Interview: K.K. Bajaj, Chairman, Bajaj Capital
Gautam Chikermane
WITH FOUR decades of experience in the business of financial intermediation and a client base of over five lakh retail investors, Bajaj Capital is among the pioneers in the business of financial intermediation in the country. K.K. Bajaj, chairman, Bajaj Capital, and the driving force behind the company, speaks to Gautam Chikermane on the history of the company, his views on responsible intermediation and what he sees as the road ahead.
How did you enter the business of intermediation? What was the objective of the company when it was set up?
We started out as Capital Investment Centre and corporatised as Bajaj Capital in 1965. I was working as an advocate when I recognised the potential of this business, as I was dabbling in the markets through my brother’s brokerage. Studying his clientele, I realised that most of them lost money on the bourses.
With my educational background in mind, the broking community at DSE roped me in to handle their press briefings and meets. I offered to help with prospectuses and drafting memoranda of association. With the public issues gaining ground in the 1950s, there were rich pickings, as I could take a certain percentage of the issue size as an advisor to an issue.
Interview in Outlook Money
Wednesday, March 31, 2004
Thursday, January 15, 2004
Where to invest in 2004
One size doesn't fit all. So, tailor investments to your unique financial goals.
Gautam Chikermane
AT 26, she’s the CEO of a Rs 250 crore technology company, earns more money in a month than many of us would in a year, jets around the world with the who’s who, swings and jives at parties with the gay abandon of Hrithik Roshan in Koi Mil Gaya, gets interviewed by TV channels every other day, is expected to be among the 50 most powerful Indian women in 2009, and has the looks to kill for. She might be the most desirable of women, but is she the right one for a 45-year-old professor of history, whose wildest fantasy is to discuss the intricacies of dharma with Veda Vyasa and Valmiki, who has a fear of flying, whose most intense interaction with technology is reading the morning newspaper, whose idea of growth is the grand awakening of his consciousness?
Perhaps not.
Investing is no different. Life insurance may be the best instrument to protect your family, but why mistake it for investment? Sector funds may offer the highest returns in short three- to five-year spurts, but why should the risk-averse take this uncharacteristic short-cut to supernormal returns? Bank deposits may be absolutely safe, but why should young people with many working years ahead of them be content with the pathetic returns they offer? Gold may look pretty on a woman’s neck but why should anyone make the mistake of believing gold jewellery is an investment for her girl child?
Opinion in Outlook Money
Gautam Chikermane
AT 26, she’s the CEO of a Rs 250 crore technology company, earns more money in a month than many of us would in a year, jets around the world with the who’s who, swings and jives at parties with the gay abandon of Hrithik Roshan in Koi Mil Gaya, gets interviewed by TV channels every other day, is expected to be among the 50 most powerful Indian women in 2009, and has the looks to kill for. She might be the most desirable of women, but is she the right one for a 45-year-old professor of history, whose wildest fantasy is to discuss the intricacies of dharma with Veda Vyasa and Valmiki, who has a fear of flying, whose most intense interaction with technology is reading the morning newspaper, whose idea of growth is the grand awakening of his consciousness?
Perhaps not.
Investing is no different. Life insurance may be the best instrument to protect your family, but why mistake it for investment? Sector funds may offer the highest returns in short three- to five-year spurts, but why should the risk-averse take this uncharacteristic short-cut to supernormal returns? Bank deposits may be absolutely safe, but why should young people with many working years ahead of them be content with the pathetic returns they offer? Gold may look pretty on a woman’s neck but why should anyone make the mistake of believing gold jewellery is an investment for her girl child?
Opinion in Outlook Money
Thursday, November 6, 2003
Wealth Protection
The book delves into every known wealth destruction threat.
