Means: No more overdraft like facility from NBFCs. This is important, because NBFCs could take security (like stocks, mutual funds etc) and give people a loan facility that behaves like a bank overdraft.

Meaning, you get a facility for 50 lakh, and you can draw any amount, say 10 lakh for a few days, repay it back, then take it again etc. You get charged interest only for the time that you have taken money, but the facility itself lasts a year or more, so you can do this many times over. Effectively, it's on-demand credit repayable anytime, without new loan agreements each time

This is a great facility, mostly because it can be used for temporary liquidity in a very short period of time, without needed to sell the stock or mutual funds you own. Now, if RBI's rules go through, only banks can do this. For you and me, this is a no brainer; banks have a 1 cr. limit on such overdrafts against securities. It hurts those that use such facilities to borrow more (only NBFCs can give higher value loans than 1 cr).

By restricting this to only banks - it will massively reduce the playing field for such loans. And it will have to change the business model for loan-against-mutual-funds startups to move to pure term loans (fixed term loans, repayable in EMI or bullet, no repeated taking of loan once returned)

Since this is an on-demand loan, the section pertaining to "demand/call loans" goes away. Meaning no loans that are flexible repayment whenever you want, etc.

This still leaves some hope - that if you need money, you can quickly digitally get a loan, with a digital pre-approval perhaps. But it has to have a fixed tenure and repayment plan, with perhaps a zero prepayment penalty. (Or just use a bank)

Also this hurts NBFCs that might on-lend to other NBFCs by taking securities as collateral. Don't know the impact of this yet.

I think it's a little regressive, this rule. Perhaps they could restrict the scale of this to say 5 cr. per borrower instad of removing it outright from NBFCs. Banks need competition to do better for customers.

The RBI has 6 lakh crores - 600,000 crores - of excess capital they might be able to pay the government.

History: RBI has too much capital. No country allows its central bank to hoard capital. Such capital belongs to the people of the country (the government). Therefore most central banks pay their excess balances to the government.

Not India. The RBI has hoarded capital like crazy, I mean absolutely insane levels, before they created a Bimal Jalan committee that simply said this: don’t hoard capital.

I wrote about it in 2018:

Abeyaar, the RBI is hoarding too much capital.

Then, the RBI gave an incredible 176,000 cr. dividend back to the government in 2019, agreeing that abeyaar, yes, we have too much capital.

And then it starting hoarding capital yet again.

The idea is: Have about 21% of your capital for risk. Give government anything you own that’s more than that much. This worked in 2019 to 2022.

After 2022, the RBI started seeing a massive growth in the balance sheet again. As you can see in the chart below, the growth was still relatively small in 2024 - 10% to 15% growth only.

Now in 2024, the RBI paid out 210,000 cr. as a dividend to the government.

In 2025, the surplus became absolutely massive, by the calculations of the Bimal Jalan committee report - possibly as much as 500,000 cr. !

That’s because the RBI saw the balance sheet growth collapse (due to heavy selling of dollars by the RBI) and then recover when the RBI bought back dollars in early 2025.

The result: RBI changed the Jalan committee buffer limits, to a level that basically reduced the dividend of the government.

From a capital size of 21% of balance sheet, the effective buffers were increased in a new committee review, to effectively 26%. Even with that massive increase the RBI paid out over 268,000 crores to the government as a surplus.

Currently, the buffers are even higher than in 2025. The capital is about 34% of the balance sheet, which itself is 88 lakh crores.

What does this mean?

Effectively, the RBI has about 660,000 cr. of “excess” capital that. The actual number that can be used to pay the govenrment may be lesser, because some of the gains are not realised, such as the increase in the price of gold. Increase in gold prices cause an increase in “revaluation balances” which is not a realized gain, so can’t be used to pay out dividends.

(This is a make-believe argument used by the RBI itself to pay out lower surpluses, and not quite necessary when they have liquid assets.)

If they do want to pay, of course, they could simply sell the gold to local jewellers and buy it all back, thus “realizing” all the gains, and that can be paid out. Nothing wrong with that, in a bloated balance sheet situation - one good way to reduce that size is to pay out surpluses.

(Chances of RBI selling gold and buying it back: zero. I have this habit of eating khayaali pulao.)

