The Financial Bulletin
FROM THE EDITOR
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Dear Readers, We congratulate the winner of the “Article of the month” award, Siddhartha Banerjee from IFMR, Chennai for his article “The economic crisis in Cyprus-what is in store for it in future?” . As we are moving to the second year of our esteemed newsletter "The Financial Bulletin" we move onto the second issue of the newsletter. In edition we have included two new sections in which the Internship experience and quiz section. We received a lot of diverse articles this month. Rupee have recently depreciated a lot and touched 60.05. The highest it can compared to the US dollar. Though Bernanke mentioned that they are going to easy the QE by September but still the downfall of rupee continues. There is also a lot of information related to Merger and Acquisition- A boon or curse, Derivatives, impact of the new banking licenses which was to be applied by the latest 1st July.
Happy Reading!!! Newsletter Editor
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CONTENTS 04 Scenario of rupee deprecia- 24 Impact of the new banking tion as a whole in an economy -by Banisha Chopra, IBS Hyderabad
licenses on the banking sector in India. -by Niraj Dadhaniya, JBIMS
07 Derivatives – A synonym for Gambling? -by Ashwini Iyer, IBS Hyderabad
10 Mergers and Acquistions-
27
Trade Deficit and its implications on macro economy -by Nitin Singh, SIMS Pune
Boon or Curse
32 Ponzi Schemes and its
-by Ekta Singh, IBS, Hyderabad
Effect on the Developed World
13 The economic crisis in Cyprus-what is in store for it in future? -by Siddhartha Banerjee, IFMR Chennai
16 Euro crisis myths
- by Saumya Rastogi, NMIMS Hyderabad
35 BC MODEL – a revolution in banking service is the pathway to promote financial inclusion in India
–by Ishita Bhuyan, IIT Roorkee
- by Priyanka & Souvik, NIT Silchar
19"Capital Market" Ultimate
40 DE SHAW SIP Experience
Place to make Money
- Ekta Singh, IBS, Hyderabad
-by Jewel Kumar Roy, University Of Pune
21Hedge Funds: The future of
41 QUIZ TIME
Indian capital markets -by Kali Prasad Bhogaraju, BITS Pilani
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Page 4
SCENARIO OF RUPEE DEPRECIATION AS A WHOLE IN AN ECONOMY With the Indian rupee is shedding over 11.5%
This decline in rupee could also worsen the
in value since the beginning of the fiscal year
inflation – putting an inflationary pressure
in April 2013 and reached an all-time low of
and is the matter of concern of fiscal deficit as
60.73 against the US dollar on 26th June 2013
it is reflecting the Current Account Deficit
, the current depreciation in Indian rupee has
(CAD) of India which represents the Balance
put a catastrophic impact in an Indian
sheet of India’s commercial transactions with
economy. Such a persistent decline in an
rest of the world. A continuous surge in
Indian currency will have a cascading effect
imports leads to trade imbalance which causes
of making imports costlier as structurally
current account to become negative where A
India is an Import intensive country which is
deficit
a cause of concern. With the fixed exchange
imports and exports where imports exceeds
rate having been long done away , the export
exports and thus leads to CAD. Which is
sector is standing to gain from the current
again bridged by the Foreign investment i.e.
trend and can have a reverse trend of
raising money from foreign markets which
devaluation.
leads to a problem of increase in Cost of
Basically, currency depreciation is “the loss
Borrowings which has impacted on the debt
of value of country’s currency with respect to
sector of the economy and also the exchange
indicates the excess gap between the
the other foreign currencies”. The rupee has declined almost 6.34% from march,2012 to the beginning of the fiscal year 2013. As the rupee is showing a persistent downturn impacting the Indian economy , this is putting an adverse effect in India’s imports of some key commodities viz., imports on Crude-oil, Thermal coal, Fertilizers and imports on Vegetables oil.
The depreciating
rupee is an outcome of deeply routed illness
BANISHA CHOPRA IBS HYDERABAD
that is affecting our economy.
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Page 5
rate drives away the foreign investors which in
to which investors and international market
turn depreciates the local currency. With the
prefer to stay away from risky investment
government asleep, growth has slumped and
which has significantly affected the portfolio
investors sentiments is at its lowest.
investment in India.
Since India is the major importer of oil which
As any outward flow of currency or decrease
consumes the largest part of FOREX reserves, a
in investment will put a downward pressure on
fall in rupee has bound to offset the decrease in
Exchange rate
the international prices of imported commodities
It is a known factor that deficit countries need
like oil which is adding the overall pressure on
capital flow whereas surplus countries generate
domestic inflation leads to an ultimate effect of
capital outflow. Here India capital account
increase in prices of final consumer goods which
comes into the picture which is directly
will decrease the purchasing power of consumer
impacted by the global market investors. In
and hence might pushed up the inflation. With
2008 India had a net outflow of 14 Bn $ of
this there is an increase in the imports bill of
foreign
petroleum crude and products have declined in
depreciated from 49 levels to 60 against dollar,
international currency as compare to the year
such a volatility of currency is a cause of
2011.
concern for
Also, the rupee depreciation has burden on the
the transaction risk. There is an increasing
central government in the form of FISCAL
pressure on RBI to decrease the policy rate as
SLIPPAGE due to the hike in the prices of
there is slowdown in growth due to which
imported goods and items which might warrant
foreign investors tends to stay away from
for a higher subsidy provision to be made for all
investing as they generally get attracted by
the imported consumer commodities.
higher real interest rates which further affects
With respect to rupee depreciation we have some
the Capital account flow of India and puts a
more factors that have pushed INR into the well.
depreciation pressure on Indian currency.
Continued global uncertainty is one of them
Not only the interest rate differences but there
which have adversely impacted the domestic
are also some key policy reforms lack of which
factors (Current and capital account etc) and have
DTC (Direct Tax Code), GST (Goods and
become the major cause of rupee depreciation due
Service Tax) have been in the pipeline for the
institutional investors where INR
foreign investors as its increases
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Page 6
years. GAAR, a retrospective tax law has already
contribution in the fall of rupee. With this
earned lot of flake from the business community
supportive act of RBI depreciation of rupee
lack of which the
can be controlled up to some extent.
investor’s sentiment are
further being negative over the Indian Economy. A Gloomy part of Rupee Depreciation: EXPORTERS
with
respect
to
Recent data shown RBI has indeed intervene by selling the foreign currency reserve in
the
rupee
support of rupee.
depreciation is that when a currency depreciates, exporters make profits as they get more of the local currency for every unit of foreign currency though the quantum of trade remains unchanged. NRIs are also taking the leverage of the falling of rupee by resorting to borrowing funds in India at cheaper interest rates to make investments in the
In such situation, FDI can become a important
country and take advantage of the interest rate
factor as a favour of the long term capital flow
arbitrage.
with
With all this negative aspects of rupee
ment in a project will generate cash in econ-
depreciation there can be a rope that can
omy. In concern of which government should
pull the INR from the “well” of Depreciation.
take some measures to take FDI and create a
1. Since rupee is Semi-convertible currency RBI intervention can reduce this speculation volatility for which measures takes central bank can stabilize
the
currency
value.
