ARTHAPRAJNA VOLUME 12(ISSUE 6) June 7, 2021

ARTHAPRAJ
NA
AN INSIGHT INTO THE WORLD
OF FINANCE
From the editor’s desk…...
Greetings!!!
we are back with the 6th issue of Arthaprajna volume 12. In this we are presenting
before you the team ‘Money Hunters’.

Mergers and acquisitions are the important process in the banking industry to make

financial gains enormously. Main aim of merger and acquisition in
the banking sectors is to improve the economies of scale. In the article titled as
‘MERGERS AND ACQUISITIONS OF INDIAN BANKING SECTOR’ we have
discussed how the mergers are affecting the Banking sectors and Indian economy.

Speaking of Indian economy, it was one of the worst hit economy due to covid 19,
CRICIL even stated that this the India’s worst recession since the independence. in
the article IMPACT OF COVID-19 ON INDIAN ECONOMY we have a detailed
writeup of how and in which sectors have the covid 19 had impacted.

The column fin personality speaks about the co-founder and president of Venture
Catalysts (India's first incorporated incubator) Dr. Apoorva Ranjan Sharma, His
leadership & passion has encouraged lots of investors to take a plunge into start-up
investments. In this issue we will have a glimpse about his great personality.

The column Fin tech speaks about the Digital Lending and Column fin term speaks
about the concept of Capital Growth.

In the end, we have FIN-QUIZ for you all to answer and be the winners. We have
also included answers to the quiz questions posted in the previous issue.

We look forward to your valuable feedback and suggestions at

arthaprajna@pim.ac.in

Regards,
Rajeshwari prabhu,
Chief Editor

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ARTHAPRAJNA VOLUME 12(ISSUE 6) June 7, 2021

MERGERS AND ACQUISITIONS OF INDIAN

BANKING SECTOR
In India, the financial sector has surely won multiple
great achievements for the world's largest and most diversified
democracy in a relatively short period of time. The banking
sector or industry reform process is a key component of the
government's strategy plan to reposition and integrate the
Indian banking sector into the global financial system.
The Indian banking sector has seen a number of reforms as
well as a wave of successful mergers and acquisitions, all of
which have supported its growth. Mergers and acquisitions are the most popular way
for companies to improve and maintain their market position. M&A’s are considered
as a rapid and cost-effective way to break into new markets and adopt new
technology. 
M&A’s are seen to be a quick and efficient approach to enter new markets and
incorporate new technologies. For example, Punjab National Bank purchased New
Bank of India in 1993. Except for State Bank of India and its partner banks, the only
other nationalized bank to combine was Bharatiya Mahila Bank with State Bank of
India in 2017. 
The government consolidated 27 public sector banks in August of this year, reducing
the number of public sector banks to 12. The second largest PNB was formed by the
merger of Oriental Bank of Commerce, United Bank of India, and Bank of India.
Merger is described as "A merger of two or more corporations in which the selling
firm(s)' assets and liabilities are absorbed by the buying firm." The buying firm
preserves its original name, despite the fact that it may be a very different company
following the merger.” 
“An acquisition, on the other hand, is when one firm buys the majority or all of the
shares of another company in order to obtain control of that firm.” Buying more
than half of a target company's stock and other assets empowers the acquirer to
make decisions concerning the newly acquired assets without the company's
shareholders' approval.” 
MERGERS AND BANKING AND REGULATION ACT, 1949: 
Section 44A of the Banking Regulation Act of 1949 says that no banking
businesses may merge unless a scheme for such a merger is approved by a two-thirds
majority of each amalgamating company's shareholders. It is then forwarded to the
RBI for approval.  No banking enterprises may join unless a scheme for such a
merger is approved by a two-thirds majority of

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ARTHAPRAJNA VOLUME 12(ISSUE 6) June 7, 2021

