NishkaNishkaNishka A FINANCIAL NEWSLETTER

Crowd-funding

May 2014, Volume V, Issue 46

Christ University Institute of Management, Kengeri

Introduction to Crowd-funding

Upasana Gurung, F1

Crowd-funding as the name suggests, is a way of raising capital, to finance business

ventures. Capital is raised by collecting small amounts of money from individuals where the

business has ease of accessibility. Crowd-funding is done with the help of variety of partici-

pants who support the initiative. It

can also be done through social

networking websites such as Face-

book, Twitter, and LinkedIn.

Crowd-funding expands the pool

of investors by looking beyond the

conventional circle of owners, rel-

atives and venture capitalists. It has been inspired by „crowd-sourcing‟ where we see the

collective co-operation among people who network and pool their money together via inter-

net to support initiatives taken by other people or organizations. There are a variety of rea-

sons and purposes of crowd-funding; it can range from disaster relief to citizen journalism

to artists, and political campaigns. It can also be done to raise funds to build a school or so-

cial service organisation, to run a philanthropic campaign, to create and sell a new product

or a service or to even establish a company.

Michael Sullivan was the first one to use the word „crowd-funding‟ with reference to

„worldspy.com‟ in August, 2006. There are plenty of participants in crowd funding models,

which include people who are initiators, people who propose ideas and projects and also the

ones who support the idea. What happens in the later phase is that the initiators and the

crowd come together under one platform to support the initiative and invest in the idea.

Crowd-funding is like an online community or a social networking site, a group

around the world sharing an interest in funding a person, project, event, or a business. The

primary difference between cooperatives and crowd-funding is that the latter‟s network can

assemble and disperse at any time. It is also a matter of concern how the crowd is influ-

enced by the idea of raising funds for the purpose. Crowd-funding efforts could be a success

or failure depending largely on the crowd‟s psychology.

There are various advantages of crowd funding. Crowd-funding is a transparent way

of raising funds as the stakeholders know exactly where the money is coming from. It is al-

so an excellent way to measure the goodwill of the company and test check the willingness

of the supporters for a particular project. The fund raising campaign mostly happens online,

and hence incurs very little expenses for raising funds unlike the traditional methods. This

method of funding can also help to get niche or pilot projects off the ground.

Crowd-funding in Entertainment Industry

Challapalli Kalyana Karthik, F2

Media & Entertainment (M&E) industry is one of the largest industries in the world.

Due to the lifestyle and the opportunities thrown open by the advancements in technology,

the global Media & Entertainment industry today plays a key role in the economy. Current-

ly, the major business centers of filmmaking are based in United States, India and China.

Globally, film funds involving companies who specialize in financing films are a major

source of funding films with various investment prototypes to invest in a film project. How-

ever, in India, the dawn of film funds is still at an infant stage, though some banks ventured

into film financing more than a decade ago.

Nowadays, many films in India are being financed by organized sources like compa-

nies comprising of APO (Alternative Public Offering) funds, institutional/bank loans, pri-

vate equity/venture capital institutions. Off-late, Crowd-funding has turned out to be a new

method of financing in the industry. There are global Crowd-funding platforms like Kick-

starter, Indiegogo and Distrify and Indian platforms like Wishberry, Funduzz and Cata-

pooolt. Social networking sites are the means (mediums) to Crowd-funding.

Following are a few examples where Crowd-funding was successfully used in the en-

tertainment industry.

Anurag Kashyap Films and Sikhya Entertainment used Facebook to raise half of the

$300,000 budget for Vasan Bala‟s 2012 Cannes selection “Peddlers”. Although, Eros In-

ternational subsequently acquired the film. \

Mono-moniker Helmer Onir raised his entire $670,000 budget for 2010‟s I Am via Face-

book and Twitter campaigns, and produced the picture via his Anti-clock Films Shingle.

Placebo- a documentary by Abhay Kumar which was supported by Anurag Kashyap and

Guneet Monga also raised around INR 5 Lakhs with the use of Crowd-funding for its

marketing and distribution.

Lucia, an independent Kannada film made by an ex-IT professional, Pawan Kumar made

it big. The film, a psychological thriller, was made on a shoe string budget of US

$100,000. This movie became a revolution as the film had almost 600 producers. Lucia

is the first ever crowd-funded regional film. Pawan Kumar used the platform named Dis-

trify to create awareness of the film among potential international investors, and raised

his budgeted funding of US $100,000, mostly from the NRIs.

