Photo credit: Harvard Alumni

TOI correspondent from Washington: Nirmal Narvekar, the Indian-American financier who spent nearly a decade reshaping the investment machinery behind Harvard University’s colossal $57 billion endowment, is preparing to retire, closing one of the most consequential – and controversial – chapters in modern university finance.Known on Wall Street and in Ivy League circles simply as “Narv,” Narvekar reportedly informed Harvard’s governing board that he would step down in 2027 after giving the university time to prepare a succession plan. His departure comes as Harvard’s $57 billion kitty — the largest university fund in the world, 3.5 times larger than India’s central education budget — sits at the centre of a political and financial storm triggered by the Trump administration’s cuts to federal funding.Narvekar’s career drew attention to the extraordinary scale of American university endowments — a concept still relatively underdeveloped in India. Harvard’s $57 billion fund dwarfs the financial resources of most countries’ entire university systems and education budgets. In the US, endowments function as perpetual investment engines. Universities spend only a fraction of annual returns while preserving principal for future generations.India historically developed a very different model. Most public universities depended overwhelmingly on government funding, while private institutions relied on tuition or philanthropic trusts rather than professionally managed investments. Only recently have institutions such as IIT Mumbai, IIT Delhi and Ashoka University begun seriously cultivating alumni-driven endowments. Even so, Indian endowments remain small by American standards and face restrictive investment rules that limit exposure to venture capital and alternative assets.Narvekar’s rise also reflected a broader ascent of Indians into elite American institutions. At one point, Harvard’s ecosystem featured several Indian-origin leaders, including Harvard Business School dean Nitin Nohria and Harvard College dean Rakesh Khurana. Yale’s endowment itself traces back symbolically to colonial India: the university was named after Elihu Yale, the East India Company governor of Madras who donated goods and money to the fledgling institution in the early 18th century.Narvekar arrived at Harvard in 2016 after running Columbia University’s endowment and inheriting what many viewed as a troubled investment empire. Harvard’s investment arm had become notorious for internal dysfunction, weak returns and leadership churn after suffering a devastating 27 percent loss during the 2008 financial crisis, forcing it to sell private-equity stakes at distressed prices. Over the next decade, he transformed the endowment’s structure, moving from managing about 40 per cent of its assets internally to outsourcing roughly 90 per cent to elite hedge funds, venture-capital firms and private-equity managers. He also embraced the so-called “Yale model” pioneered by legendary Yale investor David Swensen, who revolutionized university investing by shifting away from conventional stocks and bonds toward alternative assets like venture capital, hedge funds and real estate.Under Narvekar, Harvard doubled its exposure to private equity and sharply increased hedge-fund investments, gaining access to coveted investments in companies such as SpaceX and Stripe. The strategy eventually paid off. Harvard generated annualized returns of 8.1 per cent over the past three years, outperforming Yale and Princeton and placing it among the best-performing major university endowments in America, some of which are larger than education budgets of most countries.Yet Narvekar’s tenure also attracted fierce criticism, especially from conservative commentators and some Harvard insiders who argued he made the university dangerously dependent on illiquid assets such as hedge funds and private equity. Former Treasury Secretary and ex-Harvard president Lawrence Summers once remarked acidly though that if Harvard had merely matched the performance of its Ivy League peers, the university could have been roughly $20 billion richer. While many finance experts consider such critiques exaggerated, they nevertheless reflected broader anxieties about whether elite American universities have become too dependent on opaque Wall Street-style investing. Narvekar himself remained famously publicity-shy throughout his career. Born into an Indian family and educated at Haverford College before earning an MBA from Wharton School, he built his reputation not as a celebrity investor but as a disciplined institutional allocator.

To paraphrase Winston Churchill, investing in a business-development company can be like buying loans, wrapped in a fund, inside a stock.

Some investors may be tempted to jump into these publicly traded private-lending vehicles, which have been beset by concerns about the credit risks of borrowers like software companies. Many of these vehicles are currently available at deep discounts to their asset values, sometimes with high dividend yields. Be greedy when others are fearful, they say.

