FINOMENAL 2016: Day 2: “Solving NPA Crisis”-Mr.Tamal Bandyopadhyay, Adviser, Strategy at Bandhan Bank Ltd, & Consulting Editor, Mint

Mr Tamal Bandyopadhyay started the lecture by explaining how the noise over NPA has become louder after Raghuram Rajan initiated Asset Quality Review. In response to which the banks started to announce huge provisions to deal with NPAs which led to huge losses.

If the bad loans include restructured loans and written off loans along with NPA, the percentage will be much higher i.e., if it is 9% now it will increase to 20%. Most of the public sector banks have high NPA and they blame the environment and economic eco-system for their current condition. But, private banks which co-exist in the same ecosystem have low NPA between 1-2% except for ICICI which has 4%.Public sector banks are inefficient in relative to private sector banks because they are culturally different. The employee selection process is not transparent and the talent pool is poor. Public sector bankers have little incentive to remain honest as the pay is low. Hence the sector fails to attract better talent pool.

Talking about the impact of NPA on banks, Mr Bandyopadhyay said that it will affect the health and profitability of the banks. The deposit and loan growth have come down to the lowest because banks are scared to give loans, which adversely affects the investment.

Mr Bandyopadhyay said that this can be solved through privatisation of public banks by letting the government control banks through holding companies. This will take the banks out of government wage structure and investigation agencies. But this is a politically sensitive issue as it might lead to the violation of Bank Regulations Act of India. Recently, the government launched Indradhanush, brought down its stake to 52% and provided huge capitalization to public sector banks.

Mr Bandyopadhyay concluded by stating that the surgical strikes on banks might have led to the death of few banks but it is a necessity and the positive part is that we are no more in denial and are finally recognising the problem.

FINOMENAL 2016: Day 2: “Markets and Banking in India” – Mr. Ajay Khandelwal, Research Analyst, BOI AXA and Mr. Saurabh Sharma, Associate Director, National Australia Bank

In an interactive session with the students of TAPMI, Mr. Ajay Khandelwal, Research Analyst, Bank of India AXA, threw light on the importance of studying the market. He explained as to how annual report analysis is must for a manager as it helps understand about the industry, economic scenario, capital acquisition and the kind of sales of the company. He stated, “If you are aware of a company, you will see its tangibility in numbers”. Further he explained about the criteria for selecting stocks, such as history, industry-knowing about industry dynamics, balance sheet analysis, profitability and so on. He further categorized stocks as slow grower (high dividend payer), stalwart (10-12% growth), fast grower (20-25% growth) and so on. He explained how cyclicals, asset play, turnaround story and beneficiary of trend changes help categorize companies. He went on to explain the value migration of various sectors such as IT services, Pharmaceuticals, Banking and telecom.

Mr. Khandelwal later mentioned about discounted cash flow and how it plays a part in evaluating a company. He stated that the size of opportunity in credit industry in India is large. He later stated the types of stocks one should avoid such as hot stocks, whisper stocks and rich valuation, to name a few. He summarized by suggesting the students to buy stocks of only those companies one understands and that too by small amount.

Mr. Khandelwal was followed by Mr. Saurabh Sharma, Associate Director of National Australia Bank, who gave an insight to the students about the various opportunities available to them in the world of banking. He explained that unlike the usual perception that banks offer opportunities only to finance graduates, there are ample opportunities for graduates of other streams in the banking sector. He stated as to how digitization, race of e-commerce and telecom companies and also risk mitigation is changing the Indian banking landscape. He also explained recent creative disruptions such as payment banks, small banks, UPI Gateway and wallets which is transforming banking sector.

Mr. Sharma further mentioned the vast variety of profiles available in banking sector such as asset/ liability, digital marketing, corporate communication, mid office, treasury operations, audits, etc. which spread across various streams such as product management, marketing, operations and so on. He concluded by suggesting to the students to focus on the profile that excites them and to keep tabs on the development in the same. He also advised them to publish their research and improve networking so as to increase their knowledge base.

Finomenal 2016: Day 2: Closing Ceremony

The Closing ceremony saw batch address by Prof Animesh Bahadur, Dean of Admissions, Mr. Harsh Upadhyay, Chief Guest, Prof Aditya Mohan Jadhav, BKFS- Area Chair & Convenor & Co-Convenor of Finance Forum, Ms. Shruthi Chander & Ms. Monica Veer.

Prof. Animesh Bahadur appreciated the events of FINOMENAL and explained how the events & guest lectures gave a glimpse of what the practitioners & veterans from the field of finance feel about this discipline. In his opinion, he felt that the events were fruitful and was positive that the students gained a lot from this 2 day event.

