You are on page 1of 40

From the Editor’s Desk

All images, artwork and design are copyright of Monetrix, The Finance and Economics Club of MDI, Gurgaon

Dear Reader, Welcome to the special issue of Blue Chip! At a time when few of us have joined our dream colleges while others complete a year of MBA, Blue Chip proudly celebrates its first anniversary and presents its special issue from a new editorial team. Taking the baton forward from the progenitors of Blue Chip, we look forward to the coming year with hope and optimism. To make the anniversary issue of Blue Chip special, we introduce a new section wherein our team members share their summer internship experiences across various companies and functions in finance and economics. This issue’s cover article is about the current situation of the insurance sector in India, and prescribes a dosage of bancassurance, increased FDI and micro-insurance to help this sector pick up speed and reach the next stage of growth. Retaining popular sections from the last issue, this time we talk about Current Account Deficit in the Beginners’ Section and present a review of the movie Too Big To Fail. For the inquisitive minds, a tutorial on Inflation Indexed Bonds is included, and to exercise your grey cells, we offer you a crossword. From the entire Blue Chip team, here’s wishing all our

The Team
Editorial Team

Ashish Gupta Nidhi Soni
Content Creators

Amit Agarwalla Daman Aggarwal Karan Jaidka Radhika Bhattar Rishabh Gupta Rishi Maheshwari Rohit Agarwal Sankalp Raghuvanshi Saurabh Saxena Saurav Singh Shaunak Laad Swapnil Sheth Vibhav Srivastava

Cover Page photo

readers all the best for their new phase of life. Be happy. Do good. Stay sane. And most importantly, Keep reading.

For any information or feedback, please feel free to write in to us at OR visit our Facebook page

~ Editors for Blue Chip

Cover Article ( 14 Summer Internship Experiences ( 23 Wipro Limited Axis Bank | | Goldman Sachs HSBC Bank

Insuring India
The way forward
Business Quiz ( 33


Capital Account Convertibility ( 27

A radical solution to a rational problem ( 4

Capital Account Convertibility of China by 2015

Through the eyes of finance students
Beginners’ Corner ( 20 P.E. in India 8

Current Account Deficit

A perspective on P.E. in India

Tutorial ( 12 Rupee ( 30

Inflation Indexed bonds

Rupee on a Wheel Chair
Market Update ( 36

Movie Review ( 35

Stock Market Update In the News

Too Big To Fail



A Radical Solution to a Rational Problem
PGDM (2012-14)-2nd Year IMI, New Delhi
The Indian Banking Sector that was considered sufficiently robust to cushion the challenges posted by the global meltdown has been witnessing some problems of its own lately. The rising NPA’s and Cost of Funds/Deposits are a matter of concern. This shifts focus on how to reduce the two. Here, I am concerned with the latter. Banks accept deposits in form of Demand Deposits and Term Deposits. Current Account and Savings Account Deposits (CASA) are a part of Demand Deposits. CASA deposits, also known as low cost deposits are considered to be the cheapest source of funds available to banks. They refer to deposits made in Savings (SB) and Current (CD) Accounts. In CASA deposits, the banks pay interest on Savings Accounts but not on funds maintained with Current Accounts (So ideally they should try to have more and more funds in the Current Accounts). Banks borrow money from various sources at some interest and lend that money at higher rates to book profits. The sources of funds being - RBI (borrowed at prevalent repo rates), short term call money market, CASA deposits and term deposits among others. CASA deposits are the traditional source of income for the banks. These Deposits help bank to generate low cost funds which are then used for advances/ investments or to maintain liquidity for day-today operations. Also, absence of these low-cost funds in considerable amounts will not allow the banks to lower interest rates for the end-user because if a bank starts with a high cost deposit base then to earn a profit you have to lend at high rates, effectively

Soumya Sharma
taking on more risks. High cost of deposits reduces the profit margins for the bank and increases reliance on short term borrowings. The banks which have been performing relatively better have a larger share of CASA deposits in total deposits and within CASA also, the share of Current Account deposits is of considerable percentage. For example, for the Fiscal Year 2012-13 HDFC Bank had a CA Deposits share of 37.23% of the total CASA deposits, while Central Bank of India has a CA Deposits share of only 20.37% which is among the lowest in the industry, hence, it is of no surprise that the cost of deposits for it is among the highest in the Indian Banking sector (7.42%). For Central Bank of India the Cost of Deposits have been rising steadily over the past few years while the CASA share of Total Deposits has been decreasing. By analyzing and plotting some graphs for past few years we can arrive at some conclusions. Firstly, it points to an inverse relationship between the CASA share of Total Deposits and Cost of Deposits. Also the share of Term Deposits in total deposits has been increasing over the years. As bank pays more interest on Term deposits than CASA deposits, it leads to considerable expenditure. Hence, there is a direct relationship between the Term Deposits share of total deposits and cost of Deposits. So the aim is to find out ways by which the cost of deposits and funds can be reduced. After RBI de-regulated interest rate payment on Savings Accounts many banks like Kotak Mahindra, Yes Bank etc. started offering higher interest rates on Savings Accounts with an aim

© Monetrix, Finance & Economics Club of MDI, Gurgaon

Cost of Funds over the past four years for Central Bank of India of increasing their CASA deposits as they recognize the cost benefits associated with it. As a matter of fact Yes Bank registered a growth rate of 206. These banks could offer the differentiated rates because their Savings Bank Balance as of today is low as compared to older. The older banks have a very large Savings Account base so the cost of offering higher interest rates is huge for them. more established banks.5 A RADICAL SOLUTION TO A RATIONAL PROBLEM The CASA share of total Deposits is decreasing. The increment required in the savings account balance to offset the increased expenditure if the higher rates were to be offered will be very unrealistic.4% in its savings account portfolio in the Fiscal Year 2011-12 (the scheme offering higher interest rates was launched in October. The schemes have helped these banks gain a lot of mileage and they are still gaining traction from them. The Term Deposit share of total Deposits has been increasing. Cost of Deposits and Cost of Funds has been increasing. 2011). Figure 2: Growth Rate of Term deposits and Cost of deposits. Figure 1: Growth Rate of CASA Deposits and Cost of Deposits over the past four years for Central Bank of India. (Banks will gain interest by investing or lending out additional funds which will help in negating the JUNE—AUGUST ’13 | BLUE CHIP ISSUE 4 . Cost of Funds as well as Cost of Deposits has been increasing.

© Monetrix. The fact that it has only 20% of its CASA funds as Current Account Balances means that it will have considerable advantage with respect to other banks if we assume all were to offer interest on Current Accounts. Also the bank does not Cost Benefit Analysis for a PSU bank if 2% Interest Rate were to be offered have to pay interest on whole of its Current Account Portfolio. and the estimated growth prospects by launching of the scheme. Banks cannot accept term deposits for periods that are less than seven days. hence the corporates instead of depositing their excess money in the current accounts which bear them no interest. Hence. As mentioned above. So the solution. Finance & Economics Club of MDI. For certain banks like Central Bank of India which have a low Current Account Balance. The impact that this proposal might have on the bottom-line of the bank can be offset by interest income that the bank will receive once it invests or lends out the additional money that is attracted through the scheme at higher rates. the money which could have been deposited in the Current Accounts if they were to offer even a customary rate has come back to the bank but at a much higher cost. from where the banks borrow to maintain their liquidity requirements at very high interest rates. the expenditure incurred due to this scheme can be offset by deploying the additional funds generated in form of advances. Gurgaon . Banks like State Bank of India are in talks with RBI for de-regulation of interest rates on Current Accounts. banks should be allowed to decide the interest rates that they want to offer. prefer investing with mutual funds. In fact their situation can well be termed as a blessing in disguise. RBI should allow banks to offer interest on Current Accounts as well. State Bank of India) has advocated for a 2% interest on Current Accounts to attract cash lying in the hands of businesses. Infact.6 A RADICAL SOLUTION TO A RATIONAL PROBLEM expenditure) The problem is more pronounced in case of Public Sector Banks-CASA as a share of Total Deposits has been decreasing and so is the share of Current Accounts in CASA. Mr Pradip Chaudhuri (Chairman. Also. the perceived impact on their financials. some riders like the minimum monthly balance requirement to be eligible for the scheme will lower the number of Figure 3: Current & Savings Account as a Share of Total Deposits for select commercial banks current accounts flowing into other markets and mutual funds. Currently no interest is paid on Current Account deposits which has not only deprived banks of deposits at cheaper rates but has also resulted in money from Money from these mutual funds can be redeemed within 24 hours. The mutual funds lend this money to the short term Call Money Market. on the basis of. As of now. These banks are mostly left with the customers who are very loyal to them while others(savings and current account customers) are being poached by private sector banks by providing better services and in some cases higher interest rates. the proposal to offer interest rates on these accounts means maximum benefit.

