Tuesday, June 27, 2017

Is it fair to exclude student loans(education loans) from personal insolvency? Some possible reforms

While reading the Indian Insolvency Code 2016(http://www.indiacode.nic.in/acts-in-pdf/2016/201631.pdf) , I realized that student loan debt is excluded from discharge during insolvency/fresh start process. The definition below states that:
Sectin 79(15) "excluded debt" means—
(a) liability to pay fine imposed by a court or tribunal;
 (b) liability to pay damages for negligence, nuisance or breach of a statutory, contractual or other legal obligation;
(c) liability to pay maintenance to any person under any law for the time being in force;
 (d) liability in relation to a student loan; and
 (e) any other debt as may be prescribed

While matters of (a)-(c) are public policy items, it is difficult to fathom why student loans should be singled out for unfavorable treatment. One argument could be that these loans are typically unsecured and single borrower so to avoid the risk of student moral hazard of building their skills and non repayment, these are excluded from personal insolvency. This is the case in USA also, but there, if the college has been fraudulent, de-recognized etc, this debt is forgiven. In my view, this provision should be accompanied by

  1. Allowing bankruptcy protection for only those student loans which were unsecured and not under co-guarantee/co-borrower of parents. Reason being these were secured at time of sanction, and therefore should not get special treatment
  2. Allowing student loan protection to the extent the interest charges were less than the equivalent home loan rates by the same lender. If the lender had charged ~13% under floating, why should they get special treatment here
  3. Not allowing retirement annuities of parents to be attached to repay their children's loans for which they had done guarantees
  4. Allowing case/case student loan waiver where the default is not wilful. Possible indicators could be
    1. Income after graduation<200 emi="" li="" loan="" of="">
    2. Person continued jobless
    3. Institute placement records/academic credentials under question
    4. Evidence of kickbacks between lender and institute 
  5. Fine/Recovery from the concerned education institute where fraud by them is proven(Eg advertise 100% placements or facilities which do not exist)-then the bank should be able to attach and auction the institute. 
  6. Similar to RERA Code, liability on education/admission agents 
In the era prior to this Code, I have seen cases of friends debarred from bank jobs since they fell behind on student loan repayment. This leads to a vicious cycle in this economy and should stop

Monday, March 20, 2017

The success of Instamojo

Since the last 7months, I’ve been using Instamojo to collect payments for an event which I co-host. Having collected close to Rs ~80,000 over ~300 transactions(average ticket size is around 160, skew due to one-off Mar-17 event), my experience of the platform has been that it delivers what it promises- an inexpensive, swift, efficient way to collect payments for various purposes(in my case, events). Why do I like it so much, or prefer this to UPI/direct account transfer? Preregistration for events is helpful to build seriousness and minimize dropouts- while Prepayment for events builds a trackable database, and lowers credit risk and operational cash issues, so that you can focus on enjoying the event rather than on who has paid(or not). Besides, while in our case, even Rs 150-200 is a pittance actually, this lowers the odds of overplanning and wasting food/resources.

1.       Sleek and elegant web UI-Easy for payments and vendors
2.       Only option I could locate for individuals(non registered entities) which allows you the full payment gateway functionality
3.       Allows to collect fields beyond name/email/mobile-this can be used to pre-qualify people during signups, and update the database. No need to seek and update spreadsheets
4.       Protects your and the payor’s payment information-neither party is aware of the source or recipient payment method.
5.       Allows different variants and discount codes-useful for price differentiation
6.       Excellent reporting interface, downloadable 24*7
7.       Avoids payment hassles for you and various options for those who need to pay you-no more frequent logging into bank account to check who paid out
8.       Instant receipt-allows confirmation to those who paid that their funds are safe
9.       Easy refunds without time limit-useful if you cancel the event OR issue a discretionary refund.
10.   Premium options for SEO etc which I have not used.
Some things which could be better
1.       Micro Loans on T+1 at 0.25%-This might give a perverse incentive to delay payments
2.       Better Wallet Integration-They don’t have PAYTM for example, and till recently used to charge money for even offering this facility
3.       Mode of payment/Device Type meta data-this could be provided in the payments dashboard for vendor to analyze better his customer profile
4.       Not passing on TDR/MDR benefit from RBI-In the months RBI lowered the transaction charges, they could have reduced it for end customers also. But they chose not to affect the standard pricing, thus demonstrating their pricing power. Not kosher!
For all this, paying Rs 3+1.99%(+service tax) is totally worth it even though it works out to 3.5%-4.0% of my overall proceeds. But considering the time it saves me, it is totally worth it.
Kudos to the team and to their backers(their website includes names like  Kalaari Capital, Blume Ventures, 500 Startups,  Rajan Anandan, Sunil Kalra, Dave McClure, Rob de Heus, Thijs Gitmans, Pankaj Jain,  Shailesh Rao, Bharathram Thothadri, Avlesh Singh.)

