mindset and indicate moving away from the traditional farmer-assistance methods. A change is needed as soon as it comes about so as to help the upliftment of the farmers, so that they don't move away from this business. This is because if the workforce-leavingagriculture trend continues, then no soon will we have to rely on imports which will impact our current account.

HOW DO THEY MAKE MONEY? TURBULENCE IN EMERGING MARKETS

ECO Section

Karthik Venkateshwaren | MMS Finance | 2017-2019 Jerin Shaji | PGDM Finance | 2017-2019

Since the beginning of the year 2018, investors in developed countries have been subjected to uncertainty. Events around the globe such as rising bond yield, strengthening of the dollar, depreciation of various currencies, and rate hikes by Central Banks of certain countries, all happening in such a short span of time spells something more than coincidence. In order to analyse this global phenomenon, we first need to be introduced to a prominent category of countries, 'Emerging Markets'. What are Emerging Markets? Introduced in the 1980s, by World Bank Economist Antoine Van Agtmael, the term 'emerging market' refers to emerging countries that are in a transitional phase between developing and developed status. These are

countries that have some of the characteristics of a developed market but fall short of meeting the standards of a developed market. These countries are usually characterised as experiencing brisk economic growth narrowing the gap with advanced countries and have undertaken institutional transformations and integration with the world economy. Since these countries are experiencing a growth spurt, they are sought by investors for the prospect of higher returns. But there is a greater risk involved due to political instability, infrastructure shortcomings, and currency volatility. Generally, the countries in MSCI EM Index are considered from an investment point of view. The countries included in this index as of Jun 29, 2018 are: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia,

ECO Section

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Korea, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Russia, Qatar, South Africa, Taiwan, Thailand, Turkey and the United Arab Emirates. Complicated relation

yields have increased making it more attractive compared to risky assets in emerging markets. This has led to a selloff in emerging markets, consequently, strengthening the dollar and invoking depreciation of currencies and volatility in stock markets of emerging markets. The rise in Crude prices since mid-2017 has further exacerbated the situation as it has led to widening the Current Account Deficit and consequently, the Fiscal Deficit of the countries, with emerging markets again being the most affected.

Since 2008, negligible interest rates forced investors across the developed world to pour money into emerging markets for a positive return. This led to the rally of stocks, bonds, and currencies in these markets. The period between 2008 and 2014 was marked by cash worth more than $12 trillion pumped into the global system by key Central Banks, thanks to Quantitative Easing. But these countries paid the cost of making their economies by becoming vulnerable to fluctuations in inflows, underlining their dependence on it.

This has further put pressure on the currencies and has increased the default risk of these countries. If these were not enough, President Trump's trade war has increased volatility and uncertainty in global investment. As a consequence of capital flight and rising oil prices, major

Now, since 2014, the U.S. Federal Reserve has resorted to an unwinding of Quantitative Easing, and since 2017, it has started hiking interest rates thrice in a year. As a consequence, US bond

emerging economies such as India and China have resorted to monetary policy measures to rein in the currency depreciation. But countries such as Turkey and Argentina, which have major

ECO Section

exposure to foreign debts have been suffering miserably, giving voice to fears of a recession in Emerging Markets. Lira's dilemma The decline of Turkish Lira began with the strengthening of the U.S. dollar. The higher US yields reduced the allure of riskier assets. Turkey's Lira has been the second-worst performing currency this year.

Turkey has been especially vulnerable because the country imports much more than it exports. At 6.5 percent of the gross domestic product, its current account deficit is one of the widest in the world. At the same time, price increases have been accelerating. The country's inflation rate as of June 2018 stands at 15.39 percent, well above the central bank's target of 5 percent. A cheaper currency would normally

help a country export more; exporting more would give it more money to save; more savings would mean it wouldn't have to rely so much on borrowing overseas. However, it can't be applied in Turkey's case since Turkish banks have borrowed a lot of dollars and made a lot of loans in lira that is now worth a lot less than before. The usual solution is to raise interest rates until investors are attracted by the returns, enough to move their money back into the country and, in the

process, lead to an appreciation of the lira. That would have saved the banks from potentially defaulting on their dollar debts at the expense of causing much slower growth. However, President Erdogan, who was facing an election in June, did not want the central bank to intervene, because of his very unorthodox belief that highinterest rates cause rather than curb inflation. The government continued to run an expansionary fiscal policy, with the central bank not raising interest rates. But

ECO Section

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in spite of this attempt, the central bank had to hike the one-week repo rate to 17.75 percent in June, two weeks before the election. While President Erdogan has won the elections, the volatility in the Turkish Economy still persists.

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At 14% of GDP, Argentina's fiscal and current account deficits combined are one of the highest among comparable Ems. When the current President of Argentina, Mr. Macri, assumed office in December

Peso's tumble Argentina's peso has fallen by almost a half against the dollar since the beginning of the year. Foreign-currency debt hovers around 40% of GDP, up from 26% in 2015.

2015, he was tasked with cleaning up the mess, he inherited from his predecessor, Cristina Fernรกndez de Kirchner. The economy was in complete disarray. The national statistics institute INDEC had

ECO Section

produced fictitious inflation figures to disguise annual price rises. A dispute with bondholders meant that Argentina was locked out of international credit markets.

began to fret about its independence and its commitment to reducing inflation. Inflation has since then risen to 29.5%, well above the central bank's target of 15%.

Mr. Macri quickly lifted currency controls and settled with holders of Argentina's defaulted debt. Inflation was proxied at around 25% per year compared with a rate of 14% reported by official statistics agency Index. Withdrawal of subsidies on transport and utilities were undertaken gradually in order to avoid a spike in inflation. A d d it io n a lly, low inter n at io n a l borrowing costs allowed the government to plug the fiscal deficit cheaply.

Since the start of 2018, strengthening the dollar and higher American interest rates have exacerbated the situation. In April, when the government introduced a capital-gains tax on Argentine bonds, the situation intensified. Underdeveloped capital markets meant Argentina would not be able to finance locally and in its own currency. On May 4, the country's central bank, raised policy interest rates to a whopping 40% to stem the rapid depreciation of the national currency.With credit now prohibitively expensive, Argentina had little alternative but to turn to the IMF. On May 10th the government confirmed that it would be seeking a â&#x20AC;&#x153;stand-byâ&#x20AC;? arrangement, which guaranteed that credit will be available in exchange for whatever reforms the IMF deemed necessary.

But in December, when the central bank loosened its inflation target for 2018 from 12% to 15%, it spooked the investors. The bank then cut rates by 0.75 percentage points, causing inflation expectations to rise. Investors

FINLY| JANUARY 2018 | Finstreet | SIMSR

FINLY| AUGUST 2018 | Finstreet | SIMSR

ECO Section

Rupee's trouble India consistently for the past few years has been labelled as the fastest growing emerging market. This bull run of the economy was fuelled by positive & stable political environment, tumbling crude prices & reforms in the country. India has come a long way from the times it was included among the 'fragile five' and has amassed large reserves as well. However, in recent times rising crude oil prices have hurt the 3rd largest crude oil importer, thereby increasing pressure on the current account deficits of the country.