In
case
of
depreciation RBI can sell forex reserves leading to demand for rupee and putting a curve on trading in rupee forward which is once cancelled could not be bought again by the exporters and
respect to CAD as these FDIs invest-
healthy environment for healthy growth. Moreover RBI can also increase the FII limit in investment or Corporate debt instrument and can also invite long term FDI debt funds in infrastructure sector the ceiling the external commercial
borrowing can be enhanced will
allow more ECB in dollar at least cost which would help in sustaining in external funds.
not able to rebooked the forward again at the better
rates
which
was
one
of
crucial
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Derivatives – A synonym for Gambling? "Derivatives are financial weapons of
derivative markets ,there is no trading of the
mass destruction." - Warren Buffett
asset, thus only money exchanges hands
We are all aware of the chemicals which were
either immediately or on an agreed date in the
used by the Germans to kill the French and
future.
Algerian troops, thereby initiating the modern
There
warfare using chemicals for mass destruction,
instruments; Options, Forward Contracts,
but Warren Buffett has stumped us, when he
Future Contracts, Swaps and not to forget the
talks about ‘Derivatives’ being the most
Hybrid
modern financial weapon of destruction. He
combination of forwards or swaps with
refers to derivatives as ‘time bombs’ waiting
options called “swaptions”.
to explode, for both the people dealing with
An option is a contract between two parties
them and the economic system.
that gives the buyer the right but not
Let’s first delve into the lesser known
obligation to buy or sell something at a later
intricacies of Derivatives. We know that
date at a price agreed upon. The buyer buys
Derivatives are financial instruments whose
an option and pays the seller a premium-
returns are ‘derived’ from the performance of
which is the price of the option. The seller is
other
financial
instruments.
Derivatives also serve a very impo rt ant
purpo se,
of
mitigating financial risk. By using derivatives, individuals or companies can transfer their
are
many
types
Contracts,
of
which
derivative
entails
a
willing to sell or buy according to “Returns of derivatives are derived from the performance of other financial instruments ”
risk to other parties who have opposite risks or have risks that offset or want to assume risk. The Spot Market is where when the contract
ASHWINI IYER, IBS HYDERABAD
is exercised, the money or the asset or both exchange
hands
immediately
while
in
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Page 8
the terms of the contract when the buyer so
used to mitigate foreign exchange risks. An
desires.
example of currency swap is as follows:
A forward contract is a contract between two
Company X is doing business in India and it
parties to buy or sell something at a later date at a
has
price agreed upon on the day the contract is
bondholders . Other company Y is doing busi-
made. The difference between Option and
ness in Europe. It has issued bond of $ 15
Forward Contract is that both the parties incur
Million Euros. Now, both the companies
obligation to honor the contract. There is no
agreed for exchanging the principle and interest
corporate body which facilitates trading of
of both bonds. Company A will get $ 15 million
Forward Contracts, unlike options markets. Thus,
Euros Bonds with
forward contracts are traded over the counter
Company B will get Rs 20 million bond for
(OTC).
exchanging his principle and interest.
A futures contract is also a contract between two
Now that we have covered the bare-minimum
parties to buy or sell something at a later date at a
basics of what Derivatives are, let’s analyze
price agreed upon on the day the contract is
why Warren Buffett calls it a ‘time bomb’.
made. Unlike Forward Markets, trading of
According to Berkshire Hathaway’s annual
Futures is on a Futures Exchange and is subject to
report, Buffett is of the opinion that the prices
a
settlement procedure. Thus we can safely say
of the assets are tied to many variables and thus
that Forward Contract trading is much riskier than
poses great risks. Over and above that
Future Contract trading. This gives us the logical
performance of derivatives are tied to the
answer behind the price discovery of the
performance of these assets! More than
underlying asset on spot markets. Thus trading on
anything, it sounds highly confusing and very
forward market assumes the price of the asset as
risky. Derivative contracts run for many years,
the same from the futures market.
so much as 20 or more, thus the value of the
Swap is a contract between two parties who swap
variables to which the value of the contract is
the cash flows. The most commonly used swap is
attached to is under duress.
currency swap. In this case the two countries
Among other problems, derivatives exacerbate
enter the contract and exchange the principal and
trouble that a company has run into for no
interest of loan at its present value. This swap is
related reasons. This pile-on effect occurs
issued bond of Rs 20 Million to
its interest payment and
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Page 9
because most of the derivatives contract requires that a company going through a credit downgrade immediately
supply
collateral
to
the
counter-parties. This is more like the insult to injury effect! This would more likely push the company to spiral down into the liquidation of the company. Although derivatives is useful to hedge against any type of risk, and mitigate interest-rate risks, Buffett still feels that there is a lynchpin, when pulled would send the world for a spin. Thus the question arises, does trading in derivatives tantamount to Gambling ?
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Page 10
Mergers and Acquisitions- Boon or Curse In the corporate world, bigger is often better.
record merger volume -more than $3,800
When it comes to legendary, industry-
billions - but also a merger market with
changing companies (think
unprecedented breadth, across geographies
Microsoft), the
more grandiose plans win out. We tend to
and industries. M&A
think the same way with mergers and
current merger cycle differ in significant ways
acquisitions. Some mergers are successful, so
from those of the 1990s, and this probably
successful, in fact, that we can’t remember a
explains why so much value has recently been
time when the two companies were distinct.
created. Specifically, this current merger
Where would Disney be without Pixar, or J.P.
boom
Morgan without Chase?
consolidation with significant potential for
However, many mergers fall flat on their
cost synergies. The use by
faces
created
existing cash and borrowed money (after-tax
company goes bankrupt, executives are fired,
cost) to purchase the (relatively higher cost)
and in some cases, the merged companies
equity of acquired companies. Much lower
disband in a sort of corporate divorce. For
acquisition premiums being initially paid.
whatever the reason, there doesn’t seem to be
Mergers and acquisitions can result in new
a magic trick to corporate mergers. Mergers
organizations whose financial and strategic
are
and
fail.
inherently
The
risky,
newly
and
characterized
by
Horizontal
acquirers of
and
without the proper strategy, intuition,
is
transactions in the
knowledge,
mergers, can get, well, ugly.
“Mergers are risky and with proper strategy, intuition and knowledge”
For years, academic studies maintained merg-
EKTA SINGH
ers and acquisition (M&A) deals destroyed
IBS, HYDERABAD
shareholder
value.
