The MFC Journal

» The XXVIth Annual Convention of DFS

» Upcoming AFCON Events

» Arvneeti

» Industry Interaction

» Where Emerging Markets Stand Today

» Making Of A Death Trap

» Is The Indian Banking Sector Vulnerable To Crisis?

» Economizing The Bidding Process:

The IPL Auctions Are Back

In This Issue

The Department of Financial Studies, University of Delhi conducted its flagship event, the XXVIth Annual Convention on the 21st of September, 2013 at Hotel Le Meridien, New Delhi. The Master of Finance and control (MFC) programme, the flagship course of DFS, with its two year curriculum offering a specialisation in finance, has redefined the paradigm of finance education in the country. In order to gain a better insight into the present scenario of the financial world, the student body of DFS (AFCON) organise the Annual Convention because they believe that academic teaching is incomplete without a healthy interaction with the industry leaders and the global business community. The event provides the perfect platform for policy makers and thought leaders from the industry, academia, and the student populace to come together to share and exchange ideas under various domains.Dr. Subramanian Swamy, member of the BJP party and a renowned academician, activist and economist, graced the occasion with his presence and enriched the views of those who attended the event. In his speech, he emphasized the importance of a developed financial system and said that it is a prerequisite for a sustained

economic development. The students of DFS had the privilege to host Mr. Ajay Bagga, MD, Deutsche Bank, as the keynote speaker. He gave his views on the current Global Economy and the Global Financial Order. He also enumerated some of the challenges that lie ahead for the Indian Financial system. The theme of this year's Convention was “The Indian Economic Order: Exploring New Dimensions”. The event revolved around this central theme that highlighted important issues and challenges in the domain of finance and enabled the attendees to understand the myriad opinions and solutions to them. The event comprised of two panel discussions and two technical sessions. The topics for the panel discussions were: Banking in India-The road ahead and; Corporate Governance-Towards Better Managed Companies. Some prominent professionals from the industry participated in the panel discussions and put forward their views and suggestions regarding the concerned issues. The technical sessions covered the intricacies of NBFCs and Innovation in Financial Products.The event was a great success and the conjugated hard work of the senior and the junior batches paid off.

The XXVIth Annual Convention of DFS

Upcoming AFCON Events

Corporate Leadership SeriesIt takes more than just the knowledge imparted within the confines of a classroom to produce leaders. For this purpose we conduct a series of interactive sessions with key executives and corporate leaders of the industry. The aim of the exercise is to have our students interact with the leaders and achievers of various domains. We believe that there is much to be learned, not only in the way of the expertise and knowledge that those at the helm inevitably attain, but also in the way of their journey and experiences. Not only is the programme beneficial, it is also motivating for the students to interact with the personalities that they strive to emulate. For the upcoming edition of Corporate Leadership Series corporate giants such as Yes Bank, HCL, Pulsar Knowledge Center, EXL and Wipro.

HR ConclaveThe upcoming HR Conclave is a part of annual roster of events, organized by the Department of Financial Studies, aimed to promote holistic learning at a specialist, managerial and executive level to expose the students to new concepts and emerging issues in areas other than finance that are as critical to the organization. Several notable corporates, who are stalwarts of their respective fields in both government and private sector, have been invited for the event.

Travel & LearnThe Travel & Learn program is a unique and one of the latest additions to our initiatives. Academic learning should be aligned with the needs of the industry so that students are equipped with the skill set required to meet the demands and challenges of competition. This gap can be narrowed down through a coordinated approach ensuring closer interactions among industry, institutions and the academia. The Travel & Learn program helps students to imbibe the practical financial knowledge through means of short industry visits and training sessions. A training session explaining the core activities and know-how helps the students to understand the industry better. The program received overwhelming response last year and students had the opportunity to visit the reputed institutions MCX-SX, Care Ratings, Nomura, HDFC fund, Kotak Mahindra Bank and SEBI.

Association of Finance & Control (AFCON)

Student Body of

Department of Financial Studies

University of Delhi

Presents

South Campus

University of Delhi

21 2014Februaryst

ARVNEETIstrategy to prosper

RANNEETIBusiness Plan

PREHELIKAQuiz Competition

KhazanaTreasure Hunt

AD-MADMarketing

Share BazaarEquity research

SanskritiCultural Night

Prizes

worth

1,00,000!