With the muted growth rates in the Bank Deposits. with respect to launching their schemes.89 Crores) which is achievable if the bank is as aggressive as the newer banks were. This idea might appear as a radical solution to some. Here I have assumed that interest will be paid to only those accounts which maintain a monthly balance of Rs 5 Lacs and such accounts correspond to around 40 % of total Current Account Balances. Hence the growth required for the bank in its Current Account portfolio to negate the impact of giving interest on Current Accounts is 16. this scheme can offer promising results. but not the incentive to park the money with the bank. but the fact is. but the pros and cons of it need to be discussed with utmost sincerity by all the stakeholders as it has the potential to increase the profitability of the banks by providing a tangible benefit to the customers as well. compromised. The interest that bank receives by investing is taken as the 5 year average of Yield on Advances.19% (Rs 1331. so I have assumed 90% are available for investments/further advances. It can very well be a win-win situation for both the bank and the customer. Also 100% of Current Account Balances are not available for investment for the bank. CASA growth rate has been lagging behind the term deposit growth rate for most of the banks. JUNE—AUGUST ’13 | BLUE CHIP ISSUE 4 . This measure can act as a silver bullet to the flagging CASA share. Some people might feel that offering interest rates on the Current Accounts will have a negative impact on the health of Indian Banking Industry as it will put additional pressure on their liquidity position.7 A RADICAL SOLUTION TO A RATIONAL PROBLEM accounts eligible for interest payments. that there are a number of checks put in place by RBI which a bank has to pass before it launches a scheme so that the asset-liability mismatch and stability of a bank is never Figure 4: Cost Benefit Analysis The bank would want to grow at a rate so that it negates the extra expenses due to scheme and also achieve its historical growth rate.

a relatively unheard term till 2004. Till date there are Tanvi Randhar Soveet Gupta 2000 companies in which Private Equity firms have invested and this amount ranges in excess of $ 65 billion over the past eight years. They conclude that institutional investors are inclined to invest in PE firms in economies which have strong disclosure standards. In this article we take stock of the state of private equity in India including the prospects and implications and what the future holds for PE investments in India Inc. Cumming and Walz (2007) analysed the drivers behind institutional investors investment in private equity firms. build-ups. Lerner (1999) defined Private Equity organizations as partnerships specializing in venture capital. Healthcare and Biotech. Gurgaon . in India PGDM. 2013-15 XIMB The Indian corporate scene has witnessed a dramatic transformation in the past decade. Private equity funds attract huge amounts of capital from investors.E. FMCG.35 billion. © Monetrix. Today. financing restructuring of companies and providing mezzanine capital across a variety of sectors. Banking and Financial Services Industries. including pension funds. The allure of rapid growth has attracted more and more foreign investors to India. Real Estate and Power and Energy. Private equity was a niche domain in India.E. The top sectors that attracted the most amount of PE investment in 2012 were IT and ITes. This segment has now reached significant scale. congenial legal environment. universities. leveraged buyouts (LBOs). foundations and individuals who are looking for new investment avenues. with the emergence of companies owned and supported by Private Equity and a number of global Private Equity firms flush with funds set up business in India. buyout financing. Finance & Economics Club of MDI. dairy products and other consumer focused businesses are also being viewed as attractive.8 A PERSPECTIVE ON P. This has been strengthened by liberalisation of Foreign Direct Investment norms. Pharma. food. Private Equity has proved to be beneficial for small and medium enterprises (SMEs) in India looking for alternative methods of fundraising. agriculture. They get much needed resources for operational expansion and are enabled to access global markets. the private equity scenario in India showed sustained momentum and clocked a total of 400 deals in 2012 amounting to USD 7. expansion capital. But there has been a complete overhaul in the story ever since 2007. distressed debt and other related investments. stable economy and robust financial markets. Top Deals of 2012 While the PE boom witnessed in 2007 and 2008 is yet to be seen again. Investment in sectors such as healthcare. IN INDIA A Perspective on P. E-commerce emerged as an attractive sector for Private Equity investment in 2012 owing to the ever increasing internet accessibility and percolation in Tier II and Tier III cities in India. Entrepreneurs also get a boost and private equity funding in their businesses adds to India Inc’s growth story. mezzanine investments. the Indian industry covers the entire spectrum of private equity products including seed funding. insurance funds.

E-commerce and healthcare industries also attracted major investments. companies in South India attracted the most number of investments by way of 162 deals amounting to $2. Banking and Financial services industry accounted for $ 890 million across 43 deals followed by energy companies that attracted investments worth $478 million across 20 investments. SBI Macquarie Infrastructure Trust 50% 200 IT and ITes 150 Ashoka Concessions Ltd. This was seen in the case of Accel’s $50 million investment in Flipkart as well as a combined total of $ 100 million in the four deals that took place in the hospital segment as well as a total of $1.225 million across 48 deals in the healthcare and life sciences industry. Unrest on the political and economic preferred sector for private equity investment. IN INDIA Acquirer Target Company Sector Stake Valuation ( US $ mn) Bain Capital Genpact Ltd Continuum Wind Energy Embassy Property Developments Flipkart Online Services IT and ITes Power and energy Real estate 30% 1000 Morgan Stanley 210 Blackstone Accel Partners and Global Management LLC Macquarie SBI Infrastructure Fund. Impact of various Governmental Policies 2012 has been a volatile year for markets worldwide. With Europe reeling under the Eurozone crisis and the countries unable to come up with a consensus with respect to developing a coherent fiscal policy and the US averting the fiscal cliff. Several JUNE—AUGUST ’13 | BLUE CHIP ISSUE 4 .increase in GDP and India saw a drop to aptor continued in 2012 as well with the sector ac. fronts has contributed to the woes. counting for 28% and 35% in terms of value and volume respectively. Gujarat. thereby becoming the most It has been a tough year for the PE sector in India.proximately 5% GDP growth. Demographically speaking.799 million across 126 deals.E. Asia still showed a positive growth story especially with respect to Indian and Chinese markets vis a vis Europe and America but this does not disThus it was observed that the trend that was seen count the fact that China reported only a 7% in 2011 with respect to investment in the IT sec.9 A PERSPECTIVE ON P. Infrastructure Management 150 Figure 1: Top PE Deals in 2012 The top private equity investments of 2012 were seen in the BPO sector with Bain investing in Genpact and Morgan Stanley investing in the Singapore based Continuum which is developing wind assets in Kutch.460 million while companies in Western India attracted the maximum capital amounting to $3.

10 A PERSPECTIVE ON P. One of the major amendments in the budget was the change of taxability in relation to buyback of shares. In addition to this the government also imposed a higher tax surcharge of 10% on individuals whose income exceeded INR 10 million and corporates whose taxable income exceeded INR 100 million.1% in April. One of the primary reasons for this decline was that the LPs have been getting increasingly cautious with fund allocation. especially wherein capital gains to shareholders on account of such buyback were either not chargeable to tax such as in case of investments routed © Monetrix. Gurgaon . This amendment was introduced so that unlisted companies that had been resorting to buyback of shares instead of payment of dividend in order to from DTAA territories such as Mauritius or were taxable at a lower rate.2% in July). thereby giving enough time to investors to adapt to the new regulations. the Vodafone controversy brought a lot of uncertainty in the minds of the investors and they became wary with respect to the Indian government’s tough stance with respect to retrospective taxation policies. Overall. On the brighter side.8 billion invested in 2011. The market seems to be moving towards maturity. Furthermore. Trends The Indian private equity sector witnessed a downfall in investment during 2012. -1. Furthermore. The union budget for the year 2013-2014 was a cause for disappointment for the PE industry since it did not accord the pass through status to all funds registered under the Alternative Investment Fund (AIF) regulations ignoring SME funds.4 billion were allocated. which was negative in some months (0. Overall. 2005-12) avoid incidence of dividend distribution tax. A total of $7. the number of deals actually rose from 373 deals in 2011 to 400 deals in 2012. This was harmful for the investment climate in the country. Deal flow was restrained by high inflation that spilled over from 2011 and continued for most of the year.8% in June. It is also hoped that by then there will be clarity on what certain ambiguous terms in the provisions imply.E. Weakening rupee and low Index of Industrial Production growth. social venture funds and infrastructure funds. there was a deferment in implementation of GAAR to 2016-17. The shrinking size of the deals meant that the value of funds put to work over the year dropped. ending at an average of 7.5%. there were concerns in the minds of investors with respect to India’s feasibility as an investment destination. also affected investor confidence. The liability to pay tax at the rate of 20% on the consideration paid for buy-back of unlisted shares in excess of the issue price of such shares will now be of the company. Finance & Economics Club of MDI. doing their due diligence with tremendous care before committing funds. 2012 could be viewed as a year of caution for the Indian PE industry. IN INDIA controversies ranging from protests against corruption and the various scandals as well as the the debate over Foreign Direct Investment (FDI) in the retail and aviation sectors hampered the market sentiments at the outset of the year. with PE Figure 2: Total PE investments (value. -0. representing a 16% decline as compared to the $8.

including IPOs. as the exit route. PE firms will have to devise appropriate strategies to overcome these challenges and more in the coming years.115 (valued at about $7 billion) vs. including logistics and warehousing. industrial production and consumer spending. Additionally. Indian promoters are adopting a more pragmatic viewpoint. Oak Hill Capital Partners Warburg Pincus India Temasek Holdings Advisors India Carlyle Asia Partners II Type of Exit Open Market Secondary Sale Open Market Open Market Open Market Value (US $ mn) 841 1000 272 298 270 Figure 3: Top PE Exits in 2012 being favourably viewed as a credible source of capital by promoters and PE firms growing increasingly careful about the deals they make. investments are expected to get a boost. Further. the largest English speaking population with a high number of university graduates and a rising middle class that is rapidly developing an appetite for western lifestyle. Their number rose considerably . Exits On a brighter note. There is a mounting pressure on exits since a number of investments have exceeded their 5 year holding period. And with the economy opening up to FDI in the retail sector.11 A PERSPECTIVE ON P. Private Equity is just the catalyst that such a potentially explosive combination needs for a frantic span of economic activity. JUNE—AUGUST ’13 | BLUE CHIP ISSUE 4 . But there is much to look forward to in 2013. ICICI Bank Ltd. including the major ones as listed in Figure 3. PE firms continued to prefer public market sales. Investing aside. but have been the victim of unrealistic expansion plans or mediocre capital structures. Going Forward The year 2012 has been one of turbulence for the PE sector. the financial sector accounted for 35% of the total number of exits.E. IN INDIA Target HDFC Genpact Ltd.’s image as an investment ground. Despite a slower growth of the economy. concerns about returns. Sectors which support retail back end. PE firms will also be looking forward to raising more funds from the global community. which will serve as a good indicator of India Inc. especially the ones made during the boom years of 2004 to 2007 remain. Kotak Mahindra Bank Ltd. But we should not forget that India today has amplitude of entrepreneurial talent. will become more attractive. However.1 billion). GDP continues to rise. which creates an opportunity for PE funds to target companies with a healthy operating model. 2012 turned out to be a good year in terms of exits. HDFC Seller Exit Carlyle Asia Partners II General Atlantic. food processing and more. 88 in 2011 (valued at about $4. paving way for an increased trade flow.

