Cause and Effect Paper for School

In the past three months Ruth Disselkoen, has cut her breaks short to complete her work, complains of being tired, and twice a month requires overtime hours, which causes the company an additional $200. 00 a month; on the other hand, Frank Daley, has complained about the her poor work quality. Whereas, Jack Snyder seems to have little work to do, he arrive late twice a week, he takes extra breaks; although his work is always professionally completed. Even though, nothing has changed in their personal lives.I would like to have interpersonal meeting with both Jack Snyder, and Ruth Disselkoen to investigate the root of the problem, so I can determine my next course of action, and if I have the authority to implement any of the changes necessary that will eventually stop costing the company and extra $200. 00 monthly. Since Jessica Hilo’s is out on a Leave of Absence and her work assignments have been split up amongst Jack and Ruth. Jessica Hilo is one of Jack Snyder’s bos ses so; it is only fair that Jack is responsible for Jessica Hilo’s work load, and not Ruth Disselkoen.I have noticed that this entire problem began three months ago when Jessica Hilo’s took a Leave of absence and some of her work load was reassigned to Ruth Disselkoen. I believe that Jessica Hilo’s, work is causing Ruth to cut her breaks short and work overtime twice a month. Therefore, I will discuss this with the Human Resources Director, Liz, Jakowski, and I will present the idea of giving Jessica Hilo’s, entire work load to Jack Snyder, and this course of action will eliminate the monetary expenditure of $200. 00 that the company is paying monthly for overtime. I will wait for Liz Jakowski, response to determine my next course of action.

Case analysis of Barsetshire County Council (BCC) Essay

The case analysis of Barsetshire County Council (BCC) implies the need for the organizational and managerial change that it felt necessary and the aftermath of implementing the changes. As a public service organization the BCC felt that power should be devolved to the middle management and the change of organizational structure is necessary to meet the uprising demand of services by the locality and to effectively run the activities through out various departments. According to Weber’s analysis of bureaucracy, it is an omnipresent form of administration in modern society, where power and decision making authorities are held by the higher level of the organization. Development in the early twentieth century in scientific management associated with names such as Taylor, Urwick and Fayol, gave great support for bureaucratic systems of organization for their efficiency, stability and the elimination of waste. The larger the organization, the greater the degree of bureaucratization (Dawson). BCC, one of the larger county councils, formed as a bureaucratic structured public service organization, having a large number of employees over 28,000. The new CE of the BCC realized that power should be devolved to the middle management. He felt that the change in organization and management was necessary to ensure effective strategy implementation. According Nadler and Tushman(1990) the executive is a critical actor in the drama of organizational change. As being a bureaucratic organization, the BCC teamed up with new management view to turn it to a flexible, organic organization, which is more adaptable to new and unstable conditions (Burns, 1963). Now days it is obvious that, the very ability of an organization to survive will depend on its ability to master the process of change (Iverson 1996; kanter et al. 1992; Zimmerman 1991) .The situations that triggered this organizational change in BCC were referred as, though the organization was run by high professional philosophy, the business was not aimed at customer need and demands. But which is vital as a public service organization. Shortage of resources was also a norm in BCC and it was under tighter control of upper level management. And these all resulted from the narrow span of control, too many hierarchical steps of management and tightly prescribed role. It is necessary to explain here the term ‘Devolved management’. It means empowering the management team in an organization in decision making and taking initiatives as necessary and required for the operation of the organization. The situation is opposed to mechanistic systems; where decision making authority flows down from top to bottom manner, but more towards organismic system, which refers to more adaptive and lateral in environment (Burns, 1963). Thus the necessity of changes in the BCC was widely disseminated to the middle mangers and the key factors of the changes were widely emphasized. These key factors of organizational changes will be described shortly. Strategic management is the set of decisions and actions used to formulate and implement strategies that will provide a competitive superior fit between the organization and its environment as to achieve organizational goals (Prescot, 1986). Before initiating an organizational change, certain strategic planning must be done to ensure the proper functionality of the changed management. The essence of formulating strategy is choosing how the organization will be different (Porter, 1996). A well defined strategy helps the organization to achieve core competency, synergy and value creation. A devolved management, as in the case of BCC, means giving more power to the middle level management, who are in charge for implementing overall strategies and policies defined by top managers. So, top level management’s responsibility is to define a clear strategy and lead the mid level mangers toward it. As a public organization like BCC, customer orientation is a vital issue. So strategy of the changed organization should comply with this. Leadership is reciprocal, occurring among people (Kouzes and posner, 1990) leadership is people activity, distinct from administrative paper shuffling or problem-solving activity. It is dynamic and involves the use of power. The goal of senior executives in many corporations today is not simply to wield power bit also to give it away to people who can get jobs done (Stewart, 1989). A devolved management enables the managers to become more focused about the goals and being empowered to take initiative they can practice the leadership role in doing things like entrepreneurship, risk taking and proactive. Which enable the organization to be more effective and help the employees to be customer centered. The need for organizational change in BCC emphasized this by devolving power to the middle management. An effective work force is an asset of an organization. The employee in an organization, which is flatter and practices Human relations approach, performs better than others. Training and development of employees represent a planned effort by an organization to facilitate employees learning of job related behaviors (Keys and Wolfe, 1988). Also performance related rewards encourage employees to increase their effectiveness. BCC initiated performance related pay for white collar staff as the requirement of its organization change. As it is assumed that, they (white collar staffs) have a purely calculative involvement with the organization; so remunerative power is used to obtain their compliance (Etzioni, 1975). Also enriched jobs improve employee motivation and satisfaction and the company gets benefited from higher long-term productivity, reduced costs and happier employees (Dalton, 1998). An organization’s structure is defined by how tasks are formally divided, grouped, and coordinated change agents can alter one or more of the key elements in an organization’s design. For an instance, departmental responsibilities can be removed, and span of control widened to make the organization flatter and less bureaucratic. In decentralized organization, having less hierarchy levels, decision authority is pushed downward to lower organization levels. Employees have their right to make decisions and to take initiative, which is the vital part of a devolved management. The organizations are now a days turning to Horizontal organizations. The vertical approach such as traditional functional structure does not work nay more, as tend is toward breaking down barriers between departments, and many companies are moving toward horizontal structure based on work processes rather than departmental functions (Hurwitz, 1996) Organizational culture refers to system of shared meaning held by members that distinguishes a organization from others (Becker, 1982). It can act as a barrier to change as well. But the actions of top management have a major impact on the organizational culture (Hambrick and mason, 1984). In a flat dynamic organization, employees have their own say in decision making, initiate change and realize their accountability in their jobs, which are rare in bureaucratic hierarchical organization. In BCC, the top management identified that a new culture replacing the old one was necessary to initiate new devolved management. Now it is needed to evaluate whether the BCC was successful in implementing the changes. In a devolved management decision making power of the middle managers is more emphasized. Delegation, which means transfer of authority and responsibility to positions below the hierarchy also arise (Leana, 1986) in devolved management. It frees middle manger from seeking authority from the top level management whenever any situation needs instant attention. It also increases creativity and perception. As a result of devolution of management in BCC, the management of the Social service Department (SSD), the line mangers were given more power and control over decision making. That raised more accountability among the managers which enable the subordinates to reporting and justifying task outcomes to those above them in the chain of command (O’loughlin, 1990). In devolved management, the need for self esteem (Maslow, 1943) arises in empowered mangers. At also makes them running toward goal. Intentions to work toward a goal are a major source of work motivation (Locke, 1968). The performance of the managers ultimately increases. But too much accountability hampers the smooth functionalities of the managers. It creates hesitation and more complexity. It just like ‘Goal Blocking’- occurs a when person’s motivation has been aroused but attainment of goal is thwarted in some way. To maintain service, the managers need resources. The empowered management can use the allotted resource successfully despite scarcity. The mangers have more control and accountability in providing services as a result. In BSS after devolution, management properly focused on the needs of the client instead of resource led services customer oriented business was emphasized. Technology- driven workplace in which ideas, information, and relationships are becoming important, is the most dramatic element of organizational change. In BCC the introduction of computerized financial management enabled the mangers to increase decision making responsibilities in budgeting. But problem arises when top level management still have control on resource allocation after giving away the power to the middle level management to decide in using the recourses. It limits functionality. If mangers are given limited resources but are expected to improve work performance, it is a dilemma for the managers as the middle mangers of BCC faced after devolution. Moreover, the newly devolved management system had a good affect on specialists support staff of finance, personnel, and information departments. They were widely dispersed having their head of profession at the center to ensure proximity with the service and business needs instead of being centralized. This was a key feature of organizational change in BCC, ‘being close to the customers’. But some felt it as a predicament that, the communication gap was large as the specialist staffs were controlled centrally in pre-devolution period. So, still there remained some structural barriers in specialists’ service. The managers didn’t understand the activities of the specialist support staffs. Actually, though devolution evolved in SSD, the department of specialists was not ‘devolved’ fully. The devolution of management in BCC, specially in SSD (Social Service Department) was introduced both with the emergence of positive and negative aspects of it as every thing has those two sides naturally. But the balance on the positive side was far heavier than that of negative side. All middle mangers were happy (except few) with the new devolved management system, which empowered them to take decisions regarding their fields and to take initiative with out asking permission of higher authority. The accountability and the clarity aroused with in the employees. The efficiency of mangers to use the scarce resources according to the need and demand of consumers also increased. That means the mangers were becoming more responsive and cautious about the customers. The overall situation was improved in BCC after the devolution of power. But as the ‘dark side of the moon’, the devolved management faced some negative waves of thoughts from some mangers of BCC. They felt that, though they had been given additional responsibilities and decision making power, they had not been given the full authority. Some occurrences were opposed to the initiatives as the CE announced those to be needed for the organizational change and devolution of power to the middle management. Finally, it can be said that; the initiative and implementation of devolved management and organizational change for effective implementation of strategic planning in Barsetshire County Council (BCC), were totally appropriate as being public service organization. But in reality, fully devolved management cannot be possible for some factors. If the middle mangers are biased, or they are not totally focused on the goal, the devolved power they practice does not make any good to the organization. On the other hand if upper level management holds potential control over some major areas such as resource allocation of organization after devolution, when middle managers are expected to make decisions, major conflicts may likely arise between management team. Thus this will lead to frustration and job dissatisfaction among middle mangers. In a public service organization like BCC, consumer orientation is vital. So, upper level management and the middle level management’s dedication will be concentrated on achieving customer’s contention by providing required service. Even there is hoax about empowering mangers. Many empowerment initiatives fail to deliver their expected advantages and that employees can end up less committed than before (Cunningham and Hyman, 1999). Also empowerment may turn to disillusionment- because managers tend to assume that more interesting work is sufficient rewarding, they find themselves working much harder for the same remuneration (Cunningham et al, 1996). The introduction of Organizational development is then necessary for effective organizational change, which is a collection of planned- change interventions built on humanistic- democratic values that seek to improve organizational effectiveness and employee well-being (Porras and Robertson, 1992). Now a days more and more organization are turning to devolved management, the top level managers believe , this would make the subordinates more goal oriented and the barriers and conflicts between management level would be removed, thus the organization could turn into a learning organization. Barsettshire county counsil was not an exception to this. References: * Micheal E. Portar (1996), â€Å"What is Strategy?† Harvard Business Review, 61-68. * Michel G. O’Loughlin (1990), â€Å"What is Bureaucratic Accountability and How can we measure it?† Administration and society 22, Vol(3), 275-302. * Carrie R. Leana (1986), â€Å"Predictors and Consequences of Delegation†, Academy of management journal, Vol(29), 754-774. * Alan Hurwitz (1996), â€Å"Organizational structure for the new world order†, Business horizons (may-June), 5-14. * Bernard Keys and joseph Wolfe (1988), â€Å"Management Education and Development: current issues and emerging trends,† Journal of management, Vol(14), 205-229. * James M. Kouzes and Barry Z. posner (1990), â€Å"The credibility factor: what followers expect from their leaders†, Management review, January, 29-33. * Thomas A. Stewart (1989), â€Å"New ways to exercise power†, Fortune, November 6, 52-64. * Glenn L. Dalton (1998), â€Å"The collective stretch†, Management review, December, 54-59. * D.C Hambrick and P.A. Mason (1984), â€Å"Upper Echelons: The organization as a reflection of its top managers,† Academy of Management Review, April, 193-206. * Cunningham et al (1996), â€Å"Empowerment: The power to do what?†, Industrial Relations journal, vol(27), 143-54. Cunningham and Hayman (1999), â€Å"The poverty of empowerment? A critical case study†, Personal review , Vol (28), 192-207 Bibliography * Rollinson D. and Broadfield A.. (2002), â€Å"Organizational Behaviour and Analysis â€Å", 2nd edition, Pearson education. * Robbins S.(2001), â€Å"Organizational Behaviour†, prentice Hall: New Jersey. * Daft R. (2003), â€Å"Management†, 6th edition, , Thomson. * Soffer C.(1978), â€Å"Organizations in theory and practice†, Heinnman : London. * Dawson S.(1996), â€Å"Analyzing organizations†, 3rd edition, Macmillan.