}}

RanneetiBusiness Plan Competition

The meaning of Ranneeti is strategy. The

inception of any business starts with constructing

a blue print of it. A good business plan is

indispensable and can help in devising a great

vision for the company. And as it is said that if

you don't know where you are going, you'll end

up some place else.

We are providing a platform for budding

entrepreneurs in the form of this competition to

showcase their strategic and business skills

before renowned judges from esteemed

organizations.

Share Bazaar

Equity Research

People often panic when the markets go down

and sell off their stocks - but then they aren't in

the game when the tides turn. Share bazaar is an

opportunity to research across the stock

spectrum and showcase your stock picking skills to the entire B School Community. So put on

your thinking caps, prepare a research report with a long-term outlook, justify a final

recommendation of 'buy' or 'sell' & win exciting

PREHELIKA

Quiz Competition

From something as mundane as a ubiquitous

logo to Maslow's Heirarchy of Needs, do you feel

you know it all? Can you bet on your speed and

reflexes to take the ultimate dare? If you are

looking to put your grey cells to test and battle it

out with some of the best brains in the B-School

universe, Prehelika is the place to be.

Prehelika is a two-stage quiz where teams will first

be subject to an online quiz and subsequently

shortlisted for the big battle on campus. So

sharpen your impulses and don the smart hat for

the day!

AD-Mad Marketing

What does it take to sell a comb to a bald man?

Fish to a vegetarian? Or a raincoat in the summer?

Do you think you are talented enough to convince,

confuse or cheat? If yes, team up with your friends

and create magic on stage through your marketing

skills!

KhazanaTreasure Hunt

Treasure hunt at MFC has everything from brain

wrecking clues to exciting prizes for those who

trace it first. Gear up to discover the bizarre hints

and explore the beautiful sixty six acre university

campus.

Sanskriti Cultural Night

After an exhausting day rejuvenate yourself at our

cultural night Sanskriti, the crucible of our rich

heritage showcasing our diversity.

Arvneeti

prizes.

Industry Interaction

AFCON, the student body at MFC was delighted to host senior representatives of BlackRock Solutions India, Mr. Kapil Arora (Head of BlackRock Solutions in India), Mr. Sanjeev Malik (Managing Director and Country Head of BlackRock India) and Mr. Prakash Toppo (Director & Head of Human Resources for BlackRock). Mr. Kapil Arora is responsible for establishing and managing the Financial Markets Advisory and Client Solutions teams in India. In addition, Mr. Arora is actively involved in managing the Financial Modeling Group, Portfolio Analytics Group and the Solutions Center. Mr. Sanjeev Malik, apart from being the Managing Director and Country Head of BlackRock India, is also the APAC Regional Head of BlackRock's Aladdin & Technology (A&T) Group and is responsible for the local coordination of A&T global initiatives and support of regional technology needs.

The esteemed gentlemen visited the campus for the purpose of providing the students with an opportunity to work for BlackRock as well as engaging with the students in an interactive session. This session was conducted as part of the rich culture of student-industry interaction here at the Department of Financial Studies, University of Delhi. The session incorporated facets of corporate financial environment and various real life challenges faced by professionals in the industry and also comprised of the corporate culture at BlackRock along with the company's current standing and dynamics. The speakers present were not only very well qualified to share their knowledge on these topics but had a vast experience in the field, thus enlightening the students with hands on advice on how to become successful professionals in the future.

