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Category Archive: Banking & Finance

DeMonetisation – 16 side, upper and lower effects

The narrative in India has changed since 8th Nov 2016. Money and cash are the only topic people are interested and they are talking. Going to the banks is everyone’s daily schedule. Queues, frustration, waiting, life on hold, poor affected, business are at a halt,  rich are worried, marathon working by bankers, many example selfless volunteering, instigating political leaders and media and what not. Media, opposition all are crying as per their allegiance/alliance/bias/prejudice with the Govt. and the PM.

In a country which is largely illiterate about economics, dynamic economic decision faces many hurdles especially from the opposition parties with selfish motive or opposing for the sake of opposing ignoring the national interest. Increasing railway fare for a loss-making railway is also a challenge in our country.

Some pointers on Demonetisation:

  1. Most bank accounts in the country will be deposited on an average Rs. 1.0 Lac and mostly Rs.2.0 Lacs.
  2. In India, ignoring multiple accounts, there are 200 million SB accounts.
  3. Total money, if we consider 60% utilisation, that will be deposited in the bank accounts will be 200 million x 60% x 1 Lac = 1.20 crore, crore i.e. Rs. 12000 billion, i.e. US $ 179 billion.  Most of us can’t even calculate it.
  4. These cash deposits may not be all black money, but assuming 50% of which is, about Rs. 6000 billion of money not in the system will be introduced in the banking channel by the people.
  5. This is kind of Voluntary Disclosure Scheme (VDS) for small tax payers’ upto Rs.2.50 lacs deposit. They will be happy as all earlier VDS schemes had benefited rich only.
  6. For small account holders, who will allow their account to be surrogated to launder black money of others, they will get a 30 to 40% cut. This is an income for small account holders. In a way this is direct tax payment by black money hoarders to the poor. All Jan Dhan account holders will be benefited. More accounts will be opened. They all will be happy.
  7. All the money that is deposited in the bank, most will remain in the bank as now it has become white upto Rs.2.5 lacs.
  8. Banks will have a huge increase in deposits. This will make them lend more, that too at a lower rate as they are flush with funds. Oversupply.
  9. Govt companies and agencies will also borrow to speed up infrastructure projects.
  10. Many may not be able to justify their cash deposits above Rs.2.50 lacs, they will pay tax. Govt’s tax collection will increase.
  11. Many will be afraid to deal in cash in the future and will adopt plastic/e money or cheque & therefore increase in taxpayer’s base and tax collection.
  12. More tax collection triggers lower tax rates.
  13. Counterfeit notes and hoarded large black money will be evaporated.
  14. A currency not deposited in banks will become extinct. The RBI’s balance sheet will improve as currency issued is shown as their liability.
  15. Our annual GDP is Rs. 4480 billion. Our external debt is Rs.32535 billion i.e. US $ 485.60 billion , and as per the budget 2016, Rs. 4,92,670 crs has been provided for debt and interest servicing. This is the highest component of non-plan expenditure. Double of our defense budget and double of our subsidy bill. Education and healthcare get budgeted share of about only Rs. 20,000 crs. This shows how our lower tax revenue and corruption is impacting our economy. If with demonetisation we can improve the tax base and tax collection this will have far reaching impact on our country’s finances and economy. Common sense suggests when Govt has money, more share will go towards the poor and needy, whether it’s for vote bank politics or otherwise.
  16. Those who have made the country poor by evading tax and corruption will be punished by making their earning remained in cash zero.

There will be some other peripheral effects also which will be known as and when it happens.

This may not be the only step we all know, but this is a very important first step.

Inconvenience, Yes, that RBI , Govt and even PM know. We were proud of our RBI and banking system during the 1997 Asian crisis and 2008 Lehman brothers crisis but now questioning the competency of RBI.

Bankers are doing and executing a mammoth task and some issues are bound to happen. We all must support the system and make it easier for the Govt and RBI to get over the short-term problem, rather than creating and spreading messages of panic.

