Are our Bharatiya bankers turning into pesky shameless insurance agents? - Mr. Nobody's first-hand experience - PART I

Hello there friends!

Again back with some useless thought processes for you guys.  Let me first state that I am a fan of our PM, Shri. Narendra Modi, regardless of what our media or the "others" might think - I think that so far, he has done a good job.  Some say that he has only remodeled existing schemes and renamed them as a marketing gimmick for seeking attention like an ADHD-suffering child.  But then, that is what is marketing all about.  Telling our stuff to others in the most unique and catchy manner so that the product is consumed by our customers.  What is wrong if our PM is literally "selling" good governance to the public?  OK...again I started drifting away....so mean of me.  Coming back to my point, I loved the Pradhan Mantri Mudra Yojana which is nothing but a master stroke of marketing and strategy.  Marketing, because the scheme already existed (although it did not have any specific name till now!) but none knew about it [i.e. as per RBI guidelines banks were never supposed to ask for collateral security for business loans up to Rs. 10 lakhs and the same was to be covered under a government guarantee scheme called CGTMSE (Credit Guarantee Trust For Micro and Small Enterprises)].  Our PM just gave a new name to the scheme and sold it in three parts - Shishu, Yuva, and Tarun, which is perfectly fine and understandable for the common man on the road.  So, I also being a common man, went to my nearest bank (identity of the bank is held to protect "my" safety!) to get a loan under the Mudra Yojana so that we can invest in our blog and make it a full-fledged website.  The manager and staff were really good and they told me curtly regarding the procedures to be followed to get the loan but there was only one catch - I had to buy an insurance policy and that too from ONLY from the insurer which is having tie-up with their bank.

I requested them to give me at least a week to think and plan regarding my finances (since I don't want to be a defaulter and would like to perfectly repay back my loan to the last penny) and then come back to them.  I interacted with my fellow small business colleagues who had already availed finance from various nationalized as well as private banks and was greeted more or less the same story.  Buy an insurance and get a loan!  In many of the cases, the banks did not even seem interested in the actual project that we were taking the loan for!  They just leeched the customers to take on the insurance policy and sign a few agreements and the loan was there for them on the platter - no questions asked...Great way to utilize public money, I guess.  I am now thinking of making a movie similar to Prabhu Deva's ABCD series.  But mine will be titled ABCB - Any Body Can Bank - which I guess will break all records of at least Prem Ratan Dhan Paayo!

I went back to my banker and told him I do not wish to purchase the insurance since I am more than adequately protected by my present insurer.  But then who am I to teach a banker regarding personal finance.  The banker persisted.  I persisted even more.  The banker then called me one day to the branch.  There was another gentleman sitting in neatly ironed Knighthood black trousers and chic Arrow shirt sitting alongside me.  He introduced himself as something called a BDM of the insurance company (which was having tie-up with the bank).  For the next more than one hour, both the manager and the BDM put me through third-degree torture explaining to me the benefits of my death as well as the benefits of my staying alive. At one point of time, I was feeling really elated on being a mortal and getting the golden chance to die for getting the insurance money.  They were masters at the game of selling, at least, the manager was!  As per both of them, in case I survived for another 10 years and paid their premiums on time, I was going to be richer than Mukesh Ambani and Jack Ma put together after the completion of 10 years and in case, I died, my wife would be.  And when I finally told them that I did not have enough finances to pay the premiums on time, the same was answered crisply by the manager - we will give you a loan for the same!  Then I asked, "What about my Mudra loan?"  "We will give you both - take a loan for insurance policy premium and take a Mudra loan for free!"  The once-in-a-lifetime ek-par-ek-free offer was there in front of me making it utterly difficult for me to choose what to do.  When I seemed not to budge, the wily manager dialed a phone and told me that he is calling his RM/DGM (I did not quite understand what!) and asked me to speak to him also.  I was losing hope by now of continuing my business since my profits will be eroded greatly by the "premium-repayment-loan" that I will be forced to take.  My Spider-Man instinct told me to speak to the RM/DGM regarding this pestering attitude of the manager and request him to in turn advise the manager to sanction my loan.

I took the call in my hand and told him clearly, "Sir, your manager is forcing me to purchase a policy that I do not want and could not possibly handle in my present financial scenario.  Please tell him to just pass my loan on the merits of my project profitability and let me go in peace."  The voice at the other end was calm but firm.  "Sir, the insurance is a free service by the bank provided to you for your own safety.  Our duty is to protect public money.  What if you die after taking the loan?  Who will repay the loan?  You want your wife and kids to be harassed by the bank for repaying the loan that you took?"  I replied, "Sir, I am already adequately insured.  In case of my death, my wife will get the insured amount.  Since she will be my legal heir, she is bound to clear my liabilities and the same will be done through the proceeds of my claim.  Hence, I don't want this policy that you are pushing down my throat."  My logical reply seemed to offend the RM/DGM who was supposedly used to hearing "Yes Sirs" much much more frequently.  He snapped, "Look, if you want the loan; take the policy.  Or else, don't waste our time."  The line got disconnected. 

