In this week's wrapup, we talk about the OpenAI and Sam Altman saga, RBI’s secret interest rate hike, Sahara’s mysterious ₹25,000 crores and more.

For the markets edition this week, we talked about CDSL, India’s only listed depository and its flourishing business. You can read it here.

Meanwhile, here’s a recap of what we wrote over the week.

The mystery of Sahara’s ₹25,000 crores

When Subrata Roy, the founder of Sahara passed away a couple of days ago the media extensively highlighted just one thing ― a mysterious pool of ₹25,000 crores that lies in the business empire’s bank accounts. And well, it’s not something the company can use. Rather, these are funds overseen by market regulator SEBI, which must be returned to investors.

You see, Sahara was a huge brand. It was once a financial institution, a housing finance company, a media house, an airline, a hospitality business and even a stakeholder in a Formula 1 team. So naturally people trusted it. But in 2010, that trust came crashing down when SEBI learnt of a huge hidden fact.

Some of Sahara’s group companies collected thousands of crores of Rupees from the public without an official public fundraise or what you call a public listing. SEBI was obviously furious and asked the group to return this money. But Sahara’s disagreement meant that the matter eventually ended up at the Supreme Court. It also tried to prove that it had returned most of its investors’ money. The top court wasn’t taking any of Sahara’s explanations either and sided with the SEBI’s orders. It simply asked the company to deposit all of the money with the SEBI.

But here’s the thing. The fund has grown ₹25,000 crore strong now. Yet, less than 1% of it has been claimed so far. This has actually left SEBI confused about why investors aren’t claiming their money, whom to return the money to or whether there were any genuine investors at all. The mystery surrounding the origin and legitimacy of the ₹25,000 crores persists, pointing fingers at Sahara's financial activities and the truth behind its claims. So here’s our story about it.

Succession: Exploring the many theories behind Sam Altman’s OpenAI Exit

On Tuesday we discussed one of the most hot topics on everyone’s mind last week ― OpenAI’s board firing its co-founder and CEO Sam Altman. You probably read about it all in the news. But we came up with our take on the many theories surrounding Altman’s ouster. You can read it here.

RBI hikes interest rates without hiking interest rates!

Banks take deposits and use them to disburse loans. And while they do this business, the RBI (Reserve Bank of India) also tells them to keep aside a certain percentage of their own capital for contingencies. So if a loan is riskier, the RBI could just increase this percentage. For instance, a home loan is secured by an asset ― the home. So if the borrower defaults, the bank can simply recover its money by selling this home. But others like personal loans or credit cards are unsecured. They’re simply more risky.

Now if you’re a banker who’s averse to risk, you’d rather dabble in loans that require you to put up less of your own capital. But, you also know that you can charge a higher interest rate on a personal loan or a credit card. It’s these riskier types of loans that bring in the dough. So at the end of the day, you have to figure out how to balance this tightrope  —  squeeze out higher interest rates while putting up the lowest capital.

And recently, the RBI increased risk weights for unsecured personal loans, credit cards and even money lent to non-banking financial companies (NBFCs). In other words, it simply made it difficult for banks to perform the balancing act. So we wrote a story about it here.

Will Argentina trash the Peso?

Argentina is in economic shambles.

4 in 10 people  there live in poverty, the current rate of inflation is at a whopping 140% and in the last 5 years the country’s currency has dropped 90% against the US Dollar.

And its recently elected new President Javier Milei seems to have a way out of this. He wants to get rid of the Argentinian peso and use the US dollar as the official currency. That obviously sounds crazy. So here’s a primer on this radical idea.

A beginner's guide to stubble burning

A couple of days ago the Supreme Court made a bold suggestion while hearing a case related to Delhi’s deteriorating air quality. It simply said that if farmers were burning crop residue to clear their fields before sowing their next crop, then the government could punish them by refusing them an MSP (Minimum Support Price). An MSP is a price at which the government agrees to buy farm produce if farmers don’t get a fair price elsewhere. It’s a subsidy of sorts to protect their interests from the vagaries of agriculture prices.

And this begs the question ― Why do farmers choose stubble burning despite having other alternatives? It’s also something the Supreme Court was curious about too. So we thought we could do a quick primer – a simplified explanation of stubble burning, the alternatives we’ve considered so far and why it’s such a difficult problem to solve. You can read it here.

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We hope you enjoyed the weekly wrapup. Have a great weekend!

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