SBI’s power move 🏋️

The NUE chessboard has one undefeatable piece

This is edition 302 of Beyond The First Order, a premium daily newsletter that demystifies the hidden models, incentives and consequences of the most significant events across India and Southeast Asia

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Good morning,

Apple Inc isn’t speaking to its employees as much as it should. Otherwise, they’d be on the same page about in-office workdays. PV Sindhu’s Chinese connections have the Indian Olympic Association (IOA) in knots. Hyundai’s claims of zero emissions may just be a lot of hot air. India’s most powerful bank makes its most strategic move. A recent report on the quality of its rivers makes for a disappointing end to the whole “nature is healing” social media movement.

We’ll always have the memes. Sniff.

Operation: Woo SBI

If Indian banks put their mind to it, they can scuttle even the best-laid plans. 

India’s digital payments is managed by retail payments body National Payments Corporation of India (NPCI). NPCI is a payments network that is supported by all the major banks of India. The Reserve Bank of India, to reduce the concentration risk in India’s digital payments, encouraged the setting up of a new competitor to NPCI in the form of New Umbrella Entities (NUEs). 

This was an opportunity like never before for both Indian companies and multinationals to participate in India’s digital payments economy. After all, NPCI is a conduit for 70% of India’s digital payment volumes. 

Companies like Visa, Amazon, Flipkart have partnered with those like Tata Group, Reliance Industries, ICICI Bank and Axis Bank, payments infrastructure provider FSS, and Paytm* to become an NUE. Of the six consortiums that have applied, two are expected to win an in-principle nod. 

But notably missing in the list of applicants is the State Bank of India and public sector banks. SBI was kept out of forming an NUE by the Finance Ministry to avoid conflicts of interest between NPCI and the new entity. (We wrote about it in an earlier edition of BFO). 

And now, an employee union at the State Bank of India wrote a letter asking the banking regulator to scrap the whole process of NUE licensing, reported Reuters

Involvement of big multi-national companies raises fears of abuse of user data and India's digital payment networks should continue to operate on a non-profit basis, the All India State Bank of India (SBI) Staff Federation and the UNI Global Union, a vocal critic of tech giants, wrote in the letter.

The letter urged the central bank to scrap the "whole process of NUE licensing" and focus on strengthening the domestic payments group, NPCI, which operates as a non-profit.

If this is SBI’s way of making sure it gets a seat at the NUE table, it might just work. For any payments network to work seamlessly, it needs all banks to adopt it and embrace it. 

But if SBI really does not believe in the NUE story, all it has to do is refuse to support the new payments system devised by an NUE ( even a half-hearted attempt would do the trick). That is enough to throw any digital payments into disarray—SBI alone has 500 million account holders who will need to send and receive payments. 

If any NUE thinks it can make a new digital payments system work without SBI’s unconditional support, it has another think coming its way. 

Update: In an earlier version of this story, we incorrectly wrote ’employee union backed by the State Bank of India’. This has been updated to ’employee union at the State Bank of India’. We regret the error.

*Paytm founder Vijay Shekhar Sharma is an investor in The Ken

A sense of déjà vu for Li Ning

On 3 June, at a glittering event in New Delhi, the Indian Olympic Association (IOA) unveiled the official apparel to be worn by the Indian contingent at the Tokyo Olympics. This included the ceremonial kits to be worn at the opening and closing ceremonies, and the sports apparel to be worn while travelling and playing. 

The ceremonial kits were designed by Raymond, an Indian fashion brand. The sports apparel was manufactured by Li Ning, a sportswear and equipment company from China.

On 8 June, the IOA announced that it was dropping Li Ning as kit sponsor. Indian athletes would wear unbranded apparel at the Games, it said. A day later, reports said the IOA was looking for new kit sponsors, with barely weeks to go before the Indian contingent departs for Tokyo.

Why did this happen? Just look at some of the replies to Indian sports minister Kiren Rijiju’s tweet about the kit launch.

India’s relations with China are arguably at their lowest point since the Sino-Indian war in 1962. Twenty Indian soldiers died in a border skirmish between the two countries last year. Since then, the Indian government has banned over 100 Chinese apps, including popular short-video platform TikTok.

The IOA said the decision was taken keeping “the emotions of our fans” in mind. “We would like our athletes to be able to train and compete without having to answer questions about the apparel brand,” it said in a statement. Reports suggest Rijiju’s sports ministry advised the IOA to drop the Chinese sponsor.

Li Ning was India’s kit sponsor at the 2016 Olympics as well. In fact, relations between the company and the IOA were so good that the Olympic body signed a two-year sponsorship deal reportedly worth Rs 6 crore (~US$800,000) in 2018—up to the Tokyo Olympics. The deal was extended after the Games were postponed last year. Never before had the IOA signed a long-term deal with an apparel maker. 

Now, here’s the interesting part. Hindustan Times reported as early as June 2020, at the height of the border skirmishes, that IOA was mulling over dropping Li Ning. So, the IOA knew that going with a Chinese sponsor would not end well. Why, then, did it wait until a controversy was raised, to make this decision? 