I felt totally insulted.  I came asking for assistance to start a business and what I got in return was a pesky bank asking me to take a insurance for getting the loan sanctioned, which seemed like a "legitimate bribe."  There are clear cut RBI guidelines (not rules) regarding not forcible selling of insurance policies to customers, but then who cares.

Are you listening PM Sir????

More on this later and till then,
Happy Ethmos to all!

Manoj Gaur: The Superman of the Indian conglomerate Jaypee Group [No Dream Too Big] - Mr. Nobody's perspective

THE ALL-SEEING EYE OF ETHMOS

Hello there....good to see you all after such a long break.  We are sorry for the delayed frequency of our articles but the fact of the matter is that we were actually a little busy with our other small priorities like growing our Ethmos.  So, after putting our hands and legs into some serious public problems (as well as solutions), now we are going into exploring the corporate world of our country by giving a short analysis of premiere companies that have helped in creation of our Brand Bharat for the world.  Now most of you will be knowing about the Tatas, Birlas, and the Ambanis; but, today we will be giving you a short glimpse of a company that many have written off as a failure right now but we at Ethmos are able to see the true strength of a company in its ethos and values.  So, here goes nothing about the Jaypee Group!

Manoj Gaur is the poster boy of the Jaypee Group and he is actually living the tag line “No Dream Too Big “. The debt ridden group is actually standing on vast debt of Rs 61,285 Cr. However, irrespective of the debt position, we at Ethmos believe that Manoj Gaur will be able take the group from the clutches of debt. Group has already divested one-fifth of group assets, but troubled economic scenario, especially in the infra sector, is making matters worse. The issue for the group is that it is a conglomerate with wide range from infrastructure to hospitality, from sports to Information Technology, and from healthcare to sports.

Usually infrastructure projects are financed under project finance where the SPV (special purpose vehicle) will be created and the project will be financed by a consortium of the banks. The equity will be brought in by the interested parties. Usually debt equity ratio of the project related to infrastructure finance is to the tune of 70:30. The future repayment of the debt portion will be subject to  the revenue generation capacity of the project. The equity holder’s other project will not be liable for the SPV in case the SPV is not working up to the mark from the COD [commercial operations date].

In an interview Shri Manoj Gaur has mentioned that between 2006 and 2012, the group invested Rs.60, 000 crore in real estate, power and cement. “But in the last three years, analysts and people feel that there is too much leveraging and too much investment,” The sub 5% GDP has taken toll on the Group in their heyday. However, Manoj Gaur has reiterated that CDR [Corporate Debt Restructuring] mechanism is not a solution. But by going for CDR, the group will be able to get some time which can be utilized in much efficient way rather than going for a brisk asset divestiture.

Jaypee Group – Asset Quality

As far as the asset quality of the group is concerned, we are literally talking about plant and machinery rather asset quality as per balance sheet. Group has not bought a single screw from China; they usually go for the countries like Germany and Japan for the heavy equipment machinery. The asset quality of the group is world class that is the reason that not only the foreign players such TAQA, but also Indian giants Reliance and JSW are interested to get the pie.

What went wrong?

Jaypee group entered into the fertilizers by buying Duncan’s Kanpur plant. The transaction resulted in the Jaypee Group investing nearly Rs. 700 crore to enter the fertilizer business.

Similarly in 2013 the group entered in the business of chip making in venture with IBM [International Business Machine Corp.]. The Group is entering this business when the chip tycoons in the countries like China and Taiwan have already made billions. It is not expected from the group to enter in such segments when economic outlook is not good. The green filed investment should be avoided when the debt position is not good.

Abu Dhabi National Energy Company PJSC (TAQA) was initially interested in buying the hydro power plants; however, due to undisclosed reasons the deal did not materialize. At the same time, Reliance Industries also showed their keenness to buy the same. The power plants were eventually bought by the JSW Energy Ltd for Rs. 9700 Cr. The Group has also sold a piece of land near Delhi and a cement plant which generated the whooping amount of sum Rs. 6,900 Cr. The brisk sale of assets might improve the cash position, but will it be beneficial in the long run?  The group has already slipped from the third largest to fifth largest producers in terms of cement production.

Action Plan by the Nobodys of Ethmos:-

Go for the CDR mechanism since it will get some time for introspection.

Introspect group’s assets; don’t sacrifice the assets for short term gains.

