Hold those floating rate plans

The Reserve Bank of India in its quarterly credit policy meet raised repo rates to 5.75% and reverse repo rates to 4.5%.

Repo is what banks pay to borrow from the RBI and Reverse repo is what they get when they park excess funds at the RBI.

Over the last two years we have only seen money parked with the RBI, meaning the system was flush with money and banks weren’t quite lending. From May this year, after the 3G and BWA auctions, banks have started to borrow from the RBI instead, an order of 60,000 crores every day. (Repo means they have to place high quality securities with the RBI which they buy back – or “repurchase” – the next day or in a short period.)




The differential of 0.25% costs the entire banking system a miniscule 35 lakhs a day (0.25% of an average 50,000 crores) which is a sort of rounding error, but it’s not what they do anymore, it’s what they intend to do.

Even though liquidity is tight, bank margins are wide,so there is a cushion. But the interesting question is: at what point does the credit system break the back of inflation? RBI says it expects 6% inflation by year end.
 
At a time when inflation’s gone through the roof, so to speak, we try to assuage ourselves saying that things will get better because, look at 2008. But oil prices were at $140 then, versus $80 today. Inflation fell because oil prices fell to $30, and alongside we did see corporate growth come down (but India’s growth didn’t fall too much, remember)
 
I don’t think it’s a supply issue that’s driving inflation. Supply problems would affect availability and literally everything, from fuel to CNG to tomatoes is available. If this is a demand problem – too much demand – then this piddly 0.25% is not going to help. In that case, I expect another policy rate increase as early as end August – bigger than 0.25%.
 
Inflation indexes will change. The WPI will have a different series with the base year as 2004-05, but we don’t know from when. Food’s weight should go down, so inflation must moderate just looking at things that way.
 
alumni
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So much to learn from World(cup)!!!!

I really enjoyed following Soccer’10, not to watch my favorite stars on the field instead to take note of surprises that every match offered right from beginning of the league
First, the likes of England, Portugal and France walking out of the league followed by hot fav Brazil, on the contrary, teams- Uruguay, Netherlands finding a place in the quarters in something commendable.


This world cup has made me to think, think and think. One of the observation, which I could derive is that the teams which played as a 'TEAM' succeeded. There was so much expectation from Lionel messi; unfortunately, even he couldn’t turn around the match against German’s. They (Germans) strategized their game, played to their strengths and most importantly played in unison and end result; 4-0. This is just an anecdote of many such matches which had so many unprecedent outcomes.


What so special in this? …if watched as a game then nothing great about this, but if we go a step further and introspect, there are definitely some lessons, lesson’s about benefits of performing in a team, for MBA grad’s like us, who would get into the corporate world in few months and perform not as individuals but as members of teams, whose goal is to perform and deliver towards the corporate mission.


Off late, there has so much emphasis on this 4 letter word “TEAM” by corporate at large, right from Richard Branson to Steve jobs; N.R. Murthy to Azim premji, all are speaking of this 4 letter word. Is it really so powerful; I believe, it is!!...what do you think guys???


While you ponder, let me leave you with a quote from Michael Jordan ‘Talent wins games, but teamwork and intelligence wins championships’


Mervyn

W-I-P (inventory)

Propagator

Apple’s chain

There has been lot spoken about Apple’s innovative products reaching marketplace and making its competition redundant. I too agree and respect the product line it offers its customers and one of them being the recent launch of iPhone4.

It’s been reported that the company and its wireless carrier, AT&T, booked more than 600,000 pre-orders on June 15 alone, causing a suspension of sales because of the sheer volume of activity. The number is the largest Apple has taken in a single day, ten times higher than the previous iPhone3 launch last year, causing a sellout of all designated product allocation.

This kind of overwhelming response is something every company would love to achieve. Here I start to ponder over a dilemma; whether innovation and technology can only be sufficient to serve the target customers.

In my opinion, it’s, NO. The company should also focus on itself as well as it's suppliers supply chain. In Apple’s case, suppliers/ contract manufacturers are based in Asia, especially in China where there is now severe labor issues that are surfacing, and since Apple has limited supplier base, has it introduced too much risk in too few value-chain partners?

I believe Apple has, and I predict more snafus to come. The signs are unmistakable, and the pressures are building. Good process and the best technology can only take you so far. The rest comes down to the combined supply chain capability of partners. In the coming weeks Apple will have to demonstrate what being number one really means


Mervyn

W-I-P (inventory)

Propagator