The balance sheet has massively expanded recently due to the rise in purchases of dollars (swaps) and government bonds in OMOs, plus the increase in price of gold. Forex reserves - the chart below does not include gold - are flat from last year, and government bonds have increased substantially.

The RBI paying a big dividend will massively ease the issue of the government financing a deficit. Remember, next year’s deficit needs around 11 lakh crore of financing through debt. Only around 3 lakh crore is estimated for RBI dividend/surplus - if this surplus payout increases, it can reduce the deficit some more.

A bloated RBI capital of nearly 30 lakh crore on a balance sheet of 88 lakh crore (34%) is huge and perhaps largely unnecessary. In comparison, the Federal Reserve bank of the US has consolidated capital of $46bn on a balance sheet size of 6,456bn or less than 1%. (link)

The common argument is that the government is controlling the RBI. But with such enormous excess capital of over 6 lakh crore more than required, (and even the required is way too high compared to other central banks), it’s the RBI that is controlling the government, which has managed deficits down to 11 lakh crore. A little nudge towards becoming more like other central banks might be in order.

Draft rules are finally here. First, refer to this thread:

There’s a 50:50 rule by the RBI.

If you have 50% of your assets are “financial assets” (including mutual funds, shares etc but FDs are ok) and “financial” income is more than 50% (dividends, capital gains, interest etc but not FD interest) Then you were supposed to register with the RBI as an NBFC.

This creates a problem for a “friends and family” fund structure created as a company. You can pool in money together, and use that to invest - in startups, in public markets, in bonds, whatever. But since most of the income and assets are financial, you need registration with RBI as an NBFC!

What RBI created, in draft rules today, is to remove that requirement if you’re less than 1000 cr. in assets, and don’t have any customer interface or take money from the public. Great to create new funds that are primarily pooled family or friend vehicles in India.

This will eventually create competition of us, as a mutual fund, but I would say this: let a 1000 fund managers bloom. India doesn’t have as many privately held funds as we should.

Our family offices usually invest in each family member’s name, separately, because a collective investment would trigger NBFC clauses. A few people that come together to invest shouldn’t have to do something as gargantuan as an RBI registration.

What’s in the Draft rules

The draft rules say this:

1) NBFCs that don’t take loans from ANYONE, and do not have ANY customers don’t have to register with the RBI, if their assets are less than 1000 cr.

2) This means they can’t even do things like mutual fund distribution or such things.

Such NBFCs can’t invest abroad (unless it’s to create a regulated subsidiary abroad, after three years of profitability) In fact, any investment abroad by such an NBFC means you must get an RBI Okay.

What does this mean?

Anyone can now set up a company with “only owned funds” - means only capital that is equity or compulsorily convertible to equity, as owners of a company. The company should do no customer business of any sort, and have no loans from anyone, including shareholders.

Such a company can be used to exclusively invest in shares of companies, or in mutual funds. This would normally have required RBI registration as an NBFC. But after these rules are notified (they are draft rules), you will not need an RBI registration at all. (As long as you’re less than 1000 cr. and I hope you all go beyond that :) )

You might think I’ll create new companies with random people for investing! But no, there are SEBI rules that prevent you from creating collective investment schemes and soliciting money like this. It should be within your known circles - people who are willing to give you equity money (not a loan of any sort).

This should help create a much easier market access structure for family offices and people who want to build a vehicle to invest their funds together.

Draft Rules at: https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=62200

If you're a buyer between 3:00 and 3:10 you may be buying at a much higher price and if you sell after 3:20 you're selling at a lower price than the "close".

This is where a closing auction matters.

A separate session will be open between 3:15 and 3:35pm on every day. This has some combination of market and limit orders and will work like the open auction.

There's a bunch of rules around derivatives, market close timings etc which should get clear once the exchanges reveal their operating process changes.

This starts in August so there's a lot of time. But it does reduce the close "manipulation" potential by certain large entities through huge trading of underly ing stocks. It also gives clarity on closing prices and the ability to trade on a single price for the close in the auction.

(There's another "close only" auction at 3:50 to 4:00 pm but that's a tough place to be in as derivatives don't trade during that time)

Founders of this company exercised a truck load of options in March, and that involved a perquisite tax payable of over 700 crores. The company will pay on behalf of the founders, but by the first week of April. So they’ve recorded that they need to pay as of March 31, but the actual payment will be done later.

