Back to the Basics - Lessons from the Current Market Turmoil

 Back to the Basics

With banks collapsing one after another, it is reminiscent of 2008 when the last major financial crisis hit us. For some, the recent bank runs might be a shock while others might shrug it off as “history repeats itself”. But the truth, like with most things, is somewhere in between. So, its time to look back into the basics to find out what went wrong and what can we do differently? I have tried to explain it in simple terms below:

Cash is King

In personal finance, people are always reminded to keep emergency cash (6-12 months) before venturing out into investments. So, why are financial institutions, and more broadly every company, not mandated to do so? While there are complex rules for financial institutions to determine how much cash to set aside (be it Risk Weighted Assets or High-Quality Liquid Assets), maybe it’s time to rethink “Idle cash is waste of money” adage more broadly and see what is required realistically? Should we mandate every company comply with Liquidity ratios (Liquidity Coverage Ratio, Net Stable Funding Ratio) so that they have enough cash to pay off their liabilities within one year?

Liquidity > Assets

Net Worth = Total Assets – Total Liabilities. Herein lies the issue as wealth is often defined by assets and liquidity does not feature in this equation! As this article eloquently puts it while analyzing why businesses fail, “..lack of capital will destroy your business over time, lack of liquidity will destroy it in a heartbeat..”

After 2008, even as focus slowly shifted from Capital to Liquidity for regulators, companies continued to take on clients with high/ ultra-high net worth without deeply evaluating their liquidity position, often cutting corners or turning a blind eye when they requested extended payment timelines or a higher margin call, which are typical liquidity red flags. So, should the equation that needs to be evaluated during client onboarding really be Real Worth = Total Liquid Assets – Total Current Liabilities or based on the Liquidity Coverage Ratio (LCR)?

Banking = Trust

Its not a coincidence that “bank” is a synonym for “trust”. I will bank on you only if I trust you. And it’s a big IF in the financial system as the recent events have shown us. Trust, like credibility, is very fickle. It takes years to build but can very quickly collapse on the back of one misdemeanor. Funnily, people can lose trust/ credibility based on perception rather than facts, which makes it very intriguing and not quantifiable. When people lose trust in a financial institution, it would simply collapse, however long legacy it may have. Lehman Brothers was around for 161 years and went poof within one.

Knee Jerk Reactions

Governments, Regulators and Market Participants like banks are in a symbiotic relationship. Regulators need to broadly align with the government policies and keep market participants happy. Government and Regulators are not silly, they monitor the market participants very closely, and have enough data points to know roughly the strength and issues plaguing each one. But their main role is to maintain the harmony within their ecosystem. However, when things go south, governments are pressured by the common man to take action, who then press the regulators to take action against errant market participants, so it is natural for there to be some knee jerk reactions.

 

Liquidity Component of Counterparty Risk

Lack of liquidity leads to failure of a lot of businesses, not just financial institutions. Going forward, it would be more prudent for the regulators to formally embed Liquidity Risk into Counterparty Risk ratings so that the common man can get factual information about the liquidity risk profile of a firm, rather than relying on misinformation and media coverage in order to from a perception of liquidity risk leading to bank runs and failure of financial institutions.

 

Technology View

As we move into the next phase of tightening regulations, it is important for organizations to better understand the holistic picture of their company as well as those of their clients. As a technologist, I seek to understand where the challenges are and what can be done to enable the business.  

 

Challenges

Compliance, Risk and Reporting are seen as a cost and a chore in most organizations. This cost-center mindset needs to change as the impact of not doing this right is life-or-death for the firm. These functions, in turn, should position themselves as business enablers, rather than policemen. This is easier said than done, as large organizations are often complex and no single person knows everything. This is where technology can help to de-mystify the landscape, consolidate the metrics, and highlight discrepancies.

The “cost” perception also leads to most firms using off-the-shelf vendor solutions for these areas to minimize operational costs. The vendor solutions are typically aligned to regulatory mandates as interpreted by the vendor. These solutions cater for Financial, Capital or Liquidity regulations, but do not offer a read-across and are not flexible enough to cater for every client’s individual needs. While they may offer some great benefits, they should not be relied upon as a one-stop-shop for all internal & external stakeholders. Often, the cost of change from one vendor to another is prohibitive, so organizations that are heavily reliant on specific vendor solutions tend to get stuck after a while.