Naya Pata is the first independent film from Bihar which is being produced through

crowd-funding. Pawan K Shrivastava is the director of this film. Crowd funding helped

him to raise funds using various social networking sites and personal contacts. He used e

-mails to increase awareness about the project among all his contacts and asked each of

them to forward it to all their contacts. Funds started trickling in with about 30 per cent

of the funding received from absolute strangers.

India‟s Securities and Exchange Board of India (SEBI) does not allow businesses to

ask for funds on public forums in exchange for monetary returns, unless those entities are

registered as a public limited company. Most crowd-funded films offer investors rewards in

the form of Posters, DVDs, Blue-rays, electronic press kits and access to screenings and

premieres in lieu of cash. However, if the number of investors is fewer than 50, crowd par-

ticipation is allowed in exchange for equity.1

http://www.thewrap.com/movies/blog-post/seeking-film-finance-you-get-what-you-pay-

26315.

http://articles.economictimes.indiatimes.com/2013-04-13/news/38511296_1_kannada-

film-industry-lifeu-ishtene-first-kannada-movie

http://www.ibtimes.com/crowdfunding-2014-forecasts-equity-crowdfunding-takes-

1518870

Alternate Uses of Crowd-funding

Purnima Singh, F2

Crowd-funding is the collection of finance from a large pool of backer to sustain an

initiative, and this concept has been prevalent in foreign countries since 1884. Crowd-

funding is a relatively new concept in India. In 1884, the American Committee for Statue of

Liberty ran out of funds for constructing the Statue of Liberty when Joseph Pulitzer urged

the American Public to donate money for the cause and US $100,000 was raised in mere six

months. More than 125,000 people contributed for the cause with small donations. Using

Crowd-funding, visionaries have got investments in new technology; artists have raised

funds for their rock bands. Electric Eel Shock, a Japanese rock band raised money by offer-

ing people lifetime guest list and raised enough money to go for a world tour. Recently,

Crowd-funding has been used to finance movies. Crowd-funding has been put to marvel-

lous use by providing funding for NGOs; Crowd-funding has also been put to various other

specialist uses like free knowledge or open-source coding.

Crowd-funding in many of the above cases was used by companies or people when

they had issues with respect to accessing traditional capital (finance), but that is not the only

use it can be put to. People are also utilizing crowd-funding to seek wider validation of their

concept that is often new and ground breaking. Mr. Rob Thomson, a director of the famous

television series, Veronica Mars went to Warner Bros., requesting for funds as he wanted to

make a movie on the same theme but he did not get the required money from WB. It was

then that he looked to crowd funding as an alternative and specifically, approached Kick-

starter seeking necessary funding. He not only raised the money for the purpose but also

gained a lot of publicity and support of fans which contributed to the eventual success of the

film.

Crowd funding can also be used to fund education of children e.g. by using „Smart

Me‟ platform, students can request money for books and tuitions. In return, student promis-

es to maintain a certain GPA, give time to charity, or even promise certain years of work af-

ter graduation. One of the latest trends in crowd funding is raising money for academic re-

search with the launch of a new portal in April 2012 called Microryza.

There are many challenges in implementing crowd funding model in India, as people

are still sceptical about the use of online platforms, and industries are also not that investor

friendly. There are legal issues also involved as equity based crowd-funding is not legalized

in India.

India has seen a massive crowd funding success story many years before the term

was coined: the story of the Reliance Industries founder Dhirubhai Ambani. His small yet

growing textile business was crowd funded by communities across the Indian state of Guja-

rat.

To promote crowd funding in India, NCFA (National Crowd funding Association)

was formed which provides firms with a platform to raise funds. It has recently helped

Mumbai based bio-medical company BIOSENSE to raise funds amounting to about

$42,000 for its urine analysis application Ucheck. NCFA has also planned to raise funds for

acid attack victims by using the crowdsourcing platform.2

http://www.businessnewsdaily.com/5515-unique-crowdsourcing-platforms.html

Corporate Column

Sai Nanthini. R.K, F2

To gain insights on Crowd-funding, we interviewed Ms. Kanan Dhru, Founder &

Managing Director at Research Foundation for Governance in India and Mr. Ateet Ba-

jaj, Founder, Start51.

