Thread by @thesanjaydutt

Some key points made by Deepak Parekh (HDFC) in his Webinar (post Covid-19 outbreak)

1. This is a Human Economic Financial (HEF) crisis. Completely different from 2008. Will take minimum 9 months to recover fully from it.

2. Banks to be on tighter leash. Your Bank Sanction letters don’t matter now, only amount in your account does. Banks are going to revise your sanctions & make drastic reductions, if they see a credit risk.

3. Start-ups: Billion $ valuations will be challenged. Cash burn frowned upon & tough to raise new cash.

4. Time to plan for future,look for opportunities & learn from drawbacks. Like in HDFC, a team looks after present planning & another focused on future disruption & plans .

5. Make time for yourself. Learn new things. Spend time with the young and old. You will be surprised to learn so much from them.

6. Leverage is a double edged sword. It can lift you or bring you down .

7. Restarting manufacturing is going be difficult. As the labor force will be forced to choose between Fear of Life or Livelihood. To manage this, labor has to be incentivised to return and Management has to guarantee them security of life, food & stay if required....

....Company Management's have to become more prudent by Cutting Costs, downsizing, No increments/bonus. Getting cash flow back should be first priority.

8. Consumer credit has to increase and Per capita income also . India is very low in it .

9. Pub & Pvt partnership works. Example-YES Bank. Though it is a competitor, didn’t allow it to fail as repercussions wud hv been more damaging.

Wasn't right that PSU banks take over problems of a pvt bank. Along with few pvt banks,decided to come together with SBI & help Yes.

Yes bank had foreign banks/funds showing interest. But the Govt said it’s an Indian problem, let Indian banks solve it.

We should have stepped up & did the the same for PMC Bank& IL&FS. Things would have been different.

10. RBI should come forward & purchase Corporate debt. This is a common practice by central banks across the world.

11. NBFCs should be regulated more. If required, new licenses be stopped. Banks have an exposure of 12 lac crore to these cos.

12. Force Majeure - been hearing this term a lot these days. It was brought up in a Govt gazette couple of weeks back regarding payment to it’s vendors. Now many companies including large cos are taking advantage of this & trying to skip on their lease’s,payment to vendors etc.

.....This should be used only when they are absolutely not in a situation to pay, not because you can. As this can have a ripple effect on the economy.

13. Equity mkts hit badly, but will return. Only 2% equity investors in India vs 40-60 % in some countries...

...MF penetration also very low at 12% compared to 62% global. First time investors shud be encouraged to invest in through MF as less risky.

Large cos can within 24-48 hrs get QIP from foreign funds & now encourage them raise more money from public .

14. McKinsey report-> in 2018 to 2022, a billion people in the world will be in middle class category of this 650 mn will be in Asia & 318 million will be frm India.

India will be huge in consumption numbers. Financial savings have decreased due to increased consumer spending.

Top 3 things on his mind:

- Fin sector shud be strong,else economy will collapse. NBFCs need stricter supervision.

- Poor shud be supported more & steps be taken for them to be brought out of poverty.....

....In any crisis, they are the first affected and last to recover and are the backbone of India.

c. Simplify rules for investment & remove complicated tax rules

Expect govt to come with stimulus scheme on Monday. We have given some recommendations.