Nominal Yield: The nominal yield realized by holding an inflation linked bond to maturity depends on the average level and trajectory of inflation over the bond’s lifetime. IIBs Break-Even Inflation Rate: It is the rate that results in the holder of an IIB bond to break even with the holder of a nominal bond. will tend to bias the BIER downwards. Inflation reduces the real return generated by any asset. since inflation-indexed bond markets are not as liquid as nominal bond market it may lead to a higher liquidity premium in the yields of IIBs which. many governments pay the greater of the initial par value or the inflation adjusted principal. Therefore. Gurgaon . Wholesale Price Index (WPI) or any other inflation index. savings account or nominal bonds expose investors to inflation risk and may lead to lower or even negative real return. Inflation Indexed Bonds (IIBs) are financial instrument to protect investors from inflation. However. by ignoring the trajectory of the inflation rate. IIBs are less volatile and enhance diversification. IIBs’ prices are inversely related to real yield. The realized nominal yield can be approximated. The principal and interest payments of IIBs rise and fall with inflation as these payments are based on Consumer Price Index (CPI). It can erode common man’s purchasing power. Potential advantages of IIBs IIBs are a good hedge against inflation. Figure 1: Barclays Universal Government Inflation-Linked All Maturities Bond Index as of December 2011 IIBs can be of various types depending on the fact if only the principal or both principal and coupon payments are linked to inflation.12 TUTORIAL Inflation Indexed Bonds Inflation is the key driver of investment performance. IIBs popularity amongst investors has been rising over the years as investments in money market. This provision provided to the investors is known as deflation floor at maturity. Finance & Economics Club of MDI. One main disadvantage of IIBs is the liquidity concern as not all the countries have deep and liquid IIB market. the principal amount could decline below the par value. Apart from protecting against inflation risk. Break-Even Inflation Rate tells us about the market participants’ average inflation expectations over the rest of the term of the bonds used in calculating BIER. in deflationary scenario. However. equities and other assets and hence help in diversifying a portfolio and in turn improve risk-adjusted returns. have historically shown low correlations with commodities. Key terms Real yield: The real yield of an inflation-linked bond represents the annualized growth rate of purchasing power earned by holding the security to maturity. © Monetrix. probably. Investors would earn a higher return holding IIBs with lower inflation risk if the actual inflation rate over the term of the bond is higher than the break-even inflation rate.

The reference WPI on issue date was 125 and the reference WPI on coupon due date was 140.13 TUTORIAL IIBs help issuers reduce their cost of financing because investors are ready to pay a premium for protection against inflation and this premium reflects in a lower yield paid by the issuer. generally. 2010. This rate is determined through auction and remains constant for the bond’s tenor. this time around RBI filled the void by providing protection to both coupon payments and the principal. CPI and GDP Deflator. RBI issued 10 years IIB to offer better real returns to investors.000 the inflation adjusted principal on Sep 15. government is both the issuer of IIBs and publisher of the inflation index. The coupon rate of 1. Capital Indexed Bonds (CIBs) were issued in 1997 but CIBs provided protection only to principal and not to the coupon payments.67 The coupon payment on Sep 15. 2010. is being released since January 2011 and it will take some time to stabilize and monetary policy has been targeting WPI for achieving price stability. Indians started increasing their gold holdings which to an extent deteriorated India’s CAD. exclusive series for retail investors is scheduled to launch around October 2013. However. however.44% will be a fixed real rate. would be calculated using adjusted principal amount and the applicable coupon rate as follows Rs 1.000 * (140/120) = Rs 1. in India. some economists believe that such an act of distorting inflation index might lead to erosion of government’s credibility with long-term repercussions on future government promises.67 * (0. with the first coupon payment due on Sep 15. IIBs in Indian context Inflation has been consistently high in the past few years in India. IIBs are G-Sec and therefore would be eligible for short-sale and repo transactions. Therefore. This creates a moral hazard because the government can directly influence the value of its liability. RBI criteria for selecting the index to which IIBs should be linked The index should: ● Fulfill ments hedging require- IIBs issued by RBI will not have ● Closely track inflation any special tax ● Be a widely accepted inditreatment. JUNE—AUGUST ’13 | BLUE CHIP ISSUE 4 . The government tried various measures to curb gold import without any considerable success.02/2) = Rs 11. IIBs expose issuers to the inflation risk. RBI has linked IIBs to WPI rather than CPI which is a concern for the investors as they are primarily exposed to CPI and not WPI. no government would dare to do so as the long term repercussions would greatly outweigh the short term benefits.67 Moral Hazard Some economists argue that. It is also argued that issuance of IIBs have a favourable impact on the issuer’s cost of financing by reducing the desired inflation risk premium from the rest of the nominal bond. FIIs cator of inflation are allowed to invest in IIBs but ● Be available to the public subject to the overall cap for ● Have a high frequency of their investment in G-Secs. IIBs are not new to the Indian market.166. Ultimately in June 2013. As per RBI. Illustration A 10 year IIB with coupon of 2% was issued on Mar 15. However. which is currently $25 billion. For a face amount of Rs 1. out of WPI.44% and was oversubscribed with a bid to cover ratio greater than four.166. Interest rate offered by banks’ products and other financial instruments were not meeting the expected return of Indians which led to a shift from financial assets to physical asset. WPI was most suitable for indexing. The argument given by RBI for picking WPI is that CPI. 2010 would be: Rs 1. 2010. The first issuance of IIB was open to institutional investors. However. The first issuance was worth Rs 1000 crore at a real yield of 1. IIBs have a deflation floor or capital protection scheme which means that at the time of redemption higher of the adjusted principal and face value will be paid to the investors.

in the forefront. Property & Casualty. Recently. Need of Insurance for an Economy Insurance decreases the total Savings of the Economy . in 1956. the collective pool may help them in the times of need. It is measured as Ratio of Total Premium Underwritten to the © Monetrix.14 COVER ARTICLE Insuring India . make modifications. In simple terms. It is worthwhile to note that while the insurance companies have steady. For a country with a 1.The Way Forward Insurance in general works on the principle that if we collectively pool our money. which benefits the long term markets and lengthy infrastructure projects. Insurance in India The origin of insurance in India dates as back as 1818 when Oriental Life Insurance Company was set up in Calcutta. policies and acts got passed and after independence. Gurgaon . So the investment horizon is generally long term. IRDA has made it better for the companies to raise capital by allowing life insurance companies which have completed 10 years to come out with IPOs. Insurance is mainly classified as Life Insurance and Non-Life Insurance or General Insurance (Health. a total of 245 insurance companies got merged to form LIC. Insurance Penetration in India is rather low. This money is instead transferred to the insurance companies which through various channels can be utilised for investments and other potential development projects thus increasing the GDP for a country.It has been observed that as more and more people get insured. the soon to be RBI governor. it is very critical to have such institutions and markets as people face constant threats from getting run over by a careless driver to a fraud to natural calamities. the under-nourished child of the financial services industry. Finance & Economics Club of MDI. increased FDI and micro-insurance. this brings insurance sector. cancellations renewals of all the insurance companies registered under it. Disability and Long-Term Care). Eventually. It enjoyed a monopoly for 38 long years till the former Governor of RBI Mr R N Malhotra submitted a Report in 1994 recommending opening of insurance sector. we can safeguard ourselves in circumstances which are rare and damaging. With this tenure set to begin next month. if everybody pays a portion of the threat faced by them. The empowerment and flexibility to frame regulations will help IRD promote sustainable growth of the insurance sector. It is the main authority in India with responsibility to protect the rights of policyholders. pitched for the approval of increasing the FDI in insurance limit to 49%.2 billion population like India. the4 Insurance In May 2013. This article looks at status quo of insurance in India and ways to make this under-nourished child a healthy one with a prescription of bancassurance. Over the years many laws. the cash outflow is generally deferred for a long time. regular cash inflow in the form of premium. Regulatory and Development Authority was formed in 1999 which is the main regulator for Insurance in India. they tend to save less with themselves for precautionary measures and hence the individual savings of the economy reduce. Raghuram Rajan. If we see the current situation.

