Interest Rate

May 2, 2011

Why are SBI,Axis and HDFC Bank afraid of liberalizaton of Savings Account interest rate

SBI and HDFC Bank which are the 2 of the largest banks in the country have protested against the RBI proposal to free up the interest rate given on savings account in India.Note RBI fixes the rate at which money deposited in saings account earns interest currently for all banks in India.The current rate is 3.5% which is way below the near double digit inflation rate being experienced in India.Most Indians deposit their savings in bank saving and fixed deposit accounts as there is no widespread equity or debt investment culture in the country.This allows banks with a large retail depositer base to earn supernormal profits by paying pathetic interest rates on savings account and lending that money at 12-13%.While the public sector banks have to serve a lot of priority sectors private banks have no such concerns.This leads to high NIM for private banks leading to huge profit growth each year.This has made investing in top banks in India such an attractive proposition.
April 22, 2011

Indian Politicians (Digvijay,Amar Singh) indulge in Character Assassination,Propaganda against Civil Rights Activists to stop Jan Lokpal Bill

Indian Politicians after being forced to bend against the popular support received by Anna Hazare and other civil rights activists in the recent fast unto death […]
April 16, 2011

Solar Water Heaters in India – Understanding Benefits,Cost,Subsidies for Buying Solar Heaters, SWH Manufacturers List

Solar Water Heaters are one of the most successful solar products which have managed to proliferate without government subsidies needed for other solar products like solar panels etc.Note Solar Power in India is taking off with the government promoting its through the JNNSM subsidy policy.The payback period for solar heaters is quite short and it substitutes the need for electricity needed to run power guzzling water heaters in residential and commercial establishments.The other reasons for the success of solar water heaters is that they are relatively easy to build and install making them quite popular.China has the largest number of solar water heaters installed in the world and other countries are not far behind.India too has seen a rapid growth in the use of solar water heaters with roofs around India marked with solar water heaters.Note the government of India through MNRE also subsidizes the buying of solar water heaters making them even more popular.Solar Water Heaters of different qualities,capacities and prices are available in the Indian market.Solar Installers are responsible for doing the whole turnkey installation of solar water heaters,piping system and maintenance.
April 6, 2011

Anna Hazare Deflates the Congress Ploy of Portraying Him as a Puppet,Says not to Insult His Intelligence

The Lok Janpal Bill has received a tremendous response from India's Civil Society which is totally fed up with the endemic corruption and a government which refuses to do anything as most of its ministers are caught in numerous scams themselves.One of its former ministers is already cooling his heels in Jail after India's Supreme Court was forced to take over the investigation as the government refused to take action.The Anti-Corruption Bill which has been formulated by eminent citizens and social activists has been rejected by the government (what a surprise) and the ruling party Congress has refused to talk.Here is a Guide and Summary of the Main Points of the Draft of the LokJanpal Bill.Instead the ruling party has brought in politics into the picture saying that Anna Hazare has become a puppet for the opposition.
April 5, 2011

What is Jan Lokpal Bill and How it Plugs the Giant Loopholes in Government Version LokPal Bill

India’s Civil Society has brought out the Jan Lokpal Bill that has been drafted has been drafted by eminent members of the civil society like Prashant […]
April 5, 2011

Jan LokPal Bill – Summary and Guide to India's Civil Society Anti-Corruption Bill Deserves Our Support

The Jan LokPal Bill is supposed to be the answer to India's massive endemic corruption which strikes daily in the form of a new scam or scandal.The government has proven to be woefully inadequate in taking on the corrupt politicians,bureaucrats and businessmen.This corrupt nexus has been repeatedly exposed and its structure exposed through the Nira Radia Tapes.The Indian administration has shamefully failed to take action only promising to do something without doing anything worthwhile.The Indian Judiciary has also castigated the government numerous times for its abject failure in the 2G Telecom Scam,Black Money Scandal etc.However the government instead of strengthening anti-corruption measures has only put obstacles in the way.Its no wonder when the committee meant to look after the Bill comprises of ministers tainted with a number of scams themselves.Anna Hazare has held a fast unto death to put pressure on the government to pass the draft bill but the Minister appear unconcerned.Here is a short summary and guide to the main points of the Jan LokPal Bill which IMHO deserves the support of the whole Indian civil society.
April 1, 2011

US Exim Bank supports Amercian Solar Companies through cheap vendor financing in a straight fight with Chinese State Banks

One of the major reasons for the Chinese success in the export markets in Asia and Africa have been the massive vendor financing done by state owned Chinese banks.Large orders have been won by Chinese companies like Dongfang Electric and Huawei as Chinese Banks financed the multi billion Indian orders by cheap loans.Note in large project finance cases cheap loans can make a huge difference in project returns and can be the clincher in choosing the equipment supplier.The US Exim Bank too seems to be pulling up its socks in helping American companies win large equipment orders through vendor financing.Note the US Exim Bank had got involved in a huge controversy when it agreed to finance a utlra mega power plant based on coal energy by Reliance Power in India.Despite protests by environmentalists,Exim Bank had gone ahead in financing as it would lead to jobs in America.Note USA is one of the biggest laggards in climate change and the government does not really care much out there.
March 28, 2011

India's Supreme Court castigates ED for incompetence on Black Money Hasan Ali Hawala Corruption Case

India’s Supreme Court has become a schoolmaster for the errant Indian investigative agencies which keep showing glaring incompetence and reluctance to go after top offenders.The Indian […]
March 19, 2011

Wikileaks Indian Exposes Main Indian Political Parties to be "Birds of the Same Feather"- Turn of Crowing BJP(Chari,Advani,Javadekar) to get singed by Truth

