Thursday, September 17, 2015
Sunday, September 13, 2015
PGDFS ROLE OF NATIONALIZED BANKS
Nationalisation of Banks in
India - Introduction
After independence the
Government of India (GOI) adopted planned economic development for the country
(India). Accordingly, five year plans came into existence since 1951. This
economic planning basically aimed at social ownership of the means of
production. However, commercial banks were in the private sector those days. In
1950-51 there were 430 commercial banks. The Government of India had some
social objectives of planning. These commercial banks failed helping the
government in attaining these objectives. Thus, the government decided to
nationalize 14 major commercial banks on 19th July, 1969. All commercial banks with a deposit base over
Rs.50 crores were nationalized. It was considered that banks were controlled by
business houses and thus failed in catering to the credit needs of poor
sections such as cottage industry, village industry, farmers, craft men, etc.
The second dose of nationalisation came in April 1980 when banks were
nationalized.
Objectives Behind
Nationalisation of Banks in India
The nationalisation of
commercial banks took place with an aim to achieve following major objectives.
1.
Social Welfare : It was the need of the
hour to direct the funds for the needy and required sectors of the indian
economy. Sector such as agriculture, small and village industries were in need
of funds for their expansion and further economic development.
2.
Controlling Private Monopolies : Prior to nationalisation
many banks were controlled by private business houses and corporate families.
It was necessary to check these monopolies in order to ensure a smooth supply
of credit to socially desirable sections.
3.
Expansion of Banking : In a large country like
India the numbers of banks existing those days were certainly inadequate. It
was necessary to spread banking across the country. It could be done through
expanding banking network (by opening new bank branches) in the un-banked
areas.
4.
Reducing Regional Imbalance : In a country like India
where we have a urban-rural divide; it was necessary for banks to go in the
rural areas where the banking facilities were not available. In order to reduce
this regional imbalance nationalisation was justified:
5.
Priority Sector Lending : In India, the agriculture
sector and its allied activities were the largest contributor to the national
income. Thus these were labeled as the priority sectors. But unfortunately they
were deprived of their due share in the credit. Nationalisation was urgently
needed for catering funds to them.
6.
Developing Banking Habits : In India more than 70%
population used to stay in rural areas. It was necessary to develop the banking
habit among such a large population.
Demerits, Limitations - Bank
Nationalisation in India
Though the nationalisation
of commercial banks was undertaken with tall objectives, in many senses it
failed in attaining them. In fact it converted many of the banking institutions
in the loss making entities. The reasons were obvious lethargic working, lack
of accountability, lack of profit motive, political interference, etc. Under
this backdrop it is necessary to have a critical look to the whole process of
nationalisation in the period after bank nationalisation.
The major limitations of
the bank nationalisation in India are:-
1.
Inadequate banking facilities : Even though banks have
spread across the country; still many parts of the country are unbanked.
Especially in the backward states such as the Uttar Pradesh, Madhya Pradesh,
Chhattisgarh and north-eastern states of India.
2.
Limited resources mobilized and allocated : The resources mobilized
after the nationalisation is not sufficient if we consider the needs of the
Indian economy. Some times the deposits mobilized are enough but the resource
allocation is not as per the expansions.
3.
Lowered efficiency and profits : After nationalisation
banks went in the government sector. Many times political forces pressurized
them. Banking was not done on a professional and ethical grounds. It resulted
into lower efficiency and poor profitability of banks.
4.
Increased expenditure : Due to huge expansion in
a branch network, large staff administrative expenditure, trade union struggle,
etc. banks expenditure increased to a dangerous levels.
5.
Political and Administrative Inference : Many public sector banks
badly suffered due to the political interference. It was seen in arranging loan
meals. It ultimately resulted in huge non-performing assets (NPA) of these banks and
inefficiency.
These are several
limitations faced by the banks nationalisation in India.
Apart from this there are
certain other limitations as well, such as weak infrastructure, poor
competitiveness, etc.
But after Economic
Reform of 1991,
the Indian banking industry has entered into the new horizons of
competitiveness, efficiency and productivity. It has made Indian banks more
vibrant and professional organizations, removing the bad days of bank
nationalisation.
