The future of financial services

You got educated, got married, started investing and quickly you were convinced you should pay for your kids college expenses. So you invest more for your kid’s education and less for your own retirement. No I am not arguing against that. That is for another post!

Some big chunk of business that the financial services sector is looking at is funding the educational sector. Not just the students but also the colleges. So what do you think is likely to happen?

Let us speculate.

Mr. Kapil Sibal will get the ‘Educational Reforms Bill’ passed. So all kinds of people will get into education business. With a little help from a ‘helpful’ politician will ensure that the best teaching talent from IIT, IIM, Indian Institute of Science, TIFR (Tata Institute of Fundamental Research), UDCT, and other ‘jewels’ of Inda will migrate to these second and third rate Universities. This will help them charge only Rs. 750,000 for a Bcom degree, Rs. 25,00,000 for an MBA degree….and the like. The colleges will be owned by Trusts (the Indian laws here may not change) but the syllabus setting, ‘owning’ the IP on the notes, etc. will be owned by a company. This company will be ‘private equity funded’. So suddenly your kids education for which you saved Rs. 10,00,000 will not be enough. So your son will borrow Rs. 20,00,000 (provided by a friendly bank owned by Citi) and do his MBA.

Then he will marry, have a kid,…..and the cycle continues. LOL.

P s: the financial service industry will lobby with the government of India and a section in 80C will be introduced to increase your deduction to Rs. 500,000 for ‘College Savings Plan 539’ . Then all of us will write articles on this noble provision in the Act. God Bless. Amen.

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3 Responses to “The future of financial services”

  1. Abhishek Gupta on April 15th, 2010 at 3:44 pm

    Subra Sir,

    Check out the article by Vivek Kaul in DNA Money about how the IRDA Specifically Mr. Hari Narayan has worked always for the insurance company and never for the investor.

    Transformation is expected on this commission for Insurance and Mutual Funds (SEBI is still unhappy with upfront commission and wants it to be ZERO)


  2. “So you invest more for your kid’s education and less for your own retirement. No I am not arguing against that. That is for another post!”

    Waiting for that post.

    Good article

  3. Dear Subra
    For once I think that you are wrong
    Throwing open education to the free markets will only decrease the costs and increase the quality of education in the long run..
    This has been proved time and again in world history..
    ( Look at the telecommunications industry for example )
    But the catch is.. The markets should be truly free and not biased to serve some vested interests..

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