Chicago Loangitudinal Study Essay Example | Topics and Well Written Essays - 500 words

Chicago Loangitudinal Study - Essay Example The study can be termed as a prospective cohort study for the simple reason that study was followed up over a period of time for the children with the similar demographic characteristics. Their educational and psychosocial outcomes were observed with input of certain programs and policy intervention schemes. The study did inform that higher participation in the child-Parent center program resulted into higher level of school achievement, higher parent participation, and lower rates of school dropout and so on. Programs and policy interventions were used as manipulative or independent variables to measure its impact on behavior and psychosocial outcome along with children’s increasing capacity to lessen their learning difficulties. Family, school-related many individual factors were used to measure child’s development, their social behavior patterns along with attitudinal differences starting from the early days and then throughout the school-age years. Such intensive study was never conducted ever before in the history. A great deal of information was collected and examined through class room adjustment, parent participation, special education placement. Educational expectations of all concerned especially students and parents were also understood with altered programs and policy interventions as an independent variable. All children under study were born in 1980 and belonged to the same community and geographical location. So in a sense it was not only a longitudinal but a detailed cohort study giving a lot of insight on their response characteristics. Data from table 1 clearly reveals that impact of government intervention programs on children’s educational achievement was considerable, when sample characteristics of ‘CPC Preschool’ and ‘No CPC Preschool groups’ are compared in reference to the original and age 14 samples. ‘CPC Preschool’ children outsmarts ‘No CPC Preschool’ group in development

Everyday Use (style of dee) Essay Example | Topics and Well Written Essays - 500 words - 1

Everyday Use (style of dee) - Essay Example This is the reason why she does not want her friends to come to her home. Dee is hard to satisfy because of her very high standards, so not many people can get along with her comfortably. People tend to be irritated from her attitude. Even her first boyfriend is driven away from Dee because of her hard-to-satisfy nature. Dee always picks out faults in him, so he breaks his relationship with Dee and instead, marries a cheap city girl. Although Dee is hurt by the distortion of her relationship with her first boyfriend, yet she maintains the image of a powerful girl and does not share her emotions with anyone. This essentially speaks of the fact that she is a very strong person who can fight with things single-handedly. Dee is the kind of person who would stand for women’s empowerment in the society. Her arrogance irritates her family, but the fact is that her arrogance is driven by her love and possessiveness for her family. All her efforts are directed at transforming her typical and traditional family into a more modern and enlightened family. Dee is confident that it is right to progress. Being ahead of her time, she makes every possible effort to make her family move along with her. However, her family’s lack of realization makes her an outcast in her own family. College means something very special to Dee. It provides her with a way out of the regular old-fashioned lifestyle and integrate into a totally different world. She realizes that the world is advancing really fast, and to keep pace with it, she has to endorse the new culture and the values associated with it. Dee says to Maggie, â€Å"its really a new day for us. But from the way you and Mama still live youd never know it† (Walker 130). However, there were some objectionable aspects of Dee’s personality. For example, rather than understanding her family values and history, Dee believes whatever people tell her. Instead of searching for the truth, she is keen to

Writer's Choice Article Example | Topics and Well Written Essays - 500 words

Writer's Choice - Article Example The journal conducted some surveys, as well as interviews and the findings, proved that the Southwestern Region of the United States has been tracking modifications in their programs as well as assessment focus. States in the Southwestern Region are now changing from functional contents to academic contents (Sato, 2008). The journal focuses on the year 2007 and how the five states of the Southwestern region of the United States institutes these alternative programs. The journal also finds that, due to the wide range of student physical disabilities and student cognitive behaviors, a one-size alternative assessment will not fit everybody. In examining the challenges of planning and implementing alternate assessments across these five states, the researchers developed six study queries. These queries include: the challenges that are encountered during the execution of the fresh policies and practices. The second query was how the alternate assessments in the five states looked liked before the research. The researchers explored the different training methods that were offered to educators of alternate assessments. They also examined how the collected results are applied at the student, school, and district as well as at the state level. The researchers also examined to what level the state alternate assessments captured similar skills as states examinations specified for the general student populace. Finally, they examined the technical issues that states were encountering in developing plus implementing valid and reliable alternate assessments (Sato, 2008). I personally feel that the research was well planned. This is because alternate assessments for learners with cognitive disabilities are fairly new in many states, but the research takes an approach that is different from other programs. Other researches do not include every student with different

Read Case 7.2 titled Poverty and Pollution, prior to starting this Essay

Read Case 7.2 titled Poverty and Pollution, prior to starting this assignment - Essay Example In many third world countries, large volumes of the population live in poverty conditions due to lack of quality infrastructure, lack of taxation revenues for government improvements, or even warring regimes attempting to seize power as a primary goal that depletes national resources. This is why businesses that conduct their operations in poor nations disregard pollution control standards: Because they can easily get away with these actions with little to no consequence. Thoroughly assessed the connections between economic progress and development, on the one hand, and pollution controls and environmental protection, on the other. Thoroughly suggested the reasons a business may conduct operations in a third world country and disregard any standards of pollution control. Many third world nations, since government is unable to stimulate economic growth internally, rely on foreign direct investment as a means of trying to stimulate the national economy. Many will provide taxation incen tives or even removal of tariffs as a means to foster foreign investment, which provides an ample incentive to move operations from developed nations to the third world country. For example, in Yemen, there are viable opportunities for water-based transport industry leaders to invest in the nation. The Yemen currency is substantially below that of major nations such as the United States, the United Kingdom and Saudi Arabia, therefore companies attempt to exploit these opportunities for substantial profitability when local investments require very little start-up or asset procurement capital. Between 2009 and 2011, transport and shipping projects were estimated to be valued at $9 billion, with much of this foreign investment being recruited by the country’s Council of Ministers (United Nations, 2009). Using Yemen as the relevant example, companies will establish operations in this country due to the political problems currently plaguing the nation. Powerful militant groups in this country took over the majority of government oversight, forcing the nation to consider a complete rewrite of its constitution. Instability in this country politically defies opportunities for the business to devote resources to attempt to impose sanctions on businesses that pollute, therefore it becomes simplistic business practice to simply dump its unwanted waste in the country and in its waters without concern of local government backlash, fines, or complete dejection from the nation. Yemen is a member of the United Nations, however the UN only maintains jurisdiction in partnership with the legal systems abiding in the country. By the time nations such as Yemen with difficult political environments make legally-supported appeals to the UN to curb pollution by foreign companies, the ensuing process is so elongated that the business is able to exploit foreign nation resources and simply move to another, less developed third world country. Are the aforementioned practices of bu siness polluting in other nations due to lack of authority over government or UN-supported legalities ethical? Any reasonable individual that believes in corporate social responsibility and many global standards of human rights would absolutely indicate that this is highly unethical. However, at the same time, a person considering the ethical responsibility of foreign businesses must consider the theory of ethical relativism before making a determination. Those in global society that are strong supporters of ethical relati

Descriptive Statistics Case Study Example | Topics and Well Written Essays - 500 words

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Critical Reflection Journal.School to Prison Pipeline Essay

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Alcohol Use in Micronesia Essay Example | Topics and Well Written Essays - 750 words

Alcohol Use in Micronesia - Essay Example Today, alcoholism is a major issue that calls for international attention and input to try and manage. This paper evaluates the culture Truk, Marshallese, and Palau, and compares them to identify distinct differences and similarities to generate a hypothesis. Prior to the Japanese administration, chewing of betel nut was common, until the Japanese introduced alcohol and it is now a part of their traditional and modern day occasions except house parties intended for financial exchanges (Nero 1990). The Palaun’s today are associated with high drinking capacities. This drunkenness is linked to increased wife-beating which is today more common than ever for this culture. Abuse origin is thought to be the administration of the Japanese who introduced corporal punishment as a mode of discipline and for violence against women by their husbands, and increased drunkenness amongst Palauan’s men resulting to high Palauan aggressiveness. Chuuk culture is located in Moen Island where alcohol abuse is a common practice that originated from United States immigrants, embedded into Trukese cultural system, and perpetrated by their cultural attitudes and values (Mac 1979). Additionally, Trukese marriage stability occurs with age where men become less violent and are only alcoholics unlike youngsters who drink and engage in fights. Trukese are alcohol abusers identified through destructive conduct and aggressiveness and fights. These drunkards are mostly identified as high school dropouts, and unemployed wage workers (Mac 1979: 134). The Marshallese people are located in Moen islands and originally consumed alcohol in during transition of young males to manhood. However, bottled alcohol or liquor was introduced to them by Americans resulting to changes in youth ethos to take charge of their own affairs and not blindly following the community elders (Carucci 1949: 147). Alcoholism amongst Marshallese unmarried

Category Analysis of Sports and Energy Drinks In Hong Kong Essay Example for Free