Do not go for any greenfield projects as the debt position is already high.

Rather than sacrificing the assets, go for the equity sale, which will generate cash and will have presence in the projects as well.

Brand building: Create a new brand image.

Retain the greatest assets, aka, employees.

Try to find amicable solutions for the stuck up infrastructure projects where group is a supplier.

We believe the actual asset is an off balance sheet item, which is the leadership of the Gaur brothers and integrity of the Jaypee Group employees. Tough times never last but tough people do. Under the leadership of Shri Manoj Gaur, we hope that the group will see the resurgence like phoenix.

Mr. Nobody's perspective on OROP (One Rank One Pension) in an Army veteran's words

So we are shamelessly back again with one more "no"issue which we may not think that you will be enjoying since you have so much to enjoy in the form of saas-bahu, naag-naagin, and whatnot type of entertainment serials whose stories are also repeated in the prime time "news" channels of our country.  But since we never ever care about our TRPs, we will as usual follow the right way rather than the easy way and bring forth the issues which you will never even bother to care since you are not even appraised of the situation by our "paid" media.  But first of all, we would like to kindly go through this article which has been posted by a retired Army veteran regarding the One-Rank-One-Pension scheme (OROP).  Due to space constraints, we will not be discussing what is OROP over here since there is too much literature available on the internet for anybody willing to read about it.  What we are bringing forth is the pain of a man and many more like him who have fought; served; lived but not lived; debilitated their body, mind, and soul; and dedicated their entire lives to either save the country from external and internal threats or conducting rescue operations in natural calamities ranging from earthquakes to floods.  We hope this article by retired Colonel S. S. Cheema will at least stir your conscience and God forbid if every serving defence/paramilitary personnel becomes frustrated like this, then our country will not go to the dogs but will definitely go to the ISIS!  So here goes:-

"OROP

I do feel ashamed to ask for OROP. At the end of all this what did I really do? Of course, I did one tenure of Leh, flying at 20,000 feet plus altitude, then one tenure flying at North Sikkim again at 20,000 feet plus of altitude (with no integrated Oxygen masks, which my country could not procure for 22 years I was in uniform) and one ground tenure at Gurez - oh that ? it was only at 14,000 feet stay for 2 years - a cake walk. The doctors do advice there should be no more than 2 tenures at high altitude - but I am sure they would have some vested interests in saying so. But then look at the hardships of my counterpart bureaucrat - He had tough decisions to make - there were power cuts every now and then in those days over and above he had to handle the pressure of politicians, and imagine the pressure of getting some tons of money home and trying to hide it. He could not comfortably sleep over it as they poked his back through the mattresses. He was living in perpetual fear. Anyone can nab him - that no one did as long as he did not become overly greedy is another part of it. What pressures did I have - believe me - NONE, I laughed and LIVED my life to the fullest when I was up there, and when I was down here. I stood on the bund of my bunker after two drinks and threw best of my abuses to our adversary - of course who would have been stupid to shooting me down - a Paki ? forget it - those bastards could never aim straight. And then I had so much activity to choose from, how could I not live to the fullest - I mean. There was a competition with my senior subaltern as to who can cross the LOC and piddle in the enemy territory in the middle of the night. Bloody hell we could not decide the winner because both crossed over and did the thing, We had to repeat it for a week before we were caught by our company commander. Now imagine the hardships of my counterpart - close your eyes once again and think - Blood pressure and the diabetes of long and stressful working hours. No entertainment other than a few clubs, drinking sessions and back to his home. How could I not think about those poor souls ? Dying at 90 (in Chair) doing their good work because a bureaucrat, a Judge and a politician never really retires. He works and dies in chair - after all, there are so many studies, one man panels to study and planning commissions to sit too. If he continues getting his house, a few servants (aka Helpers) and a vehicle to run around - he deserves it. If he really gets sick of it and decides to retire (an honest) bureaucrat would have only 200 odd crores at his disposal - he can only buy a small house and live his remainder life in poor perpetuity. My discomforts are just my imagination because I cannot remember number, name and I have a loss of words when I am speaking. Doctor said that it may be “High Altitude Affect” where the rare air has low Oxygen levels and kills the brain cells. (I was really good in my hey days with numbers at least). Oh! he has to be wrong. In any case, I would have got memory loss within another few years.  So why the hell should I attribute it to hard service conditions?And then my demand is more so unfair when I heard our Prime Minister Mr. Modi say that the OROP is at the cost of the poor of our country. Imagine the millions of FREE mobiles, laptops, TV that could have been distributed to the poor. Imagine the poor could have been lifted from their poverty (what has not happened for last 60 years) in one stroke of the money being set aside of OROP. He could have bought a better Jet, better and more secure multimillion dollar cars - after all he is now the Prime Minister of the fastest growing nation and has to live his life so. And then why do I deserve OROP as I quit my job only after 22 years? I did not serve to my last day of retirement. Well I should have continued. So what if I lost my mother and my father (Also a retired Fauji) was all alone and his second son was also serving in Fauj? He could have always stayed alone - after all he was from Infantry and could have done so for some more years of his life. Because I was a Fauji and in anyways due to posting to field - my wife and children could have shifted with him. That besides the point that none of the school was forthcoming to give my daughter and son admission. They (Like me) had no permanent friends as till class 9th they had changed 8 schools.There is another thing that I overlook - I chose to be Fauji - why should I crib? I signed a bond when I entered NDA at the age of 17. I should have read more carefully. That besides the point that most of these bureaucrats were studying hard for IAS and other services at this age and their mothers were still wiping the shit off their ass.The Politicians and the Bureaucrats are fighting a battle and not looking at the bigger picture. I pray to almighty that this fight should not change the outlook of the serving Faujis - They (Bureaucrats and Politicians) may win this battle - but they will lose the war and the nation will suffer. But then who cares ? like shit anyone does. I was an idiot all along and hope to die believing that this nation is mine…. - Oh and me I am a proud Col S S Cheema (retd)It is indeed a sad day for me. My Grand father was in army, my father retired from army, my brother retired from army - and I have told my son - you will join Armed forces over my dead body...."

