...Risk Management Risk is inherent in our business and sound risk management is critical to our success. The major types of risk we face are credit risk, market risk (which includes liquidity risk and price risk) and operational risk. We have developed and implemented comprehensive policies and procedures to identify, monitor and manage risk throughout the Bank. Credit Risk Credit risk is the possibility of loss due to the failure of any counterparty to abide by the terms and conditions of any financial contract with us. We identify and manage this risk through (a) our target market definitions, (b) our credit approval process, (c) our post-disbursement monitoring, and (d) our remedial management procedures. Wholesale Credit Risk For our commercial banking products, we target the top end of the Indian corporate sector, including companies that are part of the private sector business houses, public sector enterprises, and multinational corporations and leading small and mid-sized enterprises (“SME”). As a result, a large part of our wholesale lending is generally concentrated among highly rated customers. In addition to market targeting, the principal means of managing credit risk is the credit approval process. We have policies and procedures to evaluate the potential credit risk of a particular counterparty or transaction and to approve the transaction. For our wholesale clients, we have a risk assessment and grading system that is applied to each corporate counterparty...
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...The Reserve Bank of India (RBI) is the nation’s central bank fundamental commitment to maintaining the nation’s monetary and financial stability. From ensuring stability of interest and exchange rates to providing liquidity and an adequate supply of currency and credit for the real sector; from ensuring bank penetration and safety of depositors’ funds to promoting and developing financial institutions and markets, and maintaining the stability of the financial system through continued macro-financial surveillance, the Reserve Bank plays a crucial role in the economy. Our decisions touch the RBI at a Glance Managed by Central Board of Directors India’s monetary authority Supervisor of financial system Issuer of currency Manager of foreign exchange reserves Banker and debt manager to government Supervisor of payment system Banker to banks Maintaining financial stability Developmental functions Research, data and knowledge Sharing Central Board of Directors by the Numbers Official Directors 1 Governor 4 Deputy Governors, at a maximum Non-Official Directors 4 directors—nominated by the Central Government to represent each local board 10 directors nominated by the Central Government with expertise in various segments of the economy 1 representative of the Central Government 6 meetings—at a minimum—each year 1 meeting—at a minimum—each quarter Monetary Authority Issuer of Currency Banker and Debt Manager to Government Banker to...
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...LOVELY PROFESSIONAL UNIVERSITY DEPARTMENT OF MANAGEMENT Report of Contemporary Issues in Management NPA’s of Bank Submitted to Lovely Professional University In partial fulfillment of the Requirements for the award of Degree of Master of Business Administration Submitted by: Suruchi Sehdev 10907783 RR1904A56 DEPARTMENT OF MANAGEMENT LOVELY PROFESSIONAL UNIVERSITY PHAGWARA EXECUTIVE SUMMARY After liberalization the Indian banking sector developed very appreciate. The RBI also nationalized good amount of commercial banks proving socio economic services to the people of the nation. The public Sector banks have shown very good performance as far as the financial operations are concerned. The total income of the public sector banks has also shown good performance since the last few years. The public sector Banks have also shown comparatively good result. The gross profits and the net profits of the Public Sector banks have been on a high from past few years. The private sector banks are also showing good results in case of profits. However, the only problem of the Scheduled Commercial Banks these days are the increasing level of the non performing assets. The Non-Performing Assets (NPAs) problem is one of the foremost and the most formidable problems that have shaken the entire banking industry in India like an earthquake. Like a canker worm, it has been eating the banking system from within, since long. It has grown like a cancer and has...
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...INTERNATIONAL FINANCIAL MANAGEMENT ASSIGNMENT ON BALANCE OF PAYMENTS ) INDEX S No | Particular | Page | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | WHAT IS BALANCE OF PAYMENT? The balance-of-payments accounts of a country record the payments and receipts of the residents of the country in their transactions with residents of other countries. If all transactions are included, the payments and receipts of each country are, and must be, equal. Any apparent inequality simply leaves one country acquiring assets in the others. For example, if INDIANS buy automobiles from Japan, and have no other transactions with Japan, the Japanese must end up holding RUPEES, which they may hold in the form of bank deposits in INDIA or in some other INDIAN investment. The payments Indians make to Japan for automobiles are balanced by the payments Japanese make to Indians. individuals and institutions, including banks, for the acquisition of Rupee assets. Put another way, Japan sold India automobiles, and INDIA sold Japan rupees or Rupee-denominated assets such as treasury bills . Although the totals of payments and receipts are necessarily equal, there will be inequalities—excesses of...
