Dear Readers,
“Historically, pandemics have forced humans to break with the past and imagine their world anew. This one is no different. It is a portal, a gateway between one world and the next. We can choose to walk through it, dragging the carcasses of our prejudice and hatred, our avarice, our data banks and dead ideas, our dead rivers and smoky skies behind us Or we can walk through lightly, with little luggage, ready to imagine another world. And ready to fight for it.” Arundhati Roy
This pandemic is an opportunity to expand our knowledge by finding new ways to circumvent the circumstances, invest in the most intuitive ideas that come to our mind and surpass this havoc. As Ben Franklin rightly said, “An investment in knowledge always pays the best interest,” we at Finstreet are back with the next edition of our monthly magazine “Finly” for the academic year 2022 23
Team FINLY has always been a dedicated group of people who put in a lot of time and effort to put this magazine together, and we can't thank them enough for their unwavering support and initiative
The November 2022 edition's cover story revolves around "Credit Suisse Crisis". The Eco Section discusses the Emergence of UPI. Further, the Intriguing Indeed section delves into Digital Banking Units
We are thankful to Prof. (Dr.) Pankaj Trivedi (Course Coordinator, MBA Core and Faculty Coordinator, Finstreet) for providing the much required mentoring, support and backing to the Finly team
Gaurav Bavkar
AbhigyanVerma|MBA3|2022-24 AditiVora|MBA9|2022-24
Credit Suisse is a global investment bank and financial services firm based in Zurich, Switzerland. It was founded in 1856 to fund Swiss railway projects and issue loans for making Swiss electric grids and the European railway system It maintains offices in all the major financial centres of the world. It is also a part of the elite “Nine Bulge Bracket Banks” providing services in investment banking, private banking, asset management, and offering financial solutions. It is known for strict bank client confidentiality and banking secrecy The financial stability board considers it to be a systematically important bank It is also a primary dealer and forex counterparty of the FED. Credit Suisse endorses a strategy called bancassurance of trying to be a single company that offers every common financial services product. The investment bank is intended for companies and wealthy individuals with more than 50,000 euros
Credit Suisse is at the centre of market turmoil amid rumours that the bank is on the brink of collapse. Investor’s faith has been breached as they have rushed to sell the Zurich based bank’s shares as it prepares to unveil a costly restructuring plan due later this month. Speculations have resulted in experts predicting a 2008 Lehman Brothers like collapse for the bank Since the beginning of 2022, Credit Suisse’s share price has fallen close to 60% At the same time, the spreads on Credit Default Swaps (CDS) on Credit Suisse's debt have spiked to a 14 year high, the highest since the global financial crisis of 2008 The company has constantly been losing investor money, which was triggered by a letter written by Chief Executive Ulrich Koerner to Credit Suisse’s employees on Sept’30 Reportedly, Credit Suisse has over 50,000 employees and around $1.62 trillion in assets under management The company, in general, has
been losing market value since 2008. The reason for such a secular decline is the company's high aspirational risky bets that have made it lose tons of investor money. This has led to the domino effect of making the raising of capital costlier, hurting the profitability and stamping on investors’ confidence. The cases of Greensill Capital going bankrupt and Archegos Capital Management, a hedge fund run by Bill Hwang, collapsing and resulting in a $5 5 billion loss added salt to the wounds. Adding to the causes were high profile managerial malpractices (the espionage incident of CEO Tidjane Thiam on Iqbal Khan) and exits of senior executives, which further undermined the investor’s confidence
quite sharply. Higher yields essentially imply the bank would have to pay higher returns for every dollar or euro it borrows from the market. This becomes a problem, especially in the current global recessionary scenarios when central banks are raising interest rates to contain inflation This increases the cost of raising capital for the bank in a market that does not provide high enough returns. The other worrisome issue is the rise in the spread of Credit Default Swaps Currently, the CDS spreads for Credit Suisse bonds have spiked to 14 year highs.
Source: Reuters
The steady decline in Credit Suisse’s share price is one of the major impacts on the global bank as investors are shrugging away and losing their confidence
If the global bank collapses, the immediate impact will be on the global financial market and might trigger the next financial crisis like the Lehman Brothers. The first two events Covid and the Russia Ukraine conflict have already created a lot of risk for banks in the form of rising interest rates for borrowers, currency depreciation, and economic slowdown, which could result in defaults by borrowers. In such a scenario, if Credit Suisse collapses, there could be more trouble However, India should not worry much as the bank’s presence in India is limited and controlled.