the shareholders of each amalgamating company, according to Section 44A of the

Banking Regulation Act of 1949. 
According to Chapter XV of the Companies Act 2013, any planned merger between a
bank and a company (not involved in banking industry) must first be approved by the
High Court, and then by the RBI, in order to put the scheme into effect, as specified
exclusively by the earlier Companies Act of 1956. 
Mergers of nationalized banks were exempted from the permission of the fair-trade
watchdog CCI in 2017. The goal was to pave the path for faster consolidation in the
PSU banking sector. This ten-year exemption comes at a time when various experts
and even officials have been discussing the necessity for banking sector
consolidation, particularly among the smaller banks. According to the Reserve Bank
of India, there were 5,743 frauds recorded by Public Sector Banks (PSBs) in the
financial year 2018-19, involving a total sum of 95,760.49 Crores. PSBs control a
whopping 85 percent of the market, far outnumbering their respective company
shares.
An initial inquiry of these incidents has uncovered involvement of not only midlevel
staff, but also high management, as well as political intervention and decision
makers' "pro-corporate" mentality. When the banking sector is troubled by large
levels of nonperforming assets (NPAs), it is cause for concern because it represents
financial distress among borrowers such as Vijay Malaya, Nirav Modi, Dewan
Housing, and others, as well as inefficiencies in transmission channels 
According to statistics, India surpassed Italy as the world's tenth largest economy in
2018, with the highest bad loan ratio. This is due to the fact that nearly 90% of non-
performing assets are held by government-controlled institutions.  This is due to the
fact that nearly 90% of non-performing assets are held by government-
controlled institutions. The government proposed merging the four PSBs, Bank of
Baroda, IDBI Bank Ltd, Oriental Bank of Commerce, and Central Bank of India,
after they collectively lost Rs. 21,646.38 crore in the fiscal year ended March 31,
2018. As a result of these disastrous circumstances, the Centre was compelled to
consolidate its banks.
The fundamental goal of a merger and acquisition like this is to consolidate banks in
order to reduce the rise in bad loans or non-performing assets, improve financial
health, upgrade technology, and increase scale efficiency. It also aids in the rapid
acquisition of a big number of new clients. An acquisition not only offers your bank
with more capital to deal with in terms of loans and investments, but it also expands
your geographic reach. The general public's tax money is being utilized to bail out
failing private banks by capitalization them. Other challenges include execution risk
in getting the two new banking entities onto the same platform, HR/IT
synchronization, process streamlining, and circumstances of mismatch in compliance
consistency and risk culture, all of which have a detrimental impact on the business'
profitability and lead to a loss of customers.
By: Suzaina

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ARTHAPRAJNA VOLUME 12(ISSUE 6) June 7, 2021

Source:

IMPACT OF COVID-19 ON INDIAN ECONOMY:

The climate has changed in many respects since the
first outbreak of corona virus (covid19) in Wuhan, China. Aside
from the pandemic's catastrophic consequences, such as the
high death rate and strained healthcare systems, the epidemic
has left economies all over the world stumbling and even
drowning. Although some of Covid's economic effects are temporary, others may
have long-term consequences.

The lockdowns have had a major effect on supply-chain management, as well as the
GDP and import-export cycle. Linkages, supply chains, and macroeconomic factors
are the three major areas of impact for Indian companies. This is the worst downturn
since the Great Depression in the 1930,while travel and tourism, logistics, car,
metals, drugs and pharmaceuticals, and retail are among the most heavily impacted
industries, education as we know it has undergone significant changes and is also
impacted while travel and tourism, logistics, car, metals, drugs and pharmaceuticals,
and retail are among the most heavily impacted industries, education as we know it
has undergone significant changes and is also impacted.

Some major industries have been affected due to the pandemic:

 Education: Although the world we live in has evolved with time and technology, there
have always been a few aspects that have remained predominantly ‘old school,' pun
intended. The importance of educational quality is something that no one should
overlook, and educational institutions across the country have smoothly moved to e-
learning and online teaching with the common aim of ensuring students' success and
uninterrupted learning. It would not be an exaggeration to suggest that we began e-
learning in a very short period of time. It is impossible to overestimate the efforts of
educators who have adapted to technology, video lessons, and online live classes.
Educators all over the world have been working hard and will continue to work hard
to provide quality lessons and education despite limited resources and passion
 Tourism and Aviation: Without direct government intervention, this industry, which
is one of the hardest hits, is likely to suffer the most from the recession. Since people
are unlikely to travel for pleasure for many months, this would have a significant
effect on tourist inflows in all countries, reducing the money flow in this industry.

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When the lockdown started, the National Restaurant Association of India (NRAI),
which represents the majority of Indian restaurants, advised its members to close
their dine-in services, which primarily impacted dine-ins, pubs, cafes, and food
delivery sites such as Swiggy and Zomato, which saw a 60percent drop in revenue.
 Electronic components and raw materials: China accounts for nearly 55 percent of
India's electronics imports. Due to the pandemic, imports have decreased by 40%,
prompting the Indian government to promote Atmanirbhar, or indigenous
development, in an effort to minimise dependence.
 Pharmaceutical Industry: With a large percentage of Active Pharmaceutical
Ingredients (API) coming from China, the industry's economic impact is important.
With the rapid spread of Covid, the market for medicine has become paramount, and
a significant decline in API imports has a negative impact on drug production,
resulting in a price increase. Manufacturing of car parts and vehicles has taken a big
hit as a result of declining demand, income levels, and the global recession. This
sector is expected to continue to decline as long as the lockdown remains in place.
 Auto Sector: Manufacturing of car parts and autos has suffered a huge impact as a
result of decreased demand, income levels, and the global recession. This industry is
projected to continue to decline as long as the lockdown remains in place.
 Textiles Industry: Such as cotton, other fabrics, and yarn from India has been
severely hampered as a result of the shutdown of textile plants in China. Reduced
demand and purchasing abilities have resulted from a lack of raw materials, a
shrinking workforce, and working capital restrictions such as cotton, other fabrics,
and yarn from India has been severely hampered as a result of the shutdown of
textile plants in China. Reduced demand and purchasing abilities have resulted from
a lack of raw materials, a shrinking workforce, and working capital restrictions
 IT industry: The IT industry's reliance on several of the above-mentioned industries,
such as manufacturing, retail, hospitality, and communication, has had a significant
impact on purchasing power and IT investment patterns. This has had an influence
on the sector's need for extra workers and income inflow.
By: Suzaina

