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  1. 1. © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010
  2. 2. Message from the Director Ingenuity and enterprise are the mindful insights that provide a vision for the future. As the years have passed, NITIE has stood the tests of time by scaling new heights and reaching pinnacles against Dr. Subhash D. Awale all odds. It has maintained the tradition of featuring in the top was the Joint Educational league of Business Schools across the country with our students Advisor (Tech), achieving accolades in every sphere. With the alumni occupying Government of India coveted positions in the industry, with the areas of excellence being before he took up the Operations, SCM, Marketing, Finance and Information Technology, Directorship of NITIE. NITIE has built a reputation for itself over the years. He was Vice-Chancellor of Dr. Babasaheb Ambedkar It gives me immense pleasure to introduce you to the first issue of Technological University, our quarterly Finance magazine. ‗In-Fin-NITIE‘ is an initiative by Lonere from 2000-2005. $treet, the Finance Forum at NITIE. $treet, the Finance Interest He holds a B.E (Civil), Group seeks to assist the budding managers in assimilating M.E. (Structures) Degree classroom as well as practical learning in the field of Finance, and Ph.D. from IIT Delhi. thereby nurturing them to evolve as better managers. The initiative During 1998-99, he is truly a showcase of the talent of the students in the area of functioned as Member- Finance with contributions towards the field in the form of Secretary of All India multifarious articles. These articles are well complimented by Council for Technical quizzes and other compilations to grab the interest and attention of Education (AICTE) in the reader. The knowledge of Finance as a domain is essential to the addition to his duties in understanding of business administration and management. All the the Ministry. Over the past fields of business be it Production, Marketing, Manpower 30 years, he has been Development or Research Development revolve around Finance. actively involved in the field of Technical This initiative by $treet is a step that will help students gain a better Education as a Researcher, knowledge of the domain and also innovate to offer solutions to the Teacher, Planner and challenges that continue to confront the industry and society. Administrator and has I applaud the zealous efforts of the meticulous students and Prof. M. handled all aspects of Venketaswarlu under whose competent auspices the initiative has Technical Education been undertaken. I congratulate them for their endeavour in including Engineering, helping NITIE continue to be the preferred destination for leading Technology, Architecture, Management, Pharmacy, business establishments seeking the finest and most innovative etc. managers. Dr. Subhash D. Awale Director, NITIE © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 1
  3. 3. From the Editor’s Desk It was money that drove human civilization from the barter system to more complex forms of business and trade. Whatever may have Patron: been the form of money during the progress of civilization, be it Dr. Subhash D. animals, metals, coins, paper notes or e-money, there is no denying Awale the fact that businesses and economies have and always will revolve around money. ‗Money is as money does‘ is one statement that is Convener: often cited to explain the function of money. Prof. M. Venkateswarlu Finance is the science of money management. In the past, as economies grew larger and transactions grew more complex, finance assumed a bigger role in the functioning of the economy. Banks were Editorial Board: Aakash Chawla setup to act as custodians of money and Central Banks evolved to Gaurav Bajaj regulate the functioning of banks. Before mankind could introspect, Gaurav Malhotra we had a complex financial system in place. Ritika Arora The above assumes more importance in the wake of the economic Design Team: downturn that recently engulfed the planet. It started off with the Rajneesh sub-prime crisis which arose out of poor lending standards and Umesh Karthy LRJ within the blink of an eye, the global economy was in shambles. Some referred to it as the biggest economic recession to hit the globe post Special Thanks: 1929, whereas others called it the ‗death of capitalism.‘ Whatever Team IMPACT may have been the reaction to the same, the bottom line is there for Abhishek Kumar all to see. The new global economy needs a ‗new world financial Amitabh Vatsya system‘, one that is poverty-alleviating, stable, economically viable, Rohit Kumar ecologically sustainable and mutually acceptable. At NITIE, we believe Finance is more than just a field of Disclaimer: management. It is much more than the analytics, the exciting The opinions intricacies and the high paying careers. It is a social science that has expressed in the played a stellar role in the evolution of mankind and will always be magazine are those of the respective closely linked to the holistic development of economies and societies. authors. In-Fin-NITIE We believe finance is about expression and innovation. And it is this or Team $treet does very spirit that we have attempted to capture and portray through not necessarily In-Fin-NITIE. endorse them and cannot be held In-Fin-NITIE gives you a glimpse of finance at NITIE, underscoring responsible for the the reverence that NITIEians have towards finance and the same. importance it commands in their scope of thinking and innovation. We would like to hear from you regarding the magazine. Letters to the editor can be sent to © Team $treet, 2010 ‗Bon voyage‘ for the journey through In-Fin-NITIE! Team $treet © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 2
  4. 4. Contents  Perils & Prospects of Private Equity Page 4 in India - Amitabh Vatsya, NITIE –Page 7  Home Equity Insurance: Page 8 Redistributing Risk - Shailabh –Page 9 Kothari and Rishabh Bhandari, NMIMS Page 10  Dollar Docked (Cover Story) - Rohit –Page 14 Kumar, NITIE  Innovative Monetary Policy Tools- Page 15 –Page 18 Ajay Jain, IIM Bangalore  Qualified Institutional Placements – Page 19 Innovation or Convenience - Abhinav – Page 21 Saini, NITIE Page 22  Events @ NITIE  Fin - Quizzitive : The Finance Quiz Page 24 © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 3
  5. 5. Perils and Prospects of Private Equity in India - Amitabh Vatsya, NITIE OVERVIEW The chart above depicts very succinctly, the success story of the Indian Private Equity (PE) sector. It boasts of a glorious Compound Annual Growth Rate (CAGR) of 43.67%. But these figures belong to a different era, one before the collapse of the Lehman Brothers. A world where raising capital was not the ordeal it is today. Back in May 2009, I had posted a query on Nicube (a professional networking website popular in Europe) about careers in Private Equity. I got an instant response from Donnie Brasco, an Investment banker with Barclays: “PE is dead, virtually dead and it seems that it will remain so for several years to come. There seems to be some activity in terms of PE funds buying debt from ‘distress sellers’ (i.e. other PE funds, hedge funds, etc.), but other than that, why do you want to go there? I don't see how money could become as cheap as in 2003-2007 again.” This was indicative of the general global counterparts was left at cross roads in the post- sentiment towards PE in the western world. Chart 1 Lehman era. This article will mostly address the issue suggests that the concerns of Mr. Brasco about the raised by Mr. Brasco about the fate of PE in the Indian global market were not unfounded. Indian Private context. The discussion will move from the challenges Equity, a relatively nascent market compared to its ahead of Private Equity in India to the current status of © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 4
