1

DIRECTORS MESSAGE
The vision of N. L. Dalmia Institute of
Management Studies and Research
(NLDIMSR) is to provide the highest
quality management knowledge and
develop leaders of integrity.
N L DALMIA INSTITUTE OF
MANAGEMENT
STUDIES
&
RESEARCH is one of the most admired
& recognized Business Schools in the
Country. Our industry aligned innovative
courses, strong work ethics and a deep
commitment to academics have created
perhaps the most impactful Centre of
higher learning & research. Our highly
researched course curriculum provides
a holistic perspective of innovative
thinking-a key to add business value in
todays fast changing & competitive
environment.
We are amongst very few B-Schools
with a strategic focus exclusively on
Emerging Markets and Industry Needs.
Our Students learn a wide range of
business and practical applications
through classroom learning, case
analysis,
projects
and
hands-on
experience
through
the
industry
interaction. Further, we are the

first management institute in Mumbai

to have installed 12 terminal Bloomberg
Lab.
Our
deep
commitment
to
management education balanced with
social responsibility ensures that our
students develop the sensitivity to
become successful business leaders.
With the wide spectrum of
committees in our college like Finance
Forum, Ace Club (Marketing club), HR
Club, E-Cell (Leadership Club),
Alumni Club etc. we strive to provide
a platform to nurture the innate skills
latent within the budding managers.
From debates, skits and seminars,
management games, they provide an
extensive breadth of opportunities for
our students to outshine.
With this new endeavor of
publishing our college magazine
"DELT" we give an expression to
the knowledge in the minds and
creative arc of our students, a chance
to widen our horizons, valuable inputs
from the faculty members and
precious articles by the corporate
world. As we embark on a new
journey, together we shall sail in the
ship of knowledge and anchor the
harbor of success!
With Warm Regards,
Prof. Dr. Chandra Mauli Dwivedi
Director, NLDIMSR

EDITORIAL
We welcome all the readers to a
wonderful and interesting tour of the
eleventh edition of our semi-annual
magazine, DELTA. We are grateful for
the overwhelming response to the
previous issue. Delighted by your
feedback we are back with yet another
treat for you!
I take the opportunity to thank our
Director, Prof. C.M Dwivedi for his
support. I also extend my heartfelt
gratitude to our Dean Academics, Prof
Dr. Gulab Mohite, our Head of Finance,
Prof. Naveen Bhatia, Prof. Dr. Anil
Gor, Head of the Finance Forum, our
professors and the entire team of
DELTA and Finance Forum for their
guidance and keen interest to make
this tabloid a success.
Delta is an initiative for
gathering
and
disseminating
information and knowledge generated
in young minds of future managers.
DELTA,
being
a
semi-annual
magazine, will keep you updated with
current issues of business and also
give an overview of other important
functions of management. The current
edition encompasses reading pieces
on topics that you will find interesting
and distinctive.

Get acquainted with new Jargons

like Fractional Reserve Banking
System,
Shadow
Banking,
Computational
Finance,
Cloud
Computing amongst others.
The magazine mirrors the thoughts
of the students of this institute. I do
hope that the magazine enhances the
knowledge of all the readers and
encourages many more students to
use it as a platform to express their
creativity. I sincerely hope that this
month's edition makes for an
interesting read.

Gayatri Bhatia

Shivani Rajpuria

(PGDBM Finance)

(PGDBM Finance)

In this issue

trends, improving efficiency, and

recommending changes to the overall
business.

ADVANCE DATA ANALYTICS &

APPLICATION IN FINANCIAL
SECTOR
Statistics are like bikinis. What they reveal
is suggestive, but what they conceal is
vital.
-Aaron Levenstein, Business Professor at Baruch
College, New York

Data analytics (DA) is the science of

examining raw data with the purpose of
drawing conclusions about that information.
Data analytics is used in many industries to
allow companies and organization to make
better business decisions and in the sciences
to verify or disprove existing models or
theories. Data analytics is distinguished from
data mining by the scope, purpose and focus
of the analysis. Data miners sort through
huge data sets using sophisticated software
to identify undiscovered patterns and
establish hidden relationships. Data
analytics focuses on inference, the process
of deriving a conclusion based solely on what
is already known by the researcher.
HOW IS ADVANCED DATA ANALYTICS
CRUCIAL FOR FINANCE?
1. Decision Support Partnerships
Data drives more than just reporting
financial firms need quantitative
strategies to drive overall business. Big
data transforms finance teams from
researchers and analysts to key
influencers.

2. Compliance Cost Reduction

Last year, the financial services industry
witnessed hundreds of new regulations.
These changes will have a heavy
influence on the sectors data strategy.
Beyond long-standing Sarbanes-Oxley
regulations, new regulations from Basel
III, the Dodd-Frank Act and other
legislation create new complexities
with data as a mission-critical remedy.
Boston-based State Street Corp., for
instance, is experimenting with semantic
databases information storage
solutions with flexible data structures
that prioritize meaning in relationships.
With automation of LEI(Legal Entity
identification) data an otherwise
manual process comes cost savings
opportunities
through
improved
efficiency.
3. Rigorous Predictive Models
Volumes of data are growing
exponentially for the finance sector.
These data points are invaluable for
profit and efficiency maximization.
Cut costs, influence business decisions,
and grow profits all three provide
opportunities for advanced analytics as a
guiding force. As reporting standards
grow more complex and competition for
consumers becomes more rigorous, the
need for data will become exponentially
higher.

Opportunities include synthesizing

diverse data systems, extrapolating
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profile; it has become attractive for

students.
JOB PROSPECTS AND SALAR IES I N ADVANCED
BUSI NESS DATA ANALYTIC S

At IIT-Bombay, 27 companies made 94 offers

in analytics; 26 consulting firms made 124
offers and 78 offers from 19 companies in
finance sector, last year.
If you torture the data long enough, it will
confess.
-Ronald Coase, Economist

It is very clear that Advance Data Analytics is

the next rising star and Financial Services is
the major sector where it is most widely
used.
CONCLUSION

First it was information technology (IT), then

finance and now it is big data analytics - the
current favorite sector for most Indian
Institute of Technology (IIT) graduates.

Domain specific Hiring

Waseque Siddiqui
Given better pay packages and promising
career growth prospects, IITs have seen a
good number of engineers opting for a
career in data analytics during placements.