Internal application landscape in major financial institutions is often complex, with legacy applications, disparate systems and convoluted data flows making it difficult to form a consolidated view across different metrics. Data duplication and multiple points of adjustments make it difficult to assess accuracy. Large organizations typically operate in silos with domain specific SMEs being non-fungible and therefore being unaware/ unable to assess impact on other functional areas. Businesses grapple with semi-automated solutions and are overwhelmed with operational priorities. Regulators have been moving towards element-based reporting (e.g., XBRL standard), but not at a consistent pace across the globe.

 

Solution Approach

Loosely connected architecture through APIs or micro-services would offer the most flexibility and reduced cost of change. This could be a great way to connect internal applications that produce different metrics as well as externally to clients, regulators and vendor solutions. Legacy applications/ services can be re-designed in a cost-effective manner to offer service endpoints. This approach also abstracts underlying complexity and allows flexibility of the technology stack being used for each application.

Liquidity solutions should be designed for message/ event-based processing, rather than batch processing, to improve turnaround times for crisis situations. For example, each cashflow or adjustment should be separately propagated through the application components/ calculation layers, rather than re-processing the entire set of cashflows as a batch. Each liquidity risk event could potentially then trigger a corresponding counterparty risk re-assessment based on appropriate factors, which could be tuned through a neural network.

An utopian concept would be to use Blockchain to encapsulate a single version of every transaction front-to-back, with each function appending details and calculated metrics as it traverses through the trade lifecycle. This would avoid data duplication and reconciliations. However, this approach would probably only be meaningful to new digital banks that start from scratch as it is not viable to re-engineer legacy applications this way.

Data virtualization tools can be used to provide an overarching management dashboard with actionable insights from various metrics to the business. Vendor solutions can be great reporting tools that offer last-mile connectivity to the regulators (e.g., submission mechanisms, final adjustments, review/ signoff workflows).

Way Forward

While everyone has an opinion about current events, its important to learn the lessons from the past and present to apply to the future. Stay close to your clients and investors, understand their needs, act on their concerns, be prompt and clear in your communication and most importantly, emphasize the role of Liquidity in making or breaking companies!

 

அ...ஆஹா

அன்பின் அலையிலே ஆடல்

ஆடலின் ஆழத்திலே இன்பம்

இன்பத்தின் இதழிலே ஈரம்

ஈரத்தின் ஈறிலே உண்மை

உண்மையின் உருகலிலே ஊமை

ஊமையின் ஊக்கத்திலே எண்ணம்

எண்ணத்தின் எதிரொலியிலே ஏக்கம்

ஏக்கத்தின் ஏயலே ஐயம்

ஐயத்தின் ஐம்புறத்திலே ஒளி

ஒளியின் ஒய்யாரத்திலே ஓவியம்

ஓவியத்தின் ஓதுதலிலே ஔவியம்

ஔவியத்தின் ஔடத்திலே அன்பு!

The Beauty of a Virus

Beauty is in the eyes of the beholder
   And its perception is highly subjective
It can become a burden as heavy as a boulder
   If the subject is not strong enough to fit the adjective

But what if the beholder is Mother Nature?
   And she uses the smallest creature
To assert her safety and her future
   Leaving her children with a bit of a wound and suture..

Nature practices Christian Inquisition, to those who bite the hand that feeds them food
   It practices Buddhist middle path, striving to maintain her balance and re-construct
It practices Muslim Jihad, using the good in the evil to kill the evil in the good
   And it practices Hindu Dharma, sowing justice to those who have no qualms to destruct

Mother Nature had wailed in torture, drenching you in flood
   She had raged in her fury, engulfing your neighbourhood in fire
She now demands your attention by drawing your blood
   Now that her own health is extremely dire.

Virus is probably the only organism humans do not know how to kill
   And Mother Nature is using her little ones to enforce her will
It has put the humans in their concrete boxes, make them squirm around their girth
   To react and reflect on the damage they have done in their short span on earth!

Lesser bikes & cars on the roads naturally reduces pollution
   Lesser visits to restaurants means lesser food wastage, what an easy solution!
Forcing more time at home with precious ones, to rekindle love and respect
   That people need in abundance to restore what their Mother has lost, in retrospect.

Oh! Mother Nature's beautiful child that has no colour
   The cell-less creature with extraordinary valour
I hope you remain invincible through our lifetime
   To teach these reckless humans some manners, time-to-time!

Random Access
The search has just begun !!! (for a better world..)

Mankad - Stop It!

Mankad - No other word evokes so much emotion amongst the players and spectators in Cricket as this one word. So much that one such incident has made me sit up and conceptualize this article in the middle of the night! Here is my take on it.. 

