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Finance Continuum

Finance Continuum 2018 was organized on 4th August 2018 with a theme reflecting the paradigm shift in the Indian Financial Sector. The Continuum saw a series of lectures centered on the theme:

       “Disruptive Innovation, Transformation and Changing Regulations: Paradigm Shift in the Indian Financial Sector”

Following luminaries participated for delivering lectures at Finance Continuum 2018 on August 4th, 2018 at SJMSOM, IIT Bombay:

  • Ms. Shalini Chhabra | Senior Vice President- HDFC Bank
  • Mr. Shivaji Dhekane | Deputy Vice President - Analytics, Tata Capital
  • Mr. Nayan Mehta | Chief Financial Officer, Bombay Stock Exchange
  • Mr. Ashish Desai | Senior Vice President and Head - Product and Payments, Aditya Birla Payments Bank
  • Mr. Nitish Sikand | Executive Vice President and Fund Manager – Fixed Income at Invesco Mutual Fund
  • Mr. Ashish Jain | Head of Fund Services–Deutsche Bank
  • Mr. Anil Ghelani | Head of Passive Investments & Products – DSP BlackRock
  • Mr. Yatish Shivaprasad | Senior Vice President- Societe Generale GSC
  • Mr. Amol Deherkar | Head of Corporate planning and strategy – Retail finance at Edelweiss


Listed below are some of the suggestive and non-restrictive sub-themes for discussion: 

The outlook for the Indian Banking Sector

Speaker: Ms. Shalini Chhabra| Senior Vice President- HDFC Bank

The Indian banking system consists of 27 public sector banks, 22 private sector banks, 44 foreign banks, 56 regional rural banks, 1,589 urban cooperative banks and 93,550 rural cooperative banks, in addition to cooperative credit institutions. Bank credit grew at 12.64 percent year-on-year to Rs 85.511 lakh crore (US$ 1,326.78 billion) on May 11, 2018, from Rs. 75.91 lakh crore (US$ 1,131.47) on May 12, 2017.

The bank recapitalization plan by Government of India is expected to push credit growth in the country to 15 percent and as a result, help the GDP grow by 7 percent in FY19. Enhanced spending on infrastructure, speedy implementation of projects and continuation of reforms are expected to provide further impetus to growth. All these factors suggest that India’s banking sector is also poised for robust growth as the rapidly growing business would turn to banks for their credit needs.


NBFC Regulations: Evolution, rationalization & challenges ahead

Speaker: Mr. Shivaji Dhekane | Deputy Vice President - Analytics, Tata Capital

Non-banking finance companies (NBFCs) are companies engaged in the business of loans and advances that form an important and integral part of the Indian financial system. They play an important role in nation building and financial inclusion by complementing the commercial banking sector in making credit available to the unbanked segments of society, especially to the micro, small and medium enterprises (MSMEs), which account for the majority of non-agricultural employment in the country. In terms of financial assets, NBFCs have recorded a healthy growth of 19% CAGR over the past few years and its share in total credit is expected to grow to 20% by 2020 from 13% in 2015.

 With the growing importance of data-driven decisions, technology can enable NBFCs to more efficiently serve their customers. Some of the applications include lending based on data from mobile phone records, the rise of social media scoring, assessing of the customer’s propensity to repay the loans. These are also referred to as alternative data scoring.

NBFCs can realize the potential value of alternative data by making investments in technology and analytics to leverage both traditional and non-traditional data sources. This will enable a healthy competition, increase product innovation, and also further the government goal of increasing financial inclusion.  

Challenges still exist for NBFCs as the financial sector sees a rapid transformation. Owing to the lighter regulations on NBFCs, globally they have been seen to take up high leverage and sub-credit assets thus risking the health of their assets. Another issue is with respect to the convergence of the regulations of banks and NBFCs. Though it has improved in the recent iterations to regulations, further convergence is desired. The NBFCs act as a catalyst to the development of the country and is therefore important to nurture and actively manage their health.


Redefining the lines: Growing influence of FinTechs on Indian Financial services and the challenges

Speaker: Mr. Nayan Mehta | Chief Financial Officer, Bombay Stock Exchange

Fintech refers to financial technology that describes an emerging financial services sector in the 21st century. Originally, the term applied to technology applied to the back-end of established consumer and trade financial institutions. Since the end of the first decade of the 21st century, the term has expanded to include any technological innovation in the financial sector, including innovations in financial literacy and education, retail banking, investment and even crypto-currencies like bitcoin.

Since the internet revolution and the mobile internet revolution, however, financial technology has grown explosively, and fintech, which originally referred to computer technology applied to the back office of banks or trading firms, now describes a broad variety of technological interventions into personal and commercial finance. According to EY, Fintech Adoption Index, one-third of consumers utilize at least two or more fintech services and those consumers are also increasingly aware of fintech as a part of their daily lives.


Trends in Digital Lending

Speaker: Mr. Ashish Desai| Senior Vice President and Head - Product and Payments, Aditya Birla Payments Bank

Digital Lending enables borrowers to apply for any consumer or business lending product (credit card, line of credit, mortgage, business loan) 24x7 from any internet connected device, at any location, any time of the day. The aim is to make lending fully digital across channels and mobile devices.

Digital lending targets to transform inefficient and lengthy loan and mortgage origination processes into a fully digital, paperless, risk-conscious and customer-oriented experience streamlining tasks and operations for realtors, partners, brokers, agents, branch employees, specialists and back office users across any type of device.