BlackRock Solutions

As a part of MFC's student-industry interface program, a guest lecture was recently conducted by Mr. Bhupinder Singh (Vice President, Strategic Planning and Analysis) and Mr. Vinay Gupta , both part of the Business Advisory Group at Pulsar Knowledge Centre . Both speakers are vastly experienced finance professionals, each having worked for over a decade across various renowned organizations in the financial sector. The focus of the discussion was credit rating analysis of a bank and the rating methodologies used by major credit rating agencies like S&P, Moody's and Fitch. This was explained with the aid of a presentation on a key project that was undertaken by PKC for a major bank to help them secure a better credit rating from the Moody's credit rating agency. It was an interactive session with active participation from the students who chipped in the discussion with various questions on the technicalities involved in credit rating analysis. The discussion involved a detailed analysis of the various rating parameters that are used by credit rating agencies, Mr. Gupta emphasized on the importance of qualitative factors such as franchise value, risk positioning, regulatory environment and bank's operating environment. These factors are assigned a high risk weight of 70% while rating a bank. Other category of factors includes quantitative factors such as a firm's profitability, liquidity and capital adequacy. The speakers also discussed a number of important KPIs that are looked at by credit rating agencies. After the enlightening session, PKC also participated in the internship process for first year students at MFC.

Pulsar Knowledge Centre

Where Emerging MarketsStand Today

Anjul Pratap Singh

After enjoying their heydays in the last decade, emerging markets seem to be losing their sheen now. If we go by the headlines these days, currency devaluation, timid export, lackluster growth are all coming from these markets which were expected to outpace the advanced economies by a wide margin in terms of growth back in 2007. So is yet another emerging market crisis overhanging?Recently we witnessed the worst sell off in the emerging market currencies in the last five years. The Turkish Lira slumped to a record low, South Africa's Rand fell to a level weaker than 11 per dollar for the first time since 2008. Argentine policy makers devalued the Peso to the record low in 12 years. Venezuela also devalued its currency and running with the international reserves at 10-year low. Ukraine's Hryvnia dived down over the concern of anti-government protest. Russian Rubel, Brazilian Real and Indian Rupee all felt the heat of the current downturn. Chinese slowdown raises concern about the

growth outlook of the countries which are heavily reliant on the raw material export to China (like Brazil's iron ore and Chile's copper). Indian growth engine also slowed down to some 5%.To get down to the causes of this downturn in emerging markets, let's first look at the factors which propelled the boom in these markets in the early 2000s. In reality, the growth of the BRICS and other emerging markets was driven by: the low starting point or base of development, unutilized workforce, cheap labour, and favourable demographics. The 2008 crisis, which wreaked havoc in developed economies, also caused a sharp slowdown in emerging economies. To restore growth, emerging markets switched to development models more reliant on credit. Now double-digit credit growth was the driving factor for the economic activities across economies in these markets like China, India, Turkey, Brazil and many others.This credit driven revival led to domestic credit expansion to

finance investment and consumption growth and also augmented by foreign capital inflows, driven by the perceived superior economic fundamentals of emerging markets (EMs). Availability of funds and low interest rates fuelled speculative investment and borrowing, pushing asset prices to record highs.In the last 15 months, concern about the development in EMs has increased. With the slowdown in growth of BRICS nations, the situation is aggravated by recent capital outflows driven by the fundamental concern about EMs and US monetary dynamics. Improvement in US economy now has led to the prospects of further scaling back of the bond buying by Federal Reserve. So the credit driven growth of EMs is in a plight as investors now running back to developed markets to reduce their risk of investment. EMs are now stuck with the huge pile of debt they have created in the last decade.Total debt to Gross Domestic Product above 150-200% of GDP is now common. Bank credit has increased rapidly and is above the levels of 1997 (as percentage of GDP) in most countries. Many corporations in China, South Korea, India and Brazil are highly leveraged. Many borrowers are struggling to repay the debt. Losses are currently hidden under the head- non-performing loans in countries like India. Fiscal deficit, income inequality, corruption, hostile and difficult business environments, excessive concentration

of economic power in heavily subsidized state corporations and political rigidities increasingly compound the problems of debt and capital outflows. Political instability exacerbates economic problems, for example in Brazil, Turkey, South Africa and India.To answer whether we are going to witness the yet another emerging market crisis like the Asian crisis of 1997, we also need to look at the notable changes took place in these markets in last 15 years. Although the growth is stymied by various problems discussed above, emerging market economies have larger holding of foreign exchange than in the past. These countries can allow their countries to depreciate modestly as capital flows out to increase their export and clamp down the imports-thus keeping their current account deficit in the comfort zone. We also need to understand that now sophisticated investors don't invest keeping generalities in their mind but cherry pick the countries on the basis of their fundamentals. Market will punish those with the bad policies and politics but those with strong fundamentals and good policy environment will also be rewarded for sure. So the whole question comes down to the individual country in the band of emerging markets. How these countries are going to grapple with the problems specific to them and how sustainably they will wriggle out of the current mess, created by them only, will decide their future.

