9 August 2016 | Shruti Kohli | Mumbai
She still depends on a Rs 3000-mobile handset, but has embraced credit cards as much as to sometimes put herself in a potentially embarrassing situation of not having enough in wallet to pay a taxiwallah. She helps thousands of investors make money on the stock market but stays away from equities, depending on mutual funds for her investment, to avoid ethical quagmire.
Madhabi Puri Buch, MD & CEO of ICICI Securities and one of the most charming faces of India Inc, talks to Shruti Kohli and tells her story of dealing with money as a child of well-off parents, first salary of Rs 1800, Rs 3.5 lakh first home on Mira Road, philanthropy and her dream of bringing drinking water to those who don’t have it if she were to hit a jackpot. And of course her taste for pani puri on Shahjahan Road in Delhi and her newly discovered fetish for traditional jewellery – just 20 years after her marriage.
Shruti: How disciplined an investor or spender are you?
Madhabi: I’m very disciplined when it comes to being careful with spending but not very disciplined when it comes to investing even though am responsible for the family’s financial affair but you know how it is we all tend to prioritise our professional work over personal work and every evening when you get ready to go home it gets postponed to tomorrow and tomorrow and tomorrow.Always work comes first.
Unfortunately I’m not quite disciplined on our financial management of our own savings as I would like to be. But I like to believe that as a family we are relatively careful spenders. We don’t lead a lifestyle which perhaps in a way we can afford to. It’s simply a question of what gives you a kick. This goes for my husband as well. We enjoy our work so much that it’s that that gives us enough fulfillment and we don’t need to look at other avenues for fulfillment and happiness. So we don’t need to go out there and spend a lot of money trying to make ourselves content. We are happy every single day 24X7.
Shruti: How much was in your first pay packet?
Madhabi: This was way back in 1989. I had just joined ICICI Ltd. That time we were a financial institution. It was 2000 rupees that time maybe less. 1800 rupees is closer.
Shruti: How much did you pay for your first home?
Madhabi: Our first home that we bought or rather that we booked, cost us a princely Rs 3.5 lakhs. It was in 1991. This was a flat in Mira Road. At that time, this was all we could think of and afford in terms of EMIs. We lived in a rented flat in Versova then. That was in a sense the beginning of a disciplined life because fairly early in our lives we took loan to buy that house and had to pay EMIs which in a way is forced saving. Later we sold that house.
Shruti: Which car do you drive? How many cars do you own?
Madhabi: Right now we are a one-car family for the whole reason that we are a family that lives on three different continents. My son is studying in the US. My husband works and lives in London. Until recently when he was here in Mumbai we were ofcourse a two-car family and even then we used to squabble over the car because we were three of us- a family of three. I must admit I have a second baby as I called it which is a small charitable trust I run Toofles Foundation. Sometimes the car is required to run some errands for the second baby as well. When my son comes down we squabble over the two cars because we are then four of us with two cars.
As for me, I have a Toyota Fortuner which I don’t really like much. It’s too big, though very big. It takes me a step ladder to get in.
Shruti: How much cash have you got in your wallet/purse right now as we talk?
Madhabi: I think I’ve done a good job of refurbishing my wallet recently. So I probably would have a good 1500 rupees or something. But normally if you catch me on an average day, I’m terrible. You’ll be lucky if I get 500 rupees. Wait let me check. Bingo! Today I have not bad 2,600 rupees. I’m really a credit card person so I very rarely have more than 500 or 600 rupees in my wallet.
Sometimes it can be very embarrassing when you get stuck somewhere and you’ve to take a cab and you suddenly realise you can’t pay a cabby 200 rupees because you have only 100 rupees in your wallet. So that’s quite embarrassing but it often happens.
Shruti: How many credit cards do you have?
Madhabi: In this case I’m very loyal to ICICI. I have two ICICI bank cards and I don’t use anything else.
Shruti: What is the wisest tip you have given?
Madhabi: I think the wisest tip that I’ve given is to say that the equity market, contrary to popular perception that it is a risky asset class, it’s actually a very reliable asset class with very good returns. With only one condition, that you should have a 5-year perspective at least. And if you have a 5-year perspective the chances that you will be disappointed are very low. Take a 5-year perspective and you will be amazed how good an asset class it is how good an investment avenue it is. Actually not a risky asset class which people think it is simply because when they look at the ball by ball commentary literally on the stock market on a minute by minute basis in the media it feels like it is a speculative sport. Actually if you have a 5-year perspective it is not.
Shruti: What do you have a fetish for? Jewellery, Gadgets, or anything else which you look forward to buying?