Foreign capital or 'hot money' has started flowing outwards resulting in the strengthening of the greenback currency. In 2018 till the month of June FII capital outflow totalling INR 47872 crore has been observed. This outflow, however, has been cushioned by the DII inflows. Rising crude prices have started to seep into the consumer's basket of goods,

and CPI inflation in India has risen to 5.00% in June 2018. This has prompted the Central bank to raise interest rate by 25 bps to 6.25% for the first-time years.

All these factors coupled with upcoming 2019 elections has resulted in 'Rupee' becoming one of the worst performing c u r re n c i e s i n t h e A s i a n m a r ket depreciating by 7.8% in 2018. However, unlike 2013, where India did not have the reserves to tackle this volatility, in 2018 the Reserve Bank is loaded with a USD 400 billion to face a new 'taper tantrum' and facilitate the steady decline

ECO Section

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in the 'Rupee'. Thus, unfavourable macroeconomic conditions, geopolitical instability, trade war tensions may have applied break to the rampant bull run of 2017, which has been reflected in the revision of the growth rate of India by IMF.

Weakening Yuan China which has been the growth engine of the global economy over the past decades has morphed itself into a USD 12 trillion powerhouse capable of influencing the global policies. The second largest economy in the world has however in recent times experienced a slump in its growth rate & has an economy running on massive public and private debts mounting to almost USD 28 trillion & fraught with

shadow entities. To revive the economy President Xi has come up with a multilateral solution, 'One Belt One Road'. At the same time, China has decided to shift gears and morph from an exportdriven economy to a consumption-driven economy. For these aims to materialize China has started investing heavily in environment & research & development approximately Yuan 726 billion which makes up roughly one-third of the budgeted deficit spending for 2018. Also, to facilitate consumer demand PBOC has cut reserve ratios to grow credit lending. These initiatives are bound to multiply debt levels further. China has also come into the direct line of fire from Washington over its 'unfair' trade policies which have instigated a trade war of monumental proportion. President Trump's trade war rhetoric seem to be culminating into actual policy whereby heavy tariffs have been slapped on China. This ongoing trade war has brought in a state of pessimism in the Asian giant's economy which has been treading in a choppy manner in the recent months.

ECO Section

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This has all resulted in the weakening of Yuan depreciating almost 4.00% with respect to USD. The weakened currency should normally assist in growing the export profile of a country, however, in the long term the protectionist tendencies by its biggest trading partner might end up hurting the economy. However, with the US turning protectionist, China has stepped up in the global forum as an advocate of free trade and will implement policies which would make Chinese markets more conducive to global trade.

that emerging economies are expected to grow at high rates, the government establishments in each emerging market is resorting to policies which would prop up growth, which would expose these markets to the 'Fat Tail Risks' & make 'Black Swan' events more likely. Thus, it would be wiser for these markets to wait out the storm and tread with caution & prudence as the world heads towards turbulent & volatile times where tweets from a single account wipe out & create billions in the blink of an eye.

Conclusion The emerging markets have been a source of high return when advanced markets have become unattractive to investors with respect to the returns offered. Historically both these markets have seesawed between bear & bull markets. This has led to situations like the Asian Crisis in the 1990s and the latest 2008 financial crisis in the global economy. The recent cooling of the emerging markets which is being attributed to its volatility is a result of a myriad of global macroeconomic factors, policies & geopolitical risks like populism. And because of the mandate

S TO RY BEHIND

Saiyam Jain |PGDM - IB |2017-19 Deepanshi Agarwal | PGDM FINANCE | 2017-19

Fintech Funda

Call for the Hour In order to sustain India's economic growth, its banking sector is required to grow by at least 2.5 times the GDP growth in order to continue its growth momentum. For instance, if our economy is to grow at 7.5% then our banking industry has to grow at minimum 18.75% in order to contribute the economic growth. Major reforms have been taken in order to develop the banking infrastructure in India, including changes in regulations regarding bad loan resolution, technological advancement and rising NPA issue with the bank. Changes in Indian Banking System Indian banking industry has harnessed changes from 1985 when the process of

mechanisation started. Right from the mechanisation where the entry of records was manual after 35 Years now, it is possible to transfer the money with a click of a button, all thanks to the disruptive technologies, penetration of promoting policies either by Government or by Private Players like Google Tez, Paytm, PhonePe (Using the hassle-free process or cash rewards for using their platforms). The asset quality issue is the major threat to the banking industry and the RBI with the help of other government institutions are managing the threat. However, it is the technological advancement that the banking industry has to cope with. As it is not only changing the operational functioning of banks but also impacting the integral process, credit appraisal, customer interaction and digital services.

Fintech Funda

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About UPI Unified Payment Interface is the realtime online payment system developed and owned by National Payments Corporation of India, (regulated by the RBI) promoting Digital India and providing support for the interbank online transaction. UPI is the extension of Immediate Payment Service enabling user to transfer and receive funds instantly 24*7, and across public holidays. Launched on 30th December 2016, through BHIM interface, NPCI has initiated the new journey towards making India a digital economy at a faster pace. The major objectives of UPI are to cater the needs of next generation by leveraging the trends like smartphone adoption, cheap data services, different language interface, etc. The asset quality issue is the major threat to the banking industry and the RBI with the help of other government institutions are managing the threat. However, it is the technological advancement that the banking industry has to cope with. As it is not only changing the operational functioning of banks but also impacting the integral process, credit appraisal, customer interaction and digital services.

Trending Digital Platform: UPI (Unified Payment Interface) UPI is the major stakeholder among all the digital payment service platform, as it allowed the user to instantly transfer the amount up to â&#x201A;š1,00,000 per transaction. It witnessed the increase of about 37% in total transaction volume in November 2017 with 105 Million Transactions.

Digital services including payment platforms and fund transfer mechanisms are emerging as the technological landscape in the financial world, which will be an unstoppable change having big challenges and opportunities at the same time, which everyone has to embrace. Companies providing the high-end services in these areas are emerging as the market drivers even when not having the traditional brick and mortar presence. The entry of Google Tez, Paytm, BHIM etc., has initiated the new volume highs and helped in presenting the positive outlook towards the Digital Payment Industry. Google Tez has become the largest player in UPI based service platform, followed by BHIM and PhonePe. Two major factors that drive the growth of technology are, firstly the reasonable price penetrated smartphones and secondly the reasonably priced data services.