Making Of A Death Trap

Ashish Jain

As seven times Formula 1 world champion Michael Schumacher is battling for his life after the ski accident, so did many of the Indian companies after the 2008 crisis.Ever since the economy has slowed down after the 2008 subprime crisis, Indian companies have found it tough to pay back their loan obligations. With demand slowing down and input costs rising, the earnings have taken a hit, and the drying cash flow has made it difficult to service debt.Companies across sectors are jammed in a debt trap, which has turned into a ticking time-bomb ready to explode any time. Once this time-bomb explodes, it will have rippling effect across the Indian economy. Data shows that companies are not making enough money to even repay the interest on their debt. Even after 5 years, many of the companies are still grappling with the high debt and finding it very difficult to overcome it. Moreover the condition is in such a stage that some of these companies have to borrow just to pay the interest on their past obligations.

But what happened in such a short time that led to the above condition? It started during 2003 when economy was booming, there was huge demand in the market, margins were thick and interest rates were low. Thus companies took these conditions as a perfect time to expand and diversify using low interest debt available to do so. Many companies borrowed recklessly till 2008 and continued with the diversification and expansion plans, until 2008 crisis of US subprime crisis and failure of Iceland banking system which had domino effect on the whole financial world. This is when the bubble of low interest rate, high demand, and thick margin exploded. The money that these companies thought they will make of the ongoing boom run to repay the debt obligations never came thus leaving them in a dilemma of how to repay the debt. But these were just the beginning of the problems that were about to knock the door of economy and particularly these high debt laden companies.Now one would argue that if domestic interest rate are high why not borrow from abroad where debt is

available at lower interest rate. A valid argument I would say but the sharp decline in rupee's value has had a similar effect on foreign borrowings. Depreciation of rupee value in comparison to many leading foreign currencies has nullified the low interest foreign debt. Thus, another door closed for the debt-laden companies.Interest coverage ratio is one of the parameters through which one can measure the depth of the trouble a debt ridden companies.This ratio—expressed as earnings before interest and taxes, divided by interest expenditure. If it is less than one, it means companies are not generating enough cash flows to meet their interest payments which again are adding to the existing overload debt burden. This is worrying for both investors and lenders. What magnify the above is that these problems are mostly in capital intensive sectors such as iron & steel, power and

construction.Companies can use CDR (corporate debt restricting), cut-off in inventory level, selling non-core business and exiting non-viable projects as a part of turn around. Firms like Suzlon, GMR Infrastructure, Ashok Leyland, DLF et al have already begun the above exercise. For instance, wind energy major Suzlon Energy, which obtained a $1.8 billion restructuring package early this year, is trying hard to turn itself around.One can blame government for red-tapism& bureaucracy, promoter's exuberance, company's over-zealous commitment or rosy projections about the future but the problems are here to stay. Nonetheless, the principle debt has been decreasing from the peak levels but at a snail's pace. As of now companies need to stay put to survive and take tough decisions for a comeback.

Company Total Borrowings (Rs.cr)

Interest outgo (Rs.cr)

PAT (Rs.cr) Interest Coverage Ratio

Suzlon energy 14,971 484 -782 -0.59

Ashok Leyland 4,895 124 -25 0.99

Jet Airways 9445 253 -894 -1.65

MTNL 11,926 347 -947 -0.68

Adani Power 40,609 1,073 -1,072 0.63

Lanco Infratech 31,377 719 -576 0.64

Ranbaxy Labs 5,735 111 -454 -2.51

Bajaj Hindustan

5,345 168 -509 -1.25

Indiabulls Power

8,857 38 -26 0.95

*figures are as of Dec, 13

Is The Indian Banking Sector Vulnerable To Crisis?