The Incident
For those who don't know cricket, this article is not for you, thanks for coming!

For those who follow cricket, but wonder what the fuss is about, Mankad is basically when the bowler starts running in, realises the batsman at the non-striker's end is out of the crease, and runs him out. Pretty simple, huh?

The Emotion
It's wrong, it's ridiculous, it's against the spirit of cricket...so many negative emotions usually accompany just a mere mention of this word..

Let's break it down - For people to feel emotion, there needs to be a protagonist and an antagonist, with a stronger antagonist evoking a stronger reaction. People have realized this a long time ago. Hence parents tell us stories as kids with "Good" and Bad" characters and the best movies have strong villains. In Cricket, why not pitch the principal participants one against the other? They are duelling as part of the game anyway, why not frame them "Good" and "Bad" to create a story to hook the audience to your product (or 5 different products to be precise - T10, The Hundred, T20, ODI and Tests)?

Emotions associated with the Batsman - Anger, Frustration, Disappointment, Righteousness...

Emotions associated with the Bowler - Guilt, Shame, Ridicule, Contempt...

The Protagonist and The Antagonist
Another important concept to understand is the notion of certainty. The audience should not be confused who is the "Good" and who is the "Bad". Depending on the maturity level of the audience, they should either realise at the beginning of the story (like the young kid), within a short time (like in masala movies), or at the maximum before the climax (like in thrillers). Otherwise the audience will get confused and the story will be consigned to the realms of an "art movie". For all practical purposes, Cricket falls under the masala movie category that needs to appeal to a wide ranging audience. It is also the reason people don't really get Philosophy, which is closer to reality, depicts people as both good and bad, and deals with greyish concepts.

Let us understand the key players, pun intended. It is very obvious from the beginning of the story that the Batsman is the Good Boy and the Bowler is the Bad Boy. [While people with higher maturity levels will start arguing at this point, heck you are just poking your nose into my script..] Good Boy is playing the game within the rules, minding his own business, when the Bad Boy comes along, does something naughty to create trouble for everyone including the Good Boy and when the Good Boy starts crying and the Teacher comes along, says he is playing within the rules! How dare you, Bad Boy Bowler!

The Line
That brings us to the concept of The Line, which is central to the rule.. "The Line" that everyone in cricket 'agrees' should not be crossed became the butt of all jokes after Australia started liberally using it, stretching it, manipulating it and what not and other teams started creating their own versions, as any self-respecting nation would do.. This concept reached its height at the infamous Cape Town ball tampering scandal. "The Line" is synonymous with "The Spirit of Cricket" and is analogous to the "Good and Bad" in Philosophy. You think you understand it, but you don't..  Gotcha!

The Laws
And finally the rule itself, that MCC the self proclaimed guardian of cricket, sits around a board room to decide how the game should be played in the maidans of Kolkata. Smart children create their own rules to play in the backyard, but I think we have already established that most of the people watching cricket are not inherently smart, especially with their time, especially those young fathers watching test cricket...

Anyway, coming back to the story, the MCC Laws state thus -

Stumped - which is essentially the same thing at the other end

Run Out - which is essentially the same thing at both ends

No Ball - which is essentially the same thing if done by the bowler

Mankad - bad, bad, you naughty boy, look away! (the law technically covers this under run out)

As you can see, the above is certified to be confusing by lawyers and challenges every single grey matter in your brain, so let me simplify for you..

The Rule
As with anything in this world, there are written and unwritten rules that needs to be adhered to.

Written rules
The Good Batsman at the striker's end can cross the line to whatever extent he thinks he can get away with, without getting Stumped.

The Good Batsman can run anywhere he likes inside or outside the Pitch or the Line or even the Boundary, without getting Run Out. Once he gets run out, the focus shifts to Good Fielding or his persona changes to Lazy Runner (Mind you, he is still not a Bad Batsman!).

The Bad Bowler can cross the line before delivering the ball, in which case:
1. The batting team gets 1 more run
2. The batting team gets 1 more ball
3. The batsman does not lose his wicket
4. The batsman gets a free hit to make fun of the bowler and swing his arms without worrying about losing his wicket the next ball - *&€*&*$@!!
5. The bowler gets a black mark - No balls are specifically recorded and tracked for shaming him long after his career is done (Remember that guy Ishant Sharma?)

