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BW Businessworld

Foreign Banks: Go Deeper

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Ever since Mint Road articulated its option for foreign banks to go in for the wholly-owned subsidiary model (as opposed to “branch operations” as is the case now), debate has pivoted on the trade-offs involved. Will they get “near national treatment” with regard to branch openings on a par with private banks here? Mint Road has seemingly argued against “niche” — select cities, select business, select clients. R. Gandhi, deputy governor, RBI points out that “under-banked centres do not necessarily constitute rural areas and many of the centres are located on the fringes of metropolitan and urban areas”. And given the Modi government’s plans to develop 100 smart cities, “existing foreign banks (in India) would by now have started to strategise to foray into such centres so as to have the first-mover advantage”. It’s a brilliant way of saying: if you do want to have larger slice of the pie, get embedded here! 
— Raghu Mohan
Black On The Face
Coal India’s (CIL) target of raising its production to 1,000 million tonnes (mt) by 2019 is ambitious, to say the least. It would mean doubling of production from the current 550 mt in just five years! This, when it took CIL 12 years to increase production from 200 mt in 1991-92 to 300 mt! The fact remains that CIL has missed most of its targets so far and blamed others for the shortfalls. Last year, when the country was reeling under heavy coal shortages, all CIL did was blame the government for not providing rail linkages. It’s high time that the public sector behemoth began addressing internal problems like corruption, manpower, technology, black market that have kept production low, instead of setting one unrealistic target after another. 
— Moyna
Show Some Heart 
The government has indicated its plans to part-sell shares held in SUUTI (Special Undertaking ­— Unit Trust of India) by bundling them into ETF units. These shares formed the underlying of units that the government repurchased from investors at a discount in 2000 following the crash of the US-64 scheme; they are currently worth Rs 50,000 crore. It is well known that the old ‘assured return’ Unit Trust schemes (including US-64) failed because of mismanagement of funds by money managers. The investors were further short-changed when the government repurchased units at a discount. The government has the moral obligation to share its gains (from SUUTI investments) with investors who lost money in Unit Trust schemes. They may not be large in numbers, just a few, in their twilight years. 
— Shailesh Menon
Easing The Delivery Pangs
logistics, it seems,  has emerged as the biggest barrier to the expansion of the e-commerce industry in India. The captive logistics model, created to deal with fake addresses, cash on delivery and higher expected return rates, has pushed up delivery costs by up to 20 per cent compared to third-party logistics providers. The e-tailers who operate on wafer-thin margins are now looking at a hybrid model that is a mix of captive logistics and strictly monitored service-level agreements with third party logistics providers to rationalise delivery costs. Flipkart, for instance, has set up regional warehouses and is constantly increasing the supplier base across the country to ensure delivery from the nearest supplier or regional warehouse. Amazon India, too, is building capacities with its logistic arm Amazon Logistics. For catering to the sector’s potentially explosive growth, e-commerce providers and third-party logistics providers should make significant investments to create the backbone logistics infrastructure.  
— Nevin John
Run And Earn Miles
Airlines, hotels, retail outlets, petrol pumps, e-commerce portals all do it. Reward customers for just walking through their doors. Loyalty programmes have emerged as one of the strongest marketing tools to make customers stick with you. But just imagine a loyalty club for runners – to incentivise them to keep running! Procam International, which organises the Standard Chartered Mumbai Marathon, Airtel Delhi Half Marathon and Tata Consultancy Services World 10K Bangalore, has come up with a loyalty programme for runners called the Enduranz Club, where you earn miles or Runz by running. You get to become a member of the club if you have participated and completed any timed race category in any Procam event. The more marathons you run, the more Runz you earn. Redemption rewards include a rub down by a masseur post race or a special meal or a photo op with event ambassador. Certainly, an innovative idea. But are the incentives enough to get Indians to run more?   
— Chitra Narayanan
Flattering To Deceive
Automobile sales appear to be sputtering again after a brief spell of acceleration. Vehicle sales across categories fell 3.61 per cent in October; while passenger car sales slid 2.55 per cent that of two wheelers dropped 3.61 per cent. October had held hope for the industry on account of the festive season after September saw poor numbers. Now, the industry will have to wait till December for sales to perk up on account of year-end discounts. Another worrying trend is the falling sales of two-wheelers over the past few months. It appears that the domestic automobile industry is yet to completely recover from the slump in 2013, its worst in the past decade. There is uncertainty across different buyer segments, indicating that the larger economy, too, is not out of the woods yet. It’s time the government got down to reviving the economy with some meaningful actions. 
— Sachin Dave
(This story was published in BW | Businessworld Issue Dated 15-12-2014)

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