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Mutual Fund CMOs, Are You Tapping The Stories In Lucknow, Ernakulam, Vadodara?

For the longest time, the Indian mutual fund industry was a story of latent potential as risk-averse Indians, even for their long-term savings, preferred the safety of bank deposits to the savvy of mutual funds. In recent years, that potential is starting to be unlocked as more investors gravitate towards mutual funds as a savings and investment habit. Where in India might be more money like that located?

It’s a business question for chief marketing officers (CMOs) of mutual funds as they try to find new markets and new investors. A dataset that can provide direction to that search is the district-wise data on deposits that India’s central bank releases on a quarterly basis, the last being as of June 2017.

This Reserve Bank of India (RBI) dataset carves India into 666 districts. For each district, it breaks down total deposits available with a scheduled bank into three categories:

Current deposits: Typically, used by businesses. For the sake of the question we are trying to answer, we will keep this aside, and focus on the other two deposit categories.
Savings deposits: Fluid money belonging to individuals.
Term deposits: Sticky money belonging to individuals and businesses.

Here are two takeaways from this dataset:

1. Metros matter: Much as India is growing beyond her big cities, its current economic nerve centres—and personal wealth—are still concentrated in and around the metros. There are only 12 districts where the total savings and term deposits exceeds Rs 100,000 crore. And they are spread across a wide range: from Gurgaon (Rs 103,772 crore) to New Delhi (Rs 1,009,694 crore).

In the map below, these are the yellow dots. Click on the legend to isolate them and mouseover on the dots to see which ones they are and their bank deposits. Other than the five main metros or their offshoots, there’s Hyderabad, Pune, Ahmedabad and Lucknow.
Mumbai and New Delhi stand out by a long way. The deposits in New Delhi, for example, are 9 times that of Lucknow and 4 times that of Chennai.

2. The 3 clusters: The map plots 169 districts that have deposits of above Rs 10,000 crore, divided into four bands. From the point of view of focusing marketing resources, there are 3 clusters that can be seen:

i) The capital cluster: Around Delhi, extending into Punjab, Haryana, Western Uttar Pradesh and Uttarakhand. This houses districts like Jalandhar (rank 26, Rs 55,779 crore of deposits) and Dehradun (rank 28).

ii) The Pune-Ahmedabad cluster: This belt runs from Pune to Ahmedabad, and passes through Mumbai—the biggest of them all—and touches several districts in Gujarat. This includes Vadodara (rank 17), Surat (rank 30) and Rajkot (rank 45).

iii) The Kerala belt: It runs along the length of Kerala, and branches off into Tamil Nadu at two points. This belt has 6 districts in the top 50, led by Ernakulam (rank 16), Thiruvananthapuram (rank 23) and Coimbatore (rank 29).

Then, there are smaller pockets, in terms of number of districts: for example, around Kolkata and Chennai. The question before mutual fund CMOs is this: are they maximizing the potential of these districts.

This data is also available as a time-series for the last 5 years for all districts, which can be used to identify stories of growth. If you are interested in an analysis of this data that is tailored to your needs, please contact us.

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News in Numbers, June 2, 2016: Call drop data in 11 cities, India’s first rail university…

11

What is it? The number of cities that will get access to call drop data in the next 15 days.

Why is it important? The naming and shaming strategy is expected to push telcos to improve their service quality, and keep the drops below 2%. Earlier, the Supreme Court struck down the telecom regulator’s recommendation of imposing penalty on telcos. Now, it is reportedly seeking the authority to do so from the government.

Tell me more: On Wednesday, the Telecom Regulatory Authority of India released the call drop data for Delhi. Airtel’s 2G and 3G call drop rates have deteriorated in May when compared to those last September while Vodafone’s 2G call drop rates improved (though still above the permitted 2% limit) and on its 3G network, it remained constant at 1.4%.

 

46.43%

What is it? Percentage of loans given by public sector banks (excluding the State Bank of India and its associates) of the total as of March 2016.

Why is it important? It’s down from 50.06% in March 2015 and the lowest in over 12 years. The shrinking market share is likely to expedite consolidation in Indian banking industry. Recently, the Minister of State for Finance Jayant Sinha said India would have 8-10 competitive public sector banks “when the dust settles”.  

Tell me more: This is an effect of the central bank’s mandate asking lenders to clean up their balance sheets by March 2017, which led to categorising more loans as bad, increase in provisions and net losses, and deterioration in capitalisation levels. In terms of deposits too, public sector banks lost their market share – from 50.95% in March 2015 to 48.32% in March 2016.

 

Rs 865 crore

What is it? The cost of setting up India’s first railway university in Vadodara, excluding land costs.

Why is it important? The railway university, which would offer MBA, B.Tech, M.Tech degrees, and diplomas is aimed at transforming India into a global centre for research and development in railway engineering and management. Indian Railways is the largest rail network in Asia and the world’s second largest under a single management.

Tell me more: An internal report by the Railway Board last year had suggested the setting up of rail research centres and introducing railway-related subjects in existing universities instead of setting up new ones. The National Academy of Indian Railways in Vadodara is the apex training institute for all Railway officers.

 

Rs 20,000 crore

What is it? The cost of building a common Secretariat on Lodhi Road in Delhi to house various ministries (excluding a few key ones) and departments.

Why is it important? This move is likely to make inter-communication between ministries and departments easier and quicker and would also help the government in tackling shortage of office space, which often pushes them towards high rentals.

Tell me more: The proposal by the Central Public Works Department would be presented to Prime Minister Narendra Modi for his approval. This includes razing down of residential complexes of 4,000 families who will be provided with alternate housing.

 

8,000

What is it? The number of Delhi University (DU) teachers who have been protesting against some recent changes in University of Grants Commission (UGC) rules since May 24.

Why is it important? This affects the evaluation of answer sheets of around 1.3 lakh undergraduate students. They are protesting against the increase in number of working hours, difficulty in getting promotions, especially for Assistant Professors, and the likely loss of jobs for approximately 5,000 teachers, especially those in ad hoc positions.

Tell me more: The UGC has called for a meeting of all stakeholders on June 6 to discuss issues including the basis on which teachers are promoted and their workload and if the issues are not resolved then, it could lead to a delay in DU results and sessions.

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