A generational shift in purpose and influence

Women constitute 18 percent of family business leaders globally. The highest percentage belonging to family businesses in Europe and Central Asia. Traditionally, women have been relegated to “invisible” role in the family businesses in administrative duties, or as informal advisors or to exclusively managing the household. However, the role of women in family business has been evolving over the last few decades.

The STEP Project Global Consortium and KPMG Private Enterprise surveyed over 1,800 family businesses from 33 countries across the globe, to reflect upon how demographic shifts are changing the role of women in family businesses – the value that women contribute, the various forms of influence they may have on the success of their businesses and the families and the unique competitive advantages they can deliver. Thomas Schmidheiny Centre for Family Enterprise, Indian School of Business being the only member from India conducted the survey in India with responses from 53 companies across both manufacturing and services sectors.

The report finds that women in family businesses are slowly breaking the stereotype and engendering greater diversity at the workplace. Though women continue to face the dilemma and role conflict, they are equipping themselves to balance the obligations at work and at home. “Both men and women contribute to gender stereotyping and hence they need to work together and clearly define the roles, responsibilities and communicate to all stakeholders”, said Dr. Nupur Pavan Bang. “Organizational practices and policies are required that promote fairness and minimize bias”, she further adds. Some of the salient findings of the report are: 

Emerging from the shadows: Women are now equipped with the required education and training and actively taking up positions of power, authority, and decision-making roles in the family business. They are taking up leadership positions in the so-called masculine industries such as manufacturing, mining, and construction. 

The ‘hidden’ CEO: The societal and cultural bias have women play the role of a chief emotional officer. They are required to nurture and take care of the emotional needs of the family, keeping the family together and perpetuating the family’s values and traditions across generations. Instinctively, these unique characteristics make women holistic leaders with unique management styles and are an asset to the organization. 

Redefining “women’s work”: Women in family businesses, especially Millennials, are breaking down the barriers and redefining how women in non-traditional businesses are perceived. Many highly competent women leaders are successfully managing their family businesses in male-dominated industries such as steel and scrap-metal processing, cement manufacturing and the production of hardware products. They have the knowledge, experience and skills in their business and are valued and respected by the employees and customers. 

Transformational power of women: Though women continue to face role conflicts, they are able to balance the need at the workplace and at home. They have sophisticated and transformational leadership style, judgement, and unique outlook. 

Succession by merit: Traditionally in family businesses, succession is based on primogeniture, which discourages women to consider professional careers in their family’s business. However, certain country level rules such as gender equality movements and one-child policy in China have given women better access to resources. Family firms’ decision on succession are increasingly being driven on merit and capability instead of gender. 

Societal change and family business leadership: There has been a push from governments around the world to address the issue of under-representation of women in business. For example, In India, the amendment to the Hindu Succession Act in 2005 conferred property rights to daughters (married or unmarried) and granted them equal rights as the sons. Also, the mandatory gender quota for women on corporate boards introduced by the Companies Act (2013) prompted family firms to have higher percentage of women representation on the boards as compared to non-family firms. However, most of the family business leaders believe that quotas are not the answer and only help to generate awareness of the existing bias. 

Outdated mindsets: Women in family businesses can bring about the change in organization and society and help mentor, guide, and develop the pipeline for future women leaders. 

The findings of the survey are relevant to the family businesses in India too. Women in Indian family businesses have been breaking the various cultural and societal biases and perpetuating the businesses to new frontiers. Yet, in India, female participation in work force is decreasing and is one of the lowest in the world. India is placed at 95 out of the 129 member countries in the UN SDG gender index score and is ranked below the global average on gender equality. Women in family businesses are well placed to lead the way to bring about greater gender parity, offer and create opportunities for other women too. 

The editorial team behind the report comprised of Dr. Nupur Pavan Bang and Yashodhara Basuthakur (Thomas Schmidheiny Centre for Family Enterprise, Indian School of Business), Andrea Calabrò, (STEP Global Academic Director & IPAG Family Business Institute, IPAG Business School), Mary Jo Fedy, Karmen Yeung and Tom McGinness (KPMG) amongst others.

