FINLY January 2021

FINLY

JANUARY 2021 | Issue No. 97

Corporates Owning Banks: Dissecting RBI's Proposal Intriguing Indeed

Sector Analysis

Vaccine Diplomacy

Micro Finance

Eco Section Indian Agriculture laws: Evolution,Changing landscape and Aftermath

CONTENTS 01

02

EDI TO R I AL

TEAM F INL Y

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08

C O VER ST O R Y

EC O SEC TIO N

Corporates Owning Banks: Dissecting RBI's Proposal

India's Latest GDP Results - Genuine Recovery or Pent-Up Demand ?

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17

SEC TO R ANALY SIS

C O MPAN Y AN ALYSIS

Microfinance Sector

Equitas Small Finance Bank

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27

INTR IGU ING IN DEED

EC O SEC T I O N

Vaccine Diplomacy

Indian Agriculture laws: Evolution,Changing landscape and Aftermath

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36

C ALL F O R AR T IC LES WI NN ER

C ALL F O R AR TIC LES R UN NER UP

Laqshay Gupta SSCBC| BMS-1

Debashrita Panda NMIMS | 19-21

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ALUMNI SEC TIO N

Prashant Ramalingam PGDM Finanace | 17 - 19

ISSUE NO. 97, JANUARY 2021

Editor's Note

Dear Readers,

The year 2020 was a year unlike any other; a series of a roller coaster rides, pushing the limits of human resilience and patience in every aspect. The lockdowns were compassion in action; knowledge has provided us the comfort and books have truly lived up to the expectation of man’s best friend.

The world is going through a crisis, let’s make and not break ourselves through this pandemic. Let’s revel through the havoc of this unprecedented situation mankind is facing by leveraging the curiosity within us. It’s 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 has rightly said, “An investment in knowledge always pays the best interest”. On this note, we at Finstreet are proud to unveil the 97th edition of our monthly magazine “Finly” for the academic year 2020-21.

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 we can’t thank them enough for their constant support and initiative.

We have received an overwhelming response for this month’s “call for article” competition, with some high-quality content from some of the best management colleges of the country. We thank all the participants for their sincere efforts. This month’s winner and runner-up articles are a recommended read.

We are thankful to Prof. (Dr.) Pankaj Trivedi (Course Coordinator, Finstreet) for providing the much required mentoring, support and backing to the Finly team.

We thank all our readers and faculty members for their valuable reviews and feedback.

HAPPY READING!!!

STAY HOME STAY SAFE!!!

Akshitaa Bahl |Editor-in-Chief| PGDM FS

Nilomee Savla |Editor-Finly| PGDM FS

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ISSUE NO. 97, JANUARY 2021

TEAM FINLY Faculty in-charge

Editor-in-chief

Editor - FINLY

Dr. (Prof) Pankaj Trivedi

Akshitaa Bahl

Nilomee Savla

Team Coordinator

Devansh Mehta

Conceptualization & Design

Anusha Nair

Content Team

Shivam Mahendro

Shrishti Gupta

Aakanksha Agarwal

Anuja Singhal

Anurag Yadav

Kaushal Daga

Mehul Parwal

Rahul Khera

Riya Agarwal

Shubhangi Thapliyal

Tanya Nayyar

Rohan Bhakkad

Sahil Mehdiratta

Jitesh Patil

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| COVER STORY

CORPORATES OWNING BANKS: DISSECTING RBI'S PROPOSAL INTRODUCTION An Internal Working Group (IWG) constituted by the Reserve Bank of India submitted its report in November recommending significant changes to the ownership structure that currently governs private banks. The IWG was formed to assess the existing ownership guiding principles and corporate structure for Indian private sector banks.

THE PROPOSAL The working group has proposed an entry of corporates into the banking space, conversion of big NBFCs into banks, hike in promoters’ stake, and also a hike in minimum capital for new banks, among others. The key points of the proposal are: Entry of Corporates into Banking Space: According to IWG, big corporates and industrial houses may be permitted as

Anuja Singhal | MBA FS | 2020-22 Riya Agarwal | MBA FS | 2020-22 promoters of banks only after essential amendments to the Banking Regulation Act, 1949. The amendments shall help in preventing connected lending and exposures between the banks and other financial and non-financial groups.

Connected lending is a situation in which the bank's controlling owner extends loans of inferior quality at lower interest rates to himself or his connected parties while credit exposure is a measurement of the maximum potential loss to a lender if the borrower defaults on payment.

Conversion of NBFCs into Banks: NBFCs with an asset size of Rs. 50,000 crore and above, moreover ones which are owned by a corporate house, may be considered for conversion into banks subject to completion of 10 years of operations and meeting due diligence criteria and .

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| COVER STORY compliance with additional specified in this regard.

conditions

Hike in Promoters’ Stake: The cap on promoters’ stake, in the long run, maybe raised from the current level of 15% to 26% of the paid-up voting equity share capital of the bank. On non-promoter shareholding, a uniform cap of 15% of the paid-up voting equity share capital of the bank has been suggested.

Hike in Minimum Capital for New Banks: The minimum initial capital requirement for licensing new banks to be increased from Rs.500 crore to Rs.1,000 crore for universal banks and from Rs.200 crore to Rs.300 crore for small finance banks.

Payments Banks’ Conversion into Small Finance Bank: For payments banks, such as Airtel Payments Bank and India Post Payments Bank intending to convert into a Small Finance Bank (SFB), 3 years of experience as a payments bank is necessary.

Harmonization and Uniformity in Different Licensing Guidelines: The RBI needs to take steps to ensure harmonization and uniformity in the licensing guidelines. With the issue of new licensing guidelines and new rules being more relaxed, the advantage should be given to existing banks, and if new rules are harsher, legacy banks should also adapt to new regulations, but a non-disruptive transition path may be provided to the affected banks.

Non-Operative Financial Holding Company: For all new licenses to be issued for universal banks, NOFHC will be the preferred structure.

However, it should be mandatory only in cases where the individual promoters, promoting entities, and converting entities have other group entities. Entities or groups in the private sector, public sector, and NBFCs can set up these wholly-owned NOFHCs. THE IDEA BEHIND IWG’S PROPOSAL RBI’s IWG feels that allowing corporates to promote banks can be a key source of capital.

India being a capital-starved economy, the corporates owning banks can bring management expertise, experience, and strategic direction to the banking system of India.

The IWG also famed that internationally, there are very few jurisdictions that explicitly disallow large corporate houses.

THE PROS More private banks backed by strong corporate entities could mean more availability of capital and more experience, management expertise, and strategic direction to banking.

On the proposal to allow promoters of existing banks to raise their stake to 26%, there appears to be an all-around cheer.

An increase in the stake of promoters will help in greater accountability and would ensure that only the promoters with heavy pockets can enter into the banking sector.

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| COVER STORY Moreover, the recommendation to harmonize licensing guidelines for all banks, whether new or old, will help restore a level-playing field for all the market players. Improved capitalization can be ensured with the RBI’s proposal to increase the minimum net worth for all universal banks to Rs 1,000 crore.

The implementation of the proposal would limit the size of shadow banking in India and ensure stronger supervision.

NBFCs have multiple strengths that will give them a head start in their entry into Indian banking.

As cited in the McKinsey Global Institute report, Gross NPA to total assets ratio stood at 8.5 percent for the banking sector as a whole, and 11.3 percent for PSBs. Non-banking finance, in the form of housing finance and asset-based finance, has emerged as an alternative to traditional bank financing in India. Unfortunately, the NBFC sector in India has also been under stress as witnessed in the recent crisis of NBFCs concerning ILF&S and Dewan Housing Finance.

CURRENT TREND OF BANKS Credit growth is considered an important function of the Gross Domestic Product (GDP) growth in India. As compared with ideal market trends, India has a lower credit to GDP ratio. The main cause for such a trend is that banks in India stick to high-quality borrowers and there is an entire section of the economy waiting to be tapped under this. Even so, low credit penetration is not harmonious with a high proportion of non-performing assets (NPAs) in India.

WHY HAVE CORPORATES BEEN KEPT AWAY SO FAR? The large private corporates have been kept away from the Indian banking system till now as the corporate governance in Indian companies isn’t up to international standards and keeping a check on the non-financial activities of the promoters would prove to be a herculean task. Also, there is a risk of promoters giving loans to themselves as seen in the pre-nationalization era. Before the bank nationalization happened in 1969, some of the private banks were owned by large corporates, and these big industrialists used to give loans to themselves.

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| COVER STORY PROBLEMS WITH THE PROPOSAL Talking about the disadvantages of IWG’s recommendation, there are too many problems with the proposal. The Indian Banking system has been in trouble for the last few years. With the new proposal of IWG, the RBI will create large capital, large entrepreneurship, and large lending capacity, which all, on one hand, is not healthy for our economy. Hence, many concerns were raised by the former RBI governor Raghuram Rajan, former RBI deputy governor Viral Acharya and many other economists on giving an entry to private corporates into the Indian banking system. Even foreign rating agencies like S&P Global has called it a “risky proposition”.