Gautam Chikermane
What affects your personal finances more: a downturn in the economy or a personal disability? Most likely, the latter. But if you see the number of people glued to their TVs, studying the streaming stock prices, you would think the economy is more important. So, a Sensex slide of 100 points seems more important than a change in law that makes dividends tax-free in your hands. In a well-researched book, Jarvis and Mandell take these contradictions head on: "People focus on the macro economy..., rather than paying proper attention to their own personal economy." As a result, "Many of us succumb to the uneasiness surrounding the volatility of the market, which... makes us feel powerless to change our own wealth protection situation."
‘Wealth protection’ is a new term in a country that’s only now learning to deal with wealth creation. It is such a vast and deep subject that one wonders if the personal economies of our future generations will be like those of complex mid-sized enterprises that manage more than Rs 100 crore. From tax-saving entities to forming trusts so that the inheritors of your wealth are not burdened, from using insurance as an estate planning tool to buy-sell agreements, the book delves into every known wealth destruction threat.
Book review in Outlook Money
Gautam Chikermane
What affects your personal finances more: a downturn in the economy or a personal disability? Most likely, the latter. But if you see the number of people glued to their TVs, studying the streaming stock prices, you would think the economy is more important. So, a Sensex slide of 100 points seems more important than a change in law that makes dividends tax-free in your hands. In a well-researched book, Jarvis and Mandell take these contradictions head on: "People focus on the macro economy..., rather than paying proper attention to their own personal economy." As a result, "Many of us succumb to the uneasiness surrounding the volatility of the market, which... makes us feel powerless to change our own wealth protection situation."
‘Wealth protection’ is a new term in a country that’s only now learning to deal with wealth creation. It is such a vast and deep subject that one wonders if the personal economies of our future generations will be like those of complex mid-sized enterprises that manage more than Rs 100 crore. From tax-saving entities to forming trusts so that the inheritors of your wealth are not burdened, from using insurance as an estate planning tool to buy-sell agreements, the book delves into every known wealth destruction threat.
Book review in Outlook Money
Wednesday, October 15, 2003
All under one roof
Assessing the new-generation banks' claims to being your one-stop money managers.
Gautam Chikermane
THOSE SEVEN bright red pieces–five triangles, one square and one parallelogram–represent a bank. Invented in China two millenniums ago, the game of Qiqiaoban (seven clever pieces), now popular as Tangram, was designed to tickle the analytical abilities of children. The myriad shapes–of people, objects, letters, numbers, ideas–that these seven modest-looking pieces can morph into boggles the imagination. Quite like the transformation your bank has undergone does.
Hardly a decade ago, that bank, a service-less PSU entity, was only good to park your salary and some fixed deposits; if you were a collateral-backed businessman, you used the bank to borrow money. Your ‘relationship’ with the bank depended on the level of intimacy with the bank manager, your ‘contact’; the perks were mostly quicker service–often, simply service.
Today, the bank has outgrown the confines of a branch building and traditional ‘service’. It is no longer the lowly safe-keeper of your salary. It aggressively pursues you with offers of loans to buy homes, cars, consumer goods. It sells you mutual funds and insurance. If you’re reasonably well-off, it aspires to manage all your investments. It pays your bills. What next? It will probably offer to pick up your children from school.
Opinion in Outlook Money
Gautam Chikermane
THOSE SEVEN bright red pieces–five triangles, one square and one parallelogram–represent a bank. Invented in China two millenniums ago, the game of Qiqiaoban (seven clever pieces), now popular as Tangram, was designed to tickle the analytical abilities of children. The myriad shapes–of people, objects, letters, numbers, ideas–that these seven modest-looking pieces can morph into boggles the imagination. Quite like the transformation your bank has undergone does.
Hardly a decade ago, that bank, a service-less PSU entity, was only good to park your salary and some fixed deposits; if you were a collateral-backed businessman, you used the bank to borrow money. Your ‘relationship’ with the bank depended on the level of intimacy with the bank manager, your ‘contact’; the perks were mostly quicker service–often, simply service.
