Bad bank- a lantern at the end of a Tunnel

Securitization is an aspect of asset reconstruction. The recent budget exuded a sense of amelioration by hinting at establishing a “Bad Bank @ Asset Reconstruction Company” Modus Operandi of an Asset Reconstruction Company (ARC) ARCs purchase bad loans at deep discounts. The bank transfers its right to receive interest, principal, collaterals et al to theContinue reading “Bad bank- a lantern at the end of a Tunnel”

Growth & inflation – two sides of the same coin

Liquidity in the economy is a double-edged sword. Policy makers stimulate growth, as well as arrest inflation using it. The expected results are to be achieved by sustaining the abundance / crunch in liquidity. The initiative starts with printing more currency notes; bond buybacks & Long-Term Repo Operations (LTRO) are frequently used methods to infuseContinue reading “Growth & inflation – two sides of the same coin”

Chronicles of gold rally

Yellow Metal (aka ‘gold’) is lucrative, lustrous, an electrical conductor, malleable and a safe haven. The list is not exhaustive. Given the current circumstance, the price of the yellow metal continues to remain bullish, subject to moderate corrections. Gold has seldom failed in maintaining its store of value. Lets ponder a bit on the rationaleContinue reading “Chronicles of gold rally”

A deep dive into Special Drawing Rights (SDR)

Rupee’s performance since 2020 has not been encouraging. The domestic currency has depreciated about 6%. Incumbent, it hovers in 74-76 ball park. In line with the principles of managed floating exchange system – RBI intervenes only in days of acute volatility. Theoretically the exchange rate system is trifurcated. Fixed, floating & managed floating system ofContinue reading “A deep dive into Special Drawing Rights (SDR)”

Basel III – Capital requirement norms

Life follows the path of a rollercoaster. None is a consistent winner nor looser. YES bank is a quintessence for it. From a leading private sector bank in the economy, the bank’s going concern underwent a shadow of doubt in the recent past. Banks with shallow financial indicators i.e. breaching threshold capital requirement norms, assetContinue reading “Basel III – Capital requirement norms”

The road not taken – Global currency

Why not a unified ubiquitous currency across the globe? Is it even pragamtic? For it happen, then concepts namely hedging, forex risk @ exchange loss shall find places in history books. Recapitulate, our introduction to the concept called barter system in history books. Worthwhile to mention, barter was the sole system of exchange during erstwhileContinue reading “The road not taken – Global currency”

Swiss Challenge – an innovative bidding

A system which entails an appropriate price for an object is an ‘auction’. Auctioning methods have under gone radical change over the years. Inter alia ‘Request for proposals’ / ‘Public private partnership’ / ‘Swiss-challenge’ methods are popular incumbent methods used for government projects. What’s Swiss Challenge? Swiss challenge is a sophisticated method of bidding, comprisingContinue reading “Swiss Challenge – an innovative bidding”

Decoding ‘Green Shoe’ option

Origin – ‘Green Shoe’ clause eponymously derived its name from ‘Green Shoe Manufacturing Company’ (GSMC). GSMC is a subsidiary of ‘Wolverine World Wide’ (WWW), incumbent. WWW is a footwear behemoth trading in New York Stock Exchange (NYSE). Modus-Operandi – Green shoe option entails excess issue of stocks with a ceiling not exceeding 15% of theContinue reading “Decoding ‘Green Shoe’ option”

Floating rate bonds: a sophisticated version of inflation indexed bonds

A pall of eclipse glossed one of the secured investment abodes in India on 28th May 2020. RBI announced subscription cessation of its 7.75% Savings bonds w.e.f 28th May 2020. Such bonds were the only respite available to investors, then. Whilst, deposit rates  were edging decade low trajectories. It was widely anticipated, that the schemeContinue reading “Floating rate bonds: a sophisticated version of inflation indexed bonds”

Upended Indian ratings at Baa3

 With the recent downgrade of India’s rating from Baa2 to Baa3 tethered with a negative countenance, the incumbent economic impasse has exacerbated the pressures. In fact, gravity has acted with vigor on the ratings of several other economies. The revered largest economy was downgraded for the maiden time by S&P (Standard & Poor) from AAAContinue reading “Upended Indian ratings at Baa3”

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