Will Mobile Phone Operators become the New Age Bankers?

“Banking is essential to a modern economy. Banks are not.”

                                                                                    —Edward Furash (1993)

Much competition in telecom sector has reduced the Average Revenue per user for mobile service providers. Inorganic Growth is costly in this sector as it is very capital intensive. This has led Mobile Network Operators (MNO) to find new avenues of growth. Mobile banking proves to be the next big opportunity for mobile phone carriers. Even though many banks provide some or other forms of mobile banking solution, the penetration of mobile banking is still in nascent phase in many economies around the world. Mobile phone carriers can fill this gap by providing a portfolio of banking services. In addition to it, mobile banking by MNO has the potential to bring basic banking and financial transactions services to unbanked consumers in the world.

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Unbundling services in civil aviation

With Kingfisher already gone bankrupt and the rest fighting it out for the small passenger base, the aviation industry is one place making survival tough for all the players.

Air Asia is all set to enter the market and this again as a nightmare for the already reeling industry. Unbundling the services in civil aviation for the domestic sector at such a crucial time has come as a boon for the operators. The operation costs have been going up and the passenger count has remained more or less stagnant in the present economic scenario.

The history of low cost carriers dates back to 1971 when Dallas based South West Airlines started its operations. In India, the trend was set by Air Deccan in 2003. From there on the price war amongst the different carriers became fierce with all the major carriers either reducing the fares or launching a second line (low cost) to withstand the competition (Eg. Jet Connect etc.).

The price war was getting stiffer and the pressure on profits was mounting. This was visible with Kingfisher’s case (though mismanagement too played a great role in its case) and many of the other operators posting losses quarter after quarter.

The present move of DGCA to unbundle the services has been very well received by the operators with major operators like Indigo, Jet Airways and even Air India incorporating the changes within two weeks of the decision. Indigo is already charging extra for window and aisle seats along with seats in the first, second, last, and second last rows. The free baggage allowance has also been reduced by Jet Airways and Air India from 20 kgs to 15 kgs in ecnomy class travel with different airlines charging different rates for the same. Also, Air India and Jet Airways are planning to charge for food and drinks on board.

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IIM Raipur - A Sneak Preview

IIM Raipur - A Sneak Preview

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Financial Inclusion- Creating wealth at the bottom of the pyramid

“The importance of finance to economic growth has also frequently been ignored by economists.”

Fed Governor, Frederick Mishkin in 2005

WHAT IS FINANCIAL INCLUSION?

We had two committees in past which give definitions of financial inclusion: Rangarajan Committee on Financial Inclusion which defines it as “the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost.”

Raghuram Rajan Committee on Financial sector Reform which described it as “Financial inclusion, broadly defined, refers to universal access to a wide range of financial services at a reasonable cost. These include not only banking products but also other financial services such as insurance and equity products.”

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EQUINOX `13

 

 

 

 

 

 

 

 

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Arthsankalp-Panel discussion on Economic Policies

India witnessed resurgence of reforms in the past couple of months and these reforms have great implications on the business environment. As future managers, it is very imperative for B-school students to analyze the macro economic implications of these policies. The Finatix club of IIM Raipur organized the event Arthsankalp to provide a platform to participate in the panel discussion for students from various B-schools of India. The event witnessed both competitive spirit as well as knowledge sharing spirit. The finalists were chosen after immense scrutiny in the first 2 rounds. First round was a quiz on economics in business environment. 540 teams participated in the first round. Out of these 540 teams, 13 teams were shortlisted for the second round which involved an article submission on the topic: “Comparison of the economic policies of India, Japan, China and U.S. economies”. 4 teams got shortlisted for the final round which involved a presentation by individual team followed by a brain storming panel discussion on the topic “Macro economic analysis of recent reforms in retail, energy and financial sector in India."

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Resurgence of 1991 reforms in India

Indian economy has witnessed major reforms in the year 1991 which include-liberalization of foreign trade, abolishment of industrial license system and opening up of foreign direct investment. The growth witnessed by Indian economy after 1991 can be attributed majorly to these reforms. However, the current scenario is quite gloomy with a GDP growth of 6.9%, fiscal deficit of 5.7% of the GDP and credit rating of negative BBB-. In the wake of such turbulent situation, Indian Government has introduced various reforms recently which include:

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