Raghuram Rajan and Viral Acharya called the proposal a “bombshell” move that could further exacerbate the concentration of economic and political power in certain business houses and that the exchequer could face significantly higher bailout costs if these banks failed. They also argued that highly indebted and politically connected business houses will have the greatest incentive and ability to push for new banking licenses, a move that could make India more likely to succumb to authoritarian cronyism.

Some of the risks associated with corporates owning banks are: Over-financing risk due to connectedlending of the borrower and the lender.

Banking regulators are not strong enough to prevent the connected lending problem.

The concentration of economic power with the big private corporate houses is a threat to our economy.

Industrial houses need financing, and they can get it easily, with no questions asked if they have an in-house bank which can prove to be disastrous.

Banks owned by corporates will be too big to fail, and the risk of their failure will eventually fall on the government and not on the Corporates.

The Government will be forced to step in and prevent the bank from failing using the tax-payers money to protect the economy.

The RBI’s supervisory capacity will be over-burdened with the entry of private players.

Conflict of interest will arise as the lender is also the borrower in the market.

CONCLUSION Mixing industry and finance will set us on a road that is dangerous for growth, public finance, and the future of the country itself.

Hence, we believe that this is not the right time to give corporates an entry into the

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| COVER STORY banking sector. The proposal needs further deliberations, and RBI can consider its implementation in the future once the existing banking structure, regulations, compliance, and risks management frameworks are strengthened.For now, long overdue reforms on better loan underwriting, monitoring, recovery, and robust risk management are the only ways to ease the pressure on the banking sector in India.

This pandemic is a call to action for the Government to undertake the necessary reforms to capitalize on the looming opportunities.

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| ECO SECTION

INDIA'S LATEST GDP RESULTS- GENUINE RECOVERY OR PENT-UP DEMAND? INTRODUCTION The COVID-19 virus was first detected in the Wuhan region of China in December 2019 and it was subsequently declared a pandemic in March 2020 when more than 200 countries and territories confirmed medical cases caused by this disease. This caused India to undergo one of the harshest lockdowns by any country. Due to the lockdown, there was a halt in all activities which in turn caused an economic arrest. Only essential goods and services such as agriculture, IT & financial services, utility services, and mining activities were allowed to operate.

India had been witnessing a pre-pandemic slowdown with exports-imports, energy, agriculture, manufacturing, stock market, and many other sectors falling after the lockdown was imposed. This was directly reflected in the first quarter of the FY 2020-21 where India saw the GDP decline to -23.9%. It exceeded many estimates which gave a figure of around 20 points of contradiction with the first Atmanirbhar Bharat package coming out in the latter part of the first quarter.

Rohan Bhakkad | MBA - FS | 2020-22 Kaushal Daga | MBA - FS | 2020-22 GDP GROWTH RATE AS per Murphy’s Law, “Anything that may go wrong will go wrong.” It’s evident from the graph that Indian GDP was already in a phase of decline. The pandemic further shattered the Indian economy and India saw a negative GDP growth for the first time in its history since its adoption of quarterly results.

Post the shocking results of the first quarter (due to the restrictions imposed during the lockdown), the second quarter was expected to recover with the Unlock’ phases getting initiated from June. This meant the resumption of economic activities in various sectors and a gradual return to a new normalization.

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| ECO SECTION This resulted in estimates still being negative but a V-shaped recovery was expected.

Researchers used the 'nowcasting’ method and arrived at estimates which ranged from 912 points of contraction. But the numbers were even better than expected with the second quarter of FY 2020-21 recording a GDP growth rate of -7.5%. Two straight quarters of GDP contraction means India has entered a period of a technical recession. This is the first time since India began releasing quarterly estimates of GDP in FY 1998-99.

Private consumption was clocked at 11.3% as compared to 26.7% in the first quarter of FY 2020-21 whereas Investments or Gross Fixed Capital Formation reflected a huge difference in the numbers, 7.3% in the latest quarter as compared to 47.1% in the previous quarter. A contraction of 22.2% in this quarter as compared to growth of 16.4% in the Government Final Consumption Expenditure was a shock since the central government had announced various relief packages through the Atmanirbhar Bharat scheme. An increase in investments came after the restart of various projects which were closed down but if the new investments are being manifested is not clear.

IMPACT OF THE STIMULUS PACKAGE On 12th May 2020, Prime Minister Narendra Modi announced the “Aatma Nirbhar Bharat Abhiyaan” with which there was a roll-out of an economic package of ₹ 20 lakh crore which is equivalent to 10% of the Indian GDP. The objective was to focus on making our country independent and also to make it competitive with the global supply chain and empowering the poor, laborers, and migrants. Following this, Finance Minister Ms. Nirmala Sitharaman announced various measures under the economic package.

The government announced collateral-free loans for businesses up to ₹ 3,00,000 crores which will help many businesses to keep running as the lockdown was slowly lifted thereby contributing to the overall GDP. The Cash Reserve Ratio was also reduced by 100 basis points to 3% by the RBI which resulted in liquidity support of ₹ 1,37,000 crores. RBI also increased banks borrowing limits under the Marginal Standing Facility to increase the liquidity in the economy. This helps to keep the supply and demand cycle moving which encountered the dampening effect of the pandemic.

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| ECO SECTION HIGHLIGHTS OF THE GDP NUMBERS When the lockdown was lifted, the economic activity moved forward which resulted in positive growth in many sectors. This rebound of activities was seen in many sectors including services such as passenger vehicles and railways. We also saw the manufacturing sector, which had shrunk by 39.3% in the last quarter saw a rise of 0.6% in this quarter whereas the construction sector which is the second-largest employer in the economy contracted to only 8.6% when compared to the first quarter shrink of 50.3%.

We also saw a change in the electricity and public utilities which recorded a growth of 4.4% from a contraction of 7%. Agriculture remained stable at 3.4% with the onset of the Rabi season, providing support to the GDP. However, the contraction to 8.1% from 5.3% in the financial services sector due to the unchanged interest rates and the extending moratorium was a reason to worry about.

Another very important reason for such fast recovery in domestic consumption was the support that the government had provided to the common man byways of reducing and extending the tax filing dates, providing the people with incentives for making purchases in the real estate to provide the liquidity that was necessary for the economy. One of the major concerns will be how the economy reacts when these measures will be lifted or rolled back by the government, as there is a high probability that the demand may once again go down and people may start to reduce their spending.

PENT UP DEMAND The Indian economy was in a strict lockdown from March 2020 to May 2020. This hurt the demand-supply of some goods that are required but were not necessary, for example, Indian automobile companies like Maruti reported 0 sales in April 2020. Once the lockdown was lifted these were the companies that saw a surge in the orders and demand from the customers as the requirement was always there but the lockdown has restricted them from the purchase. Hence, we saw there was a situation where customers had to wait for their opportunity to purchase as the demand for the last few months came all at one time and on the other hand, the manufacturing companies were also not operating during the lockdown. This was the trend amongst majorly all the sectors in the Indian Economy.

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| ECO SECTION The other major reason for the increased demand was the Indian festival season starting from the Ganesh Chaturthi followed

by Navratri, Eid, Diwali, and now Christmas coming. It has been historically seen that there is an increase in the consumption amongst the Indians during the festivals.

Earlier in the article, we saw that Maruti was unable to sell a single unit but with the festival season around the corner, September-October months saw a huge spike in the sales reported by top automobile companies, including Maruti.

Vehicle registrations in September grew by 14% compared to the previous month; electricity demand shot up by 10.2% year-onyear in October; exports went up by 5.3% after shrinking for six months; unemployment fell from a high of 23.52% in April to 6.67% in September this year. The real demand requirement amongst the Indian economy can be seen only after the festival season comes to an end, but as for now, it is driving on the Festive and Pent-Up demand. The Society of Indian Automobile Manufacturers believes that the automobile sales across segments will fall by 25-45% this fiscal year, despite the bonanza sales in September and October.

This will lead to more purchasing power with the consumers which will reflect in more demand. However, it is somewhat early to comment on whether the Indian GDP numbers are real recovery numbers or just the result of pent-up demand.

We will have to wait for another one or two quarters and then only we will be in a better situation to comment on this. When the Q3 results of FY2020-21 for many companies will come we will understand their sales, inventories, and future growth prospects.

Many companies themselves have agreed upon the fact that the sales domestic figures and the actual inventory that would be left would reflect the real picture in the coming days.

FUTURE AND CONCLUSION Atmanirbhar 3.0 was announced after the results of the second quarter of FY 2020-21 with the key focuses on individual sectors to increase job creation.

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| SECTOR ANALYSIS

MICROFINANCE SECTOR ‘Microfinancing’ was introduced in India in the 1980s to provide credit to low-income households and a solution to poverty and to empower women. Despite its strong potential, there are still difficulties related to accessibility in rural India.

Microfinance is a type of banking service that mainly targets people who face difficulty in formal financial service. It is targeted the low-income and unemployed fraction of society.