(MMS Finance)

Spending on big data by companies, say

industry players, is expected to grow to
around $34 bn in 2020 from $4 bn in 2011.
And, with a data analytics profile paying
salaries of over 50 per cent than any other
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BASEL ACCORDS
Why the Basel norms came into the picture:
On the date of 26 june,1974 a number of
banks had released payments of Deutsche
Marks (DEM- German Currency at that time)
to Herstatt (Based out of Cologne, Germany)
in Frankfurt in exchange for US Dollars (USD)
that was to be delivered in New York. No
due to the time zone differences, Herstatt
ceased its operations between the times of
the respective payments. German regulators
forced the troubled Herstatt Bank into
liquidation. The counter party Banks did not
receive their USD payments. Responding to
the cross-jurisdictional implications of the
Herstatt debacle, the G-10 countries (the G10
is
actually
eleven
countries: Belgium, Canada, France,
Germany, Italy, Japan, the Netherlands ,
Sweden,
Switzerland,
the
United
Kingdom and the United States) and
Luxemborg formed a standing committee in
1974 under the auspices of the Bank for
International Settlements (BIS), called the
Basel Committee on Banking Supervision.
Since BISs HQ is in Basel, this committee got
its name from there. The Committee
comprises representatives from central and
regulatory authorities.
Basel I
In 1988, the Basel committee on Banking
Supervision (BCBS) in Basel, Switzerland,
published a set of minimum capital
requirements for banks and these norms
were labeled as Basel I. Its focus was
mostly based entirely on credit risk (default
risk) - the risk of counter party failure. In the

norm the capital requirement and capital

structure of risk weights of banks were
defined.
Under these norms: Assets of banks were
classified and grouped in five categories
according to credit risk, carrying risk weights
of 0% (Cash, Bullion, Home Country Debt like
treasuries) ,10,20,50 and 100% and no rating
banks with an international presence
required to hold capital equal to 8% of their
risk-weighted assets (RWA) At least, 4% in
Tier I capital (Equity Capital + retained
Earnings) and more than 8% in Tier I and Tier
II Capital.
One of the major role of the Basel norms is
to standardize the banking practices in all
countries. However, there are major
problems with definition of capital and
Differential Risk weights to Assets across
countries, like Basel standards are computed
on the basis of book- value accounting
measures of capital, not market values.
Accounting practices vary significantly
across the G-10 countries and often produce
results that differ from market assessments.
The other issue was that the risk weights did
not attempt to take account of risks other
than credit risk viz., market risks, liquidity
risks and operational risks that maybe
important sources of insolvency exposure
for banks.
Now this gave the need to make some
changes in The Basel-I accord and lead to the
Basel-II accord.
Basel-II
Basel-II was introduced in 2004 and this laid
down the guidelines for capital adequacy (
with much more refined definitions) , Risk
Management (Market Risk and Operational
Risk) and disclosure requirements.
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Following are some of the key guidelines for

the same:

Use of external rating agencies to set

the risk weights for corporate, bank
and sovereign claims.
Operational risk has been defined as
the risk of loss resulting from
inadequate or failed internal
processes, people and systems or
from external events. This definition
includes legal risk, but excludes
strategic and reputation risk,
whereby legal risk includes exposure
to fines, penalties or punitive
damages resulting from supervisory
actions, as well as private
settlements.
Disclosure
requirements
allow
market participants assess the
capital adequacy of the institution
based on information on the scope of
a pplication, capital, risk exposures,
risk assessment processes, etc.

systematic risk. To ensure that the banks do

not take on excessive debt, and that they
dont rely too much short term funds, BaselIII norms were proposed in 2010.
The guidelines of Basel-III aim to promote a
more resilient banking system by focusing on
four vital banking parameters Viz. capital,
leverage, funding and liquidity.
Basel-III and the Indian Banks:

With the RBI flagging off the implementation

of Basel III guidelines, Indian banks have to
plan for more capital in the years ahead.
They are well placed to meet the higher
capital requirements and can strengthen
their competitive positions vis a vis
international banks provided the
government can deliver on its own
responsibilities towards public sector banks.
The RBI has set a more demanding schedule
for Basel III implementation than the Bank
for International Settlements. The BIS has
set the deadline for the full implementation
as 2019. The RBI would like the Indian banks
to comply by 2017.

Basel III

It was believed that the Basel-II accord was

good until the financial crisis of 2008 which
disclosed some of the loopholes in this
accord and which also gave the need to
further make some changes in the Basel
Accords and thus the Basel-III accord came in
place.
The shortcomings which were revealed in
the Basel-II Accord were that these norms
did not have any explicit regulation on the
debt that the banks could take on their
books, and focused more on individual
financial institutions, while ignoring the

Kunal Maliwar
(MMS Finance)

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CLOUD COMPUTING FOR

FINANCIAL SERVICES
WHAT IS CLOUD COMPUTING?
The U.S National Institute of Standards and
Technology (NIST) defines cloud computing
as a pay-per-use model for enabling
available, convenient, on-demand network
access to a shared pool of configurable
computing resources (e.g.., network,
servers, storage, applications, and services)
that can be rapidly provisioned and released
with minimal management effort or service
provider interaction. This cloud model
promotes availability and is comprised of
five key characteristics, three delivery
models and four deployment models. In
other words, cloud computing is a potent
combination of a public utility, such as
electricity or telephone, and autonomic
computing. Like a public utility, it has
elasticity for scaling up or down, is accessed
through pooled computing resources using a
multi-tenant model and can be metered and
billed only for the usage. And like autonomic
computing, its a self-managing system of
distributed computing resources, adapting
to unpredictable changes while hiding
intrinsic complexity from users.
Cloud Computing can be delivered
through such delivery models as:
Software as a Service (SaaS)

Google Docs A suite of products that

allows you to create different types of
documents, work on them in real time with
other people and store them, along with
other files, online.
Salesforce.com A cloud-based Customer
Relationship Management (CRM) platform

that can be used by a firm to connect with

customers and employees.
Data as a Service (DaaS)

Google Public Data A public data service

that makes large datasets easy to explore,
visualize and Communicate.
Xignite Capital Markets Data A platform
that provides data for New York Stock
Exchange.
Business Process as a Service (BPaaS)

ADP Employease An Online business

process services for HR, benefits
administration and outsourcing.
AMEX Concur An online business process
that connects travel suppliers and mobile
solutions from around the world to provide
advanced travel and expense functionality.
Public Cloud A public cloud is available

over the internet to everyone. The cloud

provider manages and owns everything from
operations and facilities to computing
resources. Popular public clouds are Amazon
EC2, Google App Engine and Microsoft
Azure.
KEY CHALLENGES

Market Opportunity and consideration

factors
A 2010 IDG survey revealed that:
6% of CIOs polled felt that cost reduction
across the board was a critical business
priority for the future
62% felt that optimizing resources and key
business processes was going to be a priority
67% saw improving the marketing time for
products and services as critical in the
coming years
A financial services firm that heavily
relies on IT enabled services can benefit
from cloud computing, despite the
objections mentioned above. Perceived cost
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savings, ease of scaling-in and scaling-out,

faster time-to-market for deploying systems,
virtualization of enterprise-wide data as a
service,
enterprise
technology
standardization, and the ability to access
data and applications on the move are all
critical consideration factors that can drive
financial services firms to adopt cloud
computing.