Fintech Funda

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Policymakers should also be given credit for the surge of the digital transactions in India, as companies provide the infrastructure to use it but government influences the citizens through its major reforms and policies mentioned as: 路Demonetisation 路Introduction of Government's BHIM App 路 Accepting Digital Payments for Government Services 路Incentives on Digital Payments.

But still with these initiative taken the 19 Crores of Indian population is still unbaked (Source: World Bank), and services like IMPS and UPI are the tools that can narrow down this gap. According to a Business Insider report, the technology will help the banks to reduce its cost of transaction significantly by up to 25%, whose benefit got directly transferred to the customer in the form free digital services. Thus, banks and other financial institutions are looking positively towards high-end technologies including IMPS, UPI, Blockchain, etc. to get

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Fintech Funda

the leverage of their minimal cost of transaction and security But, according to the report titled F l a v o u r s o f Fa s t , p r o v i d i n g a comparative rating to the countries for the digital payment services placed India as the most evolved digital payment system among the 25 countries including Japan, China, and U.K., surveyed on the parameters like round-the-clock availability, adoption, and immediacy of payments. How does it work? ·Let us assume a person named 'Abc' has to make payments using UPI ·To make UPI money transfer, 'Abc' needs 2 basic things: o A smartphone with UPI application (app), o A bank account. ·Abc' has to download the UPI app and get a UPI ID by registering on the app with his bank details ·UPI ID is a virtual identity like an email

address ·It can be a mobile number or a name along with the name of your bank. For example Ÿ Abc@sbi or Abc@icici Ÿ9 9 0 0 0 0 0 0 9 9 @ h d f c o r 9900000099@axis ·The payment is verified instantly through the smartphone, without relying on net banking or debit card payment. ·Abc' has to buy a book online. He can initiate the e-commerce purchase by selecting UPI as the payment mode and providing his UPI ID Abc@sbi. ·For confirmation of the payment, he then receives a pop-up notification on his smartphone through the 'UPI App'. · To a u t h e n t i c a t e t h e p u r c h a s e transaction, he has to enter his secure pin on the app. ·A confirmation of a successful online purchase from the merchant will be received by him within seconds. A simple 3 step process to make Online Transactions through UPI

Why is it better?

Fintech Funda

·UPI works 24x7, 365 days, unlike RTGS or NEFT services which have specific working hours. ·UPI eliminates the need to share your name, your bank account number, IFSC code, or bank branch. ·UPI also eliminates the use of physical tools like debit cards. ·UPI also eliminates the need to use multi-step processes, to avoid phishing due to insecure frameworks. ·UPI can also be used to send a request for money, like an invoice. ·All companies like Uber, Ola, Big Basket, Zomato, BookMyShow, etc. can register their virtual identifiers on the UPI system and receive funds from a customer's bank account through the UPI. ·Online payments of utility bills and school fees can also be made using UPI.

UPI – Future of Indian Payments Hassel free, direct debit-credit from an account, Cash Rewards, Referral Rewards are a major contributor to this growth, against the mobile wallet where money is kept with some other party, in UPI, money is directly credited and debited from the account. For an instance, Google Tez is offering ₹101 cash reward for referring Google Tez to new user and amount is directly credited to bank account. June was also considered the milestone in the history of UPI as of 20th June 2018 UPI payment platforms have crossed 10

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Million transactions, a record for a single day. It has also recorded that 110 banks and financial institutes are on the UPI platform highest in UPI history compared to 101 in May. In spite of having a continuous surge, Government has proposed to drop the incentives on UPI payments and limits in some cases to BHIM app users only. This step has been taken in order to counter the Google Tez, Paytm and PhonePe some cases to BHIM app users only. This step has been taken in order to counter the Google Tez, Paytm and PhonePe strategy as Government backed BHIM share in total volume has now come to a single digit. In awake of this, recent decisions have been taken to promote the BHIM app in Indian Context. Government has also tried to raise the use of digital transactions in tier 2 and 3 cities but has not reached the mark, major reasons behind it are use of feature phone, hesitance in using online fund transfer, unaware of the rewards & cashback and not having enough environment as compared to tier-1 cities where online transactions are promoted by the vendors and sellers. Against of UPI, Paytm using its mobile wallet has marked significant growth in tier2&3 accounting to $50Billion in gross transaction value. This shows that there is a long way to go bring tier 2 and tier 3 on board for the digital transactions.

Alumni Section

Most of us hardly know about the course structure of an MBA program before joining any B-school. While choosing a Bschool for our self, we look at one & the only important thing: 'placements' of that college. But trust me leaving the top 10-15 colleges aside, in rest of the B-schools you should look at 1000 other things apart from their placement figures. The placement report is the most deceptive thing to look at while selecting a B-school. We have 4000+ B-schools & 400000+ Intake across these B-schools. We really need to make most out of our MBA education to cut through this competition and get something meaningful out of it. Dhaval Patel PG - Operations| 2016-2018

We could easily figure this out that since last few years, every third guy you come across wants to do an MBA. The amount of craze you can see around for MBA is immense & unimaginable. But is this craze even close to real? Do people have that dire interest in the value education & learnings out of an MBA program? There is a serious doubt about that.

Here are the 10 key Mantras to make most out of your MBA journey â&#x20AC;&#x201C;: Network with people â&#x20AC;&#x201C; You may be an introvert, you may not like to be around with people, you may not be talkative but trust me you need to learn to get along with people around you. In the world of MBA, networking is the most important weapon to leverage upon. Throughout your entire life, you will come across people from your MBA time.

Alumni Section

In the future, you might have to work under them / with them. You might need to ask for favors or seek information. In this two years, make as many good friends as you can. Your classmates, faculties, alumni, friends from other B-schools and people from industry are the ones whom you should be in good touch with. Mind well that you should never take the Bootlicking & Flattery approach. Rather don't do it. Participate in curricular & extracurricular activities – Gone are the days when your cpga would be the only thing that would matter. Well, come to the world of MBA where being 'Jack of All Trades' is the bare minimum. It is highly advisable to be sincere & serious about your academics but that would not suffice the ask of this program. Start participating in curricular & extracurricular activities as soon as you can. I have seen people getting lost in the creative, theatrics & dramatic world and necessarily claim it as their major nonacademic achievement. It's OK to be in that world but never forget the case study competitions, simulation exercises, and other core competitions. I would recommend participating in at least a few of these events. To name a few – Tata - Mind Rover, Deloitte – Mavericks, GeP – The Game Plan and there are tons of other national & i nte r n at i o n a l l e ve l ca s e st u d y competitions organized by various companies. You could also look up to good annual events by top 10-15 Bschools. Be thorough in what you do – Most of you have prior work experience. The

work you had done after your Bachelors is completely different from what you will do after your MBA. After MBA, as a Manager, you will be held accountable for all your work. It's important that you learn to be thorough in whatever you do. Not just work, this applies to the assignments, projects, internships etc. Don't assume stuff and take things for granted. Keep your basics right and pay attention to the minutest details. Being thorough in what you do will make you dependable and credible enough. This will in turn help in gaining trust from people around you. Have a holistic perspective – Unlike engineering which is mostly about the 'Depth' of the matter, MBA is about the 'Width' of the matter. As a Bachelor, we would focus on the mere righteousness of our work but this will not work as MBA grads. Now we need to look at things from altogether a different perspective. Being into the field of management, it's mandatory to have a holistic perspective about things you do. Never ever draw lines between marketing, finance, operations or HR even though you might major in any one of them. Every one of them is equally important for sustainability and overall growth of any company, organization or even your own startup. Start seeing things through a different lens. Try to see the strategic view of your work & how it is going to impact the bottom line of the business. Just to give few examples- a finance guy should be considering salability of financial products rather than just developing them, a marketing guys should analyze the impact of advertisement on balance sheet instead of just the user engagement, an operations guys should

