Tattlery

Last week, RBI, the Central Bank of India said, Hey NBFCs! Bas! No more free lunches for borrowers with bad loans! So, what were NBFCs doing? NBFCs were dishing out fresh loans to borrowers with bad loans, in hope that the borrower will fix the bad loan. Textbook Sunk Cost Fallacy. How? If a loan goes bad, RBI forces NBFCs to acknowledge immediately after 3 months of non-payment. But, NBFCs decided to subvert this rule, by making the company with the bad loan issue bonds on the loan, which are then bought by an AIF, an Alternative Investment Fund (Minimum Investment 1 Crore INR). The NBFC is a majority investor in this AIF that contains bad debt to boost the credibility of the AIF and attract investors. The NBFC also promises that external investors will least likely to be hit, the NBFC will absorb the first 25 to 30% of default, if default occurs, thereby cushioning external investors from risk. NBFCs are ready to take this risk to get their money back. AIF's were the NBFC's game of dice. But, The NBFC is stuck with an underperforming AIF with a bad NAV right? This is where, the NBFC decides to evergreen the debt. How? A Brand New AIF that absorbs the bad AIF! AIF can hold defaulted debt, wait longer times for recovery, show a positive NAV, and keep the bad debt invisible. There's a crude proverb in Tamil, that goes, Rotten eggplants make it to the market eventually. (The one with Kathirikaai and Kadaitheru ;) After 7 to 10 years, the rotten AIF will finally be picked, identified and deemed unrecoverable. Sic. Now, RBI asks, Rasode Mein Kaun Tha? Hidden Risk Kyun Tha? 30% Bank Lending to NBFCs NPA Kyun Tha? Vo Tha? Thum Thee? Kaun Tha? Kaun Tha? So, RBI has enforced a slew of rules, after being informed by Securities And Exchange Board Of India on the AIF escape route. RBI says, Achaa Suno NBFCs, If you are investing in an AIF, the AIF cannot lend or buy bonds of any company that you have already lent to last year. If you already have one such investment or an ongoing investment, dump it within a month. If not 100% of the investment will be treated as a provision, meaning expense. If this happens, the NBFC's balance sheet will record a loss (or low profits), since the investment will be treated as an expense. Say, if the NBFC has 10 Crores invested in an AIF, if all 10 Crores are recorded as an expense, this is an outflow from the NBFC's balance sheet. NBFC's cannot afford this, as NBFC's have to show account for holding a Capital Adequacy Ratio (CAR). This means, the NBFC has to always have say 15 Crores in hand, if it has to lend and operate with 100 Crores. The new regulation does not forbid junk bond AIFs. Bad Loans can still be bought by AIFs. But, the NBFC cannot invest in these AIFs. This way, the AIF will be bought at a fair low price, and make money on recovery. If there's no evergreening of loans, banks and NBFCs will register a loss, but the AIF will recover the money. There's discontent. 🤷

A few years back, in NCR (Delhi, Gudgaon, Noida), Grofers used to be the go-to online grocer for online deliveries in our neighborhood. Now, In Chennai, Blinkit (Ex-Grofers) is the preferred app for a quick grocery purchase in our locality. Skincare Saviours,... Bold & Beautiful mascara, lines and Kajals,... Get beauty essentials delivered in minutes , read the unevenly shaped brown Blinkit paperbag that carried a blobby yellow sachet that read Gold Winner Gingelly Oil and a damp packet of Paneer, and was dropped tacitly at the doorstep as the buzzer went unanswered. Not just cosmetics, you can order a last-minute iPhone (a substantial investment in India economically, so much so Apple offers EMIs) online on Blinkit!!! Check out the price variation in this Order History - 100 G Green Chillis - Rs.12 iPhone 15 - Rs. 1,40,900 Manyavar Kurta (Burgundy, L) - Rs. 3000 Steep!! Right? Why? Seems, it's Blinkit 's USP in the competitive e-Grocer space. If it's optimized dark stores and quick delivery that differentiates Zepto , e-Retail is Blinkit's proposition. In the Playstore though, Blinkit still claims to be an e-Grocer. But, the image Blinkit aspires to create is, O! You can get anything and everything at Blinkit in minutes. And, for this, Blinkit is comfortable holding on to and exploiting to the fullest its vast dark stores that can store up to 10,000 items, unlike @Zepto's dark stores that are optimized to hold not more than 4000. The strategy is aimed at holding and dispensing a huge catalogue and at catering to an elastically expansive user base. But, who'd want to buy an iPhone on Blinkit ? You may ask. But, if they do, it's 50 times the money made on a grocery sale for Blinkit. In a country of 130+ Crores / 1.3B+, Blinkit predicts 5 to 10 Million (50 Lakh to 1 Crore people) might, and it's too probable a chance to dismiss. Apparel, Fashion, and Electronics are high-margin categories as compared to Grocery and Food, and Blinkit wants to tap into more categories and deliver them quickly. With this strategy in place, Blinkit is also nurturing a secret Peter-Parker-ish dream to evolve as an e-Hypermarket. Time will tell. Follow Tattlery and Stay Curious!

