With the acute cash crunch in the domestic as well as in the local markets, money lending business could be off a handy business starting/expanding option to think of. But the model would be little bit different one as the lending process would involve towards the business process only and not meant for personal loans kind of thing. The commercial banks are at this moment so reluctant to stretch their arms that local lenders remains one of the prime viable option for the small business expansion. All you need to get a license of money lending and of course interest ceiling is there. Do business legally, pay your tax properly and you could gain a handsome return iff the recovery procedure is settled smartly.
The idea of a service what I am going to mention below for the Banking sector, is popping up to my mind from last few days. And that I think this could be one of the important value added services of the Banks.
The Service: Free/low cost transfer of jewelery and precious objects (which are generally kept on bank locker) from one station to other with the same account/person.
Analysis: As the Indian Economy is growing, opportunities are emerging from every corner of the country. Workers, professionals, students are migrating from one place to another sometimes with their families. They have to carry their precious belongings with them. This involves high risk associated with lost, robbery etc.
Bank could reap benefits of this fact and provide free or low cost service to those account/vault holders.
1. Increase the faith of the consumers. This could accelerate the viral marketing and word-of-mouth among the peer group.
2. Will reduce the chances of losing accounts and that will help to retain the customers. This kind of customers are regarded as Mercenaries . They seems satisfied with your service but tends to change the service providers soon for some reason or other. This is specially true for the executives who are serving the private sectors and the rate of job change is quite high. Banks can tap those customers and convert them in to angels in this way.
The growth of stock market, financial market boom and a good base of technical brains, gave the country a big push towards the Financial Technology market. In addition, financial engineered products have added the ice in developing the related softwares, KPOs, BPOs, Technical assistance overseas and within the home territory.
A bunch of Financial technologies have emerged from the last 5 years or so. And this in turn has reduced the dependency on US and European markets in a no. of ways like, employment, revenue generations, economic, company and sector specific growth etc. The expected recession in US, Sub-prime woes worldwide, might have an impact in the Indian current economic growth, but economic recession is not possible, not even a drastic slowdown. As, the in home demand for the financial products and associated technologies are quite high and a large no. of consumers are yet to be tapped. Thats why you can notice a large no. of foreign financial players entering to this market.
Possible economic recession in US could have an impact to the overall outsourcing sectors in India. It is the high time to concentrate in home grown market for the IT, ITES and Financial services companies. A blend of these sectors have already started to raise the head as frontier market segment. This is also a kind of engineering as well. This frontier will definitely ROCK!
Deregulation and the boom in the Financial Sector of the Indian Economy entails the prospect of the Insurance Business. World biggies are entering Indian to tap the market, population with the effort of Joint Venture with the existing large and capable financial houses. More than 75% of the population are yet to be tapped through the insurance coverage. Earlier Insurance policies were seen as a tax saving vehicle and a life-risk hedging technique to some extent. But in these days, the generation Y and X are quite concern with the usability of the Insurance policies, specially for the health insurance policy. Insurance also serves the purpose of the money management. The popular reasons to the boom in the Insurance sector in India are:
1. Growing cost of living – Emergence of General Insurances)
2. Increasing Medical expenditures (Health Insurance)
3. Declining overall rate of interest (So Equity linked plans are getting popular for the better returns)
4. A tax saving instrument
5. Vehicle of overall savings (Money Management)
6. Increasing Insurance awareness
7. Diversified Economy – Diversified needs
The Insurance companies are facing lots of difficulties in reimbursing the claims to the insureds in the face of Natural Calamities, Terrorism Attacks, Political risks and so on. And of course you can blame the Global warming directly or indirectly. As the loss as well as the no. of claims rises, the cost of insurance (the premium in fact) rises too. There are financial loss as well that might trickle down to the society in the following ways:
1. Too much loss for the Insurance companies results in job curtailing
2. This in turn impact towards the expenditure level and the production – Slow growth rate of the economy
3. Fear of financial recession and stagflation with the appreciation of rupee – to save the export oriented sector, RBI buys Dollar in exchange of rupee – so inflation rises. Sterilization effort would have minimum as Govt. has to provide the interests
4. Increase in the cost of Insurance
Most of the Insurance companies are working hard to figure out the premium level for the different insurance policies incorporation the above factors.
Social Security or Insecurity is a great cause for the development of the Finance market along with financially engineered products. The issue is more prominent when the finance market is open but regulated, big market and the presence of a large private sector companies. India would be the suitable example in this case.
Some Brief Characteristics Of India with respect to the Finance Market:
1. Large Financial market yet to be trapped
2. A big no. of customers
3. Foreign players are welcome with a bit of regulations
4. A knowledge Economy with increasing education and Internet penetration
5. Economic Liberalization has been implemented, so private companies are dominating
6. Less Social Security on part of the Govt.
7. Expenditure driven economy and this is more prevalent with the young earning generations
8. A well grown stock market competing with the other world indexes
The above points could shed the light as to why more and more financially engineered products are entering in to the Indian market. E.G: Mutual fund, Pension funds, Derivatives, Insurance, Forex Funds, Bonds, Money market instruments and so on. The style of money management has been changed drastically from that what had been prevailing in 20 or 30 years ago. This style of money management has received a big boost with the falling rate of interest in banks.
In addition, the growing price level, expenditure level, status maintenance, no old age pensions etc. also have kept people busy towards active money management. And US type of model would be more applicable as the Indian Economy move global.