Ganesh Mehta

Banks play a crucial role in shaping and boosting any economy by acting as an intermediary between those who have financial means at their disposal, and those who are in need of funds. In this way banking helps to maintain a balance between demand and supply of funds. For evaluating the current performance and future outlook of an emerging economy like India, sustainability and profitability of the banking sector in the country is indispensable. The total

Sonia Kumari

assets of the Indian banking sector has reached USD 1.5 trillion in FY12 from USD 1.3 trillion in FY10, and is expected to reach USD 28.5 trillion by FY25. Total lending and deposits have increased at CAGR of 22.8 per cent and 21.2 per cent, respectively, during FY 06-13 and are further poised for growth, backed by demand for housing and personal finance. (Source: Aranca Report).

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

2008 2009 2010 2011 2012 2013

Public Sector Banks

Private Sector Banks

Foreign Banks

All Scheduled Commercialbanks

Fig 1-Ratio of Gross NPA To Total Gross Advances (Source: RBI Statistics Report)

Some characteristics which ensure a healthy and growing banking industry are high net interest margins with low NPA's, high and stable Capital adequacy ratio, perfect mix of income generation from various resources, good internal capital generation, active capital markets, government support and transparent regulation framework . The quality of banks' earnings cannot be judge solely on the basis of their profit or losses' figures; mix of different assets namely standard, sub-standard, doubtful and loss assets plays a critical role. Banks' having an increasing income with poor credit quality of their asset base proves to be a threat for to their long term existence. In fig-1, ratio of Gross NPA to Total Gross Advances increases to 3.84% from 2.33%, 2.97% from 1.91% and 3.42% from 2.39% for Public sector Banks, Foreign Banks and All Scheduled Commercial Banks respectively which imply that either NPA's are increasing or Total Gross advances are decreasing.Capital Adequacy ratio which is maintained as a ratio of capital (Tier1 + Tier 2 Capital) to total risk weighted assets (risk weights as per BASEL II) is a very crucial indicator for analyzing a bank's performance. This was close to 14% as on March 31, 2011, and is currently around 12-13% for PSU's. Low capital adequacy ratio with increasing Gross NPA to total Gross Advances is a concern for the Banking Sector.From 2010-2012 with an average growth rate of GDP above 6%, the Banking sector was growing reasonably well. FY13 and the ongoing FY14 have proven to be challenging for the Indian economy as well as the global economy. Indian economy is struggling with the trinity problem of high Inflation, high current account deficit and lower growth. On the one side of the coin, India is striving with an uncertain political environment, non-transparent regulatory framework which negatively affects investor sentiments and growth prospects of the country, on the other side the US Federal reserve tapering and other global

events affect the Indian economy on the global front. RBI, the Central Bank of India lays down rules and regulations for efficient functioning of the banking sector and investor protection, keeping in view the desired targets of the Government of India in terms of Monetary and Fiscal Policy. To regulate demand and supply of INR and for investment and trade enhancement, the RBI sets policy rates (Repo and Reverse Repo) and rest of the money market rates change accordingly. Under the Fiscal policy, the RBI on behalf of Government of India decides limits for priority sector lending, small and medium size industries to grow economy as a whole in terms of employment creation and standard of living. A depressed economy increases NPA's for the Banking Sector due to Priority sector lending and slowdown in various sectors like real estate, coal & mining and the infrastructure sector which are all heavily dependent on banks' borrowings.The Banking Sector is a growth driver for an economy. Credit Quality of banks' asset and economic conditions can change the game within seconds from that of a winner to a loser. Some of the main causes of the Eurozone debt crisis were easy credit conditions during the 2002–2008 period that encouraged high-risk lending and borrowing practices, the – 20082012 global recessions, fiscal policy choices related to government revenues and expenses and choices of government in bailing out the institutions. Similarly, Sub-prime mortgage crises also worsen because of sub-prime lending with low interest rate and easy credit conditions. Now the question arises: “Is the Indian banking sector vulnerable to crisis?”We are trying to answer the stated question by analyzing the banking sector NPA's and scrutinizing the causes of the NPA's. The last section will cover recommendations and the future outlook of the sector.Assessing NPA'sIt is evident that the major concern of the banking