Further, Credit Suisse bonds have become increasingly cheaper as few people want to lend money to it, causing its yields to rise
Credit Suisse is currently focusing on strengthening its flagship wealth management business, pruning back its investment bank business into a “capital light” and “advisory led” franchisee, and evaluating options for Securitized Products
Business. The new CEO Ulrrich Koerner is likely to make big changes in the investment banking and wealth management verticals and cut costs at all levels. Various analysts estimate the bank could face a capital shortfall of approximately 4 6 billion Swiss francs, depending on how much the company is able to raise from asset sales and what it does to scale back its flagship business, restructure, facilitate growth and have a safety cushion
Raising capital will be a major challenge for the bank Asset sales will help but 4 billion Swiss Francs is likely to come in the form of a highly dilutive capital raise. The only relief is that some of this is already in the share price Another option for the bank could be a directed capital increase at a major shareholder. As the last resort, Credit Suisse could seek State Aid as it is one of the globally important banks, whose failure would cause significant harm to the Swiss economy and financial system
Credit Suisse is in process of reshaping the bank for a long term sustainable future with significant potential for re creating its value Given the deep franchise the bank has along with a strong capital base and a long standing focus on serving some of the world’s most successful entrepreneurs, the bank has all it takes to succeed and overcome the hurdle
Jayesh Bellani
Unmesh Datar
MBA
MBA
2022
UPI, or Unified Payments Interface, is a platform that enables the user to transact in real time through various platforms on mobile devices. It works on instant money transfers from one bank account to another UPI was introduced in the Indian markets to increase awareness and safety of online transactions, with the promotion of the same and promote a green environment by reducing the usage of notes Moreover, the purpose was also to regularize and bring the cash transactions into an organized form to better track the cash cycles
UPI was introduced to the general public in 2016 It was an easy system to use on the customer's and the merchant's end It only required an internet connection and a smartphone. One could quickly transfer money through a mobile number linked to an account, a scanner with the embedded UPI This contact number of the person is linked
to the bank account, which is, in turn, linked to the UPI. This system is rapidly replacing the traditional debit card system, as we can see this by the sheer volume of transactions In fact, in 2022, we have already crossed 27,188.54 million transactions till May, which is almost close to 70% volume of the last year in the first five months of the year With this rapid growth, RBI introduced the linking of RuPay credit cards to the UPI system in August, which brings in the power of both the credit card and UPI in one place, with the promotion of both indigenously created systems.
With these two systems interlinked, it has created tough competition for companies like Visa and Mastercard to catch up with the quick acquisition of consumers by the UPI system coupled with the government supported RuPay cards UPI has already crossed over 4 lakh in digital payments across the country. The credit card businesses of Visa and MasterCard run on the principle of earning money through every transaction made on their network with fees of around 0.10% per transaction
that is chargeable to the banks to use their network With the introduction of UPI, we can see that credit card transaction, swiping cards at the merchant POS system, has tremendously plummeted as it is a time consuming and tedious process At the same time, the UPI system takes seconds As currently, the government has only allowed RuPay credit cards to be a part of the UPI network; Visa and MasterCard are set to lose their firm grip over the credit card markets As the UPI network is free of cost, this would eat into the revenues as the banks would prefer the RuPay network to avoid the fees that occur on billions of transactions that occur with their cards.
ACROSS INDIA
Source: NPCI, 2022
ACROSS INDIA
Source: NPCI, 2022
NPCI International Payments Limited (NPIL) is an international arm of the NPCI that supports international locations and is now actively involved in expanding to new locations with payment partners abroad Digital payments provider Liquid Group entered an agreement with NPIL to provide its network in 10 countries: Singapore, Malaysia, Vietnam, Cambodia, Hong Kong, Taiwan, South Korea, Thailand, Japan, and the Philippines. Currently, the NPIL is in conversation with 30 countries worldwide to introduce this system in their respective countries with the infrastructure supported by India. Bhutan was the first country to adopt UPI in its system through the BHIM app to offer convenience to Indian tourists In countries like Nepal, France, and the UK, people can use the UPI systems with the respective partners in those countries to have P2P and P2M transactions Many other nations like UAE, Oman, and European countries already have payment merchants who have established an MoU with NPIL to send remittances across India This helps quick and hassle free transfers to India with a single system. In the coming days, we can expect UPI to be the new system like PayPal to be accepted in various countries with a single touch on your smartphone
India's Finance Minister announced the introduction of the Central Bank Digital Currency (CBDC). This would have a
