Research On Turning Nbfcs Into Banks Finance Essay - Free Essay Example

Sample details Pages: 5 Words: 1362 Downloads: 2 Date added: 2017/06/26 Category Finance Essay Type Narrative essay Did you like this example? NBFCs are purveyors of credit to the sectors where credit gap exists. It has been observed that in many places in India, the small and local entrepreneur goes first to an NBFC for funds even before approaching banks in view of the formers convenient access, freedom from red-tape and hassle free transactions. The expansion of the consumer durable business in India over the last few years can be attributed to NBFCs entering the trade. Don’t waste time! Our writers will create an original "Research On Turning Nbfcs Into Banks Finance Essay" essay for you Create order The activities of NBFCs in India have undergone a plethora of qualitative changes over the years because of functional specialization. NBFCs have grown as an effective and critical financial intermediary due to their inherent ability to take quicker decisions, assume greater risks, and customize their services according to the needs of the clients. These features help them score over banks and thus have contributed to the proliferation of NBFCs. As can be seen from the above figures from the year 2006-07 onwards the capital has been growing at a lower rate than the loans and advances shelled out by the deposit taking NBFCs. This widening growth rate implies that most of the loans and advances are being funded using borrowings, though capital adequacy ratio is maintained but there is a shift in dependence from capital to other sources of funds. The year 2008-09 can be taken as an exception on account of the economic downturn. This signifies that the business model of deposit tak ing NBFCs is not in a right track and needs to be corrected so that the growth rates could be comparable. In the given scenario, if the loan portfolio goes bad, there is high probability of the capital being wiped out and hence depositors could be at risk. Also it has been seen that in comparison to banks which have a NPA level of around 2-3 percent, many NBFCs have a higher NPA level, thus making them more vulnerable to risk. Thus their conversion to banks on this account seems to be difficult and bumpy. Shriram transport finance, owing to it unique nature of operations, seems to be on the verge of breaking the trade off. It has a yield of 17.2 % (in line with the customers and the market segment is addresses, mostly those who have no or limited access to banking channels), a NPA figure comparable to that of banks. It has reached a scale of Rs 30000 Crore on March 2010, indicating it has managed the tradeoffs well Thus, we see that there are certain NBFCs which have comparabl e NPA levels as of banks and have better yields too, hence can put their case forward and their conversion into banks should not be as bumpy as expected, though the only problem is they target a specific segment of customers. The current guidelines that came in 2001 specify Rs. 200 crore as the minimum starting capital for new bank to be increased to Rs. 300 crore over three years from commencement of business. Industry body CII is demanding the minimum capital to be raised to Rs. 1000 crore  [1]  . The argument of RBI is that a higher minimum capital ensures only serious players enter the business and also a higher capital provides higher safety and stability in bad times. Raising a capital of Rs. 200 crore to start with will be beyond the reach of small players and hence, only large established business houses, large NBFCs and some high net worth individuals are likely to pass this criterion. Currently, In India the promoters are allowed to bring in higher stake (minimum of 40 percent of the paid-up capital of the bank) at the time of licensing of banks with a lock-in period of 5 years. The main intention is to have a stable capital base with strong professional management, but without any interference or control of management by the promoters. The February 2005 Ownership and Governance (O G) guidelines require promoters and other shareholders of the banks to divest/dilute their shareholding to a level of 10 percent or below of the banks share capital within a specified time frame. Given that, it is likely that quite a few promoters will try to create a holding company with the bank as a subsidiary  [2]  . This structure, which is called Bank Holding Company (BHC), is also open to debate as RBI feels that some promoters may find ways to control the functioning of bank and affect the integrity of the business in the process. Foreign shareholding in new banks While foreign capital providers an alternate source of capital, the plethora of r egulations over foreign investment in various sector suggests that RBI is likely to keep the cap (50% or below, locked at that level for initial 10 years  [3]  ) on aggregate foreign investment in banks. Although, this will be in contrast to the current FDI policy in private sector banking (74% foreign equity allowed). NBFCs conversion into banks NBFCs are very strong contenders of new banking licenses. Deposit taking NBFCs (NBFCs-D) have been regulated by RBI for a long time now but non-deposit taking NBFCs (NBFCs-ND) also have been brought under some stricter regulations in recent times. Still, deposit taking NBFCs are closer to banks when it comes to regulations, something that should help their claim to a new bank license. RBI thinks that the regulations for NBFCs have not been stringent enough compared to banks and NBFCs capability to work under stricter regulations can be questioned. Therefore, the track record of an NBFC cannot be taken as an automatic eligibility criterion for conversion into banks. Hence the conversion to banks for NBFCs would not be an easy ride. Considering the various issues that RBI is pondering over regarding new banking licenses, we have come with a set of criterion that can be used to evaluate few likely contenders for banking licenses. The criteria would also help us in identifying th e bumps which various NBFCs would face in their conversion to banks. As a sample, we have taken three NBFCs into consideration: 1. Religare Enterprises, 2. Reliance Capital and 3. Shriram Transport Finance Company NBFCs-D have been regulated by RBI for long time and their regulations are similar to, though not as strict as, that of banks. Gross NPAs to advances- less for NBFC-D compared to NBFC-SI ND, hence better deposit directions and other measures signify they are better suited for conversion into banks than non deposit taking NBFCs. Hence an NBFC-D can be considered forerunner in getting the new bank license. Table 5: Comparison of few NBFCs over criteria of new bank license Legend: Favorable Unfavorable As we see, large NBFCs are in better position to raise the minimum starting capital required. RBI is averse in giving license to companies that belong to groups having exposure to other industrial sectors. All NBFCs having a real estate exposure are at a disadvantage and are not preferred by RBI. Conclusion Thus, we saw that there are numerous bumps in the road which leads NBFCs to banks. But at the same time, many NBFCs have a strong case and the road for them seems to be smooth. The hurdles were manifold and had diverse origins, some stemmed from the widening gap between capital and advances base thus making the business model risky while others came from the difficulties in complying with RBI guidelines like exposure to other sectors. Some of the NBFCs though have showed that they are on par with the traditional banks, and hence are strong contenders of the license. Even if some of the NBFCs do get converted into banks, they face a bumpy ride under the stricter regulations enforced by RBI and the need to reduce their existing NPA levels. So, while analysing the future of NBFCs in Indian Financial system, we see three possibilities arising: a) Conversion into banks, b) Remain as NBFCs and serve the niche segment, and c) become Business Correspondent- There seems to be a direct match between the strengths of NBFC model and the requirements out of a Business Correspondent in terms of coverage, financial strength, better technology and governance. NBFC segment is too varied and diversified to chalk out a single future path for all of them and considering continuing different needs in present economy, it is better for economy that NBFCs continue exist in different forms.