Category Analysis of Sports and Energy Drinks In Hong Kong Essay Introduction Our company, Otsuka Pharmaceutical Co. , Ltd, is planning for a product strategy to its product: Pocari Sweat. Pocari Sweat is a grapefruit-tasting, non-carbonated sweet beverage and is advertised as an â€Å"ion supply drink†. It is designed to increase endurance, replace electrolyte loss or prevent dehydration when exercising for long periods of time. Pocari Sweat is well-recognized by the local people, especially to the athletes. Category Attractiveness Analysis Category Factor The product category we defined is the Sports and Energy Drinks. We gained the first mover advantage when the product was launched at 1980, which we are the market leader which has a off-trade volume of brand share of 43. 8% in 2012 (see Appendix Table 6). The threat of new entrants in this category is low due to the intensive competition, and there is low pressure from substitutes as sports and energy drinks are specialized products. The bargaining power of suppliers is low while the bargaining power of buyers is high. The competition in current market is highly intensive. Details can be referred to the analysis on Category Factors on Attractiveness in Appendix. Overall, this category is still attractive. Aggregate Factor The product life cycle of Sports and Energy Drinks is more likely in mature stage. From the historical figures of whole beverage market, the market size of Sports and Energy Drinks is relatively small. The market growth of off-trade sales volume of this category is increasing constantly by 5. 4% from 2007 to 2012. It will grow constantly in the future by 5% of each year. Since Sports and Energy Drinks are daily commodities for those people after exercising, the sales cyclicity and seasonality is low, as well as the profit variability. Profit level of the market is high. Overall, this category is attractive. Environmental Factor Due to the rise of childhood obesity and the increasing number of cases of cancer, diabetes and heart disease, there are an increasing number of initiatives by both government and non-governmental organizations to promote healthy living and a more balanced lifestyle. The consumer awareness of doing exercises increases and consumers become more willing to engage in sports to keep fit and relieve the stress of their work. Also, there are an increasing number of participations in sports event. Each year, the number of registration of Standard Chartered Hong Kong Marathon increases gradually. Other sports events such as Nike Night Run, New World Harbour Race, and charity runs are also well supported by the local residents. These led to increased consumer awareness of the benefits of sports drinks, result in the increase of purchasing of sports drinks. Competitor Analysis Level of competitions Level of competitions can be divided into Sports Drinks, Sports and Energy Drinks, Beverages and Food. Since the sales volume of Sports Drinks is contributed to 80% (Appendix Table 1) of sales in the Sports and Energy Drinks category, analysis of competition would be focus on the Sports Drinks only. Based on the perceptual map analysis, the closest competitor to Pocari Sweat is Aquarius. Both Pocari Sweat and Aquarius are ion supply drinks with a grapefruit-liked flavour. Aquarius tastes a bit lighter than Pocari Sweat. For Lucozade and Gatorade, the brand images of both are more professional for athletes, with stronger taste in different flavours. Aquarius would be the main competitor for further analysis. In terms of the brand shares of Sports Drinks, Lucozade would also be a main competitor of Pocari Sweat. GlaxoSmithKline, the company of the brand Lucozade, stated that strengthening core business is their strategic concern on 2012. The company objective is having growth in the Sports Drinks market, and they set up a new innovation centre in mainland China. Aquarius, which is a sport drink launched in 2011 by Coca-Cola Company, is highly involved in many race events in Hong Kong. Although there are no Aquarius advertisements in Hong Kong, you can find Aquarius as sponsored sports drinks in local events such as Standard Chartered Marathon Hong Kong. Maintaining growth in the market is also the main objective of Coca-Cola Company in Aquarius. Although Aquarius is a new entrant to the market since 2011, it has about 5% of volume brand shares in the market in two years. With the financial background and the brand image of Coca-Cola Company, it raises the brand awareness of Aquarius by keep involving in the public event, in order to attract the sportsmen to buy their products. Aquarius would be the main competitor in the field of isotonic rehydration sports drink. Conclusion. The Sports and Energy Drinks market is attractive, as the market size is constantly growing, the threat of new entrant is low, the pressure from substitutes is low and the profit variability is low. With the continuous sports and healthy lifestyle promotions by both government and non-government organizations, they will boost up the sales of Sports and Energy Drinks. In the Sports Drinks market, Pocari Sweat is the market leader with 43. 8% of brand shares of total in volume. People prefer buying Pocari Sweat for recovery after exercising comparing with other related products. Aquarius is the closest competitor related to our product. Still, the company has to maintain the brand loyalty and attract more customers by marketing and advertising. Recommendation The company can put more resources on advertising and also target a new market segment: manual labours. Manual labours need to replace electrolyte loss and prevent dehydration while working, especially in the hot seasons. Pocari Sweat would be the best choice for them. Also, the company can invest more on RD to develop a new product which is best suited for the new market segment. Words counted: 934. Reference Euromonitor International 2013, Sports and Energy Drinks in Hong Kong, China, Passport. Euromonitor International 2013, Bottled Water in Hong Kong, China, Passport. Euromonitor International 2013, Carbonates in Hong Kong, China, Passport. Euromonitor International 2012, Consumer Lifestyles in Hong Kong, China, Passport Annual Report 2012, Otsuka Holdings Co. , Ltd. Annual Report 2012, GlaxoSmithKline plc. Annual Report 2012, Swire Pacific Ltd. Supermarket Price Watch. [Online]. Consumer Council. Available: http://www3. consumer. org. hk/pricewatch/supermarket/index. php? filter1=027filter2=006lang=en Erik, P. Sports drinks vs. energy drinks. [Online]. Available: http://www. examiner. com/article/sports-drinks-vs-energy-drinks-the-good-the-bad-and-the-ugly Appendix Category Factors on Attractiveness Reasons Attractiveness Low Threat of new entrants Current market is competed intensively, and the new entrants are hardly survived in this environment. The capital requirement is high as special formula for sports drinks needs to be developed. High High Bargaining Power of buyers The major buyers are supermarkets (61. 4%) and convenience stores (35%), which they have a higher bargaining power when purchasing a large amount of products. (Appendix Table 3) Low Low Bargaining Power of suppliers The ingredients of the Sports and Energy Drinks can be purchased from different suppliers. The switching cost to other suppliers is low. High High Intensity of Rivalry There are 9 major brands in the current market. (Appendix Table 6) The competition is highly intensive. Low Low Pressure from substitutes Other carbonate drinks or juices do not have the same benefits as sports and energy drinks on performance and recovery during exercising. Bottled water would be the main substitutes of Sports and Energy Drinks. High. Attractiveness of Market Variables Reasons Attractiveness Small Market size Compare with other drinks, the market size of Sports and Energy Drinks is relatively small, only has an off-trade sale volume of 20. 3 million litres in 2012. (Appendix Table 2) Low Constant Market growth Market growth of sales volume increased by about 5. 4% each year from 2007 to 2012, the forecast growth rate of the market is also positive. (Appendix Table 4 5) The market is growing constantly. High Low Sales cyclicity Sports and exercising are daily activities across the year. High Low Sales seasonality. Sports and exercising are daily activities across the year. High Profit level With the benefit of economic of scales and mass production, the profit level is high for Pocari Sweat. High Low Profit variability Sports and exercising are daily activities across the year. High Product Life Cycle Stage Reasons Maturity There are lots of competitors in the Sports and Energy Drinks market. The pricing of the Sports and Energy Drinks is stable among this few years, ranged from $9. 5 – 13. 9, which means that the price is at the edge related to the material costs. (Appendix Table 7) Also, the volume growth of category is about 5. 4% in each year from 2007-2012, which is low to moderate growth of the market. The forecast volume growth of the category has 5% which is quite considerable. Level of competitions Product Form Sports Drinks: Pocari Sweat, Aquarius, Lucozade Sport, Gatorade, Drinkazine Energy Watt and other related â€Å"ion supply drinks† Product Category Sports and Energy Drinks: Including the energy drinks, such as Lucozade Energy, Monster Energy, Red Bull, Libogen Tonic Drink Generic Competition Beverages: Carbonated soft drinks, bottled water, beers, juices, etc. Budget Competition All consumer products with similar price. Current Future Company Strategy Matrix on Sports Drinks Otsuka Pharmaceutical Co. , Ltd GlaxoSmithKline Coca-Cola Company Objectives Grow market share and volume Grow market share and volume Grow market share and volume Current Strategies Advertising and promotion of products. Products expanding in multiple segments of category. Products launching and increased advertising spend. Expected future strategies Focus on product development, increased advertising and promotions. Focus on brand extensions with new flavours to fill category. Focus on raising brand awareness through local sports events.

Features of a cognitive behavioural approach to counselling

Features of a cognitive behavioural approach to counselling In order to answer this question effectively I will first discuss what cognitive behaviour therapy is and its key features. Then I will elaborate on a couple of other approaches to counselling and explain why it is different. Cognitive behaviour therapy (CBT) can help you to change how you think (Cognitive) and what you do (Behaviour). These changes can help you to feel better. Unlike some of the other talking treatments, it focuses on the here and now problems and difficulties. Instead of focussing on the causes of your distress or symptoms in the past, it looks for ways to improve your state of mind now. (Royal College of Psychiatrists, 2010). The name cognitive behavioural is used in different ways to designate cognitive and behavioural therapy. It also refers to psychoanalysis based upon a combination of essential cognitive and behavioural research. Cognitive behavioural therapy is commonly used to counsel people with a wide range of disorders such as depression, phobias and anxiety. Cognitive behaviour therapy has become progressively popular in the past years, with professional and mental health consumers (BABCP, 2010). It is usually used for short-term periods of time and it focuses more on helping clients deal with very definite problems. Since cognitive behavioural therapy is basically a short term treatment alternative, it is more affordable that other therapeutic alternatives. During the course of counselling, individuals learn how to recognise and change negative or destructive thought patterns that have a negative influence on individual behaviour. The underlying perception behind cognitive behavioural approach to counselling is that our thoughts and feelings play an essential role in how we portray our behaviour. For example an individual who always has thoughts on plane crashes and air disasters may find themselves avoiding air travel. The fundamental objective of cognitive behavioural therapy is to counsel and teach patients who cannot control all aspects of life around them. The following are key features of a cognitive behavioural approach. Cognitive behavioural therapy is mainly based n the cognitive form of emotional response on our behaviours and thoughts, and not external surroundings such as events, people and situations. The key benefit of this fact is that it helps individuals to perform and feel good even if the circumstance does not change around them. The approach is considered to be one of the most rapid and quick forms of therapy for curing psychological disorders. The usual number of regular sessions that patients use across all types and approaches related to cognitive behaviour therapy is only 16 (Horn Ippen, 2006). Other types of therapy such as psychoanalysis can take a longer duration equivalent to one year. What makes the cognitive behavioural approach to be briefer and more time limited is because of its highly informative temperament and the fact that it formulates the use of coursework. The official ending of the therapy is determined by the decision of the client and therapist. Thus, cognitive behavioural therapy is not as much of an open-ended process unlike other approaches. Some other forms of therapies believe that the major motive why individuals progress in therapy is because of the affirmative relationship between the client and the therapist. Therapists, who believe in the cognitive behavioural approach, focus on furnishing their client with self psychotherapy skills and therefore the client learns to be more independent. With these self counselling skills, the clients will automatically change as they have learnt how to think differently. A vital aspect of thinking is based on facts. For example, in most cases, people upset themselves about things when, in fact the real situation is very different from what they actually think. If people knew the real fact then they would not waste as much time upsetting themselves. The inductive method was adopted in the cognitive behavioural approach in order to encourage people to clearly distinguish assumptions and myths from practicalities and reality of life. This greatly helps individuals to admit the reality and thrust aside imaginary negative thoughts. The cognitive behavioural approach is a joint effort between the client and the therapist. This is because the therapists task is to teach, listen and learn whilst the clients task is to be able to express their concerns, and show a determination to absorb what they learn from the therapist. The therapist makes attempts to know more about the thoughts and feelings of the client and also plays a fundamental role in helping their clients achieve the targeted goals in life. The client has to undertake homework in the form of implementing and putting into action the techniques and skills that they are taught during the therapy sessions. Without practising the skills and techniques, the clients will not be able to overcome their problem. As this approach is a directive and structured approach to counselling then a specific agenda is set out for each and every session. The techniques taught are aligned with the clients goals. Therapists do not tell their clients what their goals should be or what they should stand for. The approach is directive in a manner that it demonstrates to the clients how to behave and think in ways to achieve what they are fond of getting. There are many ways in which the cognitive behavioural approach differs from other forms of counselling. Sandburg, (2004) said that the cognitive behavioural approach primarily differs from other forms of counselling in terms of emphasis on understanding, identifying and changing the underlying attitude about one selves thinking and thoughts. In cognitive behaviour therapy the initial approaches emphasize on behavioural features of coping (e.g. leaving or avoiding the situation and interruption etc) instead of thinking ones way out of a situation. The person-centred therapy differs from the cognitive behavioural approach to counselling as this is an approach that focuses on putting much of the treatment responsibility on the client while the therapist takes a non-directive role. It is greatly associated with the objective of human potential movement, as it defines human nature to be inherently good. Person-centred therapy emphasizes that human behaviour is inspired by a drive to fulfil ones goals. Person-centred therapy focuses on a persons strength rather than their weakness. In this case the therapist tries to create a room between real self and ideal self. This created room helps the client discover a further understanding of who they are and also develop a greater self-worth esteem which results in increased capacity to experience and articulate feelings at the time they occur.

