Tag Archives: Business Studies

Affect Theory

Locke’s “Affect Theory (1976)” is probably the best known job delight model. The principle premise of this idea is that pleasure is determined via a mismatch amongst “what one wants in a process” and “what one has currently”. Further, the idea states that “how a great deal one values a given side of labour (e.g. the degree of autonomy in a feature) moderates how satisfied/disillusioned one will become even as expectancies are/aren’t met”. While a person values a particular side of a procedure, his pleasure is extra considerably impacted every in reality (at the same time as expectations are met) and negatively (while expectancies aren’t met), in comparison to new how doesn’t cost that aspect. to demonstrate, if worker appreciates freedom in the work area and worker is detached approximately freedom, then worker A would be extra glad in a function that offers more freedom and much less satisfied in a function with little or no autonomy in comparison to worker B. This concept additionally states that “an excessive amount of a specific aspect will produce more potent emotions of dissatisfaction the more a worker values that facet”.

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BANK FRAUD – TYPES AND PREVENTION

CHANCHAL SHARMA

M.COM, NET (COMMERCE)

SAPNA YADAV

ASSISTANT PROFESSOR

MONIKA RANI

ASSISTANT PROFESSOR IN COMMERCE

INTRODUCTION : – Banks are considered as necessary equipment for the Indian economy. This particular sector has been tremendously growing in the recent years after the nationalisation of banks in 1969 and the loberalisation of economy in 1991. Due to the nature of their daily activities of dealing with money, even after having such a supervised and well regulated system it is very tempting for those who are either associated the system or outside to find faults in the system and to make personal gains by fraud.These frauds, unlike ordinary crimes, the amount misappropriated in these crimes runs into lakhs and crores of rupees. Bank fraud is a federal crime in many countries, defined as planning to obtain property or money from any federally insured financial institution . It is something considered a white collar crime.BANK FRAUDS PHISHING

To understand the concept of Bank Fraud, we need to understand the concept of fraud and the various types of frauds and the ways to detect the same and the prevention of the same.

WHAT IS FRAUD : – Generally, A dishonest act or behaviour through which one person gains or tries to gain advantage over another which results in the loss victim, directly or indirectly is called fraud.

Under the IPC, fraud has not been defined directly under any particular section, but it provides for punishments for various acts which leads to commission of fraud. However the section is dealing with cheating, forgery, counterfeiting,misappropriation and breach of trust cover the same adequatly.

as outcome of fraud exceeds the losses due any other crime put together. With the rising bank business, cheating in the bank additionally expanding and the fraudsters are turning out to be increasingly complex and shrewd.

The four most important elements for constituting fraud are : – the active involvement of the staff, failure to follow the instructions and guidelinesof the bank by the staff, collusion between businessman,executives and politicians to bend the rules and regulations and any external factors.

LEGAL REGIME TO CONTROL BANK FRAUDS : –

  • The Indian penal code,1860
  • Criminal procedure code,1973
  • The Negotiable Instruments Act,1881
  • The Reserve Bank of India Act,1934
  • SARFAESI Act,2002
  • The Banking Regulation Act,1949

IMPACT OF FRAUD IN INDIA : – Many recent fraud incidents reported are related to fix deposites,loan disbursments, and credit and debit card frauds and ATM based frauds.All these frauds show that not only they undermine the profits, reliability of services and operating efficiencies but also have an impact on the society and the oragnisation itself.

This rise in the NPA is a serious threat to the Indian Banking industry as the sturdiness of a countrys banking and financial sectors deetermines the qualities of the product and services. it is also a direct indication of the living standards and well being of people.

Frauds has also hampered the growth of this establishment/industry. it is a huge killer for the business sector and underlying factor to all human endeavours. it is also increase the corruption level of the country.

CLASSIFICATION OF FRAUD AND PERVENTION:

To maintain uniformity in fraud reporting, frauds have been classified on the basis of types and provisions of the Indian Penal Code, and the and the reporting guildelines for the same has been prescribed by RBI The Reserve Bank of India classifies Bank frauds in the following catgories: –

  1. Misappropriation and criminal breach of trust.
  2. Negligence and cash shortages.
  3. cheating and forgery.
  4. Any other types of fraud not coming under the specific heads as above.
  5. Irregularities in foreign exchange transations.

MECHANICS OF BANK FRAUDS

DEPOSIT ACCOUNT FRAUDS:

The following types of frauds are generally commited;

  1. value inflation of cheques deposited
  2. changing the nature of the cheques(crossed to bearer)
  3. operating a dormant account fraudulently

Prevention Measures:

  1. carefully and systematic examination procedures of cheques and other trasactions.
  2. seperation of book keeping and cash handling operations.

PURCHADED BILL FRAUDS:

These are generally expensive and can take the following forms: –

  1. Discount on stolen or fake Railways Recipts and motor recipts along with other necessary bills.
  2. fake/forged bills for valueless goods are discounted.

Prevention Measures:

  1. Strict examination before discounting the bills.
  2. Establishing a better connection between the purchaser and the seller in the caes of dispatch of proceeds.
  3. Examining the recipts properly and strictly by conferming from the connected authorities.

HYPOTHICATION FRAUDS:

Cash advances,against pledged goods as securities are fertile field for frauds.

  1. Inflation of stock statements.
  2. Some of the stocked goods in the large quantity may have been less value.
  3. hypothicating some goods in the favour of different banks.

Prevention Measure:

  1. Only marketable goods to be acceptd as security
  2. Strict examination of the banks representatives and borrowers credential
  3. proper evaluation of stocks
  4. Verification of statements of stocks.

LOAN FRAUDS:

The following types of fraud are generally commited: –

  1. Two diferent person taking loans on the same item or product
  2. Borrowing is denied when the particular person is alleged of non payment
  3. Loan taken from one purpose but used for a different purpose i.e loan taken for agriculture but used for personal purposes.

Prevention Measures:

  1. Proper verification of documents and the purpose for taking the loan
  2. Incase of a substantial amount of loan taken, it should be checked by the competent authority

COMPUTER RELATED FRAUDS:

To provide efficient and fast service, most of the branches of the bank except the ones in the rural and remote areas have been computerized.

Not many frauds related to computers have yet been reported so far as computerization in the Indian banks is of recent origin. There is a need to anaysisthe nature of such crimes so that appropriate preventive measures may be devised.

CHEQUE FRAUDS:

This constitutes the biggest volume of bank frauds. This crime is done in the following forms:

  1. Cheques are stolen, filled and signed spuriosly and encashed.
  2. The signed cheques are stloen and are encashed with alterations, if needed
  3. Cheques issued by organistions for employees are duplicated.

Prevention Measures:

  1. The instruments must contain a proper date
  2. Checking cheque kitting
  3. The amount should be checked that it should be written in both numerical and words.

DISHONOUR OF CHEQUES:

Dishonour of cheque or cheque bounces are very serious problems and it is becoming even bigger. To cope with this issue which was affecting the smooth business tracsactions, the Government of India has introduced the Negotiable Instruments Act,1881 which provides for provisions to deal with cases of cheque bounce under section 138 to 142.

The Superme court of India in a landmark judgement has also provided with new guidelines to deal with cheque bounce cases.

CONCLUSION:

These frauds are a creation of the experienced criminals, frantic customers or someone associated with the banking system or a bunco bankster or their collusion. Most of time with a strict vigilance and examination of various documents, their work can easily be detected.

These frauds are now becoming more and more frequent and can be considered as one of the main reasons for damaging the economy of the country and with such high profile frauds happening all over the country, it has become necessary to put a check to these activites and if possible to create a more stringent legislation to deal with these issues.

“Sticking to the rules and eternal vigilance is the basic prevention measure.”

Impact of Goods and Service Tax (GST) in Indian economy

Saakshi singhal

 Ph.D, Research scholar, Department of commerce, MDU, Rohtak

gst in India

Abstract

GST (Goods and Services Tax) is defined as a uniform indirect tax levied on goods and services across a country. More than 160 countries have implemented GST. The GST rolled out from July 1, 2017. GST, as an umbrella tax has replaced central taxes such as Central Excise Duty, Service Tax, Additional Duties of Excise & Customs, Special Additional Duty of Customs, and cesses and surcharges on supply of goods and services. There was a huge hue and cry against its implementation. In present paper it has been shown that which sectors are positively or negatively affected by GST.