Today, the bank has outgrown the confines of a branch building and traditional ‘service’. It is no longer the lowly safe-keeper of your salary. It aggressively pursues you with offers of loans to buy homes, cars, consumer goods. It sells you mutual funds and insurance. If you’re reasonably well-off, it aspires to manage all your investments. It pays your bills. What next? It will probably offer to pick up your children from school.
Opinion in Outlook Money
'You Will Get Unbiased, Unambiguous Advice'
Interview: Sanjay Sachdev, Chairman, Association of Financial Planners
Gautam Chikermane
Formed in 2001, the Association of Financial Planners is today a body of 24 institutions (four insurers, nine mutual funds, five banks, three distributors, three other institutions). As its new chairman, Sanjay Sachdev has his job cut out–getting the industry, regulators, corporations and individuals to buy financial planning as a concept, and building a team of certified financial planners. Excerpts from an interview with Gautam Chikermane:
What are your priorities today?
We need to get accreditation from the industry and the regulators. Every participant should be involved in marketing financial planning, and take it to the masses. This includes banks, which are involved in financial planning and distribution. Every financial planner, whether corporate, individual or manufacturer, whoever is interested in financial services, should become part of the financial planning industry and help nurture the financial planning movement in India.
We need to learn from those who are already in this business. There is a huge body of professionals engaged in advising investors, helping them buy mutual funds, insurance, pension products and so on. Our goal is also to help them sell the right product by educating them and spreading more awareness.
We also want to expand the role of financial planning and to get it recognised by regulators.
Do you have the competency to do all this?
There is knowhow in other parts of the world. Our effort is not to reinvent the wheel but to use the wisdom available to us from our global partners and utilise it here.
Interview in Outlook Money
Gautam Chikermane
Formed in 2001, the Association of Financial Planners is today a body of 24 institutions (four insurers, nine mutual funds, five banks, three distributors, three other institutions). As its new chairman, Sanjay Sachdev has his job cut out–getting the industry, regulators, corporations and individuals to buy financial planning as a concept, and building a team of certified financial planners. Excerpts from an interview with Gautam Chikermane:
What are your priorities today?
We need to get accreditation from the industry and the regulators. Every participant should be involved in marketing financial planning, and take it to the masses. This includes banks, which are involved in financial planning and distribution. Every financial planner, whether corporate, individual or manufacturer, whoever is interested in financial services, should become part of the financial planning industry and help nurture the financial planning movement in India.
We need to learn from those who are already in this business. There is a huge body of professionals engaged in advising investors, helping them buy mutual funds, insurance, pension products and so on. Our goal is also to help them sell the right product by educating them and spreading more awareness.
We also want to expand the role of financial planning and to get it recognised by regulators.
Do you have the competency to do all this?
There is knowhow in other parts of the world. Our effort is not to reinvent the wheel but to use the wisdom available to us from our global partners and utilise it here.
Interview in Outlook Money
Sunday, August 31, 2003
The threefold path
Why funds have not found favour with small investors yet.
Gautam Chikermane
Despite the higher returns they offer and the superior levels of transparency they practise, the penetration of mutual funds in India is a meagre 6 per cent compared to 76 per cent for banks. A Sebi-NCAER study says only 3 per cent of India’s household savings is invested in shares, debentures and the UTI; the rest is in FDs (44 per cent), government-backed instruments including PF and pensions (32 per cent), insurance (11 per cent), and idle cash (10 per cent). This is easily explained: having grown on a staple of government-backed, high-assured-returns schemes, made juicier by tax benefits, households are completely averse to risk.
Which was fine till yesterday. It’s a different, riskier world today. First, the returns on small savings have crashed by more than 4 percentage points in as many years. Second, tax benefits are disappearing. Third, sacred institutions, including state governments, are defaulting. Fourth, there’s inflation, invisible yet deadly. The real return (the difference between interest rate and inflation) on the 6.5 per cent tax-free RBI Relief Bond works out to 2.3 per cent today. It hurts–ask the retired.