War Poem about Leaving Love :: essays research papers

Leaving Love My love is pleading with me Telling me not to leave her I can feel her agony deep inside myself too She is on her knees begging Our bond of love is strong, I feel terrible to leave her But I then departed, I gave her my heart Then my journey to the army I started In training now Preparing for a war That will soon be upon us In which my head shall bow For my country or more For months now working Training in long, hard sessions Of every hour, and every day Countless soldiers scream in depression They want to be back home. And when I lay on those small, hard beds Deep in the coldness of the harsh, metal frame And wrapped in nothing but a thin, cotton sheet I lay and try to forget my pain On my body and in my heart. Don?t Fall Back Holding the lines In deep, dark, snowy trenches Plague infests us all and the smell of the dead stings my nose when I take in a breath. As I shoot the other people down I take their lives for my own And when I look up above the trench to shoot again All I see is pinpricks of light They look at me with the knowledge of a thousand stars And they stare into my innermost soul, where it is dark They see my soul shrinking, like the waning of the winter moon My heart can feel it too It feels as though it is being wrapped up tightly Wrapped in the bloodstained snow around me Beauty, which is a lie, a lie of the glowing light A light, which is truly dead A light whose sparkling beams are knives stabbing into my heart Icy fingers reach out to my soul The fingers of life and death Sent by the moon With the icy fingers, those brilliant beams and the moon They each send an ever sparkling, iridescent light to show dark patterns in the snow Am I to live? I care not, as long as I have my one love Lost in Memory I am now free from war Free from the deaths That occur right next to me Forever waiting for disaster This obsession is draining my life I am drowning in my own sorrow and pain I look at the stars sometimes For hours on end, I watch them, I reminisce the war

My Antonia :: Free Essay Writer

My Antonia 1. Jim Burden, a successful New York City lawyer, leaves an acquaintance a memoir of his Nebraska childhood in the form of a recollection of their mutual friend, Antonia Shimerda. Jim had first arrived in Nebraska at the age of ten, when he was made the trip west to live with his grandparents after finding himself as an orphan in Virginia. On this same train, Jim has his first glimpse of the Shimerdas, a Bohemian immigrant family traveling in the same direction. As fate would have it, the Shimerdas have taken up residence in a neighboring farm to the Burdens'. Jim makes fast friends with the Shimerda children, especially Antonia, who is nearest to him in age, and eager to learn English. At her father's request, Jim begins to tutor Antonia, and the two of them spend much of the autumn exploring their new landscape together. Shortly after Christmas, tragedy strikes with the suicide of Mr. Shimerda. After an emotional funeral, the Shimerdas retreat into despair, and the Burdens struggle to be as accommodating as possible. As a result of the hardships that the Shimerdas suffer, a wedge is driven between Antonia and Jim. A couple of years later, the Burdens decide to move into town, and shortly thereafter Antonia takes a job as a housekeeper with a neighboring family, the Harlings. Jim begins to see more of Antonia once again, especially when a dancing pavilion comes to town and enlivens the social situation. Jim's high school years quickly come to a close, and he is offered a spot at the university in Lincoln. He makes a great success of his commencement speech, and spends the summer hard at work in preparation for his course of study. Before leaving, he takes one last trip out to the countryside with Antonia and her friends, where they gather to reminisce about old times together. In Lincoln, Jim throws himself into his studies, which take up the majority of his time in the first year and a half of his course. In the spring of his second year, he begins to see a good deal of Lena Lingard; a mutal friend of his and Antonia's who has always intrigued Jim. After several months of theater going and dalliances about town, Jim decides he needs to make a fresh start of things and prepares to transfer to Harvard for his final two years of college.

Internet Censorship Essay - America Needs Censorship of Cyberspace

America Needs Censorship of Cyberspace      Ã‚  Ã‚   In June of 1998 the country was horrified to learn of the death of James Byrd Jr. He was a 49-year-old black man who had been found horribly mutilated after being dragged to death. Authorities have charged three men with murder and violation of civil rights ("A Fatal Ride in the Night" 33). Obviously, if convicted, these men are guilty of a horrible crime, but what if this crime had been committed after viewing a racist website? If a person reads an emotionally charged, hate-filled website and then commits an act of violence, can the creator and owner of the website also be found guilty?    No laws have yet been established to censor material in cyberspace. The Communications Decency Amendment, which sought to ban pornography and other offensive material on the web, was struck down in Congress last year. The Internet has exploded in the past decade. It is everywhere and millions of people have access to it, through work, school, and home. As the Internet becomes a part of daily life for more and more people, laws need to be made to banning pornographic, racist, and other offending websites, to protect citizens from the threats these websites pose. Although some may see this as an infringement of their First Amendment rights, it is important for us as a society to reject these ideas and ban these websites.    Many lawmakers want to establish laws to control what is available on the Internet. Their number one reason is the availability of everything on the Internet to children. Even though parental controls, software that blocks offensive sites to children, are available many parents fail to use them. Senator J. James Exon, who proposed the amendme... ...Victor J. Vitanza. Allyn and Bacon, 1996. 157-159.    Russell, Diana E. H. "Pornography Causes Harm to Women." Women, Men, Gender. Mary Roth Walsh. Yale University Press, 1997. 158-168.    Stamper, Chris. ".XXX Marks the Porn Site." ABCnews.com. July 17, 1998. <http://archive.abcnews.com/sections/tech/DailyNews/dotxxx970715.html>    Thomas, Pierce. "Judge Delays Internet Porn Restrictions." CNNinteractive. Nov. 19, 1998. <http://cnn.com/TECH/computing/9811/19/internet.decency.02/index.html>    Von Boven, Sarah and Anne Belli Gesalman. "A Fatal Ride in the Night." Newsweek. 22 June, 1998: 33.    Walsh, Mary Roth. Women. Men, Gender. Yale University Press, 1997.    Wayne, Stephen J., G. Calvin MacKenzie, David M. O'Brien, Richard L. Cole. The Politics of American Government. St. Martin's Press, Inc. 1997.   

Analysis of a Doll’s House

Analysis of A Doll’s House by Henrick Ibsen Shira Simmons South University Online Kris Shelton March 12, 2013 A Doll’s House has several high points that lead up to what I’ve considered the most defining moment. When Torvald finally reads the letter Krogstad (a fellow schoolmate and an employee at the bank) wrote revealing that it was not from Nora’s father that she borrowed money, but from him, what follows was totally unexpected by me. It seems that the situation of her husband falling ill and the decisions she had to make in regards to that, forced her to grow.In the end, Nora makes a decision that she doesn’t want to be married to her husband Torvald any longer, and she tells him so. The line, â€Å"We’ve been married for eight years. Doesn’t it occur to you that this is the first time the two of us, you and I, husband and wife, have had a serious conversation? † (Isben 1879 p. 590) says Nora, licks at where she is going wit h this conversation between the two of them. As you first read into the play, a perfect â€Å"trophy wife† scenario is portrayed. It’s the typical male working and the wife taking care of the kids and other affairs.The time this play was written, it was more common for the woman to stay home while the man worked. Today it isn’t rare to see the woman working and making more than the man. They are experiencing the normal money issues most married couples have and Torvald is expecting a higher salary after the New Year. As the other characters present themselves, you start to pick up on some uneasiness from Nora whenever Krogstad visits their home and one instance from Mrs. Linde whenever she was present. One evening whilst Torvald was away, Krogstad visits and has a chat with Nora.He tells her that if she didn’t convince Torvald to let him keep his job that he would blackmail Nora about the money she borrowed from him and forging her father’s signatu re on the contract for paying him back. Presenting that maybe their marriage isn’t as perfect as it seems. Torvald had become ill and Nora being the caring, dedicated wife that she had taken it upon herself as her wifely duty to see to it that he got better. Nora had little to no knowledge that forgery was a criminal offense; she only thought she was doing what was best for her husband.So she told her husband that she borrowed money from her father. Mrs. Linde, an old friend of Nora’s visits as well; she’s the only person Nora really has to confide in during the time this all-takes place. The plot reveals that she and Krogstad had a fling some years ago and now that she was widowed, wanted to link back up with Krogstad once again. She convinces Krogstad that he must leave the letter for Torvald to read because Nora should no longer hold a secret betwixt her and her husband. I felt there was a possibility that Mrs.Linde didn’t come to just meet back up wit h Krogstad, that she may have decided this in the mist of Nora and her situation, even though she states otherwise. Maybe she did so to help out Nora and Torvald by focusing Krogstad’s attention elsewhere. Right after Torvald reads Krogstad’s letter, he immediately attacks Nora and belittles her. After saying such degrading, hurtful things, Nora coldly looks at him and replies â€Å"Yes, I’m beginning to understand everything now† (Isben 1879 p. 590). This implies she has now realized exactly what she has been and how she has been treated by her father and him both.He raves on about what she has done to him and what he must do to fix it. Not once taking into account what Nora must be going through herself, or consequences she would have to endure? â€Å"†¦No, I’d better read it again. Yes, it’s true! I’m saved! Nora, I’m saved! † (Isben 1879 p. 590) exclaims Torvald after reading an apologetic letter from Krogstad a nd only after Nora saying something did he mention â€Å"we† were saved. During her farewell pardon, Nora sounds like a completely different woman. She sounds strong, sure, independent and determined; so very different from whom she was in the beginning.Although this situation basically ruined their marriage, it really shed some light for Nora. She finally realizes that she has been robbed of so much, being both a prized possession of her father and Torvald’s; that’s the beauty of it. Now she can set forth to learn and to be happy with herself. References: Ibsen, H. (2011). A doll’s house. In D. L. Pike and A. M. Acosta (Eds. )  Ã‚  Literature:  A world of writing stories, poems, plays, and essays. [VitalSource digital version] (pp. 555-589). Boston, MA: Pearson Learning Solutions.

It Is Much Better to Die with Dignity Than to Live with Pain Essay

I believe to die with dignity is better than to live with pain, because of euthanasia, seppuku, and organ donation. Euthanasia is from the Greek word which means â€Å"good death†. It refers to end someone’s life without pain and agony. Seppuku is a form of Japanese convention suicide of honour, it is a way of dying with dignity. Organ donation is after the death of terminally ill people to donate their organs to those in need. To begin with euthanasia, euthanasia is a different way of die with dignity. In present-day society, it is considered by a vast majority of the population â€Å"right† when it serves human dignity, or a larger cause. (â€Å"Euthanasia Essay – Right to Die With Dignity†,n. d. ). Euthanasia is responsible for the patient, family responsibility, socially responsible, sensible, rather than immoral. For example, people with senile dementia can’t do anything. Even how they feel brings too much pressure to their family. Life like this, they can’t feel any happiness. Why can’t choose die with dignity? Secondly, it’s a prize of death which literally means† stomach cutting†is a particularly painful method of self-destruction, and prior to the emergence of the samurai as a professional warrior class, was totally foreign to the Japanese( â€Å"Seppuku – Ritual†,n. d. ). To the samurai, seppuku is not only a way to die, it stands for honour, courage, loyalty, and moral character. This is a way to die with dignity, although they were defeated. They don’t want to live with humiliation, so they rather prefer to die. Living in society is not just sleeping,eating,playing. This kind of thing, is a way to give expression to personal value. Further more, organ donation is very sacred way for a person to die. If they live with only pain and there is no way to save them, why they can’t choose medically assisted dying? Increasing number of people choose donate their organs after their death in present-day society. This is a helpful way for others who needed it. To some of people who accept donaor’s organs they can survive. According to the U. S. government, 77 people receive transplanted organs each day. That’s the good news. The bad news is that 19 people in the United States die each day waiting for an organ that never becomes available. Trisha(2011) Organ donation is not only an end of life decision, it can be used to help someone else live longer. On the other hand, organ donation isn’t legal in some of any other countries. There are some poor people or people who need money, they like to donate there blood, kidney, liver to hospital, then they can get substantial revenues. This is not good for people’s health, they can’t for money to organ donation. Organ donation is only for people who will be die, people should respect organs, rather than to make money then they only have to donate their organs. For government, they should control it in a better way. In conclusion, one person if he can’t do the best then choose seppuku, it not reflect he has failure. It is a other way to die with honor. One person if he rather chooses to be medically assisted dying in order to help others. Stand on a good chance, his death can rescue any other patients. One person if he live with only pain, why he can’t choose die with dignity? Life is only left pain, death for them is a better way. Death is not to end of someone’s life, it’s better to die with dignity rather than live with pain.