CURRENT ADOPTION
NYSE
Euronext
Capital
Community Platform:

Markets

Recently, NYSE Euronext launched a PaaS

community cloud service for the financial
services industry, aimed at brokers, dealers,
hedge funds, and other market makers. The
platform has been set up to host customer
applications and services, such as electronic
trading, market data analysis, algorithmic
testing and regulatory reporting. The
infrastructure consists mainly of storage and
virtualization tools from EMC and VMware,
running on Xeon-powered blade servers.
NASDAQ OMX Data on-demand:

This SaaS cloud service, built with the

support of Xignite, provides easy and flexible
access to massive amounts of historical level
1 tick data. Its a web application that allows
users to purchase data online and access it
using an application programming interface
(API) or as plain text files.

Now a part of Bank of America, Merrill Lynch

used IBM iDataPlex servers as part of an IaaS
Strategy
to
build
and
evaluate
risk
analysis
programs. The
servers
turn
many separate
computers into
a pool of shared
resources, i.e., a
cloud. Morgan Stanley uses PaaS cloud
vendor Force.com for its recruiting
applications and has extensive cloud
penetration in analytics and strategy.
Microsoft Azure Data Market for the
Energy Industry:

Microsoft Data Market SaaS cloud services

enable the discovery, exploration and
consumption of data from trusted public
domains and commercial data sources, such
as demographics, health, and location based
services,
real
estate,
weather,
transportation, navigation, etc. It also
includes visualizations and analytics to
enable insight from that data. All this data
can be incorporated into software
applications for any device through a
common API. Different players in the energy
industry are using this platform to create
energy
forecasting
and
analytics
applications.

CME Clearport OTC Data on-demand:

This on-demand SaaS web service is also

built on top of the Xignite platform and
offers access to end-ofday OTC settlement,
volume and open interest data to support
markets available through CME Clearport.
I-Banks using cloud for risk analysis and
non-core processes:

Waseque Siddiqui
(MMS Finance)
10
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COMPUTATIONAL FINANCE
Computational finance is a branch of applied
computer science that deals with problems
of practical interest in finance. Some slightly
different definitions are the study of data
and algorithms currently used in finance and
the mathematics of computer programs that
realize financial models or systems.
Computational finance emphasizes practical
numerical
methods
rather
than
mathematical proofs and focuses on
techniques that apply directly to economic
analyses. It is an interdisciplinary field
between mathematical finance and
numerical methods. Two major areas are
efficient and accurate computation of fair
values of financial securities and the
modeling of stochastic price series.
Simulation of Brownian motion sample
paths is an important tool in calculating the
price of financial instruments under the riskneutral measure.

Applications of Computational
Finance

Algorithmic Trading
Quantitative Investing
High Frequency Trading.

Algorithmic Trading
Algorithmic trading, also called automated
trading, black-box trading, or algorithmic
trading, is the use of electronic platforms for
entering trading orders with an algorithm
which executes pre-programmed trading
instructions accounting for a variety of
variables such as timing, price, and volume.
Algorithmic trading is widely used by

investment banks, pension funds, mutual

funds, and other buy-side (investor-driven)
institutional traders, to divide large trades
into several smaller trades to manage
market impact and risk.
Algorithmic trading may be used in any
investment strategy, including market
making, inter-market spreading, arbitrage,
or pure speculation (including trend
following). The investment decision and
implementation may be augmented at any
stage with algorithmic support or may
operate completely automatically. One of
the main issues regarding HFT is the
difficulty in determining how profitable it is.
A report released in August 2009 by the
TABB Group, a financial services industry
research firm, estimated that the 300
securities firms and hedge funds that
specialize in this type of trading took in a
maximum of US$21 billion in profits in 2008,
which the authors called "relatively small"
and "surprisingly modest" when compared
to the market's overall trading volume. In
March 2014, Virtue Financial, a highfrequency trading firm, reported that during
five years it made profit 1,277 out of 1,278
days, losing money just one day.

Strategies

Trading ahead
rebalancing

Pairs trading

Delta-neutral strategies

Arbitrage

of

index

fund

Mean reversion
Mean reversion is a mathematical
methodology sometimes used for stock
investing, but it can be applied to other
processes. In general terms the idea is that
both a stock's high and low prices are
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temporary, and that a stock's price tends to

have an average price over time. An example
of a mean-reverting process is the OrnsteinUhlenbeck stochastic equation. Mean
reversion involves first identifying the
trading range for a stock, and then
computing the average price using analytical
techniques as it relates to assets, earnings,
etc. When the current market price is less
than the average price, the stock is
considered attractive for purchase, with the
expectation that the price will rise. When the
current market price is above the average
price, the market price is expected to fall. In
other words, deviations from the average
price are expected to revert to the average.
The Standard deviation of the most recent
prices (e.g., the last 20) is often used as a buy
or sell indicator. Stock reporting services
(such as Yahoo! Finance, MS Investor,
Morningstar, etc.), commonly offer moving
averages for periods such as 50 and 100
days. While reporting services provide the
averages, identifying the high and low prices
for the study period is still necessary.

Quantitative investing
Quantitative investing represents an
investing technique typically employed by
the
most
sophisticated,
technically
advanced hedge funds. These firms employ
fast computers to find predictable patterns
within financial data. Some of the larger
investment managers using quantitative
investing include Renaissance Technologies'
Medallion Fund,AQR Capital, Winton Capital
Management, D. E. Shaw & Co., Numeric
Investors, Grantham, Mayo, Van Otterloo &
Co. LLC (GMO), First Quadrant, Robeco.