The Bad Bowler can do naughty things, like Mankad a batsman at the non striker's end, when the batsman is innocently walking/ running the length of the pitch without paying attention to the bowler. How dare you Bad Boy!

Unwritten Rules
The Good Batsman can evolve into a Smart Batsman if he moves outside the line before/ after the ball has been delivered using the crease, stands outside the line to counter the swing or back up by stealing a few steps at the non strikers' end before the bowler has bowled the ball - To the extent he is admonished by the team and the commentators if he doesn't do that and gets run out! Which idiot will not exploit the freedom to the fullest?

If a few Good Batsmen do not score many runs, it's a Bad Pitch that warrants ICC attention. How dare they tilt the scales towards the Bad Bowler! What messages are they giving to the millions of impressionable young kids watching the game? Do they want them to become Bad Bowlers when they grow up?

The Good Batsman must be begged multiple times to stay within the lines, and if he doesn't listen, a decent guy should simply overlook his inadvertent act. IF YOU DO NOT LISTEN TO ME, YOU WILL BECOME A BAD BOWLER!!

The Result
Over the last 120 years, The Gentleman's game has morphed into a Batsman's Game. I cannot think of any other sport that is so heavily weighted towards one set of players. [Chess is slightly more advantageous with White, but that's adjusted by alternating the colour through a tournament]. The rules have been heavily tweaked to favour the batsman, increasingly so over the last few years. Even the terminology has biased connotations now that I think of it. You score a boundary or a century, but lose a wicket. Let's make it more even to enjoy the game more.

Incidentally, it was the second instance for the batsman in question to be Mankad-ed, and he reacted with the same fury and claimed moral high ground as with the first one, so clearly some people never learn their lessons, don't believe they have done anything wrong or are used to complaining about Bad Boys in school. This also shows that the current rules are inadequate and puts the onus squarely and unfairly on the bowler for identifying and penalising the batsman breaking the rules. Imagine what would happen if the batsman is responsible for telling the bowler each time he has overstepped?

Broadly, in the age of cutting edge technology, why should fielding teams even 'appeal' for an OUT like LBW, caught, run out or Mankad?

The Solution
Dear ICC, there is a simple solution. If you can use technology to deduct 1 run for each foray outside the crease before the ball is bowled, it will eliminate the problem and take the focus off the bowler and umpires in such situations, while the batsman might also be happier off not losing his wicket. Second instance in the same match might be worth 2 runs etc.. but that's my mind wandering way past the current reality. Don't you have a Code of Ethics that this should be part of?

At the very least, hope you realize soon that a good movie requires a good antagonist...

As for Mankad, let us STOP villifying the Bowler for holding the Batsman accountable to the same extent that he is!

Random Access
The search has just begun!!!
(Used to be an opening batsman)

Bhutan Trip - Day 6 - Paro Tiger's Nest

My daughter woke up feeling better this morning, which was good news to start the hectic day involving a hike to the Tiger's Nest, probably the most recognized monastery in Bhutan. The breakfast was Indian continental fare, so we feasted on puri and potato curry, gobi bhajji, in addition to toast, corn flakes and by now my favorite drink black tea.

We went on a 20-min car ride to the base of the Taktsang Monastery (actual name of Tiger's Nest) trail. We were apprehensive about how the kids will react to the hike. My 6 year old daughter held up surprisingly well and walked up all the way up and down the 6 km trek (one way). My 3 year old son meanwhile didnt take well to the horse dung littered along the way and wanted me to carry him. We managed to overcome his initial resistance and convinced him to walk along, distracting him with some impromptu games whenever he started whining. We packed the essentials for a hike with kids, but that made the bag an additional burden. In hindsight, almost everything we packed was used, so no regrets on that front!

My wife and I alternated between the kids to keep them entertained, as they are not at an age where they can appreciate the natural beauty around them that is hard to see anywhere else in the world. We wound through the pine forests and with breathtaking views of the surrounding mountains in almost every turn. There are horses available to ferry people halfway up the trail where there is a big prayer wheel. The horses are well trained, but we decided to trek the whole way up, earning quite a few raised eyebrows and praises from passers by, and we were actually faster than a few of them. We stopped for an occasional drink from the water bottles the guide carried for us. Beyond the halfway point, there is a cafeteria, where we got some biscuits, tea and coffee. It took us about 2 hours to reach this midway point.

