Thursday, 20 June 2013

Profit Sharing Community Banking - Simple. Sustainable. Social.

Banking is the simplest business I have come across in my life. You take money at a lower interest rate and lend it at a higher interest rate. That's it. The more money you garner, the more rollovers you do, the more money you earn. All the complications in the business comes because of 2 factors. One is man and the other is man's love for money. If all men were honest and if money were merely a medium of exchange (and not an indicator of prosperity), as it were originally meant to be, we would not need to employ all the IT, systems, techniques, credit ratings, recovery agents, etc. in the business of finance. The world of finance has been further complicated by numerous product innovations that laymen don't understand.

In effect, banking has become a tough choice for the common man and its one that he can't escape from. At regular intervals, banks go bust and the Government ends up paying for these funny situations that giant banking corporation end up in to. We have seldom heard of a small bank going bust. Of course, we have heard them of running off with public money but they have not gone bankrupt. On wondering why giants fall and small guys thrive, we get to learn a lot.

Very recently, I happened to read about Raiffeisen Gammesfeld eG Cooperative Bank in Southern Germany that is run by just one member of staff, Mr Peter Breiter. This added more strength to my thoughts on a Profit Sharing Community Bank Model (PSCB) that I have been working on from many years.

The Proposal

A PSCB entity runs a business focused on customers in a particular region or belonging to a particular community or have something in common, something that binds all customers together. Say, for example, all artists of New York, all peasants of Hubei, all residents of Dharavi, all Mexicans in UK, etc. The interested people, called members here after, open savings account with the bank. Members nominate a couple or more members to look after the affairs of the bank. The funds saved in the bank are used, primarily, to loan businesses run by members. The funds could also be loaned for various other capital expenditures like home construction, purchase of vehicles or consumer goods, certain other expenses relating to education, marriage and other aspects of life, etc. Thus, the basic business model is similar to any cooperative bank.

The Distinction

A PSCB does not offer any interest on the depositors' funds. In other words, depositors lend their monies to the PSCB at 0%. However, this will be compensated by a profit sharing model the PSCB will employ. The profit sharing will work in line with the dividend distribution model. Dividends will be distributed to all accounts at the end of the year in line with the balances maintained in the account.

The Cooperative Bank Model
  • Anyone can become a customer of the bank by opening a bank account.
  • Anyone (in some cases, eligibility clauses are mentioned) can become a member of the bank by subscribing to the shares of the bank.
  • Account holders are given fixed interest as per as per the interest rate charts.
  • Dividends are distributed to the members, or shareholders, from the profits earned.
The PSCB Model
  • The meaning of an account holder (customer) and member (shareholder) are converged.
  • One becomes a member by virtue of holding an account with the bank.
  • No interest is paid on the accounts/deposits.
  • Profits are distributed among members in the ratio of the annual average balances held in the account.
The big question here is, when the earning is not guaranteed (in other words, earnings is not a fixed number), why would anyone be interested to take this risk?

  • PSCBs operate as a community and thus, there would definitely be members who are in need of funds. When the cost of funds is zero, PSCBs can lend to these members at a rate far better than what the market can offer.
  • Communities are closely knit and therefor, the risk of default is minimal. Members would definitely want to be known for good things in their community. They would consider paying off their loans before indulging in other expenses. Of course, there are risks of fraud.
  • The decisions of lending are taken by the nominated members, there is a fair chance that the borrowers have a good public profile and have enough repayment capacities.
  • The PSCB will invest all the idle funds in to liquid mutual funds or deposits to earn revenues. The PSCB can also bargain for a higher interest rate considering fund volumes.
  • Source:
  • In other words, PSCBs potentially offer returns higher than what a savings account can offer, but there are risks associated.
The focus of the PSCBs is more on the social front. It tries to pool in funds from one set of people to help people in the same set. A strong sense of belonging-ness gets rated at rates higher than what savings accounts can offer. There is value transaction happening in the process in lieu of price transactions. The value transaction makes a PSCB a sustainable business. Of course, undoubtedly, prudent fund management can easily help earn better returns than a checking account. PSCBs make banking simple, so simple that if perfectly executed, you do not need a full time employee for the bank. The whole business can be transacted on volunteerism culture, the underlying assumption being that men and money behave as they are supposed to.

Wednesday, 5 June 2013

Kabhi Bhoola Kabhi Yaad Kiya #WarningSigns

This blog post has been written exclusively for Colgate for their "Write a Moral Story about ignoring warning signs" competition on IndiBlogger. All characters in this story are fictional and has nothing to do with anyone or anything from anywhere. The story itself is a work of imagination.

Life is a process. It is not a stagnant equation but a dynamic situation. What's true today can become untrue tomorrow. What's right today can become wrong tomorrow. What's perfect today can become imperfect tomorrow. What's love today can become hatred tomorrow. Today's trust can be betrayed tomorrow. Today's success can be failure tomorrow. Today's life can get over tomorrow. Things change at the speed of thought. In the whole process, Warning Signs play a great role in telling us where we are headed, whether we are in the right direction, what corrections do we need and how we can help things go right. Seeing these signals, with an open mind, can help tremendously. On the hand hand, choosing to ignore them can lead to disastrous situations. Here's the story of Armaan who chose to ignore, not one but many, warning signs.