–

sector in India is the rising NPA's banks have had to bear over the recent period. The boom of the 2000's pre the global financial crisis saw huge investments in emerging markets. As a result there was a surge in liquidity and demand in India backed by a high growth never witnessed by the Indian economy. This led to huge disbursements of credit by banks. However with the changing scenario and high inflation in the Indian economy the Reserve Bank of India took to a tight monetary policy which led to high borrowing costs and thereby rising bad loans by companies. Scheduled banks recorded Gross NPA's as a percentage of total advances of 3.4% as at March 2013. Industry estimates place this figure at 4.4% at March 2014.Public sector banks in India are worst affected by bad loans as they have to face government guidelines and pressures being dominated by the political circle. Public sector banks which account for 76% of total gross advances in the banking sector have seen a 32% CAGR in Gross NPA's since 2008.In the past two years itself the Gross NPAs grew by greater than 40%. Majority of the lenders which borrowed from public sector banks have been infrastructure companies and farmers both of which have seen a muted demand over the past few years on account of stagnant growth. These figures indicate that it was no surprise that the Reserve Bank of India issued a paper in December 2013 on recognition of financial distress and revitalizing distressed assets in the economy. NPAs in the Private Sector grew approximately by 9% CAGR since 2008. Private Banks have had the advantage of diversification of their credit base adding security to their assets. However, foreign banks in an attempt to compete in the Indian markets have seen a growth rate greater than 20% in their NPA's in the past two years.Dissecting the causes of NPAOn scrutinizing the NPAs of public sector banks or nationalized banks it is witnessed that in 2013,

58% of the NPAs were generated by the non-priority sector and the priority sector which is often accused of being the non performing sector has accounted for around 40% of the NPAs. Among banks in the SBI Group itself, the NPAs of the non-priority sector have grown by 54% in 2013 compared to an 11% increase in priority sector NPAs. To further assess the causes of NPAs in the non-priority sector there has been a drastic fall in credit demand across sectors besides witnessing a negative growth in Industrial input production of -3.1% as at March 2013. Total bank credit has seen a decline of 14.9% by June 2013. The major industrial sectors that support the banking structure have all had negative bank credit growth, these being petroleum, metals, mining, textiles and chemicals. The worst affected sector has been the real estate sector which has contracted due to an oversupply backed by high real estate prices and a falling demand in an illiquid market. Under such circumstances banks which fed these sectors with debt at times when they were booming have a difficult time recovering money in today's market.The question any responsible banker would raise is; why have banks taken to such easy loans over the years? Since the problem of NPAs has only increased in recent years, why haven't policy makers or the administrators taken action all this while? One major cause outlined by most bankers is the issue of restructured debt. The Corporate debt restructuring practices in India are a major cause of the recent sickness faced by Indian banks. In order to show low NPAs banks are lured to restructure loans offering companies lower interest rates and accepting equity stake for another round of financing. Furthermore the regulator does not mandate the times a company can restructure loans, therefore a company can restructure loans as many times at the behest of banks. This coupled with political appointments at heads of public sector banks provides easy money for cash starved companies. There is a lack of

regulation that curbs the practices of promoters raising money through multiple companies. If restricted assets are accounted for, loans which are stressed in the banking sector in India are as high as 9.2% as per Crisil Ratings. All the hoo-ha by the current Finance Minister that banks need to identify 'willful defaulters' comes out as hypocrisy when there are no norms by the government to identify these defaulters nor is there any attempt to ward off the misuse of Corporate Debt Restructuring.Way AheadResearchers, analysts and bankers all state the issues faced by the Indian banking sectors are grave and the Public sector banks today need multiple times the money the government is providing them to stay afloat in an uncertain and murky environment both domestically and globally. A banking failure would have a direct impact to liquidity constraints faced by infrastructure companies in an emerging market. An economy already plagued with illiquidity may starve off cash if there is further shortage. Due to the close set up within Indian banks and a fluctuating set of foreign institutional investors the repercussions could be high and wide and strike the Indian inter-bank market spurring a Financial Crisis similar to the one witnessed by the USA in 2008. In an economy obsessed with reforms the banking sector has had its share of reformation but denied some essential changes in lending