Typically, quant investing is implemented by

people who have spent time in the physics,
math, computer science, or statistics
disciplines. The condensed results of
quantitative analyses, however, can be
readily accessible to all far-from-quantitative
investors, when presented in an intuitive
framework.[weasel words] The process
consists of thorough examination of vast
databases
searching
for
repeating
patternspersistent occurrences of a
phenomenon, correlations among liquid
assets ("statistical arbitrage" or "pairs
trading"), or price-movement patterns
(trend following or mean reversion).

High-frequency trading
High-frequency trading (HFT) is a primary
form of algorithmic trading in finance.
Specifically, it is the use of sophisticated
technological tools and computer algorithms
to rapidly trade securities. HFT uses
proprietary trading strategies carried out by
computers to move in and out of positions in
seconds or fractions of a second. It is
estimated that as of 2009, HFT accounted for
60-73% of all US equity trading volume, with
that number falling to approximately 50% in
2012. High-frequency traders move in and
out of short-term positions at high volumes
aiming to capture sometimes a fraction of a
cent in profit on every trade. HFT firms do
not consume significant amounts of capital,
accumulate positions or hold their portfolios
overnight.[8] As a result, HFT has a potential
Sharpe ratio (a measure of risk and reward)
tens of times higher than traditional buyand-hold strategies. High-frequency traders
typically compete against other HFTs, rather
than long-term investors. HFT firms make up
the low margins with incredible high
volumes of trading, frequently numbering in
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Strategies of HFT
the millions. It has been argued that a core
incentive in much of the technological
development behind high-frequency trading
is essentially front running, in which the
varying delays in the propagation of orders is
taken advantage of by those who have
earlier access to information.
In the United States in 2009, high-frequency
trading firms represented 2% of the
approximately 20,000 firms operating today,
but accounted for 73% of all equity orders
volume. The major U.S. high-frequency
trading firms include Chicago Trading,
Virtual Financial, Timber Hill, ATD, GETCO,
Tradebot and Citadel LLC.The Bank of
England estimates similar percentages for
the 2010 US market share, also suggesting
that in Europe HFT accounts for about 40%
of equity orders volume and for Asia about
5-10%, with potential for rapid growth. By
value, HFT was estimated in 2010 by
consultancy Tabb Group to make up 56% of
equity trades in the US and 38% in Europe.
As HFT strategies become more widely used,
it can be more difficult to deploy them
profitably. According to an estimate from
Frederi Viens of Purdue University, profits
from HFT in the U.S. has been declining from
an estimated peak of $5bn in 2009, to about
$1.25bn in 2012.
Though the percentage of volume attributed
to HFT has fallen in the equity markets, it has
remained prevalent in the futures markets.
According to a study in 2010 by Aite Group,
about a quarter of major global futures
volume came from professional highfrequency traders. In 2012, according to a
study by the TABB Group, HFT accounted for
more than 60 percent of all futures market
volume in 2012 on U.S. exchanges.

Market making.
Ticker tape trading.
Event arbitrage.
Statistical arbitrage.
News-based trading.
Low-latency strategies.
Order properties strategies.

Areas of concern for HFT

Flash trading.
Insider trading.

Careers in Quantitative finance

Alternative Investments and Proprietary
Trading
Proprietary
trading
in
alternative
investments is trading done for the direct
benefit of the owners of the firm; this is
opposed to agency trading which is trading
done for the benefit of its customers.
Traditional financial institutions often
engage in proprietary trading as an
important sideline. Hedge funds, typically
organized as limited partnerships, do so as
their primary business activity.
Trading Support
For trading desks, pricing complex
instruments and transactions rapidly and
accurately while simultaneously managing
risk in manner consistent with firm-wide
objectives
are
critical
capabilities.
Quantitative
analysts
provide
the
mathematical talent required to build and
maintain these decision support systems.
Both proprietary implementations built inhouse and commercial systems sold as
turnkey solutions are used. The trading
activities themselves may either be
proprietary or customer related.
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Consulting and Customer Support

On the sell side investment banks and other
financial institutions provide research
reports and other forms of analytical support
to their customers. These supports may be
provided gratis as a means of maintaining
client relationships or stimulating the
demand for a firms services. A visit to any
number of brokerage websites will give you
an indication of how pervasive this is.
Product Development
An increasing share of the business
undertaken by investment banks has been in
the form of exotic options, hybrid securities
and collateralized obligations. These
products are used to enhance return or to
insure against legal, fiscal, regulatory or
liquidity riskssome of which are company
specific and may require customized
solutions.
An example has been the development of
collateralized obligations. The most common
of these are mortgage-backed securities
(MBSs), which break apart a payment stream
into sub-deals or tranches, e.g., separating
the principal and interest streams, POs and
IOs, respectively. In turn, derivatives of these
tranches can be created, e.g., in which the
yield from a fixed rate IO is swapped with a
floating rate.

Firms now recognize that, with the increasing

complexity of financial products and markets, the
organization's survival depends upon being able
to define and enforce coherent risk management
policies.
Portfolio Management
Portfolio management deals with the
identification of financial objectives and their
translation into a portfolio of assets that must be
managed over time in the face of uncertain
investment performance and consumption
demands. This is no simple task: There are
thousands of potential investments related to
one another in complex ways, an enormous
number of parameters which must be estimated
in a statistically meaningful fashion, and a system
of operational, business and legal goals and
requirements which must be expressed in a
consistent mathematical framework.
Academic and Industrial Research
There are practical problems that must be solved
well enough to allow the players in financial
markets and in the financial service industries to
operate but for which the best available
approaches involve compromises that employ
oversimplified models because of limitations of
theory, available data or computational
resources. Modern theories, despite their
elegance and utility, fail to adequately account
for many of the nuances of real markets. These
limitations represent opportunities for the
academic or industrial researcher.

Risk Control
Laws and regulations dealing with credit and
capital requirements have been around for
decades, in certain forms for centuries. However,
recent catastrophic, high profile failures of hedge
funds and investment banks have led to a call for
a more consistent, verifiable, quantitative, firmwide approach to risk monitoring and control.