People (3/4/5) are dying in queues and we are sorry about this. But people are also dying on borders and in terrorist attacks and for poverty and hunger. All the three categories can be saved with this measure.

Rs.2000 notes will enable more corruption. Well, apart from our mindset, stricter laws and its implementation will eradicate corruption, not currency denomination. Present exercise is to bring out the fake/black money and make a new beginning. (Corruption will not go as long as we pay the constable at a signal when we break the law.)

Everything for the nation is inconvenient; be it fighting on the borders or fighting for the freedom or fighting black money. Do people who think and talking about the inconvenience thinks soldiers on the borders and freedom fighters were fools or less inconvenienced?

We want to end corruption when it hurts us, but we indulge in it when it helps us.

Some media journalists are showing inconvenience and hardship of the poor as a focus of the demonetisation. But in a corrupt country, poor remaining poor is a greater hardship than hardship for a few days for the larger good. These journalists, hope so not biased, do not understand whom they are supporting and what harm they are doing to the economy, by their myopic views.

Some people fought against corruption and after coming to power stand with people supporting corrupts and creating panic in the guise of poor people.

One selfless leader is doing some good for the nation, support him at all cost and inconvenience. One can check the RESUME of the opposition leaders who are opposing the move. You may look around the alternative leadership available in the country and make up your mind with all the inconvenience who should we support?

“Leadership is not about the next election, it’s about the next generation.” Simon Sinek

Sunil Gandhi

Do you possess this creative problem solving skill?

There is a book titled “Wicked problems worth solving”.

The author Jon Kolko, “A wicked problem is a social or cultural problem that is difficult or impossible to solve for as many as four reasons: incomplete or contradictory knowledge, the number of people and opinions involved, the large economic burden, and the interconnected nature of these problems with other problems.”

Some of the wicked problems our world is facing like poverty, healthcare, disease, famine etc. These are complicated problems due to the involvement of multiple expertise and disciple involved. Like poverty is linked to education and inequality of income, healthcare is connected with poverty and education and likewise.

The author offers designers approach to solve these problems.

IDEO.ORG is a design firm working to improve lives of poor and vulnerable communities.  They are approaching the problems in poor and developing countries with the new and emerging concept of Human Cemented Design (HCD). This is a creative approach to problem solving. They believe that Embracing human-centered design means believing that all problems, even the seemingly intractable ones like poverty, gender equality, and clean water, are solvable.

Moreover, it means believing that the people who face those problems every day are the ones who hold the key to their answer. Human-centered design offers problem solvers of any stripe a chance to design with communities, to deeply understand the people they’re looking to serve, to dream up scores of ideas, and to create innovative new solutions rooted in people’s actual needs

They are working on the projects like to identify opportunities for saving products for banks  for savers of low income Mexicans, how to sell health insurance in rural Nigeria using mobile money platform, create micro franchise opportunities for an NGO in India,  working with the Bezos Family Foundation on early child development, working with utility manufacturers for more intuitive and user friendly experience.

In short, they are using an HCD approach to solve many small but important wicked problems across the globe.

HCD entails three stages:

  • Inspiration: Define the challenge to be solved and collect data.
  • Ideation: Ideate with all stake holders’ data collected to generate many ideas.
  • Implementation: Bring solution to life

There is an approach for each of the stage.

HCD approach design the solution which is viable (business/economics), feasible (Technology) and desirable (Human).

HCD is the approach business world use for service design to design customer focussed serviced design. This is the approach advance Governments are taking in solving people’s problem and better citizen service. Govt of the UK is quite ahead in this approach. Taking service design to Parliament, the author writes “ In order to create great services in the first place, the government has to stop thinking in silos. It needs to create services that cross departmental boundaries.

Be it NGOs, Social Entrepreneurs, For Profit Entrepreneurs and Governments all are gradually moving towards deign thinking. This Human Centered Design thinking and approach can help us doesn’t only solve wicked problems but create better customer/citizen experience.