Paying regular premium is always seen as a burden in the eyes of an Indian earning a meager sum.15 15 COVER ARTICLE GDP of a country.Indian mindset is fearful. Macroscopically. Figure 1: Indian Insurance Market. There is a constant fear of being cheated by Insurance Companies. Companies have to call people. 4. India stands at a meagre 3. 2. 2004-2015 5. Insurance is a push product rather than a pull product. 3.4% compared to other Asian Countries like Taiwan.The benefits of insurance will always be felt at times of a calamity. spend a lot of money to make people aware of the risks they face in order to get customers.Although increased competition has forced the companies to be quick and simple in modes of settlement. Insurance is not yet deemed as Figure 2: Percentage of Population above 60 years for a few countries JUNE—AUGUST ’13 | BLUE CHIP ISSUE 4 . Lack of Transparency in Insurance Policies . it is still perceived by the masses that insurance. Perceived Lack of Short Term benefits . Hong Kong which have Insurance Penetration of more than 10%. graphic dividend. Hence spending on insurance tend to be discretionary. Complexity involved in Settlement . specially general insurance has complex terms of contract and settlement involves lot of hassles. It is young and comparing Challenges in Insurance Penetration in India 1. However during necessary product in majority of the segments. it is reaping its demoat a staggering 25% year on year. regularly advertise. If the last decade the insurance Market has grown we see the age of India.

the bank staff is trained to sell the insurance products and charges an appropriate fee from the insurance company Insurance as Fully Integrated Financial Services/Joint Ventures Apart from the above two. utilizing the base of insurance companies ● To improve the current level of services offered in the insurance sector through increased competition among the existing companies ensuring better standards Bancassurance in the World Banks have been in existence since as early as 1472 (Monte dei Paschi di Siena of Italy) and the first life insurance company was Amicable Society for a Perpetual Assurance Office which started in 1706. However it doesn't only mean distribution through agents. fiscal aspects of Banking and Insurance.16 COVER ARTICLE What is Bancassurance? Bancassurance is a Portmanteau of Bank and Insurance. a fully integrated model is when the two entities behave as if it is just a function of the bank. which fully understands the insurance products. Referral Model In this model the bank parts only the client database to the insurance company and the insurance company sells the insurance to the prospective customer by itself. but bancassurance can also © Monetrix. France has had Bancassurance only since past 30 years. banks have found their Net Interest Margins reducing which is an indicator of their margins thinning out. and customises the products to its customers just as it would do to its own banking products. Bancassurance means selling insurance products through banks existing distribution channels. Gurgaon . even for the world. but an overall integral approach towards legal. In simple words. Not only that. The development of Bancassurance in India began for the following reasons: ● To improve the channels through which insurance can reach the common man in a widening Middle Class of India ● To create a wider base for the marginally penetrated banking sector. In those terms. cultural. Country Australia Belgium Brazil Chile France Italy Malaysia Portugal Spain Bancassurers’ Bancassurers’ Life Share Nonlife Share 43 48 55 13 64 59 45 88 72 Source: World Bank Very small 6 13 19 9 2 10 10 7 Figure 3: Country-wise market share of Bancassurers in Life and Non-life segment Benefits of Bancassurance For the Banks Because of increasing competition. Bancassurance is relatively new. behavioural. Finance & Economics Club of MDI. The bank in return gets a referral fee Corporate Agency In the corporate agency model.

trust plays a major role in making decisions. which the insurance company might take advantage of. although insurance has seen good growth. which a common man doesn't know much about. from this consolidation in the form of bancassurance he can keep the faith he has had for a long time and avail the other service without a heavy heart. the potential for growth is still tremendous. foreign players have not really been attracted to Indian Insurance sector. banks sometimes feel integrating the two would cause a substitution effect. It not only gives them the large pool of customers to target but also gives them their financial profiles. They can then target which product to sell to which customer. Banks would have to thoroughly understand implications and risks involved before selling them. However. some of them have started pulling out of India. Hence regulatory policies need to be set just right. customers would reduce consuming one product for the sake of other. after the initial excitement. Also. 13 years on. panies.e. a lot of it is largely because of domestic players. Customers for long have had to keep trusting the government controlled monopolised insurance companies for long term commitment towards their insurance needs. For the Insurance Companies For the insurer. On the contrary. A possible “Conflict of Interest” is also a threat to bancassurance penetration in India as Banks have a lot of detailed information about its customers through “KYC” norms set in place. The Insurance Laws Amendment Bill seeks to raise FDI cap in the insurance sector from 26 percent to 49 percent.17 COVER ARTICLE help them reduce the NPA ratio of banks through diversifying channels like insurance. as banks do take term deposits which are similar products as insurance premium. their buying behaviour. but has been pending in the Rajya Sabha since 2008. i. Another issue is that the insurance products themselves have become complicated over the years. Banks are made for daily transactions where as insurance are made for long term incidents. purchasing habits an insight into their personality.Chidambaram and Raghuman Rajan for clear the pending Parliament approval of this bill. However. The incoming plethora of private players both in insurance and banking sector. It has been a long wait for the Bill to get passed Figure 4: Bancassurance Model Challenges for Bancassurance One of the big challenges for Bancassurance is merging of two seemingly different working styles and cultures of banks and insurance com- JUNE—AUGUST ’13 | BLUE CHIP ISSUE 4 . FDI in Insurance India opened the insurance sector to foreign players in 2000 with FDI limit of 26% through automatic route. There have been recent calls from P. the banks customer base is a gold mine of sorts. customise and tailor make their insurance according to their needs For the Customers For a customer to the insurance industry. The couple of years that followed saw an influx of many foreign players partnering with domestic players.

foreign players. increased FDI will go a long way in addressing this need.000 crore over the next 5 years. It will make insurance © Monetrix. Gurgaon . IBEF Figure 5: Major Private Insurance Players in India and their Foreign Partners and the sooner it gets passed. and boost the overall sentiment about Indian economy. The new funds will help increase the penetration. of which domestic players contributed around Rs. IRDA estimates the sector will need further investment of around Rs. March 2013. the better it will be everyone involved. Bajaj Allianz Life Insurance Foreign Partner Allianz AG (26%) Domestic Partner Bajaj Finserv Ltd (74%) SBI (74%) HDFC Bank (72. government and customers. Considering the capital crunch faced by domestic companies. making the market more competitive. 21000 crore. It will help challenge the monopoly of the government owned Life Insurance Corporation. 32. insurance sector has seen a capital investment of over Rs.4%) Aditya Birla Group (74%) Max India (74%) ICICI Bank Ltd (74%) Bajaj Finserv Ltd (74%) IFFCO (74%) Year 2001 SBI Life BNP Paribas Assurance (26%) Standard Life (26%) Sun Life Financial Inc (26%) New York Life International (26%) Fairfax Financial Holdings Ltd (26%) Allianz AG (26%) Tokio Marine & Nichido Fire Iznsurance Group (26%) Nippon Life Insurance (26%) 2001 HDFC Standard Life 2000 Birla Sun Life 2000 Max New York Life ICICI Lombard 2000 2001 Bajaj Allianz General Insurance IFFCO-Tokio General Insurance 2001 2000 Reliance Life Insurance Reliance Capital (74%) 2011 Source: Insurance Sector Report. which is capital intensive. 50. Over the last decade. FDI hike in the sector will prove beneficial for all stakeholders: domestic players. Finance & Economics Club of MDI.000 crores.18 COVER ARTICLE Top Insurance Cos. The most obvious benefit of FDI will be the increased investment in insurance. Increased FDI in the sector would help more foreign players enter the market.

successful implementation of various bancassurance models. etc. unknown to the concept and need of insurance. Looking Ahead Undoubtedly. The foreign players will bring in more innovative insurance products available in the developed countries. Even if these products may or may not be foremost requirement of the Indian insurance sector. Tata-AIG is a prime example of successful implementation of micro-insurance. which is specially designed for insuring low-income people by offering them affordable insurance products. micro-insurance is not simply offering low premium insurance products. these will be lucrative in the urban areas. the insurance companies. In the TataAIG model. Micro-insurance Another key way of achieving better insurance penetration is micro-insurance. the regulators. it needs to develop more supportive regulations to increase the micro-insurance market in India.19 COVER ARTICLE policies available at lower premiums leading to more number of people opting for insurance. micro-insurance market is governed by supply. The premium is low but regular and proportionate to the risks involved. Keeping distribution and customer acquisitions costs low is key. New technological capabilities brought by the foreign players will add improved efficiency throughout the value chain. It involves different distribution channels than urban insurance to reach out to rural areas where the people generally are illiterate. all the stakeholders . Also. the potential as well as the need for growth of insurance in India is tremendous. not demand. say illness. and increased penetration of micro-insurance by more companies will go a long way in achieving the desired insurance penetration in India and pave the way for further economic growth. and hence offering insurance at low premiums is a challenge. risksharing business models can be developed with foreign and domestic players. Micro-insurance operates through three regulated distribution mechanisms: 1) 2) 3) Partnership model Agency model. Increased FDI limit. However. calamities. and Micro-agent model. JUNE—AUGUST ’13 | BLUE CHIP ISSUE 4 . it is imperative that the proposal for hiking FDI in insurance to 49% is approved and implemented as soon as possible. to fulfill this promise. These people are more prone to risks. both domestic and foreign. And hence. Thus because of all these advantages. IRDA specifies the rural obligations to be met by each insurance provider. and the non-insurance providing partners . Partnership model is more found and mostly the partners are NGOs. with the proposed increased limit. But. But. regulations to attract the foreign players.the Government.all of them need to go ahead hand in hand. Microfinance institutes and banks. 4 or 5 women belonging to selfhelp groups become informal brokers for micro-insurance and earn some income by selling insurance.