The IOA’s troubles aren’t over, though. Indian badminton player and medal favourite PV Sindhu has an individual sponsorship deal with Li Ning. It’s a four-year deal signed in 2019, worth reportedly Rs 50 crore (US$6.8 million). Apart from sports attire, Li Ning also makes racquets for Sindhu. Having played with Li Ning racquets for two years now, it’s highly unlikely Sindhu will entertain any requests to change her equipment with just weeks to go before the Games.

Imagine the scenes if Sindhu wins a medal with a Li Ning racquet.

The tables have truly turned for Li Ning. During the Rio Olympics, the Chinese company had complained to the IOA that three Indian athletes had worn a rival brand’s apparel during matches. One of them wore Japanese brand Yonex’s top, apart from using their racquets, from the quarterfinals onward, all the way to winning a historic silver medal. 

Who was that athlete? Sindhu, of course.

Don’t oversell

Automakers can’t seem to steer clear of greenwashing accusations—Hyundai’s the latest. Its UK unit has been ordered to refrain from claiming that its hydrogen fuel cell cars “purifies the air as it goes”.

Perhaps a warning to not oversell your green credentials, as cleaner vehicles don’t do away with vehicle emissions completely. Brakes, tire wear, and road surface wear are responsible for over half of the particulate pollution from road transport.

Just another reminder that emissions from transport can never be fully eliminated. 

Apple every day, keeps the employees at bay

Tech giants want their staff to come back to the workplace. 

In May, Microsoft’s CEO Satya Nadella published a note about the future of the company’s hybrid workforce, and now Apple has said that it expects its employees to be back in the office on Mondays, Tuesdays, and Thursdays from September of this year. 

Hybrid work and three-day in-office workweeks seem to be the sweet spot that most companies are opting for.

But Apple’s employees don’t quite agree, according to a report by The Verge. They want the option to stay remote. And some of them are even quitting. Over 2,800 ‘remote work advocates’ banded together to write to Apple’s CEO Tim Cook:

“Over the last year we often felt not just unheard, but at times actively ignored,” the letter says. “Messages like, ‘we know many of you are eager to reconnect in person with your colleagues back in the office,’ with no messaging acknowledging that there are directly contradictory feelings amongst us feels dismissive and invalidating...It feels like there is a disconnect between how the executive team thinks about remote / location-flexible work and the lived experiences of many of Apple’s employees.”

Apple had even put out a fairly lengthy ad in July 2020 to show the pains of collaborating while working from home. But probably didn’t create ads or send notes acknowledging that a large group of people actually preferred the remote work set up.  

And there’s something else that stands out in the letter written by the Apple employees: 

“For inclusion and diversity to work, we have to recognize how different we all are, and with those differences, come different needs and different ways to thrive,” they say.

Mandating an in-office presence can exclude a lot of really capable people from the workforce. 

These could be people who’re primary caregivers who can’t step away from family responsibilities, the majority of whom are women. It could be people with physical or mental health disabilities for whom commuting is a problem. And it could be people who just can’t afford to live close to the office and commute easily. 

According to research by David Phillips, an Associate Research Professor at the University of Notre Dame, people with longer commutes face a bias during hiring decisions.

My results show that applicants living in distant neighborhoods received positive responses from employers less frequently than those living near the workplace. In fact, applicants who lived 5-6 miles farther from the job received about one-third fewer callbacks.


When I presented employers with two applicants from neighborhoods with similar levels of affluence but different commute distances, they still preferred the nearby applicant. I also edited all aspects of the fictional person’s name, work history, education, etc., so people from different neighborhoods appeared similar on average. Other factors equal, proximity matters.

And while Apple has been making slow but steady progress in its diversity and inclusion efforts, the new in-office mandate might be taking a step back from the opportunity that pandemic induced remote work opened up. Apple also did not find a place in market data company Refinitiv’s top 100 list of the world’s most diverse and inclusive companies in 2020. 

As everyone turns ESG-conscious, the spotlight should be on diversity and inclusion in a return-to-normal world.

PS: To Apple’s credit, earlier this year, it decided to add ESG as a factor for bonus payouts to executives. But for diversity and inclusion to be front and centre in this fast-changing world, we might even have to evaluate between traditional notions of ESG and an emerging version of it. 

Nature didn’t heal… completely

Remember all those pictures on snow-capped mountains, suddenly made visible when the country went under the first Covid lockdown? There was an outpouring of pictures on social media, about how “nature was healing” as humans remained locked in. As it turns out, it wasn’t all blue skies. A recent e-publication by the Centre for Science and Environment, a Delhi-based environmental think-tank, “busts the myth” about India’s rivers becoming cleaner during the pandemic.

“The water quality of India's 19 major rivers did not improve significantly during the COVID-19 lockdown. While Ganga and four other rivers became dirtier, the water quality in another seven rivers remained unchanged. Only four of the rivers showed a 100 per cent compliance with the primary water quality criteria for outdoor bathing during pre-lockdown and lockdown period.”

As industries and cities unlock again, environmental concerns about water pollution will come in second to economic revival. Rivers are likely to get dirtier before they get clean.

That’s a wrap for today.

Hope you’re taking care of yourself, staying socially distant, masking up, and washing your hands frequently.

We’ll see you tomorrow.

Stay safe,
[email protected]

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