Mool Nivesh

India’s financial sector is a patchwork of diverse institutions, each created to address specific gaps in access, inclusion, and economic development. But why do we need such a variety—and what are the strengths and limitations of each? The Basic Need: One Size Doesn’t Fit All India’s population is not only vast but also incredibly diverse—urban and rural, rich and poor, literate and illiterate, salaried and self-employed. A single type of financial institution cannot cater to all these segments efficiently. For example, while commercial banks are well-equipped for large-scale, urban, and corporate banking, they often find it unprofitable and risky to serve remote rural areas, small borrowers, or those without formal documentation. How Different Institutions Meet Different Needs Commercial Banks  offer a full suite of services but prioritize profitability and risk management, often leaving the rural poor and informal sector underserved. Cooperative Banks  and  Regional Ru...

Terminal value  often dominates financial models, sometimes making up 60-100% of a company's valuation. Instead of seeing this as a model weakness, consider it a reflection of how equity investors truly profit: through  price appreciation . While we might receive some dividends, the bulk of our returns comes when the stock price climbs. Terminal value isn't just a number; it represents this future price appreciation, capturing the value of all cash flows a business generates beyond the explicit forecast period. The stronger a business's long-term growth potential, the more significant terminal value's contribution becomes. Embracing terminal value means focusing on the  long-term perspective . It highlights a company's enduring growth potential and differentiates truly quality businesses. A high terminal value isn't a red flag; it often signals strong future growth expectations. Consider Indian giants like  Asian Paints  or  Reliance Industries . Their valu...