Alumni Section

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should be considering salability of financial products rather than just developing them, a marketing guys s h o u l d a n a l yze t h e i m p a c t o f advertisement on balance sheet instead of just the user engagement, an operations guys should give equal importance to organizational hierarchy while designing a business process instead of just the operational efficiency. Not just these 4 domains, every successful individual will give equal importance to other angles like economy, politics, culture & regional differences. Never ever copy stuff – It will be quite a shock to adjust from a chilled life to suddenly a hectic life. It is going to be too much work. 8-9 subjects in a trimester will throw tons of assignments, presentations, and projects at you. It's extremely difficult to get used to it. People generally try to find their way through this overburdened schedule by using the “Ctrl+C & Ctrl+V” method. The assignments, case studies & tests are pretty much “doable” and one should try to value such tasks and take them seriously. One can find solutions very easily from various sources. You may have to stretch a lot to complete your work but I would suggest never ever copy your assignments, presentations, and projects. The greatest learning out of MBA is from these classroom exercises. One should never ever compromise on these. This is the bare minimum expected from an MBA grad. Keep yourself updated – As MBAs, we are supposed to know everything. This

may sound practically impossible but yes that is what it is. We may not be able to know everything but we should try to know as much as we can. One can start by reading business newspapers daily. Economic Times, Business Standard etc. are some of the good newspapers. Every MBA grad must read newspapers daily without absolutely no excuse. Besides these insights about economic reforms, international trade, financial status, stock m a r ke t s , b u s i n e s s e nv i ro n m e nt , technological trends etc. is useful in all respect. Groom your analysis & communication skills – The most important of all, this mantra is the fundamental key to success. You cannot survive without being handsomely good at Excel, Word, and PowerPoint etc. You absolutely cannot. No matter what other engagements you have in your life or how much you hate learning these tools, you must get over with it & start grooming your analytical & communication skills. Every job profile irrespective of which industry you are into requires some level of analytical activity & stakeholder interaction. Above average level analytics skills and effective communication skills will take you all the way. Gaining advanced skills in analytics like Tableau, R, Python, SQL etc. is not always required but it's always good to have them. For the communication part, it's not only your vocational skills but written, interpersonal skills as well. Learn to use resources effectively – As a manager, we will always run short on resources be it – information, data, time, right team or right tools & technology. The expectations of our stakeholders will

Alumni Section

always be high and we must strive hard to meet them with limited resources. We should delight them by making most out of what we have. To start with learning to use resources around you during your MBA time. This includes – online reports & research sources like EBSCO, EMIS, WARC, ScienceDirect, etc. It's not wise to do primary & secondary research all the time on our own. Rather look out for readily available reliable information. The next big thing is to understand the strengths & weaknesses of our team and assigning right work to the right individual for overall effective output. Learn to effectively & quickly extract information from annual reports, research papers, white papers & journals. We will never ever get complete information in real life. Trust me, I can say this from my personal experience. The information is always obscure & incomplete. All we need to do is to connect the dots and make a reasonably meaningful picture out of the small pieces of information that we have. For quality & productive output it's always advisable to spend less time on collecting information and more on analyzing it. Learn to be professional – We have all lived in a highly chaotic & unorganized world during our bachelors & masters. Everything would be all over the place. We would hardly be punctual, tidy, well dressed. The kind of interpersonal behavior we maintain is not mature. Its fine to enjoy our lives and live a 'Bindass' life until we are in our college life. But once we are out into the corporate w o r l d w e o u g h t to b e h i g h l y professional even though we are

working with some of the coolest companies. Your Alumni will tell you that it's OK and the company culture is quite chill. But trust me people are going to judge you at every moment. Try to always be professionally dressed, well groomed. Learn to talk politely & sensibly. Your voice, the way you talk, behave, present yourself and interact with stakeholders will definitely matter. Always believe that the first impression is the last impression. Just keep in mind that unlike during engineering where you used to solve technical problems, now as managers most of the time you will solve people problems. So, the 'Human' in you is all that matters the most. Leave your comfort zone behind – 8 hours' sleep, 9 to 5 job, same office, same routine, similar faces, social life etc. etc. These things are mostly going out of your life once you choose to be in the MBA world. During your MBA time, you would hardly find time to sleep as much as you want (in case you take things seriously). You will generally not get a typical 9 to 5 job. You need to be flexible enough to work round the clock as per business need, travel places, tackle highly complex situations and face some of the most annoying people out there. I can assure you that most of you will hate your job profile, the location of your office and the kind of people you need to engage with. But at the end of the day, you need to dump your likes & dislikes, start to accept whatever you get and move on in your life. You must come out of your comfort zone to survive straight out of a Tier 2 B-school. The sooner you do, the easier it becomes.

FOOD PROCESSING INDUSTRY

SECTOR ANALYSIS

Sector Analysis

Introduction Famously referred to as the â&#x20AC;&#x153;shadow banking systemâ&#x20AC;? by the Financial Stability Board (FSB), NBFIs includes entities and activities which works outside the purview of a regulated banking system. In the Indian context, the system includes NBFCs and collective investment vehicles such as money market funds, fixed income funds, mixed funds, real estate funds, and securitisation-based credit intermediation like securitisation vehicles and structured finance vehicles. Also, NBFCs are distinct from abroad as they are regulated by the Reserve Bank of India in harmony with the regulatory laws of the banking system so as to minimise the scope of regulatory arbitrage.

Shalini Balakrishna | PGDM FINANCE | 2017-19 Shreya Maheshwari | PGDM FINANCE | 2017-19 NBFCs have gained immense prominence in the country and have grown to the extent of becoming the third largest segment, accounting for 9 per cent of the total assets of the financial sector, after scheduled commercial banks or SCBs (64 per cent) and insurance companies (14 per cent), as reported by RBI in 2014. With fewer regulatory provisions than banks and greater accessibility, NBFCs have been successful in serving the unbanked and underserved areas by providing them credit facilities and promoting financial inclusion. Also, they have brought in efficiency and diversification in the financial intermediation by having greater understanding and hold of niche business segments leveraging over greater customer engagement due to increased accessibility.