Perquisite tax is an operating expense. So they had kept cash to pay for an operating expense but paid it out a week later. As of March 31, 2025, operating cash flow went up by 700 cr and because it has to be paid to the government in April, the “Other Current Liabilities” section of a balance sheet goes up by the same amount.

This makes it appear as if that 700 cr. was operating cash flow. It wasn’t - the company effectively paid a perquisite to the founders of 2000+ cr. (ESOPs when exercised are considered to be a payout to the founders at the current valuation). This 2000+ cr. isnt actually paid, of course.

Normally, you would consider such a payment in “financing” cash flow, not operating cash flow. But because this is called a perquisite, it is actually like a salary, which is an operating expense.

Effectively, what was deeply cash flow negative became cash flow positive with an ESOP hack of sorts. Genius move. It might be a coincidence that this happens in March, but it just made the March 31 results look good. Man this is so much fun to uncover.

What this means: People that look at such data need to figure out these hacks so they know when to not believe such data or take it at face value. Cash flow isn’t positive, yet.

One type of company that goes IPO is a company that doesn’t need cash. Think of the AMCs. Those electronics companies. That big car company. None of them needed more money, because they are cash positive. In these cases, the promoters sell their shares so we can participate.

If you don’t like this, remember that in the distant past (70s), the government forced the cash positive MNCs to list, so that Indians could participate in their future. So you got to participate in the Unilever, Nestle etc subsidiaries and that’s been overall good.

Second is a company that has raised capital in private markets, has enough money, and is looking to list to allow private players to exit. This is again not a problem as the company has cash - and have revealed fully about who is selling how much, what they bought at etc.

Are these companies bad then? Not really. I can tell you a bunch of companies that did an OFS though they did need money (which they raised later) - such as a very famous food delivery company you know.

Most companies do a combination now - even the government companies.

In a pure OFS co like IRCTC - a government owned co - there was no need of cash, so it was entirely the government selling shares. In 2018!

It’s now 9x higher. Why is that kosher, and a Korean giant bad?

The regulators job is to ensure you have the information you need to decide. Its job is NOT to decide for you if this IPO is good for you or not.

We need more freedom to decide, lose/win, and participate, and less information arbitrage.

But the big thing also is: tax saving.

Think about this. I have a fantastic company, generating 1000 cr. pre-tax profit. I will pay 25% tax - leaving 750 cr. If I need to take 100 cr. for myself, I have to pay a dividend of 160 cr (since 40% of that is also taxed).

Instead, I could list the co.

If I listed the company at 20 times earnings (750x20=15,000cr mcap) and sell say 0.8% of the company for 120 cr.

I will get a post tax income of 100 cr (since LTCG is only 15% including surcharge)

But I give up 0.8% of this co’s growth forever.

So there is a tax advantage in listing a co and selling it versus taking dividends. And that’s a good thing for us investors, because the guy giving up stake today might see it worth many times more tomorrow.

The OFS person makes that call. Too many times, they give up too much.

A stock exchange that listed at Rs. 800 or so is up 21x since the IPO in 2017. It was entirely OFS.

A loser might lose 1x (max you can lose is 100%)

It’s not whether the company got funds or someone sold . It’s the quality of the company and earnings and growth.

• The US hit us with 50% tariffs in the quarter

• Huge FPI and FDI outflows from equity markets continued.

The big culprit, really, was Gold. India saw $19bn of gold purchased in the Sep quarter. This is normal as it was about $20bn last year (Sep qtr) as well - usually a Diwali thingy.

In fact because of gold, the Sep 2024 (last year) quarter was a $16 bn deficit.

Gold isn’t, in my head, a current account item. We can only import gold (we can’t export it as gold, only as jewellery). So gold is generally something we use as a capital good - i.e. it’s something that is largely used for saving. Like when you buy a US company’s stock for investment. If that’s the case, it shouldn’t be in the current account, it should be in something called the “financial account” along with FDI/FPI and such.

If you REMOVE gold, then we have a massively POSITIVE current account surplus - of $6bn.

In fact, we’ve had a net-of-gold-surplus for 10 of the last 11 quarters.