PGDFS MEANING AND ADVANTAGES OF GIC (GENERAL INSURANCE OF INDIA)
WHAT IS GENERAL INSURANCE
Man has always been in
search of security and protection from the beginning of civilization. The urge
in him lead to the concept of insurance. The basis of insurance was the sharing
of the losses of a few amongst many. Insurance provides financial stability and
strength to the individuals and organization by the distribution of loss of a
few among many by building up a fund over a period of time.
The general insurance industry in India was nationalised and a
government company known as General Insurance Corporation (GIC) was formed by
Central Government in 1972.
With effect from January 1, 1973, the erstwhile 107 Indian and
foreign insurers who were operating in the country prior to nationalisation,
were grouped into four operating companies, namely, (a) National Insurance
Company Limited; (b) New India Assurance Company Limited; (c) Oriental
Insurance
Company Limited and (d) United Insurance Company Limited. Except
for aviation insurance of national airlines and crop insurance which is handled
by GIC, all the four subsidiaries operate all over the country competing with
one another in underwriting various classes of general insurance.
The four companies have a network of 2699 branch offices, 1360
divisional offices and 92 regional offices spread all over the country. In the
international market, the industry is operating in 16 countries directly
through its agencies and in 14 countries through subsidiary and associate
banks.
Some of the schemes in operation for the benefit of poor are the
Personal Account Insurance Social Security Scheme, Hut Insurance Scheme and Crop
Insurance Scheme for poor families in rural areas. The total assets and net
worth of GIC grew by Rs. 26,424.03 crore and Rs. 4,759.13 crore respectively as
on March 31, 2006.
During the year 2009 10, the net premium income of the
corporation was Rs. 8776.87 crore as against Rs. 7402.33 crore in 2008-09. The
net incurred claims were at Rs. 6,856.39 crore, i.e., 84.9 per cent as against
Rs. 6217.14 crore hi 2008.
ADVANTAGES
OF INSURANCE
1.
INVESTMENT OF FUNDS
In the cource of their business, insurance by
the way of premiums collect vast sums. Especially in life business much of it can
be invested profitably over long periods. This benefits the nation as a whole
because insurers are required by law to invest the major portion in government
securities and other approved investment, out of which nation-building
activities are undertaken.
2.
REDUCTION OF COST INSURANCE
Income earned by investment of accumulated
funds further increases the fund and goes to reduce the cost of insurance for
otherwise the premiums would have to be higher to next extent.
3.
EFFECT ON PRICES
Manufacturers pass on the consumer, the cost
of insurance along with other production cost. Still it is beneficial to the
consumers because without insurance the cost would have been much more.
4.
INVISIBLE EXPORT
Providing insurance service overseas is our
invisible export, like export of material goods and the profit brought in is
contribution to the favorable balance of trade.
5.
REDUCING COST OF SOCIAL SERVICES
No victim or heirs of a deceased victim of
motor accidents now a days goes without compensation from insurance funds built
out of compulsory insurance of motor vehicles and this is no small benefit
social relief.
PGDFS ROLE OR OBJECTIVES OF LIFE INSURANCE OF INDIA
OBJECTIVES
OF LIFE INSURANCE CORPORATION (LIC)
- Spread Life Insurance widely and
in particular to the rural areas and to the socially and economically
backward classes with a view to reaching all insurable persons in the
country and providing them adequate financial cover against death at a
reasonable cost.
- Maximize mobilization of people's
savings by making insurance-linked savings adequately attractive.
- Bear in mind, in the investment of
funds, the primary obligation to its policyholders, whose money it holds
in trust, without losing sight of the interest of the community as a
whole; the funds to be deployed to the best advantage of the investors as
well as the community as a whole, keeping in view national priorities and
obligations of attractive return.
- Conduct business with utmost
economy and with the full realization that the moneys belong to the
policyholders.
- Act as trustees of the insured
public in their individual and collective capacities.
- Meet the various life insurance
needs of the community that would arise in the changing social and
economic environment.
- Involve all people working in the
Corporation to the best of their capability in furthering the interests of
the insured public by providing efficient service with courtesy.
- Promote amongst all agents and
employees of the Corporation a sense of participation, pride and job
satisfaction through discharge of their duties with dedication towards
achievement of Corporate Objective
PGDFS UNIT TRUST IN INDIA
UTI was established by an Act of Parliament
on November 26. 1963. It started the sale of its units on July 1, 1964. It was
established to encourage and mobilize savings of small investors through the
sale of its ‘units’, and to channelize these resources into corporate
securities.