We, from Ethmos, personally apologize to you Sir for having brought the situation for breeding these thoughts in your mind and in the minds of many like you who have given their everything for worthless animals like us.

So, for our Honorable government as well as the cribbing media who thinks that the cost of OROP, which is estimated at Rs. 8,000 to Rs. 12,000 Crores is too big and demanding for our poor junta, here is the solution (which we have already mentioned in our numerous previous articles but repeat at the cost of repetition):-

1.  Kill the "cash-based" economy - Make the public (we are pointing towards the business-class public over here) to COMPULSORILY transact anything above Rs. 20,000/- through cheque and account transfers.  This provision is already given in section 40A of Income Tax Act 1961 but our babus never care to enforce this section because they are too busy collecting their haftas from the public.  Since it will take a generation to change the babus, what the government can do is a BLANKET BAN on any cash withdrawals or deposits above Rs. 20,000/- in any Bank/Financial Institution/Organization.  How will this effect OROP?  He he he...this will lead to documentation of transactions in the bank accounts and better tax compliance and higher tax collection.  If we are correct in our financial maths calculations, this will directly and indirectly lead to more than doubling of our tax revenues (which is presently only Rs. 5.45 lakh crores from direct taxes, a.k.a. income tax).  Furthermore, link all the tax departmental servers into an integrated central taxation server system wherein the returns filed by any businessman can be cross-checked/verified/scrutinized by all the tax departments because most of times, only big businessman are paying anything of the sort of Sales Tax, VAT, Service Tax, etc. while the small and medium guys just get free by paying the regular income tax without declaring their correct turnovers. (More details on this later in our forthcoming articles).

2.  Kill the corruption-based economy - make corruption a non-bailable cognizable offence regardless of the rank and position of the official.  A longer and harder stick is required when the bull is out of control - common sense of course!

3. Introduce the Bank Transaction Tax system wherein the tax is collected based on type of transaction, which is will improve tax collection as well as reporting system.

4.  Curtail the British Raj era systems of providing mansions and palaces along with chauffeur-driven vehicles to civil servants.  We received independence nearly 68 years back and need not pamper a few people for doing what is duly their duty to be done for which they are being paid and rewarded handsomely.  How will this affect OROP?  Again, it will lead to huge cost savings.  Presently, a Group A service officer (like IAS, IPS, etc.) is entitled to travelling by an Innova car which consumes a liter of diesel for every 8 to 10 km it runs.  Why can't we replace it with a fuel-efficient car like Tata Indica? (of course, it will be low on the style and aura quotient but will do as well at less than half the cost, since the purpose is to travel rather than flaunt your power).  Furthermore, for any small family to live, a 3-BHK or 4-BHK apartment/house/villa is more than sufficient - why spare an entire acre of real-estate to again pamper these people who have the habit of getting so since the Raj era because the primary idea of the Britishers was to "crush the mass by empowering the class."  The space saved can be used for more productive revenue-generating activities like tax-collection centers, schools, hospitals, and what not.

Dear PM and FM Sirs,

These are just some of the suggestions that we put forward to you so that nobody can cry hoarse that we don't have enough money to pay these gentlemen who have given more to us than we can ever repay them.  Please at least treat them with the honor they so genuinely deserve.

Thanks and happy Ethmos to you all!