Knowledge@Wharton -- Finance and Investment

India's Union Budget Steps on Foreign Investors' Toes -- Again

Tue, 05 Mar 2013 12:25:03 EST

India's Union Budget last year carried a seemingly innocuous reference to tax avoidance, which spooked many foreign investors. Now, a different finance minister, P. Chidambaram, has done it again. The response to the budget was overshadowed by a reference to tax residency norms, causing markets to fall as foreign investors thought they were being targeted. The government later clarified that there was no such intention. But was there a message between the lines? Is Chidambaram telling foreign investors that they can't take India for granted?

Is India Wooing the Wrong Dollar-surplus Segments?

Thu, 28 Feb 2013 10:17:17 EST

India needs dollars; the country has to pay a huge oil import bill every year. The nation's merchant exports are not adequate in the absence of a strong "Made in India" image. Foreign direct investment, money pumped into the markets by foreign institutional investors, and remittances by non-resident Indians are all being targeted. But are the government's priorities misplaced?

India's Aspiring Banks Line up for Licenses

Thu, 17 Jan 2013 09:06:44 EST

The Indian government and industry want more banks. So far, the regulator that authorizes the creation of new financial institutions -- the Reserve Bank of India -- has resisted the move. Recent changes in statute have left it with no reason to object, however, and the agency will issue new licenses soon. Still, no one expects more than a handful of aspirants to get the green light.

Despite Earlier Setbacks, India Inc. Eyes Targets Abroad

Mon, 12 Nov 2012 14:00:16 EST

A few years back, when the Tatas took over Jaguar Land Rover, the Birlas bought Novelis and the Bharti group acquired telecom company Zain, experts predicted a rash of Indian takeovers of global assets. It didn’t happen that way: In a number of deals, the targets proved difficult to assimilate. There was a hiatus. Now, however, Indian companies seem to be back on the takeover trail.

Private Equity in India Finds Opportunity in Adversity

Thu, 25 Oct 2012 11:28:23 EST

Private equity (PE) in India is facing problems because of unclear and changing regulations, and the lack of exit routes. At the same time, many are turning to PE funds because other sources of finance have dried up. This year is expected to be one of consolidation for the industry, according to the “India Private Equity Report 2012,” released by global management consulting firm Bain & Company.

Indian Banks Have Catalyzed Growth: Now They Have to Grow

Thu, 06 Sep 2012 10:01:13 EST

Bankers in India are facing critical issues these days. The Reserve Bank continues to keep interest rates high, which increases the danger of assets turning toxic and impacts corporate borrowing. At a recent panel discussion of industry representatives in Mumbai, however, the concerns were concentrated more on the industry's longer term challenges.

In India, the Three R's Are Being Joined by an 'F': Financial Literacy

Wed, 15 Aug 2012 13:44:44 EST

India has had several stock market-related scams in which investors have been taken for a ride. Ordinary people are also being erroneously sold financial products, such as insurance and mutual funds, from unscrupulous vendors. Simply warning the public hasn't made much of an impact, so several public and private organizations are pushing programs that teach the basics of business and finance in schools. With a national strategy for financial education about to be finalized, their efforts are intensifying.

Vijay Mahajan: Rebuilding a Stronger Microfinance Sector in India

Thu, 26 Jul 2012 09:54:42 EST

The microfinance sector in India has gone through turbulent times in the past couple of years. The central government has now stepped in with the Microfinance Institutions (Development and Regulation) Bill, 2012. Vijay Mahajan, the president of the Microfinance Institutions Network of India, talked to India Knowledge@Wharton about the implications of the new bill and the way ahead for the sector.

Reserve Bank's G. Gopalakrishna: 'We Have No Target for the Rupee'

Thu, 24 May 2012 12:02:00 EST

The Indian rupee has been falling very sharply in recent months. G. Gopalakrishna, executive director of the Reserve Bank of India (RBI), says that the central bank's principal job is to monitor volatility, not value. On a related issue, he tells India Knowledge@Wharton that full convertibility of the rupee is not on the horizon.

India's �Do-no-evil� Budget Conceals a Bombshell

Mon, 19 Mar 2012 15:47:09 EST

India’s Union Budget for 2012-2013 was described by commentators as a ‘do-no-evil’ budget. There was nothing spectacular, but there was general agreement that it was a competent job in a difficult economic environment. Then somebody saw the fine print: The Vodafone tax case is back on center stage due to a clause that would allow transactions by foreign entities involving assets principally in India to be taxed locally -- and retroactively, dating to 1962.

Atyant Capital's Rahul Saraogi: Rule of Law Determines Depth of Debt Market

Thu, 18 Aug 2011 11:41:09 EST

Rahul Saraogi runs an India-focused investment fund and has spent the past decade researching and analyzing the Indian markets. He is managing director of Atyant Capital Advisors (India) and previously headed Meridian Investments, an India-focused investment company that managed assets for high net-worth Indians. In this opinion piece, Saraogi says it is the rule of law that makes all the difference to financial markets. The loopholes in the system are costing the Indian economy dearly, he argues.