Keywords

Goods and service tax, Indian economy, GST

Introduction

The Rajyasabha unanimously passed the constitution (22nd amendment) bill 2014, on 3rd August 2016 with 203 votes in this bill’s favour. All parties, except the AIADMK, backed the bill. GST is an indirect tax on the consumption and production of sales of goods and services throughout India, to replace taxes levied by central Govt. and state Govt. GST is levied and collected at each stage of sale or purchase of goods and services. It has a system of Input Tax Credit which will allow sellers to claim the prepaid tax so that the final liability on the end consumer is reduced. It is the biggest tax reform in 70 years after independence of India, the Goods and Services Tax (GST) was finally launched on the midnight of 30 June 2017, though the process of forming the legislation took 17 years (since 2000 when it was first proposed). It was launched at midnight 30 June – 1 July 2017 session in both the houses of parliament convoked at the Hall of the Parliament, but which was immediately boycotted by the opposition by staging a walk out to show their disapproval of the same.

Before 1st July 2017, some taxes were levied by the state Govt. and some were levied by central Govt. Govt. levied only one unified tax rate instead of all different types of taxes, GST is applied on goods and services at the place where actual consumption happens. It is based on the Destination Principle. GST levied and collected at each stage of sale or purchase of goods and services. Goods and services are not distinguished and are taxed at single rate in supply chain till the goods and services reach consumer. It is the consumer of goods and services who bears the tax. The manufacture/wholesaler/retailer pays the applicable GST rate but can claim back through tax credit mechanism.

The current taxes like excise duties, service tax, custom duty etc. have been merged under GST. The taxes like sales tax, entertainment tax, VAT, and other state taxes will be included in GST.

How GST is levied

GST is levied on the place of consumption of goods and services. It can be levied on following states:

  • Intra-state supply and consumption of goods and services.
  • Inter-state movement of goods.
  • Import of goods and services.

 Impact of GST on Prices of Goods and Services

Tax experts claimed that the previous practice of tax on tax – for example, VAT was being charged on not just cost of production but also on the excise duty that was added at the factory gate leading to production cost building up but now all had been gone when GST is rolled out. The prices of consumer durables, electronic products and ready-made garments will be available at low price after rolled out GST. In other aspects, for goods which were taxed at low rate, the impact of GST brings price increment. Services bearing essential ones like ambulance, cultural activities, pilgrimages etc. were exempted from levy are same. India has seen the strongest tax reform that aims to do away with various – tax system on goods and services and bring them under one rate. We can draw the following impact of GST on prices:

 The government rolled out the much talked about Goods and Services Tax (GST) on the midnight of June 30. The GST Council has fixed the tax rates, keeping a view on all goods and services; they are classified under tax slabs 0 % (exempted ones), 5%, 12%, 18% & 28%.

Here is a list of some items which are completely exempt from the GST regime:

  • The unprocessed cereals, rice & wheat etc.
  • The unprocessed milk, vegetables (fresh), fish, meat, etc.
  • Unbranded Atta, Besan or Maida.
  • Kid’s colouring book/drawing books.
  • Sindoor/Bindis, bangles, etc
  • Below is a list of the sectors which are negatively or positively affected by GST.

Sector wise positively impact of GST

Sectors Tax Implications under GST
Auto Commercial Vehicle (CV)/Two wheelers (2W) To marginally reduce by 1% compared to the existing tax structure.  Positive
Auto – Small cars Small cars which less than 4 meter length and more than 1500 cc engine tax rates to reduce by 2-2.5% compared to the existing tax structure.  Positive
Auto – Midsized cars and SUV Midsized cars <1500 cc &<4 meters in length and SUV rates would come down by 8% and12% respectively.  Positive
Consumer goods – essential items Effective tax rate in essential goods (soaps, toothpaste, edible oil and hair oils) under various tax slabs – Positive
Consumer goods – Footwear Footwear tax rates (<Rs 500) to reduce to 5% from 9.5% and <Rs500 to reduce to 18% from 24-30%– Positive
Consumer goods – Cigarettes Effective tax under GST would be 28% along with additional Cess and other taxes. GST rate in cigarettes according to the current rate will gradually increase over the next 5-6 years – Positive
Building Materials Organised players to benefit from higher tax rate in the long term, as they gain market share on reduced pricing spread between organised and unorganised players. However, higher tax rate may lead to tax evasion through loopholes, which is a concern from organised players.
Logistics In Consolidation of warehouses across the country with free movement of goods will lead to higher volumes for logistic companies. Execution of the same, however, might take some time as unorganised players will have to adapt to new systems under GST.

Sectors negatively effected by GST

Sectors Tax Implications under GST
Hotel more than Rs 5000 room rental Tax rate on fine dining restaurants increased to 28% from 15%. This will result in room rentals hikes, with consequent impact on hotel occupancies.- Negative
Restaurants & fine dinning Tax increased to 18% from 15%. This tax revision will affect the fine dining restaurant industry which has already seen significant pressure on its sales due to macro environment slowdown. – Negative
Branded Apparels Garments >Rs 1000 will be taxed at 12% instead of 7%. This will adversely impact business as price hikes would lead to late recovery in sales.

 

Conclusion

At the end we can say clearly with no doubt that it is the biggest ever change in tax structure of India. There is a fall in prices of Auto Commercial Vehicle, Two wheelers, Small cars, Midsized cars and SUV, essential items, Footwear, Building Materials etc. and education, healthcare are going to be exempted from GST but on the other hand, price of some other goods and services increased after GST like Hotel room rental, Restaurants & fine dining and Branded Apparels. There was threat of inflation before GST rolled out.  It can be concluded that GST has been going to be an historical record for its full fledge implementation and hopefully this biggest historical reform will result in ease of doing business in India.

References

  1. http://economictimes.indiatimes.com
  2. The Tribune, 2016.
  3. ey.com>Home>Service>Tax
  4. http://www.quora.com
  5. com>business>Economy.
  6. economics.com
  7. http//hindustantimes.com
  8. http://M.rediff.com
  9. relakhs.com
  10. mapsofindia.com
  11. gstindia.com
  12. http://en.m.wikipedia.org.

Assessing the Prospects of Green Marketing in India

Dr. Rouf Ahmad Rather

Lecturer

Department of Commerce and Management

Gandhi Memorial College  Srinagar , J & K

Abstract 

The word “eco-friendly” has become a slogan of today’s marketing practices of different companies throughout the world. Green marketing is gaining noteworthy attention from both marketers and consumers. Given that a cautiously crafted green marketing strategy can earn trustworthiness with customers and provide a stage for revenue growth, it’s an area worthy of additional reflection. This paper is an effort to present a picture of green marketing prospects in India.

Key words: Green marketing, Environmentally friendly product, Awareness, India

 

Introduction

Green marketing generally aims to promote eco-friendly products and a safe environment where people could stay. Right now green marketing is widely becoming a phenomenon throughout the world as concerns on our environment have begun to escalate in the past few decades. Every year, the population of people who are turning towards green brands or environmental friendly products are increasing, so, magnifying the phenomenon exponentially. Thus, businesses in almost every industry nowadays are flaunting the “green” features of their products and services in every chance they get. The success, however, of any green marketing strategy is heavily reliant on the consumers it would like to target.

 According to the American Marketing Association, green marketing is the marketing of products that are presumed to be environmentally safe. Thus green marketing incorporates a wide range of activities, including product modification, changes to the production process, packaging modifications, as well as changing advertising. Still defining green marketing is not a simple task where several meanings intersect and contradict each other; an example of this will be the existence of varying social, environmental and retail definitions attached to this term. Other similar terms used are Environmental Marketing and Ecological Marketing.

 According  to Polonsky (1995)’s definition, “Green or Environmental Marketing consists of all activities designed to generate and facilitate any exchanges intended to satisfy human needs or wants, such that the satisfaction of these needs and wants occur, with minimal detrimental impact on the natural environment”. Thus “Green Marketing” refers to holistic marketing concept wherein the production, marketing consumption an disposal of products and services happen in a manner that is less detrimental to the environment with growing awareness about the implications of global warming, non-biodegradable solid waste, harmful impact of pollutants etc., both marketers and consumers are becoming increasingly sensitive to the need for switch in to green products and services. While the shift to “green” may appear to be expensive in the short term, it will definitely prove to be indispensable and advantageous, cost-wise too, in the long run.