Excerpts from Kanan Dhru’s interview:

1. In your view, what is Crowd Funding?

A: Crowd-funding is a fantastic platform to reach people with your ideas. It actually helps in

seeking approval from the masses. It also helps us to understand what are our markets and

its feasibility.

2. Is it necessary to be a legal entity to post and raise funds?

A: The answer is Yes and No. We are still unclear about the legal restrictions. However, you

would need to be a legal organization to participate in equity, and lending crowd-funding.

Individuals can also take projects. They need not necessarily be incorporated. Especially

when donation or reward models are used, incorporation is not necessary.

3. Do platforms charge upfront fees in addition to the success fee on funds raised?

A: I'm not aware of any reward-based platforms serving entrepreneurs that charge an up-

front or posting fee. They charge around 10% success fees. Some platforms like Indiegogo

may charge upfront fees. It is basically to test the seriousness of the projects. Remember,

that it may take some out-of-pocket costs, such as creating a quality video production, to

make the campaign great.

4. Are there are any limitations to what a funding portal can do?

A: There are certain restrictions indeed. Once you start, one cannot change the amount of

the project. The number of days involved and the name of the project cannot be changed.

These restrictions are unpredictable. There are also certain restrictions posed by the JOBS

Act.

5. How does a crowd-funding intermediary look like?

A: There are not many intermediaries involved in India as this is an online platform. There

are certain difficulties we face while communicating certain things. Hence, it is an oppor-

tunity for people to enter into as intermediaries. It would be a great platform for all.

6. Can I crowd-fund if I want to keep my not-yet-patented product/invention confiden-

tial?

A: This is an interesting question. I would say that there is always a risk involved in any

project. It creates a mystery though. First, your project must focus on creating the excite-

ment/eagerness among people on what you are doing. Depending on the project, however,

you may be able to post a campaign without divulging the unique aspects you want to pro-

tect, meaning, you don't have to post detailed renderings of your invention. You can address

your project's benefits and what problems it solves, without revealing the design details of

how you'll accomplish this.

Excerpts from Ateet Bajaj’s interview:

1. In your view, what is Crowd

Funding?

A: A person gets up and says “I

want to clean….” You see him and

he continues “you think this will

solve the problem; if yes, come,

join, share and collect resources to

finally solve it.” The ones who feel

their „Wish to Clean‟ political sys-

tem matches that of Mr. Kejriwal

goes and funds. For those who

leave everything to fate, we crowd-fund our faith at many temples. This is how crowd-

funding is always been around. We are just trying to divert the crowds‟ energy through

technology and their ambitions.

2. Is it necessary to be a legal entity to post and raise funds?

A: Yes. You need to be a legal entity, a person who has a PAN Card, a Bank Account, a De-

gree Certificate and address proof is necessary to post the project online. Also, not to forget

the same legal entity (person) has to be in the pitch video which shall be used to raise funds

(if it is a company or organization, a person can run project on behalf of the organization

with authority and basic documents).

3. Do platforms charge upfront fees in addition to the success fee on funds raised?

A: I cannot speak for all portals prevalent in India or World. Start51 is an „all or nothing‟

crowd-funding portal; so when you win, we win. When the targeted amount is reached we

take reward of 5% of the total amount collected..

4. Are there any limitations to what a funding portal can do?

A: The first limitation is that there has to be creative enhancement on both the sides i.e. the

Creator (of the project) and the Contributor (to the project). If there is nothing new, it will

be your first limitation in crowd-funding space and there are some others which differ from

portal to portal like:

- Taking international funds.

- Giving stake/shareholding as reward.

- Running projects on multiple projects.

- Some SEBI and taxation norms.

5. What will crowd funding intermediates look like?

A: Incubation centres, co-creation spaces, self-help seminars, inter college activities, intra

college activities. Any platform that facilitates “Mind to Market” can use crowd funding as

a tool to make potential idea meet its “Angel Consumer (Investor)” aka the contributor.

6. Will fraud make crowd funding radioactive?

A: Fraud is radioactive. If someone can go on radio, ask everyone to help, and in this de-

mocracy being successful with his make-belief fake/fraud intention while asking for money,

can be radioactive for that person. Thus, investors need to be careful.

7. What role will state regulators play?

A: Crowd funding is like open virtual platform, which can be a tool for many intermediates

and also for various regulators-

- SEBI (for equity based crowd funding), RBI (for international crowd funding), IT (for tax-

ation model to be used by the project creator and contributor).