to some extent. a surplus in the current account implies that the country is earning more foreign exchange from exporting goods and services than it is spending on importing goods and services. depletes the country’s foreign resource base by extracting more foreign exchange than it injects. This situation would deteriorate the current © Monetrix. The current account is further subdivided into three components: 1. Causes of a Current Account Deficit A desire to purchase imported goods especially in times of high economic growth will lead to depletion in the current account balance. a recession led to an improvement in the current account. preferable to foster swifter economic growth in a less developed economy. For instance. Higher consumer spending will result in a higher spending on imports. 3. On the other hand. the UK economy was experiencing a high growth phase and a simultaneously widening current account deficit. This implies that the savings are insufficient to finance all investment opportunities which is generally true in case of developing countries on account of their huge Figure 1: INR vs USD that imports and exports are price sensitive. this positive net sales abroad leads to creation of foreign assets in the domestic economy. The impact of this would be seen in a fall in demand for exports and a rise in demand for imports given 2. An appreciation in the exchange rate would make the domestic currency more expensive in terms of the foreign currency. The current account balance is one of the two indicators of a country’s foreign trade balance. Transfer payments Net income such as interests and dividends scope for investment and relatively lesser domestic savings. Therefore. In such a case. The current account deficit can also be measured in terms of the difference between investments in an economy and its national savings (both public and private). Gurgaon . The largest component of current account being the trade balance. Finance & Economics Club of MDI. a deficit in the current account is. A current account deficit. on the other hand. Of these three parts. the second and third are a small fraction of the total.20 BEGINNERS’ CORNER Current Account Deficit The Balance of Payments of an economy is an accounting record of all transactions of a country with the rest of the world. during the late 1980s. It has two components: current account and capital account. Balance of trade which is the difference between the value of goods and services exported from the country and the value of goods and services imported into the country.

in other words. If the deficit is a result of excess of imports over exports. domestic consumers will start purchasing less of imported goods and more of domestically produced goods because of the presence of a cheaper currency. This makes the foreign currency more expensive in terms of the domestic currency. the only way to reduce oil imports is to discover indigenous methods of oil exploration and extraction to fulfil the needs of the country. the deficit is a consequence of excess of investment over savings. Reserve bank of India has taken several measures to bring down the CAD. on the other hand. However. India’s CAD which was around 1% of the GDP in the early 2000s. it may be an indicator of the domestic economy being less competitive in the international market or a case of high economic growth leading to consumer spending being biased towards imports. Consequences of a Current Account Deficit A deficit in the current account is not always bad unless it constitutes a high percentage of GDP. The Finance ministry along with the apex bank. Since oil has a variety of uses both as an industrial input as well as a domestic commodity. Relative competitiveness of industrial production is an important determinant of the demand for exports of the domestic country. grew sharply to nearly 5% of GDP in September 2012. India’s growth story has been majorly driven by oil of which over two thirds are imported. if investments are higher it shows that the domestic markets are prospering and hence. It is also the largest component of India’s import bill followed by gold. the exchange rate falls. it is a positive sign indicating a growing economy. The government is considering options for shale gas exploration but this will take time and till then the oil import bill will continue to be a major contributor to the deficit in the current account. are attractive to foreign investors. and moderating exports on the other. A current account deficit sometimes balances itself out. If a country lags behind in terms of technological or other efficiencies. the economy must focus on improving demand for domestic products both internally and externally by ensuring that production technology is more efficient and comparable to international standards. In that case also it becomes imperative to analyse the factors responsible for the deficit to judge whether it is good or bad. India: A case study India’s current account deficit or CAD is a hot topic of discussion in any economic or finance related circles and rightly so since it impacts the economy by posing risks to macroeconomic stability. In such a scenario. India has been experiencing a consistently high CAD which is unsustainable and unhealthy for the progress of the economy. This would also protect India from the external oil supply shocks that can have a huge impact on foreign exchange reserves. If.21 BEGINNERS’ CORNER account whereas depreciation in the exchange rate would improve the current account balance. as a consequence of which the current account deficit will reduce. If savings are lower it could be pointing towards conspicuous consumerism or impact of fiscal policy or a temporary shock in the economy. Thus. JUNE—AUGUST ’13 | BLUE CHIP ISSUE 4 . This was mainly seen as a consequence of imports of gold and crude oil in large quantities on the one hand. A deficit implies greater demand for foreign currency to purchase imports and lesser supply due to relatively lesser exports. its products become less attractive in the international market thereby reducing the current account balance.

Coupled with a weak currency. limited foreign exchange reserves of the country are used which causes a depreciation in the exchange rate of currency. Thus it is evident that an effort to reduce imports alone is not a sustainable solution to correct the deficit situation.S. After the recession in the U. The government has been taking measures to reduce imports by increasing gold import duty by 2% to 6% in January 2013 and by another 2% to 8% in June 2013. curbing import demand and increasing export competitiveness to rein in its burgeoning current account deficit.22 BEGINNERS’ CORNER High demand for gold comes as a result of Indians’ strong affinity for the “yellow metal” as a safe investment in a volatile market. in 2008 and the EU in 2009-10. machinery etc which are significant investments for building the infrastructure in India. it becomes difficult to curb gold imports. Hence. In May 2013. India must leverage areas where it has a stronghold like IT. imports still play a crucial role. but in areas like telecom and mining. Finance & Economics Club of MDI. it can pose a huge threat to India’s external liquidity position and credit rating. Figure 1: India’s Current Account Deficit as percentage of GDP returns is gold. Gurgaon . If capital inflows are insufficient. Other imports include capital goods. Domestic production to a certain extent has reduced dependence on imports. This should be backed by the government policy of strengthening ties with global partners and improving infrastructure of existing Export Processing Zones. As no major change is expected in the current global growth or commodity price trends in the near term. the world markets have lost investor confidence and the only asset providing large fibres and simultaneously improve its competitiveness in manufacturing goods. India must introduce policy changes like further liberalization of the economy towards foreign investments. pharmaceuticals. Instead there should be more focus towards increasing demand for exports in the world markets. a large part of the current account deficit has been financed by external debt. RBI restricted the import of gold on a consignment basis by banks. the Finance Minister made an appeal to people to reduce gold imports. In case of India. © Monetrix. garments and natural Implications of a large deficit The deficit implies an excess demand for foreign exchange which is financed by attracting capital inflows in terms of foreign direct investments (FDI) or foreign institutional investments (FII). transport equipment. In March 2013.

There were also two fun-filled experiential learning sessions. if given an opportunity. The first few days were sent in Induction activities. I was in regular contact with Mr. the final presentation during Week 9 and a closing and felicitation ceremony on the last day. Were there any events organized just for interns? Were there any ice-breaking or networking activities? We had an exhaustive induction program. have they grown or have they ceased to exist. I had to conduct Wipro Limited Strategy and M&A Bangalore India Karan Jaidka numerous meetings and interviews with Business Unit heads. Rishad Premji.23 ISSUE SPECIAL Summer Internship Experiences Company: Team: Location: Title of Project: Strategic Investment Effectiveness and Roadmap for the Future Brief Description about the Project: The Central Strategy Office (CSO) at Wipro critically analyzes and subsequently funds (if found suitable) for a period of two years. commencement of the project. The last day witnessed a grand closing ceremony and felicitation for the best interns. identify the current state of these projects. I had to analyze (strategically and financially) 51 past ‘rolled-back’ projects. in which many business leaders addressed us and introduced us to the culture at Wipro. who took a key interest in my project and its analysis. I would gladly work with the same team in Wipro. My work was also well appreciated by my team members and the HR personnel. in which we got to know and interact with many fellow interns from different Bschools. and finally provide recommendations for improving the success ratio of these CSO approved-and-funded projects and the investment program as a whole. Chief Strategy Officer at Wipro. JUNE—AUGUST ’13 | BLUE CHIP ISSUE 4 . There was a one-day training program on data analysis and effective presentation techniques. various new initiatives and seed projects which different BUs across Wipro have identified as potential new projects and offerings. This was followed by a detailed project scoping. I also had meetings with Business Finance Mangers (BFMs) of various BUs to gather financial data of these projects. I got to meet. How was the overall experience? Would you like to work in the organization (same profile) as a full-time employee? I had a good two-month stint at Wipro and had a great learning experience. There were regular weekly reviews with my mentor during the entire course. Once the funding ceases after two years. Hence. project owners and other team-members associated with these projects in order to gather first-hand information. a mid-term progress review after Week 5. How was the Internship structured? It was a 9-week internship. the initiative is ‘rolled-back’ to the respective Business Unit (BU) and the BU takes the project forward. What were the roles and responsibilities you had to take up as part of your project? As I had to study 51 projects. interview and work with many top leaders in the industry.

24 ISSUE SPECIAL Summer Internship Experiences Company: Team: Location: Axis Bank Ltd. India Saurabh Saxena Title of Project: Developing a Credit Risk Model for counterparty banks Brief Description about the Project: Measuring the credit risk a counterpart plays an important ole in a bank. How was the Internship structured? We had induction on the first day which was followed with our meeting with our project guides and buddies. So there was really no need for any such activity. Finance & Economics Club of MDI. GFID. For a counterparty bank with a lower risk. The based on the secondary research and the best practices followed in industry. We also had branch visit to give us exposure to the daily work life in a branch and understand the various facets of it. the interest rates charged would be low and a higher credit exposure can be undertaken as a percentage of bank’s capital and vice versa is true for a bank with a higher counterparty risk. Were there any events organized just for interns? Were there any ice-breaking or networking activities? The culture in Axis Bank is really one in which amicable and everyone is very approachable. The organization helps you in building up a holistic understanding of the banking and is very friendly and amicable at the same time. Treasury Mumbai. © Monetrix. What were the roles and responsibilities you had to take up as part of your project? My job was to understand the banking industry as a whole and alongside develop a deep understanding of the various facets of credit risk. develop a model for credit risk measurement of different types of counterparty banks. We had leadership talks within the entire span of our internship in which leaders from the different verticals of the bank would share their rich experiences and learning’s with us. How was the overall experience? Would you like to work in the organization (same profile) as a full-time employee? The overall experience was very enriching and eye – opening. my internship project was to develop the credit risk rating model for different types of banks. I would love to go back and work in the same profile which was offered to me as a full time employee. Here at Axis. Do the literature survey of the existing models which have been developed for credit risk measurement. Gurgaon .