If you are a problem solver irrespective of the type of the organisation, or wish to be a part of it, HCD is a necessary skill.  & the good part is it can be learned online for free. Yes, Acumen is conducting regular online free course on the subject of HCD.

Sunil Gandhi

Free Ebook – Download now – Limited Period Offer

The Bread is Moving. The book is free for a limited period.

Praise for the book:

“Customer Experience to Counter VUCA and Disruptive Times:

Retail is changing at a Fast Pace. Consumers are changing faster, thanks to Disruptive Technology and Multiple Screens. And yes, the On Line disruption is Impacting Operating Models of all businesses. How should businesses counter the VUCA situation all around ??

There is No Magic Formulae, Nor any Rocket Science to combat these challenges.

The Author Passionately brings to us , his proposition about Customer Experience (CX).

If Retail is Theatre that consumers need to enjoy- Designing and Delivering CX is the Key.

He explains in detail, with lots of Live Examples, what CX means and how Organisation, whether Retail or Non Retail should go about Defining to Designing and Delivering CX on the ground..

His analysis of various companies reveals that, Customer Centricity is at the heart of Successful Companies. I am sure that, each one of you would have encountered many WOW moments and many more Horrible let downs by Airlines, Telecom and other Companies.

Customer Centric Companies are obsessed with Customers Delight right from their Vision, Mission to their Product ,  Service & CX. The author proposes that every organisation should have a Chief Customer Experience Officer (CCXO ) to delight the customer.

The book is written in a simple to read and ready to execute format. I am sure, you will enjoy reading this book. And without wasting any time, you will start designing your organisations CX….”

  • Govind Shrikhande | Customer Care Associate & Managing Director | Shoppers Stop Ltd.

“This book is very apt and timely for Indian market. Especially for hospitals, customer experience is critical and the book tells almost A to Z of it.”

  • Joy Chakraborty, COO, Hinduja Hospital

I have read a lot of management books, however this book stands apart especially for Indian businessmen. I am impressed with how simply Sunil Gandhi has explained one of the most important aspects of Customer Experience (CX). Citing Indian examples he drives home the point very clearly and I am sure readers will be able to embark on a CX improvement journey right way.

  • Maman Choksi, Director, RE/MAX Gujarat, Director.

Readers Reviews:

By Manoj Papisetty on 28 September 2015

In this book, he collates some of the most useful ways to look at new age businesses and lists down neat, powerful processes with workable frameworks for any business. I am particularly excited about this book in India because of the new startup era we are seeing in the country. It will certainly help the new age startups grow quick, efficient and sustainable.

By Anish Desai on 5 December 2015

Customer Experience Champion Sunil Gandhi, yet again takes the readers of his books through some amazing insights in delivering the value of your product/service. It’s a must read for all who believe customer is at the core of the business and the key to turning around business is by focusing on the value chain and the customer. A thorough joy ride!!!!

By Surendra Arora on 2 October 2015

You must have read many such books written on US companies or situations, I admire Sunil for giving a Indian perspective to it. Interesting read for all corporate executives and business person.

By Amazon Customer on 28 September 2015

An excellent and very pertinent viewpoint that has been explained very logically and persistently.

By Gopinath Narayanan – Published on Amazon.com on 8th June 2016

A must read for anyone in the customer experience role. This is a well researched book, with several examples and case studies. Very contemporary, and includes the impact of social media.

The Bread is moving


Download now on your Kindle. Click here.

In fact it is not free, it comes with two conditions

  • Share this post
  • & share your review on Amazon, that’s it.

Welcome to download , its free till 23rd July 2016


Sunil Gandhi

A small but expanding list

This post is an overview of my books.

The Fifth Idiot:

This is a fiction about entrepreneur’s aggression to expand rapidly to please PE investors and creating wealth through an IPO. & how one incident changed everything. Read how he becomes employee happiness-centric from mere profit and market share-centric.