Green Marketing Practices in India

Nike is the first among the shoe companies to market itself as green. It is marketing its Air Jordan shoes as environment-friendly, as it has significantly reduced the usage of harmful glue adhesives. Kansai Nerolac Paints has been at the forefront of paint manufacturing for more than 88 years pioneering a wide spectrum of quality paints. Kansai Nerolac has worked on removing hazardous heavy metals from their paints – among this lead being the most prominent metal. Kansai Nerolac does not add any lead or other such heavy metals in its manufacturing process.

Dell has been one of the vendors who focus on producing green IT products. They have a strategy called “Go green with Dell” to sell these products in the market. It also comes in an eco-friendly packaging with a system recycling kit bundled along. Talking about the green commitments of the company, Sameer Garde, Country GM, Dell India, says, “Dell is also actively pursuing green innovations that will be of value in 2009 from data-center efficiency to the use of eco-friendly materials for everything from chassis design to product packaging.

Eco Hotels (Ecotels) is a certification system promoted by Hospitality Valuation Services (HVS) International. This system is based on 5 main criteria: environmental commitment, solid waste management, energy efficiency, water conservation, and employee education/community involvement. In India we have Eco-hotels like Orchid, Rodas, Raintree etc. believing and practicing green marketing. According to Harish Tiwari of Infinity Infomatic Pvt Ltd, a well known distributor, who says, “We don’t find any difficulty in selling green products because the knowledge for these products has increased in us as well in customer. They are ready to pay higher for these products once they convinced.” In May 2007, IBM launched Project Big Green to help clients around the world improve the efficiency of IT and better optimize their data center resources. IBM has software and services technologies to help businesses reduce data center energy consumption and cut energy costs by more than 40 percent.

The Introduction of CNG in New Delhi, the Capital of India, as it was being polluted at a very fast pace until Supreme Court of India forced a change to alternative fuels. In 2002, a directive was issued to completely adopt CNG in all public transport systems to curb pollution. The Gas Tech Electronic Products (Pvt) Ltd. has invented LPG Kit for motorcycles/scooters (4 stroke and 2 stroke).Can be fitted in 50 cc to 375 cc air cooled , single cylinder 2 stroke as well 4 stroke vehicles with cent % fuel efficiency, with clean exhaust and zero pollution.

Significance of Awareness in purchasing of green products

Generally speaking awareness comprises a human’s perception and cognitive reaction to a condition or event. Awareness does not necessarily imply understanding, just an ability to be conscious of, feel or perceive. To create more awareness for the consumers, many companies can be involved in programmes that support the environmentally friendly products. The consumers with respect to high to average level of green product awareness show high to medium level of green buying behavior and consumers having awareness to small degree and not at all show low green buying behavior. Hence there is an urgent need to make consumers aware about green products in order to speed up the green buying behavior among all consumers. (Rouf & Rajendran 2014)

The media are playing a significant role in creating awareness and educating people about the benefits of environment conservation to the society (Lalit & Kanokthip, 1998). In developing awareness of a green product, companies attempt to augment consumer knowledge of the product and its environmental attributes in the hope of bringing about purchase behaviour. But still now the exact nature of the relationship between environmental knowledge and environmentally sensitive behaviour is still to be established (Arbuthnott & Lingg, 1975). Consumer awareness might be useful when the manufacturer’s objective is to overcome resistance to new environmentally safe packages. Advertising of the new advantages and benefits of such products helps its consumers become more aware of the damage to the environment and they tend to change their buying habits. Unless consumers are aware of the advantages of green products, manufacturers‟ effort to introduce this product to the market will be wasted efforts (Kassaye & Dharmeda 1992).

Challenges in adopting Green Marketing 

Implementing Green marketing is not going to be an easy job. The firm has to face many problems while treading the way of Green marketing. Challenges which have to be faced are listed as under:

  • Green marketing encourages green products/services, green technology, green power/energy; a lot of money has to be spent on R&D programmes. So practicing green marketing initially will be a difficult and costly affair.
  • The customers may not believe in the firm’s strategy of Green marketing, the firm therefore should ensure that they convince the customer about their green product, this can be done by implementing Eco-labeling schemes. Eco-labeling schemes offer its “approval” to “environmentally less harmless” products have been very popular in Japan and Europe. In fact the first eco-label programme was initiated by Germany in 1978.
    • in the beginning the profits will be very low since renewable and recyclable products and green technologies are more expensive. So Green marketing will prosperous only in long run.
    • Many customers may not be willing to pay a higher price for green products which may affect the sales of the company.
    • The firms practicing Green marketing have to strive hard in convincing the stakeholders and many a times there may be some who simply may not believe and co-operate.

The Future of Green Marketing

There are many things to be learned to avoid green marketing myopia, the short version of all this is that effective green marketing requires applying good marketing principles to make green products desirable for consumers. The question that remains, however, is, what is green marketing’s future? Business scholars have viewed it as a “fringe” topic, given that environmentalism’s acceptance of limits and conservation does not mesh well with marketing’s traditional axioms of “give customer what they want” and “sell as much as you can”.  Evidence indicates that successful green products have avoided green marketing myopia by following three important principles:

Consumer Value Positioning

  • Design environmental products to perform as well as (or better than) alternatives.
  • Promote and deliver the consumer desired value of environmental products and target relevant consumer market segments.
  • Broaden mainstream appeal by bundling consumer desired value into environmental products.

Calibration of Consumer Knowledge

  • Educate consumers with marketing messages that connect environmental attributes with desired consumer value.
  • Frame environmental product attributes as “solutions” for consumer needs.
  • Create engaging and educational internet sites about environmental products desired consumer value.

Credibility of Product Claim

  • Employ environmental product and consumer benefit claims that are specific and meaningful.
  • Procure product endorsements or eco-certifications from trustworthy third parties and educate consumers about the meaning behind those endorsements and eco-certifications.
  • Encourage consumer evangelism via consumers social and internet communication network with compelling, interesting and entertaining information about environmental products.

Conclusion

 Green marketing covers more than a firm’s marketing claims. While firms must bear much of the responsibility for environmental degradation, the responsibility should not be theirs single-handedly.  Green marketing requires that consumers want a cleaner environment and are willing to “pay” for it, possibly through higher priced goods, modified individual lifestyles, or even governmental involvement. Until this occurs it will be difficult for firms alone to lead the green marketing revolution. It must not be forgotten that the industrial buyer also has the ability to pressure suppliers to modify their activities. Thus an environmental committed organization may not only produce goods that have reduced their harmful impact on the environment, they may also be able to pressure their suppliers to behave in a more environmentally “responsible” fashion.

Green marketing should not be considered as just one more approach to marketing, but has to be pursued with much greater vigour, as it has an environmental and social dimension to it.  And thus green marketing assumes even more prospects and relevance in developing countries like India.

References

Arbuthnott, J. and Lingg, S. (1975). A comparison of French and American environmental behaviours, knowledge and attitudes. International Journal of Psychology, 4(10), 275-

Kassaye. W. Wassen and Dharmeda V.(1992). Balancing Traditional Packaging Functions with the New Green Packaging Concerns. Advanced Management Journal, 57 (4), 15.

Polonsky, M.J. (1995). A stakeholder theory approach to designing environmental marketing

strategy. Journal of Business and Industrial Marketing.10 (3), 29‐46.

Lalit M. Johri and Kanokthip S. (1998). Green marketing of cosmetics and toiletries in       Thailand. Journal of Consumer Marketing, 15(3), 265 – 281.