Movie Analysis Goodbye Lenin ! - 895 Words

The 2003 German film Goodbye Lenin! received countless awards for its actors, direction, and European film. This film starring Daniel Brà ¼hl and Kathrin Sass goes back to the Cold War Era when a wall separated East Berlin and West Berlin. Communism controlled the lives of East Germans and the Party subjugated them to their ideals. The underlying theme of a repressive totalitarian regime transitioning to a more democratic regime drives the comedic plot of Goodbye Lenin!. The film shows excellently the impacts of a totalitarian regime in everyday life. Goodbye Lenin begins prior to the fall of the Berlin Wall. Christiane Kerner becomes a dedicated member of the socialist country after her husband left her in the West. One night Christiane sees her son, Alex, participating in a protest against the regime she has a heart attack. For the next eight months, Christiane is in a coma and she misses the political change that occurred. In that time, the Berlin Wall falls down and capitalism c onsumes East Germany. She eventually wakes up and Alex with his sister Ariane must prevent her knowing what has occurred because if she hears any shocking news Christiane may experience a fatal heart attack. The rest of the film revolves around Alex comically trying to recreate East Germany for his mother as the Germany progresses into reunification . The first part of Goodbye Lenin! paints an elaborate picture of what a totalitarian regime looks like. Some of the many aspects of a totalitarianShow MoreRelatedOrganisational Theory230255 Words   |  922 Pagestheory focuses attention on the human issues in organization ‘There is nothing so practical as a good theory’ How Roethlisberger developed a ‘practical’ organization theory Column 1: The core contributing social sciences Column 2: The techniques for analysis Column 3: The neo-modernist perspective Column 4: Contributions to business and management Four combinations of science, scientific technique and the neo-modernist approach reach different parts of the organization Level 1: Developing the organization