But buying shares of a BDC isn’t like buying a loan or a bond and just collecting the payments. And buying them cheaply doesn’t necessarily mean you will get more for your money. In fact, looking at those trading for a premium to their underlying net asset value could even make more sense right now.

For starters, many funds hold more than just loans. Their assets also often include equity stakes, sometimes even in other lending funds. These equity investments can be among the toughest for investors to assess.

On top of that, BDCs often earn various kinds of fee income through their lending. These can be collected when borrowers prepay their loans early by refinancing, or when a new loan is arranged. Fees can rise and fall with how active the lending market is. That is a separate risk from mere credit risk.

For example, Sixth Street Specialty Lending recently cited its outlook for a period of lower fees when discussing its decision to lower its quarterly base dividend. “Activity-based fee income can take several quarters to normalize following a market dislocation,” Sixth Street Specialty Lending Chief Executive Bo Stanley told analysts.

Other features of the kinds of loans that BDCs make also play into the ups-and-downs of their income. Some loan payments can be deferred, or what is known as a payment-in-kind. The idea is that allowing a borrower to preserve cash can help it through a rough patch.

But IOUs don’t bring in additional cash to the fund. So they can stress the ability of a BDC to keep paying its dividend, even if all its loans are technically current.

Returns on private-credit funds can be higher than what is available on traditional loans or other forms of corporate credit. But that higher return can also reflect the risks that differ from other debts. Researchers from Ohio State University argued in a recent study that private-debt funds’ returns should be measured with “an approach that adjusts for both equity and debt related risks.”

Marc Rowan, Apollo Global Management’s chief executive, has said that a more equity-like debt profile is what many investors were seeking out, particularly with BDCs. “This is not, people who have taken their Treasury portfolio or their investment-grade portfolio and gone into levered lending,” he told analysts on Apollo’s first-quarter call. “This is, people who have sold their equities to go into levered lending.”

Thinking of a BDC more like a stock may also suggest a seemingly odd path forward: Focusing on funds trading at a premium to their net asset value.

For a healthy fund to take advantage of the current anxious market by making higher-price loans, it may first need to raise more equity. That is much easier for a fund not already trading at a big discount.

Sixth Street Specialty Lending is one BDC trading at a premium to its net asset value, currently around 10%. The stock did fall after the firm cut its dividend, narrowing that premium.

But a dividend that is forgone for now isn’t necessarily gone forever. The Sixth Street BDC tracks so-called embedded fees it could earn from future activity. Some of funds’ activity fees also can act to protect them from loans being repaid early to be refinanced at tighter spreads. The ability to issue shares and lend at higher rates in the meantime also could boost future fee income.

To maintain a premium, though, investors will also have to continue believing a fund’s loans are worth what it says they are.

So even with all of the other things going on at BDCs, there is nothing enigmatic about their core mission: making good loans.