significant impact on the economy Currently, all our banking services run on the core of SWIFT systems and, hence, UPI is a transactions platform for the same It is the last layer of technology above the banking system
Looking at the success of UPI, which can be said to be the test of CBDC, RBI can work on implementing the e Rupee in the economy UPI is an aid to the intermediary banks to transfer money from one bank account to another. With CBDC, there will be no requirement for an intermediary bank as there will be a direct system settlement rather than money changing accounts This means it is a more advanced version of UPI that, if implemented well, would replace the whole ideology of the traditional banking system
Currently, UPI is a free service offered to consumers and merchants The question raised by many market experts to the government was who is paying for the infrastructure for creating this system Is charging the transactions on UPI imminent in the coming days? Even if UPI has been successful in eating up shares of the traditional banking system and the cash system, it will not be the whole and sole of the future as with UPI, every transaction comes under the scrutiny of the Income Tax department
UPI has been an overall successful product in India Looking at the realities of the current
markets, UPI will gain even more considerable traction in the Indian economy. Slowly the popularity of the system has also started penetrating other markets abroad, resulting in even faster settlements without unnecessary delays and swift trade settlements. With the new versions of UPI allowing not just debit card bank accounts to be linked but also credit card and overdraft accounts to be linked, we would soon see most of the banking operations coming under the UPI gambit. This will add to the dream of our current prime minister, Mr Narendra Modi of Digital India. In the current infrastructure, almost all the retail structures accept UPI payments, and soon we could see a swift transition to the B2B payment transaction processes. To deal with the challenge of internet connectivity, NPCI introduced SMS UPI, which would help people transfer money with a simple SMS With RBI announcing CBDC, we can expect it to be executed through the infrastructure built for UPI Looking at the cost challenge, even if the government has said that its UPI systems would carry no cost, it is highly unfeasible to keep this charge free. To grow and build the infrastructure, we can expect the government to charge us a one time or meager fee on every transaction.
KushThakker|MBA4|2022-24
ShreyaMathur|MBA4|2022-24
The global electric vehicle market is witnessing constant growth, valued at $163 billion in 2020 and is estimated to reach $823 75 billion by 2030, registering a CAGR of 18 2% from 2021 to 2030 The Indian automobile sector ranks fifth globally and is expected to rise to third place by 2030. Federal authorities are creating a transportation alternative that is “Shared, Connected, and Electric” to solve this, and they have set an ambitious goal of attaining 100% electrification by 2030
The number of launches recorded in the year 2022 have been the highest in the two, three, and four wheeler segments, with a startling growth rate of 686% in the first quarter itself. The number of electric two wheelers alone increased by 250% year over year, while carmakers overall introduced more models than ever before
Mahindra Electric (Mahindra and Mahindra Pvt. Ltd. Subsidiaries)
Mahindra, the first large scale EV manufacturer in India, unveiled the Reva as its first EV in 2001 and subsequently launched two other versions Mahindra E20 and eVerito To facilitate EV charging, the company has partnered with several organizations and envisages in house manufacturing of EV battery packs.
Source: Statista 2022
Tata Motors offers a range of cars such as the Nexon, Tigor, Nano, Tiago etc. in electric versions as well. The company would cater to a demand of nearly 4,00,000 buses, estimated for various State Transportation Unions in India in the long run. Moreover, Tata is in the process of establishing a network of frequently spaced charging stations Hyundai Hyundai entered the EV market in India with the launch of the Hyundai Kona EV, specially designed to fit the operational conditions in India One of the car's distinctive selling advantages is its 452km of range on a single charge. This effectively satiated Indians' mileage requirements for automobiles.
Hero Electric: The Indian market for electric two wheelers (E2W) is dominated by Hero Electric (division of Hero MotoCorp). In 2017, Hero Electric unveiled its first scooter powered by lithium ion batteries As opposed to the 4,223 units it sold during the same period last year, the company reported sales of about 8,953 electric scooters in July 2021. It recently partnered with Zypp Electric to help the expansion of the logistics and delivery market. In the next three years, the company intends to install 1 5 lakh electric scooters for Zypp Electric's fleet
Okinawa Autotech Pvt Ltd: The company intends to release three new electric scooter models each year and may soon consider producing electric motorcycles as well. In terms of sales, it occupied the 2nd spot for electric two wheelers It reported sales of 46,447 units during FY22, an increase of 566% over the previous year It now has a 20% market share as a result.
Source: Statista 2022
Ola Electric: One of the most significant electric two wheeler debuts in India for 2021 is reportedly Ola's S1 It comes as a premium electric scooter
designed following Etergo AppScooter. Though the company launched in August 2021, it has managed to sell 14,371 units for the financial year 2022.