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...BANKING SECTOR IN INDIA * Introduction: Indian Banking Sector * Role of Banking Sector in Developing Economy (India) * Regulatory Body: RBI * Banking Regulation Act 1949 * Present Scenario * Future Aspect * Risk Involved * SWOT Analysis : Banking Sector in India 2.1 Banking Sector (India) In India the banks are being segregated in different groups. Each group has their own benefits and limitations in operating in India. Each has their own dedicated target market. Few of them only work in rural sector while others in both rural as well as urban. Many even are only catering in cities. Some are of Indian origin and some are foreign players. All these details and many more are discussed over here. The banks and its relation with the customers, their mode of operation, the names of banks under different groups and other such useful information are talked about. One more section has been taken note of is the upcoming foreign banks in India. The RBI has shown certain interest to involve more of foreign banks than the existing one recently. This step has paved a way for few more foreign banks to start business in India. * Central Bank: The Reserve Bank of India is the central Bank that is fully owned by the Government. It is governed by a central board (headed by a Governor) appointed by the Central Government. It issues guidelines for the functioning of all banks operating within the country. * Public Sector Banks a. State Bank...
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...growth in business volumes, revenues and profits during a period of slower GDP growth, tight liquidity and relatively high interest rates. The Bank has built its business upon the trust of millions of customers who avail of its products and services through a distribution network of 1,622 branches and 9,924 ATMs spread across 1,050 centres in the country. The retail deposit base continues to be the cornerstone of the growth strategy of the Bank and it has performed well in a challenging environment, reflecting the quality of our customer franchise. I am also happy to report that the Bank’s assets are healthy and growing satisfactorily. It remains the endeavor of your Bank to offer a full suite of high quality products and services to our customers to meet their evolving financial needs. The Bank continues to balance growth with profitability and this is evidenced in the healthy return on assets and return on equity reported for the year. I am happy to report that your Bank’s performance has been...
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...Report and Recommendations RESERVE BANK OF INDIA August 2011 2 ABBREVIATIONS AND ACRONYMS AFC ALM BIS CIC-ND-SI Asset Finance Company Asset Liability Management Bank for International Settlements Systemically Important Non-Deposit Taking Core investment Company Capital Market Exposures Certificate of Registration Commercial Paper Capital to Risk Weighted Assets Ratio Commercial Real Estate Financial Companies Regulation Bill Foreign Direct Investment Investment Company Inter Corporate Deposits Infrastructure Finance Company Initial Public Offering Insurance Regulatory and Development Authority Joint Parliamentary Committee Know Your Customer Loan Company Liquidity Coverage Ratio Lender Of Last Resort Micro Finance Institution CME CoR CP CRAR CRE FCRB FDI IC ICD IFC IPO IRDA JPC KYC LC LCR LOLR MFI 3 M&A NBFC NBFC-ND-SI Mergers and Acquisitions Non Banking Financial Company Systemically important Non Deposit taking Non Banking Financial Company Deposit taking Non Banking Financial Company Non Deposit taking Non Banking Financial Company Non Banking Financial Institutions Non-convertible debentures Net Owned Funds Non-Performing Asset Over-the-counter Public Financial Institution Priority Sector Lending Reserve Bank of India Residuary Non Banking Company Return on Assets Return on Equity Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Scheduled Commercial Bank Securitisation and Reconstruction Companies Securities and...