After the stop over there, I decided to buy an orange juice bottle, which was one of the best decisions I have ever made in life :) It was a master stroke for the second half of the trek, which is even harder with rugged steep terrain. The orange juice acted as the reward for my son to walk a further 100m each time. The trail was mostly rocky paths laid crudely in the mountain, and the mud mixed with water and dung can be quite slippery in places. About an hour and a quarter from the halfway point, we came to a viewpoint from where the Tiger's Nest seems almost within arm's reach. It offers a great photo op and this is where most of the photos in the internet come from. However, due to the geographics, we have to take a flight of steep stairs down to a 100m waterfall, before climbing up steeply a few hundred steps to the monastery.  Apparently, the trail was improved after a fire at the monastery in 1998. There were 2 deaths in this part of the trail in the recent past, prompting the authorities to install railings. Climbing down with kids on the narrow stairs, I cannot imagine how scary it would have been without railings, especially those with children.

It started drizzling just as we entered the Tiger's Nest. This was a monastery founded by the second Buddha, Padmasambhava, born on a lotus in Srilanka, who apparently flew here on a tiger from Tibet, hence the name. There is a cave inside the monastery where he had meditated for 2-3 months and laid out a prophecy foretelling the arrival of the unifier of Bhutan. There are 3 sanctums inside, including one of a Spoken Buddha. You cannot escape feeling the calmness and peacefulness inside, to the extent my daughter started meditating!

As we finished our rounds, the rain had intensified, as did the kids' hunger that is directly proportional to their crankiness. Rains so far in Bhutan have not been more than a mild inconvenience, as "intense" showers hardly make you drenched. It is just the start of the rainy season, so I could be wrong, but we decided to commence the trek downhill in the rain without an umbrella. My son started acting up and wanted me to carry him. A soothing doze of Milo didn't seem to calm him down, so thus began the trek back carrying him in my arms. It didn't take long for me to become exhausted at that altitude, even before I reached the top of the stairs near the viewpoint. Our guide Karma (a very common name in this country) didn't think twice to start carrying my son and walking. He has a son of the same age, so he definitely can relate to what I was going through I guess. He was so agile through the steep portions of the trail that I had trouble keeping up with him carrying my child! We ended up alternatively carrying my son all the way down. I was so thankful that he didn't insist on being carried on the way up! We stopped for lunch at the cafeteria for some decent vegetarian buffet (apparently, it is the same dishes here every day, but tourists don't have to worry about that point).

In all, it took about 4 hours up and 2.5 hours down including the midway stopovers, at the end of which I was sure about 3 things:

1) I was incredibly proud of my children for trekking on their own
2) There is definitely something divine about the place that you can only feel when you are there
3) DO NOT under-estimate the trek when you are travelling with kids.

Our guide told us an interesting story that every time somebody does something naughty in the vicinity of the monastery, it rains in the area. A part of me couldn't stop wondering how things would be if a similar thing applies to Chennai, maybe a hurricane every day!

After the exhausting hike, we did a quick tour of Paro downtown, with a stop at the vegetable market to pick up some local delights (like chilli and cheese of course) to try back home. A Bhutanese dinner with rasmalai rounded up what was an amazingly lovely trip of Bhutan that I would highly recommend everyone. When I think about the trip, some things are just meant to happen in life :)

Bhutan Trip - Day 5 - Thimphu/ Paro

The day started off on a not so great note, with my daughter and wife both down with food poisioning symptoms. The pharmacies nearby were closed, so we commenced our journey after a light breakfast.

First up, we went to the National Handicrafts emporium to browse through the work of the local artists. While generally costlier than what you would find in the town markets, we still spent a few tourist dollars on some items. Clothing items were too costly for our liking though.















Next, we went to the Painting School, where they teach the local students 13 artistic skills, and give them a stipend while they study that typically is for 6 years. There they are taught a wide range of skills, including drawing, painting, sculpting, stitching, designing etc, and the stipend accrued over the learning years can be used to start a small business upon graduation. This also acts as a means of keeping the at-risk youth engaged in meaningful work.

We made a hurried trip to the National Postal Museum, which we had to abort halfway through following another vomiting episode for my daughter. But, the highlight of the place is that they print customized stamps with your own photo.

Instead of the Folk Heritage centre that was on the agenda, our guide recommended that we visit a more general museum called Simply Bhutan. There, they had their own guides explain to us the Bhutanese way of life, from the way they build their houses without nails!, the tools they use at home both in the past and the present, how their houses look like and the life history of the Kings. We could also try our hands at archery (and no one could hit the target from 5 feet :P) and toss some coins into the Wishing Well. The whole experience was so engaging that my daughter forgot her illness for a while. My son didn't want to leave the grain grinder and taking coins out of the wishing well with a magnetic stick. Given the hour long journey to Paro, we decided to have lunch inside Simply Bhutan itself, where they treated us to a sumptuous spread along with a nice live dancing performance.