Madhabi: (Laughs) Well, this is a bit amusing now. For the first 20 years of our married life my husband got tired of trying to get me to buy jewellery. Every birthday, every anniversary he would say, “Come on let’s go shopping. Let me buy you some jewellery. And I would say, “No! I can’t be bothered with all this stuff. I’m not a jewellery kind of person.” But suddenly I don’t know what happened but it was almost like clockwork that after twenty years now I’m so fond of jewellery that I’m making up for those first 20 years (laughs). So today if you ask me I enjoy buying traditional very traditional jewellery. So wherever in the country I am visiting whether Hyderabad, Kerala or to any place, it’s an important milestone for me to go look for some traditional jewellery of that place. Possibly pick up just a small piece but I enjoy doing that.
And it’s not much diamonds. Mainly gold and actually traditional. So for instance if I were to find a gold piece of jewellery, it typically tends to be gold but with semi-precious or precious stones.
Gadgets, absolutely not. My son often jokes that the cell phone that I carry even my driver has a better cell phone than me. Let me see. It’s a Nokia. Black in colour. But it’s a really lower range model. I don’t even know. It’s really worn out. I can’t see the model number or name anywhere. It cost me around 3000 rupees. I love it because it’s got nice big keypad numbers and the numbers are displayed nice and big on the screen too. You see when you are on the wrong side of forty and you need to see your numbers and messages, then you stick to a 3000 rupees phone.
Shruti: Is there an expenditure you would want to cut?
Madhabi: Well, I don’t think I need to be very careful about what I do with my wallet but I do need to be very careful about what I do with my calories.
And I think I need to overspend here a bit. I am just not spending enough calories (laughs). I think I need to be doing that. We are at that age when we need to look after our health and worry about how we are going to remain fit for the next 20 years.
Shruti: You earn well at present. Did u ever imagine as a child that you will have this kind of income? Have you ever, as a kid or teenager or now, set a target that one day you’ll be a millionaire, or a billionaire?
Madhabi: Not really. I came from a very comfortable household so in that sense I must admit that I led a fairly privileged life. So we were never wanting for anything but at the same time we were not rich so it’s not as though we had money to throw around. So I think we always grew up with the value system where we were always financially comfortable but never had an expectation that we would have enough money to throw around. The value systems that get inculcated generation after generation are about your belief systems rather than your money. Teach your children the value of money. Teach them that every penny has to be earned, every penny has to be saved. Nothing comes for free. Those are the values that get inculcated. We have taken care about this with our son.
Shruti: Most men who earn a lot of money spend it on owning a private jet, yacht, scotch, and of course on women. How are women different in spending the money they earn?
Madhabi: Well, we like our jewellery and we like our sarees. So I don’t think we can complain. One diamond can make up for a lot of scotch bottles.
Shruti: How do you handle bill payments – Credit cards, phone etc? Do you have someone managing all this for you? If yes, how was it when you had no one doing it for you? People tend to forget making payment in time and are then saddled with penalties.
Madhabi: It’s a bit of a mix. You know a lot of this stuff as I told you I am very much a credit card person. It helps me at the end of the month maybe to take stock where the money has gone. But the regular bills are you know your kirana ka bill you know you just have to go and stop at the kiranawala and pay him cash. I have a very efficient maid who’s like my housekeeper. She takes care of most of the things. Making sure that the kirana ka bill actually tallies with the diary she keeps at home. Bhajiwala ka bill she does all that. I’m fortunate to have …infact I’ve always had girls
Shruti: How do you indulge yourself? Eating out, holiday or any others?
Madhabi: Life has been a lot different since the time my husband moved to London. While he was here we used to do a lot of things together. For instance, eating out at nice places. We enjoyed meeting our friends. We have a gang of friends whom we practically met almost every weekend. We had a good time together. Ever since he has moved I find I have spent more and more of my time on charity work. Earlier I used to spend my Saturday on it and that was dedicated for it. But now since he’s not here, even Sundays are available.
Shruti: What’s your favourite cuisine?
Madhabi: It would have to be a lot of chatpata chaat, bhelpuri, pani puri and all of that. I would say I am a Delhiite on that. You give me the world’s best cuisine, I still want to go to Shahjahan Road and have chaat and pani puri there. But I would say Chinese comes a very close second.
Shruti: If you were to hit a jackpot and suddenly get something like a billion dollar, what will u do?
Madhabi: You know a billion dollar is a lot of money. There’s no way that anyone can spend it. But yes if I had an opportunity, I would certainly want to create a different kind of a legacy. I think it would be something to do with making clean drinking water available in our villages in India. I can remember for a long time that when I was young I used to fast on Mahashivratri. This is a ‘nirjal vrat’ or fasting without water. I don’t do it anymore I guess I’m becoming old. So the whole day I did not have water. I still remember how we used to feel that just that one day of going without water. When we used to have water after breaking the fast, water felt like holy nectar. I would think about so many people in our country who do not have drinking water available to them. So if I ever had a billion dollar it would go into creating something which could provide clean drinking water in our villages.