The Changes in the mutual fund industry, from a regulatory standpoint, in the recent past and its impact on the industry

Speaker: Mr. Nitish Sikand| Executive Vice President and Fund Manager – Fixed Income at Invesco Mutual Fund

In the aftermath of the 2007-08 financial crises, the regulations in the financial services industry have increased many folds. In India, SEBI has also introduced a couple of initiatives to protect the investor’s interest that on the other hands can be considered as anti-industry.

  • Entry Load Ban: In August 2009, SEBI banned the charge of entry loads on investors thereby decreasing distributors margins.
  • Introduction of Uniform factsheets: In Sep 2015, SEBI directed mutual fund houses to standardize their fact sheets with the aim to prevent investors from taking unwarranted risks.
  • Colour coding to risk-o-meter: In 2013, SEBI made it mandatory for the mutual fund houses to use product labels with color codes to help investors assess the risk involved while investing in a respective mutual fund scheme.
  • Introduction of Direct Plans: The rationale behind introducing the direct plans was to reduce the role of distributors in increasing the retail participation. If investors approach mutual funds directly to transact, the fund houses would be able to cut off the long chain of distributors and agents who have always added to their cost structure.
  • Mandatory disclosure of commission (in the account statement) paid to distributors: As directed by SEBI, fund houses will now have to disclose the commissions they pay to distributors, in Rupee terms, for the businesses solicited.

Indian Mutual Fund Industry: Challenging the status quo and setting the growth path

Speaker: Mr. Ashish Jain| Head of Fund Services–Deutsche Bank

The asset management industry has grown enormously in the last couple of decades with the AUM increasing 20 times from 47,000 crores in 1994 to 8.25 Lakh crores in 2014. At the same time, the industry expanded rapidly in terms of no. of companies, products, schemes. The industry is still very young and has huge opportunity to grow. But, despite this tremendous growth, the industry is still not able to free itself from the constraints and faces some challenges that needs to be discussed and tackled to create a path for growth for the industry for it to reach its true potential. The share of asset management industry has remained very low in the total household savings, garnering lesser than 3% from the total household savings. It is neither growing in a desirable pace. Even after being a consistent provider of inflation beating return, the industry is outpaced by other investment alternatives like Gold, Real Estate etc.

The asset management industry need to challenge its status quo and provide products for the needs of varied investors. This way the industry will be able to increase the volume and create greater return for all the stakeholders. It need to observe the global trends and take cue from them for providing wider product basket. If only these challenges are tackled, the industry will grow to its true potential.


Latest trends in passive investments and overview on the debate about active v/s passive investments

Speaker: Mr. Anil Ghelani | Head of Passive Investments & Products – DSP BlackRock

Passive investing has changed globally, driving costs down for mom-and-pop investors. However, mostly ETF (exchange-traded funds) is the passive investment strategy that is trending in the market and is one of the trusted investment vehicles for a broad range of institutional and individual investors. These came into the picture around 30 years ago, ETFs now manage roughly $4 trillion in assets globally which is less than the amount invested in open-end mutual funds (actively managed and indexed). Most market analysts expect assets in ETFs to outperform mutual funds within a few years, based on the current investing trend.

Passive investing, sometimes called index investing, is a strategy that tries to replicate the returns from whatever index it tracks. That may be the FTSE 100 Index or something less well known. These days there are many passive funds and Exchange Traded Funds (ETFs) available to investors. Passive investments are popular with those who believe in active management to be unreliable and expensive. Instead, the passive investor is happy to accept market returns in exchange for the peace of mind that nobody is overcharging and returns are unlikely to seriously under perform the market.

Even passive funds have some charges, so returns are virtually guaranteed to be a little lower than those of the index itself. Active investors are not prepared to accept average market returns and want to beat the market. They know they will have to pay higher fees to do so but this is balanced by the possibility of higher returns. There has long been a debate between supporters of active and passive investments as to which is better.

Transformation Imperatives for a Global Bank

Speaker: Mr. Yatish Shivaprasad | Senior Vice President- Societe Generale GSC

Banks are investing in the short-term on cloud computing and FinTech collaboration, and longer-term on blockchain and AI technologies, as part of a digitalisation drive. Digital disruption has the potential to shrink the role and relevance of today’s banks, and simultaneously help them create better, faster, cheaper services that make them an even more essential part of everyday life for institutions and individuals.

When it comes to regulation, international standards are set by bodies such as the Basel Committee on Banking Supervision and the European Union. After the 2008 crisis, regulators had proposed significant solutions to the crash. Ten years after the global financial crisis, the banking industry has regained its health and the mood of bankers is more buoyant.


Indian credit landscape and emerging trends in Retail Lending

Speaker: Mr. Amol Deherkar| Head of Corporate planning and strategy – Retail finance at Edelweiss

Retail banking in India is not a new phenomenon. It has always been prevalent in India in various forms. For the last few years it has become synonymous with mainstream banking for many banks. The typical products offered in the Indian retail banking segment are housing loans, consumption loans for purchase of durables, auto loans, credit cards and educational loans. The loans are marketed under attractive brand names to differentiate the products offered by different banks. India’s retail banking now bigger than Russia but not close to China.

The growth of retail lending, especially, in emerging economies, is attributable to the rapid advances in information technology, the evolving macroeconomic environment, financial market reform, and several micro-level demand and supply side factors. Demand has grown for both corporate & retail loans; particularly the services, real estate, consumer durables & agriculture allied sectors have led the growth in credit. India registered a record inflow of amount of US$ 51.02 billion in mutual funds in FY 2016-17. According to the Association of Mutual Funds in India (AMFI) data, this was the highest investment in mutual fund schemes since the fiscal 1999-2000.