Ideals of Diversity and Inclusion Confront Pressures of the Pandemic

This article was first published in the Risk Intelligence, GARP, October 09, 2020; Co-author- Sai Nitya Bodavala

https://www.garp.org/?gclid=CjwKCAiAnIT9BRAmEiwANaoE1X4rhFetaNK1DLTbwhctSbYRfytVuS2XlAAat-3d08bCZpDi59HqLxoChLMQAvD_BwE#!/risk-intelligence/culture-governance/conduct-ethics/a1Z1W000005jKKbUAM

The economic downturn is a stress test for a pillar of ESG policy and analysis

In a 2015 report, The Power of Parity, McKinsey & Co. concluded that if women fully participated in the world economy, global GDP would increase $28 trillion by 2025. India alone could account for $770 billion of that amount.

In the United States, according to a recent study by Citi, racial inequality cost the economy as much as $16 trillion over a 20-year period.

The benefits of gender and racial equality – the diversity and inclusion objectives now embraced by much of the corporate world – are more and more evident. The tide rose and prosperity spread during years of economic growth. Will the pandemic-constrained economy put these gains and commitments at risk?

“The global pandemic has certainly brought to light a renewed focus on diversity and inclusion, reinforcing the reality that we are all in this together,” Debra Walton, chief revenue officer of Refinitiv, said in September when the financial data and technology company released its annual Diversity & Inclusion (D&I) Index.

Those advocating greater representation of women in executive suites were heartened when Citigroup – which ranks 60th on the D&I Index top 100 – designated Jane Fraser as its next CEO, effective in February.

Ranking	Company	Overall Score
1	BlackRock, Inc.	81
2	Natura & Co Holding SA	80.25
3	Accenture Plc	80
4	Royal Bank of Canada	79
5	Industria de Diseno Textil SA	78.5
6	L'Oreal SA	78
7	Allianz SE	77.75
8	Telecom Italia SpA	77.75
9	Novartis AG	77.5
10	Bank of Nova Scotia	77.25

“The global pandemic and social unrest this year has reinforced the focus on diversity and inclusion in the workplace coming from different business stakeholder groups,” said Elena Philipova, global head of ESG at Refinitiv. The D&I Index, now in its fifth year, based on hundreds of environmental, social and governance data points and topped by asset management giant BlackRock, “emphasizes the critical importance for companies to commit to, measure and report on their diversity journey beyond gender. Sustainable and resilient workforce is the fuel for businesses especially during volatile times.”

Gaps Remain

And yet, only 37 of the Fortune 500 corporations are led by women, and minorities remain significantly under-represented on corporate boards, according to an Institutional Shareholder Services ESG analysis reported in the New York Times. 

Those boards must contend with the reality, as expressed in a Bloomberg Professional Services blog article last year, that “companies that do not evolve with the times, embody the principles of their target markets and implement clear diversity initiatives will quickly find themselves struggling to retain clients – especially in light of the wealth transfer to the millennial generation that is expected in the next five to ten years.”

In support of women, companies have altered workspaces to be more accommodative to breastfeeding mothers, implemented leadership development programs, and encouraged women to enter into traditionally male sectors such as manufacturing. 

For When Women Thrive, Businesses Thrive, Mercer analyzed workforce gender equality in multiple industries and geographies. “The overall representation of women at an average organization is 47% across all functions and career levels,” Mercer senior consultant Ayçe Nisancioglu writes. “Women comprise 58% of support staff and 21% of executives. Among [126] financial services organizations participating in the survey, there are fewer women compared to men entering the workforce, and women are hired at lower rates compared to men in all levels, except the senior manager level.” 

Internal Labor Market Map on Financial Services Organizations

Source: Mercer

Job Loss

Historically, in economic downturns, men's jobs have been more at risk than women's, owing to men's greater representation in sectors such as manufacturing. In the recession of 2007-'09, 5.5 million men lost their jobs, versus 2.5 million women. Sectors hit hardest by COVID-19 – leisure and hospitality, health and education, and retail trade sectors – have a disproportionately high number of female employees, making them 1.8 times more likely than men to lose their jobs,” McKinsey says.

An analysis by Ashoka University economics professor Ashwini Deshpande found that in India, men lost 100 million jobs in April 2020, as opposed to 17 million women. However, absolute numbers can be deceiving. When compared to March-April of 2019, 29% of men reported a loss in employment in April 2020, women 39%. The pandemic has left a larger percentage of women unemployed.

