Archive for February, 2016

Is India Headed For A Subprime Mortgage Crisis?

Friday, February 26th, 2016

I wrote this blog post four years ago after reading this article in Economic Times.


Not wanting to sound alarmist, I decided to can it. I revisited the post many times since then and I stuck to my decision each time.

Until I read this question on Quora a couple of days ago:

This is when it struck me that the anxiety I felt a few years ago when I read the bestseller by Michael Lewis has probably spread to a wider audience after the movie version of the book hit the screens last month. Therefore, I decided against keeping my thoughts to myself and publish the post. Here goes:


Banks have huge exposure of loans to both builders and home buyers.

  • Exposure to Builders: INR 1.2 lakh crores = US$ 24B
  • Exposure to Home Buyers: INR 2.5L lakh crores = US$ 50B

Sales of new homes have been hit by high prices of real estate. I’ve my own views on whether Indian real estate prices are reasonable or not. But, since prices are decided by an interplay between supply and demand in a free market, I’ll keep my $0.02 on this subject to myself. That said, a broker I know told me that he hadn’t closed a single deal in the past month, which is apparently a first for him in his eight-year career.

Despite lukewarm sales, builders are not reducing prices. This has led to an impasse in the Indian real estate market. This has hit the government in two ways:

  1. Depressed sale of new homes has slashed government’s revenues from stamp duty and registration
  2. Government-owned public sector banks are staring at a sizable chunk of their real estate loan portfolio turning delinquent if home sales are stuck where they are.

According to the aforementioned ET article, the government has told CEOs of government-owned public sector banks to put pressure on builders to drop prices and to instigate home loan takers to push builders to execute projects on time.

The government’s suggestion sounds well-placed because, by virtue of having lent such huge sums, banks are in a pivotal position to intervene with builders and home buyers to break the current deadlock.

How’re banks responding? They’re reportedly asking the government to appoint a real estate regulator, whose role it’d be to “tackle malpractices in the sector, including lack of transparency about the size of the property or the date of completion of projects”.

Whaaaat? I didn’t expect banks to act on the government’s advice immediately. But I was shocked by their pushback for several reasons:

  • Why do banks want a regulator to do their job? Aren’t they supposed to grant loans only after whetting a borrower’s project plan and gaining full visibility into basic parameters like size and timescales?
  • Since when has lack of transparency become a malpractice? Very few banks give reasons for rejecting a loan application. Can their rejected borrowers sue them for malpractice citing lack of transparency?
  • How come banks didn’t insist on a real estate regulator when they decided to lend such huge sums to builders?
  • Why are they raising the red herring of a regulator only now when the government is putting pressure on them to use their position to rev up the economy and, in the process, prevent their own loan portfolios from becoming Non Performing Assets (NPA)?

Not finding any logical answers, my thoughts drifted to The Big Short, the non-fiction book by Michael Lewis. Released in 2010, the book explained why American banks relaxed lending norms and opened the floodgates of mortgages in the first half of the 2000s, which triggered the subprime mortgage crisis in 2007.

I began wondering if similar factors are in play in India now and whether they’d lead to the same consequences as in USA.


The NPA problem faced by the Indian banking system has stemmed from loans made to real estate, infrastructure and a few other sectors. To that extent, the above real estate-centric post won’t fully explain the reasons undergirding the looming crisis. But, since it captures the NPA zeitgeist accurately, I decided to publish it without any change.

Apple CEO – Patriot Or Anti-National?

Monday, February 22nd, 2016

The Pune Mirror edition of 20 February 2016 carried a column by my fellow alum Ajit Ranade, Chief Economist of the Aditya Birla Group. Although it was titled “The anti-national Apple CEO”, it portrayed Tim Cook more as a patriot than an anti-national although he’d challenged the FBI order on the San Bernardino case.

I wrote an email to Ajit sharing my thoughts. The text of my letter is given below.


20 February 2016

Dear Mr. Ajit Ranade:

Greetings from a regular reader of your Pune Mirror column who also happens to be an alum from IIT Bombay (C85, Chemical Engineering, H4).

I liked your above mentioned article in today’s Pune Mirror.