stpatterns. As recently as the 31 of January 2014, the RBI laid out frameworks to limit bad loans. This involved incentivizing banks which identify stressed assets earlier and taking necessary steps like sale of assets to prevent loans from turning bad. The Reserve Bank issued guidelines aligned with their paper on bad loans which was elaborated on earlier. These recent measures mandated by the Central bank are promising as they involve categorizing assets that are stressed followed by decisions by banks to prevent such

assets from turning bad. A dire need in banking practices is revisiting norms of corporate debt restructuring practices as mentioned earlier. The Central bank has issued guidelines lately introducing an independent examination of assets under restructuring by an evaluation committee. This should restrict nefarious practices by businesses to buy their way out of debt. Another recent introduction overseen by the new Governor of RBI has been the re-launch of interest rate futures. Although these do not have much to do with the quality of credit, yet they provide a suitable hedge to both investors and bankers and this should boost the structure of credit in the economy. These derivative instruments have been well received across the three exchanges where they have been launched. The major purpose of these derivatives has been as hedge instruments. Indian Banking Sector Outlook The banking sector in the near future in highly dependent on the growth the economy can sustain in calendar year 2014. As tedious as it is, the ongoing talk on the street over the uncertainty about the coming general elections and the awaited Federal Reserve taper is paramount to the fate of the Indian banking sector. Around 17% of total loans of Indian banks face foreign currency exposure. The major cause of concern over Indian banks is asset quality. A CPI inflation rate over 9% and talks of CPI being the basis of monetary policy review brings out negative vibes over an already high repo rate. It wouldn't be naïve to say that fundamental factors of inflation and growth shall determine the ability of the borrower to payback. Analysts expect restructured and non-performing assets to rise to 15% due to a constrained growth and high inflation. Challenges are not new for Public sector banks in India. It would be safe to say that the key to one of the world's most sought after treasury lies with the lender of the last resort. All that remains to be seen is who shall win the battle. The Rockstar or The Rouge.

Economizing The BiddingProcess: The IPL Auctions Are Back

Manik Madan

Well it's again that time of the year, just a week before the auctions for a game's domestic T-20 extravaganza, a game about which millions are crazy in this country, when all the franchises start gearing up with their plans for buying of the best domestic talent available at the cost of a pedigree and at the same time looking for foreigners to fill the 4 slots within the available purse. At this very point of time, the series that the Indian team plays, be it ODI's or T-20's, plays a big role in making someone over the night a billionaire. Last year, it was the turn of Jaddu or Sir Jadeja, as he is more popularly known in cricketing terminologies. This year most probably, it will be the 36-ball wonder, Anderson from New Zealand, who will grab the best auction price. Also some big names are there for grabs, like the likes of Mitchell Johnson, who ripped the British apart in the recently concluded Ashes; Brad Haddin, who is in the form of his career; at the same time, there are forgotten heroes of yester years, Sehwag, Yuvraj, Zaheer who might grab their respective roles in different teams.The Financia l Management & Econometrics taught at MFC are kind of very important for any franchise that wants to be successful in building its team. According to my understanding of the available purse and the capped players available with the right to match order processing, following could be the squads (just a guess) –One of the consistent performers over the previous six seasons, Chennai Super Kings

(CSK), having reached five out of six finals under the charismatic leadership of the current India skipper, MS Dhoni, have twice been crowned as the IPL Champions. The players who were retained in their roster are MS Dhoni (India), Suresh Raina (India), Dwayne Bravo (WI)*, R Ashwin (India), R Jadeja (India). However, to sustain their authority as one of the top dogs of this competition and that too while following the constraints of the budget might prove to be a tough balancing act. Possible buys to carry them further forward should include Corey Anderson (NZ)* , Mitchell Johnson (Australia)* , Aaron Finch (Australia)*, Morne Morkel (SA)*, Cheteshwar Pujara (India), S Badrinath ( India) , M Kartik(India), P Ohja (India), Chris Morris (SA)*, Glenn Maxwell (Australia)*, Praveen Kumar (India).Mumbai Indians (MI), the team crowned champions last year, are always known for throwing money like nothing and can go to any extent to get a player that they want. It will still have to be maintained that they don't know how to utilise their resources well & it will be there for everyone to see how they defend their title as defending champs. The players who have been shown the green card for next year are Rohit Sharma (India), Ambati Rayudu ( India), Lasith Malinga (SL)* , Harbhajan Singh (India) , Kieron Pollard ( WI)*. But to stay as the champs they might have to go for Steve Smith (Australia)*, Jason Holder (WI)*, Darren Sammy (WI)*, Zaheer Khan