In India's informal sector, in 2017-18, 4.9 million domestic workers were considered regular but unprotected, two-thirds of them women. Current social distancing norms disallow these women from working, meaning that if they were the sole earners in their family, they have no source of steady income. Even in those sectors where working from home is a possibility, women face considerable difficulties. 

Childcare and Chores

The advances of women in the corporate world, and into jobs that were traditionally male, has contributed to a redefinition of conventional gender roles. The expectation that women must still manage their household has not abated, however. Working women have had to devise ways to manage their work, their home lives, and raise their children. Having different physical spaces – home and office – can be helpful for balancing these activities. The pandemic has upended this idea entirely. 

The closure of schools and offices forces all family members to stay at home and figure out a new dynamic. With parents working from home and having to care for children with little to no chance of getting additional help, women seen a regression in role expectations. An OECD report found that women in India on average spend six hours a day on unpaid care work, while men spend 36 minutes on the same. 

In the context of the pandemic, a Boston Consulting Group study of working parents in the U.K., U.S., France, Germany and Italy found that women are currently spending 15 more hours on household and childcare activities per week than men. The results are reinforced by Cambridge-INET Institute in Inequality in the Impact of the Coronavirus Shock: Evidence from Real-Time Surveys. 

“When men went to war in times when conquest and bravery were the proud badges to wear, women stepped up and supported the soldier in every way they could,” said an Economic Times article. “The working woman has been largely lonely in contrast, in a society that still can't see women as holding important positions at work that cannot be compromised.” It seems to be accepted now that when push comes to shove and a choice must be made about whose job is more important, the woman's job takes a back seat, and she is duty-bound to take household responsibilities. If support systems – extended family, household help, day-care centers – crumble, so may women's professional prospects. 

Waning Productivity

The amount of time that women are spending on unpaid care work cuts into what they can devote to their jobs. A study by the Institute for Fiscal Studies in the U.K. found that “mothers are doing paid work during 2 fewer hours of the day than fathers, but they do childcare and housework during 2 more hours each. Mothers combine paid work with other activities (almost always childcare) in 47% of their work hours, compared with 30% of fathers' work hours.” 

A report published in Nature said the number of hours that female academics were able to dedicate to research during the pandemic has come down significantly. This was, again, owing to the increased time spent on childcare and housework. Such impacts could set back the cause of women for future generations.

The U.S. employment report for September 2020 showed the percentage of women working or actively looking for work was 55.6%, the lowest since 1987 (with the exception of last April and May). “We know that women leaving the workforce to care for children for a while has lasting effects on their earnings, their seniority and their climb up the ladder,” Julia Pollak, a labor economist with the career site ZipRecruiter, told the New York Times. 

Digitization and Credit

Some of the touted benefits of digitizing the workplace are heightened efficiency, greater flexibility, faster implementation and the like. But how does the digitization benefit women? 

A lot of small-scale female entrepreneurs in services such as salons, food catering and boutiques have lost their livelihoods due to the pandemic. The impact of digitization is questionable. 

However, should the digitization within these sectors be designed in such a way that it increases access to formal credit for these women, it may be beneficial. Currently, small-scale women entrepreneurs have a tough time accessing loans to fund their enterprises, but digitizing their banking and simplifying the credit process may ultimately help then to revive their businesses. 

For women working in sectors where digitization is possible, perhaps more research needs to be done to determine mental health effects. Working from home has brought om feelings of isolation and depression. Although work-from-home is intended to offer more flexibility, it could also be argued that the workday for women never seems to end, and there is no clearly defined line between work and home life. 

Sustain the Commitment

COVID-19 has brought about unforeseen changes in the lives of everyone, forcing adaptation to a “new normal.” Still unresolved is the question of who bears the brunt of this adjustment. 

Despite all the strides toward gender equality, there has also been a reversion to conventional roles that may set women back by a decade or two. Avoiding this dismal outcome will require a policy response by governments and companies. Writes Bloomberg Opinion columnist Elisa Martinuzzi, “As governments shift from handing out financial lifelines to restarting and rethinking their economies, they could tie aid to goals of sustainability, such as improving the balance of women in companies' leadership.” 

Diversity and inclusion efforts can suffer when survival is at stake. Ian Cook, vice president of data analytics company Visier, argues that D&I must be strongly embedded in decision-making processes so that companies remain true to their values and uphold commitments that they have made to their employees, especially during a time of crisis. And this is sure to reward them in the long run. 