The book has earned praise from Ritesh Agarwal of Oyo Rooms, Ninad Karpe of Aptech, Richa Anirudh of Zindagi Live TV Programme and Dr. Anupam Sibal of Apollo Hospital

A reader’s review on Amazon:

The Bread is Moving:

The book is primer for Indian entrepreneurs on the subject of customer experience (CX) and service design. What, why and how of CX.

The book is praised by Govind Shrikhande of Shoppers Stop and Joy Chakraborty of Hinduja Hospital.

One of the readers recently tweeted.

The Highest Ignorance:

The book is a fiction. A story of a woman’s journey who discovers self is not a body but a soul and road she takes once ignorance about the self evaporates and the deep desire for enlightenment emerges.

This book has received praise from Dr. Jagdish Sheth, Professor at Emory University – USA, Christopher Chapel of Loyola Marymount University, Los Angeles, USA Vallabh Bhansali of Enam, Padmabhushan Mallika Sarabhai, CA Bhavana Doshi of KPMG & CA Pradeep Shah to name a few.

“For today’s brake-less and largely aim-less people, Sunilbhai has created a ‘sugar coated’ fast pill. Fiction that presents the highest wisdom in a practical and applied manner. Hope a lot of readers take its benefit.”

– Vallabh Bhanshali , Co-Founder & Chairman , ENAM Group

“Beautiful……. very touching……… lucidly written story … A must read for all… young and not so young, initiated and non-initiated…… “

– CA Bhavana Doshi, Senior Advisor, KPMG

There are some good readers’ reviews on Amazon. This book an English translation of my Gujarati book Titled ‘The Shortest Journey’.

Wow ! & Weird:

This is a collection my choicest blog post over last 6 six years. Infact this is available free on my blog on registration. Welcome to register and download this ebook.

The book is praised by CA Ashwin Parekh, Ex – E & Y, Anand Rathi, Bijou Kurian of Reliance Retail and Rajnikant Patel, Ex – MD & CEO of BSE and ICE.

Coming up next:

Dangerous Debt – What every entrepreneur must know.

This is at the manuscript stage and I am inviting beta readers.

Wish you a happy READING experience with these books.

Sunil Gandhi

How Service Design influence our happiness?

We have known about the importance of service design and how it can be implemented in solving people problem in previous two posts.

One of the fundamental principles of Service Design is it is Human Cantered. Human be it customer, citizen or patients’ or patients’ relatives.

The largest service provider who touches the maximum humans in any country is the Government (Govt.) of that country.

Governments are the biggest service providers in the world. Everything Govt. does is a service to the citizen. Govt. touches many aspects citizen’s lives.

  1. Direct Tax Departments
  2. Indirect Tax Departments
  3. Railway/Public Transport
  4. Passport and Immigration
  5. Water supply and cleaning up of the cities
  6. Policing
  7. Healthcare (To a large extent)
  8. Education (To a large extent)
  9. Insurance (To a large extent)
  10. Banking (To a large extent)
  11. Business Policies
  12. Welfare Schemes
  13. Judiciary

All these are services and mostly provided un-designed in a human-cantered way.

Which single private company can provide so many important and inescapable services?

Every important sphere of human life is influenced by the Govt. Imagine if these services are not designed keeping the HUMAN aspect at the core, how much irritation and frustration they can create?  We all are experiencing the pain of our Govt. services so no need to borrow our experience.

What we experience when we deal with Govt. services is (One or all) ;

  • Inconvenient
  • Inefficient
  • Irritable
  • Irresponsible
  • Indifferent

& therefore results in stress and frustration. This is perhaps the cause of massive and wide spread corruption as we all want to avoid such experience.

Perhaps happiness index of the country can change if the Govt. behaves and offer these services in a human-cantered way. It is not the money which gives happiness to the citizen but it is the Govt. Services which are responsible for our happiness.