Page 2

Waseque Siddiqui
(MMS Finance)
14
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FRACTIONAL RESERVE
BANKING SYSTEM
Banking in laymans terms refers to a system
where savings can be made and withdrawn
as and when needed. The nomenclature
banking is not only restricted to the financial
system but to all types of reserves. But when
the term banking pops up it generally relates
to the financial commercial banking and we
are always pounced up with en-number of
pre-fixes Commercial banking, investment
banking, shadow banking, net banking and
the list is not exhaustive. One such term that
has always been in vogue is the fractional
reserve banking system.
Fractional Reserve Banking
System as the name suggests, refers to
keeping aside a portion of the pool of
deposits received by a bank from the
customers. All the banks and financial
institutions follow this principle of banking
system. The reserve or the monetary base so
created serves as a buffer so as to prevent
the chances of bank run. It leads to banks
following the principle of Borrowing Short,
Lending Long. Without this principle the
entire system can collapse leading to crisis in
the economy. This system is being practiced
ever since and without this system in place
the economy would not have been able to
flourish in this manner. Fractional Reserve
Banking System leads to creation of credit
money. It acts in fueling the money
multiplying function and also serves as a
major factor in growth.
Example: How does this system work?

Say there is only one bank in the economy. A

farmer has 1000 Gold coins with him. He

deposits the entire sum in ABC Bank. The

bank keeps a fraction say 10% i.e 100 coins
aside as reserve to meet the demand
requirements and lends out the remaining
amount of sum i.e 900 coins for an irrigation
project. The same amount is then forwarded
to the labourers working there and the
amount received by them is deposited in the
bank. Again the bank receives 900 coins and
keeps 90 coins aside and lends 810 coins for
another project. 810 coins are then reverted
in the form of deposit and the cycle
continues and the credit keeps multiplying in
the economy. Assuming that receiving 810
coins is the last aspect in the loop the bank
would have kept the entire sum and the
assets and liabilities of the bank would be
matched.
Sr
No
.
1.
2.
3

Receipt
From

Receip
t

Reserv
e

Farmers
Labourers
Employee
s

1000
900
810

100
90
810

Len
t
Out
900
810
-

The actual money in circulation would have

been 1000 coins but the multiplying effect
would have created a credit circulation of
2710 coins in the economy. This is known as
M1 Money supply. Had there been no
multiplying effect how would the economy
be functioning? It is a big question. The
entire system could actually be in chaos. And
there would be no growth taking place in the
economy as no productive use of the money
supply could be made.
There have however been
criticism to this system as economists say
that in case of the sudden demand by all the
depositors for their money it could lead to
15
Page 11

bank run. One improvement over this

system as suggested by the experts can be
that the functioning of the banks could be
split into two
1. Receiving deposits and no lending
further. : This means that the entire
sum could be kept as reserve and
would be used for meeting the
demand as and when it arises.
2. Receiving for the purpose of lending.
: For this the term of deposit should
be matched with the term of lending.

To sum up it can be said that the fractional

reserve banking system, if not followed,
could have led to a chaos in the economy.
However, it has a lot of scope for
improvement as suggested by the experts.

Gayatri Bhatia
(PGDBM Finance)

16
Page 12

Way back in 13th century a seed that

was sowed is now a heartbeat of the
financial system. It is believed that the Italian
word Banco which means desk or bench is
origin of word Bank. In ancient Roman
Empire rich traders would set up a desk
arrangement on roads so called as bancu
and lend their gold coins to farmers in
exchange of keeping goods and grains as
secularized asset. Now years have passed,
more financial innovations have occurred,
regulators
have
come
up
with
sophistications; but, raw banking still has its
share like a black knight has in the army.

banks, by and large, derive funds through

mobilization of public deposits, shadow
banks raise funds, through market-based
instruments such as commercial paper,
debentures, or other structured credit
instruments. They raise funds from shortterm money market segments and use these
funds to buy long-term maturities. Hence, in
due times of crisis an investor with worried
intention pulls out his money and serious
problem arises. To repay such investors,
shadow banks will have to sell long-term
assets. These rapid sales generally reduce
the value of those assets, causing serious
troubles ahead in the peak of crisis. This is
what actually happened in US sub-prime
crisis, and hence its impact was seen in the
whole world.

The Word Shadow banking was suggested by

American economist and former Managing
director of PIMCO (Pacific Investment
Management Company) Mr. Paul Allen
McCulley in subprime crisis of 2008. The
word shadow banking mainly refers to the
Non-Banking financial corporations (NBFCs)
which are more over same as the traditional
Banks except for there is no regulatory
authority for them. It means that there is no
transparency in shadow banking , as is
reflected by the nomenclature. In US there
are two bank regulators mainly federal
reserve and state level regulator, Who
ensure smooth and transparent operations.
On the other hand NBFCs lack regulations.
Secondly, in traditional commercial banking
system the deposits invested by savers or
depositors are insured by the government
upto a limited extent. Hence during the time
of crisis the banks are safeguarded against
the possible vulnerability of bank run. Unlike
shadow banking systems, deposits are not
backed or insured. Third, while commercial

Currently, the size of the shadow

banking system in the world is approx. $75
trillion. This data is measured by Financial
Stability Board (FSB) in October 2014. FSB
was established on the verge of subprime
crises, in April 2009 as a successor to the
Financial Stability Forum (FSF). The FSB
measures and evaluates vulnerabilities in
the global financial system and proposes
actions needed to address them. In addition,
it advises on market and systemic
developments, and their implications for
regulatory policy. According to FSB, Shadow
banking can play a beneficial role as a
complement to traditional banking by
expanding access to credit and by supporting
market liquidity, maturity transformation,
and risk sharing. In emerging markets like
China and India popularity of this type of
financial institutions is increasing vastly.
Shadow banking assets as a proportion of
(Asian) GDP expanded from 4 percent to 42
percent between 2002 and 2014 mainly due
to developing nations like China and India.

SHADOW BANKING

17
Page 13

Drivers for the growth of shadow

banking are mainly lower expectations from
government bond yields, tighter regulations
levied on banks amongst others. This
enforces financial institutions to shift their
funds to shadow banks, brings about a
growth in pension funds and insurance
companies try to find more investing
options.
In Indian context, shadow banks are
known
as
Non-Banking
Financial
Corporations (NBFCs), though these are
under the regulation of the Reserve bank of
India (RBI). In between the years 1950-60
many banks and financial institutions (FIs)
have defaulted and people have lost their
deposits to a great extent. Hence so as to
protect investors interest, RBI started
regulating deposits in 1963. As time passes
the norms and regulations on NBFCs were
tightened .Nowadays NBFCs have to surpass
registrations and have to work under the
supervision of RBI. RBI thus reduced the risk
that an investor carries in depositing in
NBFC, but by this way it has multiplied its
responsibilities since there are more than
12,000 NBFCs currently working in India.
The share of NBFC assets have steadily
grown from 10.7% of banking assets in 2009
to 14.3% of the banks assets (As per CARE*).