Mr. Harsh Upadhyay spoke about how the events must have given perspective to students who wish to make a career in finance and what it takes to be a finance professional. He also mentioned about how this must have been especially important for the BKFS students who are into a specialised finance program. He also mentioned about the importance of communication skills which will go a long way not only during placements but also in the corporate world.

Prof Aditya Jadhav spoke about how the Finance Forum has grown over the last 3 years. He applauded the efforts of the students, members of the various committees and the management for doing an excellent job for the event. He thanked Prof Animesh Bahadur, Ex-Director Prof RC Natarajan, Prof Seena Biju, Prof Madhu Veerraghavan, Prof Vidya, Alumni Relations Committee, Prof Surya Mahadevan & Mr Nayak & Mr Ananth Pai for taking care of all the organisational responsibilities.

The ceremony concluded with Ms. Shruthi Chander & Ms. Monica Veer expressing their thanks to all the participating teams for making the event such a success, Professors of TAPMI and the committees namely, the Student Council, Literary & Media Committee (LiMe), Welfare Committee, Alumni Relations Committee (ARC) & the Logistics Committee for their continuous support.

FINOMENAL 2016: Day 2: “Corporate Bond Market in India”- Mr. Atul Khadilkar, Member- India Management Committee and Head- Financial Institutions Group, South Asia (National Australia Bank)

Mr. Khadilkar started the lecture with discussing the usual financing options available to the corporates in India and where India stands in terms of the bond market in the global context.

A company starts with investing their own Equity in the business but there are other sources such as debts in the form of loans from banks and the bond market. Both the equity market and the debt market consists of a wide range of market participants. Drawing a comparison between loans and bonds, he explained how banks chose between loans and bonds. Loan in a bank is a bilateral arrangement and has its own risks and challenges attached to it, and is therefore no longer the most attractive source of income for them in today’s market. On the other hand, bonds are more standardized and liquid in nature. Unlike loans, bonds are also rated, which attracts a wide range of investor pool. So, bonds are better than loans in these aspects and therefore there is a need for the development of the bond market in India.

He also gave an overview of the Indian bond market in the global context, in comparison to some of the developed and developing economies like the US and Japan.

Talking about the creation of demand for bonds in the Indian market, he discussed why the country needs it in terms of infrastructure financing, GDP growth and the Government’s take on fiscal discipline. He also discussed the working of the RBI Working Group in the Indian financial market.

In the end, he concluded by discussing the various kinds of bonds avaiable to the investors today in the Indian market, how the bond market is evolving in the financial system and will bring about a sea change in the coming years for banks and corporates, not only in India but all over the world.

Finomenal 2016 – Day 1: Bloomberg Olympiad Finale

Four teams from N.L.Dalmia,SIMS Pune,TAPMI, and Great Lakes Institute of Management made presentations for the finale.
Mr. Gaurang Trivedi,Mr. Bharat Gupta,and Mr. Akshay Chinchalkar were the esteemed judges for the event. Mr. Joel Pannikot and Prof. Madhu Veeraraghavan also attended the event.

The participating teams were given a scenario with a $30 million hedge fund. They had to invest the money in three asset classes and use one technical indicator for each class.

SIMS Pune were the runners up and the host team, TAPMI secured the first place. We thank all the participants and guests for making the event a great success.

 

Finomenal 2016 – Day 1:”Accessibility to funds is crucial”- Mr. Tamal Bandyopadhyay,Adviser, Strategy at Bandhan Bank Ltd. & Consulting Editor, Mint

Mr. Tamal Bandyopadhyay, the author of Bandhan: The Making of a Bank took an interesting session on Bandhan Bank. He began with how Bandhan Bank was the brainchild of Chandra Shekhar Ghosh whose main idea was to make funds available to the poor & is more about entrepreneurship than about microfinance.

He began with how the Bank was launched on 23rd August, 2015 and mentioned about the founder who came up with this idea when he saw women vegetable vendors in Kolkata borrowing & then paying back a sum of 500/- along with interest of 5/-. This practice intrigued him and as he inquired more about this, he realised that it was more due to need of accessibility of funds. The vendors were willing to pay the nominal interest as this enabled them to have funds at their doorstep. The idea soon took shape and today, Bandhan Bank has about 2,022 branches and about 70 lakh customers. According to Mr. Bandyopadhyay, there are 2 types of entrepreneurship. First is E-Commerce wherein things are aggregated and funds are raised through investors. Second is businesses like Bandhan Bank which go beyond e-commerce & involve blood & sweat of people. And it is banks like these that make a difference in the lives of so many people.