Banking Concepts and Practices

XITE, Gamharia Banking Concepts & Practice [Paper 11: Elective II, Academic Session 2011-12] 1. Evolution of Banking: Bank-Meaning, Definition, Features & Classification, Concept of Different Types of Banking System, Overview of Indian Banking System 2. Commercial Bank: Basic Concept of Commercial bank, Role of Commercial bank in Financial System, Credit Control by Central Bank 3. Central Bank: Meaning, Functions, Methods of Credit Control 4. Monetary Policy: Meaning, Objectives and Instruments 5. Customer Relationship: Definition, Features of Contractual Customer Relation, Customer Orientation, Retail Banking 6. E-Banking: Concept, ATM, Core Banking, Virtual Banking, Electronic Payment System Reference Books: 1. Banking Law and Practice- P. N. Varshney 2. Indian Banking- P. Parameswaran & S. Natarajan 3. Money, Banking & International Trade- M. C. Vaish 4. Banking Concepts & Practices- Shekhar & Shekhar 5. Banking Concepts & Practices- Canon Notes prepared by: Fr. Alex Mascarenhas SJ, Loyola Nivas, H-15, St Mile Road, Sakchi, Jamshedpur 831 001 INDEX | | |EVOLUTION OF BANKING |NEGOTIABLE INSTRUMENT | |MEANING OF BANKING |BILL OF EXCHANGE | |CLASSIFICATION OF BANKS |PROMISSORY NOTE | |SYSTEMS OF BANKING |CHEQUE | | |CROSSING & ENDORSEMENT | |INDIAN BANKING: PROFILE | | |INDIGENOUS SYSTEM |BANKING PRACTICE | |MODERN FINANCIAL SYSTEMS |BANK ACCOUNTS | |CHANGING PROFILE |TIME DEPOSITS | |CHALLENGES AHEAD |LOANS & ADVANCES | | |CHARGE CREATION | |COMMERCIAL BANK |TYPES OF SECURITIES | |FEATURES |BILLS COLLECTION | |ROLE IN FINANCIAL SYSTEM |PAYING BANK | |MULTIPLE CREDIT CREATION |COLLECTING BANK | | |GRIVANCE REDRESSAL | |CENTRAL BANK | | |CONCEPT & MEANING RETAIL BANKING | |FUNCTIONS | | |RESERVE BANK OF INDIA |BANKING SERVICES | |NEW TRENDS IN CENTRAL BANKING | | | |ANCILLARY SERVICES | |MONETARY POLICY | | |MEANING |E-BANKING | |OBJECTIVES | | |INSTRUMENTS |CONCEPT EVOLUTION | |TYPES OF MONETARY POLICIES |CORE BANKING | |RBI MONETARY POLICY |VIRTUAL BANKING | |LIMITATIONS |E-PAYMENTS | | |MERITS & DEMERITS | |CUSTOMER RELATION | | |MEANING |APPENDIX | |NATURE OF RELATIONSHIP |MUTUAL FUNDS | |FEATURES |BANK NATIONALIZATION | |CUSTOMER ORIENTATION | | EVOLUTION OF BANKING A. MEANING OF BANKING: Banking was first associated only with the lending activity. The idea of accepting deposits from the public in order to lend it to others on credit developed much later. Modern banks have gone way beyond traditional banking and have added fee based financial as well as ancillary services to banking which are very much within the limits of their expertise. A1. DEFINITION: Dictionary gives multiple meanings of a BANK- †¢ It is a heap or storage of goods. †¢ It is the shallow edge of the sea. †¢ It is the raised edge of a river or a road. †¢ It is a blockage of sandbags to a flow of water. Though none of these explanations speak directly about financial dealings, all of them give a common meaning that it is a sort of CUSHION provided to PROTECT something. Hence, there can be a grain bank, a blood bank, a sperm bank, a question bank, a river bank, money bank, etc. The exact origin of the word bank is not certain. Some trace its origin to German word ‘Banck’ which means heap or mound, others trace it to Italian word ‘Banco’ which means heap of money while some others trace it to the French word ‘Banque’ which means a bench for keeping things. Jewish bankers and money changers transacted their business of lending and exchanging money on benches in the marketplace in Lombardy and so the bench became the banking counter. Bible has a reference to money changers who were transacting business on their benches inside the Jewish temple and Jesus throws their benches and scatters them. If a banker failed by losing all his money, his bench was broken up by the people which gave birth to the word ‘bankrupt’ Monetary banks derive their meaning from all the above concepts. They provide facility to the customers to ‘store’ their wealth and give ‘protection’ to it and in the mean time they lend it to others to ‘gain’ some returns. †¢ According to Kent, â€Å"bank is an organization whose principal operations are concerned with the accumulation of the temporarily idle money of the general public for the purpose of advancing to others for expenditure. †¢ According to Crowther, â€Å"bank is one that collects money from those who have it to spare or who are saving it out of their incomes and lends the money so collected to those who require it. † †¢ According to Hart, â€Å"banker is one who in the ordinary course of business honors cheques drawn upon him by persons from and for whom he receives money on current accounts. † †¢ According to John Paget, â€Å"no person or body corporate otherwise can be a banker who does not take deposit, does not take current accounts, does not issue and pay cheques and does not collect cheques for his customers. † All these definitions have described the meaning of a bank but have not given a precise definition. Banking Regulation Act of 1949 u/s 5(1) has given the meaning of banking as follows- â€Å"Banking means accepting for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise and withdrawable by cheque. † Hence, bank in the technical sense can be defined as â€Å"an institution that accepts refundable deposits for lending or investing. † The concept of offering fee based services has no direct connection to traditional banking; it evolved much later due to the financial expertise available with the banks. A2. HISTORY OF BANKING: The concept of banking is as old as the authentic history of humanity. ANCIENT WORLD: The system was started by the Babylonians before 2000 BC. The practice of granting credit was widely prevalent in ancient Greece and Rome. Credit by compensation and by transfer orders is traced to Assyria, Phoenicia and Egypt even before its development in Greece and Rome. EUROPE: Many European countries established public banks either for facilitating commerce or to serve the government. Begun as an office for transfer of public debt, The Bank of Venice [1157] is the most ancient bank. The Bank of Amsterdam was established in 1609 to meet the needs of the merchants of the city. It accepted all kinds of specie deposits to be withdrawn or transferred to another account later using a certificate valid for six months. These written orders in the course of time got transformed into modern day cheques. ENGLAND: English banking began with the London Goldsmiths who accepted customer’s valuables for safe custody and issued ‘payable to bearer’ receipts which in course of time enjoyed considerable circulation. Actual growth of private commercial banking began with the establishment of Bank of England in 1694. INDIA: The first reference to banking in India is found in the book ‘Arthashastra’ by Chanakya in the year 300 BC. He mentions about guilds of merchant bankers who received deposits and advanced loans. The traditional indigenous bankers and money lenders were active in India since time immemorial. The first bank in today’s understanding to be established in India was Bank of Hindustan in 1770. Unfortunately it failed subsequently. Presidency Bank established in 1806 which then became Imperial Bank and finally State Bank of India is the first successful bank in India. Co-operative credit banks started playing significant role since II world war. A3. FEATURES OF A BANK: Features of a bank are the services they offer to their customers. Traditional banks have just two features: accepting deposits and lending money on credit. Modern banks have introduced a third feature of fee based services. A3a. DEPOSITS are basically of two types- Demand deposits & Time Deposits. Demand deposits are in the form of running accounts like Savings Bank A/c, NRE A/c, Current A/c and Overdraft A/c depositing or withdrawing money without any advance notice. On Savings Bank A/c and NRE a/c banks offer interest on the balance amount where as for an overdraft a/c they charge interest on the money overdrawn. Current A/c and the credit balance in Overdraft A/c fetch no interest to the account holders. All these accounts will have cheque book and passbook facility. Now one can do banking transactions from the comforts of ones own office or room or while traveling even without entering the bank premises, pay bills anywhere and anytime and draw cash from ATM day and night and even during holidays through e-banking. Time deposits are always accepted to mature on a due date. Banks give interest on time deposit. Longer time deposits usually [but not necessarily] fetch higher interest. All banks allow pre-maturity withdrawals of time deposits and give whatever interest is applicable for the duration the deposit was with the bank with or without a penalty interest for pre-maturity withdrawal. A3b. CREDITS can be further sub-grouped duration-wise or security-wise: Duration-wise credits can be short term for less than a year or medium term for one to three years or long term for beyond three years. Banks usually prefer short term credits as they give better liquidity. Long term credits are usually given for capital requirements. Customers are charged interest on credit which is little higher than the interest banks give on deposit. Security-wise credit may be secured, partially secured or clean. When credit is given against a collateral tradable security of at least equal value it is termed as secured credit. If the securities offered against the credit do not cover the credit amount completely then it is partially secured credit. If personal guarantees are offered instead of any tradable securities, it is a clean credit. Banks usually prefer secured credit to ensure the capital safety. A3c. FEE BASED SERVICES may or may not be linked directly to banking activities. These features are unique to commercial banks and are on offer because of the expertise they have and also because their primary aim is profit. Cooperative banks usually do not offer such services except cheque book and bill collection facility. Some of the fee based services offered by them are- Financial Services are those involving money through the customer’s accounts like Cheque, Bill Pay, Bill Collection, Debit Card, Fund Transfer, etc. Free availability of sufficient funds in the account is pre-condition for these services. †¢ Utility Services are those financial services which are provided by the bank to th e general public even without having an account in the bank like Foreign exchange, Bank Pay Order, Bank Drafts, Traveler Cheque, etc. Funds and the bank charges have to be provided at the time of availing these services. †¢ Agency/Fiduciary Services are those services in which the bank acts like an agent/trustee on behalf of its customers like Letter of Credit, Bank Guarantee, Originator/ Underwriter of Capital Issues, Safe Deposit Locker, Safe Custody, etc. Investment Services are those agency services where bank guides the customers in making investments outside the bank for higher returns like D-Mat A/c, Brokerage and Advisory Service. B. CLASSIFICATION OF BANKS: There are various types of banks depending on the purposes of their businesses. But such a classification may or may not be exclusive since some overlapping is always possible- B1. COMMERCIAL BANKS by their very name mean business and so perform all kinds of banking functions such as accepting deposits, advancing cr edits, offering fee based ancillary services including foreign exchange and foreign currency remittances. They are organized in the manner of joint stock companies. Their main aim is to maximize profit from their banking business. Hence, they have expanded their network through branches wherever there is a possibility of better banking business. In many developing countries like India, commercial banks are obliged to contribute to the economic growth of the country through various regulations of the regulatory authorities. These banks may be govt. owned, public sector or private sector or even foreign banks. Private sector and foreign banks vie with each other in providing personalized services in order to expand business. B2. FOREIGN EXCHANGE BANKS are specialized in foreign exchange and financing foreign trade in addition to the normal banking services. They also offer other information collecting services to their customers on foreign trade prospects, foreign agents, and foreign collaborators and provide foreign currency remittance facilities. Foreign exchange banks usually have their head offices outside the country. Their branch network is usually bare minimum; restricted only to big urban centers with great potential for foreign exchange business. B3. INDUSTRIAL BANKS are also known as development banks and are specialized in providing long term loans to industries for the purchase of assets. They are usually not into ordinary banking services; they basically underwrite shares and debentures of industries and also subscribe to them. Some of the industrial banks are- Industrial Finance Corporation of India-IFCI, Industrial Development bank of India-IDBI, Industrial Credit & Investment Corporation of India-ICICI [now merged with ICICI Bank Ltd. ] and Small Industries Development Bank of India-SIDBI. These are more of finance companies set up by government than banks. B4. AGRICULTURAL BANKS like State Cooperative Banks-SCB, District Central Cooperative Banks-DCCB, State Cooperative Agricultural & Rural Development Banks-SCARDB, Primary Cooperative Agricultural & Rural Development Banks-PCARDB and Regional Rural Banks-RRB provide all types of agricultural credits to the farmers for their short term, medium term and long term agricultural needs. They also offer limited ordinary banking services that are required by the farmers. Land Development Bank of India-LDBI gives long term loans on mortgage of agricultural land and National Bank of Agriculture & Rural Development-NABARD gives refinance to other institutions which give direct agricultural loans to the farmers. Both these banks do not provide retail banking services. B5. COOPERATIVE BANKS work on the principle of cooperation among a group of shareholding members usually confined to a small geographical locality and the purpose of their cooperation. Their activities are largely restricted to their own members. They do not come under the strict regulatory controls of Central Bank since they are separately covered under Cooperative Societies Act. But they do have regulatory norms to satisfy, though not of the same level as that of the commercial banks. Cooperative banks are basically of two types- Urban Cooperative Banks that cater to the needs of urban population and †¢ Rural Cooperative Banks which cater to the needs of the rural population. B6. SAV INGS BANKS promote small savings and mobilization of resources. They may not lend on credit; they may invest the entire