MARKET SHARE OF ELECTRIC 2-WHEELER IN 2022, BY MANUFACTURERS
Duty Reduction on Electric Vehicles: A proposal to reduce customs charges on nickel concentrates, nickel oxide, and ferronickel from 5% to 0%, 10%, and 2.5%, respectively, is included in the budget. Local manufacturers of EV batteries will reduce production costs thanks to the plan to cut the customs tariff on motor parts from 10% to 7.5% which will aid in bringing down the overall cost of EVs
Sources: Auto Punditz, Statista 2022
PLI ACC Scheme: The Production Linked Incentive for Advanced Chemistry Cell Battery Storage was introduced by the Department of Heavy Industry in June 2021 and supports the vision of “Atmanirbhar Bharat”. Its objective is to persuade domestic and foreign investors to make investments in India's Giga scale ACC manufacturing plants. It plans to implement a battery swapping policy, which will standardize the battery requirements for EVs used throughout India. As replacing a depleted battery with a fully charged one is a more practical choice than on the spot recharging, which can take hours, the legislation will aid in promoting EVs in ime sensitive service industries like delivery and inter city transit
Low Battery Cost: One of the biggest obstacles to widespread adoption has been the high cost of lithium ion battery cells, which often raise the price of electric car purchases relative to ICE models of similar size However, the cost of battery packs used in EVs has sharply decreased during the past several years. Battery prices have decreased 89% from a global average of US $1,200 per kWh in 2010 to US $132 per kWh in 2021, according to a 2021 analysis by Bloomberg New Energy Finance.
The two main areas where 5G is expected to have a maximum impact are V2X & autonomous vehicles
V2X: Vehicle to everything connectivity is one of the primary functions of 5G technology in the EV ecosystem Through high speed internet connectivity, V2X enables cars to interact not just with one
another but also with other elements of the surrounding traffic system
Autonomous Vehicles: Automakers have made countless unsuccessful attempts to gain level 5 autonomy One of the major obstacles has been the constraints provided by the currently widespread 4G technology because autonomous cars rely on machine learning algorithms that steadily perform better as more data is supplied and examined. A completely networked and intelligent road transportation system is projected to be made possible by manufacturers thanks to 5G, which is expected to have download speeds of around 500 mbps as opposed to the existing 100 mpbs
One of the greatest obstacles to the widespread adoption of electric vehicles is the battery, which is why manufacturers have begun to provide Battery as a Service (BaaS) to increase sales To reduce the cost of acquiring electric vehicles, manufacturers give buyers the option of buying them without batteries. When the battery's charge runs out, it can be replaced with another battery or rented from a service provider This innovative model has been demonstrated to lower the cost of the car by as much as 40%
The EV market is projected to be well positioned for major development in the upcoming decade, thanks to a substantial infrastructure that is affordable, accessible, and supports all consumer groups as well as a solid finance ecosystem, governmental incentives, and technology improvements Despite all the barriers the countries face, EVs will rise to their potential and bring about a revolution of mobility.
DhruvVora|MBA9|2022-24
ShubhamGupta|MBA2|2022-24
With its headquarters in India, Airtel is a leading global provider of communications services with over 491 million clients in 17 South Asian and African nations. With more than two billion people covered by its networks, the firm is one of the top three mobile operators worldwide Airtel is the second biggest mobile operator in Africa and the biggest integrated communications solutions provider in India High speed 4G/4 5G mobile broadband, Airtel Xstream Fiber which offers speeds of up to 1 gbps with convergence across linear and on demand entertainment, streaming services for music and video, digital payments, and financial services are all part of Airtel's retail portfolio.
Airtel has a diverse portfolio of services that it offers to its customers voice, data, network integration, data centres, managed services, enterprise mobility applications and digital media Airtel also boasts of its strategically
placed submarine cables and a satellite network along with a global network of about 2,50,000 kilometers, covering 5 continents
Bharti Tele Ventures Ltd., the predecessor company to Bharti Airtel Ltd., was formed in 1995 Bharti Tele Ventures was renamed Bharti Airtel Ltd. with effect from April 24, 2006, in order to better reflect the company's brand essence, purpose and the nature of its business activities. The company first introduced mobile services in Delhi and Himachal Pradesh in 1995 1996 under the brand name "Airtel." The business received license to offer fundamental telephone services in the state of Madhya Pradesh during the 1997 1998 academic year, making it the state's first commercial telecom operator. The business purchased JT mobiles between 1999 and 2000 in order to provide cellular services operator in Punjab, Karnataka, and Andhra Pradesh. Additionally, they have
increased the size of their South Indian presence by purchasing Skycell Chennai
The business introduced cellular mobile services in the Mumbai area in 2002 2003 in the region of Maharashtra, Kerala, Madhya Pradesh, Uttar Pradesh (west), Haryana and Gujarat. Additionally, they increased the size of their South Indian presence by purchasing Skycell Chennai
The company went public in the year 2002 and got listed on the Bombay Stock Exchange as well as the National Stock Exchange of India The cellular phone operations were rebranded as Airtel later in 2003 Additionally, they introduced fixed line services in the Tamil Nadu and Karnataka circles, as well as International Long Distance Services
Following the signing of a contract with Vodafone, Jersey Airtel and Guernsey Airtel, two wholly owned companies of the Bharti Group, announced on May 1 that they would begin offering mobile services in the British Crown Dependency islands of Jersey and Guernsey under the name Airtel Vodafone In Jersey and Guernsey, a 4G network is run by Airtel Vodafone.