South Asia is one of the leading markets in global micro-financing and its share in 2018 is around 62%, growing at a rate of 13.8% annually, which is more than other geographies. A large portion of these borrowers is from India. In FY 2019, the loan portfolio of Indian microfinancing worth INR 1.785 trillion and 6.41 crore unique borrowers, the industry has grown 40% YoY. The growth factors are diverse microfinance lenders and different microfinance models.

Anurag Yadav | MBA C | 2020 - 22 Mehul Parwal | MBA FS | 2020 - 22 Microfinancing in India is channeled through microfinance institutions (MFIs), small finance banks (SFBs), non-banking financial companies (NBFCs), banks, and nongovernmental organizations (NGOs). MFIs hold the largest share of the loan portfolio, which stands at a staggering amount of INR 681 billion and account for 38% of the overall industry portfolio. This suggests that borrowers are more inclined to take loans from MFIs. MARKET SHARE OF FINANCIAL INSTITUTIONS

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| SECTOR ANALYSIS Among the microfinance industry players, banks have shown stable growth supported by the ease of access to funds, higher loan ticket size, and low delinquency ratio. On the other hand, MFIs hold the largest share of loans portfolio, but their growth is unfavorably affected by the limited access to finance and high customer acquisition cost and servicing cost rising due to operation in remote geographies. In FY19, the average ticket size per client in the case of NBFCs and MFIs was INR 25,850, although, in the case of SFBs, it was INR 30,780. There is also a structural problem of unaffordability by end customers and large NPA for microfinance providers as interest rates vary from 24% for larger NBFC-MFIs to 35-40% for smaller MFIs. PORTER FIVE FORCES ANALYSIS The Threat Of Substitute: Products Informal providers (money lenders, employers, friends, and relatives) are giving tough competition to the microfinance industry in rural India. They are easily accessible and can provide credits to people immediately. Villagers require money mostly for a shorter duration (maybe a few weeks or months), and the amount is mostly small.

Hence, in this scenario, informal providers can act as a substitute for the industry.

Further, commercial banks, cooperative banks, and small finance banks have started focusing on rural and semi-urban areas, where the market is still untapped. Banks charge significantly lower interest rates

when compared to micro-finance institutions. With the increase in people's financial literacy in the future, banks can act as a substitute for the micro-finance industries.

The Threat Of Existing Rivals SHGs directly or indirectly through MFIs/NGOs are the major operators in the microfinance industry. Nearly thousands of entities are concentrated in states like Odisha, Karnataka, Chhattisgarh, and Andhra Pradesh. Hence, they are putting pressure on the businesses to reduce the margin if they want to be in the business.

Also, many CSR activities are taken by companies like Infosys, PepsiCo, Oracle Corporations, and many more, which are having a detailed plan on corporate social responsibility. They are not directly involved in money lending; however, they provide technical and financial support for the development programs in collaboration with local organizations, making them virtual competitors in the microfinance field.

In rural areas, people perceive MFIs as banks. However, MFIs provide loans without security, whereas a bank needs security.

Hence, this leads to a situation where banks become the competitors of MFIs. The Threat Of New Entrants Suppliers of microfinance in India may be classified into the following three categories:

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| SECTOR ANALYSIS Commercial Banks (Formal sector)

The Bargaining Power Of Supplier

MFIs and SHGs (Semi-formal sector)

Most of the country's rural areas are still untouched by the Microfinance sector, whereas in some areas, the concentration of MFIs is very high. If we go by this fact, MFIs should have negligible power in dictating the business. However, this is not the case and because of prevailing financial illiteracy in rural India, MFIs are charging very highinterest rates (between 20% to 30%). To address this problem, RBI in 2014 said the microfinance institutions (MFIs) should arrive at the lending rate by calculating their cost of funds plus a maximum 10% margin or the average base rate of the five largest commercial banks by assets multiplied by 2.75 times, whichever is lower.

Informal providers such as chit funds, money lenders, pawnbrokers, employers, friends, and relatives.

Banks have started implementing Business Correspondent (BC) model and also providing the facilities of the No-Frills account and by doing so, they have forayed into microfinance. With a much larger capital base, these banks may be a significant threat to the microfinance entities. Therefore, the flooding of more and more companies in the industry will pressure the microfinance institutions' margins.

MAJOR PLAYERS: The Bargaining Power Of Customers Equitas Small finance bank In the microfinance industry, buyers are mostly in groups or clusters like SHGs. An individual has less buying power as compared to groups. These groups exercise power through the MFIs, to which they are affiliated. Also, they become influential since lots of options are available.

Therefore, as an institution, the decisions of a supplier can be influenced by them.

Equitas Small Finance Bank was founded in 2007 with headquarter in Chennai. It offers a small loan between INR2000 and INR35000 to Economical Weaker Section (EWS) and Low-Income Group categories. It charges 24% p.a interest up to loan amount INR25,000 and 23% p.a interest on loan amount more than INR 25000.

ESAF Microfinance and Investment (P) Ltd

Further, local money lenders, who provide microfinance services and are easily accessible, are giving tough competition to microfinance institutions, thereby increasing the customer's bargaining power.

ESAF is the leading MFI in India that has empowered more than 4 lakh members through its 150 branches. The institution provides boutique loan products to suits .

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| SECTOR ANALYSIS varied customers. It offers loans between INR1000- INR 1 Lakh and charges an interest rate of 22-26% p.a on a diminishing basis for 3months-60months.

Fusion Microfinance Pvt Ltd. Fusion Microfinance is an RBI registered NBFC-MFI that works on a Joint Liability Group (JLG) lending model of Grameen. It offers loans to women in rural and semiurban regions. It offers a loan of INR3,000INR60,000 for a period of 8months24months and charges interest of 21%-21.5% on the reducing balance method.

GOVERNMENT POLICIES: The microfinance sector is known for satisfying the financial needs of the people who are at the bottom of the pyramid.

Therefore, from time to time, the government takes several steps to promote and regulate the microfinance sector.

In 2010, there was a microfinance crisis in Andhra Pradesh, which triggered a strong response from RBI. Malegam Committee (headed by Y.H. Malegam) was formed and based on its recommendation, several regulations were put in place for microfinance industries in December 2011 by RBI. Now comes the Rashtriya Mahila Kosh (RMK), an autonomous organization under the Ministry of Women & Child Development. It was established in 1993 to promote and support schemes for

improving facilities for credit for women. Its functioning was reviewed during the period 2014-2015 and steps such as simplification of loan procedures and a downward revision in the rate of interest were taken to revamp the organization.

On 8th April 2015, Pradhan Mantri Mudra Yojana (PMMY) was launched by the Government of India to “fund the unfunded� by bringing non-corporate, non-farm small/micro-enterprises to the formal financial system and extending affordable credit to them. Under this scheme, microcredit is offered mainly through Micro Finance Institutions (MFIs), which deliver credit up to Rs.1 lakh for various microenterprise activities. Also, Micro Units Development and Refinance Agency (MUDRA) Bank was set up by the government, which is responsible for regulating and refinancing all Micro-finance Institutions.

Further, to encourage more borrowing among customers and stimulate the slowing Indian economy, RBI has increased the lending limit for low-income borrowers from INR 1 lakh to INR 1.25 lakhs. This increase in lending limits, supported with new investment channels and changing business models, will support the microfinance sector's holistic growth.

OUTLOOK: Government schemes and established financial institutions have enhanced microlending to nearly 67% of the rural

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| SECTOR ANALYSIS population, however significant geographic concentration of MFIs within few districts of the country (34% of districts with microfinance presence contribute 80% of the portfolio) indicates a higher potential for microfinance penetration.

Further, the target of India is to become a USD 5 trillion economy by 2025. To achieve this goal, the microfinance industry will play a crucial role by uplifting many low-income households' lives and enabling them to contribute to the country's economic growth. The microfinance sector's future will be determined by the players' ability to develop new products, forge new partnerships, create new investment channels, and leverage technology to meet consumers' demands.

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| COMPANY ANALYSIS

EQUITAS SMALL FINANCE BANK BUSINESS OVERVIEW Equitas Small Finance Bank was originally incorporated as V.A.P Finance Private Limited in 1993. Its promoter, Equitas Holdings Limited, obtained RBI approval to set up a small finance bank (SFB) in June 2016.

Thereafter, the NBFC was converted into a Small Finance Bank (SFB) and its operations commenced on September 5, 2016. Equitas Small Finance Bank is the leader among SFBs in terms of distribution network. As of June 30, 2020, the bank had 856 banking outlets and 322 ATMs spread across 17 states and union territories in India.

Tanya Nayyar | MBA - D | 2020-22 Jitesh Patil | MBA - D | 2020-22

Also, in terms of assets under management (AUM) and total deposits in FY19, it is the second-largest SFB in India. The bank provides microfinance loans that facilitate financial inclusion, housing finance, vehicle finance, and MSE finance, with the main focus on financially unserved and underserved customers. The bank also provides current accounts, salary accounts, savings accounts, other deposit accounts, ATM-cum-debit cards, mutual fund products, third party insurance, and issuance of FASTags.

