Indian Institute of Management Bangalore’s Post

In a recent study, ISB’s Professor Prasanna Tantri explores how transparency in banks’ lending costs can make a real difference for businesses in India. Co-authored by Professor Nitin Vishen of the Indian Institute of Management Bangalore, the study looks at a significant policy change by the Reserve Bank of India (RBI) that required banks to disclose a cost-based benchmark interest rate. The findings are compelling: increased transparency not only lowers interest rates but also boosts firms’ borrowing and investment. Read the full research paper, published in the Journal of Accounting and Economics, here: https://lnkd.in/dqSSk-J2 #ISB #ResearchAtISB #ISBFaculty

CMA Dr Rashmi Soni, Professor - Finance & Law and Ms Ekta Swarnakar, Research Teaching Associate - Finance & Law, K J Somaiya Institute of Management, authored an article titled 'Importance of financial literacy in new wave of economy growth' in Forbes India. In this article, the importance of financial literacy is highlighted, along with an overview of the current scenario in India. It is explained that achieving financial literacy and independence cannot be attained without leveraging the digital financial services available in the country. The article emphasises embracing digital financial literacy presents a significant opportunity to strengthen the economy. Click on the link below to watch the entire telecast: https://bit.ly/3KxTjSE #KJSIM #KJSomaiyaInstituteofManagement #MBA #FacultyinNews #FinancialLiteracy #FinancialServices #DigitalFinance #Finance #Money #Economy #PersonalFinance

Ramesh, a retired school teacher in Delhi, was always careful with his savings. 💰 He diligently invested in fixed deposits (FDs) to secure his retirement income. But a few years ago, inflation started to rise, slowly eating away at the returns he received from his FDs. The interest he earned barely covered the increase in prices, reducing his purchasing power. 😢 One day, Ramesh's son, who is a financial advisor, told him about Inflation-Indexed Bonds (IIBs). These are special bonds offered by the Indian government where the principal amount increases with inflation. This means even if inflation rises, the value of Ramesh's investment remains protected. 📈 💹 Here's how it works: Let's say Ramesh invests Rs. 10,000 in an IIB with a fixed interest rate of 5%. If inflation is 4% that year, the principal amount of the bond will be adjusted to Rs. 10,400. The interest payment will be calculated on this adjusted amount, giving Ramesh Rs. 520 (5% of Rs. 10,400) instead of Rs. 500 (5% of Rs. 10,000). This ensures his returns stay ahead of inflation and his purchasing power is preserved. Ramesh was happy to learn about IIBs. They provided a solution to the problem he was facing with traditional fixed-income investments. He invested a portion of his savings in IIBs, along with his FDs, to create a more balanced portfolio protected against inflation. 😊 The Indian Bond Market 💵 The Indian bond market is vast and growing rapidly. As of 2023, it is estimated to be around Rs. 220 lakh crore (Rs. 220 trillion). This includes government bonds, corporate bonds, and other debt instruments. Investment Opportunities and Penetration 🙅🏻 While the bond market is large, investment in bonds, particularly retail participation, is still lower compared to stock markets. This is due to factors like perceived complexity, lower liquidity (ease of buying and selling) compared to stocks, and a lack of awareness about the different types of bonds available. However, initiatives by the government and financial institutions are increasing awareness about bonds, including IIBs. These efforts are expected to improve investor participation and penetration of bond investments in the future. By understanding inflation and the benefits of IIBs like Ramesh, more investors can utilize these bonds to create a well-rounded portfolio that protects their wealth from rising prices. 🪙 #investments #bonds #inflation

Mr. Ashish Kirar Student at the Department of Financial Studies, University of Delhi, will try to explain G-Securities (G-Secs) in this short video. G-Sec is a tradeable instrument issued by Central or State Governments. It acknowledges the government's debt obligation. Such securities are short-term terms usually called Treasury bills (T- Bills) with maturities of less than one year (91 days, 182 days, or 364 days) or long-term called Government bonds or dated securities with maturity of one year or more (between 5 years and 40 years). > T-bills are zero coupon securities and pay no interest. Instead, they are issued at a discount and redeemed at the face value at maturity. > Dated G-Secs are securities which carry a fixed or floating coupon (interest rate) which is paid on the face value, on a half-yearly basis. In India, Central Government issues both T bills and bonds or dated securities while State Governments issue only bonds or dated securities, which are called State Development Loans (SDLs). G-Secs carry practically no risk of default and, hence, are called risk-free gilt-edged instruments. Other G-Sec includes Cash Management Bills (CMBs), introduced in 2010, a new short-term instrument to meet temporary cash flow mismatches of the Government. CMBs have the generic character of T-bills but are issued for maturities of less than 91 days. G-Secs are issued through auctions conducted by RBI. Auctions are conducted on the electronic platform called the E-Kuber, the Core Banking Solution (CBS) platform of RBI. #dfs #mfc #mba #finance #UniversityofDelhi #Gsec

Very insightful lessons from Mr. Subbarao, who served as the 22nd Governor of the Reserve Bank of India (RBI) from 2008 to 2013. He took office during a challenging period marked by the global financial crisis. Three things stood out to me in this book summary 1. I do not want you to think like me, I just want you to think 2. Making it a habit to speak to skip-level reports 3. People are good at explaining how things are done but never why they were done that way Thanks Shiv for the summary