  6. 6. the same. The last section will bring forth the growth Professor of entrepreneurship, Mark Cannice. He asked opportunities for PE firms. local venture capitalists how confident they were about the high growth industry for the next 6 to 18 Recent reforms regarding LPs and GPs months. The ‘Confidence Index’ above shows an upturn In an environment where access to capital will decide and downturn by quarter. the future of private equity, institutional investors (Limited Partners), sitting on huge pools of capital are Disappointment of Asian LP with setting their own terms to turn things in their favour. performance of their PE portfolio About 10 European and Asian development financial According to the recent ‘Coller Capital Global Equity institutions including CDC, who invest in emerging barometer’, many LPs report that poor performance of market private equities including India, have endorsed PEs during the downturn has damaged the perception of the Institutional Limited Partners Association (ILPA) the asset class within their organization. This has Private Equity Principle. ILPA, a not-for-profit resulted in a change in their risk appetite and association, represents the interests of institutional investment criteria. A good percentage of investors private equity investors. have deepened their Due Diligence prior to committing to funds. Many have demanded improved reporting These principles recommended that the general partner from their GPs. community should charge moderate management fees and stick to the fund’s investment purpose. Also, Complexity regarding Transfer Pricing changes in tax laws that impact general partners should In recent years, Transfer Pricing (TP) has attracted a lot not be passed on to the investors. According to a recent of attention from taxing authorities around the world. A report by London-based research agency Preqin, there robust TP policy should be a critical component of any are about 78 firms from India, out on the roads to raise global private equity manager’s overall tax risk private equity money. Adoption of such principles by management strategy. A recent judicial pronouncement these Limited Partners (LPs), who commit to emerging in India underscores the importance of a robust TP, as an Indian court held that where a foreign enterprise has a dependent agent in India (and thus an agency PE), then nothing further is taxable in India in the hands of the foreign enterprise if the correct arm’s length price is applied and paid. As private equity houses expand their global management company footprint and deploy more senior executives to local sub advisory offices, fund managers should revisit their TP models.1 Treaty-based structures markets, will only add to the woes of PE fund managers, Most private equity houses employ treaty who are already finding it difficult to raise cash in an based structures to mitigate exposure to source country extremely challenging environment. taxation by investing through treaty-protected special purpose holding companies. The use of Special Purpose Decreasing Confidence of Venture Vehicles (SPVs) to obtain treaty protection and other tax Capitalists benefits is subject to ever-increasing scrutiny by taxing Venture capitalists often talk about downturns being authorities across the world. the right time to invest in start-ups. Yet the data does In India, the tax authorities have been scrutinizing PE not reflect this belief. An interesting study was investments and have been aggressively investigating conducted by University of San Francisco Associate deals involving the transfer of interests in companies © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 5
  7. 7. with underlying Indian investments. In the high-profile participated once again in India in 3Q09, in partnership Vodafone case, the Indian tax authorities attempted to with Kohlberg Kravis Roberts & Co., taking a 15% stake tax a non-resident on the profit from the transfer of in Aricent Technologies for US$255 million. IDFC Private shares in a Mauritius company on the basis that the Equity, along with Oman Investment Fund and SREI profit arose from the underlying shares in an Indian Infrastructure Finance, delivered another TMT deal, an company. The matter is currently pending before the infrastructure one, with a US$224.4 million investment Bombay High Court, and the Indian revenue authorities into Quippo Telecom Infrastructure, and also bought out have proceeded to issue notices to several other BP Energy India’s wind power interests for $95 million.3 multinational companies in similar situations. In light of the prevailing uncertainties, fund managers face Laws of Attraction challenges while structuring in India. This may prove to The total no of foreign Venture Capital firms registered be detrimental for the growth of Private Equity in India. with SEBI is 135. Out of the 135, 20 firms were registered in 2009. So what is the reason for the sudden entry of foreign PE firms in India? The reason lies in the 2009: A year of moderate activities for underlying structure of the Indian Industry. Medium-size PE companies in India need to access capital markets On 05 Dec 2009 VCCircles, a VC / PE research firm because of the traditional shortage of private capital, reported: “PE / VC deals show signs of comeback with whereas in other parts of the world, similar size 29 transactions in November.” companies are often privately or bank-funded and can get away with being less transparent. Another factor Company Investor Value ($ Mn) which favours the attractiveness of Dish TV Apollo Management 100 India is that post the opening up of IPL Theatrical Rights Dar Capital 71 the economy in 1991, the country Gateway Rail Freight Blackstone 64 has seen huge improvements in Manthan Software Services ePlanet, IDG Ventures, 15 both capital markets regulation Fidelity Ventures and in corporate governance. In Ansal Properties & IPRO Growth Fund 14 fact, even some medium-size Infrastructure companies in India compare “Private Equity (PE) and Venture Capital (VC) firms cut, favourably with similar companies in industrialized on an average, one transaction a day in November 2009, countries. The capital markets impose higher standards indicating clear signs of a pickup in deal activity. of governance on these companies listed in India. Although the absence of large PE transactions meant Furthermore, Indian capital markets regulation today is that the total deal value was lower in November this of a high standard. However, enforcement has the year compared to same month last year, the number of potential to improve further. deals rose to 29 against 22 in November 2008.” 2 This was led by strong growth in VC and seed funding The Road Ahead which accounted for more than half of all PE / VC deals India’s newly-elected government came to power with a last month. In the VC space, those striking multiple deals strong mandate for change: Infrastructure spend is included Intel Capital, Mumbai Angels and Gujarat expected to increase along with various initiatives to Venture Finance Ltd’s SME Technology Venture Fund. help the rural poor, including expansion of the According to the latest ‘Asian Private Equity Barometer’ report, produced by AVCG in association with KPMG In light of the prevailing uncertainties India, 3Q09 at US$932 million from 36 deals, exhibited a regarding tax structure, fund managers small shift in value or numbers from 2Q09’s US$1.3 face challenges while structuring in billion from 35 investments, and signs are that the India. Indian market will remain consistent over the next few quarters. CPP IB, a prominent Australian investor government’s NREGA (National Rural Employment © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 6
