Saying yes to Financial Inclusion

I won't be at town for a while, so no blogging this week. So thought of posting this one article published in Business standard. If you remember, I had published an article on Financial Inclusion in one of my earlier blogs (Why be excluded?). Well, banks in India seem to be taking steps towards this direction. Lots of MFI's (Micro Finance Institutions) exist in the market but because of the meagre portfolio they can afford, banks seem to be interested in taking a piece of the pie.

Already, banks like Yes Bank are entering into the foray, with a pilot plant set up in Mumbai. Its Micro Finance wing Sampann, has started operations in 3 areas of Mumbai. It has adopted the strategy of giving loans to individuals directly, instead of Groups of Individuals, as is the case of Grameen Bank.

All said & done, the only limiting factor on banks is that they can keep a variable uinterest rate as long as RBI doesnt put any cap on the interest rate, as explained by Sitaram Rao, consultant to SKS, a micro finance institution.

Frequent defaults could also cause banks unable to keep up with the rest of the business. Alltogether, it also seems as a strategy by banks to offer customers free accounts for taking the facility. The banks anyway gain here, because the risk of default, if nil can earn the bank considerable profit. As I mentioned in one of my blogs on the Inverted Curve. During such a period, banks provide loans for a high interest rate for short periods. This helps the banks in earning huge profits in no time.

Only time will tell how the plan goes. Financial inclusion Zindabaad!!!

Global Financial Crisis-Asian View

I was just browsing through several articles at Business standard thinking what to present to you guys (I was afraid I would run out of topics soon!) when I came across this article by Prof. Shankar Acharya, Honorary Professor at ICRIER Delhi, and Chief economic advisor to the Government of India.

In his article, Prof. Acharya describes about a lecture conducted at ICRIER by noted economist Mr. Andrew Sheng. As rightly explained by Prof. Acharya, the market now is full of articles on the crisis, most of them being works of western economists. But there is few literature available on its affect on the Asian markets. Mr. Sheng's lecture describes about the very historical facts that led to build up the atmosphere for this crisis (Yes, according to Mr. Sheng, it had started as the fires of the previous downturn of 1929 was cleared up).


Click the Link below to read the whole article-

Global Financial Crisis-Asian Perspective

And needless to say, constructive criticism is invited on the article. Do post your comments.

Interim Budget speech 2009

The Interim Budget speech as presented by Hon. Finance Minister Mr. Pranab Mukherjee.

Contributor: Mr. K.P. Nagashrith, BSIM-Bangalore


FM's Budget Speech

Money Kr. & Monetary Policy

What is the RBI? How does it affect me? Want to find out? Check out this very simple document describing in very easy terms what the RBI does. I would recommend you to study about the different types of RBI rates while going through the PDF to get a thorough understanding (Like SLR, CRR, Bank rate, Repo rate, Reverse repo etc.)

Share this document with your friends as well. Money Kr & Monetary Policy

Courtesy: RBI Financial education

BUDGET BASICS

A lot of People gather at the hall and discuss matters that mean most to the nation, followed by occasional 'booing' by the opposition and claps from the ruling party. So which side do you take? The following data gives a simple description of what the budget is all about and how to interpret it.

1. What is a Budget ?

Budget is Estimate of inflows and outflows of the Government during a year. Budget is presented for the ensuing Financial year.

2. What does Budget consist of?

Every budget consist of Actual figures for preceding years, Budget and revised figures for the current year, Budget estimates for the following years

So the Budget presented in March 2001 will be estimate of Inflows and outflows of the Funds for the period beginning from 1st April 2001 to 31st March 2002.

3. When is Budget presented?

Budget is to be presented in Lok Sabha on a day as the President directs. By convention, the Budget is presented in Parliament on the last working day of February.

4. Who draws the timetable for Budget?

Timetable is drawn by the Business Advisory Committee (BAC) of Parliament. In the schedule drawn up by the BAC, there is a fixed period of discussion for each ministry.

5. Who has the responsibility for Budget?

Budget Division in the Finance Ministry has the overall responsibility. It prepares the budget on basis of proposal received from various departments and ministries and the availability of funds. However, final approval is from the Prime Minister.

6. What if Budget is not approved by 1st April?

The Constitution empowers Lok Sabha to grant a Vote-on-Account (Article 116) so that the government can continue with the necessary expenditure into the new fiscal, before the Budget proposals actually get passed after necessary discussions. The vote-on-account normally covers the expenditure requirement of the government for two months.