Apart from this. How was the overall experience? Would you like to work in the organization (same profile) as a full-time employee? Overall. Apart from this. I followed the release of quarterly results by companies in the sector and accordingly updated the earnings estimates in the Goldman Sachs model for the company.25 ISSUE SPECIAL Summer Internship Experiences Company: Team: Location: Goldman Sachs Global Investment Research Bangalore. it was a great learning experience which helped me to develop both financial expertise and soft-skills. I had the chance to work on the sector report which was later released by Goldman Sachs. What were the roles and responsibilities you had to take up as part of your project? During the internship. Were there any events organized just for interns? Were there any ice-breaking or networking activities? The guest lecture series in which several eminent personalities from Goldman Sachs offices worldwide came to deliver lecture and share their experiences and career growth opportunities was designed specifically for intern class. interns were allotted different teams spread over several geographies and sectors for rest of the internship. India Rishabh Gupta Title of Project: Stock Pitch and Coverage of Earnings Season Brief Description about the Project: It involved studying and analyzing the sector allocated during the internship period. How was the Internship structured? It was an eight-week internship where the first week involved induction into the GS culture and imparting financial and excel skills to be needed during the internship period. JUNE—AUGUST ’13 | BLUE CHIP ISSUE 4 . a stock was selected to ascertain possibility of investment and accordingly BUY/ SELL recommendation was given for the stock. updating and modifying them according to requirement. After this. I look forward to returning to the company as a full-time employee. I worked on the financial models of the companies in the sector. Based on that.

There was a regular interaction with the project mentor who helped a lot in understanding and completing the project. I got an opportunity to meet and network with fellow interns. at the end of the internship. specifically in managing the Information Technology (IT) infrastructure. I understood the corporate culture and how a multinational bank operates. under the aegis of my mentor. detailing of the project. I got to learn a lot from the experiences of senior people in the company. I was responsible for understanding and analyzing various operational costs incurred by the company on various HSBC Bank Retail Banking and Wealth Management Mumbai. I would love to join HSBC as a full time employee in the same profile I interned for. It also included many ice breaking activities and team games which gave all the interns from schools across the country an opportunity to know each other. Gurgaon . the internship started with a 3 day orientation program wherein I got to meet various business leaders and understand the values and processes being followed at HSBC. midterm review after 4 weeks and a final presentation in the last week. we had a closing ceremony and a big party. How was the overall experience? Would you like to work in the organization (same profile) as a full-time employee? Working with HSBC was a very enriching experience. India Ashish Gupta fronts and seeks opportunities for their reduction or elimination wherever feasible. © Monetrix. forecast the cost for the next three business quarters and identify the potential initiatives that can be taken to manage and reduce cost incurred on the same. This gave me a better sense of responsibility and accountability towards the deliverables. What were the roles and responsibilities you had to take up as part of your project? The most important part for me was that I was independently working on this project. Yes.26 ISSUE SPECIAL Summer Internship Experiences Company: Team: Location: Title of Project: Identification of potential initiatives for Strategic Cost Management Brief Description about the Project: The objective of the project was to understand various costs and expenses incurred by the company. Also. Finance & Economics Club of MDI. Were there any events organized just for interns? Were there any ice-breaking or networking activities? Yes. which began with various orientation activities followed by team introduction. Also. How was the Internship structured? The internship was for a period of 9 months.

1 trillion of reserves were illegally moved out of China into real es- JUNE—AUGUST ’13 | BLUE CHIP ISSUE 4 . The 12th Five Year Plan which. US. Switzerland and Canada were the only countries to have open regimes. in an effort to find fiscal and economic policies that would enable Third World countries transition to globalized market economies However. This has made clear that China’s economy can no longer sustain on export oriented growth model. although without formal thought or organization of policy or restriction. This Prachi Aggarwal phenomenon called as ‘Capital Flight’ caused major Asian crisis in 1990s following which many countries imposed capital controls. It helped them diversify their portfolio and share risk. Free capital flows enabled financiers to invest in other nations as well. China’s outward direct investment (ODI) exceeded $77 billion in 2012. China’s economists had known this for long and therefore came up with 12th Five Year Plan which talked about new development models. it had been practiced. In 1980s and early 1990s when these economies started booming. According to official figures.2 % recorded in FY 2011. This indicates that many Chinese investors are looking for opportunities outside their home country . Many Asian economies imitated the trend and opened their borders to free capital flows . But later on many countries started imposing capital controls to retain their domestic reserves.This is due to significant fall in exports by 3 % as compared to previous year. resort to outward foreign direct investment is needed to absorb excessive production capacities. Now. came into effect in 2011. since the very early 90's. even as inflows of FDI fell for the first time since the height of the global financial crisis. Till 20th century there were no restrictions on movement of capital across transnational boundaries.. Why China is aiming towards CAC? The recent global slowdown has led to decline in China’s GDP growth rate to 7 % in year 2013 from 9.CAPITAL ACCOUNT CONVERTIBILITY OF CHINA BY 2015 Capital Account Convertibility of China by 2015 PGDM 2012-14 Fore School of Management What is Full Capital Account Convertibility? CAC was first coined as a theory by the Reserve Bank of India in 1997 by the Tarapore Committee. an increase of 12.6% on the previous year. Capital Account Convertibility means freedom of currency conversion in relation to capital transactions in terms of inflows and outflows.But absence of adequate safeguards and proper structure led to diminished local reserves. strengthens the commitment to promote the “going global” policy. $ 3. Following the end of Second World War. A recent report from the think tank Global Financial Integrity (GFI) identifies China as the largest source of illicit financial flows in the developing world. This has led to imbalance in demand and supply. For a decade China has advanced mainly because of exports and high investment in production capacities. this trend of open regime was adopted by several developed economies. In layman’s term CAC would mean easing of norms in transactions which leads to creation of an asset or liability in any foreign country or freedom in converting local financial asset into foreign financial asset and vice versa.

Gurgaon . China would not only be able to spread its global presence but also be able to keep track of illicit outward flows. Risks that China may face due to Full CAC Dutch Disease Dutch Disease is a term that was coined after Netherland crisis erupted in year 1959. Swiss and Singapore bank accounts. This means that large part tablished their manufacturing units in China. This caused downfall of Netherland’s Figure 1: Top Destinations for China’s Outward Investment manufacturing sector and led to economic crisis.of unexploited resources. By adopting a fair policy of capital flows in and out of country.28 CAPITAL ACCOUNT CONVERTIBILITY OF CHINA BY 2015 tate in the US. Trade policy of free movement of capital will The volatility and unpredictability of US mar. of China’s economy is relying on US currency. This may lead to apity. It has foreign exchange reserves WTO. By adopting full capital account convertibil. It will help China to come out of shackles of economic downturn that all emerging nations are facing in current fiscal. it will enable financiers to invest in different nations and diversify their portfolio. This suc. ily tradable across different nations and will reduce dollar hegemony that China has been aiming for years. It is well known that in downfall in exports and the affect may be huge year 2011 China surpassed US to become the enough to shake the foundations of a strong top manufacturing country by output. it aims to reduce its reliance on US dollar. Full capital account convertibility will make Renminbi easRise in inflation Huge inflow of capital may cause trigger in spending power of consumers. often ill-gotten gains laundered through Macau gambling tables.4 trillion.sector less competitive. Also. cess had already marked the beginning of dominance of China in global markets.economy.encourage many foreign investors to invest in kets has made China rethink about its trade pol.China considering the country’s large reserves icy. Central bank © Monetrix.The discovery of large reserves of natural gas field shifted the focus from manufacturing sector to mining sector. Several top notch companies have esof USD 3. At a time when factory costs are rising and manufacturing growth has slowed China believes that more capital inflows will help in domestic financing and spur the growth. This can cause abrupt minbi a global currency. Full CAC is a step towards making Ren. Australia etc. preciation in currency and make manufacturing Also. China is seen as China is one country that holds largest amount the most favorable destination of trade by of US bonds. Finance & Economics Club of MDI. This will lead to risk sharing and will expand capital markets of China.

Rise in interest rates will attract more foreign capital and hence may give rise to vicious cycle. China will be able to face its repercussions due to presence of excessive trade surplus. It should implement this policy in a phased manner . research units close to production units. More importantly. China maintained a fixed exchange rate to ensure its competitiveness in foreign trade. So. China should ensure the presence of adequate safeguards. They may start investing in capital markets which is highly volatile. All the above facts lead to the conclusion that China should go ahead with its policy of Full capital account convertibility. the need of the hour is inclusive growth. Financial Disintermediation Huge inflow of capital may cause rise in availability of assets with banks. Conclusion Implementation of policy of full capital account convertibility is no doubt a major step in China’s long history of restricted trade practices and fixed exchange rate. rules and regulations in place before looking forward to this step. This highlights the fact that China continues to re- Figure 2: USD . Also. even if free capital flows result in large amount of outbound capital.29 29 CAPITAL ACCOUNT CONVERTIBILITY OF CHINA BY 2015 may intervene and may raise the interest rates to sterilize the economy. Currency depreciation Domestic investors may start pulling out the assets or money to foreign nations in lookout for more attractive investment opportunities. This may undermine the faith of people in nation’s banking system. Implications on Global Markets Currency Appreciation. At a time when major economies are facing crisis . More number of companies is moving their JUNE—AUGUST ’13 | BLUE CHIP ISSUE 4 . It will bring China closer to world market and help in integration of world’s resources. Once full capital account convertibility is middle class is the main reason. This leads to dramatic decrease in purchasing power and increases the prices of imports significantly.US has always argued that Yuan’s real value is much higher than quoted one. Open trade practices will enable China to build its competitive strengths and compete with other economies in a fair and transparent manner. why China is still a favorite investment hub among foreign players.Chinese RMB Exchange Rate tain market confidence in spite of downward trend in world economy. This may cause rapid drain of domestic currency and may lead to its depreciation.For years there has been a conflict between the US and China over actual value of Yuan. China has large amount of foreign reserves.