smartphones which are low cost for Indian customers The funds received by airtel through google will help them develop a variety of consumer electronics, available across different prices to make them affordable for the customers Google will also help Airtel with its 5G plan
In July 2022, Bharti Airtel closed a $1 Billion investment deal with Google International. As a result, Google holds about 1.28% of the total equity shares of the company The Google Airtel deal will help to build entry level
Source: Screener
As of 30th June 2022, Airtel’s shareholding pattern comprised of promoters holding about 55.93% unchanged from previous quarters. FIIs shareholding decreased to 18 54% from 19 36% in the previous quarter The DII’s shareholding increased to 20 22% in June 2022 from 19.50% in the previous quarter. Public shareholding also increased from 5 16% to 5 26%
Source: Screener
The revenue from operations for Bharti Airtel for the quarter of March 2022 was INR 19,495 crores, and that for June 2022 was INR 20,187 crores, which is a 3.55% increase. The operating expenses for the March and June quarters are INR 9,791 crores and INR 9,991 crores, respectively, resulting in an operating profit of INR 9,704 crores for the March 2022 quarter and INR 10,197 crores for the June 2022 quarter The net income for Bharti Airtel stood at a loss of INR 2,468 crores, whereas it clocked a profit of INR 406 crores in the quarter of June 2022.
Bharti Airtel, the second largest telecom operator has achieved an Average Revenue Per User (ARPU) of ₹178 for F Y 2022 in comparison to ₹146 for F.Y. 2021, which is an increase of 21.9%.
The jump is a positive sign for the telco’s short term goal of reaching the ₹200 ARPU level. In the coming quarters, there is a high probability that Airtel reaches to close the ₹200 ARPU level
The total number of customers in India has reached 326.04 MN from 321.4 MN, an increase of 1 44% Such an increase is considered to be a positive sign taking into consideration the competitiveness of the telecom industry and the company ’ s revival after the pandemic
Airtel has increased the number of towers from 2,16,901 units in 2021 to 2,37,577 in 2022
which is an increase of 9.5%
Source: ScreenerSector Outlook: The arrival of Jio into the Indian telecom market caused a paradigm shift in pricing that benefited established telecom providers The telecom sector used to include more than eight companies, but after considerable consolidation, there are now only three private operators and one government operator Now that the momentum has changed toward the data, data services are being used increasingly frequently as smartphones become more accessible India now has the second highest number of internet users and has grown to be the second largest telecom market user worldwide Increasing home entertainment bundles, collaborations with content providers, and rising data usage brought on by work from home opportunities and online learning could be significant growth drivers going forward
Company Outlook: The nation’s oldest private telecom operator is launching 5G mobile services in eight major cities and will cover most parts by March 2023 and the entire nation by March 2024. Though Airtel will be suitable to repel competition in the
wireless business, the company ’ s CAPEX might be allocated towards the non wireless business and discerned digital capabilities to drive its growth going ahead.
AnshikaSingh|MBA4|2022-24
ArvindAggarwal|MBA4|2022-24
Gottfried Wilhelm Leibniz introduced the binary system in the late 1600s, the basis of all technological advancement Then, in the late 1990s, digitalization became truly global and spread to the masses. On 1st July 2015, Prime Minister of India Narendra Modi launched a campaign Digital India with a vision to improve online infrastructure for citizens of India by increasing internet connectivity Three main objectives of the campaign were: the development of secure and stable digital infrastructure, delivering government services digitally, and universal digital literacy As a result, banking bodies of India, both national and corporate, were encouraged to onboard their services through networks.
Today, Indian banking organizations like ICICI, Axis, and HDFC are among the leading organizations in adopting digitalization, and national banks like SBI, Canara Bank, etc have
also adopted the new technology In the coming years, India is expected to grow in both digital banking and neobank accounts.
With approximately 400 million neobank accounts which are to be activated by huge investments in cloud technology, this is supposed to be the new revolution in bringing data under one roof for easy access. Many national banks like the Bank of Baroda are also investing heavily in training their employees for services like cash forecasting at currency chests, predictive maintenance of ATMs, etc., to provide better customer services. With advanced technologies, many new features like Chatbots: AI based interactive chat boxes for customer grievances; RoboAdvice: an advisor to track customers’ financial health by analyzing the shared financial history and give investment recommendations, etc. are also added to the interactive web platforms of banks.