Shadow banking in India thus operates with

very much lesser risk levels than those exist
in other countries. Stronger regulatory
environment are leading towards secured
lending. Lower liquidity and higher lending
infrastructure are attracting more investors
to invest in shadow banks of India. With
rising number of investors the backing of
promoters is increasing and newer
opportunities like diversification and
mortgage based lending will definitely
increase in India.

Mohit Apsingekar
(PGDBM Finance)

18
Page 14

TECHNICAL ANALYSIS : A
MECHANICAL APPROACH TO
INVESTING
Introduction
The methods used for analyzing securities
and making investment decisions fall into
two very broad categories: fundamental
analysis and technical analysis. While the
former involves analyzing the characteristics

market, currency or commodity, technical

analysis Technical analysis analyses price,
volume and other market information using
chart patterns, technical indicators and
oscillators or even the combination of these.
However, the basic difference continues to
be a technical analysts exclusive use of
historical price and volume data and hence
they dont really care if a stock is
undervalued - the only thing that matters is
a security's past trading data and what
information this data can provide about
where the security might move in the future.
Like any other discipline, technical analysis is
centered on following principles. They are as
follows:
1. Market discounts everything

of a company in order to estimate its value,

the latter doesn't care about the value of a
company or a commodity. Technical analysis
concerns itself majorly with the price
movements in the market. Wikipedia defines
it as In finance, technical analysis is a
security
analysis
methodology
for
forecasting the direction of prices through
the study of past market data, primarily price
and volume. If one may see past all the
fancy and exotic tools that technical analysis
employs, one may realize that it really just
studies supply and demand in a market in
order to determine what trend will continue
in the future.
Basics of technical analysis
In contrast to fundamental analysis which
attempts to measure a securitys intrinsic
value by looking at facts of the company,

While technical analysis has received

a lot of criticism for only considering
price
movement,
ignoring
fundamental factors of a company, it
assumes that a securitys price
reflects all relevant information that
possibly has or could affect the
company - including fundamental
factors such as economic, market
psychology and news events.
Technical analysts believe that these
external drivers are all priced into the
stock, thus, removing the need to
actually consider these factors
separately. This only leaves the
analysis of price movement, which is
viewed upon as a product of the supply
and demand for a particular stock in the
market
2. Price moves in trends

In technical analysis, it is believed that

prices trend directionally, that is, up,
down, or sideways (flat) or a
combination of these. This means
that after a trend has been
established, future price movement
19
Page 15

is more likely to be in the same direction as

the trend than to be against it. The basic
definition of a price trend was originally put
forward by Dow Theory. The Dow Theory on
price movement is a form of technical
analysis that includes some aspects of sector
rotation where sector means a group of
stocks group of stocks representing
companies in similar lines of business.

difference comes in the formation of a wide

bar on the vertical line, which illustrates the
difference between the open and close.
Candlesticks rely heavily on use of colours to
explain the happenings during the trading
period. There are two colour constructs, one
for days that price goes up and one for days that

3. History tends to repeat itself

This is mainly in terms of price

movement and is attributed to market
psychology. It is believed that investor
behaviour repeats itself so often, that
predictable price patterns develop on a
chart. Recognition of these patterns allow
the technician to select trades that have a
higher probability of success. Technical
analysis uses chart patterns to understand
these trends. Many of these charts are
century old and yet relevant as they
illustrate patterns in price movements that
often repeat themselves.
Since technical analysis uses charts and
technical indicators in abundance, well now
look into some of the different chart types
and indicators. The article is limited in scope
and not everything can be brought into the
purview, however, some of the most
fundamental and important stuff follows.
Chart Types
The two most commonly used chart types in
technical analyses are
1. Candlestick Charts
2. Point and Figure Charts
Candlestick Charts

These are similar to bar chart, in the way that

they too have thin vertical lines showing the
period's trading range. However, the

the price falls. When the price of the stock is up

and closes above the opening price, candlestick
will usually be white or clear. If the stock has
traded down, then candlestick will usually be red
or black as there is no standardization of colours.
Point and Figure Charts

This chart reflects price movements and is

not as concerned about time and volume in

the formulation of the points. A point and
figure chart consists of a series of Xs and Os.
The Xs represent upward price trends and
the Os represent downward price trends.
There are also numbers and letters in the
chart; these represent months, and give an
idea of the date. Each box on the chart
represents the price scale, which adjusts
depending on the price of the stock: the
higher the stock's price the more each box
20
Page 16

represents. The other critical point is the

reversal criteria. This is usually set at three
but it can also be set according to the chartist's
discretion. The reversal criteria set how much
the price has to move away from the high or low
in the price trend to create a new trend. When
the price trend has moved from one trend to
another, it shifts to the right, signalling a trend
change.

It is important to understand that these are

just two categories of chart types and these
two, within them, encompass many more
charts! And there are wide variety of chart
patterns that have further various methods
of interpretation and normalization (Use of
moving averages). There is volumes that
maybe written about all of it and that,
unfortunately, remains outside the scope of
this article.

1. Moving
Convergence/Divergence
(MACD)

Average
Oscillator

Developed by Gerald Appel in the

late seventies, the MACD is one of the
simplest and most effective momentum
indicators. It turns two trend-following
indicators, moving averages, into a

momentum oscillator by subtracting the

longer moving average from the shorter
moving average. As a result, the MACD
offers the best of both worlds: trend
following and momentum.

Moving onto indicators and oscillators,

Indicators are calculations based on the
price and the volume of a security and are
used to confirm price movement and the
quality of chart patterns, and to form buy
and sell signals. Indicators are of two types,
namely, leading and lagging. Leading
indicators are mostly used during flat
periods as they precede price movements
while lagging indicators are usually used
during trending periods as a confirmation
tool for they follow price movement.
Oscillators are the most common type of
indicators. They are bound within a range,
for example zero and 30, and signal periods
where the security is overbought (near 30)
or oversold (near zero).
Following are some popular indicators:

2. Relative Strength Index (RSI)

Developed by J. Welles Wilder, the RSI is

an extremely popular momentum
oscillator that measures the speed and
change of price movements. RSI
oscillates between zero and 100.
Traditionally, and according to Wilder,
RSI is considered overbought when
above 70 and oversold when below 30.
21
Page 17

The standard calculation for RSI uses 14

trading days as the basis, which can be
adjusted to meet the needs of the user.
3. On Balance Volume (OBV)
Developed by Joe Granville and
introduced in 1963 On Balance Volume
(OBV) measures buying and selling pressure
as a cumulative indicator that adds volume
on up days and subtracts volume on down
days. The positive or negative volume total
for the period is then added to a total that is
accumulated from the start of the measure.
It was one of the first indicators to measure
positive and negative volume flow.