In
2006,
however,
businesses around the globe bought (and therefore sold) more companies for more money than ever. It was not just a year of
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Page 11
Conglomerate merger:- This occurs when two companies in unrelated industries combine, such as where an electronics company joins with an insurance company.
Some successful mergers are highlighted below: Disney-Pixar -The merger was a success after the movies that Disney and Pixar have put out since: “WALL-E,” “Up,” and “Bolt.” Pixar has plans for twice-yearly films, unthinkable before the merger, and has certainly gained the expert options are much improved. They are driven by
advice
globalization,
adver t is ing,
a
long-term
market,
various
from Disney when mar ket ing
it
comes to
p lugs,
and
barriers to growth, which make M&As a valuable
merchandising. When it comes to marketing to
tool by which companies can quickly attempt to
children, no one does it better than Disney.
increase revenue.
Even pre-merger cartoon “Cars” got the Disney
Depending on the intent of the combination, there are three common ways in which businesses get together so as to obtain advantages in their markets. They are:
Vertical merger:-This occurs when a company combines with a supplier or customer. An example is when a wholesaler combines with retailers.
treatment
and
remains
a
top
seller
in
merchandising amongst 4 year old boys (just ask my nephew). Exxon-Mobil-
ExxonMobil
remains
the
strongest leader in the oil market, with a huge hold on the international market and dramatic earnings. In 2008, ExxonMobil occupied all ten spots in the “Top Ten Corporate Quarterly Earnings” (earning more than $11 billion in one
Horizontal merger:- This occurs when two
quarter) and it remains one of the world’s
companies in a similar business combine.
largest publicly held company (second only to
An example is the combining of two
Walmart).
airlines.
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Page 12
A major failures in mergers was Sprint/Nextel when in 2005, another major communication merger
occurred, this time between Sprint and
Nextel Communications. These two companies believed that merging opposite ends of a market’s spectrum ho me
–
personal
ser vice
cell
fro m
phones S pr int ,
business/infrastructure/transportation
and a nd
market
from Nextel – would create one big happy communication family (for only $35 billion). But the family did not stay together long; soon after the merger, Nextel executives and managers left the new company in droves, claiming that the two cultures could not get along. And at the same time, the economy started to take a turn for the worse, and customers (private and business alike) expected more and more from their providers. Competition from AT&T, Verizon, and the iPhone drove down sales, and Sprint/Nextel began lay-offs. Its stocks plummeted, and for all those involved, the merger clearly failed.
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Page 13
The economic crisis in Cyprus-what is in store for it in future? Introduction
Cyprus
Cyprus is a tiny nation of only about a
regulations and its unreasonable appetite for
million people. Its gross domestic product per
risk. The Cypriot banking system is infamous
capita which averages around $30,000 puts it
for being an offshore money laundering arm
among the richest nations in the world. The
of many rich Russian oligarchs. These
economy of Cyprus was declared as a high
Russians used to pour money into the
income economy by World Bank and it was
country’s banking system to evade taxes and
included
advanced
the banks attracted by higher interest rate
economies by the International Monetary
invested money on Greek government bonds
Fund in 2001. But this tiny island nation has
to a large extent. When Greek sovereign
taken the center stage of all economic
bonds collapsed in value the Cypriot banks
discussions at present. This is because it is
suddenly found a hole in their balance sheets.
another
is
Because of the large scale of the problem,
grappling with financial problems and could
Cypriot government was unable to rescue the
be the starting point of yet another financial
banks and turned to its European partners for
crisis.
a bailout.
in
Euro
the
list
of
zone economy which
seems
to
be
its
lax
banking
How the crisis took shape? Like many other European countries Cyprus has a huge debt problem. But Cyprus has put all its eggs in the banking
“Because of the large scale of the problem, Cypriot government was unable to rescue the banks”
industry. It has a very large banking system compared to its economy with total assets of 896% of GDP as in 2010. Even if one excludes the overseas operations of the domestically owned banks the size of
SIDDHARTHA BANERJEE IFMR, CHENNAI
the banking system still exceeds seven times the GDP of the country. The core problem in
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Page 14
country because of its lesser mobility.
Cyprus’s plea for bailout The “troika” ultimately agreed to a bailout
Implications of the crisis
proposal but with a condition that roughly 6
Since banking sector plays a vital role in
billion euros of the total 16 billion euros would be
Cyprus’s economy contributing about 9% to
paid by the depositors. This seemed to be a
the GDP and accounting for 5.1% of jobs the
terrible precedent and faced resistance from
fallout of this sector will give a heavy blow to
everyone including officials of European Central
the country’s economy. Deficit targets as
Bank like its President Mario Draghi. He
negotiated between the Eurozone and Cyprus in
condemned this proposal to make “insured
a MOU imply that the country’s
depositors” pay for the bailout as unreasonable,
contract by nearly 8% in 2013-14.Apart from
since it was obvious that investors would pull
this
their money from any risky Eurozone bank
restructuring of the existing banking model, the
leading to a bigger economic debacle. Hence the
economy is likely to suffer from a ripple effect
plan was promptly revised.
across various sectors including tourism. But
According to the changed bailout agreements
this crisis has implications beyond its borders.
direct
impact
on
economy will
GDP
from
the
Laiki bank, one of the largest banks of Cyprus
The crisis of Cyprus is about more than just
has been terminated and the senior bondholders
Cyprus; it’s is about the Europe as a whole and
have to bear the losses. In approving a Euro10
through
billion package, European Union has called on
crisis may spill over to other European
Cyprus to arrange an additional Euro 6 billion to
countries like Malta and Luxemburg which like
cover the gap what
now appears to be
Cyprus have banking sectors several times
insufficient. So, Cyprus now needs to generate a
bigger than the economies. Big investors may
total of approximately 13 billion Euros. This is a
become more anxious of losing money and
huge amount for a country like Cyprus, even if it
might withdraw money from the second tier
goes after uninsured deposits in local banks. In
European banks. These countries might also
addition to this Cyprus has imposed strict capital
find it harder to get access to international bond
controls to prevent
markets. This can only lead to further troubles
a possible bank run.
Consequently, a Euro in a Cypriot bank is worth
Europe the rest of the world. The
for the Eurozone economies.
less than a euro in a bank of any other Eurozone
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Page 15
What are the options for Cyprus?
currency and still be in the Eurozone is still an
Generally when the banking system of a country
unsettled question. This is clearly a constraint
collapses
its
country’s
savers
also
weakens.