  8. 8. Another factor which favours the attractiveness of The Rise of Entrepreneur-In- India is that post the opening up of the economy in Residence 1991, the country has seen huge improvements in This concept is a popular practice among both capital markets regulation and corporate Silicon-Valley start-ups and can be copied governance. successfully in the Indian terrain as it is abundant with tech start-ups and start-ups Guarantee Act), which will put more spending power in coming out of B-School campuses. Basically the hands of India’s rural consumers. Expansion of road- this system allows a venture capital firm to support a building plans, from the current 2 km to 20 km a day by senior executive, who has had a significant experience in 2012, should help ease congestion and make the executing programs in a certain segment or has been an country’s supply chains operate more efficiently. entrepreneur and can build a team around a technology or a vertical. This model is gaining significance by At the same time, the creation of ready-to-run projects in the power sector will make it significantly more likely that the government will hit its target of building the The influx of an entrepreneurial culture ultra-mega power projects (generating more than 4,000 is due, but it is just a matter of time MW each) via the public-private-partnership (PPP) before the same happens. model. Regulations governing the flow of foreign capital into the country are also expected to be relaxed application by some VC firms such as Cannan Partners although the taxation treaties which streamline that and venture incubation organizations such as CIIE. flow are being reviewed at present. Are you listening, Mr. Brasco? PE is certainly not dead in India. Indian market is The Demand for ‘Owner Mentality’ currently the favourite destination of PE investors and it On the human value addition front, more private equity will remain so in the foreseeable future. The relatively firms will hire operating partners who become deeply nascent Indian financial sector has a large number of involved in the management of buy-out investments practices to learn from veteran markets. The influx of an and other portfolio companies. In many cases, private entrepreneurial culture is due, but it is just a matter of equity firms retain the incumbent management, time before the same happens. Indian financial markets preferring not to rock the boat when buying out a need to structure the taxation system to entice more company. As seasoned managers with an in-depth investments from abroad. Indian domestic PE firms such industry or functional expertise, operating partners act as IDFC PE and ICICI Ventures are getting matured and as sage counsellors and critical advisors on operating, will hopefully be able to develop a perfect ‘value financial and strategic issues for the portfolio addition’ model. Success stories like the Bharti -Warburg companies’ management teams. With a clear mandate Pincus deal will be the order of the day. The wounded to add value to an investment within a fixed time-frame, Indian PE will strike back and its resurgence is actually they can adopt a less sentimental approach and focus occurring in front of our eyes. unflinchingly on results to make fast decisions and act References: rapidly where necessary. It has been shown that running 1. PriceWaterhouse Coopers Global private Equity the business as an owner inevitably helps unlock value. Report 2008 The benefit of this joint management ownership 2. program is that it instantly puts in place, highly 3. Asian Venture Capital Journal Private Equity motivated owner executives to run the company from barometer Q3 2009. day one. The author is a first year management student at NITIE and can be reached at © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 7
  9. 9. Home Equity Insurance: Redistributing Risk - Shailabh Kothari and Rishabh Bhandari, NMIMS A lot has been written about the sub-prime crisis of 2008 Why an equity insurance? Why not simply insurance, the and its causes, but little has been probed into the ways of kind we have against fire, burglary, etc? The reason is avoiding or mitigating the aftershocks of such a simple. Both the securities markets and the insurance tumultuous meltdown that brought the world economy to industry help people manage risks but their payment a grinding halt. The sub-prime crisis was certainly an schedules and structures are grossly different. The effect of information cascade that caused the people to insurance industry pays only when an unexpected event believe that the growth in real estate prices would has occurred whereas in securities contracts one’s continue indefinitely. Statistics show that the real home position is valued almost every second resulting in a change in value of one’s contracts. Since the value of real estate keeps changing, traditional insurance contracts cannot be of much help. This issue can be resolved by hedging through financial markets. However, hedging through conventional futures markets can also be problematic as most of these contracts require posting margins, margin calls, etc. Such obligations can be burdensome for ordinary households. An option contract is one where one can have benefits of both the insurance Source: The Businessweek dated June 21, 2007 industry by having a premium for entering into the contract and the futures markets that allow for prices for the US as a whole increased by 85% between frequent change in the value of the asset. By paying a 1997 and 2006 when they hit peak though there were no premium, the homeowners can buy a PUT option that fundamental changes in construction costs, population or gives them the right to sell the house if the prices fall long term interest rates during the boom; a result of below the strike price, thereby minimizing the losses speculation spelt by social contagion. [Premium + Price at which the house was bought – Current price – (Strike Price – Current Price)]. The option What is Home Equity Insurance? writers in this case will be usually the real estate This article is an attempt to apprise the readers of a developers or insurance companies. financial innovation through which risks of owning houses can be redistributed among the institutional insurance An attractive strategy for the insurance companies would companies while ensuring that the individual be to build insurance products based on the futures homeowners don’t have to bear the brunt of falling markets on real estate indices and pass it on to the home prices. owners. Such insurance products will completely eliminate the downside risk for the home owners, while © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 8
  10. 10. also limiting the upside potential. Having pass-through prices depend on the trend in prices. The Black-Scholes options would allow them to realize the benefits of model also assumes that costless continuous arbitrage is appreciation of their home prices while minimizing possible between the option market and the market for downside risk. underlying asset. This assumption is flawed in real estate markets where transaction costs are enormous. Prof. The traditional insurance contract can also be replicated Robert Shiller of Yale University has come up with a new through home equity insurance by having European put option pricing model which eliminates the drawbacks of option contracts with exercise date contingent on ‘Life Black-Scholes’, though its viability remains to be tested. Event’. The premium charged by the Insurance companies will be low since such life events are rare. This makes it The entire home equity insurance is based on an index profitable for Insurance companies and an effective instead of a case by case basis which may cause the means for homeowners to hedge risks through financial homeowners to sell their homes at less than what they markets. deserve and not be adequately reimbursed. Example: The individual homeowners may not be well versed with the derivatives markets which may cause them to stay Payoff away from it. Any product that is being designed must be 10 done by keeping in mind such homeowners who lack the 5 0 skills and knowledge possessed by financial analysts. Also, Profit/loss 1 5 9 13 17 21 25 29 it must be marketed in a way they find attractive and easy Profit/Loss -5 with put option -10 Profit/loss to understand. -15 without put -20 -25 Concluding notes -30 Curre nt price of house It is imperative for