sum to produce returns enough to pay good interest to their deposit holders. They are very successful in Japan, Germany and India. Post Office Savings Bank, Employee Provident Fund and Public Provident Fund are some examples of Savings Banks. B7. INVESTMENT BANKS are financial organizations which assist business houses to raise funds for their long term capital requirements from the market hrough the sale of their shares and bonds. Hence, they certainly conduct other ordinary banking business in order to collect funds for their business. These banks act basically as middlemen or agents. They function in two ways- †¢ Originator- They act as originators of the capital issue by bringing out the new issue and managing it until the shares are finally allotted for a fee for the services provided by them. They have nothing to do with the gain or loss of the capital i ssue which goes directly to the company. †¢ Underwriter- They under-write the entire capital issue for a mutually agreed price and re-issue the shares to the public for the market price. The entire gain or loss made in the process is the gain or loss of the bank and not of the issuing company. Commercial Banks are also eager to provide investment banking facilities since these are basically wholesale banking activities with definite sources of large gain in a short span of time with or without committing one’s own funds. B8. MERCHANT BANK is a loosely used term. Some merchant banks may neither be a merchant nor a bank. Merchant banks mainly deal with corporate financial advice such as share issue, capital re-construction, mergers and acquisitions. Merchant banks also accept deposits and are involved both in money market operations and foreign exchange dealings. They also manage funds on behalf of their clients. B9. CENTRAL BANK is not a commercial bank; it is the apex bank of a country which controls nation’s monetary and banking structures, like Reserve Bank of India. It is owned by the central government in most of the countries but not necessarily always. For example, in USA it is owned collectively by the member banks. Central banks work in the national interest in developing the nation’s economy. Central bank does not deal with ordinary banking activities. It issues and regulates currency, provides banking services only to the central government, the state governments and the member banks, keeps cash reserves of the member banks, holds gold reserves of the country and nation’s forex reserves, acts as clearing house and acts as a lender of last resort. C. SYSTEMS OF BANKING: There is no uniform system in commercial banking. They have evolved based on the needs of a particular place. Philosophically there are two banking systems- Capital based Western Banking System and Service based Islamic Banking System. Islamic banking system is the only banking system in the world that is totally fee based and does not pay or give interest. Islamic banks collect fees for all the services offered by them since giving or receiving interest is against the Islamic Law- Shariat. Most commercial banks follow capital based banking systems: they accept deposits from the public at lower interest rate and give out credit on higher interest. The difference in interest rate is their profit which is gained by from their capital. They also charge a fee for all the value added services rendered by them. In practical sense we come across three major western banking systems worldwide- C1. GROUP BANKING is commonly found in USA. It is a federal system favored mostly by banks in USA. Under this system, a group of banks come under a centralized management of a holding company may or may not be affiliated to a larger bank or any government controlled agency. Holding company exerts control over all the subsidiary banks though each subsidiary bank maintains its own distinctive identity. The group may also include non banking financial corporations. In some cases instead of a holding company, individuals or a group of individuals take the control over administration of the member banks through ownership of their stocks. Such a system is known as CHAIN BANKING. For all practical purposes, both mean the same except for their ownership pattern. MERITS- 1. Parent bank pools the resources and helps the member banks. 2. Large credits more than a member’s capital can be handled through consortium basis. 3. CRR, SLR and capital requirement is centrally maintained by the parent bank. 4. Parent bank provides service on research, legal matters and investments, reducing individual member bank’s cost. DEMERITS- 1. It is a step towards monopoly, not healthy from economic point of view. 2. Decline in business of one member in the group affects the entire group. 3. If the parent body is not a bank, it may divert funds to further its own interest. C2. UNIT BANKING system is an individualistic system also favored largely in USA. In this system each bank is a centralized unit without branches; it may have service centers like ATM at multiple convenient places or even a few branches within a strictly limited area. All functions of the bank are performed at one centralized place. For remittances they are linked through correspondent banks. MERITS- 1. Every type of banking service is available under one umbrella 2. It is competitive and highly efficient. It can take prompt decisions. 3. Continuity in personal relation helps in customer care. 4. Even unique local needs are addressed by this system. DEMERITS- 1. Being localized, it can not spread risk and its resources are limited. 2. They can not diversify services, can not have large scale operations 3. Mobilization of funds is limited to their own area and so fear of failure exists. 4. They have to depend upon their correspondent bank for remittances, increasing cost. 5. Very difficult to run unit banking in rural areas since rural resources are limited. C3. BRANCH BANKING system is followed almost universally. In this system banks will have their head office at one place and branches at multiple convenient places. Each branch functions like any other full fledged bank and yet is fully controlled by the head office. They even have specialized branches to take care of specific requirements of customers, like NRI branch, SSI branch etc. This is very convenient to the customers. In some branches even the weekly holiday is changed to suit the people of the area. MERITS- 1. This system can spread risk, diversify services, can have large scale operations. 2. It can have specialized branches for exclusive purposes. 3. They can move cash reserve from less required branch to more required branch. 4. Remittance through branch system is easy, cheap and efficient. 5. Brings uniformity in the functioning supported by centralized system. 6. There will be an efficient head office control and less fear of failure due to its size. DEMERITS- 1. Centralization of command delays decision making process. 2. Every branch may not be in a position to offer all banking services 3. Administration tends to be bureaucratic, sticking to the rules at the cost of the need. 4. More the branches, difficult will be monitoring and supervision 5. Unique local needs may not be well taken care of From the above analysis we can safely conclude that branch banking system is the best system and so is favored world over. NOTE: State Bank of India is planning to bring itself and its subsidiary banks with all their branches under one Holding Bank which will be like a Central Bank with full policy control over its member banks and yet with administrative freedom given to each of the member bank to maintain their unique identity. This will also be a group banking system with an important change that the holding company is a bank whose majority stake is held by the government. Hence, this system is going to combine the advantages of all the three systems discussed above. INDIAN BANKING: PROFILE In India, ancient scripts as old as ‘Manu Smriti’ deal with regulations on credit like- credit instruments, judicial proceedings on credits, renewal of commercial papers, interest on loans, etc. Chanakya’s Arthashastra refers to accepting deposits for lending. This was mainly money lending where as the modern concept of banking came to India with the colonial rulers. Though Chanakya’s Arthashastra speaks both about deposit and credit, it is basically money lending. INDIAN BANKING SYSTEM – AN OVERVIEW v v v INDIGENOUS SYSTEM BANKING SYSTEM NBFI v v v Indig. Banker Money Lender. ____ _v______ DFI NFFC MF. v Cooperative Scheduled v v Rural, Urban, LTCCS Coop Commercial v v v SCB, DCCB, PACS SCARDB, PCARDB Public, Private, Foreign, RRB v Nationalized Banks, SBI, SBI Group A. INDIGENOUS SYSTEM is the oldest system of banking in India. It is basically a business for profit controlled by a few upper caste communities. Hence, it got degenerated into highly exploitative system against the lower castes and accepted by the masses out of helplessness. A1. INDIGENOUS BANKERS are individuals or firms who lend money against securities- hundis, promissory notes and legal bonds which state the amount of loan, due date, rate of interest and penalty interest beyond due date. They may or may not accept deposits from the public. It is a monopoly of certain castes among Multanis and Marwaris, in the West, Gujratis and Bengalis in the East and Chettis and Brahmins in the South. The interest rates of these bankers range from 6% to 150% depending on the nature of the security. Many of them have trading interests and control the marketing of the borrower’s products. They operate mainly in big trading centers with their offices and branches. A2. MONEY LENDERS are individuals usually from Mahajan, Sowcar and Pathan communities. They do not accept deposits and their methods of business are not uniform. Others with surplus funds too are involved in money lending occasionally. Money lenders usually lend small amounts on personal security without any written agreement with prohibitive interest ranging from 75% to 300%, invariably quoted and collected on a monthly basis. They operate mainly among peasants and urban labor class. The lenders in both these categories are not interested in increasing productivity through credit. They are not even bothered about the principal amount as long as the interest keeps coming on time. Most of their credit goes for non-productive consumption activities. They are willing to give fresh credit to pay off the old credit with interest as it enhances their earning. There are enough cases where illiterates get cheated by them. Money lending now requires a govt. license and has a cap on interest rates. In spite of such restrictions, money lending business it still continues illegally among the low income groups because of easy access, absence of paper work and familiarity with the lenders. B. NON BANKING FIN. INSTITUTIONS or NBFI consist of development finance institutions, non-banking finance companies and mutual funds governed under SEBI. They do not come under direct RBI control like the commercial banks. B1. DEVELOPMENT FINANCE INSTITUTIONS: established by the central government for specific priority sector developmental activities. They are EXIM Bank, NABARD, NHB & SIDBI. EXIM Bank derives its name from Export-Import and its main activity is direct lending by way of long term loans and investments in export and import activities. †¢ NABARD is abbreviation for National Bank for Agriculture & Rural Development and is involved in refinancing banks and non banking financial institutions for agricultur al and rural developmental activities. †¢ NHB stands for National Housing Bank refinancing banks and non banking finance institutions on housing credits. †¢ SIDBI is short form for Small Industries Development Bank of India and it extends refinance to banks and non banking finance institutions for small scale industries. B2. NON-BANKING FINANCE COMPANIES: come under the regulations and supervision of RBI since 1998 but not under the II schedule like the scheduled banks. They are private or public limited companies and are allowed by RBI to accept deposits and offer 1% higher interest than the banks. They give credit only for the specific activities for which they are established like- equipment leasing companies, hire purchase finance companies, investment companies, loan companies, housing finance companies, etc. B3. MUTUAL FUNDS: are trusts that accept funds from the investors and redeploy them both in equity market as well as non-equity securities in a pre-determined pattern made available to the investor in advance and fully share the accrued profits with the investors after deducting their legitimate expenses. Hence, gain from mutual funds depends on the types of securities purchased by them. Broadly speaking there are three types of Mutual Funds. Equity Funds invest at least 65% of their funds in various equities and may give superlative returns or make one lose one’s own money depending on the market situation. Debt Funds invest in non equity securities and give low but steady returns. Balanced Funds are combination of both equity & debt funds. For a detailed discussion on Mutual Funds please see appendix at the end. C. BANKING SYSTEM consists of both cooperative and scheduled banks. C1. COOPERATIVE BANKS received momentum after the 2nd World War. They are formed by the cooperation of any group under the Co-op Societies Act. Such groups are largely localized and the success depends on their own expertise. Urban Co-op Banks catering to the needs of the urban population and Rural Co-op Banks such as State Co-op Banks and District Central Co-op Banks catering to the needs of the rural population fall in this category. Co-op Banks are not listed under the second schedule of RBI Act, 1934 but they come under RBI supervision separately. They are required to allocate 40% of their credit to the priority sector of the government like any other commercial bank, work within the jurisdiction of their state and are primarily into short term credit to its members. They are allowed to offer cheque book facility and interest 1% higher than commercial banks on deposits, but they do not offer all the banking and other ancillary facilities of a full fledged bank. All co-op banks/ credit societies have to be registered under Cooperative Societies Act of the respective states. They work on the basis of cooperation and can be established by any group of people by forming a co-op society and subscribing for their shares. The main difference between a co-op bank and a co-op credit society is that the former can receive deposit from general public and give cheque book facility but give credit only to the members where as the latter provides its services and benefits only to its members. Besides these, there are also Primary Agricultural Credit Societies, Primary Cooperative Agriculture & Rural Development Banks and State Cooperative Agriculture & Rural Development Banks in the cooperative sector. Cooperative banking structure, particularly the rural sector cooperative banking is quite complex in India. It can be broadly classified as follows- Urban Cooperative Banks alone have a single tier structure catering to all types of needs of the urban population through their branches in major cities spread all over the state, just like any other bank. Rural Cooperative Banks have three tier structures of delivery- State Cooperative Bank at the Apex level, District Central Cooperative Bank at the Intermediary level and Primary Agricultural Credit Societies at the Base level. Long Term Cooperative Credit Societies usually have two tier system- Primary Cooperative Agriculture & Rural Development Banks at the base level and State Cooperative Agriculture & Rural Development Banks at the state level. Some states have unitary system with State level banks working through their own branches and some other states have a mixture of both systems. C2. SCHEDULED BANKS are those which are registered as joint stock companies under Indian Companies Act and are also listed under 2nd schedule of the RBI Act, 1934. They are licensed by RBI to have branches all over India or even abroad and perform all banking activities including foreign exchange. They are required to lend 40% of their credit to the priority sectors of the government. They directly come under RBI regulations and supervision. RBI control over the scheduled banks is so efficient that we do not have any example where a scheduled bank has ever applied for liquidation since the inception of RBI. Scheduled banks are basically of two types- a. SCHEDULED COOPERATIVE BANKS are those cooperative banks with a large capital base and listed under the 2nd schedule of RBI Act of 1934. They can offer all banking facilities just like any other commercial bank. b. SCHEDULED COMMERCIAL BANKS are those private or public limited joint stock companies listed under the 2nd schedule of RBI Act of. They are further classified into 4 groups: Public Sector Banks, Private Sector Banks, Foreign Banks and Regional Rural Banks. b1. PUBLIC SECTOR BANKS are public limited companies whose majority shares are held by the government. Hence, their board of directors is fully controlled by the govt. and they come directly under govt. regulations. They are further classified into State Bank of India, Subsidiary Banks of SBI and Nationalized Banks. †¢ STATE BANK OF INDIA: The East India Company established three banks- Presidency Bank of Bengal in 1809, Presidency Bank of Bombay in 1840 and Presidency Bank of Madras in 1843 as bankers to the respective Presidency Governments. In 1921 they were amalgamated into Imperial Bank of India which also functioned as the central bank till RBI was formed in 1935. In 1955 it was nationalized and re-named as State Bank of India, popularly known as SBI. It also acts as the banker to the government wherever RBI does not have its offices. †¢ SUBSIDIARY BANKS OF SBI or SBI Group was formed by SBI with majority shareholding in them. State Banks of Saurashtra / Indore have merged with SBI in 2008 & 2010 respectively. State Banks of Mysore / Travancore / Hyderabad / Patiala / Bikaner & Jaipur are in the process of merger. SBI European Bank is their foreign subsidiary bank. †¢ NATIONALIZED BANKS: 14 commercial banks were nationalized in 1969. They are- Allahabad Bank, Bank of India, Bank of Baroda, Bank of Maharashtra, Canara Bank, Central Bank of India, Dena Bank, Indian Bank, Indian Overseas Bank, Punjab National Bank, Syndicate Bank, United Commercial Bank, United Bank of India and Union Bank of India. 6 more were nationalized in 1980. They are Andhra Bank, Corporation Bank, New Bank of India, Oriental Bank of Commerce, Punjab & Sind Bank and Vijaya Bank. b2. PRVIATE SECTOR BANKS do not have any govt. stake in their share holdings. Most of them are owned and controlled by business groups and follow aggressive corporate culture in their functioning to maximize their profits. The promotion prospects of their employees are directly linked to the business they promote unlike in public sector. Hence, they are far ahead of public sector banks in value added services, customer care and at the same time they also charge a host of hidden costs unlike the public sector banks. b3. FOREIGN BANKS are those banks whose head offices are located outside India and are allowed to do banking business under certain conditions. Prominent among them is lending 32% of their credit to the priority sector including export credit. Financing foreign trade remains their main business in India. They can fulfill their priority sector lending requirement by lending to priority sector export business and investing in priority sector government financial institutions. b4. REGIONAL RURAL BANKS were created to provide institutional credit and other facilities to the small and marginal farmers, agricultural laborers, artisans and small entrepreneurs in rural areas under 20 point Economic Program of the central government. 19 such banks were established in 1976, one in each state. They were given a jurisdiction to work, freedom to have branches or agencies within their jurisdiction and were put under the sponsorship of a nationalized bank. Ownership pattern of the capital was 35% with sponsor bank, 50% with the central govt. and 15% with the state govt. D. CHANGING PROFILE: Indian economic policy has been founded on the philosophy of economic growth and social justice. Indian banking sector has undergone a dynamic change over the years based on the needs of its economy. Most important among them are- REACH- The branch network of Indian banking system in so extensive, it covers almost all remote corners of India. It is one of the largest networks in the wo rld. †¢ DEVT- The diversification and development of our economy and its rapid growth is all because of our banking system’s credit to various priority sectors. These achievements have become a reality because of the changing profile of our banking system over the years. We shall discuss the major changes in the profile as under- D1. CHANGE IN SECURITY ORIENTATION: Traditionally personal creditworthiness of the borrower mattered a lot for any credit to be released. It meant, safety of the credit alone mattered for the banks and this safety came from the wealth the customers possessed. It effectively meant that only moneyed people could borrow from the bank. Now, banks have now changed their orientation from safety to purpose. Credit is now made available to make them creditworthy. Hence, technical competence of the borrower, operational flexibility and economic viability of the project has become more important than the security offered by the borrower. D2. CHANGE IN REGIONAL IMBALANCES: Private Banks opened their branches in urban locations because of the business potential. As a result Rural India remained unconnected by the banks. For example, pre-nationalization of banks there were only 12555 branches of banks in the entire country and they were located mainly in the urban centers. Post nationalization of banks number of branches has rapidly risen and as of Mar-09 it stands at 82408 branches. It is important to note that over 49% of these branches are now in the rural areas. It gives evidence that banking network has now spread uniformly to cover the entire nation without rural-urban bias. D3. CHANGE IN BANKING HABIT: As a natural corollary to the development in the field of branch banking, development of baking habits in India have grown at an unparalleled pace. Banks have successfully induced the customers to save a part of their earning in banks for the future. Some banks even sent their agents door to door to collect the savings. This helped the banks to diversify their lending portfolio considerably. If the deposits & advances counted for 13% & 10% of GDP respectively in 1969 they shot up to a whopping 50% & 25% respectively in 2002. D4. CHANGE IN BANKERS ATTITUDE: A welcome change is the change in the attitude of the bankers. Earlier lending had a wholesale character coupled with the security of the credit. This attitude of the bankers made the banking facilities almost the exclusive prerogative of the elite classes. With the branches reaching the rural areas banking went retail and for the ordinary masses. Grant of credit no more became a matter of privilege; it became available for genuine production need based purely on technical norms. D5. CHANGE IN BANKING PRODUCTS: As the focus got shifted from wholesale to retail banking, private banks in particular came up with novel products to suit the needs of the retail customers, like- home loan, auto loan, credit card, etc. Pigmy deposit introduced by Syndicate Bank and imitated by others in its various forms for example aimed at pooling idle money and inculcate saving habits among people. Banks sent their agents door to door to collect the deposit money on a daily basis and without setting a minimum. Bank deposits grew substantially because of this scheme. Such innovative products were considered a tough proposition earlier by the banks due to the volume of operations involved. Now, computerization of banking system has removed this difficulty. Some of the banks have started offering even auto FD where amounts above a pre set limit gets converted automatically into FD to fetch higher interest and gets redeemed automatically when cheques are presented and the account runs short of balance. D6. CHANGE IN MODE OF BANKING: When the banking system was manually operated, almost all services were time consuming except depositing money into the account in the base branch where the account is maintained. Computerization of banking has made service faster; the entire country is made to appear like one branch and even the necessity to go to the bank during banking hours for transactions is becoming redundant. Cash can be drawn from ATM anytime, even during holidays and bills can be paid directly to the account from one’s own office. D7. CHANGE IN NON-BANKING ACTIVITIES: Many banks have diversified their activities beyond traditional banking activities like equipment leasing, hire purchase financing and factoring [acting as agents for the customers. ] A major step in this direction is the merger of ICICI with ICICI Bank D8. CHANGE IN APPROACH TO CREDIT: As a corollary to the shift from security orientation to purpose orientation, bank’s approach to credit also changed from lending to development in the recent past. Banks started lending for the purpose of industrial development, providing access to capital market and long term savings of the economy. They even started specialized branches to cater to the specific needs of the customers, like- NRI Branch, Overseas Branch, SSI Branch, Recovery Branch, etc. D9. CHANGE IN CUSTOMER SERVICE: Private Banks started giving more focus to customer care in order to win more business. They even gave free collection and delivery facilities to HNI customers. To cope with the increasing banking habit, RBI too came up with a Banking Ombudsman scheme to redress the customers’ complaints. E. CHALLENGES AHEAD: Banks have sacrificed some qualitative aspects of growth while expanding the banking system to achieve development and increase its reach. Prudent regulations have no doubt helped to ensure systemic stability, but enhanced efficiency would necessitate institutional changes in the internal functioning of the banks in the following fields- E1. ORGANISATIONAL STRUCTURE: Centralized structures work wonders under uniform conditions. As the banks diversify their business into the field of agriculture, rural development and other priority sectors they have to deal with different types of customers who need different kind of treatment. They can not afford to force the standard sophisticated practices on all the customers uniformly. For example, to finance rural development it is very much essential that banks evolve simple and meaningful procedures to the comfort of the rural folks. The most common complaint against banks is the under-financing and non-availability of timely credit to meet the borrowers’ need based requirements. Hence, banks must revamp their organizational structures by delegating power, decentralizing control and monitoring performance. E2. EXCELLENCE IN MANAGEMENT: Quality of management is another challenge in the face of fast expansion. Here are ten critical characteristics of a good bank management- 1. An open culture and extensive vertical and horizontal communication, 2. Strong shared values, 3. Profit performance as a value, 4. Customer focused business orientation, 5. Willingness to invest in new products, 6. Strong sense of direction and consistent leadership, 7. Commitment to recruit best persons, 8. Investment in training, 9. Product information system and 10. Strong credit risk management. E3. CORPORATE GOVERNANCE: There are instances where the boards have shown reluctance to ratify and adopt RBI circulated covenants on professinalization of bank boards. Corporate governance can not be enforced through regulations, it must spring from within. E4. EMPLOYEE COMPETENCY: Together with the change in organizational structure there is a need to increase employee competency also. When new entrants into the market like Mutual Funds are cutting into the business of the banks, contemporary banking is becoming more and more skill sensitive and information technology is throwing new challenges to the banking systems, employee competency has become all the more important to retain the existing business of the banks and expand it. E5. APPROPRIATE TECHNOLOGY: Well established banks are facing stiff competition from the new entrant banks in terms of use of appropriate technology that makes banking convenient. The established banks do use modern technology but are way behind in maintaining pace and are challenged by these new entrants in order to remain in business. E6. NONPERFORMING ASSETS: These are popularly known as NPA, the loans that do not perform- loans under litigation or bad loans that are doubtful of recovery. 6. 2% of loans of scheduled commercial banks were NPA and the public sector banks had to write off 42. 5% of the NPA as on 31. 3. 