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| COMPANY ANALYSIS

The bank believes that their risk management system, along with their expertise in dealing with unserved and underserved customer groups, has enabled them to contain their NPA levels and boost their credit ratings, allowing them to access capital from banks and financial institutions at competitive rates.

They also distribute products and use technology across digital platforms to find ways to best serve their target customer segment. They also implemented facial recognition features for transaction authentication in their mobile banking apps.

IPO ANALYSIS Equitas Small Finance Bank IPO comprised a fresh issue of shares worth Rs 280 crore, and an offer for sale of 7,20,00,000 share by the parent company Equitas Holdings. The Bank planned to raise roughly ₹518 Crores with equity shares of face value of ₹10. The issue was priced at ₹32 to ₹33 per equity share. The minimum order quantity was 450 Shares. The IPO opened on Oct 20, 2020, and closed on Oct 22, 2020. KFintech Private Limited was the registrar for the IPO. The shares were proposed to be listed on BSE, NSE. Bank proposed to use the Net Proceeds from the Offer towards increasing the Bank’s Tier I capital base to meet the bank’s future capital requirements. Equitas Small Finance Bank IPO was subscribed 1.95 times. The public issue was subscribed 2.08 times in the retail category, 3.91 times in QIB, and 0.22 times in the NII category.

SHAREHOLDING PATTERN

From the above pie chart, we can observe that a major stake in the Equitas Small Finance Bank is held by the Promoters of the company with 82.05%. Mutual funds hold 3.07% in six schemes. FIIs hold around 1.3% stake, while Non-institution investors hold 6.28% and the rest 7.29% stake is held by other DIIs. CORPORATE GOVERNANCE Equitas Corporate Governance strategy envisages compliance with the highest degree of transparency, accountability, and fairness in all aspects of its operations and all interactions with its stakeholders. The policies and processes of the Bank have been fine-tuned, right from its inception, to ensure utmost clarity and fairness when dealing with their customers for two key reasons, Vulnerable Customer Profile and Handling Public Money.

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| COMPANY ANALYSIS Their client profile is that of low-income households that do not have access to banks. With limited access to formal finance, these customers could be exploited by players that charge excessively high interest rates or follow coercive and unlawful practices. Also, Equitas avails loans from banks and they hence need to demonstrate additional responsibility in the handling of public funds. Due to this perspective, they have made Governance a high priority issue.

like Used Car Finance, Affordable Housing, Agri-Business, and Liabilities, which resulted in an increase in staff expense.

Total provisions and contingencies were ₹247 crores (including ₹99.63 crores in respect of accounts in default but standard against the potential impact of COVID-19) as compared to ₹102 crores the preceding year.

RATIO ANALYSIS

FINANCIAL ANALYSIS Statement of P&L

CASA Total income has increased by 22.25 % in FY2020 as compared to FY2019. This increase can be accounted for by an increase in interest on advances, interest on balance with interbank funds, and an increase in other income sources like commissions, exchange, and brokerages.

Also, a 38.8% decrease in income from investments has been observed. Operating expenses rose to ₹1,180.08 crores from ₹1,008.48 crores.

During the year, the bank increased its employee strength in newer businesses

The percentage of total bank deposits that are in a CASA is an important metric to determine the profitability of a bank. The CASA ratio indicates how much of a bank’s total deposits are in both current and savings accounts. A higher ratio means a larger portion of a bank’s deposits are in current and savings accounts, rather than term deposit accounts. CASA ratio declined to 20.46 % in FY2020 from 25.25 % in FY2019.

This is due to a decrease in current account deposits and a double-digit increase of 27 % in term deposits.

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| COMPANY ANALYSIS NIM Net interest margin (NIM) is a measure of the difference between the interest income earned by a bank or other financial institution and the interest it pays out to its lenders (for example, depositors), relative to the number of their assets that earn interest. NIM has increased to 7.74 % in FY2020 from 7.30 % in FY2019. Although the interest expended has increased by 19.78 %, a higher 25.26 % increase in interest earned had caused the NIM to grow marginally.

LOAN TO ASSET RATIO The loan-to-assets ratio is another industry-specific metric that can help investors obtain a complete analysis of a bank's operations. Banks that have a relatively higher loan-to-assets ratio derive more of their income from loans and investments, while banks with lower levels of loans-to-assets ratios derive a relatively larger portion of their total incomes from more-diversified, noninterest-earning sources, such as asset management or trading. The loan to asset ratio has increased to 26.59 % in FY2020 from 25.21 % in FY2019.

ROA The return-on-assets (ROA) ratio is frequently applied to banks because the cash flow analysis is more difficult to accurately construct.

The ratio is considered an important profitability ratio, indicating the per-rupee profit a bank earns on its assets. The ROA ratio is a company's net, after-tax income divided by its total assets. ROA has decreased to 1.39 % in FY2020 from 1.45 % in FY2019.

IMPACT OF COVID-19 The Covid-19 pandemic has led to significant disruptions and dislocations for individuals and businesses, affecting regular banking operations including lending, fund-mobilization, and collection activities. To counter such issues, Equitas SFB increased its total provisions and contingencies to Rs. 247 crores (including Rs. 99.63 crores in respect of accounts in default but standard against the potential impact of COVID-19) from Rs. 102 crores in the preceding year.

Since most of the borrowers of Equitas SFB are small business owners, the Bank encouraged its customers to opt for Moratorium to help them conserve cash during the lockdown and use their savings to kick start business once lockdown eases.

Strict lockdown during Moratorium 1.0 hindered businesses of customers and the Bank’s ability to conduct center meetings, carry out cash collection, and meet customers.

The loan segment of Equitas SFB has a major share of MSME & vehicle loans. This sector took a major hit during Covid-19,

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| COMPANY ANALYSIS decreasing the total loans taken from this sector. A fast-paced recovery in this sector, as well as other sectors after the lockdown, has increased the loan book exponentially from 7.5 Cr in April 2020 to 465.08 Cr in June 2020.

FUTURE OUTLOOK All SFB are leveraging front-end technology platforms to further improve customer acquisition and transaction management.

The objective is to make it easier for customers to manage their accounts, while facilitating significant cross-selling opportunities for a wider range of products, thus building on our existing relationship with our customers. ESFB intends to leverage the functions to further grow their banking operations. In order to achieve this, they intend to further cross sell their liability products such as recurring deposits to their asset side customers primarily comprising microfinance customers.

on bancassurance channels to distribute various types of insurance products to existing customers, including to families of JLG customers, thereby promoting greater financial inclusion. As of June 30, 2020, they had 7 bancassurance relationships including with insurance companies offering general insurance, life insurance and health insurance products. They will also seek opportunities to undertake government banking business such as enrolment of Aadhar, collection and disbursement of gratuity and provident fund, tax collection.

The collaboration of microfinance institutions with fintech companies is expected to aid in raising their operational efficiencies and reduce cost. Equitas SFB plans to develop digital platform-only products, specifically designed for the younger and technologically savvy customer base.

They endeavour to empower customers to access various products & services and raise banks' efficiency. They also propose to focus

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| INTRIGUING INDEED

VACCINE DIPLOMACY Vaccine diplomacy is a tributary of global health diplomacy that pivots on the use or delivery of vaccines, while vaccine science diplomacy is a subdivision of vaccine diplomacy is a unique hybrid of global health and science diplomacy.

The term ‘vaccine science diplomacy’ closely refers to the joint development of life-saving vaccines and related technologies. In the case of vaccines, the most suitable decision for any nation will depend on the decisions and actions taken by other nations. Hence vaccine policies cannot and should not be made in isolation — which means it follows the fundamentals of game theory.

ORIGIN International cooperation for purposes of tropical and infectious disease control dates back to nearly 14th century when early concepts of quarantine were introduced in Dubrovnik on the Adriatic Coast of Croatia and later in 1851 when Europe held its first International Sanitary Conference for multilateral cooperation to prevent the spread of plague, cholera, and yellow fever.

Aakanksha Agarwal| MBA - C | 2020-22 Rahul Khera| MBA-C | 2020-22 These efforts gave rise to a host of international sanitary conventions and treaties and ultimately led to the formation of the Pan American Health Organization and the establishment of the World Health Organization (WHO) later on.

In 2007, foreign ministers from seven countries, namely, France, Brazil, Norway, Indonesia, South Africa, Senegal, and Thailand - issued the landmark ‘‘Oslo Ministerial Declaration’’ that formally linked global health to foreign policy.

THE HISTORICAL CONTEXT The best way to understand the concepts of vaccine diplomacy and vaccine science diplomacy is through reviewing their historical successes. An exciting but little known fact is how diplomacy is intimately tied to the initial development and delivery of many vaccines.

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| INTRIGUING INDEED The first vaccine discovered in modern times was by Britain’s Edward Jenner in 1798, who found that cowpox administered as an inoculum could prevent smallpox because smallpox caused fatal and catastrophic epidemics, the first vaccine almost immediately received international acclaim.