Sector Analysis

Market Structure NBFCs are characterised on the basis of their liability structure as well as their systematic importance. In terms of their liability structure, NBFCs can be broadly categorised into deposit-taking NBFCs or NBFCs-D, which accept and hold public deposits and non-deposit taking NBFCs or NBFCs-ND, which do not accept public deposits. NBFC-NDs are further classified on the basis of its assets size greater than 5 billion or more as systematically important NBFCs (NBFC-ND-SI).

Similarly, on the basis of activities, they have been classified under 12 broad heads with Peer2Peer Lending Platform as the latest addition. Growth Drivers NBFCs have been able to change the mindset of the Indian consumer, inculcating the savings habit in the general population, fostering the aim of

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financial inclusion of the Government of India. They have been able to generate a unique value proposition which has worked tremendously in their favor. Most NBFC s leverage cred it ap p rais al techniques that involve assigning a credit score to customers (those who have been left out by banks) in order to gauge their creditworthiness. This system has been particularly noteworthy in the Micro, Medium, and Small Enterprises (MSME) segment. The differentiated methodology of credit appraisal has paved way for a stress-free experience for customers, especially with

regard to KYC and other aligned requisites. There is still scope for further including technology in the day-to-day functioning of NBFCs and this can largely facilitate building robust interactions with the target customer base. Many new-age NBFCs have now started investing in analytics and AI to integrate with their customers in a 'hyper-personalised' way to cater to their credit needs better.

Sector Analysis

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Another important aspect which has enabled NBFCs to expand their lending base at a pace faster than the banks, is the availability of capital. A large number of Private Equity investors have shown belief and keenness in the NBFC sector and have helped the sector transform to new levels. Not only in terms of financial boost, but also with respect to the needed marketing and branding stimulation that NBFCs need.

In addition to the finance and marketing aspects, PE investors look at providing legal cover and support in terms of regulatory and compliance requirements. As per PwC report, NBFCs have been able to garner 70% of the PE deals in the last few years. Similarly, foreign investors have been upbeat about raising their stakes in these institutions.

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Sector Analysis

Hence, diversifying the source of funds through PE funds as well as short-term borrowings from the capital markets such as bonds, NCDs, CPs, etc will reduce the cost of funds minimising the impact on their profit margins. According to statistics highlighted by the Reserve Bank of India (RBI), NBFCs and Housing Finance companies have together been able to improve credit offered to commercial enterprises, reaching a new level of Rs. 2.59 lakh crores, which has been able to furnish a total of 18% of their credit requirements. This is in contrast to the struggle faced by the banking sector, which has been in the clutches of innumerable bad loans. The NBFC sector saw a whopping 18% rise in NBFC lending, as compared to the previous year.

There is a stark shift in the borrower sentiment, which has been instrumental in providing a double-digit market share in SME and Wholesale Loan segments which are expected to grow at a pace of 21 percent annually till 2020 as per Crisil, driving the medium term growth. Similarly, another major segment, vehicle finance portfolio, is expected to grow by 15% CAGR for the next five years as compared to 12% in the recent past due to increased investment by government in the road sector and rural infrastructure development, according to the Crisil sectoral outlook report. Since 85 percent of the NBFC vehicle finance portfolio comprises commercial vehicle and cars/ utility vehicles (UVs) of which tractor and wheeler financing comprises of 2/3rd of the market, it will open new market opportunities in the area and potential for growth.

Sector Analysis

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Sector Analysis

Strengths: NBFCs have been looked as an incredible source of providing distinguished and timely delivery of services to a large customer base. Not only do they help in the timely disbursement of funds, but they also facilitate consistent recovery of loans.

Low-quality asset base can give rise to potential Non-Performing Assets (NPAs). This can further lead to erosion of net worth. Plus, with the rapid thrust of the retail element in the Banking arena, NBFCs face a lot of unnecessary competition.

Weaknesses: Although NFBCs have been successful in penetrating in rural India, they are yet to make a significant mark in urban markets. Along with this, they are riddled with risk management and mitigation issues, and there is a stark need for technology upgradation.

Recent Developments in the NBFC Space

Opportunities: NBFCs have an excellent chance to have collaborations with global financial sector giants and replicate strategies and practices e x e c u t e d t h e w o r l d o v e r. Geographically, there is immense potential for NBFCs to improve customer base, both in depth, and breadth. Threats: Unfortunately, NBFCs are riddled with poor financial health, which is a major threat to the sector.

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From January 2018 to May 2018, there were open offers in the NBFC space, launched under the SEBI Takeover Regulations for listed NBFCs. These contributed to approximately 23% of the total open offers during this period. The pie chart is a representation of the increase in sector-specific activity for NBFCs. In May 2018, RBI proposed a way to do away with the exemptions provided to Government-owned NBFCs with regard to the regulatory requirements on the lines o f C a p i ta l A d e q u a c y, C o r p o rate Governance, and Provisioning. There has been a deadline fixed, 2019 to 2022, to make Government-owned NBFCs at par with other NBFCs. This is done with the

Sector Analysis

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aim to bring parity across the sector, and more importantly, to increase the competitiveness of the privately owned NBFCs for prospective acquisition deals. 'The Regulatory Funda’ NBFCs are required to maintain compliance with the Fair Practices Code (FBC) and Anti-Money Laundering (AML). When it comes to change of management control in NBFCs, the entities are required to obtain prior written approval from RBI, for change in shareholding up to 26% or change in the composition of the Board of Directors amounting to 30% or more. In the event of a takeover of a listed NBFC, the acquiring entity need to, over and above, fulfil compliance requirements of open offer obligations and other subsequent conditions of the SEBI Takeover Regulations. Given that RBI approval is a prerequisite during the takeover of a listed NBFC, public shareholders can be bought only through the open offer process, coming under the purview of the SEBI Takeover Regulations. This is

followed by executing a 30-day period of mandatory notice for the change in control. What is noteworthy is that if SEBI issues its observation letter before RBI approves the takeover of a listed NBFC, the acquiring entity has to pay interest on the open offer price for the extended time period. This amounts to an increase in the cost of acquisition. Thus, as a matter of convention and practice, it is likely to take a period of at least six to eight months for the takeover of a listed NBFC. Challenges Faced by NBFCs Rivalry among Competitors – High ·A large number of players in the sector with undifferentiated services in terms of selling of financial products ·Low switching cost to different sectors when the benefits in that sector arise · Higher Exit barriers, providing an incentive to rivals to remain and compete despite earning low profits ·Aggressive marketing and new product development strategy such as introducing new products in niche areas, flexible product mix in order to gain the market share. Also, firms may acquire rivals to increase their size in the market

Sector Analysis

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Threat of New Entrants – Medium

·Fewer regulatory norms make it easy for new players to enter into the industry. In fact, new entrants could easily change major determinants of the market environment by bringing in new products such as digital payments system, peer2peer lending platform, and fintech services.

towards housing finance companies and venture capital and other NBFC activities for availing fund Bargaining Power of Customers – Medium to High

·Many alternatives for availing credits, a higher number of substitutes and undifferentiated products increases competition in the market.