2002. It reflects on the quality of the loan portfolio. At 5% NPA, 17 out of 21 major banks in Japan were on the red. As per developed country standards it has to be around 2%. Hence, banks have to bring down the NPA ratio drastically. E7. DIRECTED CREDIT: NPA as discussed above is a direct result of the quality of the loan portfolio of the banks. The system of directed credit to priority sector has no doubt brought impressive performance in quantitative terms but qualitatively it has brought more loan delinquencies since the relation between credit expansion and productivity has become weak. Political interference in credit decision-making is pointed out as a factor. The populist phenomenon of ‘loan mela’ is certainly contrary to the professional appraisal of bank credit needs. What is required to improve the quality of loan is- 1. Serious appraisal of credit need, 2. Potential productive activity and 3. Effective post credit supervision. E8. RISK MANAGEMENT: Risk is intrinsic to any business; all the more to banking. Risks encountered by banks have increased with the diversity of banking business and growing sophistication of banking operations. The major risks encountered by banks are credit risk, interest rate risk, operational risk, forex risk and liquidity risk. While deregulation has opened up new vistas for banks to shore up more revenue, it has entailed greater competition and greater risks too. Hence, greater attention needs to be iven in strengthening of internal controls of risk management. E9. SICK INDUSTRIAL UNITS: Funds locked up in industrial sickness has reached a staggering 2% of the entire credit of the banking system in March 2000. When sick units have to be nursed for ‘social objectives’ banks should not be forced to suffer; actual stakeholders must bear the burden of nursing them. When sick units are nationalized for protecting the employment or they are public sector entities, govt. must give adequate compensation to the banks to cover their dues which rarely happens in reality. It is neither legitimate nor practical for the banks to nurse sick units in all circumstances. E10. PROFIT PLANNING: Banking can not run like other profit making business since excessive and unjustified profits can only be at the cost of development of the society so far as the lending rates push up the production cost and ultimately is passed on to the customer. At the same time strong operating profits allow for allocations to capital and reserves which are very much essential for any bank to maintain its competitive viability. This setback was realized in the 90’s when the nationalized banks posted declining profits. Nevertheless, concerted efforts by these banks improved the situation by 2002. Stiff competition makes the banks to work on thin interest rate margins but to increase their profitability, they have to increase their fee based non-fund services substantially. E11. CUSTOMER SERVICE: Though entry of new private banks no doubt has increased the quality of customer service, it is by and large confined to urban areas and to wealthy customers. Only the educated and wealthy customers have access to detailed information on all the banking facilities available. Customer care is very much wanting in public sector banks where the unionized employees are sure of not losing their jobs on this count. Efforts must be made to collect customer feedback on regular basis and remedy the defects pointed out if any, at the earliest wherever possible. E12. GLOBAL STANDARDS: Computerization has revolutionized in banking in India. But it has not yet made much progress in expanding it beyond the ational boundaries. Not many branches of Indian banks are found outside India. Just like its progress in Information Technology and software, India has to make good progress in the banking sector internationally since allocation of capital can not be bound by geographical bound aries. COMMERCIAL BANK A. FEATURES: Commercial banks are private or public limited joint stock banking companies registered under Indian Companies Act. There are three distinct features of a commercial bank- they accept DEPOSITS on lower cost and give CREDIT on higher cost and the cost difference between deposit and credit is their GAIN. [For more details refer features of a bank] Its capacity to earn profits depends on its investment policy which in turn depends on the manner in which it manages its investment portfolio. Portfolio management refers to prudent management of a bank’s profit, liquidity and safety. But most commercial banks have gone way ahead of their basic functions introducing a host of fee based ancillary financial services in order to maximize their profits. Thus a commercial bank now may be defined as â€Å"an institution that accepts deposits from the public on lower cost and lends it on credit on higher cost as well as offers ancillary services for a fee in order to increase its profits. † B. ROLE IN FINANCIAL SYSTEM: Commercial banks strive to earn a profit. At the same time their entire business of credit depends on public money deposited with them. Hence, they can not afford to risk public money just to increase their own profits. It is common knowledge that national level bank strikes throttle the lifeline of the nation’s economy and inflict heavy losses on the GDP. The significance of banks’ role in the financial system must be understood in the words of Walter Leaf, who says â€Å"The banker is the universal arbiter of the world’s economy† Commercial banks have to play a major role in three distinct areas- †¢ Providing fiscal liquidity to the financial system, †¢ Giving capital protection to the economy and †¢ Speeding up economic growth of the nation. B1. FISCAL LIQUIDITY: By fiscal liquidity we mean the capacity to produce cash on demand. The most important role of any bank is to provide liquidity to the financial system. Banks pool around idle money in small pockets through their wide spread branches into a large capital and redeploy it wherever needed. For better management of credit, banks like to have as much funds in liquid as possible while maximization of gain is possible only by deploying maximum available funds on credit. Both are important for the bank. Hence, bank has to strike an effective balance between them so that neither its profitability suffers nor the liquidity of the market is affected. Liquidity of the assets of the bank is planned in three stages- a. CASH is the most liquid asset. But it is an idle asset earning no returns for the bank. Yet certain percent of deposits must be always kept in reserve with the Central Bank in addition to cash in hand to meet immediate withdrawal of deposit. This is known as Cash Reserve Ratio or CRR. It is decided by the Central Bank. b. CALL MONEY is the investment in Money Market, Bond Market and Reverse Repo. # Money Market securities include short term securities like Certificate of Deposit [CD] of banks, Commercial Papers [CP] of companies, treasury bills of the govt. which give stable but low returns and long term govt. securities whose yield depend on the interest scenario. Bond Market securities include Medium Term as well as Long Term bonds of any banks or companies tradable in the secondary bond market. They are bought and sold at discount or premium and hence, their yield also depends on interest scenario. # Reverse Repo is the system through which RBI borrows from commercial banks to abs orb excess liquidity at lower interest rate. These funds are made available to commercial banks through bills repurchase under repo system on a little higher interest. These securities are the next best liquid assets but the returns from these securities are low. But it is important to select only those securities which give a fairly stable return. These securities can easily be liquidated in the Market with short notice. RBI prescribes a Statutory Liquidity Ratio or SLR for banks by which banks have to maintain certain percent of their deposits as liquid assets. c. CREDIT and investments give maximum gain to the bank but they are the least liquid. Hence, these assets should be created only in required proportion, never as a priority. Among them, short term credits are preferred by banks over long term credits for the sake of liquidity. B2. CAPITAL SAFETY: Commercial banks strive to earn profit. But this must be done through prudent ways without risking the deposits of their customers. They have an important role to play in the capital protection. Hence, 1. Protection of deposits must be the top priority for the banks. Deposit Insurance and Credit Guarantee Corporation set up by the govt. gives guarantee only up to Rupees one lakh per customer in case a bank fails and has to be closed down. 2. Banks must avoid investing in equity related instruments or giving loan for speculative business since equity market weakens capital safety to a large extent. This is required to increase stability of the capital. 3. Banks have to use self restraint in their credit to other volatile businesses like real estate, film industry, etc. Similarly they must be extra cautious while accepting volatile securities as surety for credit. 4. Banks must restrict long term credits and investments to a small percent since capital safety in short term credits is higher than the long term credits. 5. Before giving clean loans, banks must have a thorough reality check on the creditworthiness of the borrowers to repay the loan on time. 6. Banks must maintain a fair margin between their interest rates on deposits and credits. B3. ECONOMIC GROWTH: Banks have a greater role to play in the economic growth of the nation through economic development of all the sectors. Hence, they must provide more credit to developmental and productive activities than non-productive or consumption oriented activities. Basically there are three types of developmental activities- Large capital based corporate activities, medium or small capital based priority sector activities and export activity. a. CORPORATE SECTOR- While funding developmental activities, banks find it easy to provide credit to large capital based profit making corporates in industry & trade since timely repayment of credit received by them with interest is almost guaranteed. Funding is required not only for corporates but also for other sectors like industry, trade, service, infrastructure, transport, housing, power, finance, technology, etc and the banks can not overlook one sector at the expense of the other. Besides, corporate sector companies also have the capacity to increase its capital base or raise funds from the open market by issuing their own bonds. In other words they do not depend heavily on banks for their capital requirements where as others heavily depend on banks. Hence, banks must use their prudence while deciding percentages for corporate credit. Large capital companies, particularly industry contribute to the economic growth of the nation not only by increasing production but also by increasing job opportunities. But their main drawback is that they are basically profit oriented and development is a byproduct of their activity. They are reluctant to venture into non-profit sectors that are essential for a balanced growth of economy. b. PRIORITY SECTOR- For all-round and real development there are certain priority sectors of the nation that require funding assistance by the banks. They are- infrastructure development like housing, rail and road construction, power, transport, etc. as well as small scale industry, trade, technology, agriculture, etc. From the profit perspective these priority sectors may not be always lucrative. It will not be always easy for these sectors either to increase their capital or borrow from open market; they depend heavily on banks for their capital requirements. RBI has mandated 40% of the total credit of all cooperative & scheduled banks and 32% for foreign banks towards priority sector lending. Banks are allowed to invest in special bonds or investment instruments of these sectors to meet these requirements. c. AGRICULTURE SECTOR is surely a super priority sector. It must attract special attention of the banks since self sufficiency in agriculture has to be a top priority of any nation. Agricultural production is commercially unprofitable at least in Indian context. Small and medium farmers produce just enough to sustain since their personal labor in agricultural production gets them no returns. Any other production can wait, not food; it has to be produced proportional to the population irrespective of the cost. For the same reason, governments are providing subsidy and refinance facilities for agriculture. Banks must ensure that the government benefits really reach the medium and small farmers. d. EXPORT SECTOR is not an exclusive sector like corporate or priority sector. It can pervade both corporate as well as priority sectors. Economies of the world are so interdependent that each country must have enough reserves in the currencies of other countries to pay the bills for supplies received from those countries. In its absence they end up in raising foreign debt which in turn has a cost by way of interest; or else they end up in depleting nation’s gold reserves. If a country depends on foreign supplies, it must give high priority to exports to that country to strengthen their balance of payment. In such a situation banks must step in to provide credit to export activities in a preferred manner to increase county’s reserves in that currency. C. MULTIPLE CREDIT CREATION: There are two views on whether banks can create credit- †¢ One view held by Walter Leaf is that banks can not create money out of thin air. They can lend what they have in cash. †¢ Another view held by Hartley Withers is that banks can create credit by opening a deposit every time they advance a loan. It is interesting to know that in an effort to maintain lowest possible idle cash, banks end up in increasing the money in circulation without increasing tender cash currency while creating credit! In fact, credit creation is one of the most important functions of a commercial bank. They increase the purchasing power of people. Let us see how does this happen. C1. METHOD: When bank gives a loan it pre-supposes that bank has cash through deposits. From the deposit bank gives loan which in turn gets deposited in the bank account. It creates an asset as well as a deposit with the bank. The beneficiary customer can issue cheques for payments in addition to the existing customers who have originally deposited the money. Thus money available in circulation superficially becomes more than the actual tender cash currency. This is the view of practical bankers. Concrete Example: Let us presume that our country has only one bank B and all the citizens are heavily into banking making the cash requirement of B just 10%. B gets total demand deposit of R. 10000 and that is the only currency in circulation in our country. Balance sheet of B will read as follows: |LIABILITIES |ASSETS | |Deposits 10000 |Cash in Hand 10000 | |TOTAL 10000 |TOTAL 10000 | B has to maintain 10% of its deposit of 10000 which is 1000 as cash reserve. It implies that B can give 9000 as loan. It creates an additional deposit as it is released to the deposit account while creating a credit of 9000 and the new balance sheet will read thus: LIABILITIES |ASSETS | |Deposits 19000 |Cash in Hand 10000 | |