I agree with the spirit of your article. However, there are two lines in your article that I think need amplification:

  1. The line “That their data… will not be leaked” implies that Apple refused to hand over information it possessed. However, according to Tim Cook’s letter to Apple customers (, “When the FBI has requested data that’s in our possession, we have provided it.” Interestingly, the letter does not specify the nature of the information that Apple did provide to FBI.
  2. The line “Even against a police warrant” runs somewhat counter to Tim Cook’s statement, “Apple complies with valid subpoenas and search warrants, as we have in the San Bernardino case.”

The way I understand this issue, Apple DID hand over information IT HAD to FBI, so the controversy is really about the information that Apple DOES NOT have.

I’m not a legal expert but I’m reasonably sure that if Apple had refused to comply with subpoenas and search warrants regarding information that it DID have, someone from Apple would be behind bars – both in USA or India.

I thank you for your consideration.

Thanks and Regards.




I wasn’t expecting this but Pune Mirror also published a slightly edited version of my email in its “TELL THE ED” section today. This is reproduced below.


Seller Power In Online Marketplaces

Friday, February 19th, 2016

kingBuyer power in online marketplaces is obvious. Choice of platforms, sales returns, seller rating and venting on social media are among the many ways in which buyer is king in online marketplaces.

Platform power is also fairly obvious: Blacklisting errant sellers and withholding payments to them are some of the tools available to the platform to flex its muscle.

I got a whiff of seller power when I heard that Uber’s drivers could rate their passengers. However, I didn’t think much of it since the ratings were not public.

But I got a very tangible experience with seller power when I recently ordered food online. As usual, I fired up my favorite app FoodPanda and tried to place an order on my favorite restaurant Punjabi Rasoi. In all my previous occasions of ordering for myself, I’ve easily made the restaurant’s minimum order value (INR 150) that qualifies for free home delivery (blame inflation!). On this occasion, I was ordering for my whole family but the app kept flashing an error message saying I was short of the minimum order value by INR 750.

Whoa! Short by 750? How was that possible when the minimum order value has been INR 150 in the past?

I went to the restaurant’s information screen but I couldn’t find any mention of minimum order value there. Therefore, I had to infer that it must be INR 1000, being my order total of INR 250 plus the shortfall of INR 750. Despite the inflation blamed above, there was no way I could hit that kind of order value, and I abandoned my order.

I also strongly doubted if this restaurant would’ve really hiked up its minimum order value so sharply, so I called it directly. Its manager accepted my INR 250 order without any demur.

I was wondering what was happening.

I had my answer a half hour later.

Punjabi Rasoi delivered the food. Along with that, I found a whole lot of material – leaflet, tissue, plastic spoon and fork – from TinyOwl.tinyowl-leaflet

Founded by fellow alums from IIT Bombay, TinyOwl is the latest kid on the food delivery app block. Going by all the freebies that came with my food, it appeared that TinyOwl was going all out to attract habitual food delivery app users by poaching its competitors’ restaurants with better terms. This was confirmed when I heard from the industry grapevine that TinyOwl was waiving its customary 15% commission if a competitor’s restaurant switched to its platform. I also noticed that Punjabi Rasoi’s minimum order value on the TinyOwl app was the same old INR 150.

Since search results are ordered by minimum order value by default, Punjabi Rasoi got itself banished to the deep recesses of the FoodPanda app by upping its minimum order value to INR 1000. True to the Indian tradition of not saying no to the face, the restaurant had used this trick to shift its allegiance to TinyOwl without actually delisting itself from FoodPanda. That’s a subtle way of exercising seller power.

Interestingly, I got a PUSH notification from FoodPanda saying it was waiting to confirm my order from Punjabi Rasoi. While I appreciated its attempt at remarketing – a marketing best practice that’s still not common in India – there was no way I could go back to FoodPanda under the circumstances.

I’m sure FoodPanda will blame some technical glitch if and when it replies to my tweet. Well, when you’re in the business of using technology to mediate everyday activities, you can’t shirk responsibility for technical glitches.

But I digress.