Write to Telis Demos at Telis.Demos@wsj.com

Principal secretary to Prime minister Narendra Modi, PK Mishra, on Saturday cautioned that financial systems should remain connected to the real economy and everyday lives of citizens, warning against risks arising from excessive speculation and instability in markets, ANI reported.Addressing the 20th convocation ceremony of the National Institute of Bank Management (NIBM) in Pune, Mishra said financial systems should not drift away from productive economic activity.“Financial systems cannot become disconnected from the real economy and lives of ordinary citizens. Excessive speculation, irresponsible lending, unsustainable leverage and instability in financial markets can create disruptions,” he said.At the same time, Mishra highlighted the role of India’s digital public infrastructure in transforming financial inclusion and expanding access to banking, digital payments and formal credit.“In India, this convergence of finance and technology has enabled the creation of one of the world’s most ambitious and inclusive digital public infrastructures,” Mishra said, ANI quoted him as saying.He said the JAM trinity — Jan Dhan accounts, Aadhaar and mobile connectivity — has significantly reshaped the reach of India’s banking ecosystem.“The Pradhan Mantri Jan Dhan Yojana brought crores of people, unbanked citizens, into the formal banking system. Aadhaar created a verifiable digital identity architecture at an unprecedented scale. Mobile connectivity provided the final layer of access,” Mishra said.Referring to India’s digital payment ecosystem, he highlighted the rapid growth of the Unified Payments Interface (UPI), describing it as one of the world’s largest real-time payment systems.“In less than a decade, India has built the world’s largest real-time digital payment ecosystem. From just 2 crore transactions in 2016-17, UPI now processes over 25,000 crore transactions annually,” he said.Mishra said one of the biggest achievements of the digital payments revolution was expanding access to formal finance across both rural and urban India.“A small tea seller in a village or a professional in a metropolitan city can today transact through the same interoperable digital payment infrastructure,” he said.He also noted that digital transaction records are increasingly creating formal credit histories for individuals who previously lacked collateral or banking relationships.“Every payment made, every purchase recorded, every transfer completed, leaves behind a data trail. And that data trail over time can become the basis for a credit history, for those who have no formal credit record, no collateral to offer, and no prior relationship with the bank,” Mishra said.Emphasising the broader objective of financial inclusion, he said access to financial services should ultimately translate into economic opportunities.“True inclusion must ultimately create productive economic opportunities,” he said.Highlighting the government’s Mudra scheme, Mishra said over 57 crore loans worth around Rs 40 lakh crore have been sanctioned to micro, small and medium enterprises, benefiting a large number of women and people from marginalised communities.“Behind every Mudra loan lies a human story, a tailoring business expanded, a small workshop modernised, a transport vehicle purchased, a family enterprise stabilised, and a first business opportunity created,” he said.

The government on Friday raised fuel prices in the country, in an effort to soften the blow on oil marketing companies, as global crude soared beyond $100 while retail prices remained unaltered. Now, as petrol and diesel are Rs 3 costlier, the key question is: to what extent will the price hike help?While the outlook may have appeared slightly optimistic at first glance, the issue is no longer limited to crude oil prices, as a falling rupee has also entered the field. The main concern is what happens when a weakening currency and rising fuel costs come together, where even a small change can erase the gains from recent policy measures.According to SBI Research’s Ecowrap, rupee is now at a level where further depreciation could neutralise the benefit of the recent Rs 3 per litre hike in petrol and diesel prices. The report highlighted, “even an additional depreciation of Rs 2 in the Rupee raises the effective crude oil price, pushing the landed import cost, which fully offsets the gains from the current fuel price hike.”It added that the recent hike in fuel prices was introduced primarily to ease the financial strain on Oil Marketing Companies (OMCs), which continue to suffer from high crude oil costs while retail fuel prices have remained unchanged.According to the report, “OMCs’ under recoveries on sales of petrol and diesel are soaring because of unchanged retail prices,” adding that these companies are “incurring losses to the tune of Rs 1000 crore per day, which amounts to around Rs 3.6 lakh crore a year.”According to the bank, Rs 3 per litre revision in fuel prices would provide relief worth about Rs 52,700 crore to OMCs, but this would cover only around 15% of their projected FY27 losses.The report also highlighted the sensitivity of this relief to currency movements, noting that “Rupee has already approached a critical depreciation threshold, beyond which further currency weakness could substantially erode the intended benefits of domestic fuel price revisions.”Consider the math: assuming an FY27 exchange rate of Rs 94 per US dollar and crude oil at $106 per barrel, SBI Research has estimated the landed crude cost at nearly Rs 9,964 per barrel. It said the Rs 3 per litre hike gives OMCs a benefit of about Rs 477 per barrel, but even a Rs 2 fall in the rupee would push up import costs and wipe out much of this gain.

SBI called for broader macroeconomic preparedness, stating, “There is a need for a comprehensive policy on balance of payments.”On global oil markets, SBI Research pointed to continued volatility, citing disruptions in the Strait of Hormuz linked to the ongoing Middle East crisis. It said, “As per the latest IEA report, crude will continue to remain under pressure owing to the depleting inventories.”It further noted that shipments through the Strait of Hormuz have declined sharply in recent months, affecting both crude oil and LNG flows.On inflation, the report estimated that the fuel price revision may push Consumer Price Index (CPI) inflation higher by around 15–20 basis points during May–June 2026, while also revising its FY27 inflation projection to 4.7%.