the policy makers to constantly update the mandatory risk management practices by way of implementing innovations in the financial domain to avoid Consider a house bought at Rs. 25 lakhs. A put option is bought at a premium of Rs. 1 lakh with a strike price Rs. events leading to crises similar to those that have 20 lakhs. The graph shows the profit/loss with and occurred in the past. At the same time, these innovations must also be thoroughly tested before implementing on a without home equity insurance. wider scale to ensure that they are not a threat to the As can be seen from the graph, the downside risk is existing financial system. Home Equity Insurance can minimized to a large extent while the upside potential has definitely play a vital role in protecting the interests of not been affected much. individual homeowners - the underside being that it may cause losses to insurance companies during Life Events. What can be the roadblocks in implementing Home Equity Insurance? References 1) The Sub Prime Solution: Eliminating real estate risks by hedging through financial markets seems very inviting. However, the fundamental 0Prime%20Solution.doc. issue is that Real estate is very illiquid, unlike most of the 2) Home Equity Insurance by Robert J. Shiller and Allan N. assets. The result is inefficiency in real estate market and Weiss: indices. 3) pid=diva2:248800 The options can’t be priced through the conventional Black-Scholes model as it prices options based only on the The authors are management students at NMIMS and can current price of the underlying asset, but real estate be reached at and © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 9
  11. 11. COVER STORY AWARD WINNING ENTRY Dollar Docked - Rohit Kumar, NITIE In 1971, the Bretton Woods System was revoked by USA. The numerous factors which play in favour of the dollar as At that point in time the amount of gold backing the dollar the appropriate choice include its size, had depreciated to record low quality and stability of the dollar asset levels. No other currency markets, particularly the short term emerged as an alternate reserve government securities market where currency. Japan was riding on a the central banks tend to be the most huge current account balance. active. The high liquidity of these Although the German Mark had a financial markets makes the dollar an reputation as one of the world's excellent medium for exchange. most stable currencies, its The history of the US Dollar as the contribution in the world choice of the reserve currency dates economic affairs was not back to the year 1944 near the end of overwhelming. French Franc was the World War II. also not strong enough to play There was a vacuum the role of a reserve currency at created in the that point of time. The Swiss As the World financial Franc was based on full gold demand system due to convertibility until 2000. So after of oil was weakness of pound a brief marriage with the increasin sterling. With the Smithsonian agreement, the world economy and the international g at an world moved on to a free float economy and dollar economic and financial systems in near ever remained the dominant currency in the world market. shambles, delegates from all 44 allied increasin The demand of dollar was artificially inflated after the nations gathered in Bretton Woods, g rate, the New York with an aim of setting up a collapse of the Bretton Woods system. USA made good demand system of rules, procedures and use of its relations with Saudi Arabia, one of the largest oil producers. It supported the power of the House of Saud in of dollar institutions to regulate the exchange for accepting only U.S. dollars for its oil in 1972- could only international monetary system. There 73, just after the collapse of the Bretton Woods increase. the US Dollar took over the role that arrangement. Saudi Arabia received military cover and pound sterling / gold had played in the recognition of the legitimacy of the monarchy in previous international financial system. exchange. The rest of OPEC soon followed suit. As © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 10
  12. 12. everybody in the world needed oil, they had to hold dollars. As the demand of oil was increasing at an ever increasing rate, the demand of dollar could only increase. Thus oil became one of the most important strategies in the USA policy. Until recently oil could only be bought and sold in Figure 1 - Variation of dollar against currencies dollars, (except from 2008 at Kish, Iran) reported confirmed talks between Gulf Arab and Chinese thus inflating the demand of the dollar. So the earlier representatives in Hong Kong of oil trade in non-dollar system of exchanging dollar to gold (Bretton Woods denomination. Brazil has shown interest in collaborating System) was now changed to dollar exchange for oil. As a in non-dollar oil payments, along with India. matter of fact, USA has never taken any challenge to its oil The recent downturn has shown that we can’t have only policy lightly. one reserve currency. The size of the US economy has Mr. Saddam Hussein is said to have planned to sell oil in become relatively smaller to the amount of global balance non-dollar currencies during 2002. Suddenly biological it is expected to serve. Its trade deficit is continuously weapons were claimed to be present increasing. The US dollar peaked in value in 2000-2001 in Iraq and war was imposed on her. and has been in a significant decline ever since. There was The US It is another fact that these a relatively brief period in 2008 when the dollar dollar biological weapons and ‘Weapons of rebounded quite sharply due to the worldwide financial peaked in Mass Destruction (WMD)’ were crisis. But since then, the dollar has resumed its long-term never unearthed. Iran planned a value in downtrend. There were voices which argue that it was new oil bourse which would trade in excessive dependence on dollar which led to world being 2000-2001 any currency way back in 2005. It dragged into the mess created by the US financial sector. and has finally opened in February 2008 They said that another reserve currency was required to been in a after a lot of hiccups which were de-risk the world economy from another downturn. significant said to be externally influenced. Iran While making a decision about the choice of a reserve decline ever was also on the verge of war currency there are four factors which are largely since. because it was said to be in process considered – share of world output and trade, of manufacturing nuclear bombs. macroeconomic stability, degree of financial market In the not-too-distant future, all that development and network externalities. There had been may be history. ‘The Independent’ © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 11
  13. 13. billion. Hong Kong is issuing bonds denominated in Chinese Renminbi (Yuan). Countries are starting to use their currencies in mutual trade instead of the dollar (China and Brazil). Thus the US would have a tougher time financing its trade deficit. Would China be the next superpower? Only time would have a definite answer. China was the first economy to multifarious reserve currencies pitch for the dollar’s replacement as the world’s reserve over the previous centuries and currency. ‘The stability of the international financial ―The stability the dollar has fluctuated widely in system can’t hinge on the currency of one single country, of the the past 65 years as well. even though it is the largest economy in the world’ said international The ‘shop till you drop’ attitude of Hua Ercheng, Chief Economist at the China Construction financial Americans is showing signs of Bank in Beijing. However, the bigger question remains – system can‘t change with personal savings rate which currency will be able to replace the mighty dollar as hinge on the rising to about 7% from less than the currency reserve? China has been criticized roundly currency of 1% a year before. With increase in for the handling of its own currency