“Make sure that inclusion is a core value of the organization – not just something you do to ‘check a box,’” leaders of the Center for Talent Innovation (CTI) and Center for Workforce Excellence wrote in Harvard Business Review. “For instance, when CTI's CEO Pat Fili-Krushel was head of HR at Time Warner, they instituted a tracking and reporting system to measure progress against the diversity and inclusion goals for each division. Leaders were held accountable with 10% of their bonuses tied to their goals.” 

This is the 21st century. It is a shame that many women still have to explain equality to men. While ways of nature cannot be questioned or undone, in most other areas, let merit alone be the deciding factor. Society and culture change when people want them to change. And this change cannot be brought about by just women. Men must equally participate in bringing about the change that is on their lips, but not always in their actions (– well, for most. Not all).

Health: Journey of self-discovery

This article was first published in ISB's inhouse periodical, Spandan, September 2020 issue, https://sway.office.com/AGMm76bE9xBWptwE

In the middle of September 2017, I suffered from acute lower back pain that was diagnosed as Degenerative Spondylosis. A couple of days of rest and working from home along with the medication and exercises suggested by the doctor eased the situation.

I have always been fitness conscious and have undertaken varied activities from time to time, viz. aerobics, yoga, frisbee, badminton, gym, swimming, walking, and more, all in pursuit of being fit. However, over the years, especially post-delivery, I started to put on weight. I was 55kgs when I got married in 2008 and 80kgs in 2017. Of and on dalliances with physical activities resulted in a 3-4 kgs of weight loss only to get back to where I was and to continue the upward trend.

I am an avid reader and enjoy watching movies too. Eating when reading or watching movies takes the experience to an almost cosmic level! When did the “once in a while” eating sweets when reading or watching something at night turn into a habit and then addiction is difficult to pinpoint. As most women, being in-charge of keeping the kitchen stocked, I ensured a steady supply of ice creams, chocolates, wafers, and cakes for myself. I would feel something was missing and would not fall asleep until I had something sweet. Provocations and objections from my husband would result in a siesta of a week to ten days and then the sweet tooth would prevail, again.

While prescribing the medicines for the degenerative spondylosis, the doctor mentioned very casually that the core issue is weight for all such ailments, and it will keep happening as long as I was overweight. However, being obese himself, he laughed it off saying that he was not the right person to advise me to lose weight. The informal jest struck a chord. It also worried me that a recurring back ache at a fairly young age would mean living with it for another 30-40 years. The future with different types of aches didn’t seem appealing.

As a first step, upon encouragement from my husband and inspiration from a fit friend, I decided to leave all forms of processed sugar for a few months. The first few weeks were difficult, to say the least. Mood swings, tears, periods of craving, not being able to sleep- avoiding a single morsel of sweet was like going through thousands of emotions and turmoil in my mind each time, again and again, and with a straight or a smiling face. For the opportunity to eat sweets presented itself everywhere: at work, birthday parties, weddings, festivals, casual meetings with friends and family. Not everyone understood when I said “No” because everyone knew that I am fond of sweets.

We cannot control the actions, reactions, and provocations by others. But restraining myself from reacting to all the insinuations, mocking, show of non-confidence and discouragements has been another battle all together. Visits to the toilet to hide the tears and saying no when each cell in my body was craving for that sweet being offered was no different from the accounts of those in drug rehabilitation centres.

The immediate result in terms of weight loss was encouraging. With moderate levels of physical activity, in 6 weeks I had lost 6 kgs. But it was clear to me that my body had gotten used to a no sugar diet and I was not going to lose any more weight with the status quo. I decided to start with supervised training to strengthen my muscles, tone up and increase the metabolism, which is otherwise very low due to Hypothyroidism.

No sugar, workout three days a week and cardio the rest of the four days for an hour each day started to make me feel lighter, fitter, and agile. But it did not result in further weight loss. That is when I started to think about what I always knew but never gave any importance to; that weight loss is more about diet than exercise. It is easier to cut calories than burn them.

In all my years of being fitness conscious, I was not diet conscious. Hence, was neither fit nor healthy. The quest to get my diet right led me to a celebrated dietician. I had heard about her from a few other friends. I had seen a friend transform under her supervision. Others had experienced different degrees of weight loss but all of them recommended her highly. I did my own research too and decided to take the plunge.