CRISIL's Roopa Kudva: 'It Is Very Important for Rating Agencies to Be Transparent'

Thu, 02 Jun 2011 14:02:18 EST

In the wake of the global financial crisis, credit rating agencies have come under fire. Because they are funded by the very debt issuers they rate, questions have been raised about their impartiality. In an interview with India Knowledge@Wharton at the Wharton India Economic Forum earlier this year, Roopa Kudva, South Asia regional head for Standard & Poor's and managing director and CEO of S&P's Indian subsidiary CRISIL, offered her perspective on what role rating agencies play in the marketplace, why they should still be funded by issuers and what they can do to help mitigate potential conflicts of interest.

India's Revised FDI Guidelines: Are More Joint Venture Splits Likely?

Thu, 21 Apr 2011 15:29:28 EST

Foreign direct investment (FDI) in India has fallen sharply in recent times. In an effort to turn the tide, the government issued fresh guidelines on March 31. One key change is that foreign companies no longer need permission from their Indian joint venture (JV) partners before investing in another company in a related sector. Within a day or two of the announcement, a couple of high-profile JV break-ups took place. While that was a coincidence, experts say, those tremors may well be a sign of things to come as multinational corporations change from being partners to potential competitors.

Edelweiss Capital's Rashesh Shah on Why Financial Services Is a 'Very Local' Business

Thu, 07 Apr 2011 15:02:34 EST

Edelweiss, a rare flower found in Switzerland, was introduced to a wider audience through a song in the hit musical, The Sound of Music. At Edelweiss Capital, a financial services company headquartered in Mumbai, it is not so much the sound of music as the sound of money that is the driver. Chairman and CEO Rashesh Shah spoke to India Knowledge@Wharton about the company, the Indian marketplace, the problems and prospects facing the financial services industry and the role Edelweiss intends to play in the sector's future.

Indians Save, Americans Invest: Why Financial Literacy Should Accompany Inclusion

Thu, 24 Mar 2011 14:56:56 EST

It is a fact that education contributes to financial literacy. But such literacy can take different forms. Research by Sumit Agarwal, senior financial economist in the research department at the Federal Reserve Bank of Chicago and a visiting professor at the Hyderabad-based Indian School of Business, shows that while Indians know more about saving, Americans know more about investing. Overall, Agarwal finds that Internet-savvy Indians are 20% more financially literate than Americans. But those findings don't apply to the whole of India, particularly the rural areas that are the principal target of the government's goal of financial inclusion.

India's 2011 Budget: 'Quietly Laying the Groundwork' for Reforms

Thu, 10 Mar 2011 14:22:21 EST

This year, India's Union Budget was presented against a background of high-profile scandals, including the recent telecom scam that forced the resignation of telecom minister A. Raja. At the same time, a booming economy has allowed finance minister Pranab Mukherjee to refrain from imposing new taxes. In the latest budget, observers see a mixture of policy continuity and the potential groundwork for reforms in foreign investment and other areas. Yet Mukherjee's numbers are being questioned by some who feel that rising oil prices, caused by the unrest in the Middle East and North Africa, could stifle India's growth story.

The Global Economy in 2011: A Rocky Ride or Smoother Sailing Ahead?

Thu, 13 Jan 2011 14:26:05 EST

In the United States, most experts are betting that the economy will grow stronger in 2011, but they warn that high unemployment, a depressed housing industry and other problems could dampen growth. Meanwhile, the fate of the euro is still in question, and the specter of inflation looms large in China, Latin America and India despite their resilience to the recent global downturn. In the Middle East, observers expect renewed growth, but they note that resource constraints will become an increasing problem for the region. Knowledge@Wharton spoke with Wharton faculty and other experts to get their views on what's ahead for the world economy in 2011.

Capitalism vs. Altruism: SKS Rekindles the Microfinance Debate

Thu, 07 Oct 2010 12:54:12 EST

In August, SKS Microfinance, a company that extends loans of as little as US$20 to the poorest of the poor in India, became the first Indian company in the microfinance sector to have an initial public offering (IPO). While the IPO was successful, critics contend that microfinance organizations cannot do social good while maximizing returns for lay investors. In early October, SKS was back in the news for firing its CEO. What's next for SKS -- and its profit-oriented approach to microfinance?

Tata Capital's Praveen Kadle: Financial Inclusion 'Is Not Going to Be Achieved Overnight'

Thu, 09 Sep 2010 15:14:09 EST

Praveen Kadle, managing director and CEO of Tata Capital, has been with the Tata Group for the past 18 years in various leadership roles. In an interview with India Knowledge@Wharton, Kadle discusses a range of issues like the turnaround at Tata Motors in the early 2000s, the acquisition of iconic British brands Jaguar and Land Rover, and the key objectives at Tata Capital. India, Kadle says, needs to focus on financial inclusion, and he believes that the Tata Group can play a key role in making financial products accessible to the country's rural and semi-urban citizens.

HDFC Bank's Aditya Puri on India's 'Best Opportunity' in Financial Services

Thu, 29 Jul 2010 14:39:02 EST

After having escaped the wrath of the global economic downturn, Indian banking is upbeat, according to Aditya Puri, CEO and managing director of HDFC Bank. Opportunities abound for Indian banks as the country is poised to achieve double-digit GDP growth in two years, he says in an interview with India Knowledge@Wharton.