Renminbi. Talks about one single the replacement of the dollar as the reserve currency had savings, spending is less. As country, proliferated at the G-20 summit held in London in early consumer spending accounts for even though April. Thereby nations such as Russia, France and Brazil 70% of USA spending, the it is the had suggested that the US Dollar should be supplemented economy is going to contract in largest by the other major currencies as a shared reserve short term due to increased saving economy in currency. President Dmitry Medvedev of Russia had also rate. Leading economists call it questioned the future of the US Dollar as a global reserve the world‘‖ - “the paradox of saving”. currency and had said that using a mix of regional Hua The Commission of Experts of the currencies would enable in making the world economy Ercheng, UN General Assembly on Reforms more stable. Chief of the International Monetary and Economist Financial System, led by Joseph E. This is similar to Special Drawing Rights (SDRs) created by China Stiglitz, has suggested a gradual the International Monetary Fund in 1969 in an effort to Construction move from the US dollar to the stabilize the international foreign exchange system. The Bank basic definition of SDRs given by the IMF is as follows – Special Drawing Rights (SDRs). It “The SDR is an international reserve asset, created by the wants to increase the share of IMF in 1969 to supplement its member countries’ official SDRs in total international reserves.” Its value is based on a basket of four key reserves in a gradual manner international currencies – US Dollar, Euro, Yen and British starting from an issue of $ 250 © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 12
  14. 14. Pound. The US Dollar itself makes up almost half of the from other currencies and issued by an international value of the SDR. The exact amounts of currency making organization with equivalent authority to a central bank in up SDRs are determined by the IMF Executive Board in order to become liquid enough to be used as a reserve. accordance with the relative importance in international Russia has proposed several regional reserve currencies trade and finance every five years. including the ruble as a part of the response to the global financial crisis. Dominique Strauss Kahn, MD of IMF said The IMF’s so-called Special Drawing Rights could be used as the basis for a new currency. Its first Deputy Managing Director John Lipsky famously said “There are many, many attractions in the long run to such an outcome.” Arguments against making SDR that the Remnimbi can be added in the future to the the world's reserve currency basket of currencies of SDRs, “So, this is not a quick, short SDRs would include the fact that the US or easy decision,” said Mr. Lipsky, adding that it would be have to be dollar, the Euro and the Pound – “quite revolutionary.” delinked from which make up the large majority The status of the dollar as the reserve currency may also other of SDRs – have all lost value since be challenged by the Euro, the other global currency. It currencies late 2007 when the recession has equivalent advantages and fewer risks offered against and issued by began. Why replace a falling the dollar. The Euro area does not have a large current an dollar by an index which so account deficit as a whole (although Germany has a large international heavily includes the dollar? Also, surplus and Spain, Greece have a large deficit). The Euro organization SDRs do not contain the Chinese area intra trade is very high. However Euro, in spite of its with Renminbi, Indian Rupee, huge success in Europe remains a regional currency. Euro equivalent Australian Dollar or Canadian has not overcome its self-imposed limits on usage and authority to a Dollar, all of which are important adoption moving beyond the boundaries, due to the central bank benchmark or secondary global maintenance of the ERM-II Exchange Rate Stability in order to reserve currencies. However, requirements and the Maastricht deficit, inflation and become liquid even if the dollar is replaced by interest rate criteria. The share of dollars in global enough to be the SDR, the IMF does not have reserves stands almost thrice of the euro. used as a the financial prowess to reserve. The power of "incumbency" is conferred by the "network- safeguard the exchange risk. externalities" that accrue to the currency that is SDRs would have to be delinked dominant. Together these factors make it unlikely there © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 13
  15. 15. will be a large or abrupt change in the dollar's reserve Economist “It is hard to think of a parallel in history. A currency status. The sheer magnitude of dollar assets in country heavily in debt to foreigners, with a government the official reserves of foreign central banks and the deficit it is making little effort to control, is creating vast realistic prospect of continued, and perhaps disorderly, amounts of additional currency. Yet it is allowed to get depreciation of the dollar away with very low interest against most currencies, place ―My greatest challenge has been to rates. Eventually such an central banks at considerable arrangement must surely change the mindset of people. Mindsets risk of incurring large capital break down and a new losses on their dollar asset play strange tricks on us. We see currency system will come holding. With more than things the way our minds have into being, just as Bretton enough dollar reserves to Woods emerged into the instructed our eyes to see.‖ — Prophet meet liquidity needs, prudent 1940’s.” Cost of an abrupt asset management would Muhammad switch over from dollar to seem to dictate some other reserve currency is diversification away from the dollar and towards the euro. prohibitively high. Its replacement as the reserve currency of central banks would be slow and painful process. As The only reason why the Dollar hasn’t collapsed IMF chief Mr. Kahn said about a new global currency completely is because economies largely continue to based on SDR “it is not going to happen tomorrow, but it recycle their surplus wealth and may happen in 10 years.” The trade surpluses back into dollar- denominated assets. One “History is a nightmare from replacement seems which I am trying to awake” - imminent. When and which columnist connects the dots with James Joyce currency is a question which regard to the forex implications, only time would tell. “Less Chinese intervention to prevent renminbi strength would mean China, slowly over References time, would build up fewer dollar reserves.” In other 1. words, economies no longer concerned with pegging their 2. currencies, would have very little reason to build up large hina-s-exchange-rate-policy-and-what-it-means-for- pools of reserves. the-dollar We all are entitled to our opinions, but not to our facts. So 3. let’s get the facts right before we fell into the folly of The author is a first year management student at NITIE stumbling to forecasting. As much as 70 percent of the and can be reached at world’s currency reserves are held in dollars, according to the IMF, leading to calls for nations to diversify their cash piles to avoid excessive exposure to the U.S. economy as it quadruples its budget deficit in a bid to counter the worst recession since the Great Depression. To quote the © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 14