December 8, 2017 was the beginning of my journey with eating right. It is not difficult was my first reaction. I was eating my regular dal and curry, occasionally phulka and rice too, and tasty food like paneer tikka and stir fry vegetables. I was not majorly into junk food (apart from sweets), nor did I eat too much of fried food. So, I still maintain that the diet plan given by the dietician was not difficult. Plus, she always guided me when I needed to eat out or had to travel outside Hyderabad. It was the quantity of food and the hours of eating that became critical.

The difficult part however was to tell the detractors to back off. People felt sorry for me. They felt I was torturing myself. Many did not understand that it was a choice, not a prescribed activity in a prison. I was getting fitter and healthier. I was not sick and did not feel weak because I was eating less. Similarly, there were many who would keep telling me that I had lost enough weight and need not lose any more. People often forgot that I was educated, aware, technology and internet savvy, I can search, I can read, and I knew who to approach for advice. Deflecting unsolicited advice without the “well-wishers” feeling bad is as much of a struggle as following the diet.

There are many who were genuinely concerned that I might fall sick if I don’t eat. I had to explain to them that I was not starving myself. I was eating as much as my body needed. I was just not overeating. Which I was doing earlier. Then there were those who felt that I should eat now, enjoy my life and worry about weight when I get some disease, to them I had to tell that I AM enjoying my life. I do not want to wait till I get a disease. Prevention is better than cure. Why should I wait till I get diabetes or cholesterol to lose weight? Yes, I can still fall sick for various reasons. But I want to try while I still can, to be fit and healthy.

Six months after I started the diet and with moderate levels of exercise, I reached my right BMI. I had lost 20 kgs. I went into maintenance diet. That meant lesser restrictions. It’s been more than two years since I stopped seeing the dietician. I have been able to maintain my weight with a few kgs plus/minus. Overall, I have been fit. I can do 500 breathe-in-breathe-outs in Kapalbhati, I am comfortably able to do Chakrasana, Halasana and a 21k. I can cycle 60kms at a stretch. I aim to be able to do a full marathon, fifty pushups without stopping, and 100kms of cycling in the near future. 

What has worked for me is eating right with a combination of yoga, cardio and weight training and above all, the discipline to consistently do it. Without the discipline, it is all meaningless. Discipline involves saying NO, consistently. To yourself. To others. Not giving in to temptations. Also, that you can eat everything but have the discipline to moderate the quantity.

As you become healthier and fitter, you will keep raising the bar for yourself. Initially it is weight. Then it is strength. Then flexibility. Then speed. Ultimately, mental and spiritual well-being. The quest is never ending. Take the path less trodden. You have miles to go. But keep going. The journey itself is pleasurable. You will discover many things along the way. What worked for me may not work for you. But something will. So, start and the path will reveal itself!

Laws of human stupidity and the coronavirus

This article was first published in Yahoo.com on July 22, 2020; https://ca.sports.yahoo.com/news/laws-of-human-stupidity-and-the-coronavirus-101909061.html

Carlo M. Cipolla’s 1988 classic in Italian, translated and published in English in 2011, “The Basic Laws of Human Stupidity” is one of the best books that I have read in 2020, so far. The late author, an Italian economic historian, Fulbright fellow and professor at the University of California, Berkeley, wrote that the book is for “those who on occasion have to deal with such (stupid) people.”

The author further writes, “our daily life is mostly made of cases in which we lose money and/or time and/or energy and/or appetite, cheerfulness and good health because of the improbable action of some preposterous creature who has nothing to gain and indeed gains nothing from causing us embarrassment, difficulties or harm. Nobody knows, understands or can possibly explain why that preposterous creature does what he does.” The book is a masterpiece. Thoroughly enjoyed reading it. The five basic laws of human stupidity enumerated in the book are bang on!