Source: Indian times

INDECIES COMMODITIES CURRENCIES

BSE
GOLD:49020 RS/10
SENSEX:52100.0 1 USD =73.16 INR
GRAMS
5
NIFTY CRUDE
1 EUR=88.67 INR
50:15670.25 OIL:5074RS/1BBL
(The table shows the data as on 04-June-2021, 16:10 IST)

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ARTHAPRAJNA VOLUME 12(ISSUE 6) June 7, 2021

FIN PERSONALITY
Dr. APOORVA RANJAN SHARMA

Dr. Apoorva Ranjan Sharma is co-founder and president

of Venture Catalysts - India's first incorporated incubator. Venture
Catalysts has been ranked world’s seventh Largest Incubator and
Early-Stage Investor with the aid of using TechCrunch in 2019. In
India, it's been successively ranked as No. 1 early level participant
in 2018 and 2019. He is likewise a Board Member at TiE Mumbai.
He lives in Mumbai along with his spouse Parul, daughter Shristi
and son Shreyas.

Sharma holds an engineering diploma from HBTI Kanpur, an

M.B.A from Asia Pacific Institute of Management, Delhi, and
Diploma in Mentoring from HAAS Business School, Berkley,
University of California. He is presently pursuing his PhD in Innovation
Management from Amity University. Dr. Apoorva Sharma has a PhD in Incubation
from Amity University, Noida and graduated in Engineering from HBTI, Kanpur. He
additionally has a degree in Mentor Studies from Haas School of Business,
University of California Berkeley.

Dr. Apoorva Sharma is one of the founding fathers of the start-up surroundings in
India. He has been instrumental in growing the start-up surroundings due to the fact
early 2000. He has been a pioneer in organizing incubators in India. He has mounted
over a dozen incubators and accelerators, incubation finances and own circle of
relative’s workplace finances i.e., Venture Nursery, Amity Innovation Incubator,
Somaiya Incubator (RIDDLE), Mata Vaishno Devi University Incubator, and Indian
Angel Network Incubator. He is the recipient of prestigious Best Incubator Award
given with the aid of using President of India, for tremendous overall performance of
JSS Incubator.

Dr. Apoorva Sharma is one of the pinnacle 10 angel buyers in India, rated with the
aid of using VC Circle 2016. Over closing decades; he has curated, incubated and
led seed funding of a hundred+ start-ups. OYO Rooms is the largest achievement tale

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of accelerators in India, accompanied with the aid of using Beardom that is a latest
acquisition with the aid of using Marico Ltd. Both the start-ups had been curated,
mentored and seed sourced with the aid of using Dr. Apoorva Sharma.

He leads the middle group at venture nursery as Executive Vice President. In his
preceding roles in different firms, he has mounted many incubators and, grown angel
networks and has mentored over a hundred start-ups on fund elevating techniques,
lots of whom have long past directly to stable angel and VC financing.

He currently exited Indian Angel Network (IAN) in which he led Western Region
Investments and Technology Incubator. IAN is the biggest angel funding community
in Asia with one hundred eighty Angel buyers and appears to make investments as
much as US$ 1m. He changed into instrumental in organizing many new tasks at IAN
i.e., Small Deal Group for <50 Lakh Investments, Angel Network at Pune, Boot
Camps, IAN Incubator and the IAN publication other than placing new heights for
Mumbai Chapter. During his stint, he was helped closed 9 offers in FY 2012. In the
past, he has been answerable for organizing JSS Technology Business Incubator, JSS
SEED Fund (First Government sponsored SEED Fund), Amity Capital Venture (Now
$25m Education focused fund) and Amity Innovation Incubator. Some of ventures
mentored with the aid of using him consist of Venera Technology (World Leader in
Analyzer), Apnacircle.com ($25m merger with Video), Circuit Sutra Technology
(Leader in System on Chip), Netlike Solution (Biometric device venture employing
biggest number of deaf in India). He was additionally related to Indian Venture
Capital Association’s operation and studies functions. He had spent near a decade in
IT Industry and has worked in an angel funded start-up in Europe He is an everyday
speaker on many prestigious fora associated with angel investments and incubation
and have been visiting faculty at top entrepreneurship institutes together with SP
Jain and EDII.
Today, Dr. Apoorva Sharma has become one of the maximum influential determine
within side the Indian start-up investment space. His leadership & passion has
encouraged lots of investors to take a plunge into start-up investments.