The Once in a Century Challenge Toyota

Questions: 1. Analyse the reasons for the problems faced by Toyota in 2009. 2. Identify Toyota's capabilities and core competencies. How is Toyota placed internally to effectively implement the initiative proposed by Akio Toyoda? 3. What should Akio Toyoda do to return Toyota to profitability? Answers: 1: In the late 2009 Toyota faced a severe crisis mainly because of its quality problems in the manufacturing of its cars that effected Toyotas official recall of its cars around the globe and this also threatened the companys reputation and image of the good quality cars it manufactured and also its brand image built up by time (Hemus, J. (2010). However the vehicles of Toyota has faced a lot of issues related to accelerated problems that further stopped the growth of it production of cars globally and this also in return led to a heavy financial loss due to reasons like suspending of the production, lost market share and high repairing costs even the high reputation of quality of the cars has been destroyed over time due to all these problems. Toyota has been regarded as a crowning point of the Japanese innovation in the areas of economic reliability, quality of manufacture and fuel efficiency but in the late 2009 Toyota started facing certain serious issues with its vehicles and in six months around 9 million cars were sent back for modification for problems with the acceleration pedals, braking issues, floor mats etc, all of these were related to the problems faced by the public. It can be seen that the cars manufactured in the present times have become more complicated in its functions and features as there is a lot of changes in the automobile features like the number of wires, computer chips and sensors. As the hi-tech systems have become more complicated and are fitted in the modern cars the quality control testing has become more difficult and is creating a trouble in the uncertainties and interferences of the manufacturing process (Clark, A. McCurry, J. (2010). Any small defect in the electronic field that is influenced by the environment can lead to the failure of the car. Therefore in the Toyota crisis it can be seen that a simple mechanical default caused by the errors or mistakes of other companies could be avoided in terms of their management and technology. Hence Toyota received a lot of unmatched attention from the mass media which published a lot of negative news related to its crisis issues and also questioned the quality of its cars and the r eputation of the company. These negative events also led to a downfall of the future growth, survival as well as the profitability of the organization. 2: As the company had seen many defaults at a particular time due to its crashes and the arguments about the company went deeper and many commentators pointed out to the growth strategy of the company (Toyoda A. (2010). The President of Toyota Mr Akio Toyoda agreed that the speed of the growth had impaired the culture of the company and sent his first apology in early October 2009 expressing his sincere grief regarding the crash of San Diego. He also wrote a journal acknowledging the failings of the company and promised the safety of the customers in the future and also pointed out to all the responses of the internal and external audits of the safety features of their vehicles. Akio also spoke about the fundamental changes that would take place for the companys operations to make sure that Toyota sets a high standard for vehicle reliability and safety as well as for the customers transparency and responsiveness towards the trust restoring factors (Chang R.S. (2010). He also travelle d all the way to attend the Congress in Washington and apologized in person and said that he was unaware of all these problems several months after the fatalities of San Diego crash. 3: In order to reform Toyota Akio assembled a group of general managers like the engineering and power train bodies and took a step to instruct them to restore the production and not to waste time reporting the issues. Two teams of engineers were sent to visit each plant supplier and to identify and track the backup parts till the suppliers were again manufactured. To get immediate results there could be a declaration of a new safety system that combines the different accidents avoidance technologies. Also a major restructuring of the panel of Directors and re organization of the various departments that are in charge of the Corporate Planning and also the CSR of the company to speed up the responses of the crisis (Bunkley N. (2011). Akio also shrank the board of directors by half and stated a more significant development and organized informal meetings with the advisors to review the companys operations. They began working in closely knit group without any written reports or agendas and the decisions should be made on the spot. Another fundamental change made by Akio is that Toyota has moved its top executives in various specialized areas like a sale specialist is assigned to purchasing alone whereas a product engineer is for the area of manufacturing so that each one of them stay within their specialized areas and make use of the experience to the full References Bunkley N. (2011) In Detroit, Toyota vows to earn trust, New York Times, 10th January. Chang, R.S. (2010) Toyota creates quality task force, New York Times, 25th March. Clark, A. McCurry, J. (2010) Toyota boss offers sincere regrets for faulty accelerators, The Guardian, 25th February. Hemus, J. (2010) Accelerating towards crisis: a PR view of Toyotas recall, The Guardian, 9th February. Toyoda A. (2010) Back to basics for Toyota Wall Street Journal op-ed, 24th February. Toyota USA press release Toyota (2009) Toyota's Statement Regarding NHTSA News Release 8th November.