To conclude, technical analysis is a vast

subject and cannot be explored in few pages.
There is tons of information still out there,
uncovered here though some of the most
basic and important things like basic
understanding of technical analysis, the 3
principles, charts and their types, indicators
and oscillators, some of the most popular
and widely used indicator oscillators have
been described in brief to get the idea of
technical analysis across. So if you think that
this mechanical to investing suits your style
of investing, then quick, get exploring.

Kunal Jethwani
(MMS Finance)

22
Page 18

Events at N.L.D.I.M.S.R
Seminar on Career Options at
Darashaw,
particularly
Debt
Markets, 20th December, 2014.
The Finance Forum of N.L Dalmia
Institute of Management Studies &
Research organized an informative
session on Career Options at Darashaw,
particularly Debt Markets. This seminar
was addressed by the guest speaker Mr

Vimal Khajuria, Sr VP Darashaw. Mr Khajuria,

who is an alumni of NLDIMSR, interacted
with students and briefed them about
the basics of Debt Market, its relation
vis-a-vis the Equities Market, and various
other important aspects related to it. He
also spoke about the areas of functioning
Darashaw captures under its brand and
even the career segments offered by the
company. Mr Khajuria concluded it by
highlighting the skills set and orientation
required and also stressed on the
importance of right attitude in
comparison to the aptitude to make a
fruitful career.

Research and alumni of NLDIMSR, was the

keynote speaker for that day. He discussed
various concepts relating to technical
Analysis and its functioning. He covered
different charts, patterns, trend analysis,
Golden Ratio amongst many other things. He
also touched upon the Elliott Principle and

Fibonacci Series and its relation to the

financial markets. He kept the students
engaged throughout the seminar, thus,
making it a knowledge grasping day for
them.

Seminar on Career Options in

Finance on 10th January, 2015.

Seminar on Career Options in

Technical Analysis on 3rd January,
2015
The Finance forum of NL Dalmia Institute of
Management Studies & Research organized
a knowledge enriching session on the topic
Technical Analysis on 3rd January, 2015.
Mr. Vishal Dalvi, Founder CEO, Waves

Finance is the forte of NLDIMSR and none

other than its Alumni can be a better
epitome of it. The Finance Forum at
NLDIMSR thus invited its 8 Alumni who
occupy lucrative positions in the finance
23
Page 19

cohort to speak on the topic Career Options

in Finance on 10th Jan 2014.Ms. Snehal
Gupte, Treasury Markets Manager, ICICI
Securities, Mr Rahul Gupta, Manager Forex
Sales Dealer, ICICI Bank, Mrs. Pooja Chheda,
Forensic Investigation Manager, PWC, Mr
Harit Kapoor, Research Analyst, IDFC
Securities,Mr. Gaurav Jain, VP - Institutional
Equity Sales, B&K Securities India Pvt Ltd, Mr
Priyank Chheda, Credit Risk Analyst, Mr. Nischay
Kalra, Financial Analyst, Citi Corp, Mr Ansul
Tantia, Analyst Barclays shared services were

on the panel of speakers for that day. They

detailed about the various finance based
profiles, also highlighting on the skillset and
qualifications required for various profiles
including Corporate Bond Desk, Institutional
Equity Sales, amongst others. They brought
clarity regarding the various job offerings in
the industry. They also emphasized the
importance of profile rather than the pay to
make an enriching career in the long-run.
The seminar concluded with a Q&A Session
followed by Prof Dr. Anil Gor felicitating each
of the guests.

Seminar on BFSI on 24th January

2015
The Finance Forum of NLDIMSR conducted
a Seminar on BFSI on 24th January 2015.The
guest speakers for the occasion were Mr
Gaurav Jain, VP Institutional Equity Sales B
& K Securities India Pvt Ltd & Mr Vineet
Bhandari, Senior Manager, Kotak Mahindra
Bank; both of whom are an alumnus of
NLDIMSR itself. They focused on the
banking sector with an insiders
perspective, how it functions as the
backbone of a countrys economy and how
it channelizes savings to productive assets.
They also discussed about various profiles
in banking sector from Investment Banking,
Commercial Banking, Treasury Services,
Securities Services and retail financial
services. They guided the students with the
skill set that the banking sector looks for
and the certifications that would help them
build knowledge. It was yet another
enlightening and fruitful seminar. The
Guests were felicitated by Dr Anil Gor.

24
Page 20

INTERVIEW WITH THE

EXPERTS
One on one with Mr. Pradeep
Vaishnav
on
Mergers
and
Acquisition HR Integration
Mergers and Acquisitions are an
essential part of business strategy and form
a big part in the corporate finance world. Not
surprisingly, these actions often make the
news. Deals can be worth hundreds of
millions, or even billions, of dollars. They can
dictate the fortunes of the companies
involved for years to come. For a CEO,
leading an M&A can represent the highlight
of a whole career. And it is no wonder we
hear about so many of these transactions;
they happen all the time.
Sure, M&A deals grab headlines, but what
does this all mean to investors?
To answer many such questions we had with
us Mr. Pradeep Vaishnav, Executive Coach
and HR Advisor at To-Be solutions. He

manage this problem and the loss arising

due to it?
A: you may not predict in advance about the
acquisition turning out to be unhealthy what is
important is dealing with your customers
ethically and building their trust.
Q: what problems are likely to arise if HR
doesnt help in such M&A?
A: well it would be a havoc. There would be
lot of rumors spreading across and
miscommunications leading to inefficient
mergers.
Q: what importance does HR hold for a
finance or a marketing person?
A: HR as a whole is very important be it for a
person from finance background or
Marketing background. It forms a base as at
the end what everyone must know is dealing
with people. when it comes to people from
finance department if we consider tasks like
policy making and control or auditing, how
you manage may be felt as bureaucratic so
to avoid such hurdles a commonsensical
approach is required and thus the role of HR
comes into picture.
Q: can a finance manager be recruited as an
HR head?

explained the challenges faced by an M&A

deal and also various risks and the critical
success factors associated with it.
Q: sir, you mentioned about the unhealthy
acquisition target, so how should one

A: In the initial stages it is not possible but

yes there have been such cases in French
companies where CFOs have moved to
become the HR heads so for us also there are
possibilities for people in the top of the
corporate ladder to head the HR
departments.
Q: Sir, you mentioned about the cultural
differences between Ranbaxy and Sun

25
Page 21

pharma. What steps can be taken to

integrate those differences?