Citadel pays its interns 18,000$ + per month. Did you know? India has a few secretive companies in the Quant sector similar to Citadel, not visible in the public domain, that follow suit and offer exorbitant CTCs, values pegged to the Desi market. HFTs - High-Frequency Trading Companies are companies that tie up with investment banks, hedge funds and institutional investors. Some names in India - ALPHAGREP SECURITIES PRIVATE LIMITED Quadeye Trading LLC Some MNCs that are local favorites - Jane Street, Optiver

O! Did you notice the long line from the Rajendra Place ATM extending to Karol Bagh? The line at Tirupati's Laddoo counter would be shorter. Deposit, Withdrawal, Print Passbook, Swipe In, Swipe Out, Button Tap, Zing, and Rip-Rip echoed the roads. It was just another day in another Desi ATM, not unlike any other, and the line seemed neverending. Behind Raju, the milkman, who was withdrawing 10K bucks from his debit card, stood Ramesh, who was late for work. Behind Ramesh stood Raji, who was waiting in line to make a cardless deposit of 5K for her son, who is studying in another state. Behind Raji stood Umesh, who had his debit card wielded out, ready in hand, to deposit 50K through the card. Behind Umesh, stood Vishwesh, who was resolved to pay his credit card bills with his debit card, at least the minimum balance, by today. And behind Vish, stood countless others, checking their phones, moving along the line. The State Bank of India, SBI has 65,000+ ATMs and spent 1.1B+ USD (or Rs. 9000 Crore) on ATMs. Why? The bank has 260 Million active debit cards. Out of these, 130 Million belong to no-frill accounts and were distributed through a social scheme. The remaining 130 Million makes SBI an annual fee of ~192 Million USD (1600 Crores), assuming the least fee of Rs..125 or 1.5 USD was charged per card. Despite UPI, cash withdrawal using debit cards stood at ~33 Lakh Crores (395 B USD) and grew by 6.1% YOY. ATM withdrawals accounted for 80% of the ~40 Lakh Crore debit card transactions in 2023. The balance in the accounts of users who used debit cards alone and not credit cards stood at a high of 50,800 Crores (~6 B USD). This amount, tied to the savings accounts of the customers, is easy capital for banks. Banks also make money when their ATM is used for withdrawing money from a card issued by another bank. SBI issues 27% of India's 970 Million Debit Cards. In a country where debit card users are 10 times more than that of credit card users and as a bank that holds the motherlode of banking and the debit card market in India, SBI has a lot to gain or lose, whatever happens to the debit card. Remember this term? Disruptive Innovation? Now, that we can withdraw cash from UPI ATMs using QR in India, all of a sudden, Debit Cards are losing relevance. UPI ATMs have disrupted Debit Cards. In 4 years, Debit Card Spending has declined by 5%. In 2023, Debit Card payments declined by 1% YOY. SBI lost 58 Million Debit Card users in 4 years. (Fuzzy Data - without accounting for Inactive Cards) In the past 5 months, debit card transactions have declined by 1.6 B USD (13,000 Crore Rupees). SBI is worried. Cashbacks, Reward Points, Discounts, Merchant Offers, Ad Campaigns, email Campaigns,..... Anything to boost Debit Card Spending! SBI is at it! Operation Save The Debit Card! An Exaggerated Prediction: If UPI ATMs were to take off, debit cards may be out of use in another 5 years. Until then, Follow Tattlery and Stay Curious!

VCs in the Philippines shift targets towards B2B. The lockdown witnessed a spurt of funding in B2C startups that solved for home delivery. But, now, Kickstart, 917 Ventures, and the VC ecosystem of the Philippines in general are leaning more towards B2B. There is the understanding that success, though will naught be immediate, will be sustainable in B2B.