·However, the cost of initial investments is very high attributed to high fixed costs at the same time it may become difficult to achieve economies of scale in few years due to intense competition and low switching cost for consumers.

·A large number of players in the NBFC sector itself makes the competition intense and increase the bargaining power of consumers. Bargaining Power of Suppliers – Medium

Threat of Substitutes – Medium to High

·Fewer NBFCs are allowed to have term ·NBFCs faces intense competition and pressure from mainstream banking institutions and other investment vehicles in the financial markets such as mutual fund investments, bond market, the stock market, insurance sector, etc offering products at low or competitive prices.

·Low cost of switching for customers and greater reliance on the banking sector for loans, especially individual customers makes it difficult for NBFCs to market their products among these customers. Also, investments in stock markets and mutual funds are providing greater returns making it easier for the customer to switch as they find growth opportunities.

·However, due to a credit crunch in the banking sector, the trend is shifting

deposits with greater regulatory norms, thereby increasing their cost of funds visà-vis banks which in turns increases the interest rate they incur from customers.

·However, NBFCs are diversifying their source of funds such as raising funds through short-term borrowings from capital markets, raising funds through PE investors, etc., reducing their reliance on bank loans lowering the impact of the cost of funds on the profit margin. Major NBFCs in India Power Finance Corporation Limited: This NBFC was founded in 1986 and is known to provide financial assistance to power projects in the nation. It assists organizations in power generation, transmission, and distribution.

Sector Analysis

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Shriram Transport Finance Company Limited: This NBFC was formed with the aim of providing assistance to commercial and business vehicle companies. It specializes in general insurance, mutual funds, stock broking, etc. Muthoot Finance Ltd.: This Kerala based NBFC sanctions loans against gold as collateral. It also provides foreign exchange services, money transfers, wealth management services, etc. Cholamandalam: Cholamandalam Investment and Finance Company Limited (Chola), was formed in 1978. It is the financial services wing of the Murugappa group. Popular for equipment financing, it has extended its service base to vehicle financing, home loans, advisory services, etc.

challenge is to increase the credit penetration, especially in the rural areas through financial products modelled to cater to the specific needs. Companies have been geared to leverage the advanced technological processes gauging the data-driven insights from consumer profiles, looking for new emerging needs like vehicle upgrade opportunities, etc. The product mix is to be based on hybrid model of â&#x20AC;&#x153;physical+digitalâ&#x20AC;?, integrating the digital advance policy initiatives such as India Stack, Aadhaar Pay and Direct Benefit Transfer (DBT) and exponential increase in smartphone/Internet access with the needs of the distinct strata of society ensuring greater penetration in order to reap the long-term benefits.

The Road Ahead: Our View The growth pattern of the country is stabilising post demonetisation and GST, bringing in the underlying business model to the fore. The current year seems pivotal for the industry riding on higher budgetary spending, ease of funding and compliance norms, strong monsoon, higher demand and increased consumption and sales, especially in the automobile sector. Despite these robust macroeconomic indicators, one must equally consider the rapid changes due to digitisation, adoption of newer technologies, disruptive products and services bringing in new business models and channelizing demand as the diversification increases. Another

Internship Diaries 43

“For aspirers who wish to become achievers, Arcesium is the perfect 10 to be in. They are fine with you being a neophyte but not with you giving up. The desire to learn is what will ring a bell!” Aarohi Biyani PGDM – FS |17-19| Arcesium latently means precision & accuracy and undoubtedly it has lived up to its name. The accuracy that Arcesium shows in making its employees happy and satisfied is unmatchable. Right from the first day of induction till the last day of my presentation at Arcesium – be it organization culture, work-life balance or training; everything was just synonymous to perfect – all thanks to the Arcesium Way of “Work Hard and Party Harder”!

Arcesium is a spun-off entity from the “DE Shaw Group” and hence carries a strong reputation in the industry. It basically offers post-trade technology and professional services across the globe. The company stands as an expert in providing an end-to-end solution for the entire trade process. This precisely turned my internship into a great learning experience as I happened to assimilate all that goes into a trading process starting from trade capture till unwinds. Also, Arcesium, being a master in the shadow accounting domain gives you plenty of opportunities to interact with the sharpest minds in the ring. Giving equal opportunities to people from all disciplines is what Arc believes in. That is precisely the reason for the first round of the recruitment process to be an aptitude test, where one's analytical competence and accuracy is checked. A diligent practice of questions related to

Internship Diaries

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logical reasoning, quantitative aptitude, and basic finance is the key to the first round, where speed also plays its role. This was followed by a Group Discussion and Personal Interview to check whether one will be a company fit. GD topics are mostly surrounded by current happenings in the field of politics, economics, international relations and the likes. The PI round is the most interesting part where questions from all domains of finance will be bombarded at you irrespective of your past fields of study. International business, Capital Markets, Derivatives, Journal entries etc. are some examples. The HR round will test your confidence and the will to learn. Remember, they are fine with you being a neophyte but not with you giving up. The desire to learn is what will ring a bell! Recognition and Employee Engagement are the two things that are the key to success for Arc. The Human Capital team at Arc leave no stone unturned to reward you for all the hard work and efforts put in. Pampering employees with Customized Goodies, Team parties, Dinners, Recreational Activities, Outings, Flexi working hours etc. are definitely few things to brag about. Frequent catch-ups with the HODs provide you with a platform to voice your opinions like any other full-time employee. For aspirers who wish to become achievers, Arcesium is the perfect 10 to be in. Guiding you throughout the internship, mentors at Arc will ensure that you refine with every step taken. Your attitude, behaviour, creativity,

suggestions, everything is observed, noticed and evaluated on. The company will love your company if you are keen to learn, honest, interactive and add some value. After all, a symbiotic relationship is always better than the osmosis way of learning! â&#x20AC;&#x153;Apart from work, there were plenty of opportunities for recreation with frequent team outings and various facilities within the office campus. With this excellent infrastructure, the hours spent in the office were comfortable and fun.â&#x20AC;? Shravni Atul Mohile MMS - Finance |17-19