The
for Cyprus. On the other hand if Cyprus
badly
affected
and
chooses to drop out of the Eurozone, new
imported goods become very expensive. But there
pressure will be created on other troubled
is a positive side of this too. The country’s
economies like Greece or Spain to make a
tourism becomes cheaper, the exports become
similar move. This could strain the continent’s
more competitive and foreign investors get labors
financial
of that country at a cheaper cost. This is exactly
unprecedented level and in that case survival of
what happened to Iceland. Iceland experienced a
Euro as a common currency will be under
banking collapse in 2008 during which its
threat. Thus we can see that there are not many
currency get
currency fell from 60 krona to the dollar to 120. It was followed by a terrible chain of events, but the collapse in the krona also led to surge in exports and tourism that kept unemployment contained. In case of Iceland a free floating
and
political
system
to
an
options for Cyprus and its economy will have to suffer the due consequences. For the rest of the world the real lesson to be learnt from this crisis is that: if you are a small country do not let your banking system grow so large.
currency acted as pressure valve for the troubled economy.
Apparently
this
option
looks
promising; but Cyprus cannot just walk in the same path. To experience the positive effects of weakening of currency it first needs to drop the Euro as its currency. But that is associated with a bigger cost of transition away from a more widely used currency. The geopolitical risk associated with the currency disintegration is also high. Being a member of the Eurozone its citizens can travel and work freely in any of the 27 countries in the zone. Whether a country can drop the common
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Page 16
EURO CRISIS MYTHS Of late, in the world of finance the
know the troubles so that it could provide
EUROZONE crisis has been creating quite
protection to the continent in the future.
a stir. It is basically a continuing affair where a certain number of economies are unable to repay their government debts without taking the help of third parties. This
drastic
debt
crisis
was
the
consequence of a series complicated parameters. It
was inclusive of the
financial globalization, the provision of
Firstly, it is extremely insurmountable for the euro zone to act like the United States of Europe. In spite of this challenge, the euro
countries
have
responded
with
phenomenal speed. As a protection against the collapse of the weaker nations, there have been establishment of rescue funds
easy credit that stimulated the practices of
ranging up to a trillion dollars. Like that of
high risk lending and borrowing, the global
Federal Bank, the European central bank
slowdown, imbalances of trade, real estate
has been doing a lot to get over the crisis.
crises, and import and export fiscal issues.
To control the deficits, the euro nations have focused on stiff enforcements. They
So, this financial turmoil of Europe has the potential of having severe n drastic impact
even
are
heading
towards
a
union
according to which the financially stable
on the global front. So at this critical
nations will help and fund the
juncture there are a lot of questions that are popping up. Questions like whether Euro will survive, if the failure will result in a slowdown, if the
“it is extremely insurmountable for the euro zone to act like the United States of Europe�
impact will be on the upcoming United States presidential elections. For a better understanding of the crisis and to find answers to these questions it is necessary to clarify certain misnomers that
ISHITA BHUYAN
have arose from it. It is also essential to
IIT ROORKEE
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Page 17
economically weaker economies. Also, there are plans of providing deposit insurance that will be really beneficial in the long run. They are also provisions of executing cut backs and effective reforms to enhance productivity. So as per market standards, the Eurozone seems to be on track to the completion of aspects whose
absence
heralded
the
present
adversities.
remaining economies would compulsorily attempt to do anything and everything required to avoid a similar state by quickly cutting deficits and enhancing reforms. To add to it, the probability of fallout elsewhere would also speed up the banking and other financial combinations. Removal of Greece from the picture, would deliver the euro area
Source: article.wn.com
way stronger. Secondly, if at all, Greece is compelled to leave the monetary scenario, gradually the currency
could
be
strengthened.
The
consequences would be so dramatic that
The next topic at hand is the high hand of Germany. Already, it has given a huge chunk of rescue funds and helped many debtor nations. There are several reasons for
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Page 18
that in every debtor economy there is a political center. The avant-garde options have been rejected very firmly. Portugal and Ireland have remained confined to their commitments, Spain and Italy have managed to surpass with the help of taxes and market reforms. Greece tried to be different; nevertheless it had to reverse its course. They have realized the necessity of solidified support from political resources. Finally, the sharp turn downwards for Europe, has reduced exports and profits in USA and has left several sectors weak. There has been estimation that the euro collapse would provide a recession and starkly increase the unemployment rate by nine Germany being in such a powerful position.
percent pretty soon. Emerging nations led by
Germany’s export based economy barely
India and China have a sizeable chunk to
depends on euro. It has a competitive currency
themselves and will continue in the near
as per the other parts of the world as the rate of
future. Though this is slow, this is the only
the common currency is a living testimony to
thing that will be instrumental in keeping the
the weaker neighbors and the powerhouse of
global economy churning.
Germany. Moreover, German banks are
from the troubles of Europe, USA gains
exposed in poorer nations and hence its tax
massive
payers would come to rescue in case of failure
responsible for capitalizing dollar in the
of Spain or Italy. Though nations like Finland
global
and Netherlands might have inhibitions, every
demands.
political leader in Germany is positively alive
muddling through will provide us and our
to the desired necessities.
election with protection from critical issues.
advantages
front
paving
The
as
Additionally,
the
roads
probability
crisis
for of
is
higher Europe
A very fascinating issue regarding this crisis is
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Page 19
"Capital Market" Ultimate Place to make Money “The Globalization of the capital market is
a long run investment. The people who have
actually part of economic globalization. This will
knowledge about the Balance Sheet, cash flow
create a change in the entire world economy, not
as well as Ratio are able to analyze by their
just restricted to some fields in some countries�
knowledge and able to know about the
-- Richard A. "Dick" Grasso
financial position of the Company where it will
What is Capital Market? This question arrives in
be profitable or not to invest. The Company is
our mind. The definition of capital market is a
capable or not to declared dividend on the
market in which individuals and institutions trade
particular share or not. By this method any
financial securities. Organizations/institutions in
investor can able to make the profit through
the public and private sectors also often sell secu-
investing in the particular share.
rities on the capital markets in order to raise
Secondly, we can go through the Technical
funds. Thus, this type of market is composed of
Analysis by which any investor can predict the
both the primary and secondary markets.
future situation of the particular share where to
The simplest way to improve our financial
invest. The people who think that the particular
condition is to invest in the stock market. It is a
share has an immense growth and the stock is
place where the investor can raise their fund
on the way to bullish at that situation, the
through investing in the right fund.
investor is able to invest on the
There is a simple rule "think first
particular share. On the other
to choose a right share, and then
hand, the investor must sell
invest". There is no one in this world who can say the future situation of the stock market, but there are some simplest methods by which we can choose a right fund to invest. As my opinion, we can predict that which company's share is going to be profitable or not. First of all, we can go through the Fundamental Analysis. This analysis helps to the investor for
JEWEL KUMAR ROY UNIVERSITY OF PUNE
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their particular share on the bearish situation. The
Page 20
with the Bank's fixed deposit.
investor who has knowledge about the stop loss,
Last, but not the least, be Smart, to become a
they can apply the stop loss to save their loss.
good investor.