💡 Understanding the Difference: Savings, Bachat, and Investing In the world of personal finance, it's essential to grasp the distinctions between savings, "bachat," and investing. Each serves a unique purpose and offers different returns. 1. Savings: Savings refer to setting aside a portion of your income for future use, typically in a savings account. It is the safest and most liquid form of money storage. Savings accounts in India usually offer an interest rate of around 3-4% per annum. While the returns are low, the risk is minimal, and funds are readily accessible. 2. Bachat: "Bachat" is a Hindi term for savings but often implies more disciplined and regular saving habits, such as contributing to a recurring deposit (RD) or a fixed deposit (FD). RDs and FDs in India offer higher returns compared to savings accounts, generally ranging from 5-7% per annum, depending on the tenure and bank. Bachat helps in creating a more significant corpus over time, although the liquidity is lower compared to a regular savings account. 3. Investing: Investing involves putting your money into assets like stocks, mutual funds, real estate, or bonds with the expectation of higher returns. Unlike savings and bachat, investing carries higher risk but can provide substantial returns. For example, equity investments in India have historically provided returns of around 12-15% per annum over the long term. Mutual funds, depending on their type, can yield returns ranging from 8-12%. Real estate and other investment avenues also offer varying returns based on market conditions. Key Takeaway: Savings are for short-term needs and emergencies. Bachat is for disciplined medium-term goals. Investing is for long-term wealth creation and financial growth. Understanding these differences helps in making informed financial decisions and aligning your financial strategy with your goals. #PersonalFinance #FinancialPlanning #Investing #Savings #Bachat #WealthManagement #FinanceTips #MoneyManagement #FinancialAdvisor #InvestSmart #AaravInvestments

According to official data, there are currently 7.92 crore SIP (Systematic Investment Plan) accounts for investing in various mutual fund schemes. SIP contribution increased by nearly 25 percent at around ₹1.56 lakh crore in 2022-23, as against ₹1.25 lakh crore in 2021-22. This number is already higher at 1.6 lac crore till Jan 202. The increasing trend of Systematic Investment Plans (SIPs) in India signifies a fundamental shift in savings and investment behavior. SIPs offer a disciplined approach to investing, allowing individuals to invest small, regular amounts in mutual funds over time. This approach not only mitigates the risk of market volatility but also harnesses the power of compounding for long-term wealth creation. This is not it: There are several other benefits of SIPs: 1. Disciplined Investing 2. Rupee Cost Averaging 3. Flexibility 4. Convenience 5. Diversification 6. Long-Term Wealth Creation 7. Mitigating Market Volatility As financial literacy grows and awareness spreads, more Indians are embracing SIPs as a convenient and effective way to achieve their financial goals. The rise of SIPs reflects a broader cultural shift towards proactive wealth management and financial planning in India's evolving economic landscape. #sip #sips #monthlyinvesment #investment #investing #investmentopportunity #investmentstrategy #investingtips #investmentopportunities #investmentideas #monthlysavings #longterminvesting #systematicinvestmentplan

EP Briefs | The Economic Post | The Economic Club of India For the entire FY24, the company's net profit was ₹14,145.46 crore, up from ₹11,166.98 crore in FY23. REC Ltd, under the Ministry of Power, is a non-banking finance company focusing on power sector financing and development across India. #powerministry #nbfc #QuarterlyResults #growth #future #investing #news | Catch the day's latest news here ➟ https://lnkd.in/e7eFEYgN

Start a Systematic Investment Plan (SIP) of Rs. 5,000 per month. Increase the SIP amount by Rs. 2,000 every year. After 30 years, you will have accumulated a corpus of Rs. 7 crores 🤯🤯🤯. Every middle-income earner in India can achieve this. All it takes is patience and consistency. Please note that the value of Rs. 7 crores after 30 years will be equivalent to approximately Rs. 87.5 lakhs. At a 7% inflation rate, the value of money halves every 10 years.

How does the Bond Price and Yield Relationship work? We know bond prices move opposite to yields But why? Assume the government of India issues a bond which pays 8% interest, and has a tenure of 1 year. If the face value of this bond is Rs 100, it will pay the bond holder 108 at the end of the first year. The final payout is fixed. If we pay Rs 100 for this bond, we will make an 8% return If we pay > 100, the return will be lower If we pay < 100, the return will be higher Now assume that the government comes and issues another 1-year bond with 10% interest. This bond will pay Rs 110 at the end of the first year. Everyone should want to buy this bond, instead of the earlier one. All things being same, anyone holding the earlier bond will try to sell that, and buy the new one. The earlier bond will see a huge supply of sellers, which should result in prices going down. Prices will go down to the point where the return on the old bond matches the return on the new bond (10%). Thus, as the govt increases interest rates, the demand for the new bonds is higher, and the price of existing bonds drops. If the government had cut rates, demand for existing bonds would have increased, increasing their price. And that explains the inverse relationship between bonds yields and bond prices. Why is it important? As a #bond #investor, if yields are going up, then our portfolio value will fall with rising yields. And fixed income, which appears to be a safe investment, can become risky in a rising yield environment. ----- As a new initiative, I am planning to release some coupons every week, for someone who is interested in trying out some of our courses at discounted prices These would be for our short courses. The courses, priced at Rs 1400, can be availed for Rs 700, at a 50% discount. You can use the coupon code LINKEDIN to register for any of the short courses on the FinShiksha website. Details on my profile, and in the comments section. 10 slots available this week. ----- I help professionals build a career in #finance Follow me (Peeyush) and do go through some of my earlier posts.