People School

In short,  RBI’s first was March 27 th - cut interest rates by 75 bps and other relief was Moratorium. RBI’s second booster dose- cuts Reverse Repo rate by 25 bps to 3.75%. What is Reverse Repo rate? – Rate at which the RBI borrows money from banks. Expensive for banks not to lend. Positive move for corporates and borrowers To conduct TLTRO 2.0 for an aggregate amount of Rs. 50, 000 Crore to begin with. Liquidity booster for NBFCs and HFCs – At least 50% of amount must go to mid and small sized NBFCs and MFIs. Standard loans as of March 1, need not be classified as NPA till May 31. Banks required to maintain additional provisioning of 10% on standstill accounts. No monetization of deficit. No direct lending to NBFCs. No Repo against corporate bonds.   Now the jargon behind this move, the reverse repo rate is the rate at which banks when they have nothing to do with the money, give it to RBI and RBI gives them just 3.75%. Now until very r

v   Marrying Finance and Technology. v   Availability of data from many sources. i)         Data from Aadhaar ii)        Data from Credit Bureau iii)      Data from Fraud score card iv)      Data from Algorithmic score card v)        Duplication v   Given this data, putting altogether, decision taken. v   This is an infrastructure. v   Average of 10% of their loans was going digitally, without seeing their clients. v   Many new financial institutions, having no track record history, has become significant. v   Financial institutions, newly incepted have no customers. v   225 start-up companies in the lending business for 2 years now. v   This is alternative lending business. v   Next 5 years, see a growth of 30-40% of their loans going digitally. v   Aadhaar, Jandhan will leave a digital foot print. Origination → Data → Monitoring → Delivery → Maintenance. v   GST will be the formalization of economy, i.e. 45 million micro enterprises, which have

Indian economy per Honeywell Headwinds v   The country’s bureaucracy is just stifling. v   Retail needs to be expanded and made more competitive. v   Protectionism needs to disappear. v   Last 20 years, India has grown at 5.5% and per capita GDP now at $1800. v   India needs to grow per capita GDP at 8% per year to reach China’s level. v   For the next 20 years, we must grow at 9% to reach the GDP level of China (per capita population). India’s Advantages v   Demography v   Rising income levels v   Consumer aspirations India’s challenges v   Jobs (world-wide issue) v   Environmental (world-wide issue) v   Aging population (world-wide issue) 90% of world’s diamonds comes to Surat for cutting and finishing.

Moody’s take on Indian economy Highlights: v   FY20 GDP Projection, lowered from 5.8% to 4.9%. v   Key concerns: §   Weakening consumption §   Rural financial stress §   Low job creation §   Liquidity constraints §   NBFC credit crunch has exacerbated slowdown §   Steps to stimulate demand will be limited in offsetting slowdown v   Measures unveiled by Government: §   Income support for farmers §   Monetary policy easing §   Broad corporate tax cut v   FY21 Projection: §   Modest recovery expected §   Growth will be weaker versus recent years §   Weak demand, tight liquidity to constrain auto earnings §   Slow growth will reduce debt servicing capabilities of households. Other Economists take on economy slowdown:-- v   Market’s assumption true; Fiscal deficit way higher than Govt.’s claims. v   Govt. roadmap for future Fiscal roadmap will be crucial. v   Not seeing the favourable macros needed for yields to move. v   There’s not much

India is in a Darwinian mode, where it is called ‘Survival of the fittest’. How is India in a Darwinian mode?       1)       Consolidation: Sector after sector, more and more consolidation is happening and this is happening more of mortality, less of combinations. Like Airline sector, last many years Kingfisher, Deccan, Sahara, Jet go out of businesses and the fitter players have survived and prospered. Like Telecom sector, there use to be 13 players, excluding BSNL, MTNL, now down to 3. Like Wind Energy supply sector, there use to be 19 players, now down to 3 only. This is the speed of consolidation. This wave of consolidation playing out to two additional sectors, Real-estate and Finance.       2)       Cleaning system and Governance:  Clean business and high governance, is the way forward and present.       3 )       IBC:         Essar Steel judgement, by the Supreme Court and the efforts made by the Govt. to transition, significantly improve IBC process