Engineering colleges are also places, in fact its true about all colleges, where love blossoms. The kids have just turned into adults, experiencing a new found freedom, looking at the new world, most entering hostels for the first time, most getting ready to explore opportunities, and it all appears like they have taken a new life altogether. When a girl passes in front of a boy and their eyes meet, the heart beats and the brains start working on various permutations and combinations of how the relationship can be taken forward. In most cases, they don't even know one another's name but the plans go on.

Armaan was a happy boy who entered the MRP College of Engineering at Hyderabad. He was not exactly new to the city considering that the would visit the place often to meet his grand parents. His father, a software engineer, worked in Bangalore. His parents too married after being in love for a long time. His father is from Ludhiana and mother a native of Bangalore. Armaan knows about how his father met her at a cultural event and love blossomed. Armaan was more than sure that either he will find love at Hyderabad or love will find him.

Tuesday, 4 June 2013

Oh Radha Tera Birthday... #MyWeekendParty

My Weekend Party with Gourmet Food - WinnerThis blog post won a dinner voucher for a couple in the Kitchens of India My Weekend Party with Gourmet Food contest on Indiblogger.

This post has been written exclusively for Kitchens of India's "My Weekend Party with Gourmet Food" on IndiBlogger. Kitchens of India has come up with a wide range of Ready to Eat dishes and desserts, making a gourmet meal accessible at the comfort of your home with the concept of "Just Heat and Eat!". Interestingly, these recipes have been crafted by the Master chefs of ITC hotels, from royal recipes guarded closely over the ages.

Around 6pm, while I was browsing through some pages on facebook, I realized that it was my friend's birthday the next day. It definitely called for a treat but it also called for a surprise plan from my end. I called up a couple of other friends and luckily, all of them were available for a late night party. I called up the birthday friend, Radha, to confirm if she was available at her home.

So, we started planning for the party. Radha is the cook in our friends circle. Though a Software Engineer by profession, she's the one who can cook some real food unlike most of us who can cook maggi and coffee. Radha can cook upma, make chapattis, prepare various curries and several other food items. On most weekends, her home is our adda aka den, firstly because there is enough space and secondly because she can cook for us. It would not have been a good plan to make her cook for her own birthday while it would not have been bad either as she would not refuse to do that. Considering none of us were good at the kitchen, we decided to pack some food.

The responsibility for managing the show was given to me. We planned to meet close to her place around 11.30pm and pounce the surprise on her. I went out looking for some good food at restaurants. I walked in to some regular Andhra food places, some pizza cafes and some fast food joints. Something was holding me back from taking a decision on buying any food. I was kind of bored with regularly consuming the same stuff. I was also not interested to visit any restaurant to have food. Eating at a restaurant everyday had made my mouth kind of a machine churning the feed.

I really wanted something new to eat.

I called my friends again and told them about this dilemma. They too were of a similar opinion. While Shreya suggested we must go to the city outskirts and eat some food at dhabas, Dheer suggested we must get into an overnight bar and drink all night. Shreya also spoke about some ready to cook food which we can buy from retail outlets. The dhaba plan didn't seem very feasible as none of us were willing to drive. Neither the 'get hangover' plan seemed to fit all of us. So, we decided to experiment on the read to cook plan.

After googling a bit about these packaged foods, I was amazed. I never knew that I could use these packets of paneer sabjis, mutter sabjis and several other savories to cook food instantly. There were several varieties of rice as well. It looked yummylicious.

There were several brands that were catering this segment like the Aashirwaad from ITC, MTR, Act Chawa, Regal Kitchen, Parampara, etc. What caught my eyes was one the Kitchens of India brand. I learnt later that it too was an ITC brand. What impressed me was that Kitchens of India offered a wide array of ready-to-dine and ready-to-cook packaged foods like none did. May be, the others had many products but Kitchens of India had exactly those products that I was looking for. It looked like my portfolio.

I read further and was thoroughly impressed to learn that each of these recipes were master crafted by the chefs from ITC hotels. That stunned me. I've always loved the food at ITC hotels. Very recently, I visited the ITC Windsor Manor and the kind of paneer starters the chef had for us was simply world class. The tomato soup that I had at ITC Gardenia almost a year ago is something that I savor even now. I looked through the website and it looked pretty interesting.

I was ready to experiment.

I went to a nearby retail store and bought the ones that I liked. In the meanwhile, I delegated the task of getting something to drink to my other friend, the one who suggested to drink all night.