Gurgaon . The Federal Reserve had given an indication that the stimulus policy will continue. with the rupee being no exception. still being high. Investor confidence was hit hard because of the perceived policy paralysis. The QE1 was followed by a QE2 in November 2010 and QE3 in September 2012. Bernanke. till the employment figures improved. Any change in the dollar supply to the market has a cascading impact on every other currency in the world. 2013. the Fed might decide to scale back its bond purchases from $85 billion a month to © Monetrix. Panic on the Streets On June 19. Investors started looking towards emerging economies like China. This process is called Quantitative Easing (QE1).USD Exchange Rate However. The only thing that determines the value of a dollar is – How much is in circulation? The more dollars in circulation. As per the Reserve Bank of India . the net inflow of dollar in the Indian Economy had was not growing. The Bretton Woods systems established the dollar as the currency to which all other currencies are pegged against. people had more dollars in their hands. It’s a legal tender issued by the US Federal Reserve. So now. FII outflows increased and the rupee depreciated from 45Rs/$ to 55Rs/$ in the month July 2012. the Federal Reserve printed dollars “out of thin air” and pumped it into the market. extra dollars will increase investments in US economy and helped it to get back on its feet. the total net foreign investment inflows to India ballooned up to 50 billion dollars in 2009-10 after dipping sharply in 2008-09 & kept its pace in 201011. Brazil. Where did Federal Reserve get the money for this buying spree? Every central bank can print its currency notes depending on the requirements of the economy. started decreasing. the US Federal Reserve started buying billions of dollars worth of the dreaded Mortgage Backed Securities and Treasury Bonds or Securities. So essentially. The QE3 although did give a temporary reprieve. Zero interest rate policies gave an impetus to market forces to look elsewhere for further investments. Foreign investments in India started increasing. Mumbai Ravi Singh If we consider a 100$ bill. the chairman of the Federal Reserve announced a policy shift to "taper" some of its QE policies contingent upon continued positive economic data. Finance & Economics Club of MDI. He said.This in turn helped the rupee appreciate. Figure 1: INR . The net foreign inflows. etc. The expectation was.30 RUPEE ON A WHEEL CHAIR Rupee on a Wheel Chair MBA (2013-15) NMIMS. in order to shore up the badly hit credit market. A slew of high profile corruption allegations did put a dent on the India Story. it’s nothing on its own. Ben S. The dollar bazaar In November 2008. the less will be its value. lack of financial reforms started having its affect on the state of Indian economy. India.

nose-diving by the highest single-day books fast. on July 8th.41 trillion $ of debt on its balance sheet. the year 2012-13.93 against a dollar. inspite of political presday loss. Although no QE easing has actu. This means that QE’s will be faced loss in last 2 years. the curbs to bond buying hinge on gains in major changes in the economic policies.31 31 $65 billion a month during the upcoming September 2013 policy meeting. India the policy paralysis and an already faltering inis heavily dependent on inflows.284 billion $ RBI has interfered in the market in a limited way to keep the rupee below the psychological mark of 60Rs/$. The Current Account Deficit (CAD) of the Indian economy was around 4. Sensex shredded 526 bank would like to “taper” the credit on its points. June 19 and Monday. further worsenIndian Economy is facing. In case of petroleum & fertiliser little with its limited foreign reserves. Inspite of Foreign Investors in India started pulling out money from emerging markets by selling off Ben S. A week rupee vestor sentiment compounded the impact on has exposed the country to external shocks. Wooing foreign investors would require that. the Federal Reserve its all-time low of 59.out sooner than later. The tapering of the QE is just a start. the labour market and a pickup in growth. Inflation are some of the issues that the gold & oil will become costlier. Bernake being no longer favourable equities & debt instruments. Increasing cost of Gold.296 billion $ June End .emerging economies will be more so on their ally happened and that Ben Bernake has stated own. Oil imTrade deficit will widen as major imports like ports. Indian industry. the Dow Jones dropping 659 points between Wednesday. Since then. And the RBI can do ing the CAD. June 24. The Federal Reserve currently has about 3. To fund this big deficit. With no support of the easy dollar. The central same day – June 20th . the Rupee. which is unprecedented in its history. JUNE—AUGUST ’13 | BLUE CHIP ISSUE 4 . The National Debt of Figure 2: Rupee Movement against USD in one year America has already crossed 100% of GDP mark. the Where to now expected increase in currency value was big enough to catch everyone’s attention. the subsidy bill is expected to bloat Rupee being openly floated in the market. On the policy is going to get stringent. RBI Foreign Exchange Reserves – April End .660. closing at 14. The announcement was enough to spook the market.8% of GDP for The “tapering” growth in the Indian economy. It was almost 2-year single. the rupee has crossed the sure or any temporary respite that the Feds 60 Rs/dollar many a times and the 61 Rs/dollar might give. The prospect of losing the easy dollar supply hit the market hard. The rupee logged entity in the White House.

hiking FDI caps in various sectors. Companies with foreign debt in dollars will come under stress and so will the financial calculations of Indian’s studying abroad. Add to that. The problems within the economy are multidimensional. foreign exchange reserves of India are facing downward pressure. As further tightening of dollar is expected in the future and pre-emptive measures are required to tide over future shockwaves. The Government of India had earlier constituted a 4 – member committee headed by the Economic Affairs Secretary Mr. The panel had also suggested increasing FDI limit in insurance 74% from the current level of 26% and in multi-brand retail from 51% to 74%. As FII outflows have increased in the month of June. Figure 3: INR . including in defence to 49% from 26% and in telecommunications to 100% from 74%. implementing many of these recommendations will require Parliamentary approvals. A single policy framework and a special task force might be needed [6]. by the Finance ministry. With rumours of an election around the corner.USD Exchange Rate movement in the last five years © Monetrix. this hasn’t been good for the incumbent government. Ultimately. which has already been plagued by a number of scams and accusations of policy paralysis in the Parliament. However. Finance & Economics Club of MDI. The committee had come up with recommendations to increase FDI in India like. Gurgaon . Increase in import duty on Gold from 6% to 8% in June and the limited decontrolling of fuel prices are perceived as a piece meal approach to a complex and long term issue. the change in investor sentiment because of the economic reforms will provide the necessary breather space to the trio of RBI. the stability of the government is under question too. Finance ministry & Regulators to come up with solutions to stem the tide of the falling rupee. All this doesn’t instil confidence in your average investor. Arvind Mayaram [7]. rupee’s future hinges on the strength of the Indian economy and vice versa. Politically. Inspite of the fact that opening up of some sectors will not bring in foreign currency immediately. RBI & market regulators is the need of the hour. A co-ordinated approach like the one seen during the 2008 crisis. a fiscally expensive Food Security Bill ready to be passed by the Parliament.32 RUPEE ON A WHEEL CHAIR up.


X worked on the board of ISB. 13. Chicago Sun Times named a local woman as “the one”. Its first global balance sheet in 1854 had the bank’s name as “X bank of India. It is also the most famously featured character on merchandise across globe. Which company is the line related to: “we have heard you”? (2 words) We have just lost This Japanese vehicle is named after the bird with fastest speed of around 180-200 miles per hour. What is the current name of the bank? (2 words) Down 1. Pizza Hut and Nobel Peace Prize. 5. 18. Which Indian wine company’s name is derived from the founder’s mother’s name? Connect Louis Vuitton. 12. 19.000 sales.34 BUSINESS QUIZ Across 3. 15. What is X? Though more than a dozen woman claimed to be the “one”. Give the moniker (2 words) This character was conceptualized in 1928. US:Yankee. Agnelli family and Sheikh Bin Zayed? It was result of an agreement between PAL and Connect 1982 Asiad Games and Vidyasagar Setu in Calcutta by a company name. identity was never conclusively determined. Name of joint initiative between Europay. 4. 4. What is the company named after X known as today? Company X got its name from a painting of Nipper. Sunlight in 1884 to popularise a sense of hygiene in Victorian England. It is named after legendary queen of Chittor.facebook. Give the surname of X. (2 words) Connect Haliod Company and 1964 Olympic winter games. UK: X. Mastercard and Visa? X bought Businessweek from McGraw-Hill. listening to a cylinder phonograph. Who is X? (2 words) Which sport connects Morgan Stanley. 14. In 2001. PR director of which company said this even before the new car was launched? Answers for the quiz would be shared on our Facebook pages: www.MDI © Monetrix. It has appeared in over 130 films. 17. Australia & China”.facebook. (2 words) William X launched the laundry soap. Name X. What is X? Connect “Fifty Shades of Grey” and “Punar Milan” X was earlier proposed to be named as Pequod. 16. a Jack Russell terrier. Hyderabad and Satyam. 2. Identify. (2 Words) Japan:Samurai. 8. X is known as father of Pentium chip. 10. 11. 6. Gurgaon . Finance & Economics Club of MDI. Name the automobile. 9. 7.MDI www.