Finally, we can go through the Option where Put Option and Call Option are available. The investors who want to invest in the particular option they can make profit whatever they want. The Option is the instrument where the investor is able to invest their money and double it within a day. There is a magic tip for the Option "when any investor wants to buy the Call Option they can sell the Put Option without any doubt because the Put Option is the reverse of the Call Option. That means when the Call Option is in the Bullish position, the Call Option is in the Bearish position. The investor must choose the right Option to make money double.
There is some precaution to protect the loss in the Stock Market
Investor must have knowledge about the Stock Market.
Think twice before invests.
Investor must have positive mind.
The investors must think about the Stop Loss.
There are some software by which any investor can invest in the right share.
Analyze the position of the share market through the economy of the country.
Don't compare the Stock Market investment
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Hedge Funds: The future of Indian capital markets Introduction: Hedge funds are a portfolio of
strategies which have been revealed by some
funds which uses different strategies to maximize
of the successful fund managers in the Wall
the return. Hedge funds are high risk, high return
Street.
investment vehicles. They are just like mutual
Long/Short strategy: In this strategy, the fund
funds; they pool the money taken from the
manager will maintain both long and short
investors and invest in a portfolio of funds which
positions in his portfolio. The stocks which he
they seem to be profitable. Initially, hedging had
thinks as undervalued and would have scope to
been evolved as the technique to protect the
rise in the future will be taken for long position.
securities against the price variations of different
Similarly, the stocks which he assumes as
securities due to volatility in the markets. Hedge
overvalued and would fall in the near future will
funds are different from mutual funds in the way
be taken for short positions. Thus, his portfolio
they use different types of strategies which we
contains both long and short positions (Need
will see below.
not necessarily to be equal in amounts of both
In mutual funds there won’t be any option for
short and long positions).
going short. But, in hedge funds, fund managers have the option to go short on some securities in their portfolios. They use different strategies and pool the stocks accordingly. Mutual funds
Market Neutral strategy: In “success of hedge funds is mostly assigned to the manager of those funds”
this strategy, the main objective of the fund manager is to
are highly regulated ones where as hedge funds are very least regulated ones. Strategies in Hedge funds: Most of the hedge funds managers won’t reveal their strategies to the outsiders to maintain their competitive advantage. Hence, the success of hedge funds is mostly assigned to the manager of
KALI PRASAD BHOGARAJU BITS PILANI
those funds. The following are some of the
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Page 22
reduce the market exposure on the portfolio. This
to be bought. These securities need to be held
could be done by maintaining an equal amount of
until the inefficiencies have been corrected.
long and short positions in his portfolio. In his portfolio, he needs to hold 50% short positions and 50% long positions which implies that the amount to be invested in long positions should be equal to the amount equal to the short positions. Hence, either way the market moves, the net exposure of the market on the overall portfolio will be negligible.
Event driven strategies: These strategies are widely used ones during the times of certain events like Mergers and acquisitions. During the times of M&A,
suppose, if company
‘A’ acquires a company ‘B’, usually, the share price of company ‘A’ will go down and share price of the company ‘B’ will go up. Hence, most hedge fund
managers will buy the
Paris trading: This is the most famous hedge
company B shares and sell company ‘A’ shares.
fund strategy which capitalizes on the market
Thus, they could get higher returns.
inefficiency. Suppose, consider two securities or two indices which shows a near to 1 correlation in their movements. Then, the ratio of their share prices over a period of time in the history gives a constant value. But, due to market inefficiencies, this may not occur at each and every moment of time during the trades in the stock markets. Observing this, the hedge fund managers buys the
Mathematical aspects of Hedge funds: Hedge fund managers should be exceptionally good at mathematics. Even though strategies vary across different fund houses, the usage of statistical tools is almost same in all Hedge fund companies. Usually, they use statistical tools like SPSS, R programming, MATLAB etc.,
stock present in the numerator and sells the stock
The analysis of results is relatively complex in
present in the denominator , if the ratio found to
hedge
be less than the constant value which they got due
investment vehicles like mutual funds because
to past observations. Similarly, if the ratio is
hedge funds yields asymmetric expected results.
found greater than the historical constant, it
Performance returns: There are two kinds of
implies that the share corresponding to the price
performance returns:
present in the numerator is trading at higher price and the share present in the denominator of the ratio is trading at a lower price. Hence, numerator shares need to be sold and the denominator shares
funds
compared
to
other
similar
Absolute returns: This gives an idea on whether the fund is high risk, high return or low risk, low return and informs investor to make a decision regarding where this fund can be
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Page 23
substituted either in fixed income segment or in
probability for the hedge funds to yield highly
equity segment.
negative results which would be very higher
Relative returns: This compares the hedge funds
when compared to other investment vehicles.
to other benchmark indices and informs investor on the performance of this hedge fund Vis-Ă -vis the benchmark index. This informs the investor to choose better investing vehicle. Standard deviation: For most investments, we calculate the risk by using the standard deviation as they follow normal distribution. But, in the case of hedge funds, due to asymmetric expected returns, the calculation of standard deviation will be complex. If the calculation is done simply as we would do for a normal distribution, it could cover more risk inherently present in the hedge funds. Value-at-risk (VAR): VAR tells us the amount an investor going to lose in the extreme worst case (usually, it would be the highest amount that the investor is going to lose with 5% probability). That calculation is easy considering the normal distribution funds like mutual funds or other investment vehicles. But, in case of Hedge funds,
Source: www.forexfactory.com
due to asymmetry in returns, the calculation of VAR is also complex. Skewness: Skewness is a measure of asymmetry of returns.
A skewness of approximately zero
indicates normal distribution of expected results. But, Hedge funds shows negative skewness which implies that there is little amount of
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Page 24
IMPACT OF THE NEW BANKING LICENSES ON THE BANKING SECTOR IN INDIA The Indian enterprises made significant entry
Bank, Centurion Bank, Bank of Punjab and
into banking business in the early twenties and
IndusInd Bank to setup banks in India. Many
grew during the nationalist sentiment and freedom
of
movement in the country. During this time, major
institutions of the country.
banks were concentrated in the hands of few
IInd Phase (2004to2010)
business houses. To channelize the bank funds
Although the
to the few neglected sectors; in the year 1969, 14
Generation Private
banks nationalized followed by another 6 in the
adequate, the episode of Global Trust Bank
year 1980. These initiatives marked a paradigm
sent alarming signs to the banking industry.
shift in branch expansion and credit delivery
The regulator was more cautious and
mechanism thereby paving way to Mass Banking
judicious while allowing licenses to new
from Class Banking.
players and also monitoring the performance
The
Indian
Banking industry was dominated
of the existing players. In this backdrop, RBI
by
Public
Sector
during
gave permission only to Kotak Mahindra
pre-reform era and majority of their operations
Bank and Yes Bank. The new private sector
including pricing of products, were governed by
banks which initially required entry level
the Reserve Bank of India.
capital of Rs.200 crores was decided to be
To instill greater competition in the banking
increased to Rs.300 crores within three years.