Rouf Ahmad Rather and R Rajendran (2014). A Study on Consumer Awareness of green products and its Impact on Green Buying Behavior, International Journal of Research (IJR), 1 (8), 1483-1493

 

 

Role of RTI in SBI

NEELAM TRIPATHI

Faculty, Department of Management

Mewar Institute of Management, Ghaziabad

 

Role of RTI in SBI
Role of RTI in SBI

ABSTRACT

India is a democratic nation. Here government and financial institutions work framed by the people, of the people and for the people. Even in our preamble of constitution it is clearly mentioned that here all citizens are totally secure and they must receive equality of status and opportunity, justice, having liberty of thought and expression and the dignity of the every individual is assures. So every citizen is legally having right of transparency and accountability of government overall system including banking sector also. These research papers contain analysis of the implementation status of RTI in Indian banking sector with special reference in State Bank of India. Bank is a financial institution which works for the general public. Its functioning is to accept deposits and saving of a common man and also allow them lending or credit facilities. The basic resource of banking sector is collected from the Indian citizen, it is the duty of banking sector to handle this resources very carefully and ensure their proper utilization. Even bank must create transparency and proper accountability in their process, for getting less chances for corruption. Even a lot of people do not know that  any bank may public sector or private sector come under RTI and if customer  have any issues with them, they can file a RTI against them and get any kind of information. Till now there is a need of awareness in Indian citizens to understand RTI and  file RTI to get any information they need. Information which is available in any form material in banking sector comes under RTI. It includes records, documents, memos, e-mails, opinions, advices, press releases, circulars, orders, logbooks, contracts, reports, papers, samples, models, data material held in any electronic form. It also includes information relating to any private body which can be accessed by the public authority under any law for the time being in force. The present era of globalization and highly competativeness, public bodies are also spreading  their wings speedly to become global brands rather in corporate field or banking industry in which State Bank of India possess good reputation in all over the world basically it covers maximum developed countries . Due to heavy involvement of public functions in banking sector, it is vital to fix their accountability and responsibility towards their customers.

Keywords: Right to information, State Bank of India, financial institute, globalization.

Introduction

The Right to Information Act was introduced in the year 2005, it replaced the Freedom of Information Act, 2002. The motive behind the introduction of this act was to set up a government system to provide information to the citizen of the country. It was for the betterment of the right to information. Under this any citizen can ask for information from any public authority, and the public authority is oblige to provide the information within thirty days. It makes compulsive to public authority for maintaining  a computerized record, so it is easier to provide information to anyone who is seeking it. But the earlier times, the information disclosure was restricted in India under the Official Secrets Act, 1923 and some other laws. But by the introduction of the RTI Act these restrictions were loosened up. This Act was passed by the Parliament in June 2005 and came into force from October 2005. it was a central Act. One thing is very interesting about this act was that before its lawfully act by the central government it was already in forced at the state level some of the well known examples are in 1997 Tamil Nadu and Goa, Karnataka and Rajasthan in 2001, Delhi in 2001, Maharashtra and Assam in 2002, MP in 2003, Jammu and Kashmir in 2004, and Haryana in 2005.

Under the RTI act Indian Legislature did not include private bodies directly. But due to public demand or under various different type of circumstances they bound to put certain part of this private regulatory bodies under their authority one of the landmark judicial pronouncement of Sarabjit Roy v. Delhi Electricity Regulatory Commission (1) it was reaffirmed by the Central Information Commission that privatized utility companies are also included under the umbrella of the RTI Act, regardless of their privatization. After studying various blogs and news article one of the finding came out that till now a general public have misunderstanding that those entities which are getting subsidies or are funded by the government are comes under the purview of the RTI Act. But the hidden fact is that any private bodies can falls under the RTI whether or not they are substantially funded or aided by the government. Private entities are fall under the range of the RTI Act by their registration under any public authority through which it comes. An individual can gain any information from a private body, just by identifying the concern Public Authority with whom the private entity is registered. As banks are register themselves through the Reserve Bank of India whether private or public bank and their regulatory functions are comes under RBI and Co-operative Societies register themselves through Deputy Registrar of Co-operative Societies.

Objective of Research:

  • To select the India’s no.1 bank and find out its course of action and responses towards public under RTI.
  • To focus the essential feature of RTI in India’s renowned and must trustable bank i.e, SBI.
  • To find out the relationship of banking sectors with RTI.
  • To create attention of customer towards their right and duties in public sector bank with special reference of SBI

Data Collection:

All the study has been based on secondary data from the website, published news paper articles, court orders related with banking and financial institutions and blogs of renowned authors.

Structure of RTI in the State Bank of India

  • Central Assistant Public Information Officer (CAPIO) These officers send the application or appeal to the Central Public Information Officer or the concerned Appellate Authority for disposal. An Assistant Public Information Officer is not responsible for supply of any information.
  • Central Public Information Officer (CPIO)Central Public Information Officers are responsible for giving information to a person who seeks information under the RTI Act.
  • Appellate Authority (A A)If an applicant is not supplied information within the prescribed time of thirty days or 48 hours, as the case may be, or is not satisfied with the information furnished to him, he may prefer an appeal to the First Appellate Authority who is an officer senior in rank to the Central Public Information Officer.

 

RTI Applicability in SBI

  • Application format :There is no prescribed format of application  is given in RTI Act. The applicant  can use plain paper which  should contain the name and complete postal address of the applicant. However  in cases  information is sought electronically, the application should contain the name and postal address of the applicant. The mode of  application should be  English or Hindi or in the official language of the area in which the application is being made, accompanied by the prescribed fee and specifying the particulars of the information sought.
  • RTI Fee : The RTI fee is to be paid by Demand Draft or Bankers Cheque or IPO in the name of ‘State Bank of India’ and payable at the centre where CPIO is located. Or in other condition  applicant may deposit the prescribed fee in the ‘P & T Charges Recovered Account’ at any branch of the State Bank of India and will attach counterfoil thereof in original with the application / request while forwarding it to the CPIO / CAPIO. A specially designed voucher has been rescribed by the Bank for depositing the RTI fee / additional fee.

Format for the voucher is:

Application Fee
Application fees ……………………. Rs. 10/-
Additional fee – as cost of information
a. Rupees two for each page (in A-4 or A-3 size paper) created or copied.
b. Actual charge or cost price of a copy in large size paper
c. Actual cost or price for samples or models
d. Information provided in diskette or floppy rupees fifty per diskette or floppy
e. Information provided in printed form at the price fixed for such publication or rupees two per page of photocopy for extracts from the publication.

sources: www.sbi.co.in

Types of   information can be taken  from the SBI under RTI

Section 4(1)(b) of the Right to Information Act, 2005

Section 4(1)(b) Information to be published under the Act
(i) The particulars of the organisation, functions and duties
(ii) The powers and duties of its officers and employees
(iii) The procedure followed in the decision making process, including channels of supervision and accountability
(iv) Norms set by the Bank for the discharge of its functions
(v) Rules, regulations, instructions, manuals and records, held by the Bank or under its control or used by its employees for discharging its functions
(vi) Statement of Categories of Documents that are held by the Reserve Bank or under its Control
(vii) Particulars of any arrangement that exists for consultation with, or representation by, the members of the public in relation to the formulation of its policy or implementation thereof
(viii) List of Boards, Councils, Committees and other bodies consisting of two or more persons constituted as its part or for the purpose of its advice, and as to whether meetings of those boards, councils, committees and other bodies are open to the public, or the minutes of such meetings are accessible for public
(ix) A directory of its officers and employees
(x) Monthly remuneration received by its officers and employees, including the system of compensation as provided in its regulations
(xi) The budget allocated to each of its agency, indicating the particulars of all plans, proposed expenditures and reports on disbursements made
(xii) Not applicable
(xiii) Particulars of recipients of concessions, permits or authorisations granted
(xiv) Details in respect of the information, available to or held by it, reduced in an electronic form
(xv) The particulars of facilities available to citizens for obtaining information, including the working hours of a library or reading room, if maintained for public use
(xvi) Names, designations and other particulars of Public Information Officers

                                                  Sources: www.rbi.org.in

Any citizen of country has a right to seek information from any public authority which works for the benefit of public and under its control. This right includes work inspection, any documents and records; taking notes, certified copies of documents and records also consider any certified samples of material held by or under control the public authority. One thing  is important about the seeking information  under the Act  is that  it allow only those information , which already exists and is held by the public authority or held under the control of the public authority. The Central Public Information Officer has no right to create information; or to interpret information; or to solve the problems raised by the applicants; or to furnish replies to hypothetical questions. Even any citizen has a right to obtain information from a public authority which already stored in computer or other device or in e-mail  in the form of diskettes, floppies, tapes, video cassettes or in any other electronic mode or through print-outs provided. An applicant can received information ordinarily in the form in which it is sought. However, if the supply of information would disproportionately or divert the resources of the public authority or may cause harm to the safety or preservation of the records, that form of information may be denied by the public authority. The CPIO should not re-shape the information.