Shruti: Kids today in general have richer parents than what it was two decades ago. They also have plenty of opportunities to spend. The attitude towards money and spending seems to have dramatically changed. How do you handle your kids when they seek more than what you think is appropriate for them?
Madhabi: Well, children need to be taught that money literally does not grow on trees and that it has to be earned the hard way. And this has is done the best as a part of the normal day to day conversation that you have in the house. You can’t sit the children down one day and tell them, “Come on, I’m going to teach you 101 things about money today.”
Secondly, children observe their parents. Like I told you habits and qualities are inculcated from generation to generation. When we started in life as a married couple, we had one television and one trunk. And the TV was put on top of the trunk. That’s all nothing else. Then slowly we bought a fridge and then two mattresses. That’s all we had for a long time.
The first time we got two chairs was like a big deal. When your children hear these stories and they see you going through the grind even now, they realise that what they see today is out of a lot of hard work.
I also feel that children should be exposed to the world rather than keeping them in the confines of expensive cars and homes.
It was very important for my husband and me that our son learnt to go in the local trains. How can you be a Bombayiite and not know how to take a local train. When children take the local trains they see the people there, how they work and live. It’s just that you make sure that you get exposure to those things. When they look around, they see that there are so many people who work very hard and still earn only 5000 or 6000 or 10000 rupees a month. It’s very important for them to realise that while one spends 5000 rupees on a family meal, that 5000 rupees is actually someone’s monthly salary and probably supports a family of five for the whole month.
But yes, if he wants something special he has to understand it is something special and it has to come in a special way. So yes sure you would buy an expensive gift for your child once in a while. But then it has to be clear that it is a birthday present or you are celebrating something. It can’t just be like that. Simple rules in the house like that make a difference.
My son would have heard me often say that “O My God! Ten thousand rupees for a bottle of perfume!! I mean no question.” So it’s like if you are not indulging in that 10000 rupees perfume bottle, he understands that he can’t indulge himself with say a 5000 rupees worth Nike shoes. So it can’t be that we can indulge ourselves and suddenly our children have to be disciplined. It has to work both ways.
Shruti: What is your preferred mode of investment?
Madhabi: See I’m in a slightly peculiar position because of the job that I have we have some very tight code of conduct and guidelines. So I prefer to stay out of equities all together. It’s just easier because then you don’t have to apply your mind to close periods, grey lists, black lists and all of that. But I basically tend to divide my savings essentially between equity and debt mutual funds. Occasionally, when there is a good debenture then I am happy to put some money into that as well. But essentially on financial instruments, MFs are my preferred mode.
Shruti: Do you worry about your retirement and plan for it?
Madhabi: We are quite disciplined about that. My husband and I sit down once every year and update an excel sheet which we maintain together. That tells us exactly where we are. We started analysing and planning quite early on the lines that if we were to both suddenly stop earning one fine day, what would it be like.
Shruti: From your experience, how conscious are people in India about planning their finances?
Madhabi: I think people are becoming more and more conscious for three reasons. The first is buying a house. There is a distinct generational change. People understand and realise that buying a house and servicing a home loan is now like forced trading. That is an important decision and discipline that more and more young people are taking.
The second is in terms of planning for their children’s education. Now more than marriage its education because people are realising that finally their children will prosper if they have right education. They then realise that education is becoming more and more expensive and competitive. So they need to save for their children’s education and this cuts across all socio economic classes. People are saving with the clear objective of being able to afford an education for their children both boys and girls. It’s a wonderful thing that is happening.
The third trend is this whole thing of protection. People up till now have been somewhat confident that the social system will take care of the family in case something untoward happens. And therefore the emphasis on protection whether its accident insurance or health insurance or life insurance typically has not been very high. But I have started to see now an increasing trend of people becoming conscious that you can’t depend on your brothers and sisters and parents and aunts and uncles. They’ll support you or your family for a while. But not for very long. Therefore, the need for protection is an increasing thing.
Shruti: As a spouse, how easy or difficult it is for women to participate in financial decisions at home? What has been your experience?
Madhabi: In my house, my husband is delighted to leave all our financial planning decisions to me. And I keep complaining that I have to do that work. But I think this is not a difficult household and it’s an exception. I would say that by and large the decision maker is still the man in the family.
(when this interview was done and first published in October 2010, Madhabi was the MD CEO of ICICI Securities. A couple of years later, she quit and left for Singapore. She is now the CEO of Agora Advisories.)
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