Source: Economic Times
“In recent years, digital banking, digital payments, and fintech innovations have grown at a rapid pace in the country. The government is continuously encouraging these sectors to ensure that the benefits of digital banking reach every nook and corner of the country in a consumer friendly manner Taking forward this agenda, and to mark 75 years of independence, it is proposed to set up 75 Digital Banking Units in 75 districts of the country by scheduled commercial banks ” These were the exact words of Nirmala Sitharaman while presenting the Budget 2022 in February The government promised to take sufficient measures to further ease the lives of people, and hence on 17th October, Prime Minister Narendra Modi launched 75 Digital Banking Units (DBUs) in continuation of the campaign Digital India.
issued guidelines for the establishment of Digital Banking Units which were:
Scope of Application: For the Domestic Scheduled Commercial Banks (Except Regional Rural Banks, Payment Banks, and Local Area Banks), the units will be treated as Banking Outlets (BOs), where significant elements of the new business will be sourced
Each unit will have separate entry and exit provisions; for the front end, each outlet will have a smart, customer friendly workstation with Teller Machines, Service terminals, Interactive Digital Walls, Video KYC tool, etc. and in the back end (which includes the core banking system and office related database systems), adoption of flexible, scalable, core independent digital native technologies will be adapted that can be done by creating, updating or reusing the software advised.
With the help of the Indian Banks’ Association chief executive Sunil Mehta, the pilot project was launched under the regulations of a committee by the Reserve Bank of India.
On 7th April 2022, the Reserve Bank of India
The Indian economy is a middle income developing market, 5th largest in the world as per nominal GDP and the third largest by purchasing power parity. The current banking system, which originated around the 1800s, plays an important role in its regulation.
The Government of India and RBI are jointly taking many steps towards digitalization and easy access to banking services like white label ATMs and digital products
is in the row Starting with financial development in the 1990s, India is slated to become the 3rd largest banking sector by 2025 and technology and digitalization is going to be the game changer
The brick and mortar Digital Banking Unit outlets will create a cost effective, convenient, and enhanced service experience and spread awareness for financial literacy and cyber security safeguards in every corner of India along with real time assistance and customer grievances.
As the name suggests, Digital Banking Units will be a hub encapsulating certain minimum digital infrastructure to deliver digital products, which should be on both assets and liabilities side of the balance sheet of the digital banking segment The product part will cover digital kits for merchants, credit/debit cards, UPI QR codes, point of sales (POS) and service in services end to end digital processing of MSME loans (starting from application to disbursal), awareness of govt. schemes and onboarding customers for identified retail The goal of this project is to provide optimum service through minimum digital infrastructure and, hence, improve it.
These units will be set up in tier 1 to tier 6 centres by commercial banks (11 public sectors and 12 private sectors with 1 small finance bank) with prior experience in Digital Banking unless specifically restricted by RBI
Let's not confuse Fintech organizations that currently operate as neobanks with a partnership with non banking financial companies (NBFCs) to be a competitor of DBUs as both cater to different demands of the customer.
Neobanks or digital banks focus heavily on product innovation to offer better digital solutions, while DBUs will serve the concern of existing customers of various national and corporate banks by taking digital banking to every doorstep of India in a customer friendly way.
Canara Bank established 5 state of the art DBUs in Bengaluru Rural, Karnataka, Kerala, Tamil Nadu, and Lakshadweep. ICICI Bank and HDFC bank also announced to set up ICICI’s DBU will have two distinct features: a Self service Zone and a Digital Assistance Zone AI based chatbots will be installed at these stores for insights about customers' offers and products. Each DU will have a branch office to assist through tablet devices using Aadhar based KYC
But the challenge lies in the accessibility of these technologies by each individual of the nation for whom Digital Banking Units are introduced today under the assumption that a person with a savings account in the countryside, as well as the wholesalers or
retailers are equally literate about the current banking system and services that can ease their financial transactions.
Starting Monday, 75 DBUs in 75 districts have been launched officially These are a part of the pilot program, and their use may be increased depending on the results. There is currently at least one DBU in each of the 29 states and the eight union territories The states with the most DBUs are Karnataka, Odisha, Rajasthan, Tamil Nadu, and Uttar Pradesh, each of which has four.
At a DBU, both asset side and liability side products and services must be offered On the liability side, the available products and services are as follows:
Account opening
Digital kit for customers: mobile banking, internet banking, debit card, credit card, mass transportation system cards
Digital kit for merchants: UPI QR code, BHIM Aadhaar, POS, etc.
Banks should provide:
Making applications for and onboarding consumers for identified retail, MSME, or schematic loans on the asset products and services side Along with the online application
Disbursal, end to end digital processing of such loans may also be included. Identified government sponsored programs covered by the National Portal.
