My everyday tidbits...

CRR and Repo Rates

The Reserve Bank of India(RBI) had recently released a notification to increase the CRR by 0.5% in two stages. This led to most major banks increasing their lending rates with ICICI bank taking the lead. But what exactly is CRR and why does it have an effect on the lending rates.

CRR or the Cash Reserve Ratio is the amount that the banks have to keep with RBI. This amount is kept as an interest free deposit by the RBI. Increasing the CRR has to main effects - one it constricts the money supply and second that the banks lose out on interests for their deposit with RBI. As more borrowers are running after lesser available money the lending rates are bound to go up.

Apart from CRR, RBI also controls the Repo rate and the reverse repo rate. Both of these are effective controls in the monetary policy. Repo rate is the rate at which the RBI lends the money to the banks while Reverse repo rate is the rate at which RBI borrows the money from various banks. An increase in either of them can lead to an increase in lending rates for the banks. If repo rate is increased borrowing becomes costlier for the banks and they tend to pass the increased costs to the customers. Similarly, if the reverse repo rate increases banks might find it advantageous to deposit the money with RBI which is essentially risk free. The increase in lending rate offsets the risk that the banks have to take.

India Poised: Really?

The Times of India recently started a campaign named India Poised. Like the NDA government's India Shining campaign, India Poised spoke to a great extent about the buzzing economy and growing global influence of India. All over the national capital as one moved past swanky malls and glassy corporate offices, one could see banners and posters of the great Indian growth story. But move just a little further, into the outskirts of the city and the growth story is abruptly replaced by wretched poverty and starvation.

How can a nation be poised and shining when the majority cannot benefit from it's growth? What about the 200 million Indians who can't even earn a $1 per day? The growth story and swanky malls mean nothing to those who have to labor hard just to earn a meal per day! There is no doubt about the fact that India is actually shining and growing at a remarkable pace, but at the same time one should not forget the sizeable poor of the country. India's growth has actually hurt them as the inflation - the tax on poor - has shot up. For them living has become harder and their lives more miserable.

Thankfully, or out of pure political compulsions, the top leaders of the ruling party have sought to play down India's achievments. Prime Minister Manmohan Singh recently talked about the vast segments of our people who are untouched by modernisation; who continue to do backbreaking labour. His views were repeated by Sonia Gandhi who alluded to the dehumanising poverty in this country. No country can continue to advance for long when a majority of it's population gets deprived of basic human needs.

There is an urgent need for reforms to uplift the poor. But what can legislations do? Especially when the administration is rife with corruption and red tapism. The policies donot benefit those who need them the most and only a minute percentage of allocated funds actually reach the poor. Most of the allocated money is usually guzzled by politicians and middle men.

Hopefully, with legislations like Right to Information and the generally awakened middle class, the currently problems would be reduced in the near future. It is then that the growth of the country would start benefitting people across all sections of the society.

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Here it goes!

X- 92.67% XII: 74%

BTech IIT Kanpur: 6.5 .... lots and lots of Ds CAT: QA - 98.xx DI 99.xx VA 89.xx Overall 99.34

The title for the GD was: For the success of a Team there should be accountability for expertise

The GD was peaceful.. same points going round but round with different examples. I came in 4-5 times. We discussed the Indian cricket team, rafting, Indian army software teams, various sectors and blah blah.

I was the last one in the arrangement so had to wait till 4:45 pm for the interview. The panel consisted of two members - a nice lady(L) and a nice Sir(S). M is me.

M: Can I come in please:
L/S: Yes please and have a seat.
S: Would you like to have something?
M: No thank you.
S: Can I have a look at your certifcate folder?
M: Yes sure < and I pass the folder over to him>
L: Tell us about yourself.
M: blah,blah
L: So where do you work and what are your responsibilities
M: blah.. I m in supply chain mgmt
L: Name other major player in the field
L: Name companies which are into logistics
M: UPS,DHL etc etc
L: Name a company which has effectively used supply chain management
M: Walmart
L: How does it manage to do it?
M: cutting costs, large no of order, dictating terms to companies
S: No there is a specific term for that
M: I dont know sir
S: What management lessons can you learn from religious scriptures
M: ethics, helping others
S: Do you know any company which is ethical?
M: I dont know sir
S: Then how can you say that?
L: Some maths question
M: < a blank face>
L: You havent studied linear programming
M: No Maam
S: (Has a look at my Maths grades at college.. a series of D's) Then what is this Maths I, Maths II etc.. Anyways forget it how can you use probability in supply chain management
M: For predicting the demand
S: And how will you do that?
M: We will have a look at previous years demands and various economic factors.
S: Then?
M: Try to fit a curve to it.
S: So if you have a curve which is a straight line you will say that it will increase further.
M: No sir, other macroeconomic factors will come into picture.
S: How
M: I dont know sir
S: Do you know about green revolution?
M: blah blah
S: When was it started?
M: 1970's
S: 71, 72,73....
M: I dont know the exact year/
S: Who started it?
M: got started in Mexico and then came to India. Some scientist in India
S: Name 5 seed producing companies in INdia.
M: Monsanato?
S: You are from Punjab.. you should know that!
M: But I dont know sir.
L: Do you know about white revolution?
M: blah blah
L: Who started it?
M: Dr Kurein
S: Name 5 Tata companies:
M: TCS, Tata Steel, Tata Motors, Taj Group.
S: What does Tata Motors do?
M: Vehicles
S: What was it earlier known as?
M: I dont know sir
L: You have watching movies as an interest
S: Does he?
M: No, Infact I dont follow them
S: Doesnt matter.. You have seen Lagaan?
M: Yes
S: What managerial lessons can you derive from the movie?
M: blah blah
S: Name any two Birla companies
M: Hindalco and Noveliis
S: But that has been acquired by Hindalco only
M: Birla Cement
S: Ok, Thank you.
M: Thank you.

UNSC expansion

A couple of months back hectic activity could be seen at the foreign affairs offices of India and Japan along with a couple of other countries. These two were the front runners for getting a permanent Security Council seat. Both these countries have a clean track record at UN and sufficient reasons for inclusion in SC - India, one of the fastest growing economies, is home to over 1 billion people and Japan is the one of the largest UN aid donors. But unfortunately both of them have neighbours who are more than just enemies.

India is in a somewhat better position as Pakistan doesn't have a strong lobby, it is more like a puppet in US or China's hands. For Japan the problems are compounded by the fact that China considers a permanent seat for Japan as being equivalent to the growing US influence. No wonder there were strong protests(?) in China against Japan's candidature. But with CCP yielding an iron hand over journalism in China, no one knows for sure whether the protest were actually there or were they dramatized just to grab attention of world media.