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During these troubled times when all the central banks are coming out with all sorts of stimulus packages to give a fillip to their respective economies, one is tempted to ask
Is the time ripe for Lazy Banking?
One might not have heard about this phenomena off late but it has been rigourously practiced by Indian commercial banks during 1999-2002 period. So let’s first have a look at this evocative phrase which was coined by Mr. Rakesh Mohan, former deputy governor, RBI.
Lazy Banking refers to the phenomena of investment by commercial banks in sovereign bonds in declining interest rate …

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Voltaire once said:- “Common sense is not so common“. He wouldn’t know that stock market is one place which fits the bill perfectly. Here irrationality rules the game who has fear and greed as its close allies.
I have never been able to understand why stock picking is so diametrically opposite to owning a business. In either of the scenario, you are the part owner of the business and hence should think alike.
Stock market is primarily driven by earnings of a company whereas a businessman, no doubt would be concerned about the …

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After clearing CFA Level I in last december, I plan to take CFA Level II this june. I am sure the journey is going to be bumpy one but eventful during which I hope to learn many new things in great depths. With less than 100 days to go for CFA Level II, time is ripe to start preparing for the same.
I plan to share my learnings picked up during the journey through this blog in a separate section called “In CFA Classroom“.  So various topics like regression, fixed income …

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The news has come in. The board has approved RIL-RPL merger. Contrary to the beliefs of possible swap ratio of 20:1, the swap ratio has been pegged at 16:1 which means for every 16 shares of RPL (Reliance Petroleum Ltd.) held by investors, they would get 1 share of RIL of face value 10 each. For full details of the merger, click here.
The merger will be effective from April 1 and is expected not to give any tax relief to RIL. Reliance Industries Ltd. will issue 6.92 crores to RPL shareholders …

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If one would need to name the mother of all mergers in Indian corporate, then it would be this one. Sample this -
Post merger, RIL-RPL behemoth would constitute 20% of the Sensex topline, 17% of the total profitability, 17% of the combined net worth.
The Refining and Petrochemical giant would be 6th biggest private refiner in the world with a total capacity of 1.2 million barrels a day.
There are many stakeholders in this merger which would be keenly looking at the swap ratio which is expected to be announced on 2nd march …

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The first part of the hangover was blogged here. In that post, we looked at various things including the rescue package given to Citigroup and Bank of America by the Fed, and possible strategies which could be adopted in future.
Brooding more on the issue, one of the biggest problem which US is facing these days is that even though Fed has provided sufficient liquidity but the banks are not ready to provide it to the market. There could be two possible reasons for this-
1. Security against future losses
2. Due to stricter …

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Chanakya is happy to announce the addition of one more passionate member to its family. Please welcome Rahul Munjal who has keen interests in finance and economics. Financial meltdowns and depressions are his favorite.
Yes its about the recent financial turmoil and it’s the hangover from years of risk-taking. U.S. Treasury is trying its best to take the economy out of this hangover. They have distributed more than $194 billion through its program of purchasing stakes in U.S. banks. It has also rescued Citigroup Inc. and Bank of America …

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Dr. D. Subbarao in his first policy presentation as the Governor of RBI left all key rates unchanged. Bank rate has been pegged at 6% whereas CRR stands unchanged at 5% of NDTL (Net Demand and time liabilities). Repo is kept unchanged at 5.5% and Reverse Repo at 4%.
The Governor makes a note in his presentation that the theory of de-coupling has gone busted with this financial meltdown as it has spread its wings to emerging economies through all channels- financial channel, the real channel and importantly the confidence channel.
The …

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Yes! that was the topic of discussion among a group of my friends (including me).  Being from the same background (MBA) and read the same newspaper day in and day out (Economic Times), we had some points with us. 
All of us spoke as if we are the RBI governor, at the helm of affairs and know everything what it would take India to come out of this “Recession”. In part, we also acted as Finance Minister assauging any fears, like he does everytime stock market tanks.
But then during the mid …

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Generally people have the perception of debt as is been depicted in the pic above; the perception that a common man becomes burdened and it takes away his life, a notion which is shown umpteen times in old Bollywood movies.
Contrary to the common belief, debt could be a business man’s friend. Debt, if utilized judiciously, can be his biggest asset; as is pointed out by Mr Kravis in the movie “Barbarians at the Gate.” He goes on to say- “Debt tightens a company, it puts pressure on the management to …