Group discussions and personal interviews are integral part of selection process of any college. Different colleges may go in for some specialist selection process, but the fundamentals remain the same. They are always looking for, your ability to listen, work in team, grasp on current affairs, decision making prowess and logical & objective thinking. While, most of the attributes develop over a period of time, grasp on current happenings around you is something which is easiest to develop. At R2M, I will try to cover some topics, that I think will definitely feature in this years GD PI process. One such topic expected this year is the current financial crisis.

Subprime Crisis  : Fancy name for something which is not prime.

In US,  credit worthy customers are graded as prime. Prime customers are the ones who will pay back the loan without troubling the bank. Sub primes are the ones who might have history of defaults or are the ones with financial conditions unsuitable for paying back the loan. In ideal scenario, banks would not lend money to subprime customers, but when everything was going great guns, no body really cared and loans were showered on these sub prime customers.

These loans were used to buy properties and properties, in some cases, were over valued. But as I said, no one really cared and loans were given to almost everyone who applied for it. Property was used as a mortgage in this case. Because, the business was strong, mortgage banks decided to raise more cash. They bundled these mortgages into packages and sold them in the market to bakers who were sitting on pile of cash in a bullish market. Insurers got in the picture by insuring these packages against default and in the process collected premium. These packages and insurances were traded n number of times, with no one knowing what was exactly constituted these packages.

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All the actors in this mess were banking on a bullish stock market, economy and ever growing demand for housing. But, the demand for housing started to decline, leading to decline in valuations of the property. Payment defaults started and when banks tried to recover their money by selling of these properties in market, it twisted entire demand and supply equation of housing. This led to a sharp decline in housing prices and before one could realize, you had investment banks, insurance companies and mortgage banks collapsing all around because of massive exposure to these mortgage based securities.

The explanation above is just tip of the iceberg and I would suggest that you read further on topic. Following links can help you , if you wish dwell further,

Lessons from global crisis | Countering Crisis | 10 weeks of Financial turmoil | Financial crisis on Wikipedia | Financial times