Regarding digital services, each DBU must provide:
Cash withdrawal and deposit using ATMs and cash deposit machines exclusively, respectively no actual currency will be accepted or distributed at counters Passbook printing/statement production Internet banking kiosk to offer all or most of the services offered on the internet banking platform, including receipt and online processing of a variety of client standing instructions. Updating KYC and other personal information.
Transferring funds (NEFT/IMPS support). Submitting a grievance digitally, receiving an acknowledgement of it, and tracking the status of its resolution; Account opening kiosks, e KYC/Video KYC kiosks, client digital onboarding for programmes like the Atal Pension Yojana, and insurance onboarding for the Pradhan Mantri Jeevan Jyoti Bima Yojana are just a few examples
Bharvi Shah| MBA 3 | 2022 2024
Biomass is renewable organic material that comes from plants and animals and includes wood, agricultural residues, and waste generated from industries, farms & households etc These materials can be processed into biofuel, a source of energy utilised since the 1800s.
In the 1970s, as the world went through a crude oil crisis, society started looking for alternative sources of fuel. However, biomass did not turn out to be a feasible alternative as we did not have enough land to cultivate plants that could be turned into biomass. Thus, scientists turned to the oceans and found that seaweed could be an excellent replacement
However, the cultivation of seaweed is a cumbersome process that needs to be performed manually, thus hindering the amount of seaweed that can be produced
and turned into biofuel. As stated in a report by the Food & Agriculture Organisation of the UN, the world cultivated just 35.8 million tonnes of seaweed in 2019, whereas the world bought nearly 14 million tonnes of crude oil per day in the same year This is where Sea6 Energy comes in
Sea6 Energy was founded in 2010 at IIT Madras with the purpose of scaling and automating seaweed production so as to transform it into ethanol and natural gas. While other competitors around the world are still trying to solve the problem of scalability, Sea6 has already been running an automated seaweed farm off the coast of Indonesia since 2019 This has been made possible due to their patented technology backed by published research validating their work.
India is currently the third largest importer
of crude oil in the world According to co founder Shrikumar Suryanarayan, if seaweed farming can be automated, there is more than enough space in the oceans to replace the entirity of India’s crude oil needs He says that around 1,20,000 square kilometres of ocean space is required to replace India’s crude oil imports approximately the area of the exclusive economic zone around Andaman and Nicobar Islands.
Sea6 energy was founded by three IIT Madras students Nelson Vadassery (Director Engineering), Sailaja Nori (Director R&D), and Sowmya Balendiran (Director Business Development) along with their professor Shrikumar Suryanarayan (Chairman & CEO) after they participated in the iGEM competition by the Massachusetts Institute of Technology (MIT).
Their main objective was to develop renewable energy solutions by utilising the potential of the ocean and developing eco friendly land alternatives.
To do this, they needed a way to efficiently farm seaweed, which led to the creation of an automated aquatic farming system for which a patent was successfully applied in 2012
Sea6 Energy has a team of professionals from diverse fields like industrial automation, plant pathology, ocean engineering, marine biology, etc , with the
goal of building a new economy based on marine biomass
In 2011, the company received seed funding from IITM alumni and Biotech industrialists. In 2015, they received an investment of $6.6 million from Tata Capital Innovation Fund as part of their Series A Funding
As part of their Series B funding, Sea6 raised $9 million in 2021 from Aqua Spark, a Dutch Aquaculture Fund and Singapore based Silverstrand Capital. In August 2022, they raised a total of $18.5 million from German based BASF Venture Capital Gmbh and Aqua Spark
Sea6 Energy planned to use these new funds to increase the supply of seaweed and to expand processing capacity to produce agricultural bio stimulants and animal health products.
In the manual method of cultivation, seaweed is tied to a wire like a flower garland and is anchored in calm, shallow water for about 4 6 weeks before it is harvested. This process is time intensive, back breaking and comes with the added risk of turbulent tides breaking the seaweed apart The Sea Combine is an automated machine that places seaweed in a cylindrical ‘tubenet’ and also harvests the seaweed when it is grown This patented technology which also protects seaweed from the
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ocean's turbulent movements, is currently the most developed and commercialized one in the world
Sea6’s seaweed cultivation is around 5,000 tonnes with a target of 15,000 tonnes for next year While this is a miniscule amount compared to what is required for India to replace crude oil imports, the problem does not lie in scaling up cultivation
markets such as agricultural and animal feed inputs. It does business in 20+ countries globally.
Sea6 is still in the nascent stage and is far away from where it wants to be Even if all the world’s seaweed was focused on biocrude, current seaweed cultivation would have to go up by at least 10,000 times to challenge the crude oil market The volumes of seaweed needed to get into bioplastics at a price conscious and sustainable level is 5,000 times more than food ingredients, and 50,000 times more for biofuels
Rather, the company needs to set up business functions to process its seaweed production into a variety of different products which can start generating revenue for them.