In the times of Corona Virus, when the world is clearly divided into those who are extra cautious and those who believe in Que Sera Sera, it is very easy for one group to feel that the other group is being unreasonable. Those who are extra cautious argue in favour of extended lockdowns, complete isolation and total shut down of all movement and economic activity. They argue that it is required to break the chain and prevent its further spread. The flip side of this argument is that there are many daily wage workers who will die of hunger, especially in countries that have large unorganised workforce. There will be many job losses even in the organised sector, it’s already happening. The extra cautious set of people argue that economy can be revived if we are alive. However, even if we don’t talk of the economy, and just about saving lives, people prefer to die of a disease rather than hunger, as CNN mentioned in a report (https://edition.cnn.com/videos/world/2020/04/21/nigeria-africa-coronavirus-covid-19-lockdown-restrictions-livelihood-busari-lkl-intl-ldn-vpx.cnn).

The que sera sera group of people argue that life must come back to some semblance of normality. We cannot be in a state of perpetual lockdown. We need to make sanitisers, masks and social distancing a part of our lives and start living again. They argue that the risk of spread may be more but ultimately most people will get Covid19 and by being in extended lockdown we are only postponing it. The idea is to flatten the curve to prevent overburdening our healthcare system but beyond that it is not possible to be in lockdown till the virus is eradicated completely or till a vaccine comes to the market. The flip side of this argument is that there are chances of exponential growth again if the lockdown is eased. Not everyone may have access to preventive measures and the healthcare system may be better prepared but will not be absolutely prepared.

Based on the above arguments posed by both sides, each side feels that the other side is being “stupid”. The “extra precautious” group [EPG] feels that because of the other group [the que sera sera group (QSSG)] more people will get the virus and even QSSG will not be spared. The QSSG feel that the EPG is suffering by being in a state of paranoia and making the QSSG suffer too because of all the restrictions. Since one group feels that the other group is stupid, according to one group, they themselves are non-stupid. But the other group feels that the other group is stupid. Making both the groups stupid in the process. This validates the first law of stupidity that says: “Always and inevitably everyone underestimates the number of stupid individuals in circulation”.

What has happened is that two otherwise educated, qualified and well-read group of people who are perfectly capable of taking intelligent decisions are also found to be at the two ends of the spectrum when discussing the ways to deal with this virus. Consequently, one intelligent person seems stupid to the other intelligent person, justifying the second law of stupidity: “The probability that a certain person be stupid is independent of any other characteristic of that person”.

Now coming to the 3^rd basic law of human stupidity, “A stupid person is a person who causes losses to another person or to a group of persons while himself deriving no gain and even possibly incurring losses.” Let us look at an example: A person hell bent on not maintaining social distance and “forgetting” to not touch or pat or hug can give anxiety to the other person while herself being in danger of contracting the virus or spreading it if she is an asymptomatic carrier. But this person is a carefree person and will never realise the gravity of the situation. Take another example: There are volunteers working across the world to keep people safe, providing for food and essentials and educating people. Some people abuse them rather than appreciating them. As a result, they lose well-wishers, lose supplies and may contract the virus too. In return, they also succeed in lowering the morale of those who were working relentlessly for their safety and well-being. Everyone loses in this scenario.

Law 4 states that “Non-stupid people always underestimate the damaging power of stupid individuals. In particular non-stupid people constantly forget that at all times and places and under any circumstances to deal and/or associate with stupid people infallibly turns out to be a costly mistake”. It is infact being experienced by many of the well-wishers, administrators and leaders. Under pressure from the abusive, damaging and demoralising comments from stupid people, the non-stupid people are taking a back seat, leaving things to fate or giving in to the demands that are compromising on safety. However, in times of Corona, giving in may result in dire consequences that the stupid people never imagine or are unwilling to accept, and the non-stupid people underestimate.

When the non-stupid people give in to the demands of the stupid people, they should remember the fifth law of stupidity, “A stupid person is the most dangerous type of person. A stupid person is more dangerous than a bandit”. Before acquiescing to the stupid people, the non-stupid people must think of the consequences of pleasing stupid people. Stupidity or should we say “Covidity” will spell doom for everyone. Non-stupid people must beware and take charge!

The need of the hour is “Balance”. Being a part of EPG may work for some time but these people risk running out of patience when it might be needed the most, when then governments eventually lift all restrictions on movement. The QSSG group put themselves and all others at risk by not taking adequate precautions. Adopting a balanced approach by taking adequate precautions is required. As the number of Covid cases in India have raced past the five-lakh mark, remember that Covidity cannot be controlled. We cannot control what others do and neither should we. We can only control our own actions. So, take adequate precautions. Be safe yet balanced to maintain your own sanity.