but both of them were not able to materialize the deal. With phrases like “If we don’t do this now. To prevent further meltdown of market. This movie has made a successful attempt in exploring the meaning of ‘Too Big to Fail’ and its ramifications. Dick Fuld seeking external investment to bail the company out as Treasury is opposed to offering any bailout as they did in case of Bear Stearns. because nowhere in the movie causes for the crisis are explained like it has been done in the documentary ‘Inside Job’. Instead Treasurer Henry Paulson is trying to arrange for private solution to Lehman’s problem. But Banks do not lent out the money as intended and the government could do nothing about it. Bank of America purchased Merrill Lynch instead and Barclays were declined permission by British banking regulators. Two banks Bank of America and Barclays shows interest in Lehman Brothers. But this movie for sure clearly depicts the steps taken by the government to stabilize the economy in the most interesting manner possible. Movie starts with the CEO of Lehman Brothers. With no option left Lehman Brothers file for Bankruptcy. if viewer knows beforehand the reasons for the crisis. Realizing that if AIG fails then whole insurance sector will collapse and financial markets will suffer massive fall down.35 35 MOVIE REVIEW Movie Review: Too Big to Fail ‘Too big to fail’ is a financial thriller which chronicles the 2008 financial crisis.” audience are bound to get thrilled and get excited for what is going to happen next. It shows how government tried to prevent the financial crisis with the help of private players and what all problems were faced by the Secretary of the Treasury Henry Paulson in doing so. Treasury takes over the AIG. thus creating entities which are greater than the banks government is trying to rescue because those banks were too big to fail. In between. Hollywood would be more than happy to create the sequel of the movie but for larger good we all hope it never happens. This movie would have been more enjoyable to watch. another crisis is also shown when AIG begins to collapse. The movie revolves around the idea that the problematic banks can be saved by merging them with healthy banks. Even though the movie does not have any car chasing scenes or ultimate action. JUNE—AUGUST ’13 | BLUE CHIP ISSUE 4 . still it can be counted as a thriller movie. Treasury pumps in money to Banks to get credit moving again. we won’t have an economy on Monday.

with the incoming macroeconomic numbers things started to stir a bit. majorly due to the soaring global liquidity & Indian stock market’s ability to provide abnormal profits. it accelerated the flight of capital to developed economies. though it has seen worse even in the past this one looks quite grave than anything seen in past few years. breaking its life time lows every other day. Asia’s third largest economy has been in news for quite some time now. Finance & Economics Club of MDI. However. There is a sense of uncertainty from all corners of the country. huge loan defaults to food inflation. high CAD to ailing industrial output numbers. Rupee has never witnessed such a steep fall. Year started with strong inflows from foreign investors irrespective of all the concerns. FIIs who are the primary participant in any significant movement in Indian stock market have seen their returns plummet due to in domestic currency terms. Indian currency already bleeding due to the Balance of Payments crises was caught in the quagmire.36 MARKET UPDATE Market Update Figure 1: Sensex Movement (1st April to 30 June) Stock Market Review Indian stock is going through a very typical phase. Gurgaon . people speculating Indian economy to be in the 8+ growth rates started to recede steadily. amongst all the emerging economies it is slated to be the most affected by the current world economic environment. Along with it the © Monetrix. And lot more. unsustainable fiscal spending to next year’s elections. Trigger to the change was US Fed’s decision to roll back QE program next year.

Going ahead.45 7998. have proved their mettle time and again due to much stable earnings & rising Indian rural consumption story. Banking etc. Amongst sector performance.2 7342.2 6756. Our finance minister has tried to ease the environment a bit by introducing many new investor friendly policies & increasing the FDI limits in many sectors but this might not prove to be sufficient any time in the near future.54 -1.19 1.06 9.05 15310.4 11617. JUNE—AUGUST ’13 | BLUE CHIP ISSUE 4 . Pharma etc.3 16688.5 6634.35 Figure 2: Sector Wise Market Performance stance by RBI for introducing new ways of capital controls & tightened domestic liquidity market will worsen the environment even further.3 224. Also.33 -8.35 7430.77 7.37 37 MARKET UPDATE 1st October CNX NIFTY CNX MIDCAP BANK NIFTY CNX AUTO CNX ENERGY CNX IT CNX METAL CNX PHARMA CNX FMCG CNX REALTY 5697. cyclical sectors have been bleeding heavily with Infra. outlook is very bleak on account of further tightening by RBI & unavailability of solution in the near horizon for Indian import export mismatch.69 5.95 4215.25 Quarterly returns 2.2 192. Auto.65 7230.17 13.25 4539. being the largest losers. investors are quite wary of Indian stock market and any negative trigger causes a panic selling in the market. Power. Sectors which are particularly more dependent on financing & industrial sectors were worst affected with midcap stocks losing much more than their large cap counterparts.15 1969.1 7593.65 2242. it will take much more than words to pacify the Institutional investors who are still waiting for signs to suggest that “alas it is the turning point”. Indian stock market was trading in a stable range for some period before plunging to a four month low very recently.25 -12.95 11414. On the other hand FMCG.45 31st December 5842.05 5976.00 -14. At present.

3 7.460.275.5 on 3rd May Figure 5: Policy Rates and Reserve Ratios Decreased from 8.371.25% 4% 23% 8.1 Figure 4: Performance of World Market Indices Repo Rate Reverse Repo CRR SLR Bank Rate 7.979.234. Gurgaon .0 1.6 2.5 on 3rd May Currency Dollar Figure 6: Currency Rates (as on 30th June) Euro Pound Yen Exchange Rate (in INR) 59.4 10.2 Quarterly Returns -15.697.38 MARKET UPDATE Country Brazil Russia India China Japan USA Germany Index Bovespa RTSI Nifty SSE Composite Nikkei 225 NASDAQ DAX 1stApril 56.348.403.3 2.677.60 © Monetrix.50 90.8 -12.457.2 13.55 .6 7.25% Decreased from 7.0 5.230.25% 6.3 3.5 on 3rd May Decreased from 6.3 30thJune 47.2 1.6 5.55 77.3 3.5 -11.959.4 5. Finance & Economics Club of MDI.842.795.4 2.4 12.0 1.

Jet and Etihad filed a revised shareholders’ agreement (SHA) with DIPP and FIPB. 2013 The Hindu India eases FDI policy for retail. This move is aimed at helping manage the country’s precarious current account deficit situation and improve gold availability for exporters. The foreign direct investment limit for telecom sector has been increased from 74 percent to 100 percent. He has rightly predicted the 2008 crisis His Profile: IIT-Delhi (B. including gold coins Raghuram Rajan to replace Subbarao as next RBI governor Aug 6. oil refineries. DIPP roadblocks July 26. 2013 The Hindu The Department of Industrial Policy & Promotion. the government raised rate of interest subsidy for exporters to 3 per cent and promised to clear pending claims expeditiously. as well as the Securities & Exchange Board of India have raised concerns on effective control being given to the Abu Dhabibased airline. commodity bourses. 2013 Business Standard It will pave the way for consolidation in the telecom sector. The norms aim at safeguarding the interest of public shareholders. to end at 18. Chief Economist at IMF Jet-Etihad deal hits Sebi. Though the Telecom Ministry had announced broad guidelines for mergers and acquisition in February last year. The revision has been done in consultation with the government and will be applicable to gold imports in any form. MIT(PhD). biggest fall in 4 years Aug 8.000 crore to the exchequer It was bloodbath in markets with Sensex crashing 769. Following earlier concerns. 2013 The Economic TImes Faced with sagging exports and rising trade deficit. 2013 The Economic TImes Market mayhem: Sensex crashes 769 points. notably telecom.598 on fresh concerns about US stimulus withdrawal and rupee plunging to record low of 62. the detailed guidelines are yet to be unveiled. from 12 months currently Govt enhances interest subsidy to push exports July 31. cos must repurchase at least 50% Aug 8. giving clear signal to overseas investors that the economic reforms were on track. the biggest fall in 4 years. 2013 Business Standard Govt.39 MARKET UPDATE In the News Guidelines for telecom mergers and acquisitions by month-end July 10. decided to hike the foreign direct investment limits in a host of sectors. the chief economic adviser in the finance ministry. IIM-A(MBA). power exchanges and stock exchanges and relaxed the policy for retail. doesn’t seem to have gone down well with DIPP. RBI tightens gold import norms to squeeze CAD July 23. JUNE—AUGUST ’13 | BLUE CHIP ISSUE 4 . The decisions were taken by the federal cabinet chaired by Prime Minister Manmohan Singh. telecom (Roundup) Aug 1. 2013 Business Standards SEBI notifies buyback norms. which has found the tone and language is similar to what it had submitted earlier Sebi notified buyback norms under which it will be mandatory for companies to repurchase at least 50 per cent of their offers. too.Tech). The Indian telecom sector has at present around 13 mobile phone service providers with some of them expected to go for consolidation once the final guidelines are in place. draining investor wealth by Rs 2 lakh crore. domestic prices of the yellow metal might rise. 2013 Reuters The government has appointed Raghuram Rajan. to be the next governor of the Reserve Bank of India for a three year term. This. The companies will now have to complete their buyback offers within six months. entailing an additional burden of Rs 2.41 points.

Monetrix continuously strives to contribute to the financial and economic knowledge of the MDI community by holding events and conducting knowledge sessions and other interactions. The magazine. Daman Aggarwal. Saurav Singh. Nidhi Soni. Gurgaon. Finance & Economics Club of MDI.MDI © Monetrix.facebook. Sankalp Raghuvanshi. Amit Agarwalla. Rishi Rohit Agarwal. Blue Chip.40 40 TEAM MONETRIX (2013-14) From top left: Ashish Gupta. Swapnil Sheth. Gurgaon . Saurabh Saxena Not in photograph: Shaunak Laad Monetrix is the Finance and Economics Club of Management Development Institute (MDI). Vibhav Srivastava. you may also like to visit our Facebook pages www. is an effort in the same direction. of contributing not just to the MDI community. Rishabh Gupta. Karan Jaidka. Radhika Bhattar.MDI To keep yourself updated with latest happenings in the market as well as at MDI or just for having discussions. As one of the most active clubs in the campus. but to the fraternity of MBA undergrads throughout India.