Not convinced?  Don’t agree?

Let me explain.

As per the World Happiness Index 2015 and Accenture Citizen Experience Study;

70% of the people in the US are ‘not satisfied’ with their cost of living and only 3% is ‘very satisfied’. But they rank 15th in the world Happiness Index.

In Canada, 22% are ‘very satisfied’ with the cost of living and 47% are ‘not satisfied’ but they rank 5th in the world happiness index.

Even in Singapore, 27% are ‘very satisfied’ with the cost of living and 37% are ‘not satisfied’ but they rank 24th in the world happiness index.

& in Australia, only 11% are ‘very satisfied’ with the cost of living and 64% are ‘not satisfied’ but they rank 10th in the world happiness index.

In India 34% people are ‘very satisfied’ with their cost of living and 36% are ‘not satisfied’ but we rank 117 in the world happiness index.

More number of Indian are ‘very satisfied’ with their cost of living than the people in the US, Canada, Australia and Singapore.

Less number of Indians are ‘not satisfied’ with their cost of living than the people in the US, Canada, Australia and Singapore.

& yet, India rank 117,  way below these countries in world happiness index.

We are more satisfied and less ‘not satisfied’ than our world peers and yet we are a lot more unhappy than them.

What could be the reason?

This is only because these governments’ offer better services like healthcare, lower perception of corruption, better life choices, high life expectancy etc. Better quality of life makes them happier despite being dissatisfied with the cost of living.

These data suggests two things.

  • The quality of Govt. Services to the citizen decide the happiness of the citizen of the country.
  • should not only focus on GDP growth but happiness matrix also should guide Govt. action and this means the quality of Govt. services to the citizen.

We do not need only rich society but we also need happy society & richness does not guarantee happiness. We all know this but Govt. also should know this and focus on better services. Human-centered service design is the answer.

& the fact is, our happiness to a large extent is dependent on Govt. services.

Sunil Gandhi

How service design approach can reduce waiting time?

Healthcare is the industry where people consume the service out of compulsion. No customer comes there out of their desire or choice. Perhaps customers come here when they are in distress and in delicate health condition. People accompanying the patient are also in the disturbed mind as their loved and dear one is suffering and they are apprehensive about the outcome of the treatment.

& therefore Customer Experience a hospital creates is very critical. Healthcare experiences for inpatients can be divided into following aspects:

  • Admission – Patient & relatives
  • Diagnosis – Patient & relatives
  • Doctor Communication – Patient & relatives
  • Treatment – Patient
  • Post Treatment Stay – Patient & relatives
  • Discharge – Relatives
  • Visitors Experience

Treatment part of course is the most important aspect of the healthcare. But all other peripheral experiences do play an important role in overall patients’ experience. Patients’ journey mapping can bring any insights on how to better patients experience with appropriate and smart intervention by the hospital management.

For a simple example, let’s take a queue for OPD patients:

For OPD patients, imagine a patient has to wait for hours before any doctor sees him. This is a normal phenomenon across the healthcare units in India as there is neither better time management nor usage of technology to reduce waiting time.

Tirupati Balaji temple in Andhra Pradesh is the best example of service design in action and what service design approach can achieve.

From an average 2 to 12 hours of waiting, the temple could reduce the queue time to half an hour.

  • They converted physical queue into an e queue.
  • Bar code is generated at the time of registration and the wristband is issued.
  • The pilgrim is expected to report just half an hour before the scheduled Darshan time.

Therefore, there is no physical queue and the pilgrim can be anywhere in the town and yet maintain priority in the system.

& the most important is there is no uncertainty and anxiety.  The system is transparent. The data generated on registration are also used for vehicle management and food and beverage supply.

The entire transformation was customer centric, in this case, devotee centric. Complete case study.