NPAs are everybody's problem

This book review was first published in Business Standard on July 10, 2020; https://www.business-standard.com/article/beyond-business/npas-are-everybody-s-problem-120071000014_1.html

Vivek Kaul's Bad Money: Inside the NPA Mess and How it Threatens the Indian Banking System provides the answer and I am wiser years after having taken the loan

Book: Bad Money: Inside the NPA Mess and How it Threatens the Indian Banking System

Author: Vivek Kaul

Price: Rs599/-

Pages: 339

Publisher: Harper Business, an imprint of HarperCollins Publishers

When I was a fearless in twenties something, sometimes broke, research scholar, I went ahead and bought an under construction flat. I took on a home loan that covered 85% of the cost of the flat and a personal loan that covered the remaining 15% that was used for the down payment. After paying the EMIs, I would have barely enough to pay my share of the rent of a 500sft apartment shared by 3 or sometimes 4 friends and eat three square meals a day. I had started walking longer distances instead of taking autos, I stopped going to the Café Coffee Day and for shopping, unless for essentials. I sold the apartment soon enough at double the price.

In the recent years, whenever I have taken a loan, bogged down by the paper work, my thoughts always go back to those days and I always wonder how did someone like me, with no guarantors, on a stipend (not even a salary) and no credit history ended up getting the loans back then?

Vivek Kaul’s “Bad Money: Inside the NPA Mess and How it Threatens the Indian Banking System” provides the answer and I am wiser years after having taken the loans. Those were the years, 2005-06, when the bad loans rate was below 5 percent and hence the banks had “decided to go easy on their lending” and the growth rate of lending was highest around this time.

Last year, a friend lost her job and defaulted on the EMIs of her car loan and after the fifth month of default, two employees of the bank came and took her car away. She asked me, “How is it that Vijay Mallya and Nirav Modi get away but people like us can’t?” I had jokingly replied, “well you could get away too if you absconded to another country with the car.” Last week, I asked her to read Kaul’s book in which he lucidly explains why ‘If you owe your bank a hundred pounds, you have a problem. But if you owe your bank a million pounds, it has,’ as John Maynard Keynes had remarked and modified by the Economist [magazine] as “If you owe your bank a billion pounds everybody has a problem.” She read the book and called to thank me for suggesting it.

As evident from the above examples, Kaul’s book, if read with the attention it deserves, helps everyone, not just the economics and finance students and practitioners, to understand how developments in the banking sector and the various cycles of lending, NPAs and regulations have implications for everyone. The decisions taken over time slowly and steadily weave an invisible mesh of mess that gets noticed only when someone like a Mallya or a (Nirav) Modi gets trapped in that web and catches the imagination of the nation. How does this mesh get woven? That is what Kaul traces and explains in his book.

“Bad Money” is a focused saga of the banking system in India that includes the creation and evolution of the public sector banks, nationalization and privatization, regulations by the Reserve Bank of India such as the Insolvency and Bankruptcy Code, 2016 and how the politics too played out along the way. It goes back and forth like a “Tarantino movie”, as Kaul puts it, goes into the back stories, the sub-plots and the numbers that substantiate the stories.

The problem with the book lies in its strengths. The book is focused and hence it may not seem appealing to readers who look for more broad-based books on the economy and the financial system. However, once they pick up the book, they will find that it does take an overall view of the financial system while keeping the banking system at the centre. The book also throws a lot of numbers and graphs at the readers that may act as speed breakers, in an otherwise fast paced book, while reading though they make the book more authentic in its analysis.

The book is a one stop shop for anyone looking for references on the Indian banking system. One can only marvel at the number of books, monographs, articles, and documents from various websites that have been referred to. Anyone researching related topics need not look elsewhere and may be able to add only a “delta approaching zero” to what Kaul has written. This book organises the messy material and presents the “long and short” of it in a readable, understandable and relatable manner.

Reading is akin to breathing

This post is inspired by Oneknitatatime:

https://oneknitatatime.com/2020/07/08/knitting-versus-reading/?fbclid=IwAR2MAT4obzDzuTqyEw47IFAblyvjFmMhiw8cGhMSN1IMC424LXnqwUDY9DQ

Dear Kni-der,

Your post brought back memories of the times when I used to borrow comics, magazines and books on rent in the small town of Ramgarh as it lacked a library. I remember making a trip to this small store called the “Shreeji Stores” with Rs 2 or 3 in one fist while carrying the pile of read treasure in the other almost daily. In those days, even those Rs 2 or 3 were not easy to get and I had to beg (well, not literally, but it wasn't easy) for them many a times.

