How To Avoid Business Insolvency

 The world of business is tough and competitive, and the sad reality is that up to 80 per cent of all new businesses will fail within the first five years. So how to avoid this eventuality? Fortunately, there are ways, and the most effective ones are listed here. Continue reading “How To Avoid Business Insolvency”

Pros and cons of structured settlements – a refreshing overview

Structured Settlements have been a part of our lives since the 1970s. There are some known advantages and the unfortunate disadvantages attached with them that are difficult to ignore. Over so many years of its inception and usage, one thing is clear that it is one of those funds that do benefit the claimant and help secure his family for a long time through periodic settlements or by making provisions for a lump sum amount should he choose to sell a part of it. The Government has made honest efforts all the way to help people gain from the scheme by making it tax free and by applying judicial watch over the sale of the same. However, there can be some definite cons of the Structured Settlements too that can be classified. Continue reading “Pros and cons of structured settlements – a refreshing overview”

Utilizing personal loans to fund your new business venture

For businesses that need a small to moderate amount of funding for start-up costs, getting a personal loan may be easier than getting a small business loan. Because many small business ventures are prone to failure and the assets of the business often secure the loans, most banks have stricter lending policies for small business loans. For example, if you run into trouble and it looks like your business is failing, the bank may ask you to pay back the loan in full whereas that is not as likely with a personal loan. Here are some suggestions on how to obtain a personal loan from sources other than traditional banks and how to use the money to fund your new business. Continue reading “Utilizing personal loans to fund your new business venture”

How to Use Free Finance Calculators to Save Money

Free financial calculators are one of the best tools for managing personal finances and saving money. These calculators enable you to stay on the right track with your finances. All you have to do is enter the details of your financial position in the free financial calculator. It will provide you an output consisting useful information on how to use your money in the most appropriate manner. Continue reading “How to Use Free Finance Calculators to Save Money”

Debt Crisis in Europe

The woes of the economic slowdown and financial crisis in 2011 is largely attributed to the debt crisis in Europe. This is not a recent happening and bubble started growing from as early as 2009. The 3 of the highest exposed countries; namely Greece, Ireland and Portugal, collectively account for six percent of Eurozone’s gross domestic product (GDP). Continue reading “Debt Crisis in Europe”

Global financial & economic crisis in 2011

The financial crisis in late 2000, sometimes referred to as the Credit Crunch or the Global Financial Crisis, is generally considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. The financial meltdown resulted in the collapse of super Financial institutions with power status, the bailout of mega-banks by the central governments, and plummeting stock markets around the world. However, in 2011, the world may be witnessing something which may be equally big, or maybe even bigger.  The WWII economic crisis and conditions are still extremely fragile. Probably turning short-term debt into long-term loans was the biggest trigger for this economic recession in 2011.

Some may call me to be somewhat more pessimistic in my outlook than is required, but here are my reasons to believe so.

  • The economy in US is in dire straits. The housing sector is yet to recover and high unemployment is troubling the super-power. The US is drowning in negative equity and job-less homes. Tax cuts may be short term evasive measure, medium and long term fiscal reforms may be necessary to pull US economy through this period. The recession in 2008-2009 is still making its presence felt in US, by depleting the reserves of the economic super-power. The tremble caused by BNP Paribas and Lehman Brothers is yet to subside full. Recently, US has been downgraded from its rating by Standard and Poor. The economists are suggesting long term reforms in banking,  such as raising capital ratios and switching from wholesale to retail funding, while filling in short-term gaps in capital. However, the banking industry would be subjected to a slow recovery in this track.
  • Japan has lost its AAA rating long back. The growth prospects for the once economic super-power is pretty poor.  Currently Japan’s national debt actually in excess of 200% of its GDP but its bond yields remain extremely low, since the growth prospects are not looking bright. As an effect of this, Japanese production has declined by over 15% in recent times.
  • The major debt that Greece is facing and the crisis thereof  not cured by the massive Eurozone and IMF bailout. The current bailout support may expire by 2013, and there has been no major financial restructuring in Greece. While the Greece government is sold out to Germany, this is even a bigger cause of concern because now the government will not even be able to print bills to increase inflation to depreciate its own assets. With the huge debt on Greece, the rest of EURO-Nations are equally strapped in the rear to come out with policy changes that may liberate them from this dire straits.
  • The crisis in the Irish national banking sector far from over. Even after receiving a staggering level of bailout assistance from the EU and IMF to cover the country’s insolvency, thanks to the Anglo Irish Bank and the other minor Irish banking institutions, the Dublin decision makers were forced to inject nearly $5 billion into Allied Irish Banks, another bankrupt institution. Ireland policy makers really need to figure out how to service this public debt, without triggering a shiver down its economy.
  • Europe in general is under severe economic stress. Without a major restructuring of debt, progress seems almost impossible. Debt burdens may continue to spiral upwards, and in several EURO using nations a debt write-down is very likely. German, French, and British banks hold most of the national debts, and a shiver there may trigger a collapse of the balance which apparently is resting on a spindle.
  • China, which seemed apparently less touched by the economic crisis in the west, is suddenly increasing its interest rates in an almost desperate effort to control price inflation. While China, the manufacturing super-power of recent times, strives to control the inflation within, this is almost an indicator of less attractive options to invest, outside the country, and even maybe within the country. Are we witnessing a scenario where the market demand has been saturated and the manufacturing sector is growing wary of the same?
  • India, which is evolving as an open market economy is not free from the crisis. Although Agriculture is still India’s most engaging “career”, most of the recent economic growth has been fueled from the services sector (IT, ITeS, Banking, or even tourism in few states). The welfare of these industries thrive heavily on the welfare of the counterparts in USA and to an extent in Europe, whose needs the service. The IT and ITeS alone has an average exposure of exceeding 52% to US markets and 34% to European markets, as per a report in Financial Times. On an average the services sector enjoy an exposure exceeding 82% to European and US markets. The meltdown of the economy in the western powers may be sufficient to trigger one in India.
  • With the advanced economies under such severe stress, emerging economies, may be slightly  insulated from major impacts, which can cause a huge eruption of their regular life. Worldbank says that the financial stress for the emergent economies may be over. However, since the development in these economies are heavily dependent on foreign direct investments from the economic super-powers, the development is likely to hit a stagnation. Is this an indication that the next financial tremble will arise from the developing economies?