Lighter Side of Finance

(India) , Corey Anderson (NZ)*, Yuvraj Singh (India), Mandeep Singh (India), P Ohja (India), I Pathan(India), R Utthapa (India).Royal Challengers Bengaluru (RCB), have always performed to deceive their fans in crucial encounters. Will it be this year, that their hunt to be crowned as IPL champions will end under the rein of India's next in line skipper, V Kohli. The list of retained rockstars include Virat Kohli (India), Chris Gayle (WI)*, AB de villiers (SA)*.The possible buys for this year could be R Vinay Kumar (India), C Pujara (India), Yuvraj Singh (India) , Aaron Finch (Australia)*, Mitchell Johnson(Australia)*, I Pathan (India), Z Khan( India).Always flattering to deceive are the Rajasthan Royals (RR). Winners of IPL season I, a team always known for upbringing the future Indian national teamers. Their graph has taken a U-turn and only had the chance of winning last year under India Wall's able guidance, but the most disastrous life bans of Match fixing scandal hit them in the face, just before the crucial semi-finals. A lot depends on who they pick. The list of retained players includes Ajinkya Rahane (India) , Sanju Samson (India) , Stuart Binny (India) , Shane Watson (Australia)*, James Faulkner (Australia)*. The possible buys could be Muttiah Murlidaran (SL)*, Pankaj Singh (India), Dinesh Kartik (India), Yusuf Pathan (India), Z Khan(India), I Pandey (India), Mohit Sharma (India), A Nehra (India), M Patel (India).Kolkata Knight Riders (KKR), the team always having big stars presence in the dressing room. But, the only irony is that those stars are not cricketers, but B-town bigwigs, dancing to the tunes of Korbo-Lorbo-Jeetbo in the aisles of Eden Gardens. Winners of season - 5, under the aggressive leadership of then Indian opener, Gautam Gambhir, an important member of WC winning team 2013. A lot depends on who they pick and how they gel together as a unit. The team management has shown trust in Gautam

Gambhir (India), Sunil Narine (WI) by retaining them. Lists of possible buys include Ishant Sharma (India), V Aaron (India), U Yadav (India), V Sehwag (India), Y Singh (India).Moving Southwards, a team that has been a surprise element in some seasons, Sunrisers Hyderabad, earlier known as Deccan Chargers (ownership changed last year and so did their fortunes; reached the semis) They might & can willingly turn out to be dark horses, as they in season 2 , under Adam Gilchrist's leadership. The players retained are: Shikhar Dhawan (India), Dale Steyn (SA)*.Kings XI Punjab (KXIP) , a very indifferent team with very easy to go attitude. The only thing they have achieved is they reached semi-finals in IPL season 1, their best finish till date. They did however surprise everyone by retaining 20 years old, uncapped Indian batsman Manan Vohra. Being a Delhiite, Delhi Daredevils (DD), it makes me feel very sad, about how the team has gone from bad to worse, despite having the best Indian openers in its line up at one time. The management seriously needs to look back and have to act fast. They might have taken a step towards doing something good this time around by roping in Gary Kirsten, India's WC 2013 winning coach. They need to build a strong and a determined side. Some possible buys could include, V Aaron (India)*, Z Khan (India), G Maxwell (Australia)*, A Finch (Australia), D Sammy (WI), K Sangakkara (SL), M Jayawerdana (SL).A lot seems to be seen on the day about who becomes rich overnight and some players whose careers are at stake for National team reckoning at the same time. It's said that IPL is much more than cricket, and it all begins with these auctions. Let's watch what's in store this time around.

(Disclaimer: This article is written by a cricket lover for a business school journal, without the intention to offend anyone.)

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