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...TO THE PUBLIC SECTOR BANKS INTRODUCTION After liberalization the Indian banking sector developed very appreciate. The RBI also nationalized good amount of commercial banks for proving socio economic services to the people of the nation. The Public Sector Banks have shown very good performance as far as the financial operations are concerned. If we look to the glance of the financial operations, we may find that deposits of public to the Public Sector Banks have increased from 859,461.95crore to 1,079,393.81crore in 2003, the investments of the Public Sector Banks have increased from 349,107.81crore to 545,509.00crore, and however the advances have also been increased to 549,351.16crore from 414,989.36crore in 2003. The total income of the public sector banks have also shown good performance since the last few years and currently it is 128,464.40crore. The Public Sector Banks have also shown comparatively good result. The gross profits of the Public Sector Banks currently 29,715.26crore which has been doubled to the last to last year, and the net profit of the Public Sector Banks is 12,295,47crore. However, the only problem of the Public Sector Banks these days are the increasing level of the non performing assets. The non performing assets of the Public Sector Banks have been increasing regularly year by year. If we glance on the numbers of non performing assets we may come to know that in the year 1997 the NPAs were 47,300crore and reached to 80,246crore in 2002. The only problem...
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...been gradually getting blurred since both the segments of the financial system engage themselves in many similar types of activities. At present, NBFCs in India have become prominent in a wide range of activities like hire-purchase finance, equipment lease finance, loans, investments, etc. By employing innovative marketing strategies and devising tailor-made products, NBFCs have also been able to build up a clientele base among the depositors, mop up public savings and command large resources as reflected in the growth of their deposits from public, shareholders, directors and other companies, and borrowings by issue of non-convertible debentures, etc. Consequently, the share of non-bank deposits in household sector savings in financial assets, increased from 3.1 per cent in 1980-81 to 10.6 per cent in 199596. In 1998, the definition of public deposits was for the first time contemplated as distinct from regulated deposits and as such, the figures thereafter are not comparable with those before. The importance of NBFCs in delivering credit to the unorganised sector and to small borrowers at the local level in response to local...
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...Adequacy Framework (Basel II Guidelines) Bank’s Network : List of Centres 3 4 5 6 7 16 29 31 32 33 35 41 42 50 88 89 111 112 155 167 185 1 MANAGING DIRECTOR & CEO’S LETTER TO THE SHAREHOLDERS It has been a challenging environment but despite the slowing momentum of growth in the economy, your Bank has reported another consistent performance - reflected in a steady growth of our customer base, widening reach through multiple channels, healthy growth of business and revenues and stable asset quality. It is also an affirmation of the Bank’s focus on a balanced growth strategy. The Bank’s retail businesses grew steadily during the year and there was credible growth of both retail deposits and loans, supported by an expanding network that is critical to the retail franchise. We added 325 branches and 1,321 ATMs in FY 2012-13. Your Bank continues to balance growth with profitability and generate value for our stakeholders. This is evidenced by the consistently healthy return on assets and return on equity. We also have a deep and abiding commitment to the environment and the underprivileged. Towards this end, your Bank has adopted the ambitious goal of facilitating the creation of one million sustainable livelihoods by 2017 in partnership with reputed...
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...Foreign Currency Convertible Bonds Pages 22 to 25 Capital Account Convertibility Pages 26 to 28 Tarapore Committee and Current Status Pages 29 to 35 What is Capital Account Transaction? Capital account transaction is defined as a transaction which:- ➢ Alters the assets or liabilities, including contingent liabilities, outside India of persons resident in India. In other words, it includes those transactions which are undertaken by a resident of India such that his/her assets or liabilities outside India are altered (either increased or decreased). For example:- (i) a resident of India acquires an immovable property outside India or acquires shares of a foreign company. This way his/her overseas assets are increased; or (ii) a resident of India borrows from a non-resident through External commercial Borrowings (ECBs). This way he/she has created a liability outside India. ➢ Alters the assets or liabilities in India of person resident outside India. In other words, it includes those transactions which are undertaken by a non-resident such that his/her assets or liabilities in India are altered (either increased or decreased). For example, (i) a non-resident acquire immovable property in India or acquire shares of an Indian company or invest in a Wholly Owned Subsidiary or a Joint Venture with a resident of India. This way...