Banks
(PSB)
these
banks
pertain
performance Sector
to
financial
of the New Banks
was
system and to enhance the productivity & competence further, RBI adopted a liberalized policy and allowed Private players to enter into banking in the post reforms era. These developments can be classified into three important phases. Ist Phase (1993to2003) RBI granted licenses to few banks like ICICI
NIRAJ DADHANIYA JBIMS
Bank, UTI Bank (now Axis Bank), HDFC Bank, Global Trust Bank, Times Bank, IDBI
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Large industrial houses were not permitted to
Cons: The draft requires new banks to ensure
promote new banks but individual companies
the same priority sector lending targets which
which were directly or indirectly related to large
The existing domestic banks have to follow-
industrial houses were allowed to own 10% of
40 percent of their loans should go to rural,
equity, without any controlling interest. RBI
small and medium enterprises, and they
permitted licenses to 10 New Private sector
should open at least 25 percent of their
Banks since 1993 of which 4 were promoted by
branches in rural areas - villages with a
financial institutions and remaining 6 by indi-
population of less than 10,000. They should get
vidual banking
the
listed on stock exchange within two years of
individuals
obtaining their licenses. The purpose behind
professionals.
banks which were promoted
Ironically, by
either failed or merged with other banks.
setting up new banks is to promote greater
ThirdPhase(Beyond2010)
financial inclusion but enforcing the norms set
The Finance Minister announced in the Budget
for old banks on them
2010 that the RBI was considering some
purpose.
additional
private
It is evident that a majority of NBFCs are
sector, including NBFCs like Reliance Capital,
backed by large corporate entities showing
Tata Capital, Aditya Birla Financial Services with
keen interest
an
geographic
lucrative and a valuable channel to mobilize
improve access to banking
low cost funds to fund their business interests.
banking
objective
to
coverage and to
licenses
expand
to
the
will not serve the
in banking as this segment is
services.
The positive aspect of NBFCs to become
Pros: The main idea behind the Non-operative
Banks
holding
would
institutions to banks, focusing on the niches
hold the bank and other financial services of a
that are neglected by the banking channel in a
group, is to segregate the financial services of the
way promoting financial inclusion.
group-which are over seen by regulators and the
The entry of Private Sector Banks forced
remaining other activities. The NOHC would
the PSBs to pay more attention on customer
hold at least 40 percent of the bank's paid-up
service to sustain and grow in the aggressive
capital with a 5-yearlock-inperiod.
environment.
company
(NOHC)
which
Experts
they
are
complimentary
financial
However, PSBs are forced to
believe these steps will attract only serious
function in uneven level playing field since they
long-term players.
continue
to
balance
both
commercial
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Page 26
element and social cause. In this case, opening of
1000 crores. Real estate exposure in terms of
new banks may lead to further drop in
assets should not be more than 10% of the
clientele base (high-value) and market share of
total assets of the group. The control and
PSBs.
ownership of the real estate arm should be
The Road Ahead
separated from that of the financial services
As
per
the
guidelines
which
are
applicable now, the new private sector banks are
business. No dilution of promoter’s stake should be allowed for the initial 10 years.
expected to meet priority sector lending target as applicable
to
domestic
banks
and
branch
expansion criteria. The most significant question is–how are the new banks are going to carry out the
desired
branch expansion and inclusive
growth when the performance of the existing private sector banks itself is far from satisfactory. Few private banks are contemplating to achieve the task by adopting the strategy of Branchless Banking through Business Facilitator (BF)/ Business
Correspondent
(BC)
model.
This
business model (BC/BF) can be easily replicated by PSBs since these banks are equipped with Core Banking, which is a requirement for Branchless Banking. To bring the new system into place, the regulator should focus his attention on the following important aspects to ensure the solidity of financial system and to guard the interest of the public at large A decent track record of
at
Source: www.moneylife.in
least 10 years in the financial services business for Industrial Houses to be allowed. New players would start operations with minimum capital of
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Trade Deficit and its implications on macro economy Whenever I pore over national dailies of our
Why our economy is afflicted with trade
nation, there used to be a lot of brouhaha over the
deficit?
trade deficit of ours. That insinuates that trade deficit is of huge importance to us. But instead of forging measures to rein in trade deficit, it is ostensible that people responsible for that task are digressing for their own excuses. If we visit the website of Ministry of Commerce to get the statistics of trade, a pall of tantrums would be there. Our kind ministry has not even made website operational!!! Now what else can we
As per definition goes it due to the excess of imports over exports of a country. But the moot question which arises here is that why the burgeoning trade deficit is not tamed by our government. If we took a insight into this matter we would find that our manufacturing sector (IIP) is in bleak form from past one year. No growth in capital goods and dud investment.
expect from the Diaspora which has its task cut out. Recent (Current account deficit) CAD figures for December quarter are out. The stupefying finding in that release was a whopping CAD of 6.7% which is all time high. Resurging trade deficit and widening gold import are wreaking havoc on worsening CAD position. This fiasco in macro-economy bells death knell
“trade deficit is due to the excess of imports over exports of a country”
for our economy. If we can’t arrest burgeoning CAD, it will cause wider implications for our mounting external debt. Yawning external debt is already at an alarming level of 8.9% of GDP. It is pegged at $376 billion. Hence it will be ill afforded to finance our CAD through external borrowings.
NITIN SINGH SIMS PUNE
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Another reason is our huge appetite for yellow metal. The import duty paid on gold is causing cascading
misbalances
in
trade
balances.
According to World Gold Council, India holds the top rung position for demand of gold.
Source: Ministry of petroleum and Natural Gas Depreciation of rupee is one of the worrisome concerns which create ripples in our trade balances. Lack of political will is also a major concern which can be factored in. Ultimately, government has all the vested powers to clear this Source: www.hindustantimes.com
mess.
The import of crude oil is leading the pack. Import of crude oil is the biggest reason for trade imbalance. It is already creating far-reaching catastrophic consequences in our economy.
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Page 30
The unbridled trade deficit is adding to worsening
Political will has to be instilled in the modus
current account deficit. Due to this our Balance of
operandi of government. And most important,
Payment is getting badly affected.
we need to boost our exports to recuperate our trade with other countries. Government can make changes in their sophomoric policies to induce small scale industries to scale up their production.