And Universities and educationists that can not only be the regulating body but also help

create the wave with the power in the hands of the crowd.

8. Can I crowd fund, if I want to keep my not-yet-patented product/invention confi-

dential?

A: You show me a two minute video, which emphasis the change/realizes the solution in-

vented by you without getting into how or what is possible. If the person watching/ reading

understands your passion and can empathize with your vision, you would get an investor.

There are a lot of people who think alike towards the solution of a problem. Not necessary

everyone wants to do it himself but most will tell you to “Do It” and “Share It” with them.

So the one who wants a particular “User Experience” towards a problem, will contribute if

the reward in return is proof enough that “Your Idea Works”.

RBI Column

Pawanpreet Kaur, F2

RBI caps WMA (Ways and Means Advances): All states of India (except Jammu &

Kashmir and Sikkim) are into an agreement with RBI, according to which all states

maintain a minimum reserve balance with RBI. Now whenever there‟s a mismatch be-

tween cash flow of receipts and payments of state government, RBI provides WMA to

the states in order to assist them to overcome these temporary mismatches.

RBI has the upper limit for WMA for the central government at Rupees 35,000

Crores for the first half of the FY 2015. There still exits flexibility with RBI to revise the

limits at any time when circumstances demand.

RBI to issue banknotes of Rs 500 and Rs 100 denominations in the Mahatma Gandhi

series with 2014 as the printing year. Currency of both the denominations will:

Bear the signature of RBI governor Raghuram Rajan.

Incorporate Rupee symbol on the obverse and the reverse side with inset letter „E‟

on both the numbering panels.

Help in curbing black money.

RBI open to merger of banks: Adding

more value to banking system and econ-

omy, RBI governor has said it is open to

the merger of banks. It could be done

only if:

Competition and stability are not

compromised.

Consolidations of large sized

banks with a view to have a few

global-sized banks and the desira-

Impact of new bank licenses by RBI

Aswathy Edison and Sudeshna Bhattacharya, F1

Pawanpreet Kaur and Niken Jain, F2

RBI on 2nd April, 2014, gave in-principle approvals to infrastructure financier IDFC

Limited and micro-lender Bandhan Financial Services Private Limited to start new banks.

This approval is valid for 18 months from the date of issue, and during these months, the li-

censee companies will have to comply with rules stipulated by RBI. A total of 27 entities

applied for the license in July, 2013 after a budget announcement in February, 2010 on giv-

ing out new banking licenses with an objective of promoting financial inclusion.

Chronology of banking licenses in India:

1947-1969: There was a spate of mergers and amalgamations, the number of commercial

banks in the country decreased from 640 in 1947 to 85 in 1969.

July, 1969: Fourteen major commercial banks were nationalized with the basic objective

of ensuring credit flow to priority sectors of the economy.\

April, 1980: Six more commercial banks were nationalized.

January, 1993: Reserve Bank of India (RBI) released guidelines and issued banking li-

censes to private entities. Ten new banks were formed on the basis of these guidelines.

They were:

Global Trust Bank, ICICI Bank, HDFC Bank, Axis Bank, Bank of Punjab, Indu-

sInd Bank, Centurion Bank, IDBI Bank, Times Bank and Development Credit

Bank.

January, 2001: RBI revised the guidelines for new bank licenses. Two new banks i.e.

Kotak Mahindra Bank and Yes Bank were formed.

February 26, 2010: Former finance minister and the current President Mr. Pranab

Mukherjee announced in his budget speech (for 2010-11) that companies and business

houses will be allowed to set up new banks.

August 11, 2010: RBI released discussion paper on entry of new banks in the private

sector and invited comments.

December 23, 2010: RBI released gist of the feedback received on the discussion paper.

August 29, 2011: RBI released draft guidelines for licensing of new banks in the private

sector and invited comments.

July 10, 2012: RBI released gist of the feedback received on the draft guidelines.

February 22, 2013: RBI released guidelines for licensing of new banks.

July 1, 2013: Last date for submitting applications for new banking license. RBI dis-

closed names of 26 applicants for new banking license – two of them dropped out while

one new player was added later to the list.

September 4, 2013: RBI Governor Raghuram Rajan announced setting up of a four

member committee headed by the former RBI Governor Mr. Bimal Jalan to screen appli-

cations received.