The next set of vaccines that included a new rabies vaccine was developed almost one hundred years later by France’s Louis Pasteur. During the Cold War between the US and the USSR, vaccine science diplomacy entered its golden age. In the present day, the oral polio vaccine is helping in eradicating polio globally. Similarly, between 1962 and 1966, the USSR pioneered a freezedrying technique for smallpox vaccine and provided 450 million doses of vaccines to support global smallpox eradication campaigns in developing countries, while the US provided key financial support. The global eradication of smallpox by the late 1970s was led by such international collaborative efforts.

As an early attempt at global governance for developing pediatric vaccines for developing countries, in 1990–91, a Children’s Vaccine Initiative was launched. Vaccine diplomacy also expanded in the latter decades of the 20th century. According to WHO’s Health as a Bridge to Peace—Humanitarian Cease-Fires Project (HCFP), vaccines and vaccinations were used to negotiate so-called ‘‘days of tranquility’’ in more than a dozen countries during the 1980s and 1990s, including Afghanistan, Sudan, Angola, Chechnya, Sierra Leone, Philippines, Democratic Republic of Congo, Guinea Bissau, Lebanon, El Salvador

Iraq, and Sri Lanka.

CURRENT SITUATION In the past two decades alone, the world has faced several outbreaks such as Ebola, Zika, MERS-CoV (Middle East Respiratory Syndrome), SARs, H1N1, and "2019-nCoV" that is COVID-19.

In the present day, COVID-19 has already infected thousands of people and killed more than 1.66 million.

But unlike in many previous outbreaks, where vaccines to protect people have taken years to develop, however, the research for a vaccine to help stem this outbreak got underway within hours of the virus is identified.

CHINA’s VACCINE DIPLOMACY – Will it help to restore its image?

China intentionally delayed sharing the details of the genetic structure/ genome sequence of coronavirus that originated in Wuhan at the end of 2019, which had delayed the process of developing a vaccine by other countries to fight the coronavirus.

China has already paid a diplomatic price for its failure to control the COVID-19. In the initial stages, China was the only country to have key information about the deadly coronavirus, and hence, it got a head start for developing a vaccine. Now to repair its damaged reputation, it has started offering its potential vaccine to other countries. The Chinese Government wants to portray itself as a public health provider.

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| INTRIGUING INDEED If China can provide a successful vaccine at an affordable price, then it can help China restore its image that was damaged by the Chinese Government for not being careful in handling the virus. It will also act as a financial boost for the country’s pharmaceutical companies. According to Essence Securities, a Hong Kong-based brokerage firm, if China captures just 15% of the market in middle and low-income countries, then it can cash in around $2.8 billion in sales.

The Chinese government is trying hard to deflect blame for what they did in the early days of the pandemic. So having a really good vaccine, can help them improve their image in the eyes of the people around the world.

The idea that the Chinese vaccine is going to be a global public good is playing a crucial role for China right now because it has become the way the Chinese government is fighting the propaganda war in the pandemic.

CHINA’s VACCINE – Is it to promote diplomacy or to expand its dominance?

China's 'vaccine diplomacy' is not unconditional because the authoritarian nation is aiming to offer its potential vaccine to other countries with strings attached so that it could gain more geopolitical clout.

This was reflected when Li Keqiang visited the ASEAN region. During which assurance was given to these countries that they would get priority for the vaccine.

As China has been facing the heat for hiding information on the contagious coronavirus, as a quid pro quo for the vaccine the ASEAN members had been asked to support China at the World Health Organization - reported by newspapers in Hong Kong and Singapore.

However, the ASEAN countries are cautious of China as they know of China’s increasingly expansionist foreign policy. It has been flexing its military muscle and laying claim to territories of other countries. Also, China is expected to use its vaccine donations to advance its regional agenda, particularly on sensitive issues such as its claims in the South China Sea. In response to China's clever move, ASEAN members Thailand, The Philippines, and Malaysia, all three have signed an agreement for procuring COVID-19 vaccines from Britain and the US in November 2020.

INDIA's VACCINE DIPLOMACY STRATEGY In the past, India has always helped its neighbors in times of crisis and it is expected that India will continue to provide help to its neighboring countries this time also. This was proved when the Indian Government provided its help to those countries across the globe since the pandemic erupted. 60% of the world’s vaccine is produced by India.

The plan is very clear. Produce on a large scale and thereafter give these vaccines to neighboring countries first and then all over the world. In the global race to develop vaccines against COVID-19, Oxford University

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| INTRIGUING INDEED and AstraZeneca came together to develop the vaccine for the deadly virus. It is seen as the best hope for many developing countries because of its cheaper price and the ability to be transported at normal temperatures.

Serum Institute of India in Pune is also developing this vaccine from where it is expected to be dispatched to other countries in Asia and Africa.

AGREEMENT COUNTRIES

BETWEEN

INDIA

&

OTHER

Prime Minister Shri Narendra Modi has made it clear through his COVID-19 cooperation initiative that India will ensure that the vaccine is not just for the people of India but for all humanity. India has been aiming to make this vaccine accessible and affordable with the priority to serve its closest neighbors & its friends. The countries will be carefully chosen to include key neighbors, nations where a large number of Indians are working or studying, and those who have been very helpful and supportive of India in international forums like the United Nations.

The Cabinet Secretariat has formed a panel, and its mandate is to identify the right vaccine or a bunch of vaccines for use in the country, managing finances for large-scale procurement, and also deciding prioritization of the population group that will receive the first doses.

The first of the five models involve free distribution and might be restricted to a few immediate neighbors such as Bangladesh, Afghanistan, and other SAARC countries excluding Pakistan.

The second model warrants heavily on subsidized vaccines being distributed to poor countries as a part of India’s international obligations, benefiting several African nations through this initiative.

The third model calls for recipient countries purchasing vaccines at the market price but being assured of supply.

As soon as the vaccines are ready, they will be distributed through a strict, government-controlled channel and not be available in the open market.

So any country will not be able to buy it off the shelf even if it is sitting on trillions of dollars.

The fourth model will approach some countries to participate in Phase 3 trials of the two Indian candidates.

In the fifth model, India may offer opportunities to some countries coproduce the two domestic vaccines — a move that could hasten the production of these vaccines.

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| INTRIGUING INDEED FUTURE DIRECTIONS & MOVING TOWARDS A FRAMEWORK While the historical and the modern-day track records of vaccine and its diplomacy are very impressive, they have failed to lead to an overarching framework for its expanded role in foreign policy.

Despite a noble track record, their power has been underexplored. Vaccine and vaccine science diplomacy were the peace promoters between the Cold War powers of the 1950s and 1960s, which also led to the development, testing, and delivery of two most important 20th-century health interventions, i.e., the freeze-dried smallpox vaccine and the oral polio vaccine that resulted in global eradication of smallpox and near elimination of polio. United Nations is expected to finally step in driving the vaccination process and play a pivotal role in making consensus among the different countries of the world. Additionally, countries should cooperate in every step of the supply chain of vaccination of Covid-19 then only we can think of COVID free world by 2023.

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| ECO SECTION

INDIAN AGRICULTURE LAWS: EVOLUTION,CHANGING LANDSCAPE AND AFTERMATH INTRODUCTION To reiterate the known, the Indian agriculture sector remains the biggest source (~58%) of livelihood for the country’s population. The industry is important in terms of contribution to the economy, substantially accounting for ~16% of the total GDP in 2020.

Shubhangi Thapliyal MBA A | 2020 - 22 Sahil Mehdiratta | MBA A | 2020 - 22 and establishment of rural banking drive the growth of the segment.

EVOLUTION OF INDIA’S AGRICULTURE POLICY Before delving into the farm reforms of 2020, let us try and understand the progression of agricultural laws in India. What follows is a chronological account of Indian farm laws in pursuit of establishing the agricultural landscape of the country.

29th June 2001

There have been myriad changes in the sector in the past decade, showing immense opportunities and thus making India one of the world's largest producers.

The emergence of organized retail, assurance of minimum income based on the signing of supply agreements by retailers,

The expert committee often called the Guru Committee, submitted a detailed report (~75 pages) to the then agriculture minister Mr. Nitish Kumar.

Some of the key recommendations to that effect included revamping the existing Agriculture Produce Marketing Committees (APMCs).For farmers, following key conclusions were made:

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| ECO SECTION Practically, the farmer had no liberty to sell his produce in his village, to a retailer, a processor or a bulk purchaser even though he was free to sell in any mandi. The farmer was to take his produce to a regulated market where the sale and delivery could be carried out Provisions of the Essential Commodity Act, Labor Act, Industrial Disputes Act etc. were not applicable to warehouses.

Go-downs were declared as deemed warehouses and no APMC market fee or taxes (octroi, sales or purchase tax) could be levied on the goods stored.

4th July 2001 The government sets up an inter-ministerial taskforce called the RCA Jain Task Force to examine the recommendations provided by the Guru Committee. According to the recommendations from a ~65 pager report, all state governments were to amend their APMC laws to:Establish agriculture marketing infrastructure through private and cooperative sectorsEnable direct marketing of agricultural produce from fields without an intervention of tradersPromote forwards and futures in agricultural commoditiesThe report also stated the need to diverge MSP from acquisition. This was recommended on the back of empowering the role of marketing agricultural produce.