The market for Seaweed is a pyramid with the top having high margins but small supply requirements (pharmaceuticals, luxury food etc.) and the bottom having low etc )
At the current level of market production, suppliers can only cater to the top players. Sea6 is moving down the pyramid with its large supplies and entering less explored
Thus, while Sea6 develops the research for such gigantic levels of cultivation and processing, it is also focused on developing its business in the food and agricultural industry so as to start generating profits out of the same. Although there is a long way to go before the world can commercially deploy seaweed as a biofuel, CEO Shrikumar remains optimistic about the future due to there being no competition currently. Also, he is banking on the fact that their patents will buy them enough time in case some
JinalShah|MBA6|2022-2024
There have been major financial scams in America One of them is the ‘Crazy Eddie Fraud’ with a petition of $80 million. Crazy Eddie was a consumer electronics chain in the northeastern United States The chain was started in 1971 in Brooklyn, New York, by businessmen Eddie and Sam M. Antar and was previously named ERS Electronics (ERS stood for Eddie, Rose, and Sam; Rose and Sam were Eddie's parents) An 18 year crime spree serves as a study of multiple methods of fraud that white collar criminals engage in. The evolution of the Crazy Eddie crime drama illustrates how petty, easily rationalized criminal infractions can escalate into serious and complex frauds and conspiracies.
Eddie Antar was a school dropout. In 1969, he opened his first store of electronics in Brooklyn Mr Antar believed that people
would demand more electronic gadgets and he was right.
From the beginning, Crazy Eddie intended to save profits and avoid taxes. This engaged them in various forms of fraud. Antar falsified their books to reduce their taxable income They also paid employees off the books and skimmed thousands of dollars (in cash) earned by them through the shops Antar took $1 from every $5 of Crazy Eddie's income From 1979, all these thousands of dollars were deposited in Israeli bank accounts. The Antar family was able to skim approximately $3 4 million per year from their fraud
Due to the rise in income, there was a greater profit margin opportunity This encouraged Antar to commit more fraud and protect their profits. So, Antar discovered a new way of fraud by taking their company public Crazy Eddie held its initial public offering (IPO) on September
13, 1984 Initially, the shares were sold for $8
In 1986, the stock was trading at more than $75 per share (split adjusted).
Sam E Antar (known as Sammy) was Eddie’s cousin Sammy had a degree in accounting and served his apprenticeship with Penn and Horowitz, Crazy Eddie’s auditors. In 1986, Sammy was announced as the company ’ s Chief Financial Officer (CFO) Sammy was asked to hide the $3 million deficit from the previous year ’ s inventory fraud. He was also instructed to find ways to show 10% growth in sales For this, Sammy used a major money laundering scheme, later known as the Panama Pump. Antar’s money, which was deposited in Israeli banks, was transferred to bank accounts in Panama These Panama accounts were opened using false names and records and then payments to Crazy Eddie were drafted This money was used to inflate same store sales for the company On March 1, 1985, the company falsified inventories by $3 million. This amount was increased to between $10 and $12 million in the next fiscal year
Crazy Eddie struggled to manage new stores as the electronic industry grew more competitive. In 1987, the value of the stock sank below the IPO value. In November 1987, entrepreneur Elias Zinn tried to purchase Crazy Eddie Antar thought that this deal would allow them to transfer the fraud to the new owner. But Zinn discovered $45
million of inventory was missing This was the turning point, and the company went bankrupt in 1989.
Antar’s situation was made worse when two disgruntled ex employees came together with Antar’s father to lodge a fraud complaint with the SEC The FBI started to investigate this, too In 1990, Antar fled from his country
On June 24, 1992, Israeli police were stationed outside a luxurious home in Tel Aviv (suburb) US Marshals and Interpol were suspicious of a money transfer between two names, believed to be aliases for Antar. Police arrested Antar and raided the home, uncovering $60,000 in cash, a birth certificate, passports, and paperwork for forming a corporation without a lawyer.
Antar tried to blame his family for all the crimes and thought of himself as a trendsetter rather than a fraudster. The US
Attorney’s Office decided on a maximum sentence of 12 5 years Antar was ordered to repay $121 million to all the investors of Crazy Eddie.
The big lesson from the demise of Crazy Eddie is the importance of a strong board of directors and strong internal controls to ensure the firm is being run in the interests of all shareholders. It's also a bad idea to rely solely on the opinion of auditors
Finstreet, the finance committee of K J Somaiya Institute of Management aims at bridging the gap between industry and academic curriculum through effective delivery of knowledge oriented sessions and events through a network of highly motivated members and renowned industry experts Through the FINLY magazine, we focus on covering crucial topics for each month and giving our members a platform to express their views.