The point is to highlight that sellers can exercise power in online marketplaces and in ways that buyers can notice.

Let me hasten to add that empowering a seller does not mean depriving the buyer. Online marketplaces can simultaneously empower both parties to their mutual benefit.

I found a great example of this in this Quora thread which describes an incident where an Amazon seller talked to a buyer to assuage the latter’s concern about an order and thereby prevent the buyer from canceling the order. In the process, both parties were happy. This was possible only because Amazon permits sellers to interact directly with buyers. (Unlike competitor Flipkart, which I understand does not allow direct communications between buyers and sellers and thus triggers avoidable returns and customer dissatisfaction.)

By empowering its sellers and buyers in this manner, Amazon achieves a desireable outcome – lower returns and superior customer experience. So can other online marketplaces. Power equation is not a zero-sum game.

TTD Has A Sales Department. And That’s A Good Thing

Sunday, February 14th, 2016

Here are the updates from my recent visit to Lord Balaji and Goddess Padmavati Temples in Tirumala and Tirupati respectively. For the uninitiated, these two towns are located in Andhra Pradesh, a state in southern India.

#1. 300 Beats 50

After my last visit to Lord Balaji Temple in Tirumala two years ago, I’d posted Fifty Beats Three Hundred At Tirumala-Tirupati. Not sure if somebody read this post at the administrative body, Tirumala Tirupati Devasthanam (TTD), but the only darshan ticket that can be booked online now is the INR 300 Special Darshan. Here were my darshan timings for my two darshans with this ticket:

Darshan 1:

Darshan 2:

#2. Traditional Indian Dress

skr-melfie-tirupati-2In my 20 years of visiting Tirumala, I’ve always worn shirt and trousers. However, that changed this time: It has now become mandatory to be attired in “traditional Indian dress” for all special darshans. I was tipped off about this new rule by a friend and had noticed a line to this effect in the ticket. So I went prepared. You can see a mirror selfie – or “melfie” as I believe it’s called – on the right. But many pilgrims were caught unawares by the change and had to buy a veshti from the shops outside the temple and hurriedly wear them over their trousers. For the uninitiated, veshti is a “a rectangular piece of unstitched cloth, usually around 4.5 metres (15 ft) long, wrapped around the waist and the legs and knotted at the waist.” (Source: Wikipedia)

#3. Novel Display At Ticket Verification Counter

Verification of darshan tickets now happens before entering the Vaikuntam Queue Complex. You hand over the printout of your ticket, the attendant scans it with a barcode reader and the highlights of your ticket – darshan type, reporting time, type of ID proof, etc. – appear on a widescreen display mounted on the wall above the queue. The new arrangement makes it easy for pilgrims to view the details for themselves, unlike in the past when a facsimile of the ticket would only appear on a conventional 14 inch monitor placed in front of the attendant. I wish I could post a picture of the new display arrangement but since cameras are not allowed here, this description would have to suffice.

#4. Multilingual Signage & Announcements

hotel-fortune-kencesMany important signs and announcements made over the P.A system in the Tirumala temple premises were in multiple languages. The Ola cab driver, auto rickshaw driver and the maintenance engineer at my hotel could all speak Hindi. Whether this happened because of my rant after my last trip or not, it’s a welcome development for pilgrims from outside Andhra Pradesh!

#5. TTD Sales Department

There were constant announcements on the P.A system about room vacancies at Tirumala. The attendants at the TTD Publications Bookstore were very helpful to customers. Somewhere I noticed a sign saying “TTD Sales Department” or something to that effect. As a career sales and marketing professional, I find this to be a great thing. And I’m not surprised that TTD has overtaken the Vatican to become the world’s #1 religious organization by revenues.

Drive Engagement With Error Messages!

Friday, February 12th, 2016

Yes, you read that right. This post is really about how brands can boost engagement with their consumers by using smart error messages.

Normally, error messages are bland:

  • Record not found
  • Your search yielded no results
  • Page not found.

You can’t blame the programmers who typically write them because, sometimes, you can’t do better. As @nicksantos points out in his MEDIUM post The Unluckiest Paragraphs, “It’s hard to write a good error message when we have no idea what the problem is.”