If Tirupati Balaji temple can curtail time for waiting in the queue by the devotees, why can’t our hospitals and healthcare units do it? Though the flow of people can’t be compared but ofcousre system can be generated to reduce waiting time substantially, reduce uncertainty and anxiety of patients and their relatives.

Long waiting time for the patients in the healthcare units is one of the major causes of stress for patients and their relatives. The idea of E queues can be explored based on the patients’ traffic, doctors’ consultation time. Usage of technology with these data can certainly improve patients’ experience. The service Design approach can definitely add value here and help in creating better the patients’ experience.

When the time is the scarcest resource, isn’t saving patients’ time is the 2nd most important thing healthcare organisations do to their patients?

Sunil Gandhi

Service Design – Why you can’t ignore it?

We all know the premium designers products command in the market. As far as services are concerned most service providers are not designing the service.

Services are about customer services. For new age businesses customer service is the core service. It does not come into play once the goods are sold and when the problem crops up. Be it banking, insurance, healthcare or hotels or any other services, their core business is customer service.

Unlike products which are designed in factories and sold in stores, services are not designed but it is made available as and when the customer demands. & therefore SERVICE DESIGN is a very important part of all the services but it is not only ignored, but most providers have no clue about this new discipline.

Usually, services are not proactively designed and that brings subjectivity in the service delivery. The subjectivity of the person delivering it, the subjectivity of place of delivery affects the experience customer receives. For example, in the healthcare system studies suggest, heart attack victims more likely to die if admitted to hospital at the weekend. However, every medicine, which is a manufactured product, would perform the same way the whole day, every day. It is the service of medical professionals which are hampered on weekends.

Usually, services are not proactively designed and that brings subjectivity in the service delivery. The subjectivity of the person delivering it, the subjectivity of place of delivery affects the experience customer receives. For example, in the healthcare system studies suggest, heart attack victims more likely to die if admitted to hospital at the weekend. However, every medicine, which is a manufactured product, would perform the same way the whole day, every day. It is the service of medical professionals which are hampered on weekends.

Every service offering company has to have services designed. These companies have SOPs but SOPs are STANDARD and customers are not standard. SOPs are designed for organisation’s point of view and efficiency. Service Design is design principles which take customers’ requirement into consideration while designing the services. Service Design is human-cantered while SOPs are product and organisation focussed.

“It is because many services are almost invisible that nobody takes care to design them.” Andy Polaine, Lavrans Løvlie, and Ben Reason in their book Service Design.

Customer Experience (CX) is now in vogue but in most organisations the subject is vaguely understood. “Me too” is the mindset. Thought little, but in some of the organisations which are taking the lead in CX are also taking the lead only in measurements of CX with scorecard like NPS but not in designing the experience. Forrester recently surveyed 100 customer experience professionals and found that only 15% consistently follow a defined customer experience design process when they create new interactions or improve existing ones.

In the age of customer experience and sharing economy where social media is widespread, Service Design is a new and powerful approach for the service organisation to do their business with customers.

Kerry Bodine , ex Forrester CX Professional wrote;,
We’ve entered a new business era that Forrester calls the age of the customer — a time when focus on the customer matters more than any other strategic imperative. Service design provides a toolset and framework that enable companies to truly understand their customers and engage with them in meaningful ways — ultimately driving profits, cost savings, and competitive differentiation.

Service Design is about designing each of the touch points of the organisation which customer interacts with. Customer Journey Maps are the foundation, based on which services can be effectively designed.

When a customer enters the hotel for check in or when a patient is admitted in an emergency department of the hospital or a customer is in the bank to withdraw cash, at each of such instances which parts of the organisation are triggered and comes into action?

It is not the front end staffs which are exposed, but the entire check in, admission and cash withdrawal services are in action and therefore exposed. How these services are designed or not designed will decide the fate of the customer experience and kind of interaction the customer will have with the front end staff.

In most of the cases,there is no end to end design of the services and that is why customer irritation takes place.