Arcesium is a post-trade technology firm and is a spinoff of the D.E.Shaw Group. The company had a three-step selection process with an aptitude test, group discussion and an HR and technical i n t e r v i e w. T h e r e w e r e v a r i o u s departments in the Services vertical of the company, of which, the internship was done in the Trade, Accounting and Operations department. The teams were divided on the basis of clients. On a daily basis, the work involved was reconciliation on the position, cash, and dividend basis. This was majorly done on the company's proprietary software. The daily tasks were deadline-based and were reviewed by senior members of the team. Besides, interns can also be given specific projects with regular deliverables. Prior to starting the assigned tasks, there was a week-long on-boarding schedule with various online and offline training programs. Towards the end of the

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internship, interns have to give a presentation in front of senior members of their team and of the company. Working at Arcesium gave a glimpse of the corporate world and how! The work involved detailed learning of various financial instruments and also gave an idea of on-street client interactions. It provided insights about the hedge fund industry as well. All employees and team members were extremely helpful. The overall culture was such that no formalities were required while working. The company has a flat hierarchy where everyone from an analyst to a director is equally approachable. There was a buddy system, so every intern had two points of contact, the buddy, and the manager. Apart from work, there were plenty of opportunities for recreation with frequent team outings and various facilities within the office campus. With this excellent infrastructure, the hours spent in the office were comfortable and fun. Arcesium looks for driven and enthusiastic people with strong communication skills. They like their employees to think logically and provide innovative solutions. The same is expected of their interns, who in the short span of two months should be able to observe and understand the company's functions and suggest improvements. Overall, the experience of interning at Arcesium was truly an enriching one!

“Being at Arcesium I noticed brilliant minds working around me with a lot of experience in the financial domain. Learning at Arcesium does not hold any boundaries, I could interact with different departments and take help for working on my project.” Pranav Mathur PGDM – Finance |17-19 “Mail check kar” my friend shouted to wake me up, it was “Arcesium” coming to visit our campus for summer hiring next day. Arcesium is one of the highly anticipated companies visiting our campus for a past few years. For those who have not heard of Arcesium before, Arcesium is an independent spin-off from “D.E Shaw Group” and is one of the leading post-trade technology and services firm. It was just about a month or so in the college hence preparation for the interview was based on our prior knowledge or whatever we could learn on our own since the curriculum did not involve subjects related to the nature of work and the interview that was going to happen. The Process The process started with a presentation about Arcesium followed by an aptitude test which comprised of questions on Quant, DI, LR and general awareness. This was followed by group discussion, general awareness is the key to getting through any group discussion. My topic here was “GST and its implications” which faired easily without being a ruckus. 13 people were shortlisted for the final round which comprised of a Technical interview and HR interview.

Internship Diaries

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How did I prepare? Starting with the finalization of CV by the Placement Committee, I spoke to my seniors and understood the profiles of the companies that come to our campus. After realizing FinOps being offered by “Arcesium” and other notable companies visiting our campus, Ichoose my second specialization as Operations assuming that this might show my inclination to the profile being offered. Next, I started reading about derivatives and brushing up with my “what was there on my CV.” Simultaneously, I started reading basics in accounting and economics. Also, my interview at D.E Shaw two days prior to this gave me insights on what could be asked. How is the work at Arcesium? “Working hard and partying harder” is not just a motto at Arcesium but also

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something I experienced during my tenure of two months, Being at Arcesium I noticed brilliant minds working around me with a lot of experience in the financial domain. What can you expect? Learning at Arcesium does not hold any boundaries, I could interact with different departments and take help for working on my project, practical learning on how the infrastructure of “Hedge funds” works and knowledge on derivatives are what you can expect apart from ample of goodies and parties there. Work Culture – Flat hierarchy, Open door culture, Emphasis on innovation and technology, excellent pay structure and employee engagement. All the very best to all the Juniors !

In Picture: (From Left) Shravni Mohile, Pranav Mathur and Aarohi Biyani

Know your Finance

TYPES OF EQUITY SECURITIES Unlike debt securities, equity securities do no impose an obligation on the issuer to repay the amount financed. Instead, shareholders act as owners of a company with a claim on the company's net assets and an expectation that management will act in the shareholders' best interests. Equities can be split into two main categories: common securities and preference securities. COMMON SHARES are the most common form of equity and represent an ownership interest. Common shareholders have a residual claim (after the claims of debt holders and preferred stockholders) on the firm assets on liquidation. This makes common stock riskier than debt or preferred shares. Common shareholders are able to vote for the

board of directors, on merger decisions, and on the selection of auditors. Common shares can be callable as well as putable. CALLABLE COMMON SHARES give the firm the right to repurchase the shares at a pre-set call price. The firm gives the investors a fixed amount when it calls the stock. The call feature benefits the firm when the stock price is greater than the call price. PUTABLE COMMON SHARES give the shareholder the right to sell the shares back to the firm at a specific price. A put option on the shares benefits the shareholder because it places a floor under the share value. Other things being equal, putable shares are sold for high prices than non-putable shares. PREFERENCE SHARES have features of both common stock and debt. If a company enters bankruptcy, preferred

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shareholders are entitled to be paid first from the company assets. Most preference shares have a fixed dividend and investors do not usually have the voting rights. CUMULATIVE PREFERENCE SHARES are usually promised fixed dividends, and any dividends that are not paid must be made up before common shareholders can receive dividends.The dividends of NON CUMULATIVE PREFERENCE SHARES do not accumulate over time when they are not paid, but dividends for any period must be paid before common shareholders can receive dividends. CONVERTIBLE PREFERENCE SHARES can be exchanged for common stock at a conversion ratio determined when the shares are originally issued. The preferred dividend is higher than a common dividend. Also, if the firm is profitable, the investor can share in the profits by converting his shares into common stock.

GENERAL AWARENESS INFLATION It is the rise in prices of goods and services in an economy over a period of time. It is also quoted as â&#x20AC;&#x153;too much money chasing too few goodsâ&#x20AC;?. In case the price of say only one commodity rise sharply but prices of other commodities fall, it will not be termed as inflation. Similarly, in the case, due to rumours, if the price of a commodity rises during the day itself, it will not be termed as inflation. TYPES OF INFLATION 1.Demand Pull Inflation In this type of inflation, price increase results from an excess of demand over supply for the economy as a whole. Demand inflation occurs when supply cannot expand anymore to meet demand; that is when critical production factors are being fully utilized, also called Demand inflation. 2. Cost-Push Inflation This type of inflation occurs when general price levels rise owing to rising input costs. In general, there are three factors that could contribute to Cost-Push inflation: rising wages, increases in corporate taxes, and imported inflation DEFLATION Deflation refers to a situation, where there is a decline in general price levels.