By Sandeep
SOURCE: LinkedIn
Berkeleyeci.com

FIN TECH
DIGITAL LENDING:
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Under digital lending, many companies are willing to offer unsecured

loans in the range of Rs 25000 – Rs 500000. Digital lending is a procedure to offer
loans online. You can apply for these loans using your laptops and smart phones
over the internet. The digital lending market is spiking in India. And there is so many
benefits over the traditional lending activity, people and business are select for loans
digitally. And digital lending is increasing number of banks offering loans using
legacy systems are change to digital lending. It’s safe to say that the future looks
encouraging for digital lending.

Digital lending is the need of the time and it should grow. But it’s very
critical for the companies not only to underwrite their loans right but also to put in
place the recovery system and more importantly observe the right borrowers and
building a credit discipline. Banks and credit card companies issued credit cards to
anybody and everybody including college student. They spent it without knowing the
heavy interest rates and other changes they had to pay. RBI intervened and the
stopped damages. Yes, there were many cases where people misused credit cards but
equally the issuers are responsible for damaging the credit discipline. And digital
lending Owing to the lockdowns and curfews thrust across states in India, the
economic activities required essential services have come to stop due to the outbreak
of covid-19 and stop the spread of corona virus. Association of the India has
suggested the regulator and government to take two-sided approach as the
constrained revenue rush on small MSMEs. And it will put high pressure on their
outflows from managing payroll to debt repayment and it’s ultimately impacting
digital lenders collections.

DLAI has urged the government to not opt for debt remaking but go for
temporary financial support from the government to meet expenses, including debt
repayment to lenders. Further it has look for direct liquidity window either through
RBI or government or SIDBI to ensure the credit supply to the most unsafe sector
carry on with digital lending. To ensure the continuous flow of credit among COVID-
19 lockdown the association has recommended for suspension of ratings
requirements to ease of pressure to their borrowers instead of focusing on their P&L.
Further PSBs release rating requirement to ensure more borrowers are reached out
and given loans. These are digital lending impacted by COVID-19. So digital lending
expects to find several opportunities to the pandemic, between the SMEs for growth
and adoption.

By: Anusha S D

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FIN TERM
CAPITAL GROWTH
Capital growth, or capital appreciation, is an increase in the value of an
asset or investment over time. Capital growth is measured by the difference between
the current value, or market value, of an asset or investment and its price tag or the
estimation of the resource or speculation at the time it was procured.

Capital development can be estimated on resources which are possessed by

advertisers or individual(s). In straightforward words, resources which are for the
sake of an organization or an individual, for example, values or land.

Capital development can be applied to an organization just as people who own

values or have their own property. Capital thankfulness is available once the
resources are sold.

How a Capital Growth Strategy Works

Portfolios with a capital development technique comprise predominantly of values,

otherwise called stocks. The specific extent of values to the all-out portfolio will
differ as indicated by the individual speculator's venture skyline, monetary
requirements, venture objectives, and danger resistance. As a rule, a capital
development portfolio will contain roughly 65% to 70% values, 20% to 25% fixed-
pay protections, and the rest of money or currency market protections. While looking
for significant yields, this blend still to some degree ensures the speculator against
an extreme misfortune in portfolio esteem if the higher-hazard value segment of the
portfolio dives in.

Numerous capital development financial specialists will choose a moderate

development objective, while others will select a high development objective.
Moderate development speculators may buy loads of set up blue-chip organizations.
Speculators with a high development objective are eager to put resources into more
theoretical resources, for example, development stocks from organizations that have
practically zero current benefits however have the potential for high future additions.

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The danger of a worldwide downturn because of COVID-19 of every 2020 and 2021
would be incredibly high, as it has been noticed internationally that the closure of
every single monetary action—creation, utilization and exchange—to control the
spread of COVID-19 is inescapable. The idea of closure is interesting if there should
be an occurrence of COVID-19 because of an inventory stun, an interest stun and a
market stun. The recuperation in economy relies upon the timings and extent of
government uphold just as the degree of corporate obligation and how the
organizations and markets adapt to bring down interest. Government help to those
most out of luck (to a great extent comprised of chaotic area, transients and
minimized networks) is a basic measure to spare numerous lives.
By: Sachin

Source: Economic Times,

Market Business News,

Investopedia, Wikipedia.

FIN QUIZ
By: Sneha
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