• Long queues
• Irresponsive & indifferent employee behaviour
• No replies to resolve our queries
• Call holding for long and hearing recorded message
• Scripted call center response
• Standard answer to our emails
• No confirmation of booking or order
• Doctors communication style with patients’ and their relatives
• Not acting on our instructions
• Heavy traffic
• Not providing adequate information in advance

The customer irritation list is endless. This list can be shortened and perhaps eliminated with the service design approach by the service companies. Service industry in India is booming and now has a share of 52% of GDP. This is likely to grow in the years to come. However, the growth of service sector without service designers is going to create more irritation among the customers, more of red ocean markets.

The world over Service Design is getting the attention of the trendsetting companies. Mayo Clinic has its own design practice, Capital One bank has acquired design agency Adaptive Path, IBM is building its own design studio. However, the service design is not the discipline for large organisations. Like a product design is necessary for every product manufacturing company, a service design is going to be a necessity for every service provider company.

Governments are the largest service providers to the citizen. UK Govt is focused on the principles of service design and they have service design standards for Govt services.

Designers’ services are what we need now and the future belongs to the companies which invest in Service Design to create better customer experiences. Manufacturing mindset will not work in the new service economy.

Are you sure services your company is offering will be delivered to the customer to create desired experience every time?

Sunil Gandhi

Bankruptcy Code – Borrowers Beware

Now becoming an NPA is a more serious problem for the borrowers. Earlier plethora of laws governing recovery was used by the borrower to their advantage to delay the process. Thanks to the new law which is coming up soon and approved by both the houses of Parliament.

The message from the bill is clear. Restructure, repay or wind up.

Where any corporate debtor commits a default, a financial creditor, an operational creditor or the corporate debtor itself may initiate corporate insolvency resolution process in respect of such corporate debtor.

  1. The adjudicating authority shall, within 2 days will accept or reject the application.
  2. The adjudicating authority shall, within two days of accepting the application communicate the order to creditor and debtor.
  3. If within 10 days of the receipt of the above notice debtor fails to pay or indicate dispute, the creditor may file the application for insolvency process for the debtor.
  4. Corporate insolvency process will start from the day of admission of the above application.

The entire insolvency and recovery process shall be completed within 180 days, with one extension of up to 90 days in exceptional cases.

There will be fast-track insolvency resolution process also. This is for  special category of creditors, mainly smaller creditors and the process will be completed with 90 days.

There is also a voluntary liquidation process. A corporate person registered as a company shall meet the following conditions:

(a) a declaration from a majority of the directors of the company verified by an affidavit stating that –

(i) they have made a full inquiry into the affairs of the company and they have formed an opinion that either the company has no debt or that it will be able to pay its debts in full from the proceeds of assets sold in the voluntary liquidation; and

(ii) the company is not being liquidated to defraud any person;

There will be a new breed of professionals like Interim resolution professional, Resolution professional, Insolvency professional. These professionals will have various rights and duties in the entire process.

The proceeds from the sale of the liquidation trust assets shall be distributed in the following order of priority and within such period as may be specified:

(a) the insolvency resolution process costs and the liquidation costs paid in full;

(b) the following debts which shall rank equally between and among the following :-

(i) debts owed to a secured creditor in the event such secured creditor has relinquished security in the manner set out in section 53; and

(ii) workmen’s dues for the period of three months before the liquidation commencement date;

(c) wages and any unpaid dues owed to employees other than workmen for the period of three months before the liquidation commencement date;

(d) the following classes of creditors shall be paid equally between and among the following :-

(i) financial debts owed to unsecured creditors; and

(ii) workmen’s dues in respect of the period of nine months beginning from twelve months before the liquidation commencement date and ending three months before the liquidation commencement date;

(e) the following dues rank equally between and among the following :-

(i) any amount due to the State Government and the Central Government in respect of the whole or any part of the period of two years before the liquidation commencement date;

(ii) debts owed to a secured creditor for any amount unpaid following the enforcement of security interest;

(f) any remaining debts;

(g) preference shareholders, if any; and

(h) equity shareholders or partners, as the case may be.