7. Is it compulsory to have budget for every year?
click here

8. How to understand the Budget Document?
click here

9. What is the process of Budget approval?
click here

Courtesy: http://www.banknetindia.com

FDI: To be or not to be??

Times of India, Feb 12, 2009: With the Government decision to ease the entry modes of FDI into the country, a great leap is expected in the areas of the already hyped retail sector, telecom, insurance etc. Earlier when a company invested in a company in India, it had to enter into a joint venture with an Indian partner. Suppose the contribution of the Foreign partner in this JV (Joint Venture) was 49% and that of the India Partner was 51%, and this JV started its own subsidiary in India, this subsidiary was supposed to be constituted of 49% FDI.

Now, with the cabinet decision on wednesday, a subsidiary from the above example would be considered as a 100% Indian entity.

It seems India has started changing much of its tactics, keeping in mind the fact that most of the past stock trends have been affected due to FII's instability.

India now seems to be locking horns with China, which has less FDI restrictions, but has more restrictions over the equity market. As a result, FII's find it very hard to enter China.

FDI entry and exit is a very difficult affair. First of all, there are the limitations which a foreign company can't exceed. Exit is also difficult, as Industrial laws mention that diluting a company employing more than 100 companies needs prior Government approval.

Now that the entry has been made easy, Indian's can expect more increase in FOREX levels. But there are also problems associated with this. Remember my earlier blog on Mao's cookie crumbling (http://fingertipfinance.blogspot.com/2009/02/renminbi.html)? Well, India could loose its cookie too, as more FDI in makes the value of Indian Rupee appreciate against the US dollar. This happens because the supply starts exceeding the demand. Imagine a shopkeeper holding excess of a particular product which he has to sell before it reaches the expiry. What does he do?? He lowers the rate of the item. That's what will happen with the dollar. 1$ that I used to get at Rs. 50 will now be available say at Rs. 42. So an American can now only get Rs. 42 of work done out of me for his 1$. Now he has to look for cheaper substitutes. That's where India looses.

Also, Indian goods could loose out their competitive value. Interest rates start coming down.

So even I am puzzled....Should we or shouldnt we....the choice is yours.

Your comments on this article are invited. Do participate.

When business falls in love

The legend has it that a clergyman from ancient Rome, St. Valentine, was executed by the Emperor for marrying off runaway couples. To this day, February 14th is remembered with as much fervour and joy in memory of this kind-hearted Saint. And when it comes to business, Valentines day has much to offer. The following data could be useful to young entrepreneurs who have a lot of opportunities during the festival of love. The statistics are from the US. But I am showing this with the belief that Consumer behaviour should be the same everywhere.

Top Ways to Celebrate Valentine’s Day

Household participation rates

Greeting Cards	65%	Plush	21%
Date Night	44%	Other Gifts	17%
Candy	38%	Perfume/Cologne	12%
Flowers	32%	Jewelry	11%
Gift Cards	29%

Sources: Hallmark/Retail Industry Leaders Association/NRF

Valentine’s Cards
180 million
Number of Valentine’s Day cards exchanged annually, making Valentine’s Day the second-most popular greeting-card-giving occasion. (This total excludes packaged kids valentines for classroom exchanges.) (Source: Hallmark research)

Nearly 50 percent
Typically, the proportion of all Valentine’s Day cards purchased in the six days prior to the observance, making Valentine’s Day a procrastinator’s delight. (Source: Hallmark research)

About 40%
Proportion of all Valentine card purchases which parents account for. (Source: Hallmark research.)

Candy is Dandy

1,271
Number of locations producing chocolate and cocoa products in 2003. These establishments employed 43,379 people. California led the nation in the number of such establishments (with 146) followed by Pennsylvania (with 120). <http://www.census.gov/prod/www/abs/cbptotal.html>

519
Number of locations that produced nonchocolate confectionary products in 2003. These establishments employed 23,343 people. <http://www.census.gov/prod/www/abs/cbptotal.html>

$13.5 billion
Total value of shipments in 2003 for firms producing chocolate and cocoa products. Nonchocolate confectionery product manufacturing, meanwhile, was a $5.5 billion industry. <http://www.census.gov/prod/ec02/am0331gs1.pdf>

3,523
Number of confectionery and nut stores in the United States in 2003. Often referred to as candy stores, they are among the best sources of sweets for Valentine’s Day. <http://www.census.gov/prod/www/abs/cbptotal.html>