Source: RBI Silver lining or panacea
Source: Indiamics.blogspot.com
Consumption of crude oil cannot be stopped as it is vital for our industries and transport. But cer-
Trade policy with other nations can be made
tainly we can cap this yawning consumption by
comprehensive to soothe trade imbalances. For
using it judiciously. Use of renewable energy
example, China is the biggest manufacturing
sources must be heavily promoted. Mounting sub-
exporter in the world. India must also put in
sidies on fuel should be tamed down.
place its abundant resources to leverage them. Anti dumping rules must be strengthened to in-
Excessive import of yellow metal has to be arrested. Government can impose higher duty to divert the demand of gold. Better small savings scheme and mutual funds or debt funds can also attract investors towards them.
crease competition in market. WTO negotiations are indispensable for our nascent economy. As we are a fledgling economy, we need selective concessions in our trade
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Page 31
tariffs to support our economy. Special trade status such as the Most Favored Nation (MFN) provisions a streamlined process to increase one’s exports. In a nutshell if above slated measures are taken into consideration, then we can dream of a India which is free from trade deficit. Specter of twin deficits i.e. fiscal deficit and current account deficit can be nipped in the bud itself. I dream of our Bharat turning into Golden Sparrow of the yore. Source: www.sundaytimes.lk
Source: sp1947.blogspot.com
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Ponzi Schemes and its Effect on the Developed World Ponzi Scheme and its Origin:
cial Crisis. According to a study by Bank for
Ponzi Scheme is a fraud scheme that was started
International Settlements (BIS), the combined
by Charles Ponzi in the year 1920. In this scheme
debt of government, private households and
investors are paid returns from their own money
nonfinancial companies in 18 countries of the
or money paid by the subsequent investors rather
OECD, increased from 160 percent of GDP
than the profit generated by the organization.
in1980 to 321 percent in 2010, leading to
Charles Ponzi started it as business that would
increase in Debt-GDP ratio. These economies
buy postal reply coupons in Italy and exchange
have borrowed intensely from the future to meet
them with stamps in the US. This was an
their current consumption, putting a pressure on
arbitrage business which took advantage of the
the next generations. This will also lead to a
price difference. Charles Ponzi attracted investors
slowdown in the growth of the economies. Thus
by promising them high returns but instead of
steps should be taken to achieve political and
investing their money in stamps, he used the
economic stability because another recession
money of subsequent investors to pay high
can start anytime.
returns to the previous investors. This resulted in
Apart from debt, the Ponzi Scheme in the
extraction of huge amounts of profits, investors lost around USD 20 million (approximately USD 225 million) by the time scheme collapsed. The second-biggest Ponzi Scheme was
developed also exacerbated by “In Ponzi scheme investors are paid returns from their own money or money paid by the subsequent investors rather than the profit generated by the organization�
hidden liabilities of government and companies. It is the younger generation that pays for the
done by Bernard Mad off, a Hedge Fund Manager in New York. This resulted in losses of USD 20 billion in 2008. Currently, the developed economies are facing the effect of Ponzi Scheme. Ponzi Schemes in the Developed World: The Developed Nations of the World are in huge public and private debt due to the Global Finan-
SAUMYA RASTOGI NMIMS HYDERABAD
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Page 33
older generation which is mainly due to increase
need to take steps to reduce the declining
in life expectancy rates in the developed world.
labor. Efforts should be taken to increase
Steps that the Developed World should take to
participation of elder generation in the workforce, increasing women participation
Overcome Ponzi Scheme: There are some steps that the Developed World
and
encouraging
can take to reduce debt, increase GDP and end
contribute to larger working population.
the era of Ponzi Schemes.
Development of Immigration Policy: These developed
Elimination of Debt: It is important to finish the existing debt in the economies. Most of the debts that exist will not be paid for and there will be defaults in the future. Debt can be managed through write-offs, restructuring, increase in taxes, and inflation. Though this will result in losses for creditors and holders of financial wealth and higher taxes for tax payers, it will also help in ending existing debt in the economies. Reduction
of
Unfunded
Liabilities:
Government should raise the retirement age, reduce social-insurance payments and manage health care systems for greater efficiency. These measures can help in reducing government spending on social welfare benefits. Increase
in
Government
nations
family
formation
should
be
open
to
to
immigrants. The aim should be encouraging well educated immigrants from outside. Such immigrants will contribute to economic growth and development of the nation. Thus countries need to develop smart immigration policies. Investment
in
Education: Investment in
education can lead to growth in per capital GDP of the country. Developed nations should focus on
improving
average
education
levels,
improving the quality of teaching. Government should also support bright and intelligent students
and
encourage
innovation
and
entrepreneurship. Government should invest in Universities and ensure that topics related to future growth and development are taught in the
Efficiency:
Government can be made more efficient by making the social welfare system more efficient, reducing the number of public employees as a percentage of total population. New entrants must be encouraged to increase competition in the economies
Universities. Reinvestment in Assets: There is a need for reinvestment in public infrastructure and public assets. Airports, railways systems, highway networks
and
energy
grids
should
be
modernized. Government should also involve private sector in these activities as it will
Manage Labor Scarcity: Developed nations
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Page 34
improve strategic planning and governance,
ratio decreases in the developed nations will
reduce
they prosper.
process
prioritization Government
complexity
and
selection
should also
and
improve
of
projects.
encourage private
investment Increase in Raw-Material Efficiency: Business should aim at increasing production efficiency of supply chain. Companies should invest in material-efficient products to meet the changing consumer needs. Government should encourage development of policies for efficient technology. Global Cooperation: Though the competition will increase in the World, it is important that the Countries must cooperate only then can the problems be solved, else it will result in Beggar-thy-Neighbor leading to slower economic growth. Emerging economies should focus more on domestic consumption as compared to export based growth. Innovation: Developed world should invest in product ive
workforce
and
encourage
technologists to innovate and entrepreneurs to start new business. Many government policies are designed to protect traditional industries which
Source: thelabeconomics.blogspot.com
inhibit innovation. Thus antitrust policies should be developed to encourage innovation to achieve economic growth. Thus the fraudulent Ponzi Scheme can be put to an end only when society, government and companies cooperate. Only when the debt-GDP
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BC MODEL – a revolution in banking service is the pathway to promote financial inclusion in India The reach of banking and other financial
providing various financial and banking
services were very limited to the mass
services. These intermediaries are known as
population of India as in spite of so many
Business
years after independence of our country half
Facilitator’s. And RBI has defined the
of our population is unbanked. Although
parameters and criteria for all those entities
many programs like Co-operative Movement,
who can become BC.
Setting
up
of
State
Bank
of
India,
Nationalization of banks, RRBs, Self Help Groups
were
initiated
on
behalf
of
Government of India and other government bodies like RBI, NABARD etc. to include the financially excluded population but these programs were not that of huge success in ground level due to many constraints to cover all sections of population.
