BUSINESS
RBI’s action against Paytm hurts Buy-Now-Pay-Later ecosystem
RBI’s invoking of Section 35A despite depositor’s savings not being as much at risk, as this was a payment bank, raises the question of whether a one-size-fits-all approach is appropriate. The Buy-Now-Pay-Later model evolved by FinTechs have great potential, and this calls for a new regulatory category
BUSINESS
Union Budget 2024: Make domestic demand drivers the central theme on February 1
The formula of capex driven growth is a proven way to continue economic expansion, but the model has its limitations. Policymakers must remain mindful of the real challenges faced by the households and their falling financial capacities
BUSINESS
In a reformed Monetary Policy Committee, members must be at odds with each other
The MPC must rethink its composition and not only look at an odd-numbered set-up but also the kind of representation it needs. Given the sheer diversity of the Indian macroeconomy and the complexity encountered in policymaking, a reformed MPC must include representatives of the financial institutions, along with the current composition
BUSINESS
A reformed Reserve Bank System can add depth to the corporate debt market
Globally, most major central banks dedicate a portion of their balance sheets to alternative securities. Over 30 percent of the US Fed balance sheet comprises corporate and municipal debt, valued at over $2.5 trillion. The ECB and the Bank of Japan have dedicated 5 percent and 6 percent of their respective balance sheets to corporate debt
BUSINESS
Is the RBI ready for its own privatisation?
India must move beyond the centralised department, that the RBI has become, to a Reserve Bank System, that is composed of multiple Reserve Banks across India’s diverse regions. The four ‘local boards’ located in Delhi, Mumbai, Chennai, and Kolkata can be developed into four regional Reserve Banks, each having its own governor and management board
BUSINESS
Systemic weaknesses in the Indian banking sector imminent. RBI must remain vigilant
While the RBI’s default models do give the market a sense of safety as things stand today, experience tells us that banking crises generally follow the domino theory and spread like wildfire
BUSINESS
Why India’s rising public capex is important for reducing its cost of capital
India’s gross fixed capital formation grew by just under 500 percent over a 30-year period, despite the recent spurt in public capex and infrastructure push. What this means is that India’s commercial banks are unable or rather unwilling to expand broad money and this in turn is keeping the rate of interest high
BUSINESS
India’s fighter aircraft manufacturing ambitions need inspiration from Maruti Suzuki
India must adopt an ecosystem building approach, just as was done by Maruti Suzuki in the 1980s. This is because supplier and vendor development will be critical for technology absorption and standardising manufacturing processes
BUSINESS
Why the RBI’s ‘higher for longer’ strategy may stoke inflation in the longer-term
Forced recession can at most subdue inflationary tendencies in the short term, stoking the inflationary demons to reappear later. The fact of the matter is that the RBI is forcing the Indian economy to return to a recessionary phase when the business cycle is yet to run its course
BUSINESS
Left guessing on terminal rate, bonds embrace economic uncertainty
The Indian bond market seems to be unsure of India’s economic performance as things stand and nothing explains this better than a flattening yield curve. As the terminal rate cannot be realistically predicted given the confusing MPC commentary, bond investors are no longer anticipating a significant return differential between the short and the long end of the curve
BUSINESS
After green bond issuance, India should consider its own Green New Deal
The thinking behind the green bond issuance is to seek out international investors, who give climate change mitigation a priority and help India achieve its climate change targets
BUSINESS
A contracting RBI balance sheet detrimental to systemic stability
The RBI must tap into the foreign currency holdings of commercial banks in exchange for INR and replenish its non-issuing operations
BUSINESS
To escape the middle-income trap, India must push the productivity envelope
Countries succeeding in achieving high per capita income within a short span of time have been those that have realised the importance of Total Factor Productivity early on
BUSINESS
Why US Fed must extend dollar swap lines to BRICS central banks
With a capital of $100 billion, the BRICS Contingency Reserve Agreement is touted to be a possible alternative to the US Fed’s Foreign Currency Liquidity Swap Lines, acting as a liquidity manager for BRICS nations
BUSINESS
What the MPC tells us about RBI’s communication strategy
With the addition of the geopolitical variable, while the tone of the central bank’s communication strategy has slightly changed, it remains to be seen until how long it manages to temper market insecurities without materially changing its policy stance
BUSINESS
How India’s PE/VC industry evolved during COVID-19
As the economy normalises, the VC/PE industry is expected to look at India with higher firepower. Global trends are pointing towards a renewed interest in consumer staples, BFSI, and ITES, all recording growth in total deal value
BUSINESS
Budget 2022 | Infrastructure push is the holy grail for India’s $5 trillion target
Now that India’s private industry clearly needs a hand to hold, the country’s very own ‘New Deal Moment’ has arrived, and the government must not shy away from firing all cylinders to safeguard India’s economic potential
BUSINESS
India’s multibillion dollar semiconductor push needs military backing
India can differentiate itself from its competition by offering a sovereign guarantee to moving supply chains through military commitments as far as India-centric backward and forward linkages are concerned
BUSINESS
As India’s capital market grows, so will the demand for a sentiment index
This is just a start, and India’s steady economic rise will only bring in more capital from both domestic as well as foreign sources. It is important that tools are made available that can seamlessly deliver the pulse of the market to all participants at any given time