Information which is not to be Disclose under RTI (Exempted information)

The Act provides under Sections 8 and 9, certain categories of information that are exempt from disclosure to the citizens. The following categories of information are exempt from disclosure under Section 8(1)

a. information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign State or lead to incitement of an offence.
b. information which has been expressly forbidden to be published by any court of law or tribunal or the disclosure of which may constitute contempt of court;
c. information, the disclosure of which would cause a breach of privilege of Parliament or the State Legislature;
d. information including commercial confidence, trade secrets or intellectual property, the disclosure of which would harm the competitive position of a third party, unless the competent authority is satisfied that larger public interest warrants the disclosure of such information;
e. information available to a person in his fiduciary relationship, unless the competent authority is satisfied that the larger public interest warrants the disclosure of such information;
f. information received in confidence from foreign Government;
g. information, the disclosure of which would endanger the life or physical safety of any person or identify the source of information or assistance given in confidence for law enforcement or security purposes;
h. information which would impede the process of investigation or apprehension or prosecution of offenders;
i. cabinet papers including records of deliberations of the Council of Ministers, Secretaries and other officers;
j. information which relates to personal information the disclosure of which has no relationship to any public activity or interest, or which would cause unwarranted invasion of the privacy of the individual;

                                                                              Sources: www.sbi.co.in

Rules for the prescribed time limit or disposal  and Appeals Requests:

S.No Situation Time limit for disposing off applications
1. Supply of information in normal course 30 days
2. Supply of information if it concerns the life or liberty of a person 48 hours
3. Supply of information if the application is received through CAPIO 05 days shall be added to the time period indicated at Sr. NO.1 and 2.
4. Supply of information if application / request is received after transfer from another public authority:

(a) In normal course

(a) Within 30 days of the receipt of the application by the concerned public Authority.
(b) In case the information concerns the life or liberty of a person. (b) Within 48 hours of receipt of the application by the concerned public authority
5. Supply of information if it relates to third party and the third party has treated it as confidential. Should be provided after following the procedure given in Section 11 of the RTI Act.
6. Supply of information where the applicant is asked to pay additional fee. The period intervening between informing the applicant about additional fee and the payment of fee by the applicant shall be excluded for calculating the period of reply.

                                                                                       Sources: www.sbi.co.in

Prescribed rules for Appeals :

  • In the normal case the appeal should be disposed off within 30 days of receipt of the appeal.
  • In exceptional cases, the Appellate Authority has a power to take 45 days for its disposal with considering reasons for which it recorded.

Acceptance and rejection of RTI applications in SBI and other Banks

There were data taken from the RTI foundation of India website which the present analysis of RTI application in Banking sector and it gives last data updated up to 2012-13. It present that Only three Banks, Bank of Maharashtra, State Bank of India and Bank of India, showing  a trend of increasing  number of RTI applications  in 2012-13 in comparison to 2011-12. In which Bank of Maharashtra recorded the highest increase in no. of application received it was more than 25%. On the other hand data of 17 other Banks has shows decreased data of RTI requests in 2012-13 in comparison of previous year. On the other hand, both State Bank of India  which having top NPA grosser amongst the 20 Banks and Bank of India which is the 3rd largest bank  witnessed a slight growth in the number of RTI applications received and  they also shown slight declining  in the percentage rejected  RTI applications in 2012-13 as compared to 2011-12. But the trends of rejection rate studied more than doubled in Allahabad Bank, United Bank, UCO Bank and the Bank of Baroda in 2012-13.  Even a Corporation Bank which did not reject any RTI application in 2011-12, had rejected more than one third of its RTI applications received in 2012-13. This study focused that Rejection rates trends were showing decreased rate in 2012-13 in the Bank of India, Indian Bank and Vijaya Bank as compared to the previous year. The latest NPA figures for Banks as in March 2014 on the RBI website despite are not available.

There was article presented by Chetan Chauhan in Hindustan Times, New Delhi, has presented an analysis which is presented by one of the Delhi based advocacy group containing over 80,000 applications who filed under the Right To Information Act against 24 major public sector undertaking (PSU) banks it shows huge percentage of rate of rejection increased in 2015-16 as compared to the previous 3 years. It shows approximate 50% rejection rates of the public sector banks. Which is strongly a sign of indication that the banks are more reluctant for providing the information sought. These 24 banks, were blamed for the transparency related to governance constraint enacted law in 2005, reportedly about 40% of the RTI applications filed with the finance ministry. A Reserve Bank of India appointed PJ Nayak committee had cited RTI as one of the “constraints” on the governance in the banks.

This committee has also find out that on the total number of application received by the bank, most of the applications are related with the information of non-performing assets and others are related with the discrepancies of applicants regarding bank account and reasons for not opening an account. According to Nayak committee review related to the RTI load on public sector banks, it was presented that each bank is receiving the average applications in its branch is not more than 2. This committee has projected the debunking constraint theory of banking sector. He supported this theory with  a argument basis  that most banks have sufficient staff to deal with rising RTI applications received and taking suitable action on that  but banks are  reluctant to provide information citing constraint on resources. Even this committee has cleared in its report that there is no any co-relation between non-performing assets of the banking industries and the volume of the RTI applications filed. The banks had opposed RTI applications seeking information about loan defaults citing privacy provisions but the Supreme Court in 2016 directed them to provide information citing larger public interest. Among the banks, the State Bank of India received one-third of the total information requests followed by the Punjab National Bank and Bank of Baroda.

One of the most adorable article was  Written by Utkarsh Anand | Amitabh Sinha & Ravish Tiwari New Delhi | Published: December 17, 2015,  As On 16th December 2015 the supreme court of India strictly bounded the apex body of banking sector i.e., RBI regarding giving up the information by private and public sector banks under the RTI should be taken as the action of trying to covering up the banking action of underhand from the public gaze . A bench of Justices M Y Eqbal and C Nagappan has mentioned that “RBI is supposed to uphold public interest and not the interest of individual banks. We have summarized that many financial institutions have resorted to such acts which are neither clean nor transparent. The RBI in association with them has been trying to cover up their acts from public scrutiny”. Even this committee has given very strong verdict about the RBI attitude toward ignorance of various orders of Central Information Commission and high courts over suspicious disclosure of information relating to banks.

Even court has totally rejected RBI’s arguments for fiduciary relationship with other bank and withholding them to disclose various such informations those will be exempted under the RTI Act and it is also clearly mentioned by the court that RBI is not legally authorize to create fiduciary relationship with any bank or to maximize the benefits of any public or private sector banks. It is the statutory duty of RBI is to uphold the public interest priority basis. It must be act with transparency without hiding any information and give full disclosure all the informations seek by any applicant.

Conclusion:

After reading various articles I came on this conclusion that RTI is a powerful tool in the hand of every citizen and it would deliver significant social benefits. It gives a strong support to the national democracy, provide good governance by empowering the rights of citizens to participate effectively and hold the government officials accountable. This act is not made for just providing the  information only, as in most of the countries it act as an effective watchdog  which ensure that everyone is coming in purview of the Act to work in accordance with rules and regulations, without any irregularities. However, it should be strictly require to implement not only political or government authorities but also on active civil societies and private authorities .Currently, the RTI Act is implemented in India and accepted by the peoples but it is passing through a decisive phase, it strongly require very much more efforts to increase its growth and development. Only doing protest against the lack of implementation of this law alone is not sufficient, even it requires encouragement for the intiatator for its full implementataion, growth  and better result. As currently as per court verdict RBI must be fully support the common people, national economy and government by accepting the full norms of RTI and to create transparency and quick response towards applicants.

