Tag: annum

Ranji Reform

Perhaps the best thing that the BCCI has done in recent times is to hike the match fees given to players in First Class and List A matches. If i’m not wrong, first class players now get Rs. 2 lakh per game as match fees, and 1 lakh for List A games. Thus, if a player is a regular in his state team, he is assured of at least Rs. 15 lakh per annum, thus ensuring he can remain professional and not have to do a “day job”.

This is excellent in terms of option value for high school students who are good at cricket who are undecided if they should concentrate on their cricket career or if they should go to college and concentrate on studies. And this in turn leads to better quality of cricketers in the pool available for first class games.

For a fringe player, selection to the national team is a lottery. It is also a big step up from the Ranji game. And when you are an under 19 cricketer (unless you are Tendulkar of course; let’s talk about normal people here) there is little that indicates if you are going to be an international regular. However, your performances in school/college level and age group tournaments are an extremely good indicator of how well you are likely to do on the domestic circuit.

Now, the income that the domestic circuit offers means that it might be more profitable for you to concentrate on cricket and try and make it big, rather than giving up cricket and going to college. Even if you fail to make it big, you won’t end up doing too badly in life. So if you think you have a good chance of making the state team, you would rather go for it than playing safe and going to college.

And this means that several players who would have otherwise left the game (in the absence of reasonable income from playing domestic cricket) are available in the pool which makes it more competitive and raises the overall quality of cricket in the country, and consequently that of the national team.

At least the BCCI gets some things right.

Discontinuous Yield Curves

I think that the equity markets have topped out and have cashed out all my equity and equity mutual fund holdings, and am thus sitting on a pile of cash, which I’m looking to invest in debt. Happened to check out the websites of a few banks where I hold accounts and what caught my eye was the discontinuity in the yield curves.

Here is HDFC Bank:

1 year 1 day – 1 year 15 days Below Rs.15 Lacs 6.00% 6.50% May 18, 2009
1 year 16 days Below Rs.15 Lacs 6.50% 7.00% August 03, 2009
1 year 17 days – 2 years Below Rs.15 Lacs 6.00% 6.50% May 18, 2009
2 years 1 day – 2 years 15 days Below Rs.15 Lacs 6.00% 6.50% May 18, 2009
2 years 16 days Below Rs.15 Lacs 7.00% 7.50% August 03, 2009
2 years 17 days – 3 years Below Rs.15 Lacs 6.00% 6.50% May 18, 2009
3 years 1 day – 5 years Below Rs.15 Lacs 6.00% 6.50% May 18, 2009

Notice the discontinuity? About how for a couple of randomly chosen dates the interest rates suddenly shoot up?

Similarly with ICICI Bank:

391 days to 589 days 6.25 6.25
590 days 6.25 6.25
591 days to less than 2 years 6.25 6.25
2 years to 789 days 7.00 7.00
790 days 7.00 7.00
791days to 989 days 7.00 7.00
990 days 7.25 7.25
991 days to less than 3 years 7.00 7.00

Again same story. On certain “magical” days, interest rates shoot up. The degree of increase in rates here is much less dramatic, though. Nevertheless this is extremely interesting, and I wonder why. I remember last year going to Karnataka Bank and asking for a 1 year deposit, and they asked me to make one for 400 days saying that I’ll get 0.5% per annum better for that.

This morning I went to State Bank of India and found that they don’t offer these special rates. I had a friend check at another nationalized bank and found that they too don’t offer special rates. Wonder why the private banks are offering it, though. Why it makes that big a difference to them that the deposit is for 990 days as against 991 or 889. Or is it some way to prevent early closure?

In other news, SBI is offering teaser rates for home and auto loans. Their ads have been there all over the airwaves for the last few weeks. They offer 8% for first year, 8.5% for second and third years and then what they call as “normal rates” after that. If SBI is getting into teaser rates, god only save Indian finance.