Wikileaks has not only caused problems for the US by exposing its diplomatic cables but has caused consternation and embarassment in almost all countries.Leaders of a lot of countries have got exposed for their hypocrisy and doublespeak.In fact Wikileaks also contributed to the current unrest in the Middle East by revealing the extravagance and corruption of the ruling regimes in Libya and Egypt.The same script is now being played out in India as well where a leading newspaper the Hindu has partnered with Wikileaks in printing the sordid details related to India.
March 17, 2011

Wikileaks Exposes More Muck in Indian Politics (Satish Sharma,Nahiketa Kapur,Karti Chidambaram,M.K. Alagiri) – Legislators Bribed in Nuclear Energy Policy,Cash for Poor Votes

The Wikileaks Cable says that an Indian Official Nachiketa Kapur showed an Embassy Staffer Two Chests filled with millions of Ruppees in Cash meant for bribing legislators.This corruption scam is the latest in a series over the last 6 months or so.Already India's previous Telecom Minister is cooling his heels in Jail and crucial leaders of the ruling coalition have been questioned in the 2G Scam.Most of Indian corporate chieftains have also been implicated in the Telecom Scam with mudslinging in full flow.India's Foreign Policy is being made by such crass and corrupt leaders is a shocking revelation though nothing new.Earlier Jharkand state had seen its legislators convicted of accepting bags full of cash during the earlier Congress regime.So this means that bribing and making Indian Policies is not a new thing.India's Opposition Parties are making a huge hue and cry and demanding the PM's resignation.
March 16, 2011

PTC India Financial Services (PFS) Review and Analysis – Too Expensive to Buy the Financial cum Energy IPO despite Quality and Growth

PTC India Financial Services has substantial advantages of growth,a good business model in India's booming Energy Sector.However the valuation of the company has been kept too high for essentially what is a financial intermediary.The growth of the company has been compensated by the high valuation making it not such a good buy especially in the context of the current stock market and economic conditions.It might be better to look at cheaper alternatives in the Indian Infra Sector.
February 10, 2011

Inflation,Interest Rates and Corruption Triple Whammy Kill Indian Stocks

India’s Stock Market has been amongst the worst performing market in the world in 2011 due to a number of converging issues.While Inflation and Interest Rate […]
December 14, 2010

India's Supreme Court Extremely Shocked by Industries Minister Role in Farmer Suicides

India has been plagued with a large number of scams and scandals in recent days.Not that it has made much difference to the functioning of politicians and bureaucrats.India's Agriculture Minister was blatantly defending favored business interests while India's PM seems more interested in Big Business Privacy rather than tackling corruption.The Stock Market after falling for a couple of days due to increasing number of stock market scandals,has returned to normal.However the Indian politicians keep shocking the country with even more and more brazen acts of corruption and nepotism.
December 9, 2010

Initial Public Offerings reach a record IPO Funding of $300 Billion ;List of 2010 Indian and Green IPOs

Initial Public Offerings in 2010 is going to reach almost $300 billion globally which is a record exceeding the last biggest IPO Funding Year in 2007.The drivers of the huge growth in IPOs in 2010 are a combination of factors which have come together.Going into 2011,the picture may not be as good as interest rates increase in Europe and other emerging markets.The main drivers of Capital Raising for IPOs has been
December 3, 2010

India's Oligopolistic Banking Sector High Lending-Deposit Spread (NIM) due to Lack of Competition

India's Banking Sector is highly profitable earnings very high Lending Deposit Spreads.India's Central Bank RBI has said that this spread (NIM) needs to come down in order for India to grow by double digits.However the Banks are in no mood to change their highly profitable business model.With India's Economy growing at a rapid pace the banks are seeing high credit growth and net interest income as well.They are opposed to any change in the status quo which allows them to make supernormal profits in the highly regulated banking sector.Note I am calling the Financial Sector as an Oligopoly because the Central Bank strictly controls the entry of new players in the Banking Sector.RBI has recently proposed giving new banking licenses to some more companies but it won't change the structure of the industry.
September 24, 2010

Indian Banks Scared of Competition in Savings Rate eroding Supernormal Profits oppose Deregulation

India's Central Bank RBI had proposed to deregulate the savings rate on Bank Deposits as part of the Financial Reforms.Note Savings Rate is the only regulated interest rate in the Banking Sector.This has led to a huge windfall for Indian Banks.With a savings rate of around 3.5% and lending rates of 12%,Banks manage to reap profits from this huge spread in the rates which is commonly known as the "Net Interest Margin" or NIM.Indian NIMs are very high compared to that of other countries because of this discrepancy.Indian consumers are known to deposit most of their savings in Banks as Stocks and other Assets are considered untrustworthy.Banks with high proportion of their deposits in the form of these savings deposits have much higher profitability.Note RBI has increased the returns on the savings deposits recently by shortening the length of the cumulative returns. Indian Banks don't want competition in this space as they will lose the supernormal profits that they make because of this regulation.Private Banks are at the forefront of this opposition which is ironical as they should are the first in welcoming deregulation and competition
August 4, 2010

India not to impose Capital Controls like other Asian countries as Economy's absorbing capacity increases

India looks unlikely to impose capital or currency controls like Asian countries to stem the increasing capital inflows from developed nations.The Indian government and the Central […]
June 17, 2010

India's Central Bank proposal to Deregulate the Savings Deposit rate a Positive move

Introduction India’s Central Bank RBI is proposing to free up the Savings Deposit Rate which is currently fixed at 3.5% . All banks whether they be […]