24.7 pounds
Per capita consumption of candy by Americans in 2004. Candy consumption has actually declined over the last few years; in 1997, each American gobbled or savored more than 27 pounds of candy a year. <http://www.census.gov/industry/1/ma311d04.pdf>

Flowers
$422 million
The combined wholesale value of domestically produced cut flowers in 2004 for all flower-producing businesses in 36 states with $100,000 or more in sales. Among states, California was the leading producer, alone accounting for nearly three-quarters of this amount ($304 million). <http://www.nass.usda.gov>

$43 million
The combined wholesale value of domestically produced cut roses in 2004 for all businesses in 36 states with $100,000 or more in sales. Among all types of cut flowers, roses were second in receipts to lilies ($78 million). <http://www.nass.usda.gov>

22,022
The number of florists nationwide in 2003. These businesses employed 113,270 people. <http://www.census.gov/prod/www/abs/cbptotal.html>

Jewelry
28,527
Number of jewelry stores in the United States in 2003. Jewelry stores offer engagement, wedding and other rings to lovers of all ages. In February 2005, these stores sold $2.4 billion worth of merchandise. (This figure has not been adjusted for seasonal variation, holiday or trading day differences or price changes.) <http://www.census.gov/prod/www/abs/cbptotal.html> <http://www.census.gov/mrts/www/mrts.html>

The merchandise at these locations could well have been produced at one of the nation’s 1,892 jewelry manufacturing establishments. The manufacture of jewelry was an $8.6 billion industry in 2003. <http://www.census.gov/prod/www/abs/cbptotal.html> <http://www.census.gov/prod/ec02/am0331gs1.pdf>

The Yield Curve

In one of the previous blogs, I had mentioned about the negative yield curve. Well....thats what the economy is going through now. A negative yield curve is one of the indicators that has always played prequel to economic slumps in the past. An example can be quoted from the 1998 US Stock market slumpdown, during which the US market saw a lot of IT based startup companies who had borrowed a lot of funds for keeping the business running but in the end many went down. (I recommend Startup.com, a real life documentary, which shows the nuances of not only starting a new company, but also keeping it running during a market downturn)

To get an idea of an inverted curve, try plotting a graph between the rate of return for Government bonds and the period to maturity. If the plotted curve is sloping upwards, the economy has lots in store for you. If the curve is sloping downwards, and you are a fresher who has just arrived in the market, you are in neck deep trouble!!

Image Courtesy: www.Wikipedia.org

Industrial opportunities in North-East India

If I were to be rich,
If I were to be sucessful,
If I were to be grateful,
I would return to this wonderful land,
and give back whatever it had given me
to make me what I am today

It has been a long while since I gave this presentation. Hope that my readers get to know about the industrial scenario of the North-East from this presentation. The document can be downloaded from the following link- http://www.scribd.com/doc/2462921/Industrial-Opportunities-in-the-Northeast

Good Morning North-East

It seems good days are back at the doorsteps of this once forgotten land of ours. Companies seem to have taken a new step in selecting MBA students from far fledged IIM-Shillong, located in Meghalaya, North-East India.

A delighted Director of the new IIM, Prof Ashoke K Dutta said, "When we approached the companies, initially they were hesitant. The challenge was to convince them as to how the products would be of help to them."

It seems being from IIM itself is not an advantage after all. The students as well as the administration have to also position themselves to grab the attention of the Corporates. Proper positioning must also be done to convince the biggies that the students have the basic skills in them to hold back major repercussions during the inverted curve period.

What the North-East needs is to make itself open for more opportunities pour in. Conditions like extremism are still prevalent and fresh in the minds of investors. Companies must convey their message to the people of the North-East that instead of feeling insecure, more opportunities would be coming at their doorsteps.

Let us hope this year ushers in a new spirit of hope to the region.

The New Curriculum

MBA aspirants joining this year & in the future may get to read a lot about the Satyam Scam & the fallen IT Czar Ramalinga Raju.

The question now being debated is whether fresh MBA grads ought to have their attention focussed on such a topic. There are some who feel that MBA's should know a thing or two about business ethics, and keeping that in mind is much more important than earning profits. Others say that such cases should be left to students doing CA courses and law firms as they are more involved directly in such cases.

According to me, a businessman needs to be aware of all his surroundings. People would think twice before they do something foolish or the other.