PS: This is purely a review without any commercial or other benefit from the gateway. 

Thursday, January 26, 2017

Who is to blame for Tamil music and dance fading out in Mumbai?

There were three distinct events last week which provoked me to write this post

  1. The lament of the Mulund Fine Arts Society that they had to cancel their annual program because of inadequate contributions to fund the extra expenses due to unavailability of the usual rented hall which is now undergoing renovation. The Society has three main revenue streams, music/dance classes(~40% of revenue, but hardly 10% of this revenue is a surplus), minor entry fees/subscriptions(~15% of revenue) and interest income(~45% revenue). Total budget ~Rs 2 Mn. For a place like Mulund with a sizeable population, this is a pity. That too in a place where stand up comedy/multiplexes routinely fill up despite costing ~1000-2000 for a family. 
  2. My wife's dance senior from Chennai had a Bharatnatyam performance at Chembur FineArts society (a premier hall). Despite this being a free performance (thanks to Mahindra Finance which sponsored it), the hall was just 1/3rd full at starting time, though it did fill up to capacity by 30min into the show. This would not have happened in Chennai.
  3. I read a book on how memorizing is important, and why distributing our memory to the cloud makes us struggle to remember. I connected the dots and realized its implications for performing arts, which needs time devoted AWAY from the screen along with memorizing dance steps
I suppose addressing this topic needs conceted actions from community organizations, venue owners and citizens. Those further interested in this topic can see

Uber/Ola surge pricing proves that we need a regulated public transport

In Jan-17, Uber euphemistically announced 'price adjustments' as their communication of  increased fares. With them earlier having abolished time/distance pricing and surge multiplier in favour of 'flat fares', there was no new benchmark or way to compare the impact of this adjustment. If a government agency had done this, there would have been a hue and cry about opaque rule making, edicts etc, but when private companies like Google/Uber make decisions using Black Box algorithms, they cloak their rationale or data under the guise of 'proprietary business secrets'. Anyways, while regulation is usually considered bad by those negatively impacted, it is essential to address market failure which happens in public transportation. Imagine your fire safety, water supply, and utilities tariffs being determined opaquely and with time of day pricing. Would you accept it? Answer is probably no. A player with deep pockets(eg Uber) can sweep into a city, under cut the existing public transport systems by cherrypicking profitable business, and then increase tariffs and profits instead of expanding supply. This is my apprehension with allowing 'innovative' startups to operate under a non level playing field, in such an important field. Those with private cars or ability to afford taxis can probably cope with surge pricing, but the vulnerable folks who rely on public transport which eventually hollows out to Ola/Uber, would not have any back up option. I have covered some of these problems in another blog post here http://apoliticallyincorrect.blogspot.com/2017/01/uberola-value-proposition-fast-eroding.html

So what is the solution? Regulations like below are a good starting point once refined in the consumers favour.

But the fact remains is that unless the new age startups address age old problems of access, discrimination, non refusal of rides, regulated tariffs with surge limits, we risk later issues

Lessons from Bollywood movie Kaabil

Yesterday, I watched Kaabil, a movie starring Hrithik Roshan and Yami Gautam, which centred around the story of a blind couple whose married life is shattered by two hooligans who have political and police backing owing to one of them being a corporator's brother. This ends up in Hrithik Roshan taking revenge, and finally (as in any Bollywood movie), committing the perfect crime and remaining free. Following thoughts came in:

  1. Quit when you are ahead/Dont gloat: Hrithik discovered the suicide note of his wife due to a chance remark from the corporator. If that guy had not mentioned it in his sarcastic effort to rub salt in his wounds, the plot would have been quite different
  2. Public places hardly 'accessible'  Crowded malls are a difficult place for the blind, and this was evident from the way Hrithik struggled to find Yami when they got separated in the crowd.
  3. One can profit WITHOUT giving back to the cause: The producers could have given a symbolic profit share to the NAB(National Association for the Blind) to promote welfare of visually impaired people, but they did not. So this is one lost cause unlike say Paa, Anand etc which threw light on otherwise neglected segments
  4. The motivation to succeed: The title name comes from the fact that Hrithik wishes to become 'capable' enough to fulfill the dreams of his beloved. Often, PWD(People with Disabilities) have more motivation than their non challenged peers, simply because they need to try harder. 
  5. Importance of a support system: The couple is able to lead a normal life due to their close friends and neighbours. Each of us has the responsibility to help PWDs 
Watching the movie needs one to suspend some belief in mobiles phones(who uses PCOs these days), DNA testing etc, but it is a feel good. With 2.2% of Indians disabled, with just 40% of them in the workforce, and 54% overall literacy rate, PWDs lag the general population on several indicators. If such movies increase empathy for PWDs and narrows this gap, it is goo.  Data is sourced from below link