There were several interesting anecdotes that he shared. Bandhan Bank got its banking license when no one believed that it would do so. In fact, the bank was even turned down by a major consulting firm when the firm was approached for advice. Further, the bank is considered very frugal in its operations and hence, it is very cost effective, has a high asset quality and a high return on equity. The difference between the funds it collects & disburses are deposited in a local bank. The bank has the lowest NPAs (non performing assets) of about 15 basis points i.e. for every 100/- lent, it loses about 15 paise, much lower than any of the private sector banks. Also, the customers of the banks, who are mostly women from rural areas have a strong sense of gratitude towards the bank.

The discussion was finally concluded with a Q&A session.

FINOMENAL 2016: ECHO – Panel Discussion – ‘Fear of Automation in Financial Industry’

Nilanjan Das, Deputy Head Asset Management and Wealth Management Centre Mumbai – Deutsche Bank

Mr. Nilanjan Das started the discussion by explaining the importance of automation in increasing the efficiency of financial transactions and in rightly maintaining the regulatory standards. Talking about the Indian banks Mr. Das mentioned that Indian banks are more agile in the implementation of automation. Mr.Das on Algorithmic trading and High Frequency Trading stated that the world has gone far ahead in terms of Algorithmic trading, so we should decide where the world is moving and where we want to be. He further advised the students, who are the fresh entrants to the finance industry to focus on the innovations happening in technology. About credit risk management Mr.Das elaborated on the importance of statistical data and the study of historical data in analyzing an entity’s credit worthiness. Regarding the market positioning of IT and non IT people Mr.Das stated that the focus should be on being a specialist rather than a generalist and highlighted the importance of continuous reeducation.

Ashwani Agarwall, Equity Analyst – Baroda Pioneer Mutual Fund

Mr. Agarwall started the discussion by stating that with the advent of more technical driven transactions, requirement of human intervention has gone down. Talking about the extent of automation, Mr. Agarwall stated that banking system in India can be broadly divided into three segments, private global banks, private Indian banks and public sector banks. The biggest advancements in automation has come in from the private Indian banks. They use data analytics extensively, evaluating about 120 parameters in 5 minutes. Global private banks are driven by standardization and widespread presence which hamper quick change. On the other hand, public sector banks of the country function more as social banks and have a lot to catch up with. He ended the discussion on a note that disruptions are caused by the external environment, not within the industry.

Gajendra Kothari, Managing Director & CEO – Etica Wealth Management Private Limited

Mr.Gajendra Kothari started the discussion by stating the quote of Jeff Bezos, “There is no point predicting what is going to change, we should focus on what does not change”. He further elaborated that it is the medium which changes and not the basic need. About the Indian ecosystem Mr.Kothari spoke about how the government schemes like Jan Dhan, Aadhar and Digital India are challenging the virtues of the world. He stated that competition can arise from unexpected corners and banks today are competing with Fintech companies like Paytm. On algorithmic trading Mr.Kothari said that an algorithm is as good as the human being who has designed it. About risk management Mr.Kothari stated that the efficiency of a risk management system depends on the amount of data it can crunch and elaborated on the importance of digital footprint in credit risk analysis. Mr.Kothari ended by asking the students to disrupt themselves by investing in knowledge before technology disrupts them.

Atul Khadilkar, Member – India Management Committee and Head – Financial Institutions Group, South Asia (National Australia Bank)

Atul khadilkar started the discussion by stating that automation helps mundane tasks to be done faster. Automation has brought in efficiency due to which people can add more value. The focus should be on the output that comes out of the automated system. He added that, in India automation is more relevant in the payment system. An emerging economy gets better access to technology. He focused on the aspect of fear that stems out of the automation process. The extent of risk differs from person to person. Automation should focus on solutions for the risk involved. He concluded the discussion by stating that Risk management automation should be looked at keeping in mind the stakeholders involved.

Mahesh A. Chhabria, Investment, Risk and Wealth Management Professional Entrepreneur – Mac Financial

With a dynamic career of 20 years in Investment Management, Fixed Income Markets, Risk Management, Credit Research, Quantitative Analysis, Treasury and Audit & Business Assurance Services, Mr. Chhabria believes that automation is not to be feared.

Mr. Chhabria agreed that although automation has increased the efficiency of financial processes, some cases of automation in the existing inefficient processes have shown signs of magnified inefficiencies. According to him, as much as there is a risk of unemployment due to automation, there is always scope of deploying human workforce in other inefficient systems.
In his take on high frequency trades and trading algorithms, he said, “Risks, Reforms and Regulations play an important role in the future of algorithm trading in India. We need to understand the functions of risks involved and the benefits of the reforms.”
He concluded by stating that Innovation is definitely the key in the financial services industry. The world is quite dynamic and anything can be linked to anywhere.