Over the years, it has rapidly grown and
diversified to be an important part of the Indian financial system. In June
1997, UTI launched the first Indian off-shore debt fund — India Debt Fund’. It
has supported the development of Unit Trusts in developing countries like Sri
Lanka and Egypt providing technical advice as well as participation in the
equity capital.
The trust had built up a portfolio of
investments which was balanced between the fixed and variable income bearing
securities. The main objective of the trust was to maximize income consistent
with safety of capital. The trust had invested in securities of about 300 sound
concerns. Apart from subscribing to the shares and debentures of companies, UTI
sanctioned loans to the corporate sector.
UTI was bifurcated into UTI-I and UTI-II in
2002. The government handed over one part, comprising the 43 net asset value
based schemes (UTI-II) to a company floated by UC, SHI, Punjab National Bank,
and Bank of Baroda.
UTI-II started operations from February 1,
2003. UTI-I comprises the flagship scheme US-64 and other assured return
schemes. The government has repealed the UTI Act through an ordinance. Both
UTI-I and UTl-II will comply with the requirements of SEBI.
The unit Trust of India has been set up in
the public-sector with an initial capital of Rs. 5 crores subscribed as follows:
The Reserve Bank of India Rs.
2.5 crores
The L.I.C. Rs. 75 lakhs
The State Bank of India Rs.
75 lakhs
The scheduled banks and other financial
institutions Rs. 1 crore
UTI began operations in July 1964. It
provides opportunity for small-savers to invest in areas where their risk is
diversified.
The Unit-holders, if necessary, can sell
their units to UTI at the prices determined by UTI. One of the attractions is
that the investment in UTI has an income-tax rebate and the income from the UTI
is exempted; from income-tax subject to certain limits.
PGDFS objectives and function of UTI
Objectives:
The primary objectives of
the UTI are:
(i) To encourage and pool the savings of the
middle and low income groups.
(ii) To enable them to share the benefits and
prosperity of the industrial development in the country.
Organisation
and Management:
UTI was established with an initial capital
of Rs. 5 crore, contributed by the RBI, LIC, SBI and its subsidiaries and
scheduled banks and financial institutions. The initial capital of Rs. 5 crore
was divided into 1,000 certificates of Rs. 50,000 each. To supplement its
financial resources, the trust can borrow from the Reserve Bank of India, the
amount being repayable on demand’ or within a period of 18 months.
UTI is managed by a Board of Trustees,
consisting of a chairman and four members nominated by Reserve Bank of India,
one member nominated by LIC, one member nominated by the State Bank of India,
and two members elected by the contributing institutions.
Functions
of UTI:
The UTI functions are
discussed below:
(i) To accept discount, purchase or sell bills
of exchange, promissory note, bill of lading, warehouse receipt, documents of
title to goods etc.,
(ii) To grant loans and advances.
(iii) To provide merchant banking and
investment advisory service.
(iv) To provide leasing and hire purchase
business.
(v) To extend portfolio management service to
persons residing outside India.
(vi) To buy or sell or deal in foreign
exchange dealings.
(vii) To formulate unit scheme or insurance
plan in association with or as agent of GIC.
(viii) To invest in any security floated by
the Central Government, RBI or foreign bank.
Activities
of UTI:
The UTI can sell and purchase the units
issued by it, investing, acquire, hold or dispose off securities. Keep money on
deposit with the scheduled banks and undertake related functions incidental or
consequential to that. All the units issued by the UTI are of the value of Rs.
10 each. These units were put on sale at face value and thereafter at prices
fixed daily by the UTI. Units can be purchased in ten or multiples of ten.
Schemes
of UTI:
The familiar schemes of UTI
are given below:
(i) Unit scheme—1964.
(ii) Unit Linked Insurance Plan—1971.
(iii) Children Gift Growth Fund Unit
Scheme—1986.
(iv) Rajyalakhmi Unit Scheme—1992.
(v) Senior Citizen’s Unit Plan—1993.
(vi) Monthly Income Unit Scheme.
(vii) Master Equity Plan—1995.
(viii) Money Market Mutual Fund—1997.
(ix) UTI Growth Sector Fund—1999.
(x) Growth and Income Unit Schemes.
Advantages
of Unit Trust:
The advantages of Unit
Trust are:
(i) The investment is safe and the risk is
spread over a wide range of securities.
(ii) The Unit-holders will be getting regular
and good income, as 90 percent of its income will be distributed.