The Trade Deficit

India has goods trade (physical things) with other countries and it’s deeply a deficit - we import a lot more than we export.

Exports were so-so (mostly because of the US tariffs) and imports grew.

The trade deficit hit a mega $36 billion in the quarter. But that’s not too bad - it’s been higher in Sep 24, Sep 22, and it’s been these levels in 2011-12 too.

Most of the services trade is in IT exports, and they are growing at just 11% a year. It has however hit $43 billion in the quarter, which is absolutely massive compared to $12bn in 2010.

Remittances Hit A Big High

Indians sending money home to their families has hit an all time high of $36 billion in this quarter. After a lull, as it was going down a little, recently.

One thing: Trump taxed remittances 1% in the quarter, but not for remittances coming through banks. Money moved though legal transfers probably.

Financing the Current Account Deficit

Usually done through NRI Deposits, FDI or FPI.

FDI and FPI wise, we have seen net outflows - FPIs sold $5.7bn, FDI was a lower $2.8bn.

NRIs brought in about $3.6 bn. The difference between remittances and NRI deposits is that NRI deposits are a liability - i.e. could potentially be taken out back by the NRIs. Remittances are permanent transfers back. (An NRI keeping money in his own bank account is an NRI deposit, but sending it to his parents’ bank account is a remittance)

The rupee has weakened overall, with other currencies too.

It’s strange only because the deficit isn’t too large really (12bn only) even in a critical tariff situation. And inflation in India is quite low - usually India has a much higher inflation than the US.

And the REER (a flawed metric to measure currency weighted by only goods trade, not services) is now below 100.

(Below 100 would be “undervalued” and this chart ends October - the rupee has fallen even more since!

Note: With Services, INR would be even more undervalued.

My view:

From a rupee falling perspective, this sucks for India as a whole. This might propel more enthusiasm for making in India, but that will take years. A stable currency would be nice, however India does need to either free the rupee completely or have a limited long term range it can operate in. (We do neither, we only let it depreciate)

Freeing the rupee is the right choice now - allowing money to go out easily means more money will come in. Even if it means short term drop in the rupee value, at least we don’t have a one side move on the rupee even if our fundamentals improve.

On the RBI

1. RBI should cut rates. Because the only reason to NOT cut rates in the face of just 0.25% inflation is: our exchange rate will fall. But it’s falling already dude, and you’re doing nothing. So might as well give our businesses a fighting chance, which you’ve denied by keeping the cost of capital too high.

2. The Rupee is falling due to net trade and FPI outflows and RBI’s one sided protection policy. They don’t let the rupee appreciate but let it depreciate. Trade outflows are in past ranges. If they were balanced, they would sell USD heavily when we see net flows out.

3. The rupee has fallen 6.1% in this year at this point. It would be better if India reduced dollar holdings (with RBI selling dollars) and RBI should replace that with purchases of Rupee Bonds instead.

Here’s the concept of the current account explained: https://premium.capitalmind.in/2014/09/what-is-the-balance-of-payments/

Why is low nominal growth an issue?

It means that while inflation seems low (nominal minus real is the inflation embedded) it means that actual salaries, revenues and sales are lower in growth. Given that even the government depends on nominal growth to collect a higher tax amount, the drop in such numbers reflects in a lower topline growth.

This is the lowest effective inflation number (known as the GDP deflator) since 2019 or so. It wasn’t even this low in Covid.

If we go into the details:

Manufacturing has done well in real terms at 9.1%. As has financial services. Personal services comes off a little bit in growth.

The biggest in the economy are financial services, trade and manufacturing. the rest are relatively small.

GDP is now at 345 lakh crore at market prices, which at the rate of Rs. 89.7 to a USD is about $3.84 trillion. So no, the $4 trillion is still a while away.

Another way to look at it is from the components, and this time exports have grown lower than imports. Private consumption, at 8% growth is decent (its 55% of our GDP)

Even investments are growing decently now - and they are 34% of GDP. (Govt exp is around 8%)

The bottom line:

Nice, but not so nice. Nominal growth needs a push. Even the RBI powered MPC committee has been mandated to have inflation between 2% and 6% and we are woefully below that. It would be useful to have a rate cut now, since the cost of capital is incredibly high in India. We must compete, and while manufacturing is staging a recovery, it will fall flat if capex costs are too high for us to finance our own growth.