Report on the UK Criminal Law

Question: Dicuss a reflective report on the UK Criminal Law in the year 2014 - 2015? Answer: As per the requirements of the assignment, a reflective has been drawn upon the criminal law from the year 2014 to 2015 in United Kingdom. Various changes has been adapted on criminal law in the United Kingdom. In the month of March 2015, a change has been regarding the criminal procedure rule. The Criminal Procedure Rule Committee is liable for the changes, which is referred as Amendment No 2. These changes bring to the criminal law a new and innovative procedure for conducting trials in magistrates courts. The new rule is termed as trial by a single justice on the papers. Sections 46 to 50 of the Criminal Justice and Courts Act 2015 make changes to the Justices' Courts Act 1980, the Criminal Justice Act 2003 and some different Acts. The new statutory provisions apply to offenses charged against a grown-up (not somebody under 18), if the charged offense must be attempted in a judges' court (thus is not one sufficiently genuine to be sent to the Crown Court for trial) and if, in the occasion of conviction, the sentence for the offense cannot be detainment. Where the new provisions apply, a solitary justice of the peace, on the premise of composed material, can attempt the litigant just, in the parties' unlucky deficiency furthermore, without a hearing. The new provisions require the Criminal Procedure Rules to recommend the archives that the prosecutor must send to the litigant, and to endorse the period inside which the litigant must react to those reports before a solitary justice trial can occur (Justice.gov, 2014). In the month of February, some of the changes, which are made regarding criminal procedure, came into force on 2nd February 2015. The parts, which are affected are as follows: 6, 17, 39, 52 and 76. New rules, which have been added up on the criminal proceedings, are stated below: New rule has been added which is known as ground rules hearing. This addition is made on part 3 of the criminal procedure rules. New rule is also added up on part 63 of the criminal proceeding. The new rule states that advance notice is compulsory if an evidence is going to presented in the court of law during the appeal. This rule is only applicable if the appeal is made to the Crown court against a conviction by a magistrates court (justice.gov, 2015). In the month of September 2014, Tessa Szagun who used to be member of the committee had retired. Thus, Lord Chancellor has appointed Sian Jones as the Justices clerk Committee member. A list of standard trial preparation time limits has been enlisted in the page 7 of the magistrates courts trial preparation form. Time limits are stated in order to clarify the particular obligation on the defendant during the time of preparing application for prosecution disclosure. In the month August 2014 the list of standard trial preparation limit of the time in the page 7 of the court of the magistrate trial preparation form has been authorized to make amendment by The Lord Chief Justice. The limit of time for the Application for disclosure has be written again in order to make the obligation of the defendant clear for the prosecution disclosure in order to make an application. This form comes in the Forms page under the heading Part-3-Case management. On the Courts and Tribunals Judiciary website the amendments were published. The amendments have appeared on 6th October, 2014 after those come into force. There has been a replacement of the the Criminal Procedure Rules 2013, the Criminal Procedure (Amendment) Rules 2013 and the Criminal Procedure (Amendment No. 2) Rules 2013.in the year 2014. The new rules come into force on Monday 6th October 2014. The new changes include the process of the trial and its preparation considering parts 3, 38 and 39 of the Criminal Procedure Rules. This is followed by the process of appeals to the high court considering the extradition cases in Part 17 of the Rules. It also includes the expert evidence of part 33 of the Rules. Lastly it also includes the procedures that need to be adhered to in case certain proceedings are considered to be void or when there are certain orders that are deemed to be set aside. This is also applicable in a magistrates court considering part 37 of the Rules (justice.gov, 2015). The second aspect of the amendment include the service of the documents pertaining to part 4 along with the applications for the access to certain materials that are used for the purpose of attaining search warrants as per part 5. The production of the indictments pertaining to the Crown courts were also amended for parts 12 and 14. If a defendant was charged for low value shop lifting, then they would from now on be sent to trial. Amendments were also brought about for the application for witnesses summons as per part 28, for endorsing driving records as per part 55 and for the behaviour orders as per part 50 (justice.gov, 2015). In the month of March 2014 for preparation of trial the Lord Chief Justice has authorized the use of the amendment form in magistrates courts so that the defendant pleads not guilty. The Rule Committees case management group that is inclusive of members of others practitioners and the committee devise them. In order to assist courts the modifications are planned in order to avoid hearings which are not required to ensure that the trial occurs effectively and on time. The notes and form are structured on the Forms page, which comes under the section Part-3- Case management. Reference: Justice.gov.uk (2015). A GUIDE TO THE CRIMINAL PROCEDURE RULES 2014 (S.I. 2014/1610). Retrieved 1 April 2015, from https://www./courts/procedure-rules/criminal/docs/2014/criminal-procedure-rules-2014.pdf Justice.gov.uk, (2015). A GUIDE TO THE CRIMINAL PROCEDURE (AMENDMENT) RULES 2015 (S.I. 2015/13). [online] Available at: https://www.justice.gov.uk/courts/procedure-rules/criminal/docs/2015/guide-to-criminal-procedure-amendment-rules-2015.pdf [Accessed 1 Apr. 2015]. Justice.gov.uk, (2014). Criminal Procedure Rules. [online] Available at: https://www.justice.gov.uk/courts/procedure-rules/criminal [Accessed 1 Apr. 2015].