  16. 16. AWARD WINNING ARTICLE Innovative Monetary Policy Tools - Ajay Jain, IIM Bangalore disrupting the funding markets. Banks scaled back their term lending to other banks as they grew uncertain of the creditworthiness of their counterparties as well as their own ability to raise future funds. This severely strained liquidity conditions in the market in late 2007, resulting in EXECUTIVE SUMMARY The financial meltdown, which brought the world down to its knees, caused a major havoc in the money markets in the US in 2007-08. The Federal Reserve controls liquidity in the system through its network of Primary Dealers (PD). When the interbank markets are functional and smooth, these The financial meltdown, which brought the world down to PDs distribute liquidity to banks and thus throughout its knees, caused a major havoc in the money markets in the system facilitating transactions in the broader the US in 2007-08. economy. Banks lend to each other based on their evaluation of creditworthiness of counterparties. The Federal Reserve controls liquidity in the system During the crisis period however, a sudden loss of through its network of Primary Dealers (PD). When the trust amongst the banks resulted in reduction in the interbank markets are functional and smooth, these PDs willingness or ability of banks to distribute reserves distribute liquidity to banks and thus throughout the through interbank transactions, thereby severely system facilitating transactions in the broader economy. disrupting the funding markets. Banks scaled back Banks lend to each other based on their evaluation of their term lending to other banks as they grew creditworthiness of counterparties. uncertain of the creditworthiness of their During the crisis period however, a sudden loss of trust counterparties as well as their own ability to raise amongst the banks resulted in a reduction in the future funds. This severely strained the liquidity willingness or ability of banks to distribute reserves conditions in the market in the late 2007. through interbank transactions, thereby severely © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 15
  17. 17. soaring strains in the money market, the Federal Reserve brought down the discount rate premium, from 100 basis points to 25 basis points. The Fed also made the terms of loans more flexible. However, their efforts failed to bring the desired results, due to the so-called ‘stigma’ problem: during a financial crisis, the banks may be reluctant to borrow from the discount window, worrying that such actions would be interpreted by the massive widening of spreads between the overnight inter market as a sign of their financial weakness. - bank lending rates such as the Overnight Index Swap As it became evident that the conventional monetary (OIS) and term London Inter-Bank Offer Rates (LIBOR), policy tools were not fetching the desired results, the which is considered to be a measure of interbank funding Federal Reserve innovated to introduce new facilities to pressure. provide liquidity to those banks which needed it the most. Failure of conventional tools The Monetary Policy Tools innovation - In a bid to address the rapidly deteriorating financial Term Auction Facility (TAF) conditions, the Fed initially resorted to the conventional As the liquidity conditions deteriorated, the Fed monetary policy tools of cutting the fed funds rate and introduced a new tool called TAF to make funds directly the discount rate. Unfortunately, these tools failed to available to the banks. break the halt in the interbank market forcing the Fed to TAF provided term funding on a collateralized basis, at design innovative tools to inject liquidity into the market. interest rates set by auction. The Fed auctioned fixed The Fed tried to flush the market with liquidity through its amount of short-term loans to depository institutions that Open Market Operations but owing to a heightened were judged to be sound by their local reserve banks. The reluctance of banks to lend to each other in the inter-bank minimum bid was set at an overnight indexed swap rate money market, the banks ended up hoarding the money relating to the maturity of the loans. This credit facility the liquidity seizure continued. The hoarding of money allowed depository institutions to borrow from the Fed was also clearly visible from the falling money multiplier in for 28 or 84 days against a wide variety of collateral and at the US economy. rates below the discount rate. The facility improved As an alternate measure, the Fed also cut down the liquidity by making it easier for financial institutions to discount rate to encourage the depository institutions to borrow when the markets are strained and not operating borrow from the discount window. In response to the efficiently. © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 16
  18. 18. TAF reflects some features of both open market Asset-Backed Commercial Paper Money operations (OMO) and discount window lending. It Market Fund Liquidity Facility (AMLF) distributes the lending to the participants through The Asset-Backed Commercial Paper (ABCP) Money auctions of set amounts of funds in a fashion similar to Market Mutual Fund (MMMF) Liquidity Facility was OMOs. At the same time, using the discount window and intended to foster liquidity in the ABCP market in its collateral management operations, it lends on a particular and money markets in general. collateralized basis. What sets the TAF apart from the This lending facility provided funding to depository discount window, however, is the competitive auction institutions and banks to finance their purchases of high- format and use of a market-determined interest rate quality ABCP from money market mutual funds who were instead of a fix policy rate. Also, TAF offers an anonymous finding it difficult to meet heavy redemption demands by source of term funds without the stigma attached to investors. This facility was created to counter the large discount window borrowing. number of redemptions at money market funds which The TAF represents an improvement with respect to had left these funds in a quandary. repurchase agreements in their capacity to provide The funds that had redemptions in excess of their cash liquidity. First, the range of collateral it accepts is widened and Treasury positions were facing a situation where they from General Collateral to discount window collateral. could meet their redemption needs only by selling other Second, by providing funds for a longer term, it eliminates assets. But these other assets, high-grade short-term the need to roll over the loans every day or every week. paper, had become unusually illiquid given the And third, unlike discount window loans, the money goes uncertainty in the market about the creditworthiness of to the institutions that value it most as the interest rate is the issuers. So sales could occur only at a substantial determined in the marketplace. discount. Without AMLF, money market funds would have been forced to make the unpleasant choice between either suspending redemptions, or liquidating paper at a deep discount. This facility allowed highly rated ABCP to be pledged by eligible borrowers (banks, bank holding companies, or brokers) to secure advances. The Federal Reserve charged the primary credit rate/Discount Rate for the loan. With announcement of the AMLF, redemptions from prime funds slowed appreciably. © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 17