For more information on Capitalmind Mutual Fund, Check us out at https://capitalmindmf.com !

The first one is the brokerage piece. Currently, when mutual funds buy stocks (or anything) they pay a brokerage to the broker. To many of you that use new age brokers, this may sound extreme, but upto 0.12% of every trade for equity shares and 0.05% for derivatives can be paid as brokerage, and is not part of the TER of the scheme.

SEBI has mentioned that arbitrage funds (where research isn’t a big input) have a much lower brokerage payment than other equity funds, and they believe that is because other equity funds may be charged higher because it’s research. This, they say, isn’t to the best interest of investors - after all, research of the AMC itself is what’s being paid for in management fees.

Meaning, SEBI is saying: why should mutual funds pay higher brokerage and are allowed to charge it to investors (not part of base TER limits) when the higher brokerage is for research? (You’re free to provide contradicting opinion in a response to the draft)

So, the new rules:

- Ok boss, you can pay brokerage of 0.02% for equity, 0.01% for derivatives and that’s not part of base TER

- But if you pay more, whatever is paid will be part of TER and thus subject to TER limits

- Essentially, any higher payment will result in a reduction in what an AMC can charge in their fees.

- So AMCs will negotiate lower brokerages from their brokers, if this rule goes through

(Small twist: the brokerage is only what brokers charge. Not the GST on it, not the transaction fees of exchanges, stamp duty etc. That stuff is payable and outside of TER)

Take an example - a Rs. 1000 cr. fund in AUM can max charge around 2% (assume) for their Total Expense Ratio = 20 cr. in fees

Assume that 10 cr. goes to distributors, 10 cr. to the AMC

If they buy worth 500 cr. and sell worth 500 cr. in a year, that’s total transactions of 1000 cr. They pay 12 bps (0.12%) on this = 1.2 cr. as brokerage. It’s probably something like 0.9 cr. brokerage + 0.3 cr. for GST/Transaction fees etc. So the brokers get 0.9 cr., roughly (This is an assumption, for an example)

(Note: STT is not in this picture at all- it’s paid, but doesn’t show up as brokerage and is not in the 12bps limit)

Currently such brokerage is part of internal costs of a fund and reflects in the NAV, but isn’t visible as the Total Expense Ratio revealed. The brokerage numbers come as part of “expenses” in annual reports of the schemes.

In the new rules, if approved, only Rs. 0.2 cr. would be allowed to part of scheme expenses. Anything higher would have to be part of TER. If the AMC cannot negotiate down their brokerage and still have to pay 0.9 cr. as brokerage, an extra 0.7 cr. (more than 2) will be part of TER. But the TER limit is 20 cr. remember, of which the distributors get commissions of 10 cr., and excess brokerage is 0.7 cr. so the AMC can take a lesser 9.3 cr. as its fees, down from 10 cr earlier.

This is 7% reduction in fees, and higher if the take rate for an amc is lower (usual split between commissions and management fee is 70-30 for many AMCs)

Think about it. If the 20 cr. management fee was distributed as 15 cr. to distributors and 5 cr. to the AMC, then the AMC now gets 0.7 cr. less, which is a 14% reduction in income.

And if you remove research, the cost of running a brokerage is relatively low nowadays, even for an institutional broker; they will usually make it up on size. At some level, research can be paid for by the AMC separately, and often is; in fact some research houses offer no brokerage services at all, so that research is purchased by the AMC (and not charged separately to schemes) anyhow.

And the brokerage market is HIGHLY competitive, so there will be enough players offering lower brokerage for institutions like mutual funds anyhow. The pain is likely to be borne mostly by the brokerages who currently service mutual funds.

Note: Every AMC needs at least 20 brokers (they can’t have more than 5% of their total brokerage concentrated in any broker).

Small AMCs (like ours!) will probably hurt until we reach a certain size, but by and large, brokers are keen even at lower brokerage levels.

This is a long long post, I know.

In conclusion: brokerage limits are proposed to be slashed from 12/5 bps to 2/1 bps - and the reduction in revenue is likely to hit institutional broker revenue in the future if this goes through.