9th September 2003 As per the common recommendations from both the Guru and RCA Jain committee, the APMCs were to be reformed across the country. A model APMC Act was thus created with the key sections as follows: Section 14: No longer a compulsion for farmers to sell to existing APMC administered markets. However, farmers who don’t bring the produce to the market would not be elected to the APMC Section 25 & 27: The APMCs were made responsible for ensuring transparency in pricing, ensuring same day payment to farmers and chapters relating to Contract Farming’ Section 42: It dealt with the imposition of single-point levy and fix graded levy of market fee on the sale of agricultural produce 29th December 2004 The National Commission of Famers chaired

by MS Swaminathan submitted a report entitled “Serving Farmers and Saving Farmers”. This report marked the first of the many reports submitted by the NCF in years to come. It focused on post-harvest management, processing and marketing and bridging the gap between production and profit. The commission also went on to submit another report in August 2004.

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| ECO SECTION 29th December 2005 The NCF submitted its third report marking 2006 as the “Year of Agricultural Renewal�.

The main points revolved around: The Essential Commodities Act of 1955 and how the law had outlived its term.

From 70 agricultural products in 1989 to only 15 by 2005, ECA 1995 was said to be irrelevant The need to eliminate market fee on agricultural commodities and charging for services like unloading, loading etc.

There were also points related to the monopoly of APMC, direct marketing discussed in the report.

2007 (Undated) In a ~120-page report, model APMC rules were set. The report contained XIII chapters relating to different aspects of the APMC rule from Appointment, Composition and Elections to Market Committee (Chapter III), to Contract Farming (Chapter VI), to regulation of Trading (Chapter VII). The report also laid down rules for Levy of Market Fees and Its Collection (Chapter VIII) and Establishment and Functioning of Private Market/ E-Market, Consumer / Farmers Market and Direct Marketing (Chapter IX).

February 2012-17 In this period, the Economic Survey became

the torchbearer for agricultural reform, suggesting the areas of improvements and various recommendations. Some of the key issues highlighted in the survey include: Mandi governance a cause of concern; the need for traders to be allowed as agents in mandis Price uncertainties faced by farmers; Market risks arising in agricultural trade Stock limits in Commodities Act, 1955

the

Essential

Implementation of APMC rules in laggard states 3rd January 2019 Lead by Mr. Hukmdev Narayan Yadav, the standing committee on agriculture (2018-19) under the Ministry of Agriculture and Farmers Welfare (Department of Agriculture, Cooperation and Farmers Welfare) observed some key issues in the implementation of the earlier AMPC model, they were: Reduced competition and cartelization Undue commission and market charges Restrictions to promote multiple channels of marketing (modes of selling) To redesign the agriculture framework, a high powered seven chief ministers committee was formed to redesign the legal framework for agricultural marketing.

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| ECO SECTION 24th September 2020 Three reforms are enacted by the parliament, providing flexibility to farmers to sell, removing price controls and protecting them from the industry.

New laws and amendments On 27th September 2020, President Ram Nath Kovind had given his accent for three farm bills passed by the parliament on 23rd September 2020. The three farm bills areFarmers’ Produce Trade and Commerce (Promotion and Facilitation) Act Farmers Empowerment and Protection) Agreement on Price Assurance and Farm Services Act Essential Commodities (Amendment) Act Even though Prime Minister Narendra Modi claimed the passing of the bills as a ‘Historic Day’, it was certainly not welcomed in the same spirit across the country.

Either way, the bills are surely going to impact the farmers and hence the agriculture sector. In order to understand the bills, let us cut through the noise and look at individual Bills and what they represent..

1.Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act: The Ordinance seeks to facilitate barrier-free

trade of farmers’ produce outside the markets notified under the various state APMC laws.

Important Provisions: Trade of farmers’ produce: It allows intra-state and inter-state trade of farmers’ produce outside the physical premises of markets run by market committees formed and other markets notified under the state APMC Acts. Such trade can be conducted in an ‘outside trade area’, i.e., any place of production, collection, and aggregation of farmers’ produce including: (i) farm gates, (ii) factory premises, (iii) warehouses, (iv) silos, and (v) cold storages Electronic trading: It permits electronic trading of scheduled farmers’ produce in the specified trade area. An electronic trading and transaction platform may be set up to facilitate the direct and online buying and selling of such produce through electronic devices and internet Market fee abolished: It prohibits state governments from levying any market fee, cess or levy on farmers, traders, and electronic trading platforms for the trade of farmers’ produce conducted in an ‘outside trade area’ 2.The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020: The Ordinance seeks to define a legal

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| ECO SECTION framework for contract farming with predetermined contracts including pricing clauses.

imposed on the party breaching the agreement. However, no action can be taken against the land of farmers for the recovery of any dues.

Important Provisions: Farming agreement: It provides for an agreement between farmer and buyer prior to the production or rearing of any farm produce. The minimum period will be one crop season, or one production cycle of livestock and max is five years (unless the production cycle is > five years). This will help in transferring the unpredictability risk from farmers to the sponsor shielding the farmers from changes in the market prices Pricing of farming produce: The price of farming produce should be mentioned in the agreement along with the method of price determination. For prices subject to variation, a guaranteed price for the produce and a clear reference for any additional amount above the guaranteed price must be specified in the agreement.

Dispute Settlement: All disputes will be referred to the board for resolution.

Post 30 days parties may approach the Sub-divisional Magistrate for resolution.

Parties will have a right to appeal to an Appellate Authority against decisions of the Magistrate (who have 30 days for disposal). Certain penalties may be

3.Essential Commodities (Amendment) Act, 2020: The Ordinance seeks to impose stock limits on agricultural produce only if there is a sharp increase in retail prices.

Important Provisions: Regulation of food items: The Essential Commodities Act, 1955 empowers the central government to designate certain commodities (such as food items, fertilizers and petroleum products) as essential commodities. The central government may regulate or prohibit the production, supply, distribution, trade, and commerce of such essential commodities like the supply of certain food items including cereals, pulses, potatoes, oils, etc. only under extraordinary circumstances.

These include: (i) war, (ii) famine, (iii) extraordinary price rise and (iv) natural calamity of grave nature Stock limit: It requires that imposition of any stock limit on agricultural produce based on price rise. The limit may be imposed only if there is: (i) 100% increase in the retail price of horticultural produce; and (ii) a 50% increase in the retail price of nonperishable agricultural food items. The increase will be calculated over the price

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| ECO SECTION prevailing immediately preceding twelve months, or the average retail price of the last five years, whichever is lower.

CHANGING LANDSCAPE

According to the Trade Agreement Bill, farmers cite prior cases of exploitation by large corporates over contractual agreements and how they have been duped under heavy paperwork that they do not have the expertise to interpret.

Under the Essential Commodities Act, 2020, the farmers have long been protesting to include more crops under MSP (23 crops currently) and the bill does not solve the problem and the other introduction (no storage limit) is not even valid as the most of the Indian farmers have less than 5 acres of land, hence even if they want, they cannot store their produce to sell in favorable market conditions.

AFTERMATH While the bills looked good on paper, however, farmers have shown apprehension regarding the reforms leading to a countrywide protest. According to them, despite the drawbacks of the AMPC model, it gave them an assured income in the form of Minimum Support Price (MSP). We give you a bill-wise account of farmer’s fears: As per the Trade & Commerce Act, farmers believe that the act will incentivize the private players to buy the produce from farmers outside the APMC market due to abolishment of taxes. This, in their opinion, will eventually destroy the APMC markets and the MSP. They quote Bihar’s example where APMC was abolished leading the farmers to earn as little as 50% of MS guaranteed by the government, fueling further uncertainty.

What remains of utmost importance in the midst of these protests is the need to allay the fears in the minds of these food soldiers of the Indian economy.

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IS GDP AN APPROPRIATE MEASURE? Considering a nation up against its Gross Domestic Product and discarding public interest, even now GDP can be assessed?

Have we attained the required advancement and development? At present, this norm of industrialization and enlightenment is not as vivid as it was 200 years ago. Moreover, the essential tool for assessing the Gross Domestic Product (GDP) advancement seems devalued. People are frequently asking whether GDP restoration ought to be the councils' top interest. Is top-notch GDP fruitful if only affluents are collecting it?

The arguments mentioned above finished up puzzled in analytical explanations and casting a shadow over the severe matter they put up. Few questions are rational, and some occurrences are technical. What are the critical limitations on our succession, and how do we evaluate them? Neither of these questions can be acknowledged by modifying the basis of GDP. The calculation as Gross Domestic Product, originally GNP, was evolved around the 1940s in the United Kingdom.