  19. 19. Term Securities Lending Facility (TSLF) Primary Dealer Credit Facility - PDCF TSLF as a lending facility allowed primary dealers to The PDCF is an overnight loan facility that provides funding for up to 120 days to primary dealers in exchange for collateral at the same interest rate as the discount window does. This facility was initiated to provide an equivalent of discount window (available only to depository institutions) to the primary dealers (usually investment banks). This facility allowed primary dealers to borrow against a relatively broad set of collateral, pretty much similar to the discount loans made to commercial banks. However, the PDCF was immediately popular unlike the traditional discount borrow Treasury securities on a 28- day term by pledging window, which commercial banks continue to shun. eligible collateral. The range of securities which can be Borrowing averaged slightly over $30 billion per day for used as collateral was wider than for the TAF. TSLF is a the first 10 days since its introduction. ‘bond-for-bond’ form of lending and it affects only the There were two objectives behind the launch of PDCF. The composition of the Fed’s assets without increasing total first was to ensure the liquidity of the investment banks. reserves. The eligible securities under the facility included With this facility, they now had direct access to investment grade rated mortgage-backed securities (MBS) borrowing. Secondly, the PDCF was designed with the not under review for downgrade, and all securities eligible idea of helping to reduce spreads on the securities for repo agreements. In exchange, the primary dealers included in eligible collateral. Since primary dealers could received a basket of Treasury general collateral, which now take a relatively broad set of bonds to the Fed and includes T-bills, T-notes, government bonds and inflation- obtain immediate cash, the idea was that these securities indexed securities form the Fed's system open market should now be more readily acceptable as collateral in account. So, operationally, the TSLF is an auction process private borrowing arrangements as well. This facility thus where PDs bid for Treasury securities. allowed the Fed to extend liquidity assistance directly to While the TAF was aimed at easing interbank lending, the major investment banks that were previously ineligible. TSLF was directed toward the spreads on MBS that had References widened as financial market participants started to shun Olivier Armantier, Sandra Krieger, & James McAndrews, them. The idea was that if primary dealers can exchange The Federal Reserve’s Term Auction Facility MBS for Treasuries through this lending program, then asset managers, traders and other market players would be willing to hold them again. The author is a second year management student at IIM Bangalore and can be reached at © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 18
  20. 20. Qualified Institutional Placements – Innovation or Convenience - Abhinav Saini, NITIE deals were made while on the other hand, deals struck during the Bull Run turned into losses for most of the institutions. It was thus concluded that a secondary market revival was necessary for the QIPs to revive. However in the year 2009, QIPs made a comeback backed by some of the bigger deals, like those by Unitech (Rs 2,789.33 crores) and Axis Bank (Rs 3,007 crores). A total of 31,102.25 crores was raised through 42 deals. This is seen as a recovery on the back of a strong market run. The Companies listed on the stock exchange are eligible to surge in preference is viewed as result of a few raise funds in the domestic advantages QIPs offer, firstly it being a hassle free method market by placing securities and secondly it being less time with Qualified Institutional consuming. SEBI, at the time of introducing Buyers (QIBs). These securities can be equity Qualified Institutions Placements SEBI defined a pricing norm for QIPs which stated, “The average of the shares or any securities (QIPs) in May 2006, defined it as weekly high and low of the closing other than warrants, which an additional mode for listed prices of the related shares quoted on are convertible into or companies to raise funds from the stock exchange during the six exchangeable with equity shares. the domestic market. This, months or two weeks whichever is higher preceding the relevant date”. according to SEBI, was The major benefit of introduced to make the market One of the major changes made by Qualified Institutional Placements (QIPs) is that it more competitive and efficient. SEBI in the year 2008 to boost investments was the pricing norms of involves lesser disclosures and does not require a pre-issue filing with SEBI which gradually has made it a preferred instrument for entities to raise funds. This raises the important question - Is QIP an innovation churned out by SEBI or is it just a more convenient way of raising capital, introduced to encourage companies to raise more from domestic markets? In the first year of its introduction, 16 QIPs were introduced, which grew to 29 QIPs in the year 2007 through which about $5 billion (about Rs. 20,011 crore) was raised. The year 2008 saw a bear run grip the market and even QIPs could not provide enough fuel as only 4 © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 19
  21. 21. QIPs, allowing it to be based on the two-week average 2007, a year in which close to 25% was raised through share price, so that companies could price the issue closer QIPs. to the market value of the shares. In 2009 again, the When we study the distribution of domestic funds raised over the last three years, a period 80,000 which has experienced both bull and bear 70,000 show, we observe that QIPs have managed to Domestic funds (in crores) 60,000 grab the share of funds earlier raised by rights Rights Issue 50,000 issues. It must be taken into consideration that FPO 40,000 for the companies which do not mind dilution IPO of stakes, QIPs offer a much better and more 30,000 20,000 QIP convenient source of fund as compared to 10,000 rights issue. Rights offers are made at a 0 discount to the market price, and hence are not 2007 2008 2009 preferred by existing shareholders' especially Domestic Fund distribution in 2007-2009 when the secondary market is doing well and investment bankers had requested for a change in pricing this turns companies the QIP way. norm to allow current market price as the issue price to bring down the difference, a request which was rejected QIP and Overseas debt funds Qualified Institutions Placements, at its introduction was by SEBI. launched as an instrument to attract the Indian QIP and the Domestic Fund Instruments companies which were increasingly attracted towards QIP is majorly seen as competitor to other domestic fund international funding through depository receipts, raising options and an alternative way of meeting the something that was conceived as undesirable export of same capital requirement, though an easier and less Indian equity. costly route. When we consider the capital source fund channels used When we analyze the preference of each as a money by companies in the last 3 years, it is observed that QIPs raising tool by companies, we observe a paradigm shift have come strongly in comparison to the overseas funds towards QIPs in the year 2009. This can be majorly options. In the year 2007, the overseas funds had started contributed to lower confidence that companies had in IPO successes in that particular year and the positive outlook of QIBs, a lower inclination 35,000 towards rights issues and derailed interest in the 30,000 execution of FPOs. (in Rs. Crore) 25,000 QIP In the year 2009, a whopping 60% of the total 20,000 domestic capital raised was through the QIP 15,000 route. Unaffected by the lower prices in the DR 10,000 previous years and the losses incurred by the (ADR & GDR) 5,000 institutions, QIPs managed to steal the limelight in 0 the fund raising process of Indian corporations. 2007 2008 2009 This share of investment through QIPs, in terms of Funds raised through QIP and Depository Receipts (DR) percentage and amount stand highest ever since © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 20