November 1, 2013: Bimal Jalan committee held their first meeting.

February 25, 2014: Bimal Jalan committee submitted their report to RBI.

March 12, 2014: RBI requested for Election Commission's permission to issue in-

principle approvals for issuance of banking license.

April 1, 2014: Election Commission allowed RBI to issue new bank licenses.

April 2, 2014: RBI granted in-principle approval to IDFC and Bandhan Financial Ser-

vices to set up banks. The in-principle approval is valid for 18 months from the date of

issue.

The committee scrutinized the applications, among others, on the criteria of business

plans and corporate governance practices by applicants. State run non-banking financial

companies like LIC Housing Finance, India Post, Bajaj Finance, and Anil Ambani promoted

Reliance Capital, Muthoot Finance, Religare, L&T Finance Holdings, India Bulls Housing

Finance Ltd also applied for the license.

Under the panel‟s scrutiny were the applicants and not the applications, since the reg-

ulator made it clear that only those with impeccable track record can be considered for a li-

cense and any investigation by a regulatory agency into any entity will disqualify such an

applicant. The candidates eligible to apply for a banking license were supposed to have a 10

-year track record and they should have never been under the scanner of any regulator, en-

forcement or investigative agencies.

Over the last few years, RBI had been pushing banks to make genuine efforts to pene-

trate into India's hinterland, and to increase lending to farmers, small traders and businesses.

The new banks that have got the license will have to open at least 25% of its branches in the

rural areas.

New banks will introduce new business models, new processes, new products and

new technologies which will increase the customer service, efficiency and the level of

productivity. Entry of new banks will play a vital role in shaping the Indian economy by

providing credit for the expansion of manufacturing and infrastructure sectors. The major

agenda for issuing new banking licensees is to focus on rural banking facilities, financial in-

clusion, priority sector lending target (40%), and technology innovation. Another agenda of

giving license was to redefine competition in the banking industry, which until now, is main-

ly dominated by government owned banks.

It can be a little risky as we have already seen the past condition of private banks

where not all private banks have managed to survive and prosper. A case in the point is mer-

ger of the Centurion Bank and Bank of Punjab with HDFC Bank due to lack of financial

strength.

According to a 2012 World Bank working paper, only 35% of the adults in India have

access to formal banking services which in itself is a great opportunity for the new banks. If

the new banks can tap into this customer base, they can try and maintain a long term bank-

ing relationship which would make it profitable for them, since an individual has different

banking requirements in different stages of his personal and professional life. Also, it is

good for any business to get their customers young, as it becomes easy in building and

maintaining the relationship with the customers.

Impact on Savings and Investment:

Savings and Investment is a major indicator to judge an economy, which is facilitated main-

ly by Banks and Finance Intermediaries. Now, these banks have come in with a purpose of

achieving the objective of Financial Inclusion chalked out by the Ministry of Finance in the

year 2010. The banks would thus be forced to open their branches such that each and every

individual (having the contractual powers) has an access to banking service. This would

help banks to be able to collect more funds in form of savings. Thus, by using the money

multiplier concept, they‟ll be able to generate more revenues (profits).

Now, as everyone will have access to borrowed funds, they can think of doing better busi-

nesses by being able to borrow funds from the banks and thus, there would be a spurt in the

investment side as well.

Threats- Non-Performing Assets (NPAs):

NPAs rose 50% for the calendar year 2013.Among public sector banks, SBI had the highest

amount of NPAs followed by Punjab National Bank and Bank of Baroda. Bad loans are like-

ly to rise further in 2014 as the lag effect on asset quality in relation to economic slowdown

has not yet peaked, reveals a study by Industry body Assocham. According to RBI data, net

NPA of the 26 public sector banks rose to 2.02 per cent during 2012-13 as compared to 1.53

in the previous fiscal. Net NPA of new private sector banks rose marginally to 0.45 per cent

as compared to 0.42 per cent.

The government has set aside Rupees 11,200 Crores for capital infusion into state-run banks

for the current financial year. But, as per Moody's Investors Service, this amount is less than

half of what Indian banks really require meeting the capital norms under the global Basel III

rules. PSU banks get a breather in the form of bailout package from the Government. When

it comes to private sector banks, they have to arrange for their own sources. An example of

the NPA problem in the private sector banks is the Global Trust Bank which was granted the

banking license in 1994 and the bank clocked NPA ratio of almost 20 % of its advances.