I think this is a good move for investors. Most of you pay a lot lesser in brokerage today and it’s time that us that manage mutual funds also reduce our transaction costs.

Link: https://www.sebi.gov.in/reports-and-statistics/reports/oct-2025/consultation-paper-on-comprehensive-review-of-sebi-mutual-funds-regulations-1996-_97496.html

Looking at how inflation spiked last year, the October data looks like it will be closer to 1%!

In fact, in last month’s inflation thread, I actually said this as well (August was 2.07% year on year inflation, Sep is 1.5%)

What is really shocking is:

Personal care and effects (stuff like Soap etc but they don’t give us details) is up 19% year on year!

Update: Abhas says this is due to the inclusion of “gold” in personal care and effects, quoting an RBI note. This explains it then, and it’s not going to hurt life because gold is more an investment than a consumption good.

That has taken core inflation (what remains when you remove the volatile food and fuel elements from inflation calcs) to 4.%, the highest in two years.

The moodboard doesn’t seem bad at all, unless you look at the Personal Care and Effects bit. Inflation looks relatively subdued in every other area:

My thoughts:

I hope they release more data on what caused the large spike in Personal Care and Effects. It’s so anomalous because nothing else seems that huge. Of course, oils and fats have been in double digit inflation for a while, and soaps do have a lot of oils and all, so maybe there’s a downstream impact.

Or, it might just be higher rupee import costs of certain goods as the rupee depreciated to nearly 90. However other areas should have also seen a similar jump in inflation, from recreation to household goods, and that’s not happened.

Note that not much of the GST impact would have reflected meaningfully into the data. GST drop was Sep 22, and I’d expect a lag into pricing. Transportation - where car/2W prices will have fallen immediately - is now low on inflation at only 1.8%.

So will RBI cut because headline inflation is low? Or will they wait for core inflation to reverse too? Even at 4.6% core inflation, repo rates of 5.5% are just too high. We need lower rates for sure; while the RBI “skipped” cutting rates this month, I hope we see better October data which is the only inflation number RBI will see before the next monetary policy meet.

Here’s the tax summary

The full amount of the buyback is taxed as dividend. Shares tendered in a buyback are assumed to be sold at zero rupees.

A buyback at price of Rs 2000 when you have bought at Rs 1000 means: Effectively dividend income of Rs 2000, taxed at slab which can be 35% or more.

What about the 1000 you paid? Considered to be sold at 0 so you get a Rs 1000 capital loss that you can offset against other gains. For capital gains, long term taxes are 12.5% and you can only offset long term losses against long term gains so it's only a 15% benefit (after surcharges on tax) on 1000 = 150 rupees saved in taxes.

If you tender: the tax you pay on Rs. 2000 can be 700 rupees (35%+). You save Rs. 150 tax on the loss you made, so the net tax is 550 rupees, so what you effectively make is 2000 minus 550 = 1450.

Instead, if you sell in the market and the market price is say 1700, you will make 700 rupees profit (since your buy price is 1000) on which the tax is 15% = 105. So you get net of taxes, 1700 minus 105 = 1595.

For a taxable individual buybacks are not useful to tender in India.

I can choose not to tender?

Buybacks in India are not compulsory. There’s a tender window (can come months later) and if you don’t tender, you just don’t get your shares bought back.

If you really need the money, you might want to sell the equivalent shares in the market instead. You will usually end up with a higher amount after taxes.

Why do companies even bother with buybacks?

Buyback tax rules have become onerous, as you’ve seen. It used to be that buybacks were not taxed in your name - the companies just paid a flat 20% tax. This changed into the new system in 2024.

Buybacks are great for companies though. Dividends are ways to pay shareholders out of profits. But now, dividends are fully taxable. If you pay a dividend people get taxed at up to 35%+ anyhow. A buy back does the same thing - distributes cash - but also reduces the number of shares of a company so your future earnings are spread over fewer shares (higher EPS)

So it’s better for a company to do buybacks than to give dividends.

But it is terrible for shareholders?

Yes and no. If your company has to pay you, it's better as a buyback than a dividend.

If you get a dividend, you pay the tax on the money.