An alternative is in place, in the shape of a relatively clean and regulated mutual funds industry. But to scale up, the industry needs to do three things:
Opinion in Outlook Money
Gautam Chikermane
Despite the higher returns they offer and the superior levels of transparency they practise, the penetration of mutual funds in India is a meagre 6 per cent compared to 76 per cent for banks. A Sebi-NCAER study says only 3 per cent of India’s household savings is invested in shares, debentures and the UTI; the rest is in FDs (44 per cent), government-backed instruments including PF and pensions (32 per cent), insurance (11 per cent), and idle cash (10 per cent). This is easily explained: having grown on a staple of government-backed, high-assured-returns schemes, made juicier by tax benefits, households are completely averse to risk.
Which was fine till yesterday. It’s a different, riskier world today. First, the returns on small savings have crashed by more than 4 percentage points in as many years. Second, tax benefits are disappearing. Third, sacred institutions, including state governments, are defaulting. Fourth, there’s inflation, invisible yet deadly. The real return (the difference between interest rate and inflation) on the 6.5 per cent tax-free RBI Relief Bond works out to 2.3 per cent today. It hurts–ask the retired.
An alternative is in place, in the shape of a relatively clean and regulated mutual funds industry. But to scale up, the industry needs to do three things:
Opinion in Outlook Money
Tuesday, June 17, 2003
A Matter Of Choice
ATM cards were free.ATM-cum-debit cards aren't. Some like the add-ons, others don't need it. All have to pay. Fair? A debate.
Gautam Chikermane
But I don’t want power steering in my car... Yes, I know it will make driving easier... Yes, I know it’s the latest technology... Yes, I know it’s the future, but I’m perfectly happy with my current status... No, I don’t need any upgrades...
SOUNDS FAMILIAR? Isn’t this a common refrain, no matter what the product? If it’s not cars, it’s something else. In this case, it’s your ATM card, that kind piece of plastic that revolutionised banking and made your life so much simpler. Even better, it comes free. As it should, you’d imagine–after all, it’s only a tool that lets you access your own money. But it looks like the party may be over: some foreign banks have taken the lead in charging customers for the use of their new-generation ATM-cum-debit cards. Did you say: ‘...but I don’t need a debit card’. You are not alone, but these banks are not listening. When your plain-vanilla ATM card lapses, like it or not, you’ll be handed an ATM-cum-debit card, and billed Rs 100-150 a year for its use.
For most of you who read this magazine, paying Rs 100-150 a year will not hurt. (On the other hand, it will add up to Rs 30 crore to the profits of some of these banks.) It’s, then, a matter of principle that we are talking about.
Story in Outlook Money
Gautam Chikermane
But I don’t want power steering in my car... Yes, I know it will make driving easier... Yes, I know it’s the latest technology... Yes, I know it’s the future, but I’m perfectly happy with my current status... No, I don’t need any upgrades...
SOUNDS FAMILIAR? Isn’t this a common refrain, no matter what the product? If it’s not cars, it’s something else. In this case, it’s your ATM card, that kind piece of plastic that revolutionised banking and made your life so much simpler. Even better, it comes free. As it should, you’d imagine–after all, it’s only a tool that lets you access your own money. But it looks like the party may be over: some foreign banks have taken the lead in charging customers for the use of their new-generation ATM-cum-debit cards. Did you say: ‘...but I don’t need a debit card’. You are not alone, but these banks are not listening. When your plain-vanilla ATM card lapses, like it or not, you’ll be handed an ATM-cum-debit card, and billed Rs 100-150 a year for its use.
For most of you who read this magazine, paying Rs 100-150 a year will not hurt. (On the other hand, it will add up to Rs 30 crore to the profits of some of these banks.) It’s, then, a matter of principle that we are talking about.
Story in Outlook Money
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