The highest NPAs, at 7.21% of advances, are the loans advanced to Small and Medium En-

terprises (SMEs), followed by Agriculture loans at 5.99%. Since the new banks have to open

25% of branches in rural areas, it would be difficult to avoid the NPA issue.

Reduction in profitability per customer/branch/employee:

Due to the increased number of banks in the market and targeting of certain customer base,

the profitability per customer will come down. When supply is more than demand, the pric-

es will come down to reach the point of equilibrium. In other words, the banks will be

forced to lend at lower rates to attract new customers due to which their profitability will be

hit. This may also result in bad governance. To save money on opening new branches or hir-

ing more employees, they may hire some Direct Sales Agents (DSAs) who would collect

money on behalf of the bank and they can also source some loans (business) for the banks

which would require a greater scrutiny on the DSAs or it may affect them adversely.

Finance Buzz

Vyom Goel, F2

Volcker Rule (US): A federal regulation that prohibits banks in the United States of

America from conducting certain investment activities with their own accounts, and lim-

its their ownership of and relationship with hedge funds and private equity funds, also

called covered funds. The Volcker Rule‟s purpose is to prevent banks from making cer-

tain types of speculative investments that among others, contributed to the 2008 finan-

cial crisis.

Love Money: Seed money or capital given by family or friends to an entrepreneur to

start a business. The decision to lend money and the terms of the agreement are usually

based on qualitative factors and the relationship between the two parties, rather than on a

formulaic risk analysis.

Gate Provision: A restriction placed on a hedge fund, limiting the amount of withdraw-

als from the fund during a redemption period. The implementation of a gate on a hedge

fund is up to the hedge fund manager. The purpose of the provision is to prevent a run on

the fund, which could cripple its operations, as a large number of withdrawals from the

fund would force the manager to sell off a large number of its positions.

Series-A Financing: The first round of financing undergone for a new business venture

after seed capital. Generally, this is the first time that company ownership is offered to

external investors. Series-A financing may be provided in the form of preferred stock,

and may offer anti-dilution provisions in the event that further financing through pre-

ferred or common stock occurs in the future.

Relative-Value Funds: A hedge fund that seeks to exploit differences in the price or rate

of the same or similar securities. The relative value fund trades on gaps, rather than the

price of a specific security alone. The relative value fund may take positions if the gap

between prices or rates is considered to have reached its peak and is expected to shrink,

or may take a position in a security, if similar securities are experiencing price changes.

Balassa-Samuelson Effect: Countries with high productivity growth also experience

high wage growth, which leads to higher real exchange rates. The Balassa-Samuelson

effect suggests that an increase in wages in the tradable goods sector of an emerging

economy will also lead to higher wages in the non-tradable (service) sector of the econo-

my.

Loan Participation Note– LPN: A fixed-income security that permits investors to buy

portions of an outstanding loan or package of loans. LPN holders participate, on a pro

rata basis, in collecting interest and principal payments on the underlying loan(s).

Market Round Up

B.S. Sravya, F1 and K. Alekhya, F2

Vodafone buys out Analjit, Piramal from Indian Arm for Rupees 10,000 Crores: Billionaires Ajay

Piramal and Analjit Singh have sold their stakes in Vodafone India to Vodafone Group Plc., enabling

the British telecom major to take full control of its local telecom venture. While Piramal Enterprises,

the Ajay Piramal Group flagship, sold the 10.97% stake for Rupees 8.9 billion, Singh sold his 24.65%

holding for Rupees 1.2 billion. (ET) (12/04/2014).

Sun Pharma makes open offer for Zenotech stake: Sun Pharma has evinced its interest in buying

Hyderabad-based biotech company Zenotech Laboratories, through an open offer to buy 28.1 per cent

worth Rupees 18.41 Crores ($3 million). The former recently bought out Ranbaxy in a US $4-billion

deal. (BS) (12/04/2014).

Suzlon Energy Sells Illinois Wind Farm to Ever-Power: Suzlon Energy took over the Illinois wind

farm in the US to recover US $208 million that was outstanding from client Edison Mission Energy,

which the latter had withheld accusing the Indian wind-turbine maker of supplying defective equip-

ment. (BS) (10/04/2014).