Tired from the morning sojourns, both the kids slept off on the journey to Paro. Paro is another lovely city in  beautiful valley, cut through by the river Pa Chu. The main town is effectively made up of two main parallel streets. However, there are a lot of houses and other attractions higher up the mountains surrounding the valley, which is mainly used for farming.

First, we went to the National Museum, situated in a building that used to be a watch tower for the Paro Dzong some distance below. On the way, we passed through a wooden bridge without any nails that can carry cars and trucks. The National Museum comprises of 4 galleries, including one with various masks used in the folklore as part of the Tsechu and their significance, one gallery on old paintings, one describing the flora and fauna of Bhutan, and the final one with statues. It was a compact but interesting museum. Unfortunately, they dont allow cameras inside.


Next up was the Rinpung Dzong below, which was no different to any of the other Dzongs visited earlier. Paro was one of the most powerful Penlops earlier, which is one of the only three Dzongs in the country to have a separate watch tower.

Afterwards, we went to the Kichu Lhakhang, the oldest temple in town built in the 7th century. It comprises of the old temple with a relatively newer annex built in 19th century by the Queen Mother. The old temple has a blessed orange tree which is believed to be blessed in the past and bears fruit all through the year, in an area where orange trees do not grow much at all due to the weather conditions. One of the Indian grannies visiting started praying to the tree in front of us and an orange fell at her feet, creating a bit of a flutter. Bhutanese are highly spiritual and superstitious, so everyone around the old lady got excited. They said the oranges from the tree dont fall down even in very high winds, so they felt that this was a divine blessing to the old lady. The lady in her 70s was a bit flustered by all the attention, saying she was just praying for the well being of all people.

We finally made our way to Dewachen Resort, in a fairly remote hillside outside central Paro, but with beautiful views of the snow capped mountains and a star filled nightsky. We had a light dinner with a busy day coming up, with probably the biggest test of our stamina.

Bhutan Trip - Day 4 - Gangtey/ Thimphu

Today started off with a bright red light waking me up. When I opened the door at 5.30am, it was the sun rising on top of the Himalayas! What a fabulous opening to the day. We have a long drive ahead of 6 hours back to Thimphu today, so we had a nice breakfast comprising of toast, cereals and su ju (butter tea, another local favorite) before heading out.

On the way, we saw more yaks and a snow covered Himalayan peak, incredibly for the first time in 4 days. We traced back our journey, winding through the mountains, passing Punakha before heading up the mountain to Dochla Pass. This day, the weather was more conducive and we could see a couple of mountains of the Higher Himalayas amidst the clouds. We enjoyed some cakes and pastries at the mountain top restaurant stop while taking in the views.

The 6 hour journey through winding mountain is not for the weak stomachs, as my daughter was nauseating the whole way before vomiting just prior to reaching Thimphu. The Bhutanese are so conscious of their environment that we were requested to bring back the vomit bag to the bus for us to dispose off in our Thimphu hotel! Salute! We went to a local restaurant for lunch. I realized from talking to the restaurant staff that they need to serve at least 6 dishes along with rice for it to be considered a meal and the wait for guests to waste a portion of it to feel that they are satisfied. But it was all too much for us after the long journey.

After lunch, we visited the Thimphu Dzong. While it is just like other Dzongs in architecture and functioning, what makes this Dzong unique was the fact that this contains the King's office and the most fabulous rose garden I have even seen! White, red, purple, yellow - you name it, there were big beautiful roses, all with its own scents, carefully tended to by the royal gardeners. There are roses everywhere outside and inside the Dzong.

Still floating in the aroma of its rose scents, we made our way to the Weekend Market, where farmers from all over the country come to sell their fresh produce, incense sticks and more. We grabbed a couple of bamboo baskets before heading across the river to the souvenir shops to do the touristy thing.

As our final program of the day, we went to the Archery Stadium to see the games, which is the national game here. Archers with traditional bamboo bows and more modern composite bows line up on different parts of the stadium and were vying for glory on either side. While the modern archers were more successful in finding the target, it is no mean feat aiming at a small Styrofoam board 140m away! After 30 mins or so, the kids got fidgety and we had to coax our guide to drop us at the hotel.