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Thus, deflation occurs when the inflation rate falls below 0% (or it is a negative inflation rate). Deflation increases the real value of money and allows one to buy more goods with the same amount of money over time. Deflation can occur owing to a reduction in the supply of money or credit. Deflation can also occur due to direct contractions in spending, either in the form of a reduction in government spending, personal spending or investment spending. Deflation has often had the side effect of increasing unemployment in an economy since the process often leads to a lower level of demand in the economy. STAGFLATION Generally, the growth of an economy and inflation go hand in hand. Stagflation refers to a situation wherein the inflation is high but the growth is very slow or stagnant. Stagflation occurs when the government or central banks expand the money supply at the same time they constrain supply. The most common culprit is when the government prints currency. It can also occur when central bank monetary policies create credit. Both increase the money supply. That creates the inflation. At the same time, other policies slow growth, such as increase in taxes by the government. It can also occur when the central bank raises interest rates. Both prevent companies from producing more. When conflicting expansionary and contractionary policies occur, it can slow growth while creating inflation.

That's stagflation. Stagflation in the United States occurred during the 1970s. The federal government manipulated its currency to spur economic growth. At the same time, it restricted supply with wageprice controls. HYPERINFLATION Hyperinflation is when the prices of goods and services rise more than 50 percent a month. The severity of price increases distinguishes it from the other types of inflation. For example, galloping inflation only sees prices rise 10 percent or more a year. Hyperinflation starts when a country's government begins printing money to pay for spending. As the money supply increases, prices rise as in regular inflation. An increase in the money supply is one of the two causes of inflation. The other is demand-pull inflation. It occurs when a surge in demand outstrips supply, sending prices higher. Instead of tightening the money supply to stop inflation, the government keeps printing more money to pay for spending. With too much money sloshing around the economy, prices skyrocket. Once consumers realize what is happening, they expect continued inflation. They buy more now to avoid paying a higher price later. It aggravates inflation, especially if they stockpile goods and create shortages. HEADLINE INFLATION Headline inflation refers to inflation figure which is not adjusted for seasonality or for the often volatile elements of food & energy prices, which are removed in the Core CPI.

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PERSONAL FINANCE TAX SAVINGS INSTRUMENTS Safeguarding's one future is what drives us all to earn and save. While earning may help you live in the present but it is saving that help us go long way. So why not maximize your savings by taking advantage of instruments which not only help you save tax but also earn good returns on your investment. Here is the list of popular tax savings options which can opt for -: EQUITY-LINKED SAVINGS SCHEME (ELSS) Equity-linked savings schemes are diversified equity mutual funds with two differentiating features - one, investment amount in them qualifies for tax benefit under Section 80C of the Income Tax Act, 1961, up to a limit of Rs1.5 lakh a year and secondly, the amount invested has a lock-in period of 3 years. Every mutual fund (MF) house offers them and generally uses the word tax-saving in its name to distinguish them from their other mutual fund schemes. The returns in ELSS are not fixed and neither assured but is dependent on the performance of equity markets. One may opt for dividend or growth option in them. However, dividends are now subject to dividend distribution tax of 10 percent. Hence, someone choosing to invest in ELSS, the growth option is more viable since it helps to yield tax effective returns over dividend option.

PUBLIC PROVIDENT FUND (PPF) Public Provident Fund has been a favourite savings avenue for several investors and still standing tall. It is a 15year scheme which can be extended indefinitely in a block of 5 years. It can be opened in a designated post office or a bank branch. It can also be opened online with few banks. One is allowed to transfer a PPF account from a post office to a bank or vice versa. A person of any age can open a PPF account. Even those with an EPF account can open a PPF account. As of now, it offers 7.6 percent. As the interest is tax-free, the effective pre-tax yield for someone paying tax at 5.2 percent, 20.8 percent and 31.2 percent rates will be 8.01 percent, 9.6 per cent and 11.04 percent per annum respectively. While the minimum account required to keep the account active is 500, the maximum amount one can deposit in a financial year is Rs 1.5 lakh. If contributions are in excess of Rs 1.5 lakh in a year, the excess deposits will be treated as irregular and will neither carry any interest nor will this excess amount be eligible for tax benefit under Section 80C. This excess amount will be refunded to the subscriber without any interest. PPF is mostly preferred by those investors who do not want volatility in returns akin to equity asset class. EMPLOYEES PROVIDENT FUND (EPF) Employees' Provident Fund is another avenue that helps a salaried individual not only helps save tax through involuntary savings but also accumulate tax-free corpus. An employee contributes 12 percent of one's basic salary each month mandatorily towards his EPF account. An

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equal share is contributed by the employer but only a portion (3.67 p e r c e n t ) g o e s i n t o E P F. The employee's contributions qualify for tax benefit under Section 80C of the Income Tax Act, 1961, up to a limit of Rs 1.5 lakh a year but not the employer's share. Both, employee-employer share qualifies for interest as declared by the government each year which is tax-free in nature. The interest rate on EPF is currently at 8.55% for 2017-18 from the previous year's rate of 8.65% for 201617. UNIT LINKED INSURANCE PLANS (ULIP) Unit-linked insurance plan is a hybrid product, a combination of protection and savings. It not only provides life insurance but also helps channel one's savings into various market-linked assets for meeting long-term goals. Ulips offers different fund options with varying asset allocation between equity and debt. A Ulip can have a duration of 15 or 20 years or more but the lock-in period is 5 years. The fund value on exiting the policy (allowed after 5 years) or on maturity is tax-free. Any switching between the fund's options irrespective of the holding period is exempt from tax. Ulip may not be suitable for all investors. Those investors who already have an ELSS scheme and simultaneously hold a pure insurance plan find no gain in buying ULIP. TRADITIONAL INSURANCE PLAN Traditional insurance plans could be an endowment, money-back or a whole

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life plan. Unlike pure term insurance plans they have a savings element in them and come with a fixed term and a fixed sum assured. The premiums are based on the age at the time of entry, the life coverage and the period for which coverage is required. Premiums are to be paid each year till maturity. Few such plans have a limited premium payment option in which premiums are to be paid only for a specified term but the policy continues for long. Traditional plans are inflexible in nature. The term once chosen can't be changed. For someone who has started saving for say 20 years might need funds in the 16th or 19th year. Most such plans also do not allow partial withdrawals. Even sum assured can't be changed. The traditional insurance plans including endowment, money back or of any design have a potential for lower returns and is largely in the range of 4-7 percent per annum SUKANYA SAMRIDDHI YOJANA Sukanya Samriddhi Yojana (SSY) is a small deposit scheme for the girl child, launched as a part of the 'Beti Bachao Beti Padhao' campaign. It is currently fetching an interest rate of 8.1 percent and provides income-tax benefit. A Sukanya Samriddhi Account can be opened any time after the birth of a girl till she turns 10, with a minimum deposit of Rs 1,000. A maximum of Rs1.5 lakh can be deposited during the ongoing financial year. The account will remain operative for 21 years from the date of its opening or until the marriage of the girl after she turns 18.

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We welcome your valuable feedback Finstreet, The Finance Committee of K.J. S.I.M.S.R.

Email Us At : finstreet@somaiya.edu