(iii) Dividends up to Rs. 1,000 received by
the individual are exempt from income-tax.
(iv) There is a high degree of liquidity of
investment as the units can be sold back to the trust at any time at prices
fixed by trust.
Saturday, September 12, 2015
pgdfs role of investment trust
THE ROLE OF INVESTMENT
TRUSTS IN THE CAPITAL MARKET
Introduction
Introduction
The
capital market enables individuals and organizations with spare capital (money
which they want to invest) to channel these funds to businesses and other organizations
that need investment capital (money for expansion or other purposes). Detail of
investment trust and its role, growth are as follow:
v Capture needs for funds
Businesses
sometimes need funds above the income they get from trading to help them grow
and also to carry out their day-to-day trading activities. Business acquires
funds from several sources:
• Shareholder capital - where investors
give the company money in exchange for shares (long-term)
• Loan capital (medium-term)
• Bank overdrafts and Trade credit
(short-term).
The
investment trust concentrates on longer-term funds. Without long-term funds,
businesses would struggle to buy expensive capital equipment, build new
premises, expand into foreign markets, or acquire other businesses.
v Investment Trusts as
sources of funds
Investment
Trusts provide invaluable funds to business by acting as intermediaries. They
channel funds from financial institutions and households to businesses through
the Stock Market and these funds can help businesses grow and expand.
Investment
Trusts provide their investors with investments tailored to investors'
individual requirements e.g. the degree of risk an investor is willing to take
and the rate of return he/she expects. Investors aim to gain from holding
Investment Trusts in two ways:
• They often receive a dividend - their
share of the profit earned by the Investment Trust in a given period e.g. 6
months or a year
• The value of their investment may
grow over time if the share prices of the companies in which they have invested
go up, particularly if their Investment Trust has invested for growth. However,
the value of investments can go down as well as up, and this is the risk that
Stock Market investors take.
v Setting up and managing
Investment Trusts
An
Investment Trust is a public limited company in its own right and is listed on
the London Stock Exchange. As such, it has an independent board that protects
shareholders' interests and appoints the investment management company.
Investors buy shares in the company. An Investment Trust does not make or sell
physical goods. Its sole purpose is to use shareholders' money to invest in the
shares of other companies.
Investment
Trusts are closed-ended funds: at launch, they issue a fixed number of shares
to raise the initial pool of investment capital, the value of which will
increase or decrease according to how well it is invested. Typically, an
Investment Trust holds shares in 50 or 60 different companies at any one time;
each of these will form part of its investment portfolio. Investing in a wide
spread of different companies helps to spread risk for investors, as they are
not relying on the performance of just one company.
Investment
Trusts are just one way of spreading risk through the Stock Market. Other
methods include Unit Trusts and OEICs, which can also invest in 50 or more
companies on behalf of investors.
Whilst
Investment Trusts are closed-ended, Unit Trusts and OEICs are open-ended. This
means that unlike Investment Trusts, they expand or contract in size as people
invest in or sell their investment.
v Reasons for investing in an
Investment Trust
Investment
Trusts are attractive to investors for several reasons. Some people buy
Investment Trusts to build up a pool of capital for some future event such as
paying for their children's university education, while others invest in this
way to provide a pension. Investors can also benefit from investing in
Investment Trusts in a tax efficient manner. It is not only individuals that buy
shares in Investment Trusts, but Financial institutions such as Pension Funds
also buy shares in Investment Trusts, seeing them as attractive ways of
accumulating funds for their members. However, they are aware that the value of
their investment can go down as well as up.
Investment
Trusts are an ideal way of investing because Investment Trusts:
• may hold shares in 50 or more
different companies at any one time. This means investors can enjoy all the
advantages of stock market investment - the potential for greater returns than
bank or building society accounts - whilst spreading the risk; it is safer than
investing directly in the shares of just a few quoted companies
• have tended to deliver, on average,
excellent returns over the longer term - well above that available from deposit
accounts, inflation and many other forms of stock market investment
• tend to have low costs to the
investor
• are well placed to ensure good rates
of return over the longer-term period of 5 years or more; they may suffer
downturns when financial markets fall eg in times of recession or crisis.
v Income and growth
Recent
years have been characterized by low levels of inflation. In a low inflation
world, people are increasingly attracted towards different forms of investments,
whether for income, growth or both.