  22. 22. feeling the recession heat, which burnt them in the year One of the major hurdles seen in the path of QIP growth is 2008, which saw only $100 million (Rs 467 Crores) being the pricing norm which has affected the valuations gained raised by India Inc. through this channel. This was majorly by companies. The minimum price set by SEBI, to uphold seen as drying up of credit, volatility of the dollar and minority shareholder interest, leaves the issuer with no easing of pricing norms of QIPs. room to negotiate on price, as the pricing formula is rigid. So, even though there are many deals in hand, the Even though funds raised through the ADR and GDR regulatory floor price might prove to be a dampener. routes made a strong comeback to jump back to $3.44 billion (Rs 16000 crores) in 2009, they still stood small in comparison to the QIPs. Also it must be taken into consideration that only 13 issues of DRs were issued in the year and the major portion of fund raised was the $1.5 billion raised by Sterlite Industries. When we compare this to 42 issues of QIPs, it is safe to say that QIP had been the flavour of the year and has managed to notch up some of the desired space from the global debt instruments. The Future Ahead When we peek into the year 2010, it looks promising with around 54 companies waiting in line with valid shareholder approvals in hand to raise an aggregate capital of about Rs. 42,942 Crores, a projected growth of approximately 36%. If all these QIPs are successfully When we quantify the impact of QIP on the stability of executed, it would result in establishment of a QIP fund share price of a company, it proves to be a weakening raising structure at par with other instruments. instrument as it allows control of share prices in hands of As observed from previous years, the success of QIP in few institutions, which may exit, leading to a sharp 2010 will depend majorly on the performance of the decrease in the share price. secondary market. Estimating the future of QIP and its Taking a holistic view of the domestic and overseas fund standing in the domestic fund market, based on raising market situation since the introduction of QIP, it is conclusion drawn from the last year data would not be appropriate to tag QIP as a bit of both Innovation and sufficient, given the volatile nature of the market and the Convenience. Innovation which has managed to create its regular changes in government policies in these years. The own space in the domestic corporate capital finance performance of QIPs is yet to be gauged over longer market. Convenience because of what it offered, period of time and it still requires restructuring as the especially to the cash starved companies in the credit market adapts to the new offering. crunch period. At times when retail investments were not It is yet to be seen how the performance of QIPs will looking up, QIPs managed to shine distinctively in the change, once the western economies recover from the funds sky. It is still early days hence future amendments recessionary setbacks and the government pulls the rates by SEBI and market conditions will play a major hand in back. It would be interesting to see whether companies the further development of Qualified Institution would still prefer domestic funds or they would look to Placements. raise capital through foreign debt instruments. The author is a first year management student at NITIE and can be reached at © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 21
  23. 23. Events @ NITIE Development Program on Derivatives, August 2009 Dun & Bradstreet is the leading provider of business-to- business credit, marketing, purchasing, collection services and decision-support services in India and worldwide. As part of D&B‘s Financial Education Solutions (FES), D&B‘s team of highly qualified professionals and academicians regularly conduct innovative, high quality, comprehensive financial education and training programs. A day long Executive Development program on Derivatives was conducted by D&B at NITIE on 23rd August 2009. The workshop covered areas like Introduction to Derivatives, Indian Equity F&O Derivatives Market, Futures, Options, Options Pricing Overview, Basic Trading Strategies using Option, etc. Around 125 students attended the workshop with students themselves evaluating different exotic and vanilla options and deciding where best they can be applied. Prerana 2009 The best brains from India‘s premier business schools were in Mumbai from the 5th to the 7th of November, as NITIE played host to Prerana 2009, the annual management festival of the institute. The 3 day extravaganza which aimed at promoting business excellence, was a grand success. With Prerana Business Meet 2009, NITIE continued its tradition of providing the students with a platform to meet and interact with luminaries from the Indian corporate sector. This highly awaited elite business conclave was a resounding success, with the stalwarts like Ms. Meera Sanyal, Country Executive, Royal Bank of Scotland India and Mr. Narayan Ramachandran, Country Head, Morgan Stanley India. © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 22
  24. 24. The other big chain of events was the Summer Project Contest where students benchmarked their summer projects against the best in the country. This year, the Summer Project Contest received over 500 entries across 5 verticals of management namely Marketing, Finance, IT, HR and SCM. ‗Beat-the-$treet‘ was a legacy event conducted by $treet that asked participants to explore ‗fund- raising options‘ for a company in the midst of a secondary market slowdown. B-School Trading Competition, November 2009 NITIE was part of a pan India B-School Stock Picking and Derivatives Trading Competition from November 16 through 27, 2009. The online competition was played across India's top 16 B-Schools and over 500 teams competed for the title of Stockezy Stock Market Pundits 2009. The first round was a stock picking game where the picks were evaluated according to their returns. Three teams from every b-school qualified for the final round which was on Futures and Options Strategies. NITIE had the second largest participation from the pool of colleges selected. Investment Banking and Equity Advisory Course This is an ongoing training program for MBA students wanting to build their career in Investment Banking and Equity Advisory. The program is run by 4 professionals from the industry. The focus of the program is to give an in-depth knowledge about the ground realities of Equity Research, Project Finance, Corporate Finance and Investment Banking. Samiksha - Deliberations on Matters that Matter ‗Samiksha‘ a series of panel discussions on contemporary business themes, born out of a need for greater interaction between the industry and the academic community, has been successfully bringing together students and experts from the industry since its inception. © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 23
  25. 25. After the demise of some of the biggest banking and financial companies worldwide, Samiksha tried to find out how the RBI regulated Indian Banking sector has been evolving in conjunction with the Indian economy. The honchos from the Indian Banking industry were invited to discuss the topic ―Indian Banking – An Evolving Landscape‖ on the 5th of February 2010. The distinguished panelists included Mr. Pramod Kasat, Director - Credit Suisse, Mr. Abhijit Biswas, Director - Equirus Capital, Mr. Sanjay Agarwal, DGM - Global Risk Management - ICICI Bank and Mr. Aspy Engineer, Senior VP - Retail Banking - Axis Bank B Gyan B Gyan, an industry interaction session at NITIE was organized on the 16th of February 2010. The topic for the session was ‗Venture Capital Funding‘ and Mr. Vipul Mankad, President SIDBI Ventures, delivered an enlightening lecture on the same. Budding entrepreneurs also presented their business plans to Mr. Mankad, who obliged by offering his views on the same. FIN- QUIZZITIVE 1. Establish the connect for the following © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 24
  26. 26. 2. Connect the 2 pictures 3. Mathematicians in Poland have pointed out a new problem with these items. Because they are struck asymmetrically, using different dies that depict national symbols on one side and a standard map and denomination on the other, they may produce faulty results when spun by gamblers. The reality is, when students in Poland spun them for 250 times, King Albert of Belgium appeared 140 times, instead of a fair 125. What are we speaking about? 4. The American public worry that they were becoming too materialistic resulted in something which focused on intangibles that make life worth living. It was the brainchild of McCann-Erickson. What are we talking about? 5. Connect the following 6. Establish the connect Mail in your answers to with the subject ‘Fin - Quizzitive’ before the 15th of March 2010. Winner to get a cash prize of Rs. 1000/- © In-FIN-NITIE | VOL 1| ISSUE 1| FEB 2010 Page 25