Correspondent
ensuring greater financial inclusion and increasing the outreach of the banking sector in India the BC model
Business
The different entities who are working as BC’s of various banks are in proper legal agreement with the banks. And they cannot offer any new product or services until they have taken the prior permission of banks. And for each transactions or opening of any new accounts or for any other services they provide to the customers on behalf of the bank
“entities who are working as BC’s of various banks are in proper legal agreement with the banks”
Thus with the primary objective of
or
they are working with they receive
an
amount
of
commission for that. And the banks will be fully
has been implemented. In the year 2006
RBI
initiated
the
Business
Correspondent (BC) Model in which NonGovernmental
Organizations/
Self
Help
Groups (NGOs/ SHGs), Micro Finance Institutions
(MFIs)
etc.
were
used
as
intermediaries between the banks and the financially excluded population of India for
PRIYANKA
SOUVIK
NIT SILCHAR
NIT SILCHAR
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Page 36
responsible for all the activities of the BC and
sectors among the BPL i.e. Below Poverty
their retail outlet i.e., Customer Service Point
Line people. Even the KYC norms were
or
simplified to enhance the outreach of banking
CSP.
Thus
BC
is
primarily
the
representative of banks who provides banking
in rural sectors.
services through use of ICT based solutions in
BC offer its clients a mix portfolio of different
his own or nearby villages. And the banks
financial
give remuneration and or transaction based
micro-loans, micro-savings, micro-insurance
commission to them against the service they
and micro-remittances services etc. The
provide.
different scope of activities that BC can offer
Figure1: BC Model
to its customers are strictly guided by RBI’s
products
and
services
like
notification and they include (i) disbursal of RBI also took several corrective measures to promote BC model by allowing banks and their respective BC’s to open No Frill Accounts to promote the drive of financial inclusion. The reason to promote No Frill Account was because those accounts could be opened with either zero or for a minimal balance requirement which was not present earlier. And thus it was easy for the banks to
small value credit, (ii) recovery of principal / collection of interest (iii) collection of small value deposits (iv) sale of micro insurance/ mutual fund products/ pension products/ other third party products and (v) receipt and delivery of small value remittances/ other payment
instruments.
BC
model
is
increasingly being recognized as the most suitable approach for achieving financial
open new account especially in the rural
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inclusion in the long run as it allows banks to
the help State Level Bankers’ Committee’s
service customers and extend their geographic
i.e. (SLBCs).
reach at a much lower cost.
Figure 2: Various services offered by BC To further strengthen the pace of financial inclusion program in India in the year 2011 the Government of India in association with Indian
Banking
Association started the
SWABHIMAN SCHEME.
And under this
scheme the banks were advised to draw up a road map to provide banking services in every village having a population more than 2000 by March 2012 either through brick and mortar
branches
or
through
Business
Correspondents. Thus 73000 villages were identified and allotted to various banks with
Initially several banks started pilot project to test the viability of BC model and gradually the pace and rate of expansions of Business Correspondents
and
their
retail
outlets
Customer Service Provider increased to a greater extent with the usage of Information and Communication Technology i.e. ICT based solutions. Thus the customer provided with a Multi-application Smart Card, mobile phone enabled banking facilities, biometric ATMs, Internet Kiosks helped a lot to gather the
momentum of the financial inclusion
program in India. The Financial Inclusion Technology Fund is used for investing in
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Information
Page 38
Communication
Technology
Government’s decision to use BC Model in
(ICT) based solution for promoting financial
transferring monetary benefits of government
inclusion. Thus new technologies are invented
programs like NREGA, Social Security
especially for innovating new models and
Pensions etc. is also helping the model to gain
approach to mitigate the demand and supply
momentum. The recent tie up of direct
of banking services in India.
transfer of subsidies with the help of ADHAAR card i.e. a Unique Identification
Figure 3: BC using ICT based solutions
Figure 4: Growth Chart of BC Model released by RBI
Number with the help of BCs network also
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Page 39
shows that how effective and efficient BC
and why it can be used as a pathway to
Model has
promote financial inclusion in India.
been
in reality that
even
Government is using it for promoting its own programs. Thus BC Model has been a perfectly game changing model for reaching the financially excluded population of India. And the pace of growth of BC’s and their retail outlet i.e. CSP is really a positive sign for the growth story of financial coverage in India. The banks also actively participated for caring out new different strategies and plans for making the BC Model more effective in the ground level. And the latest data released by RBI can highlight the real success story of BC Model
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Page 40
D.E. Shaw SIP Experience Hello,
Operations- Financial Reporting Team. The
My name is Ekta Singh and i come from city
work
of joy, Kolkata. I have done my graduation
statements for the hedge funds according to
from St. Xaviers College, Kolkata. I am also a
various
certified Company Secretary. I hold a work
Luxembourg GAAP, audit confirmations and
experience of two years with HSBC Global
interaction with our investors and auditors,
Resourcing and PriceWaterHouse Coopers
roll forwards, working on acrobat and PDF's,
India.
Microsoft Outlook etc. Apart from the work ,
area
involved
GAAP
like
preparing
U.S
financial
GAAP
and
the team was highly skilled and set of I am fortunate enough to be a part of Money Matters Club. Here I was able to explore my
professionals who imparted us learning every single day.
passion for learning more through support from our mentors, faculties, teammates.
Being part of D.E Shaw didn't only gave me
Another major development for me in last one
exposure to various work fields but we also
year's time was cracking the best summer
had fun during our non-working hours as
internship programme (SIP) campus in D.E
company had highly equipped gym, regular
Shaw. The experience of SIP was amazing
yoga and aerobics classes, delicious food,
when it came to learning, team work,
gaming area, various sports and competitions.
showcasing my skills-sets, interaction with
I would like to express my gratitude towards
corporates and big companies like E&Y,
Money Matters Club which helped me getting
Blackstone, J.P Morgan, Silver Creek etc.
a wonderful industry experience by preparing us well in the field of finance well.
The selection process was too rigorous starting from written test, group discussions, panel interviews. D.E Shaw is an investment and software company incorporated in 1988. I got an
EKTA SINGH IBS, HYDERABAD
opportunity in working for the best team of D.E
Shaw
India
which
is
Financial
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I S S U E 2 , VO L U M E 1
Q
Page 41
UIZ TIME
1.
A former derivatives broker whose fraudulent, unauthorized speculative trading caused the spectacular collapse of Barings Bank, the United Kingdom's oldest investment bank lead to a loss of $ 1.4 billion in 1995 is ------------------------
2.
Name the first Indian woman CEO of a Foreign Bank? He is the pioneer in mutual fund industry and often referred as the Father of Index Fund investing. He created the first S&P 500 Index fund. Identify this famous person? Who founded the famous Wall Street Journal? Name the person who introduced the 'Double Entry' book keeping concept? Who is known as the Father of modern Economics?
3.
4. 5. 6. 7.
NASDAQ is acronym for
Answers 1. 2.
Nick leeson Tarini vaidya of KBC bank India and South Asia
3.
John Bogle
4.
Charles Dow and Edward Jones
5.
Lucas Pacioli
6. 7.
Adam Smith National Association of Securities Dealers Automated Quotations
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