Ajay Shriram Takes Over as New CII President: Industry body Confederation of Indian Industries

(CII) has elected Mr. Ajay Shriram, the Chairman and senior Managing Director of DCM Shriram Lim-

ited as its President. Shriram succeeds Infosys Executive VC Kris Gopalakrishnan as the new President.

(ET) (29/03/2014).

Government to borrow Rupees 3.68 lakh Crores up to Sept in FY 2014-15: The government will

borrow Rupees 3.68 lakh Crores up to September in FY 2014-15, 61.5% of the total budgeted borrow-

ing for the year, leaving enough room for the private sector in the second half when the economy is ex-

pected to pick up pace. (BS) (29/03/2014).

Bandhan Raises Rupees 100 Crores from Geneva investor: Microfinance Company Bandhan Finan-

cial Services, who last month was awarded the banking license, has raised Rupees 100 Crores from a

Geneva based investor to improve its capital position. (ET) (26/03/2014).

Economic Rollers

Simmy Kumari, F2

Source: Finance Ministry, Office of Economic Advisory, HDFC Securities Report, Ministry Of Commerce,

RBI, http://www.tradingeconomics.com/india/

Rates (as on 1st April, 2014) Percentage/Amount

Repo Rate 8%

Reverse Repo Rate 7%

CRR 4%

SLR 23%

MSF 9%

Bank Rate 9%

Savings Deposit Rate 4%

Call Money Rate (Weighted average) 8.48%

91 days T-Bill (Primary) Yield 8.94%

364 days T-Bill (Primary) Yield 8.97%

10 years Govt. securities yield 9.02%

WPI 5.7%

CPI 8. 31%

CBLO 8.14-9%

Food Inflation 18.19%

IIP Growth 1.9%

Forex Reserves US $ 18492500 Million

Exports US $ 26, 752.4 Million

Imports US $ 36,665.9 Million

3. 1.

2. 5.

4.

10

.

7.

9.

8.

6.

Crossword

Samyuktha Reddy, F2

Horizontal:

3. --------based Crowdfunding, in which the backers essentially donate money to support a cause. Some-

times he/she may receive in exchange a "thank you", a special mention, or even a gadget, but in any case

the pledge is essentially a gratuity.

4. --------based Crowdfunding, in which the backer receives a reward with a clear monetary value in ex-

change of the pledge. The reward is often a product or a pre-series item that the backer helped producing

by pledging money. In this case the money pledged is similar to paying for a pre-order of a product or ser-

vice.

6. Success of which Kannada movie has brightened the prospects for a new model called 'crowd-funding'.

8. The Reserve Bank of India in 2011 approved -------, a non-profit microfinance institution to crowd fund

from the overseas.

10. ----------of India is an organisation to promote crowdfunding in India

Vertical:

-------based Crowdfunding (more commonly called Peer-to-peer lending or "Crowd-lending"), in which the

backer lends the money and receives an interest rate in exchange. In this case the money is pledged in the

form of a credit loan..

2. -------based Crowd-funding, in which the backer receives shares of a company in ex-

change of the money pledged. In this case the money is pledged in the form of risk capital.

5. Bangalore-based --------Technology Pvt Ltd, which provides a low-powered Bluetooth

device Gecko that can add gesture control to smart phones, has raised more than $54,000

from Indiegogo crowd-funding platform. Apple Inc. co-founder Steve Wozniak also con-

tributed

7. equity-based online crowd funding is legalised in the US recently when ----- act was

passed

9. India has seen a massive crowd funding success story many years before the term was

coined: the story of the Reliance Industries founder Dhirubhai Ambani. His small yet grow-

ing textile business was crowd funded by communities across the Indian state of -------.

7. equity-based online crowd funding is legalised in the US recently when ----- act was

passed

An

swers:

1.

Cred

it

2.

Eq

uity

3.

Do

natio

n

4.

Rew

ard

5.

Con

no

vate

6.

Lu

cia

7.

JOB

S- Ju

mp

start Ou

r Busin

ess Startu

ps A

ct

8.

Milaap

9.

Gu

jarat

10

. NC

FA

- Natio

nal C

row

d fu

ndin

g A

ssociatio

n

PhotoFind

Nilanjana Chatterjee, F2

2. 1. 2.

3. 4.

5.