For the occasion, I needed to buy something sweet as well and the Kitchens of India product catalog surprised me with Halwas. I picked up a pack of Hazoori Petha Halwa and dropped it in to my cart. For Shreya and Dheer, who love to eat non vegetarian, I picked up the Murgh Methi and Chicken Darbari. For me and Radha, who are vegetarians, I chose Mughlai Paneer and Dal Bukhara. I chose the Mughlai Paneer as it was prepared in a gravy of cashew nuts, that I love to eat. What surprised me the most while I was shopping was the fact that most of these products have a life of 35 months. I was like totally wowed to read this. I did not believe this but when I spoke to the store manager, I was convinced. It is incredible how food and technology have come together to help homefoodless people like us staying away from home and eating the same food over and again at the restaurants. Plus, the ITC tag on all these packets made me extra comfortable.

I bought a small bottle of Shredded Mango Chutney, a Vegetable Biriyani Mix and a Chicken Curry Mix. Now these purchases didn't have any motive. I was just curious to see how they were. Considering that I would be staying back at Radha's place, I thought I can ask her to prepare some rice the next day and get her view on whether it made a good option for us.

I was ready to go. I got back to my room, got fresh and got back to watching TV. Around 11pm, I left to Radha's place. Shreya had picked up the cake and Dheer had got all that he wanted to drink. It was still 15 minutes to 12 but we couldn't wait anymore. We just started belling and banging the door as Radha ran out to see what was wrong. And here we go

Happy Birthday to you
Happy Birthday to you
Happy Birthday dear Oh Raadheee
Happy Birthday to you

The birthday bumps were next on. We just stood to clap as Shreya tried to really do some bumps. The cake was ready to be cut and her face was ready to be messed with the cake. It was all done. We were having great fun. After all the celebration, I could see that Radha was really happy to see this surprise package from us. She said that she will prepare some tea for us but Dheer was quick in showing her all that he had got. A mat was spread on the ground and he went right over. Shreya was quick to join him with some fanta sprite stuff.

Very hesitatingly, I took out the Kitchens of India products that I had shopped and handed them over to Radha. She was totally surprised. I told her that the rest is up to her and that we were also open to go out for a midnight dinner elsewhere. Radha said that she can get the buffet ready here itself and walked into the kitchen. She had some ready to eat kind of chapattis and parthas that she kept for emergencies (like this). It took some more time for her and me to set things up and then, our dinner was ready. Dinner cooked by us in the disguise of ITC chefs. I was very skeptical of how it would taste.

In the meantime, I was laughing to myself as the TV played. I was certain that Shreya and Dheer were doing it intentionally.

Kuch thanda pee lo – mood nahin hai... Dahi vade lo – mood nahin hai...
Kulfi kha lo – bahut kha chuke... Paan kha lo – bahut kha chuke... bahut kha chuke...
Aji ras malai – aapke liye... Itni mithai – aapke liye...
Pehle joote – khayenge kya... Aapki marzi – na ji tauba, na ji tauba...

After some time, we starting eating whatever we prepared. To put in the simplest words, it was just marvelous. The food was so fresh and nice to eat that I felt like I was having a live buffet at some restaurant, like Radha remarked. She revealed later that she too has been liking this Kitchens of India products that she used from a few weeks. She claimed that her usage has been increasing. We were very hungry and the consumption happened at a very quick pace. Soon, we had eaten up all that we had prepared. There was still a lot of empty space in our stomachs.

While Shreya and Dheer continued to go down, it seemed like Dheer had given enough motivation to Shreya to not just remain with cold drinks, I checked with them and Radha if we should try the Biriyani mix as well. Everyone was gung ho and the birthday girl, though we were sorry, happily got on to prepare some rice as well. Our whole objective for all this plan was not to toll her with the cooking work and it did not really seemed to work to 100%. But then, definitely, the toll had reduced by more than 80-90%, to say the least. Being able to have gourmet food at the comfort of home does need some effort, obviously. The biriyani tasted fabulous and we all loved it.

We all were wondering how the world has evolved over a period of time. From the time when we would say that we have to consume food within 1-2 hours of cooking, we have evolved to a time when food can be preserved for 2-3 years. It made us feel totally clueless on how this has happened. But then, we were happy at it. There was a time when building a home with bricks was considered a miracle and today, we have multiple floors built in a day. Above all, what made the most important and significant point to me was the amazing quality that continued to be preserved in the package making food time proof.

Oh Radha tera birthday... Oh Radha teri party...
Oh Radha yeh hai ITC ki Kitchens of India...
Oh Radha teri tasty recipe... Oh Radha teri cooking tareekey...
Oh khaaye khaaye saari nagariya...

We continued discussing on many other changes the world has seen, from various fields, and we realized how fast changing the world is. Undoubtedly, we all were under total influence of what Dheer got us but then, it is when we are hung over that we speak of the simple things in life and realize how lives and times have changed. Else, in this complicated world, there's not a moment when we try to be simple, straight and sweet.

Thank you ITC for this delicious Kitchens of India endeavor. I'm sure it will help a lot of us experience authentic cuisine at our choice of time and place. Freedom is the greatest virtue for human beings and providing freedom with the most basic needs of life is indeed a great way to help people live a better and beautiful life. Thank you for these simple solutions that are so difficult to discover.