There is a separate insolvency mechanism for individual and partnership firms. For individuals, some of their personal assets are excluded from the process. These are;

(a) unencumbered tools, books, vehicles and other equipment as are necessary to the debtor or bankrupt for his personal use or for the purpose of his employment, business or vocation,

(b) unencumbered, furniture, household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his immediate family;

(c) any unencumbered personal ornaments of the debtor or his immediate family which cannot be parted with, in accordance with religious usage;

(d) any unencumbered life insurance policy or pension plan taken in the name of debtor or his immediate family; and

(e) an unencumbered single dwelling unit owned by the debtor of such value as may be prescribed;

For smaller debtors there is a mechanism called Fresh Start Process. Here smaller debtor who cannot pay his creditor can apply under this provision.

There will be suitable changes in the Company’s Act. SICA, Limited Liability Partnership Act, SARFAESI, Recovery of Debt Due to Banks and Financial Institution Act and Partnership Act.

This single Act will simplify the entire insolvency and bankruptcy process in the country. Lenders /Creditors’ rights will be protected stringently. As per the World Bank report insolvency process in India takes an average 4.3 years as against 8 months in Singapore and one year in Malaysia. Now with this code in India,  this time, will be 9 maximum months. More safety and quicker recovery will boost lending climate in the country and this will also discipline borrowers.

Borrowers beware.

Sunil Gandhi

Dangerous DEBT

The NPA is a fraction of the problem for Indian banks. They will employ a team of lawyers and / or sell NPA to ARCs to get rid of such accounts. They will get capital from the Govt.

But for entrepreneurs having an NPA, it is the mega problem for them. Their other good accounts will get affected; no one will lend them, they will be at a risk of selling of property mortgaged to the bank. It’s a very stressful situation. Mostly most small NPAs are not willful but ignorant NPAs.

Most entrepreneurs are financially illiterate. They can do good business, but can’t read financial statements. They can’t understand the implication of debt, cash and cash flow.

First draft my next ebook Dangerous DEBTWhat every entrepreneur must know himself is ready. I am looking for a few beta readers who can give me feedback about the book.

Please express your interest by dropping your email ID in response to this post to receive a soft copy of the manuscript.

Thank you.

Sunil Gandhi

E & Y Fraud Study and The Fifth idiot

“Young players play with a great deal of fairness and sportsmanship. Once they learn how important the game is to adults, they will learn how to cheat.” Dr. Ron Quinn, Professor of Sports Ethics at Xavier University.

Cheat to win is the mindset we adults have developed and that is spoiling our children too. The recent study on fraud conducted by E & Y indicates about 70% of the Indian executives would indulge in unethical business practices to achieve the targets.

Parents’ expectations are the biggest CRISIS in our society. Be it winning in sports or getting top ranks in schools or studying the course of interest of parents and even marrying the partner of their choice. Fulfilling parents’ dreams make children do unethical things and study the subjects of their least interest. Parental pressure and expectations are the biggest stress for the children.

Parents’ are indulging in unethical practices in their workplace too not only to please their bosses but also to earn their bonuses. This Win by any Means behaviour they master at workplaces, they pass it onto to their children.

We have mastered the art of becoming parents, but when it comes to parenting there is no formal training or classes or coaching. Therefore, we do it in an untrained manner. Most of us fall into the following category: Over parenting, bad parenting, careless parenting and show parenting.

I believe that my role as a coach is not to prepare my players for success in today’s game, but success in all their games, throughout the game of life. – John O’Sullivan, Founder & CEO, Changing the game project. 

Isn’t it also the role of every parent too?

To correct the workplace unethical conduct we badly need The Fifth idiot in business. This can have a positive cascading impact, virtuous cycle. Ethics at workplace will bring back ethics at home and ethic in parenting.

Sunil Gandhi