I became more academic oriented and slowed down on reading as I went to a boarding school and during the 11^th and 12^th classes. After that, I do not remember a day when I have not read. When pursuing my CA exams, I would place books inside the accounting and auditing books and read them while pretending to study. It was important that I passed the exams in the first attempt and I could not give the impression that I did not study well just in case I failed. Thankfully, I did not fail.

Book purchases became the largest expense category on my credit card. I especially got bookshelves designed when we bought the house in which we currently live. The shelves were designed to accommodate books bought over the next 25 years but are already overflowing. Meeting authors, getting first editions, author signed copies and going for book readings all made me excited. The importance of books in my life is so profound that on my first birthday after marriage, my husband gifted the complete collection of Jeffrey Archer’s books to me, signed and addressed to me, by him.

As recently as in 2018, on a trip to Ramgarh, I went to Shreeji Stores and asked the bhaiya, who  was perhaps a teenager when I used to borrow the comics and magazines, if he still had that collection. I was interested in buying the entire lot if he did. Sadly, he did not. He did not exactly recall it but guessed that it was sold off to the scrap dealer during one of the store revamps. I was left with a feeling of emptiness for a few days at least.

I have never wanted to be a librarian. The thought never crossed my mind. But the quest to open a “chai aur kitaabein” parlour where people come, settle themselves down with a book, regular and unlimited supply of tea and snacks as they keep reading, no hurry to leave and conversations revolving around books, is a retirement plan that I keep mulling upon. Tea being the other love of my life.

Netflix and Prime became the prime contenders for the scarce time in the last few years. And like you, I did not like it. I do not like it. I started exploring audiobooks then and hated it. I would miss entire paragraphs, would go blank at times, kept rewinding, and missed the feel and smell of paper. For the record, I never enjoyed reading on the Kindle or e-books on iPad too. Coming back to audiobooks, after trying a couple of books, I gave up audiobooks as well as Netflix and Prime. I lived happily ever after for many months, just reading, and reading whenever I could during the day and compulsively at night.

I have been driving to work for 14 years now. I bought my first car in 2006. Since then, listening to music to and from my workplace became a ritual. I would spend hours updating my playlists at least one weekend in a month, adding new songs, organising old ones, making folders like “most favourite”, “just favourite”, “okay”, “not-so-good”, “latest”, and so on. About two years back, I started to get bored of listening to pretty much the same songs since 2006 for the “not-so-good” and “okay” hardly ever got played and very few songs from latest made it to the “favourite” or “most favourite” lists. Once again, I decided to listen to an audiobook. Dan Brown’s Origin had just released, and I downloaded the book on audiobooks.com with the free credit available with the trial version. The rest as they say is history.

I bought the Bose wireless, noise cancellation, sweat-proof, earbuds. They have been my constant companions for all non-car listening to audiobooks. I have subscriptions for audible, audiobooks.com and storytel. I mix paper books and audio books. From cooking to cycling, driving to dusting and shopping to sanitising, I listen.

A key takeaway from “hate at first listen” to “love of my life” now, is that the first book should always be one that is fast paced, is a thriller and one that you want to get to the end as fast as possible. I do not recall the book that led to the “hate” experience. But I do recall sitting in the parking lot of my office a bit longer so that a chapter of Origin gets over. I do remember going back to my car to get my earphones during the lunch time so that I could listen to the book when eating. I do remember avoiding friends during the evening walk so that I could listen some more. So, to all those who are still trying to get used to audiobooks, listen to some recommended crime fiction initially or a genre that you enjoy the most. Once you get used to listening, there is no looking back.

The number of books that I read/listen to has increased manifolds with audiobooks complimenting the paper books. I do miss listening to music at times. But let us face it. There are hardly any good new songs getting released now a days. I switch to music occasionally to revisit the old favourites. Netflix and Prime have entered a rationalised zone and there are rare spells of binge watching. Overall, to quote you dear Kni-der, “Life is good again!”, my old friend is the center of my universe again!

Happy reading/listening.

N