Many
investors want a high level of income and have a lump sum to invest for this
purpose. Some Investment Trusts are therefore organized so as to squeeze as
much income out of their investments as possible. For example, High Income
Investment Trusts invest most of their assets in high yielding shares (these
are shares that pay big dividends as a percentage of their share price). Their
priority is to generate a high and rising income stream.
Other
investors are more concerned about the growth of their investment over time. If
the companies in which an Investment Trust invests do well, the value of the
investment portfolio will also grow and so should the value of the shares in
the Investment Trust. However if the companies that the Investment Trust
invests in perform poorly, the value of the shares in the Investment Trust will
go down. There are at least 200 growth Investment Trusts from which to choose.
Investors' choice of trust will depend on the length of time for which they
want to invest and the level of risk they want to take.
v Understanding risk
There
are many specialist Investment Trusts which invest only in one sector. For
example, you can invest in a trust which buys shares only in pharmaceutical
companies or hi-tech industries. Other examples include trusts which buy shares
only in financial institutions or communications companies.
Because
these Investment Trusts focus on specific fields they are not spreading their
risks. They are therefore considered to be medium to high risk.
Investors
putting their money into Investment Trusts need to understand the level of risk
they are taking. Big risks can deliver high returns but can also lead to
significant losses. For example, the financial press became excited about the
prospects of new technology shares, particularly those associated with the
Internet. Many investors saw this as a chance of making lots of money quickly.
However, for many companies in this sector the bubble soon burst. This was
because the cost of promoting a new company to the public is very high and the
length of time required for them to take-off is years, rather than months. This
caused serious cash flow problems for several 'star' companies. Share prices,
which had risen at high speed, came crashing back to earth with a bump.
Because
the fund managers of major Investment Trusts have a good understanding of risk,
many of them were able to anticipate the risk involved in investing too heavily
in new technology companies. So at a time when the shares of well established
companies were falling as a result of all the hype associated with the so
called 'new economy', wise and experienced fund managers were also investing in
strong companies in the 'old economy'. Experienced Investment Trust managers
have a very good idea of the risk associated with particular investments and,
unlike short-term speculators; they often take a long-term view in order to
protect their investors.
v Spreading risk
Let's
take a look at how an Investment Trust can spread risk and secure good returns
in terms of both income and growth. Some Investment Trusts spread risk by
investing in countries all over the world.
When
choosing a company in which to invest, fund managers carry out a detailed
analysis of the:
• company's strength of management
• markets in which it operates
• general business environment.
Fund
managers also scrutinise, among other factors, trends in the:
• balance sheet
• value of earnings per share
• dividends paid to shareholders
• company's cash flow
• company's level of debt.
Investment
Fund Managers also take into account changes in the exchange rate against the
pound. This is vital, because while a company may be successful in its own
country it may prove to be a poor investment if the currency in which it
operates is losing value against the pound.
v Conclusion
Investment
Trusts play a vital role in helping well-managed businesses to secure finance.
At the same time they provide attractive opportunities to many investors - from
young adults saving for their future, to parents saving for their child's
education or to provide an income for those already in retirement. They also
provide a service to large financial institutions that are responsible for
providing income and growth for pension funds and other investments.
The
fund manager plays a vital role in delivering returns to shareholders. Fund
Managers constantly keep their shareholders in mind, knowing that their own
performance is judged daily by the value of the Investment Trust, which is
reported on in the financial press and through other media. Fund managers need
to have a keen understanding of all that is happening in the world that affects
the economy, including political, social and technological changes.
In
addition, the Investment Trust must produce a formal annual report to
shareholders once a year, hold an annual general meeting for shareholders to
express their views once a year, as well as regularly communicate with
shareholders eg newsletters or updated reports on the company's web-site.
Saturday, September 5, 2015
PGDFS LIST OF BANKS PROVIDING HOUSING FINANCE INDIA
LIST OF BANKS PROVIDING HOUSING FINANCE INDIA
List
of Home Loan Banks in India –
Check Available Major housing finance, Home Finance, Housing Loan Companies who provides
loans for your dream home or finance your house on attractive interest rates
and benefits.
Here’s
the list of List of major home loan companies in India are as follows:-
|
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- See more at:
http://www.deal4loans.com/loans/banks/list-of-home-loan-banks-housing-finance-companies-india/#sthash.Vkao5PGv.dpuf
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