But at other times, you do have a good idea of what the problem is and it is possible to write a good error message.

In the recent past, I came across two brands that have done a great job of creating smart error messages that express the problem in real life – rather than technology – terms.

#1. Onefootball – Pure Soccer!

This Android app is my go-to resource for following soccer matches. If you open this app without data connection, you’ll see the following screen:


Football fans will relate immediately with the pun on the word “offside” used in the error message.

#2. Adiction Deo

Billing itself as the “Best Smelling Strong Body Deodorant for Men”, Adiction ran a sweepstake to drive sales of a new range of men’s deodrants. To participate in it, you had to buy the product, scratch off a panel, find a 10-digit number printed on the can and text the number to the company. The winner got a date with Adiction’s brand ambassador. To increase their chances of winning, people could buy as many cans as they wished. While there was no limit to the number of codes they could submit, each code could be used only once.

When we sent the same number twice, we were expecting to see a drab error message like “Sorry, code expired”. But we got something else:


The risqué message resonates very well in the context of the fact that the said brand ambassador is ex-porn star turned Bollywood actor Sunny Leone.



As the above examples illustrate, brands can stimulate engagement and boost brand recall by making their error messages talk in the consumer’s language and context. You might need to reach out to your marketing department for help with crafting such creative messages but it can be well worth the additional effort.

Before closing, let me give you one example of how NOT to engage with error messages.

I recently exhausted the cap on my 3G plan. As stated on the MNO’s website, I sent an SMS to order a booster pack. This is what I got back:


“Inhibit mapping”? I didn’t know what this term meant and sent out this tweet in sheer exasperation.


“Rahul” from the MNO’s ORM team was as clueless about the term as me. He promised to find someone in the company who’d know better and be in a position to explain the error message to me. Apparently, he got nowhere: The guy who called me from the MNO next day was asking me what “Inhibit mapping” meant!

If you can’t find a way to write your software / website / app error messages in your the user / consumer’s language, call us but please don’t intimidate your customers with terms like “Inhibit mapping”!

Privacy Does Not Equal Security

Friday, February 5th, 2016

ps01A few months ago, I’d posted the following update on social media:

Privacy does not equal Security: Privacy is refusing to give out your mobile #. Security is refusing to give out your debit card PIN #.

To which a friend had replied, “You made it so simple!!”

Then I thought of bank account numbers and realized it wasn’t so simple.

If I told you my BAN, it’d only be a question of privacy in India. But in the USA, you could pull out money from my account only on the basis of this info* – *T&C applicable – so it’d turn into a matter of security!

Adding to the complexity is that privacy- and security-consciousness of the average John / Jane Doe vary from one country to another (if not across different regions within the same country).

ps02In my observation, America is not so security-conscious. Millions of people are willing to share their Online Banking credentials with Mint, Geezeo and the new breed of Mobile Money Management Apps (MoMMAs) ostensibly in return for tips to save a few $$$ a year. This is unimaginable in a security-conscious culture like India (apart from being expressly forbidden by banks).

Where, on the other hand, people are not so privacy-conscious and happily give out their mobile phone numbers to virtually anyone who asks for it. Including their banks. Given that so many transactions rely on mobile numbers, I wonder if it’s even possible to get a bank account in India without a mobile phone connection (I’ve never tried). But I digress. Because they have their customers’ mobile numbers on file, banks are able – and mandated – to send an SMS Alert every time a credit or debit card is used. This is a great way to control card fraud in India.

Such a regulation is unimaginable in a privacy-conscious culture like USA, where customers are not required to share their mobile numbers with their banks. As a result, alternative approaches to detecting card fraud have cropped up. Like BillGuard. This approach works in the United States because enough people seem to be ready to hand over their credit card account credentials to this and other third party services like it.

This is unimaginable (and forbidden) in India!ps-fi

To avoid going around in any more circles, let me just say that, while privacy surely does not equal security, the distinction between the two is perhaps more complex than I’d made it out to be in my aforementioned post. Just one more thing that makes life interesting for banks and fintech companies designing and building banking systems in different parts of the world!