Who knows how deep we actually are in this mess? Commodity prices are coming down, but that is probably the only brighter news in this downcast. Do let us know what you feel.

SME Lending : A Growth Strategy

SME lending in India has been a neglected target market since the independence. Though, government tried to propagate SME lending using regulations and incentives, however, somehow beneficial impact was never visible and SME lending always remained a poor cousin to other activities of lending institutions.


It needs to be initially identified what the current constraints are existent for the SME lending. It is recognized that Government should take initiative to operationalize SFCs in big Scale, and professionally run rather than bureaucratically. Subsequent sections focus on how SFCs or financial institutions need to first evolve a strategic focus on the sector by understanding the client & his needs. The SFC needs to re-engineer the SME lending value chain with the intention to develop a long standing relationship with the SME clientele set. The modifications needs to be executed across the critical areas via marketing execution, product development , streamlining of operations through internet integrated delivery channels & application of advanced risk modeling techniques.
As the relationship evolves over time, the firm is able to indulge in relationship lending due to reduction of information asymmetry which lowers supervisory costs & increases account profitability for the firm. Through retrained & empathetic staff dealing with SME clients, the interaction level deepens. Finally the SFC by donning the role of a Financial Consultant transforms from a lending institution into a one stop solution for all the financial needs of the SME client.
At the end the concept of Fund Financing is also suggested as an approach. The focus in the further studies has been made on traditional sources of Financing as SIDBI, is coming out with processes to replicate and innovate the present schemes to suit SME needs.

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This article is authored by Mukesh who is an alumni of Indian Institute of Management, Lucknow. He has been associated with Crisil and has been recognized as a young thought leader of India.

Negative Elasticity of Money

Most people are aware of Price Elasticity of Demand, even if they don’t know the term. The logic is simple, if you raise the price of your product I won’t buy your product. This is however not the case with some special kinds of products. I will classify these products whose consumption increase in case of price hike into three categories. Continue reading “Negative Elasticity of Money”

Joseph Stiglitz speaks on the problems with GDP as an Economic Barometer

Nobel Prize-winning economist Joseph Stiglitz (“Globalization and Its Discontents”) talks about why GDP is not always suitable for use as a measurement for economic well being. Joseph Stiglitz was chief economist at the World Bank until January 2000. Before that he was the chairman of President Clinton’s Council of Economic Advisers. He was awarded the Nobel Prize in economics in 2001. Continue reading “Joseph Stiglitz speaks on the problems with GDP as an Economic Barometer”

Philip Kotler on marketing in times of economic downturn

During economic turbulence, it is important for a company to view it as both an opportunity and a danger. Sometimes it is a bad idea to cut costs across the board. Marketing prodigy Kotler advices to stop cutting the budget that creates sales and gives tips on how to measure the marketing spend with non-direct marketing.  So what should companies do during a financial meltdown? Continue reading “Philip Kotler on marketing in times of economic downturn”

Riding the uncertainty wave – 5 Mantras for Success

The economic slump of 2009 has seen many companies struggling for survival. While some made it, others didn’t. This article provides some insights on what caused such a difference of performance, and provides simple guideline to battle economic uncertainty, especially for the manufacturing industries.

The economic slump of 2009 has seen many companies struggling for survival. While some made it, others didn’t. This article provides some insights on what caused such a difference of performance, and provides simple guidelines to battle the economic uncertainty and financial crisis, especially for the manufacturing industries. Continue reading “Riding the uncertainty wave – 5 Mantras for Success”