An MBA grad should know what has to be followed. There are many ways a company can earn its profits. Proper management happens when you take the right path of earning this profit. India is already dependent on FDI's & FII's on maintaining its stock market movement. Any similar mishap can make such investors loose their confidence in the Indian business environment, ultimately leading to more disaster.

Let us hope that there wont be another 'Enron' or 'Satyam' for us to study.

Why be excluded??

One of the topics being discussed in the banking world is 'Financial inclusion'. Financial inclusion aims at providing banking services to all in the most fair, transparent, & equitable manner at an affordable cost.

Much of the society today has been divided into 3 distinct parts- First come the elite who are provided with the best of financial instruments. In the extreme ridge come people who are denied all the services. In the middle come people who mostly use banking services for withdrawing and depositing money.

According to Shri. V. Leeladhar, Deputy Governor, RBI, Financial exclusion could lead to severe economic problems starting from higher incidences of crime to increase in unemployment levels.

Just having an ordinary "no frills" current/savings account is not what financial inclusion is all about. Financial inclusion should aim at providing the essential services to the needy with the necessary information so that a person can decide what is the right choice for him/her. For example, villages could have electronic ATM's which could give instructions in local dialect and which would also offer facilities for depositing money as well.

Banks when opening business in rural areas should forget their competitive restrictions and allow people to withdraw from any bank whichever is closer. Bank drawing limits at such areas should be revised.

Courtesy- Aathira G. Krishna, MBA 1st year, Pondicherry University

New Satyam CEO A S Murty says 'Yes! We Can'

TOI: Employees of Satyam, on Thursday welcomed the appointment of global delivery head AS Murty as the new CEO by the government appointed board of the crisis-hit company.

The move went down well with Satyam employees, who see him as a neutral executive and one who is not part of disgraced Satyam founder, Ramalinga Raju's coterie.

These employees earlier expressed dissent when Ram Mynampati took charge as interim CEO of Satyam, following Raju's confession of perpetrating a Rs 7,000 crore fraud.

Following his appointment as CEO, Mr Murty addressed tens of thousands of Satyam employees at different locations through a web cast that lasted over half an hour. The speech was aimed at motivating and reassuring employees, who have had to cope with social stigma and insecurity after news of the Satyam fraud came out last month.

"If an internal person, has to head Satyam, Murty is the best. He has good knowledge of delivery, HR and associates(employees). I would say that of the over 50,000 Satyam employees, Murty would be familiar with at least 10,000. I am sure he would know the top 500 leaders by name," said a long-time employee of Satyam, who did not wish to be named.

About Murty's association with Raju, the same employee said, "Raju did not accord him any special place or promotion. He is like the Pranab Mukherjee of Satyam, an effective troubleshooter, who can keep the employees together."

Eureka! That's Finance

Students like me from B.Sc background have had really hard times in and out of class coping with Finance subjects. Following are tips from a few lessons that I learnt-

1. Be in touch with your professor- Some are tough, I know, but they also know your weakness well. Ask them where you lack.

2. Get one good book & stick to it- Its true that in specializations, you have to read a lot, but often with so many books lying around, you might end up deciding which one to start. Understand it...then go for change.

3. The Job- Don't visualise yourself 2 years from now working on your PC doing some unknown research. Search the job postings available at different job sites like 'Naukri' & Monster.com. Find out what these jobs involve. Select your field of choice & work towards it. Believe me....you dont get to sit in the hot seat right away.

4. Everyday is a new day- So learn something new. There are analysis tools from excel. Dont wait for others to teeach you. The materials are available on net. And dont think you can get it done in a day.

5. Freelance- Get hold of a company of your choice. Dont just take the top ones. Take one that's faring very badly. Use your analytics that you learnt as Science Grads. Think what could have gone wrong. Do a short analysis and show it to your professors. This excercise would increase your confidence level and your proactiveness.

Do share any other tips or comments that you might have. Happy Calculating!!!

Thats how Mao's cookie crumbled!!!

You pick up your favourite toy you used while you were a kid when you notice that familiar yet unwanted tag- 'Made in China'.

One of the reasons why Chinese goods are preferred lies behind the way the Chinese currency Renminbi or more popularly called 'Yuan' is evaluated.

You see, currencies like Indian Rupee, American Dollar, GBP (Great British Pound) are traded openly in a separate market (also called as forex). This trading happens as long as each unit of currency holds a certain value against some other currency and this value keeps on changing.

