Knowledge@Wharton -- Finance and Investment

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.

Making Management Pay: Reining in Excessive Risk at India's Banks

Thu, 15 Jul 2010 15:25:59 EST

Public outrage over Wall Street bonuses has had a ripple effect on India's central bank, the Reserve Bank of India (RBI), which now wants to discourage "excessive risk" by curbing "perverse incentives" in senior management compensation at Indian banks. According to some experts, compensation caps could drive away innovation and talent. But the RBI must be doing something right, others argue, even if it is overly conservative, as India has thus far avoided compensation scandals similar to those in the U.S.

Mahindra & Mahindra Financial Services' Ramesh Iyer: Forging 'Strong Partnerships' in Rural India

Thu, 01 Jul 2010 14:56:36 EST

A transformation is underway in how rural India finances itself. In many parts, multiple income streams are reducing dependence on agriculture and bringing new business opportunities for banks and finance companies. Ramesh Iyer, managing director of Mahindra & Mahindra Financial Services, the biggest nonbanking finance company in rural India, shares his insights on emerging trends with India Knowledge@Wharton.

IMF Economist Kalpana Kochhar: Bullish on India, but the Pace of Reform Must Accelerate

Thu, 22 Apr 2010 15:07:10 EST

As countries struggle to keep their economies afloat in the midst of a global recession, what role does the International Monetary Fund play? Kalpana Kochhar, deputy director of the IMF's Asia-Pacific department and its country head for India, brings two decades of experience to her coverage of countries from India all the way to Australia and New Zealand. In an interview with India Knowledge@Wharton at the 2010 Wharton India Economic Forum, Kochhar explained why robust debt markets are so important for continued progress -- and how the IMF itself is engaging in reforms in response to criticism of its loan policies.

Public Sector Disinvestment: A Greedy Government?

Thu, 22 Apr 2010 15:07:10 EST

Public offers for Steel Authority of India Ltd. (SAIL) and Coal India Ltd. in the near future will go a long way in determining the success of the Indian government's efforts to raise US$9 billion through disinvestment this fiscal year -- one of the initiatives proposed by Finance Minister Pranab Mukherjee in his budget announced in February. But following some disappointing issues earlier this year, observers say the government is pricing these offers too aggressively to meet its target. Others question whether these exercises are truly disinvestment. As one critic notes: "The government has achieved its objective of getting the money … [but] has the ownership become wider?"

Growing Interest: Islamic Banking Expands from the Gulf to India

Thu, 25 Mar 2010 12:58:05 EST

Islamic banking – based on Shariah laws – has begun to make its way from the Persian Gulf region into India. Although the practice, which forbids interest payments, is not yet mainstream, a Planning Commission report in 2008 advocated the practice as being beneficial to some sections of backward society. Experts interviewed by India Knowledge@Wharton note that India, which has 160 million Muslim residents, could emerge as a major market for Islamic finance products.

'Prudent and Progressive': Why India's New Budget Gets More Cheers Than Jeers

Thu, 11 Mar 2010 13:50:56 EST

"Confident," "progressive" and "pragmatic" are just a few of the ways that India observers describe Finance Minister Pranab Mukherjee's annual budget that starts next month. Any concerns that the budget, which Mukherjee unveiled in late February, would throw the country's economic recovery off course were quickly put to rest with what many view as his deft handling of two major issues -- the fiscal deficit and the withdrawal of stimulus support. Wharton faculty and other experts weigh in on what the budget got right -- as well as what opportunities were missed.

Standard Chartered's Jaspal Bindra: 'This Is the Right Time to List' in India

Thu, 11 Mar 2010 13:50:56 EST

On March 3, U.K.-based Standard Chartered Bank (SCB) announced that profit from its Indian operations had surpassed US$1 billion for the first time. Flush with this success, the bank is preparing to raise between US$750 million and US$1 billion through Indian Depository Receipts (IDRs) -- instruments that are similar to Global Depository Receipts and would allow foreign companies to raise capital in India. SCB's listing will be India's first-ever IDR issue. In an interview with India Knowledge@Wharton, Jaspal Bindra, CEO of SCB's Asian operations, spoke about the bank's plans and why it believes others will follow its lead.

Growing Interest: Why Banks Are Reaching Out to Rural India

Thu, 28 Jan 2010 15:13:26 EST

Indian banks, especially those in the public sector, have made substantial efforts to tap the country's rural population. But expanding through branches has been a costly -- and largely unsuccessful -- endeavor. Instead, banks are depending on informal channels, such as local business facilitators who promote savings and other products, identify potential borrowers, collect and verify loan applications, and monitor borrowers' repayments. The real challenge, bankers and other experts point out, lies in financial education: helping the masses to understand these products, and the benefits of saving and investing.

IDFC Project Equity's Vikram Pant: 'In India, There Is Law; in China, There Is Order'

Thu, 14 Jan 2010 16:02:32 EST

In the years since it was founded in 1997, the Infrastructure Development Finance Co. (IDFC) has become a major funder of India's infrastructure upgrade. The company's Project Equity group manages the US$927 million India Infrastructure Fund, a venture fund that invests equity in infrastructure projects. What costs does poor infrastructure impose on the Indian economy? What challenges do infrastructure builders face as they invest in everything from renewable energy projects to roads and ports? In an interview with India Knowledge@Wharton, Vikram Pant, IDFC Project Equity's managing director, discusses these questions and more.

The Indian Economy in the Next Decade: Déjà Vu with a Difference

Thu, 14 Jan 2010 16:02:32 EST

As the new decade begins, India's economy seems headed for strong growth. Optimists predict the country's GDP could increase between 7% and 9% in 2010, stocks are likely to go up, and middle class consumption will continue to drive domestic demand. Still, experts also point to some problem areas, such as rising inflation and a widening fiscal deficit, which is close to 7% of GDP.