Laqshay Gupta |BMS-1| Shaheed Sukhdev College of Business Studies Furthermore, in a short period, GDP is considered a global yardstick for the nation's economies The condemnation of GDP started in the 1970s, when there was an elevated inflationary crisis and transition was nil resulted in comprehensive economic disgruntlement. Laissez-faire did not seem to contrast with collectivism. The prime critique currently to GDP is sustainability. The GDP measurement brushes aside the consequences of contamination, exploitation of natural resources, and ejection of greenhouse gases. GDP-bullies fascinated in pin-pointing that surge in GDP does not guarantee fortune among all or we can say fair distribution. The significance of contentment and the concept of sustainability put forward some crucial concerns on monetary policy's objectives. We want to move back to GDP and gaze at why it was fabricated in the initial situation for better understanding. GDP is simply the

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| CALL FOR ARTICLES -WINNER contemporary of many propositions for assessing the economy's condition, heading back towards the end of the 17th century when the economy's idea began to evolve as a vital indication.

The regard of the administration has continuously propelled the assessment of the economy. The initial edition of GDP originated in England and Wales by William Petty to evaluate its ability to pay out battle expenditure and duties. Throughout the 18th and 19th centuries, fee earnings and business continued to be the primary concern behind the economy's assessment, but the economy's idea shifted over the period. In the West, the interest of administration assessed the whole extent of a country's economy, and the Great Depression revitalized it. Then the principal issue was: how adequate available potential is there? What number of plants and industries are closed, and at what capacity they can yield if set back to the task? The WWII made it more significant when both the United Kingdom and the United States councils desired to comprehend how primarily arms and ammunition the economies could manufacture, and what that would imply for the people frugality. Interest or prosperity among people seems like an amenity.

The standard accepted explanation of GDP incorporates specific inferences regarding what includes in and what includes out of the estimation. So, it encompasses state expenses, in the chain with Keynes's macroeconomic concept, which sees

administrative expenditures as a kind of collaborative consumption. However, it ignores due job in the cabin or looking after for household. Above all, GDP is implied to calculate market movements, and, by explanation, the market does not include household work. The next inference pertains to how to calculate financial aspects. After termination of conflicts going around, statisticians comprised those characteristics of finance that certainly assisted with a market rate connected, like supervision costs, but kept out merchandise. Additional economic tasks were accommodated as division evolved. Scaling GDP has become entangled as the concept itself comes to be complicated. It is relatively straightforward to figure out how many laptops or automobiles are manufactured and traded annually. In the assembly age, larger quantities are a decent criterion of economic expansion. Still, in the concept of 'new economy,' where the excellence and ability of commodities are enhancing, should GDP record how many commodities like phones are bought; or should it maintain their improved pace and memory, the attached Bluetooth and camera, their size and weight? GDP estimation currently has several detailed customizations to take into account the idea of quality improvement. However, GDP is defined as a statistic tool formulated for large output and many units produced, but it fails to evaluate the intangibles.

From all the arguments mentioned earlier, we can conclude that GDP is not an adequate criterion for estimating a nation’s economy.

Nevertheless, pundits of GDP are pondering

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| CALL FOR ARTICLES -WINNER these deficiencies and yelling for a standard of the modification in interest and the public's betterment. While GDP fails to grasp the achievements to well-being springing from the invention, modern drugs, laptops, etc., there is an abundance of facts to infer that the community mostly gave importance to enhanced options, just in supposedly insignificant commodities breakfast corns or even in the spectrum of publications.

Furthermore, modernization is why economic development is essential for advancement.

Nevertheless, as the pundits frequently characterize that GDP development brushes aside welfare by not encompassing impact on the environment or the elevated unevenness of earnings. Let us take an example: renovation at any regional location upswing GDP, but the cost of existence and properties will not be incorporated.

There would be extensive assertions about what to comprise and what to prohibit, and what values to provide varied components of a modern GDP description. Further, we are required to maintain a distinction between the two theories of economic movements and public welfare and more aggressively.

Examination so far indicates that consummation, relationship, connections, and prosperity are firmly associated with enjoyment, while unemployment and cognitive ill condition correlate oppositely.

We do not require a yearly analysis to sufficiently inform the administration to sufficiently maintain a lower unemployment rate or finance mental state assistance.

Moreover, a strategy for extra intercourse is difficult to visualize.

Several of the aspects we evaluate are stringent criteria in economic representations and sum. So why try?

Institutions have been toiling on the index of welfare, comprising financial pointers like allowance and employment, the characteristic of the realistic and metropolitan domain, work-life equilibrium, fitness, meeting in the regional society, and schooling. The indicators are distant from perfection, but they could ultimately evolve as crucial as GDP expansion for administration to regulate overtime. The extensively vital reciprocation to estimate, and account to nationals, is that between the existing and the prospect that is the concept of sustainability. No customization to GDP will anywise express this significant component because it assesses action during a specific time interval. By distinction, evaluating sustainability banks on the insufficiency or proliferation of properties.

Moreover, the statistics required to accomplish that – for natural possession and real ones are never documented in the title snatching path to reorient administration strategy. This evaluation aspect would tell us if we were celebrating the fruits of economic development (increased GDP) only by consuming future wealth. If all the invention and expertise encapsulated in the extent of development proves not to be sustainable, then we might well be watching at the edge of improvement. However, we do not yet know the justification, and we will not discover by altering or ditching GDP.

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| CALL FOR ARTICLES -RUNNER UP

MICROFINANCE AND SOCIAL PERFORMANCE MANAGEMENT INTRODUCTION Formal financial institutions have always shown a preference for urban over rural sectors, large-scale over small scale transactions, and non-agricultural over agricultural loans. Hence, Microfinance in India started in the late 1980s in response to the gap in availability of formal sources of credit and lending to the underserved and low income population.

In rural areas, women living below the poverty line are unable to realize their potential. Microfinance programmes are currently being promoted as a key strategy for simultaneously addressing both poverty alleviation and women empowerment. The self-help groups (SHGs) and joint liability groups (JLGs) of women as sources of microfinance have helped them to take part in development activities. The participation of women in SHGs and JLGs has made a significant impact on their empowerment both in social and economic lifestyles.

Debashrita Panda NMIMS Mumbai

|2019-21|

SBM,

Microfinance companies in India conduct the following operational procedure: awareness creation, group formation (Small Help Groups), document verification (checking legal documents like Aadhar and Voter ID), loan sanction, loan disbursal & finally loan amount collection. The cycle from loan disbursement to the loan collection can last 24 months.

SOCIAL PERFORMANCE MANAGEMENT SPM refers to the effectiveness of the organisation in achieving its stated social goals and creating value for clients. With the PPI, some of the microfinance companies analyze whether clients continue to live at the same level of poverty over time, or whether they become relatively less or more impoverished. Initially, this seems to be a simple question of comparing baseline and follow-up surveys. This involves a level of data management and evaluation that is a

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| CALL FOR ARTICLES -RUNNER UP step beyond and required for analysis of client targeting.

PROJECT METHODOLOGY The Progress out of Poverty Index is a questionnaire of 10 questions to determine the social growth of a client and her family.

This is measured during the 1st cycle of loan disbursement, and during subsequent cycles (in 2 years or so). The PPI checks whether the family saves up money after exhausting it on food, clothing and shelter. The following is the list of some questions: Number of school going children in the family (with gender) Does the family own a bicycle?

There have been some observations: Agriculture, being a family intensive business, does not necessarily describe a woman's contribution or financial freedom on monetary control in the house. Though it provides food for the entire year, is not a sustainable business.

Crop failure due to drought, cyclone or heavy rainfall might push the family much deeper into debt.

The loans are being utilised for miscellaneous activities like house construction and daughter's wedding.

The loans, even though are being taken for income generation by women, are mostly being utilised by the male members in the families.

Does the family own a motorbike?

Does the family own a television set?

SPM will benefit clients, giving them: Services more appropriate to their needs More product choices Better customer service A greater ‘voice’ in the programming

Baring the women who are actually participating in agriculture/animal rearing in their households, a majority of women have no motivation to start a business of their own. This is primarily due to lack of motivation and family support, and lack of awareness regarding the benefits of the same.

Since women have a higher emotional quotient, they easily trust ring leaders and are giving out their loan amount to them.

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| CALL FOR ARTICLES -RUNNER UP CHALLENGES FACED The process takes a minimum of 1 cycle of time period so that an accurate difference can be measured.

The women are not motivated enough to start their own businesses.

It is difficult to measure the growth of families in coastal regions, thanks to the frequent floods and cyclones.

The women, despite of such efforts at financial inclusion, still do not understand the prerequisites of financial education.

Small businesses like bee keeping, mushroom cultivation, agarbati and bindi making can be some examples as they require minimum investment and yield good returns. These are sustainable businesses as well. This can start off as a novel initiative, to act as a moral boost for other women, as well as a respectable income generation source for the women without any support.

Apart from this, frequent interactions by ASHA workers or Anganwadi teachers on the importance of financial inclusion and self-employment might also lead to a spark of interest in women.

CONCLUSION

The improvement, if any, of a family does not guarantee the financial status improvement of a woman, as mostly the males are taking the decisions. If the woman chooses to remain unemployed, she has no say over the finances in the family.

RECOMMENDATIONS

Changing the statistics via SPM is not a onetime job. It needs continuous efforts both from the microfinance organisations side as well as from the borrowers to increase their income levels. There is a need for research to understand more about the reasons why there is no zeal to incorporate micro businesses amongst rural Indian women.

