One way to think of our developmental & sustainability challenges is to consider India as ~30,000 clusters of ~20 villages each.
Clusters are like organizations, & today aren't self-sustaining since revenues are less than what they pay for goods & services. This has to change 1/9
Today, most of the income generated by these clusters eventually ends up going back to the larger cities. This is because we consume food, goods, & services from outside the cluster even when they can potentially be produced within. 2/9
Young people with higher income potential move to larger cities because the local clusters tend to be economically unviable, which creates a vicious loop.
This not only hurts local clusters but also adds pressure on the infrastructure of larger towns & cities. 3/9
Clusters not doing well has many second-order effects. The loss extends to long-term asset quality, health and nutrition, the breadth of livelihoods, and overall capacity and control.
4/9
~70% of Indians live in villages. We can only do well if these ~30,000 clusters do well economically and socially. For this to happen, we have to prioritize local production and consumption.
This requires a radical rethinking of development and sustainability by the entire bureaucratic machinery. They have to help clusters become self-sustaining organizations that produce and generate revenues locally, reducing their outside dependence on goods, services, & more. 6/9
We don't realize it, but the carbon footprint of transporting food, goods, products, and services is massive!
Going local will likely also help in the fight against climate change.
Clusters not doing well is also the main reason why our cities are choking. 7/9
This thesis has evolved over the last 2 years at @RainmatterOrg thanks to @zenx & team.
To think through this, we're collaborating with the government, social organizations, storytellers, and, most importantly, clusters. Each village is different; there's no magic bullet. 8/9
Even as @zerodhaonline, we have nudged most of our team (over 60%) to move out of large cities & hopefully add to the economy of the 30,000 clusters.
If you are someone who is thinking through these issues, you can check out rainmatter.org & grove.rainmatter.org 9/9
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The biggest reason active traders lose money is overtrading, the low brokerage doesn't help.
Traders forget that costs like STT, stamp duty, etc. are charged as a % of every trade & compound quickly. You'll now see the total cost of a trade on the order form. 1/6
Ideally, we should have introduced this feature even before the SEBI circular requiring all trading platforms to display costs on the order form. This was a miss from our side.
What can't still be captured is the impact cost—the biggest cost for traders. 2/6
Impact cost is the money lost you lose due to the bid-ask spread.
For example, if the bid is at Rs 100 & offer is at Rs 100.2, buying at Rs 100.2 & selling at Rs 100 means a loss of 0.2% of the trade value. Impact costs aren't obvious, but add up when you overtrade. 3/6
Allowing NRIs to open demat accounts online is the low-hanging fruit to attract money to India. The process today is physical and cumbersome.
With Indian markets doing well, there's a great interest to invest here, but the tough onboard process leads to massive dropoffs. 1/4
Since NRIs send and receive funds from bank accounts with KYC, we can make onboarding fully digital and make it as easy as it is for a resident Indian to open a trading account.
Online onboarding is the main reason for increased retail participation in India. 2/4
There are 2 parts to the onboarding: KYC & authorization (sign). An NRI with an NRE/NRO bank account will already have the updated KYC, accessible to other financial intermediaries through CKYC.
NRIs may not have an Aadhaar or one linked to an Indian mobile number to e-sign. 3/4
We've always believed that bonds and maybe not stocks are the right stepping stone for most Indians—better than FD returns but lower risk than stocks.
But bonds have been an HNI product, and no one sold them to retail. But SEBI has just made some important changes recently. 1/6
There were two big issues:
1. Availability of bonds with small face values. Most bonds are issued through private placements and have face values of Rs 10lakh+. So retail investors were priced out. 2/6
2. All bond deals had to be settled through the clearing corporations, and they only accepted RTGS as a payment mode. So the minimum transaction size became Rs 2 lakh + by default. 3/6
I have spent the last couple of years thinking quite a bit about health. Experimenting with myself and our team, and supporting startups that are trying to help Indians make healthier choices.
A few thoughts on how and why you should focus on your health. 1/9
In chasing money goals, it is easy to forget that all the money in the world can’t buy good health. As we grow older, our health determines the quality of life, not money.
Good health also means the ability to bounce back faster if unforeseen incidents occur. 2/9
Health goals should be about how you feel, not how you look. Wanting to look a certain way, influenced by celebs and influencers who fake it with lights and photography, use performance-enhancing drugs, or hit the genetic lottery, is a recipe for unhappiness. 3/9
RBI's announcement of allowing single block and multiple debits on UPI can potentially have some interesting outcomes for the broking industry.
A few thoughts. 👇
Why? 1/9
The broking industry has a chequered past, with a few firms misusing customer funds. The regulatory changes over the last few years have ensured that such instances are unlikely in the future. But ensuring that retails investors are protected is a top priority for SEBI. 2/9
Unlike the past, a broker can't hold customer securities in a pool account–it has to be in the customer's own demat account. So the risk is limited to the idle funds with the broker. So, SEBI has mandated that unused funds be sent back to the customer bank once in 30/90 days. 3/9
Our capital market infrastructure & regulations don't get enough credit for being among the best in the world.
It is crazy & scary what is happening today in the Crypto world. Crypto Brokers & exchanges can act as banks in most markets, exposing customers to unlimited risk. 1/3
In India, all securities are held by the customer at the depository. All unused funds are sent back monthly/qtrly and one client's funds can't be used to fund another.
In most markets, brokers can hold customer securities & funds indefinitely & use them any way they want. 2/3
Like we celebrate our payment systems for being the best, we also need to do the same for our market infrastructure. Especially SEBI, for whatever they have done to protect retail investor interests by continuously reducing risks & marking our markets safer. 3/3