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...on several occasions. Apart from my personal affinity to the NIPFP, there is a close relationship between the Reserve Bank of India (RBI) and the NIPFP, from an institutional point of view also. For instance, Prof. Govinda Rao is a Member of the Southern Local Board of RBI. Initially, I thought of speaking on fiscal policy and economic reforms from a central banker’s perspective. I realised later that while I have been working as a central banker over the last one decade, I had worked for most parts of the three decades prior to that in the Ministry of Finance, in the Government of India as well as in the Government of Andhra Pradesh. So it was a difficult choice for me as to whether I should give a fiscal view of the monetary policy or a monetary view of the fiscal policy. I have worked for a short period in the World Bank, which gives a global governments’ view and also in the IMF, which gives a global monetary authority’s view. As a via-media, I have opted to give a practitioner’s perspective of fiscal policy, and economic reforms. India’s fiscal situation: a brief prelude Broadly, during the first 30 years of independence, between 1950 and 1980, the fiscal deficits of both the central and the state governments were not excessive. This was a period of revenue surplus in general. However, automatic monetisation of government deficit by the RBI, which started as an exception during the...
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...GUIDELINES TO INVEST IN INDIA MRIDUL AGRWAL mridul.15@tapmi.edu.in +919629482047 NANDINI BRAHMANAND HEGDE nandini.15@tapmi.edu.in +919686488851 MRIDUL AGRWAL mridul.15@tapmi.edu.in +919629482047 NANDINI BRAHMANAND HEGDE nandini.15@tapmi.edu.in +919686488851 India is a federal republic, with 28 states and seven federally administered union territories; it operates a multi-party parliamentary democracy system. It is a common law country with a written constitution. Parliament has two houses: the Lok Sabha (lower house) and the Rajya Sabha (upper house). The President, the constitutional head of the country and of the armed forces, acts and discharges the constitutional duties on the advice of the Council of Ministers, which is headed by the Prime Minister. The Prime Minister and the Council of Ministers are responsible to parliament and subject to the control of the majority members of parliament. Independently elected governments govern the states and union territories. India is a three-tier economy, comprising a globally competitive services sector, a manufacturing sector and an agricultural sector. The services sector has proved to be the most dynamic in recent years, with trade, hotels, transport, telecommunications and information technology, financial, and business services registering particularly rapid growth. Government Empowerment The central and state governments have passed legislation to control production, supply, distribution and...
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...market capitalization also remains low at 50 % (McKinsey report) with the corporate bond market way behind the government debt market. The bank deposits account for 52% of the GDP, and about three fourth of the total assets of the financial system. (Paper by Wharton publications on financial systems in India, 2007). The Non Banking sector, including the Mutual funds, Non Banking Financial Companies, Insurance companies and Other Financial institutions account for over 30% of the Financial Sector’s assets. This adds up to about 26 lakh crore in assets (2008-09-FSAP). According to The Financial Development index-2008, India scores better in Financial intermediation through Non-Banks ranking 16th, compared to a rank of 50th in terms of Banks. India ranks better in terms of capital access comparable to Japan, in spite of much lower assets/GDP comparatively. Classification of Financial institutions The Financial institutions in India can be broadly classified into the categories as listed in the representation below: The Distribution of Assets among the various Financial institutions in India The major share in the assets is that of the Commercial banks and then closely followed by NBFC, and Mutual funds which together account for about 20 % of the assets. What is a Non-Banking Financial Company (NBFC)? Non Banking Finance Institutions is a constituent of the institutional structure of...
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...Risk management in banking sector Table of content Particulars | Page no. | Executive summary | | Introduction | | Literature review | | Research methodology | | Sampling techniques | | Tools of analysis | | Data analysis & findings | | Conclusions | | Scope for further research | | Reference | | Executive Summary Today, The Indian Economy is in the process of becoming a world class economy. The Indian banking industry is making great advancement in terms of quality, quantity, expansion and diversification and is keeping up with the updated technology, ability, stability and thrust of a financial system, where the commercial banks play a very important role, emphasize the very special need of a strong and effective control system with extra concern for the risk involved in the business. Globalization, Liberalization and Privatization have opened up a new methods of Financial transaction where risk level is very high. In banks and financial institutions risk is considered to be the most important factor of earnings. Therefore they have to balance the Relationship between risk and return. In reality we can say that management of financial institution is nothing but a management of risk managing financial risk systematically and professionally becomes an even more important task. Rising global competition, increasing deregulation, introduction of innovative products and delivery channels have pushed risk management to the forefront...
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