In a buyback you can choose to not tender (and sell equivalent shares in the market for better post-tax returns). Or you can choose to tender and not just get money, but also get to use the loss on your purchase price.

Who benefits from buybacks? Investors in lower tax slabs and some Indian institutions that don’t pay tax, like Insurance companies, pension funds, EPFO and mutual funds.

To conclude: Calculate the real post-tax return on your investment before you decide to tender shares in a buyback. It’s usually better off just to sell as many shares in the market instead, unless you are in a low tax bracket.

RBI also changed their economic framework (which was earlier according to the Jalan committee - but today's change has no external committee backing. They raised Contingency risk buffers to 7.5%. This is massive - a 1% increase is nearly 70,000 cr. more!

RBI doesn't rescue things in emergencies - that is done by the govt (recapitalizing banks etc. is done by govt money, not by RBI) Therefore they shouldn't keep this - and no other serious economy leaves SOOOO much capital in the central bank.

My post from 2018: https://premium.capitalmind.in/2018/12/abeyaar-rbi-is-hoarding-too-much-capital-and-can-pay-a-chunk-to-the-government/

Anyhow, it's still the biggest dividend to date by the RBI. Remember, the Budget expected only 256,000 cr. so this is about 13,000 cr. more. So yes, thank you for that, dear RBI.

Background: Byju's has courses. They cost lots of money. They do aggressive marketing to sell these courses. Many parents don't have the money. Byju's then tells them they can pay every month. But it's actually a loan from an NBFC, disguised as a monthly payment.

When people realized that this is (damn!) a loan, they were a little, uhm, peeved. If they don't like the course, they could stop, they thought, so they won't pay. The NBFC said it will hurt their CIBIL score - still, defaults were high. Who took the hit? Byjus.

In Byju's annual report, the auditors noted that although the NBFCs had paid Byjus upfront some money when the customer took a loan, there was a clause that required them to return it to the NBFC if the customer didn't pay the loan.

A "full loss default guarantee" of sorts.

RBI disallowed loss guarantees in NBFCs and now it's partially allowed 5%. But it seems the NBFCs are refusing to lend to customers of Byju's - because the new rules are like this: If a customer doesn't pay, even if there is a loss guarantee, that customer is an NPA.

NPAs are bad for NBFCs, who'll hit snags when they get rated.

Byju's: oh we'll lend instead. This is bunkum. If a customer pays me Rs. X/month, can I pretend that I lent him Rs. X*12 for 12 months which he's paying me back monthly? And recognize X*12 as revenue?

So: if your customer pays you X per month, that's your revenue. If he stops paying, no more revenue. If you can recover more because you have a "contract", then you recognise revenue when you recover it. "Lending to your customers" means a subscription, usually.

https://twitter.com/deepakshenoy/status/1671780254334214146

The point is: can I write every day? This is public, but I don’t think anyone will find it. I need it to be public, so that I feel like I’m writing to an audience greater than one. But I don’t want it to be burdened by the “aura” of me, if there is such a thing. It surprises me to no end that people I meet for the first time, they know of my name. Even more that they address me respectfully - as if I’ve achieved something - I haven’t. I tweet and do something interesting with money. And I can write a little. But that’s not worthy, is it? It’s like a startup celebrating their getting funded - you’ve just given up your freedom, and will have to live with all sorts of investor expectations, and yet, we congratulate you. But in this world, this is a silly argument. There’s only a little respect that goes around. So if you get it, take it, and pretend it is your salt-and-pepper hair and the respect-your-elders Indian thingy that makes it happen. That’s good enough for me and my strange imposter syndrome.

Writing every single day is also a burden. Not because I have no ideas. I have a ton. I have to find a place to write my ideas down, because they come and go and leave me struggling to remember. And then, days later, I’ll get the same idea all over again, and I’ll be like: I really *should* write this down. Rinse, repeat.

The burden is because it tethers you to the schedule. I’m a rebel. I’ve been one since I was 12, I think. I don’t look like one, unless you’re going to call it a rebelly. (Which is a thing I have to fix, but that’s for another post) I can’t deal with a daily schedule that tight, but I have to, at some point, build the discipline.

This is, thus, the first post of a series that will hopefully go beyond, and I’m going to apologise to Mohit Satyanand for usurping the name, a minority of one.

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