Limitations:

  • Unavailability of any previous study which has been conducted to find out the role of RTI and its effective functioning in banking sector.
  • As in this research availability of published data from State bank of India is not available. All data has been taken from the website of well known authors of renowned newspapers.
  • Relevancy of data has not be supported by any authorized published data. Insufficient  availability of current data related to RTI applications  position in SBI.

Suggestions:

Some of the recommendations regarding the role of RTI in banking sector are mentioned below:

  • This act needs more clarification for implementation of specific provisions .As it require step by step action detail for each specific provision.
  • As India is well technofied and having good strength of educated people but till now there is a huge requirement of Mass awareness campaign at Central and state levels. The main objective behind this awareness program is to increase public interest and knowledge about their right to informantion from any public authority, to encourage citizen involvement; and also to increase transparency within the government system.
  • To compulsion all public authorities and training institutions for the incorporation and implementation of training module based on RTI in all training programs related with public awareness.
  • To Develop a consensus on a common set of rules and norms that would enable and encourage public to  apply for information from residing in one state from any other state, rather than going firstly to  study and understand the rules of each state and competent authority separately.

Reference:

  1. Application No: CIC/WB/A/2006/00011 (Right to Information Act – Section 19). 2006
  2. http://asiafoundation.org/2011/09/28/right-to-information-in-india-an-effective-tool-to-tackle-corruption/
  3. http://www.rtifoundationofindia.com/analysis-rti-applications-filed-banking-sector#.WSaQ92ecHIV
  4. https://www.sbi.co.in/portal/web/corporate-governance/right-to-information-act-2005
  5. https://blog.ipleaders.in/right-information-applicable-private-sector/
  6. https://www.rbi.org.in/Scripts/Righttoinfoact.aspx
  7. http://www.hindustantimes.com/india-news/rti-rejection-rate-in-most-public-sector-banks-increased-in-2015-16/story-baIUPbM9DfwGXLnSCzo51M.html
  8. http://indianexpress.com/article/business/business-others/rbi-must-disclose-all-info-about-banks-under-rti-supreme-court/

NON PERFORMING ASSETS AND ITS MANAGEMENT (A comparative study between public and private sector)

 

                                                                                                             

Bhanu Uday Somisetti

Dr. P. Raja Babu

                                                      K.Venkateswara Kumar                                                                     

ABSTRACT

Today banking has to play very prominent and crucial role in developing countries like India. In the Indian financial system banks acts as a financial intermediary or institution serves different services to accelerate the economic growth of the country. To improve the financial health of the banks various norms have been introduced at regular intervals. It is quite clear that generally the good health of a bank is reflected in better return on assets. The Non- Performing assets not only reduce the profitability of the banks by writing of the principal amount, as well as the amount of interest on advances and it is also a threat to the stability of the bank. This article mainly focuses on the causes and how a bank manages Non-Performing Assets (NPAs) under the guidelines of RBI.

KEYWORDS: Non-Performing Assets, Financial Institutions, Profitability, Banking Sector, Economic Growth, Reserve Bank of India (RBI).

  1. INTRODUCTION

All assets do not perform uniformly. In some cases, assets perform very well and the recovery of principal and interest happen on time while in other cases there may be delays in recovery or no recovery at all because of one reason or the other. Similarly, an asset may exhibit good quality performance at one point of time and poor performance at some other point of time. NPAs refer to loans which are at risk of default. Reserve Bank of India (RBI) defines “An asset, including a leased asset, becomes non­-performing when it ceases to generate income for the bank. Banks have to classify their assets as performing and non-performing in accordance with RBI’s guidelines. Under these guidelines an asset is classified as non-performing:

  • If any amount of interest or principal installments remains overdue for more than 90 days in respect of term loans.
  • In respect of overdraft or cash-credit an asset is classified as non-performing if the account remains out of order for a period of 90 days and
  • In respect of bills purchased and discounted account, if the bill remains overdue for a period of more than 90 days.
  1. CLASSIFICATION OF NPAs

According to the RBI guidelines banks must classify their assets on an on-going basis into the following four categories:

  • Standard assets: Standard asset service their interest and principal installments on time, although they occasionally default up to a period of 90 days. Standard assets are also called performing assets. They yield regular interest to the banks and return the due principal on time and thereby help the banks earn profit and recycle the repaid part of the loans for further lending. The other three categories (sub-standard assets, doubtful assets and loss assets) are NPAs and are discussed below.
  • Sub-standard assets: Sub-standard assets are those assets which have remained NPAs (i.e., if any amount of interest or principal installments remains overdue for more than 90 days) for a period up to 12 months.
  • Doubtful assets: An asset becomes doubtful if it remains a sub-standard asset for a period of 12 months and recovery of bank dues is of doubtful.
  • Loss assets: Loss assets comprise assets where a loss has been identified by the bank or the RBI. These are generally considered uncollectible. Their realizable value is so low that their continuance as bankable assets is not warranted.

‘If banks do not classify an asset as NPAs, they naturally have more money to earn interest income on their advances. If a large portion of NPAs goes unreported, the bank could reach a situation where it has advanced more money than it has available – a technical bankruptcy’. By giving this leverage ultimately RBI is delaying the inevitable, at some point of time the NPA bubble will burst.

  • KEY RATIOS FOR ASSET QUALITY

There are two key ratios for measuring bank asset quality.

  • Gross Non-Performing Assets (GNPAs): Gross NPAs is the sum of all loan assets that are classified as NPAs as per RBI guidelines. Gross NPA Ratio is the ratio of gross NPA to gross advances (loans) of the bank.
  • Net Non-Performing Assets (NPA) ratio:  Net NPAs are calculated by deducting provisions from gross NPAs. The net NPA to advances (loans) ratio is used as a measure of the overall quality of the bank’s loan book.

Net non-performing assets = Gross NPAs – Provisions

NPA ratio = Net non-performing assets / Advance

  1. CAUSES FOR IMPLICATION OF HIGH NPAS IN THE BANK

Banks with high level of NPAs have lesser funds to give loans and advances, i.e. lesser funds their interest income has to be reduced. Another negative impact of high NPAs:

  1. High level of provisioning (banks are required to keep aside a portion of their operating profit as provisions, higher NPAs will increase the amount of provision thereby impacting the profitability)

Provisioning Norms:

  1. For substandard loans, a general provisioning of 15% on the total outstanding amount is made if the loan is secured, for unsecured loans the total provisioning that needs to be done is 25% of the outstanding balance;
  2. For doubtful assets, provisioning of 100% on the total outstanding amount is made if the loan is unsecured, for secured loans the total provisioning is in the range of 25% to 100 % of the outstanding balance depending upon the period for which the asset has remained doubtful;
  3. Loss assets should be completely written off. If loss assets are permitted to remain on the books for any reason, 100 % of the outstanding amount should be provisioned.
<li>The burden of maintaining the capital adequacy ratio;</li>
<li>Increased pressure on Net Interest Margin (NIM);</li>
<li>Reduce competitive position;</li>
<li>Continuous draining of profits;</li>
<li>Negative impact of goodwill with the bank;</li>
<li>Restricted cash flow by the bank due to the provision of a fund created against the NPA.</li>
  1. OBJECTIVE OF THE STUDY

The main objectives of the study are given below:

  • To study the concept of Non-Performing Assets in the banking sector
  • To analyze the performance of banks under the concept of NPAs
  • To understand how a bank manages its NPAs and
  • To study various channels to recover the NPAs

  1. REVIEW OF LITERATURE
  2. Chandan Chatterjee, Jeet Mukherjee and Dr.Ratan Das, (2012) ‘Management of non-performing assets – a current scenario’ in their study they evident that the NPAs have a negative influence on the achievement of capital adequacy level, funds mobilization and deployment policy, banking system credibility, productivity and overall economy. And they also compare the performance of public, private and foreign banks and they present that the public sector banks are facing more problems with NPAs rather than others.
  3. Amit Kumar Nag, (2015) ‘Appraisal of non-performing assets in the banking sector: An Indian perspective’ the author of this article done a comparative study by taking ten private, public and foreign banks. This article reveals the performance of various banks and he suggested some measures to overcome NPAs difficulty.
  4. Rajeshwari Parmar, (2014) ‘Non-Performing Assets (NPAs): A Comparative Analysis of SBI and ICICI in this study the author takes a comparative study between SBI & ICICI banks and construct a relation between Net profit and Net NPAs. The author found that there is a positive relation. In case of SBI means that as profits increase NPA also increase because of mismanagement on the side of the bank and the other side of the coin ICICI bank got a negative relation which indicates that amount of NPA decreases and Profits will increase more by the amount not becoming NPA. So, they conclude that when compare to SBI (PSB), ICICI (Private bank) manages NPAs efficiently.
  5. Sonia Narula and Monica single, (2014) ‘Empirical Study on Non-Performing Assets of Bank’ in this article the authors conduct a study on private bank i.e., Punjab National Bank (PNB). It is concluded that when PNB Gross and Net NPA compared with total advances we get the result that there is mismanagement on the side of PNB. While analyzing the impact of NPA level on PNB we derived the conclusion that there is a positive relation between Net Profits and NPAs of PNB. It simply means that as profits increases NPA also increases. It is because of the mismanagement on the side of the bank.