6

Finance Quiz

Srinivas Rahul Chaganti, F2

1. The Entrepreneur Access to Capital Act (or the Crowd funding Bill) was passed by the

House of Representatives on __________.

2. The trend of crowd funding has been most pronounced in the ____________, the country

where the Internet was invented and which continues to see the most online innovation

3. Which of the Indian Institute of Management joins hands with Harvard, MIT and Berke-

ley for research?

4. The Reserve Bank of India (RBI) said banks should take into account the benefits of

credit guarantee schemes before pricing loans to the _________

5. India's 1st double-deck flyover opens in _______

6. ____________ has shortlisted Birla Sun Life Insurance, HDFC Life Insurance and Max

Life Insurance to sell the British group's 26 per cent stake in its Indian insurance joint

venture.

7. __________, ex-Goldman Sachs director, starts prison term on 17 June due to security fraud and con-

spiracy charges for having fed tips, from Goldman board meetings in the second half of

2008, to longtime friend Raj, founder of the Galleon Group hedge fund firm.

8. ____________net profit jumps 59%, beating estimates (Net income for three months ended March

rises to Rs1, 624 Crores, while revenue jumps to Rupees 8, 349 Crores).

9. How many firms are buying back shares worth Rs 6,000 Crores this year?

10. Nokia named _____________ chief executive officer (CEO), after selling its mobile

phone divisions to Microsoft Corporation.

An

swers:

1.

Novem

ber 3,2011

2.

United S

tates of Am

erica

3.

IIM-A

4.

MS

E (M

icro and Sm

all Enterprises)

5.

Mum

bai

6.

Aviva Inc.

7.

Rajat G

upta

8.

HC

L T

ech

9.

Five. (C

airn In

dia, D

CM

Sh

riram, Isg

ec Heav

y E

n-

gin

eering

, Gu

jarat Apo

llo In

dustries, an

d In

do

Bo

-

rax &

Ch

emicals)

10

. Rajeev

Su

ri

Answers of Crossword:

1. Logo of Milaap, an online fund-raising platform (a non-profit microfinance institution)

that enables people around the world to fund and impact communities in need of basic fa-

cilities in India. The Reserve Bank of India in 2011 approved Milaap to crowdfund from

the overseas.

2. Crowdfunding as a concept was known as early as 1976, when Shyam Benegal collect-

ed Rs 2 lakh from 5,00,000 farmers to fund Amul‟s ad film Manthan. He is Shyam Bene-

gal.

3. Anshulika Dubey and Priyanka Agarwal, founders of Wishberry, India's 1st online

crowd-funding platform.

4. Logo of National Crowdfunding Association (NCFA) of India is an organisation to

support, educate, and establish the Indian crowdfunding market.

5. Logo of crowdfunding website in India, Rang De, promoting social investment.

6. Actor, Director, Writer and Filmmaker Pawan Kumar, who successfully raised Rs 51

lakhs in 27 days to fund his movie “Lucia” (Kannada).

.

NISHKA TEAMNISHKA TEAMNISHKA TEAM

Nishka is a monthly finance magazine brought by the students of the finance club of

Christ University Institute of Management, Kengeri Campus. The idea behind coining this

issue of the magazine is to establish a learning among the students, which helps them to

gain an insight about the world of finance.

Faculty Coordinator

Prof. Shrikant Rao

Coordinators

Niharika Shadra, F1

Niken Jain, F2

Editor

George P Job, F2

Neha Mishra , F2

Introduction

Upasana Gurung, F1

Article coordinators

Ashwathy Edison, F1

Sudeshna Bhattacharya,

F1

Article writing

Kalyana KarthiK, F2

Purnima Singh, F2

Srijita Mukherjee, F2

RBI Column

Pawanpreet Kaur, F2

Finance Buzz

Vyom Goel, F2

Market Round-Up

B.S Sravya, F1

Katepalli Alekhya, F2

Economic Rollers

Simmy Kumari, F2

Stock Analysis

Sooraj Kumar, F1

Anwesh Jain, F1

Crossword

Samyuktha Reddy, F2

Quiz

Rahul Srinivas, F2

Photofind

Nilanjana Chatterjee, F2

Corporate interview

Sai Nanthini, F2

Designing

Krishnendu Kundu, F2

Niken Jain, F2

CHRIST UNIVERSITY INSTITTUTE OF MANAGEMENT, KENGERI CAMPUS

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