I remember when I changed my Binocular with my brother for his geometry box (which I badly needed!). For my bro (who was 7 years old), Binoculars were like heaven. So he gave in.

That's whats happening with currencies. They trade when they hold value.

Now, in the last decade, for 1$ you could get 8.28 Yuan of work done! So as a company in US, I send more $'s into China. But later, in 2005, China valued Yuan to 8.11 Yuan/$. Now I am only able to get 8.11 Yuan of work done by my Chinese friends for my precious 1 $. It is at this point that I start focusing more on quality. I now start looking at countries which offer more quality goods.

Mortgage 'Cry'sis

The following document really taught me what happened at the other side of the globe which caused such a huge turmoil world over. (PLEASE NOTE: CONTAINS OBSCENE LANGUAGE)

All thanks to Ivy League MBA's who have put us in such a shape- here's the link- http://docs.google.com/Present?docid=ddp4zq7n_0cdjsr4fn

What are all those traders shouting about?!?!?!

Ever wondered what the stock market is about. The following is just an example of what is speculation in the stock exchange!!!

It was autumn, and the Red Indians asked their New Chief if the winter was going to be cold or mild. Since he was a Red Indian chief in a modern society, he couldn't tell what the weather was going to be..

Nevertheless, to be on the safe side, he replied to his Tribe that the winter was indeed going to be cold and that the members of the village should collect wood to be prepared.

But also being a practical leader, after several days he got an idea. He went to the phone booth, called the National Weather Service and asked "Is the coming winter going to be cold?" "It looks like this winter is going to be quite cold indeed," the weather man Responded.

So the Chief went back to his people and told them to collect even more wood. A week later, he called the National Weather Service again. "Is it going to be a very cold winter?" "Yes," the man at National Weather Service again replied, "It's definitely going to be a very cold winter."

The Chief again went back to his people and ordered them to collect every scrap of wood they could find. Two weeks later, he called the National Weather Service again.
"Are you absolutely sure that the winter is going to be very cold?" "Absolutely, " The Man replied. "It's going to be one of the coldest winters ever."

"How can you be so sure?" the Chief asked. The weatherman replied, "The Red Indians are collecting wood like Crazy."

This is how stock market works!!!

Top 10 Global Financial Brands 2009

The latest Global Banking 500 list points to the magnitude of the blood bath in the global financial markets. There is a steep drop in the Top 500's overall brand value by a whopping $ 218.1-billion (down 32% from 2007) and $3.9 trillion (down 51%) shaved from their market capitalisation during 2008!

As many as 209 brands present in 2007 league table have dropped out of the new list. Notable exits include the bailed Fannie Mae and the bust Lehman Brothers whilst the salvaged Merrill Lynch and Wachovia tumbled in the ranking table by as many as 30 and 59 places respectively.

HSBC, though able to hold on to the numero uno position in the Global 500, saw its brand value erode by a around 28% to $25.4-billion in 2009.

The beleaguered Citibank which was edged out from its No 2 rank in 2007 to No 7 in 2008, saw a massive $ 18-billion in brand value erosion last year.

Here are the Top 10 Global Financial Brands of 2009-

1. HSBC
2. Bank of America
3. Wells Fargo
4. Santander
5. IND & COMM BK OF CHINA
6. American Express
7. Citi
8. BNP Paribas
9. China Construction Bank
10. Chase

Courtesy: Times of India

AeroIndia 2009

Bangalore would soon be witnessing the much awaited AeroIndia 2009 to be held between February 11-15 2009 at Yelahanka Air Force Base.

The 7th Aero India is being organized by the Ministry of Defence, Government of India. It is managed by Confederation of Indian Industry (CII). Aero India has already carved a niche for itself globally as a premier aerospace exhibition, with six successful editions organized between 1996 and 2007.The show aims at bringing under one roof, exhibitors from all around the globe to showcase the best in aviation.

Make sure that you get your tickets in time which are being distributed at select SBI Branches. The tickets are pretty expensive (least being Rs.300 per adult), but for those who are mad about machines and flying it is worth the deal.


For more information, do visit- http://www.aeroindia.in/

Hi to all!!!

One more blogger you may say. Just created my first blog site. I am a student of finance and was wondering that it would be nice to have something for people who want to know finance, but in the language that they want to. So here I am. I wont say that I am the best. But hope to make a mark.
I would like to take this opportunity to thank fellow blogger Vamshi Krishna (www.consumerpsyche.blogspot.com) who inspired me to come forward.