  • ANALYSIS AND INTERPRETATION

Table: 01 shows Gross, Net advances and net NPAs of Public and Private Sector banks during the period of 2003-14. It is found that gross, net advances and Net NPAs of public and private sector banks were raised more ten times during the period of 2003-14 whereas the ratio between Net NPAs and Net advances, Total assets have been increasing between 2010 and 2014 for public sector banks whereas private sector banks have been decreasing. It is clearly indicated that when increasing loans and advances as a result Net NPAs also increases.

TABLE: 01 COMPARATIVE ANALYSIS ON GROSS, NET ADVANCES AND NET NPAS BETWEEN PUBLIC AND PRIVATE SECTOR BANKS IN INDIA

 (Amount in Billion)

 

While comparing public and private sector banks with NPAs, public sector banks are back to regulate NPAs and there is a need for proper management of NPAs because to increase the profitability and productivity. Last month, Finance Minister Arun Jaitley had said that though NPAs in the banking sector was a cause of concern, there was no ground to “panic”. Due to NPAs is the challenging for the banking sector and its impact on the economy slowed down. He had said the NPA was mainly in sectors like highways, steel, and textiles.

            Central Bank of India has topped the list of public sector banks with maximum bad loans, including restructured assets as a percentage of total advances. According to the data provided by the RBI to the Finance Ministry, Central Bank of India’s 21.5 per cent assets are either bad or have been restructured to save them turning non-performing assets (NPAs). The other banks, which have significant amounts of gross NPAs and restructured loans include United Bank of India (19.04 per cent), Punjab & Sind Bank (18.25 per cent) and Punjab National Bank by 17.85 per cent as on December 2014. Indian Overseas Bank, State Bank of Patiala, Allahabad Bank and Oriental Bank of Commerce all have bad and restructured loans in excess of 15 per cent. The rising bad loans have become a major concern for the Reserve Bank as well as the government. Most of the restructured loans are from the corporate sector. The top 30 defaulters are sitting on bad loans of Rs 95,122 crore, which is more than one-third of the gross non-performing assets of PSU banks at Rs 2, 60,531 crore as on December 2014.

 

 

  • STRATEGIES FOR RECOVERY
  1. Debt Restructuring

Once a borrower faces difficulty in repaying loans or paying interest, the bank should initially address the problem by trying to verify whether the financed company is viable in the long run. If the company project is viable, then rehabilitation is possible by restructuring the credit facilities. In a restructuring exercise, the bank can change the repayment or interest payment schedule to improve the chances of recovery or even make some sacrifices in terms of waiving interest etc.

The RBI has separate guidelines for restructuring loans. A fully secured standard/sub-standard/ doubtful loan can be restructured by rescheduling of principal repayments and/or the interest element. The amount of sacrifice, if any, in the element of interest, is either written off or provision is made to the extent of the sacrifice involved. The sub-standard accounts/doubtful accounts which have been subjected to restructuring, whether in respect of a principal installment or interest amount are eligible to be upgraded to the standard category only after a specified period.

To create an institutional mechanism for the restructuring of corporate debt the RBI has devised a Corporate Debt Restructuring (CDR) system. The objective of this framework is to ensure a timely and transparent mechanism for the restructuring of corporate debts of viable entities facing problems.

  1. Other recovery options

If rehabilitation of debt through restructuring is not possible, banks themselves make efforts to recover. For example, banks set up special asset recovery branches which concentrate on recovery of bad debts. Private and foreign banks often have a collection unit structured along various product lines and geographical locations, to manage bad loans. Very often, banks engage external recovery agents to collect past due debt, who make phone calls to the customers or make visits to them. For making debt recovery, banks lay down their policy and procedure in conformity with the RBI directives on the recovery of debt. The past due debt collection policy of banks generally emphasizes on the following at the time of recovery:

  • Respect to customers
  • An Appropriate letter authorizing agents to collect
  • Due notice to customers
  • Confidentiality of customers’ dues
  • Use of simple language in communication and maintenance of records of communication

In difficult cases, banks have the option of taking recourse to file cases in courts, Lok Adalats, Debt Recovery Tribunals (DRTs), One Time Settlement (OTS) schemes, etc. DRTs have been established under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 for expeditious adjudication and recovery of debts that are owed to banks and financial institutions. Accounts with loan amount of Rs. 10 lakhs and above are eligible for being referred to DRTs. OTS schemes and Lok Adalats are especially useful to NPAs in smaller loans in different segments such as small and marginal farmers, small loan borrowers and SME entrepreneurs. If a bank is unable to recover the amounts due within a reasonable period, the bank may write off the loan. However, even in these cases, efforts should continue to make recoveries.

  • SARFAESI Act, 2002

Banks utilize the Securitization and Reconstruction of Financial Assets and Enforcement of

Security Interest Act, 2002 (SARFAESI) as an effective tool for NPA recovery. It is possible where non-performing assets are backed by securities charged to the Bank by way of hypothecation or mortgage or assignment. Upon loan default, banks can seize the securities (except agricultural land) without intervention of the court. The SARFAESI Act, 2002 gives powers of “seize and desist” to banks. Banks can give a notice in writing to the defaulting borrower requiring it to discharge its liabilities within 60 days. If the borrower fails to comply with the notice, the Bank may take recourse to one or more of the following measures:

  • Take possession of the security for the loan
  • Sale or lease or assign the right over the security
  • Manage the same or appoint any person to manage the same

The SARFAESI Act also provides for the establishment of asset reconstruction companies regulated by the RBI to acquire assets from banks and financial institutions. The Act provides for sale of financial assets by banks and financial institutions to asset reconstruction companies (ARCs). The RBI has issued guidelines to banks on the process to be followed for sales of financial assets to ARCs.

  1. Through website

            The present era is the internet era, RBI provide website like www.NPAsource.com  to sell the mortgaged assets banks and ARCs can conduct an auction through this website in an effective manner.

  1. RECOMMENDATIONS

            In the above study it can be concluded with some proper recommendations to manage NPAs with an efficient and effective manner. Some of the recommendations can be provided by dividing before advancing and after advancing explained as follows:

  • Before advancing
  • The bank should find the proper reasons prior to provide loans and should verify the purpose of loan required by the borrower.
  • The bank should verify the financial strength of the borrower whether he can repay or not.
  • The bank should go for credit analysis, i.e.. Credit execution and administration, Credit appraisals with the help of CIBIL (Credit Information Bureau India Limited). They should concentrate on short term funds rather than long term because chance to repay will high and working capital will be adequate.
  • Diversification of funds is needed means by investing total in one area you can reduce the risk through diversification to various sources.
  • Banks are under the control of RBI nowadays the regulatory authority is easing the norms on PSBs there is chance of easing the more norms to reduce NPAs.
  • Banks should go their policies and procedures strictly.
  • They should go with proper collateral security.
  • After advances:
  • Need to keep an eye on borrower whether he is paying proper payments are not.
  • If proper repayment is not there banks should critically examine and analyze the reasons behind time overrun.
  • Creation of separate department for recovery of loans with a proper officer.
  • Some studies reveal that bank officials are hesitant to sell bad loans because they fear this might be perceived as an admittance of failure to recover the loan. To sell bad loans to ARCs (Asset Reconstruction Companies) leads some recoveries.
  • There is a need to strengthen and fasten the recovery of loans by banks.
  • Bank officials should frequently visit the unit and should verify the physical position of assets and how it manages because if one unit/branch fails affects the total productivity of the entire bank.
  • Banks should go with various recovery strategies and recovery options to manage NPAs in an effective and efficient manner.
  • They should have proper monitor and manage to control NPAs.