Q. How would you describe the budget in

brief?

A: It is difficult to integrate due to the

cultural differences as both are independent
in terms of their culture. Ranbaxy is
aggressive whereas sun pharma is cool and
both need to go beyond communication and
come to a common minimum thing.

A. It was thoughtful budget. The home work

was well done and the Nitty-gritties were
well look into. The allocations were debated,
thoughtfully and well analyzed. All the
components are debated. It is a good start to
the new government's policy. The
framework is well laid down in various
aspects like discouraging black money

Q: Employees must be provided with speak

up opportunities but still there would be
some who might be resisting change or
unwilling to say openly. What could be done
for such situations?
A: Communication is the key. It is you who
have to coach and counsel your employees
by giving them space and letting them know
that their participation is of utmost
importance to the organization. Know in
advance who are the key people or the
best-fit for the organization. In rerecruitment your dialogues are very
important, it is basically what you capture
from the conversation.

Q.How would you rate the budget on a scale

of 100?
A. 65%. One of the main expectations from
this budget was based on tax holidays. The
corporates were expecting more holidays to
their benefit. Also, the manufacturing sector
was expected to be made more competitive.
It is lagging in the recent trends. Also, a
tangible tax planning mechanism has to
come in place.
Q. Don't you think a parity between FPI and
FDI will lead to Hot Money?
A. Yes! It is in evitable in the short run
context. If it is well administered effectively
it will be beneficial in the longer run context

One on one with Mr. Kartik Radia

on Budget 2015.
Budget is one of the most important policies
of an economy and to understand and
analyse this fiscal release the finance of
forum of N.LD.I.M.S.R oraginsed a live
screening of budget 2015 and invited Mr
Kartik Radia, Partner and Deputy National
Leader for Risk and Advisory Services Haribhakti Co. to enlighten the students with
his view and analysis. Here is a brief talk with
Mr Radia on the budget.
26
Page 22

Q. Would you agree- abolishing wealth tax

will encourage tax evasion and black money
as the income can be concentrated in the
form of tax?
A. No. I think this is a good move. Levying tax
on wealth leads to an individuals' tax to
diminish.
Q. The Finance Minister Mr Arun Jaitely also
talked about the trintiy to be made between
Adhar Card, Mobile No. and Bank Account?
A. A similar system is followed in case of LPG.
I think it is a good step. Linking has large
benefits. It has also proved beneficial in the
Pvt Organizations. It will definitely be
beneficial.

Q. 1.55 postal points will be used by the

banking sector, but the postal system in
India is very inefficient. So, wouldnt it lead
to further costs to revive the postal system
and making use of it in the Jan Dhan Yojna.
A: With the technological advancements
emails are anytime preferred over snail
mails. The postal system in India will need
cultural transformation. If the Public Sector
Banks and the Insurance companies join
hands with the postal system it will help
widen its reach. This will accelerate the
momentum of the Jan Dhan Yojna.

27
Page 23

FROM THE ALUMNIS DESK

Mr Kunal Sodhani, Kotak Securities, who
himself is an alumni of N.L.D.I.M.S.R writes
on Budget 2015.
The budget seems to be pretty balanced
focused more on control of fiscal deficit and
encouraging foreign capital which seems to
be realistic. As GDP is focused at 3.9%,
Government has tried to balance two things
fiscal consolidation and higher GDP growth
through increased capital expenditure. The
achievement of this target will depend on (i)
crude oil prices staying near by the current
levels or (ii) credible divestment program,
divestment target of Rs.695bn (strategic sale
of Rs.285bn and divestment of Rs.410bn)
should not face major headwinds. The FM
has targeted real growth of 8.1% for FY16.
The Central plan expenditure is targeted to
rise by 37% to Rs.2.6trn, which is
encouraging.
Revenue
and
capital
expenditure are projected to rise by similar
margins. Infrastructure and manufacturing,
which can create several jobs, have received
significant attention. Infrastructure Funds,
Tax free bonds, revamped PPP model and
further clarifications on REITs / InVITs should
help. I expect these initiatives to boost
growth rates, going ahead.

Budgets proposals are reflective of the

Governments intent to move towards
double digit growth with its emphasis on
making it easy to Make in India & Skilling
India and special focus to key social
initiatives of government such as Swach
Bharat (preventive health), Jan Dhan Yogana
(financial inclusion) and Digital India

(bridging digital divide), infrastructure

development, ease of doing business and
continued focus on social priorities and
overall development needs of the country.
Noteworthy measures include removal of
ambiguity on taxation of indirect transfer,
eliminating MAT on FIIs, new bankruptcy
framework and steps to develop startup
ecosystem.

If we see from the corporate point of view or

in other words market perspective, it seems
to be quite positive on account of:
-

Abolition of Wealth Tax

GAAR being delayed

Corporate taxes going down from 30%

to 25%
-

Crackdown on illegal money

In indirect taxes, surcharge and cess on

excise duty have been subsumed in the basic
duty, which now stands at 12.5%. Service tax
rate has been increased to 14%, to bring it in
line with the proposed GST rate. Individual
tax payers will benefit due to higher
deduction on contribution towards Pension
Funds as well as due to higher medical
insurance deduction and increased travel
allowance. Budget remained silent on some
important issues like labour reforms, FDI in
more sectors, etc.
The budget has proposed a near 37%
increase in the central plan expenditure,
both on the revenue and capital fronts. This
should help support growth at a time when
private sector is faced with high level of
debts and low capacity utilization levels.
Secondly, realizing the importance of the
28
Page 24

private sector as well as foreign funding over

the long term, the budget has proposed
various enabling provisions to improve ease
of doing business, remove taxation
ambiguities / concerns, attracting long term
money, among others. Various initiatives
have been announced to improve the
savings rate in the economy and bring in
long-term money to support the economic
growth. With a view to make the growth
inclusive, various steps have been
incorporated. On inflation, the Government
will now work with the RBI and a monetary
policy framework will be formalized for long
term inflation targeting. Higher allocation
for farm credit and focused programs to
improve productivity, should help in
reducing inflation on a structural basis.

Overall I see a shift from Demand Pull

growth to supply push growth.

Mr Kunal Sodhani
(Manager Currency Derivatives &
Interest Rate Futures Desk,
Kotak Securities Ltd.)

Lets take a look at Central Government

Finances

29
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30