According to sources, it has been observed that widows and unmarried women have a higher risk of defaulting than married women as they have no source of stable income. Also, the company has some very stringent policies towards these groups. Disabled persons are not given loans, per se as well.

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ALUMNI INSIGHTS MY EXPERIMENTS WITH MUTUAL FUNDS

Prashant Ramalingam | PGDM-Finance | 2017-19

It is always good to be remembered by your alma mater, as I enter close to 2 years after the completion of my participation in the Great Indian education “Rat Race”. For the risk of this article being perceived as an “Less FAQ” about Mutual Funds, following are some nitty-gritty that I have met with in the last year and a half of experimentation and practical learning of this subject. For the tiny population that might read this article, please pay close attention to tips and tricks inserted here and there, to give you a head start in your journey of financial independence.

IFund Factsheet/AMFI Data Bible/Gita/Quran/Granth

is

the

Value Research Online, Morningstar, Fundoo and Rupeevest are some popular websites to do your bit of independent research and statistical analysis about mutual funds. But when it comes to absolute numbers, don’t look beyond Fund Factsheets. It is published every month by the Fund House and

accessible when you do a simple google search “<Fund House Name> Factsheet <Month> <Year>”. As far as historical data, MF inflows and outflows, AMFI website is the one stop shop.

Returns of any Mutual Fund that you see anywhere are LUMPSUM returns By “anywhere”, I mean “everywhere”; websites and media that cover MFs, including the fund house’s official website. Only the Fund Factsheet has a small table/matrix laid out in the bottom corner of every MF scheme highlighting SIP returns basis certain conditions. Pay close attention to that to decide on whether to start an SIP in that particular scheme.

Exit Load for SIP investments calculated “differently”

are

Exit Load is usually 0 for all schemes, after 1 year of your first investment. But this is where most investors miss the very simple

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fact that each SIP investment is treated differently. Therefore, for example, if you redeem your entire investment after 12 SIPs for a year, exit load will be still applicable on 11 SIP investments after the first one. Very simple implication, but less known.

Understanding of Capital Gains is essential for understanding tax implications on your returns and filing your taxes A grip on the rules for calculating Capital Gains from MFs proceeds is helpful in awareness of post-tax returns on your investments and, filing Income Tax returns in a jiffy. For the unknown, following are the current rules governing the taxation laws surrounding treatment of Capital Gains from MFs.

Remember that 3 years maybe short-term or long-term on a case-to-case basis and an ELSS can still be subscribed to if the past performance has been consistent and MF holdings are promising. The ELSS may not be eliminated, probably just recategorized or merged into Multi-Cap schemes by SEBI. Timing the Market is really important, as taught by Covid-19 MFs are stock market linked products, which is why 10-year MF returns of most categories as on Mar’20 came down to as low as 2% pretax. And today in Dec’20, the 10-year returns have crossed more than 15%, only with the help of this Blue-Sky bull-run that we are witnessing, fueled by FIIs, low-interest rates and a declining Dollar Index. Timing is everything here and fund requirements in Mar’20 would have made you look miserable, given the state of your portfolio.

Stay invested in SIP: Power of Compounding” is overrated, Goal Based Investing is underrated

Also, as far as ELSS under Section 80C is concerned, the investor has the lowest lockin period of 3 years and can save a maximum of Rs. 46,800 in taxes (for the highest tax bracket of 30%). Often being tagged as the most attractive post-tax return product, investors should definitely look at this as an option to save taxes and earn returns.

But this is subject to the proposal of eliminating all deductions and exemptions by the Finance Minister in the last Budget.

When Fund Managers, Distributors all propagate the theory of staying invested in SIP to ride on the power of compounding effect of returns on your MF investment, it loosely translates to “Please be invested as long as possible, because that incurs expense on an increasing AUM and that is our bread and butter”. It is sad to know that people still believe these experts want good for you.

From point 5, we already know what can black

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| ALUMNI INSIGHTS swan events like Covid-19 do to your longterm returns.

enjoy the returns of the appreciating yellow metal, without even buying physical gold.

On the other hand, personally I have seen that how your redemptions become mismanaged if you don’t have a proper goal in mind. Having a goal channels the proceeds in the right place and it is only proper to do justice to your hard-earned money which did the hard work with time.

Is the MF true to Fund Categorization (theme) and Benchmark Comparison?

Experimenting too much with different categories of MFs is not bad, but…

When you start your journey of investment and financial freedom, it is good to start with many MF schemes, preferably with small SIP amounts. This should be done only to understand how the portfolio unfolds.

There is no science to portfolio allocation, when the ultimate goal is to get significant returns on your investment, with bearable risk (read “sound sleep every night”) and realistic goals. This experimenting should stop probably after a year or so and your portfolio allocation should be sealed by that time. Because time is money and money are time.

Gold and International Index MFs are a must in any portfolio, howsoever small Both from the point of view hedging and long-term stable returns, both Gold and International Index MFs have given consistent returns. In fact, US Indexes have outperformed most asset classes in the past decade. As far as Gold is concerned, Gold MFs invest in Gold ETFs, and thus we can

While analysing MFs, always see if the fund holdings are true to the theme of the fund.

For example, an FMCG sectoral fund should not have Banks as their holdings, howsoever small. Also, the fund houses have a habit of benchmarking it to a slightly underperforming index to show it in good light. It is recommended to investors to use a strict/recommended benchmark for analysing outperformance You are better off with safe choices like Nifty Index, Large-Cap, and Multi-Cap (Along with sectoral funds of IT, Private Banks and FMCG/thematic funds of consumption and digital themes) Since these are the kind of companies which are leaders in their industry with consistent, sustainable growth along with long term earnings growth prospects, you can invest and sleep over these funds, with little monitoring of the markets (maybe every 3 months) There are 14 categories of MFs as defined

by SEBI, not all need your attention Without taking names, I would advise any investor to find out the historical returns of certain categories of MFs and you would be surprised to see that your savings bank account fetches more returns.

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| ALUMNI INSIGHTS PPF/ Voluntary PF is a better choice than Debt Mutual Funds (Only safe exception being Banking and PSU/Liquid Funds of state run MFs) The whole theory of compulsory allocation of Debt part in your portfolio baffles me.

Debt MF’s work hard to give you sizeable returns, which Equity Funds give naturally. A tax saver FD (in a high interest rate regime), PPF or even extra EPF by way Voluntary PF (if your employer provides you the provision), should be the go-to avenues if you really want “Debt” in your portfolio. If you still want to go bookish and theoretical to be accepted by the masses, Banking and PSU debt fund is a safe category to invest in, specially if the fund house is state run.

Liquid Fund is definitely a better alternative to your bank account to create an emergency corpus as well as earn that extra 1-2% return AUM of a fund is often the result of heavy marketing and selling by distributors and Bank RMs If you are reading this article and to be employed as an RM selling MFs, with the risk of offending you I would like to drop the pipe bomb that a high AUM is a result of heavy marketing, investor meets and Bank RM recommendations. Unless you are a boomer and a novice (and ignorant which most people are) do your own damn research, and we can’t be living in a more resourceful era today.

Growth vs Direct Mutual Funds (Which is better? It’s a no-brainer if you know mathematics) The average person knows percentages and readymade SIP/Lumpsump calculators available online will clearly show the better option. (Good luck to you if you are still guessing). Also, an MBA/CA should definitely take efforts to do own research and invest in new age platforms such as Groww, Paytm Money, Kuvera or Zerodha Coin. Approaching an advisor to do this job, specially if you are qualified enough to do it yourself with the right resources and efforts should invite criminal punishment (And am not at all joking) If you have reached this far in the article, you may find my style of writing and use of language questionable. But my whole point of listing out these points was to put across the message that Mutual Funds, if researched right and with consistent, small and incremental investments can easily help you in achieving your financial goals and even financial freedom. And today is the easiest you can do this, with everything at your fingertips.

Invest wisely, always have a goal in mind, have a basic idea of the stock markets and never fall for the power of compounding trap by investing blindly forever. Respect stock market cycles, and ride on the big money (Blue Whale, FII, Institutions, Smart Money) wave wherever possible. Because I

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am just a drop in this ocean of money making, and so are you.

Following are some useful resources to start your research on this beautiful instrument of investment created by Adriaan Van Ketwich in 1772: Basic Research (Fees, Risk Ratios, Returns, Fund Holdings): Fund Factsheet (AMC website), Valueresearchonline, Morningstar, Fundoo Statistical Tools/Research (Trailing Returns, Rolling Returns): -Fundoo, Rupeevest, Freefincal DIY Investing Blogs Upside and Morningstar

Downside

Risk

Data:

YouTube Channels: Freefincal DIY Investing (Hard hitting, underrated, IIT Madras Physics Professor Mr. Pattabiraman, who just spits facts on your face) CONTACT: 1.Email: rprashant93@yahoo.co.in 2.LinkedIn: https://www.linkedin.com/in/prashantramalingam-14061993/

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