Bankers in India huddled to confide their disapproval clandestinely within closed doors. Oooh. Tell me more... This is how the story goes. SB, or Savings Bank in India, is a customer acquisition tool. SB has mediocre interests and can be closed and withdrawn at one's own convenience. Since SBs have no fixed maturity, banks offer low-interest rates for SBs and use SBs as a tool to upsell FDs, Cards and Loans. Thanks to their high liquidity and low-interest rates, SB Accounts are cheap capital for banks. FDs, on the other hand, are not as liquid as SBs. The bank levies pre-closure charges if you withdraw from an FD account before closure. Banks can also use FDs to reinvest in other asset classes since no liquidity has to be maintained. This means that if you deposit 10K INR in a one-year term FD account, this will stay in the account until one year. So, you can say, take a loan on your 10K deposit in FD, on lien. The bank makes money from the loan. So, banks pay more interest rates to FDs. Again, in recent times, high taxes on bank FDs have been a cause of controversies as well. Yeh Sab Chodo, What's Cooking Now? RBI wanted to suck liquidity, excess spendable cash out of the system after the withdrawal of 2000 Rs. notes. So, RBI said, banks have to pay an ICRR(cash reserve ratio) of 10% to RBI. Banks -> PAY -> RBI. Demand is higher than supply if people can spend a lot of cash (High Liquidity in the Economy). Demand > Supply implies Inflation. RBI wants to curb inflation. So, RBI has been taking measures to reduce liquidity in the economy. RBI is ready to take on OMO, open market operations to reduce liquidity. OMO: If a government buys and sells securities in an open market to influence liquidity in the economy. RBI wants to sell government securities. So, RBI will now have less cash to spend (in RBI's case, circulate) Less Cash to Spend -> Low Liquidity. Less Cash to Circulate -> Low Supply of Currency -> Increases Demand for Currency -> Strengthens Currency Value. RBI's measure to reduce liquidity is working. At the same time, banks have been paying advance Tax and GST in September. So, the banks have less cash to spend. -> Low Liquidity. Repo remains unchanged. So, people are taking more loans and credit. Loans > Deposits. So, the banks are facing an acute liquidity crunch. So, the banks are borrowing from RBI's Marginal Standing Facility (MSF) more than ever. MSF Rate > Repo Rate. RBI's key goal is public welfare. So, RBI wants the banks to boost liquidity to reduce borrowing. Hence, RBI is instructing banks to boost deposits, both in FD and in SB. To titillate investors, RBI wants banks to increase SB interest rates. Public Welfare is not any Bank's headache. Banks want to be Profitable. So, banks, both the public and the private sector, are not willing to increase interest rates for SB. And, this is what the secret meeting was all about. Follow Tattlery, and Stay Curious!

As informal loans run wild, Indonesia caps interest rates to 0.3% per day from January 24 to put a leash on unbridled P2P lending.

The Rephrase.AI Acquihire

Pushpeshu Jati Purusheshu Vishnu Naarishu Rambha Nagareshu Kanchi A flower like Parijat (the Chennai girl wanted to believe the term referred to Jati Malli, we love Nandhiyavattam/ the Madurai Jasmine flower with large buds though), A stellar ideal man like Lord Vishnu A Female Ideal like the nymph Rambha. and A city like Kanchi, says Kalidasa, the writer accredited of the epic Shakuntalam. Such was our visit to Kanchi, the abode of Kamakshi, the goddess of love. As Dumbledore says, Love is the most powerful protection, ability and magic. Isn’t it? There’s a lot to love in Kanchi. Sarees, Sumptuous Restaurants, and the sheer Colors of the Street, that define the city. Our first Shopping Destination was the Babusah, which like Matin Banaras in Varnasi, has nominal imposters to boost its credibility. Babusah housed the contemporary trends. But, if you are like me, and have a penchant for tradition, ask around for Aravind. After Babusah, the next destination was Prakash Silks, which is like Stuti Weaves in Varnasi. The shop had a wider collection of designs in low price ranges. Every Rickwala in the city referred Upashana for lunch. The meal palette at the place was the usual kootu, poriyal, and the quality was decent. (Still love Akshayam tho ;) After a long day, and an idiyappam at an AAB, hid from the main road, the road journey back to chennai was spent snoring ;) P.S. Shakuntalam is a rom com about Dushyantan and Shakuntala (recently, made into a movie). Dushyantan Shakuntala, Nalan Damayanti and of course, the Ramayan were Desi Romcoms and Bedtime stories for kids all over India, in the 90s.

2.5 Billion USD in net revenue, and a 100 Billion Dollar valuation fallen down to 66 Billion, thanks to competition from Temu (Twice the sales at Shein), legal questions on forced labor in production, and back-and-forth lawsuits against copyright and trust, Shein sells for as low as 2 USD a piece and aims for a 90 Billion Dollar valuation. Behind the Pic: The Sangeet