REFERENCES

  1. Chakrabarti, d. M. (2015). The role of asset reconstruction companies (arcs) in non-performing assets (NPAs) management in Indian banking sector: an empirical study. Abhinav international monthly refereed journal of research, Volume 4, issue 5, ISSN-2320-0073.
  2. Chatterjee, 1. C., mukherjee, j., & das, d. (2012). Management of non performing assets – current scenario. International journal of social sciences and interdisciplinary research. 1 issue 11, ISSN 2277 3630
  3. Sonia Narula, m. S. (2014). Empirical study of non performing assets of bank. International journal of advanced research in computer science and management science, Vol 2, issue 1, ISSN: 2321-7782.
  4. Nag, a. K. (2015). Appraisal of non performing asset in banking sector: an Indian perspective. Indian journal of accounting Vol. XIVII, ISSN-0972-1479.
  5. Pacha Malyadri, s. S. (2011). A comparative study of non performing assets in Indian banking industry. International journal of economic practices and theories, Vol. 1, no. 2, e-ISSN 2247 – 7225.
  6. Parmar, r. (2013). Nonperforming assets: a comparative analysis of SBI and ICICI banks. International journal for research in management and pharmacy, Vol.3, ISSN: 2320-0901.
  7. rbi.org.in
  8. moneycontrol.com
  9. npasource.com

Design a Design to Redesign a Design

When we talk about design or think about design then we design our thought to present our design and the design is something which is designed to serve a design. I first encountered the word design when I saw designs long ago; probably during the first class of painting in standard first or second but the real concept of design got designed during our studios exercise on design. Design is a pervasive in design concept. Many students during the first few days of studio they wonder what is design and why this design don’t get aligned with the design of the faculty. They keeps on telling improve your design or redesign the design to suit the design they have designed in their mind.

I sometimes feel that design is a good concept to make us to think more before drawing lines to design and this helps in later parts of the life when you get to know more about the intellectuals property rights and the laws governing the copyright. Our Guru Google and friend copy-paste has made our life so simple that even for design we don’t bother to design our thought to evolve a unique design. A design that can design your destiny in internal and external design jury is had to design if you can’t design out the essence of my small note on design. I think the design of my thoughts on design issues will help you in designing a better design. You might have heard that that faculty say that Mr X design is good or Mr Y’s design better that Mr Z’s design. But I feel that design is design. It is your design outlook that decide the design in design. Simple or complex design is design. Design is like dreams which keeps on changing every other night. A true and successful designer must be a good dreamer only then he can keep evolving the design to suit the changing interest in design.Like dreams which are are involuntary design is also. Design should be self explanatory.  And Last but not least I would say design your design not for the sake of design but for design that will design the destiny.

Conservation of Heritage

The inaction of states and local bodies will cost a lot to India which is know world wide for its rich cultural and architectural heritage. The development does not mean that old should give place to new ones. Development is all about conserving and restructuring the path of progress in such a manner that the old structures which has cultural values, architectural values, age values and place values must get a proper place amid the new ones.

Delhi is a good example for the rest of the country in taking effective measures to protection and revival of the heritage buildings. The Archaeological Survey of India is also doing its part but it has its own limitations. Therefore, every state and local bodies should come forward for striking the balance between the development and the conservation of the rich heritage of each and every corner of the country. The conservation alone can ensure their survival for the future generations. Strong legal provisions must be enacted and implemented soon.

Mall Culture in Delhi-NCR

Mall Culture in Delhi-NCR

Mall Culture in Delhi-NCR

With the upbeat of malls in the market these days, generation next has found a new excuse to hangout. This increase in the so called, mall culture to our country about a decade ago and since then the capital has no corner left for any more malls. This also has fascinated as well as invited the architects to participate in the hullabaloo, and rightly so, as there are so many functions associated with it.

Overall all these malls have no relationship with the environment outside as they work on the principal with creating a micro-climate inside those gigantic boxes of steel and concrete. We hardly get to see the treatment given to the exterior of these malls as compared to the interiors. But still very little but pleasantly these portions of buildings are given a little thought as they really do attract the masses.

The `metropolitan mall’ at Gurgaon near Delhi. The external façade of this mall is totally covered with huge glow-sign boards of various products. This is just a part of their strategy to attract the consumers through these medium. Also, various kinds of lighting fixtures along the pavement to compliment the building. Although the building is quite transparent as far as the visual connection from the road is concerned as there are no boundary walls present. Still the low height foliage and the pavement separated it from the road. Also, there is no segregation of pedestrian and vehicular pathways.Only, locally available Delhi quartzite stone are laid in a radial pattern.

Life in Ruins: Fate of Old Structures

Time is an architect. It sculpts stone into any form it finds rational. It changes economies on a whim to transform buildings for new uses. And it lets war destroy the magnificent only to be replaced with the mundane.

Time also leaves us beautiful remnants from past cities: former temples and broken castles, roofless churches and silent grandstands.

The abandoned, the weeping, the mysterious; flights of fancy are let loose at the mere sight of them. We fascinate of the once upon a time palaces, where the kings and queens laughed, where our forefathers ate and slept, where those great builders created history. Thus begins the chase of the mysterious ruins that once were the mighty and divinely fashioned city of the emperors and their gods.

“For, indeed, the greatest glory of a building is not in its stones, not in its gold. Its glory is in its Age, and in that deep sense of voicefulness, of stern watching, of mysterious sympathy, nay, even of approval or condemnation, which we feel in walls that have long been washed by the passing waves of humanity… It is in that golden stain of time that we are to look for the real light, and color, and preciousness of architecture; and it is not until a building has assumed this character, till it has been entrusted with the fame, and hallowed by the deeds of men, till its walls have been witnesses of suffering, and its pillars rise out of the shadows of death, that its existence, more lasting as it is than that of the natural objects of the world around it, can be gifted with even so much as these possess of language and of life” [2]

To historians, buildings are particularly important since most are constructed of durable materials and tend to last for a long time, providing invaluable information about the past. Through architecture it’s possible to gauge many things about a culture, such as lifestyle, artistic sensibilities and social structure. For instance, early Western religious structures exhibit a general evolution toward more intricate and meaningful interiors, reflecting not only improvements in technical skills but also a growing interest in “inner spaces,” the spirit over the body. This tendency can be seen in several of the most famous holy monuments of Western Civilization: the Great Pyramid of Egypt, the Greek Parthenon, and the Pantheon in Rome and the Church of Hagia Sophia in Constantinople (Istanbul). This inclination toward interiority culminates in the cathedrals of Medieval Europe. Thus, buildings are not just brick and marble but windows into the soul. [3]

We build too! We make buildings for our families to live in, our fellowmen to work in, our children to play in; but how many times in this never ending process of building do we think about what we create. When we design buildings, we visualize them in the first, second and third dimensions, that is, we consider all that is tangible about the structure. But in reality, there is more to it than what meets the eye. The structure build by the people of a civilization are the most important factor in assessing its growth and development. Hence, beyond the three dimensions, there also exists an intangible dimension, the fourth dimension, that of time.

           Strolling down the streets of this city called Delhi, one is bound to encounter a mix of buildings belonging to various periods of time tailored together in its urban fabric. On one hand we would see a collection of ruins of the bygone civilizations, whereas on the other one would witness history being created.

While ruins take a visitor way back in time when the structure was a habitat for our forefathers, there are these structures that are being created and inhabited today by us that will eventually have a tryst with destiny in the times to come; their fate is yet to be decided, it is to be decided by time.

In a scenario like this, one is often left wondering whether fate would be the way ruins stand today, proud as ever, or whether they will fail to stand the test of time and that of the needs of our descendants. Whether they will be appreciated, conserved and looked up to or will they be brought down mercilessly to make way for their descendants.