Banking Concepts and Practices

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

Chattel Slavery Essay

Indentureship was supposed to differ from slavery, however, the servants were treated as harshly as the slaves Chattel- African slaves were treated as commodities System of slavery whereby an individual and their offspring are recognised by the law as being the property of another person for life. This system was established by Europeans and formed the basis of transatlantic slavery With due respect to the I’s good intentions, from all that I have read and studied it would be a mockery to compare Indian indentureship to African chattel slavery in the Caribbean. Firstly, Indians were allowed to retain: their family (Africans had theirs split up); their language (Africans had the use of theirs forbidden); their religion (Africans had theirs banned); their music (Africans had the drum – representing the voice of their gods – banned by laws, some of which remain on the statute book in Barbados to this day). This highlights the all-important difference between indentureship and slavery: The heart of slavery was not the horrible labour conditions. If that were so, slavery and indentureship might be comparable. The heart of slavery was the stealing of the African’s soul – his language (the eyes through which one sees the world), his gods, his family, his musical sounds. That is why some 169 years after Emancipation, many Africans in the Caribbean remain enslaved. Some say enslaved mentally (in distinction to physical slavery), but this is misleading. SLAVERY IS MENTAL. Captivity is physical. Why the Africans have taken longer to restore their race – as opposed to Indians, Jews and other ethnic groups that suffered at the hands of White Supremacy – is because no other people were ever subjected to what the Africans suffered. If you capture a people and reduce them to harsh, brutal conditions of exploitation, once they survive, when that is brought to an end the people will soon rehabilitate themselves. But when you take away a people’s tongue, their connection to the ancestors, their gods; when you smash their family life so that the male loses respect for the female and vice versa; when you teach them to hate their skin, their lips, their hair, so that they hate anyone that looks like them – then you will have destroyed the culture and soul of that people and recovery will be almost like a resurrection. That is why it has taken Rastafari, Vodun, Orisha and the other spiritual potencies to awaken and heal the descendants of the African slaves. Secondly, millions of Africans died on the dreadful crossing from Africa. How many Indians perished on their way here? The Trans-Atlantic trade in captive Africans and African chattel slavery lasted roughly from 1473 to the 1880s – some four centuries. Indian indentureship lasted from the 1840s until when – the end of the 19th century? Thirdly, the trade in African captives depleted the African homeland tremendously. Consequently, up to this day, in contrast to the huge populations of India and China, the African continent is badly underpopulated. In fact, it has been estimated that even if all the Black people returned tomorrow to Africa, it still would not be fully populated. Walter Rodney in   provides some Statistics to give an idea of the devastating effect that the trade in Africans had on Africa for four centuries. Whole towns and villages were wiped out. Ethnic groups disappeared. Others were driven to war on their neighbours or face the prospect of having their own group captured and shipped to the ‘New World’. The natural line and trajectory of material and spiritual development for millennia in Africa’s history up to the time of the Trans-Atlantic Trade in captive African was interrupted, disrupted and corrupted. While it is true that India suffered horribly as a result of the British penetration of India during the period of indentureship, history attests that neither the scale nor the time period of this penetration can match the reality of the impact of the Slave Trade and Slavery on Africans and their Motherland. But while the enslaved Africans – unlike the indentured Indians – had their ancestral cloak ripped from them, the White man could not take the living nucleus of their culture and its memory from them. So (as they say ‘whoever loses his life shall gain it’) they took this breath of their culture and created the living soul of Africa in the Caribbean – they recreated their musical forms, they reconceived their ancient gods through new prisms (likje Judedo-Christianity, for example in Haitian Vodun and Rastafari), they revived their sense of an organic connection to the earth, they rediscovered the taste of their traditional cuisine, and so on. And that is why we find that almost all that is distinctive about indigenous Caribbean culture owes its inspiration, its image and likeness, to Africa. It is also probably why there is no enduring large-scale mass Back to India or Back to China movements coming out of the Caribbean. In a sense, Mother India and Mother China were not taken away from their indentured children in the Caribbean since they continued to wear their traditional dress, listen to their traditional music, speak their traditional language and worship ther traditional gods. When the true history of the last 5 centuries of the recently past millennium is finally placed in proper perspective, the incomparable tragedy of the African people during the era of the slave trade and slavery will come fully to light. It is without precedent in human history. I close by suggesting that the Indian people – who are essentially of African origin as Rashidi has documented – have a secure place in Rastafari, and as the Mansinghs have shown in their research, they have made a valuable contribution to the development of the Rastafari way of life. Indentured servants were working â€Å"on contract† to repay a debt, usually for transportation to America. â€Å"Chattel† means personal property, so â€Å"chattel slaves† were legally considered property, the same as a mule or a goat. An indentured servant worked for his/her master without pay until the debt was paid off. Typically, for repayment of the cost of being taken from England to America, the time of service was seven years, although it ranged from four to ten. At the end of that time, the indentured servant was free to leave and find other, gainful employment. There were cases of abuse by masters in which additional time was added by charging the servant for things like rent, food, lost or broken tools or products, etc. , because indentured servants were usually not well-educated and could be taken advantage of. The only ways a chattel slave could be released from a lifetime of unpaid service were manumission (being legally given freedom by his/her owner) or purchase, either by himself/herself – rare, but possible – or by a third party, such as societies of abolitionists who purchased slaves’ freedom for them. The best-known of these groups bought land in west Africa and founded there the nation of Liberia, for the purpose of resettling freed American slaves. Interesting sidelight: the term â€Å"indentured† is related to words like â€Å"dentist† and â€Å"dental. † An indentured servant had a written contract with his master. At the time the contract was signed, it was torn in two. The master kept one half and the servant kept one half. To ensure that these halves were part of the original document, the tear-lines were deliberately made irregular and jagged so that no other piece of paper would match. The jagged tearing was â€Å"indented† – it looked like teeth

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Organizational Behavior (OB) - Thesis Proposal Example Top executives take the decision to carry on, discover the desirable preferred behaviors, generate the plan, and offer the capital for the change program. Middle management mostly makes â€Å"actionable top management’s plan† (Robbins & Judge, 2010, p. 89) and then executes the plan. Directors go along the plan’s lead as well as assist the workers in their efforts to perform in the needed way. Workers perform the preferred behaviors that expectantly bring about enhanced efficiency as well as competence and offer the response regarding how the plan has to be adapted to develop the organization’s capability to act in the innovative manner. These days, managers must recognize as well as apply the understanding of behavioral psychology in addition to the examples from intellect to deal with organizational behavior change productively. In the earlier period, efforts on behavior change that has concentrated on the structural phases of organizations have scientifically failed because they have ignored the reality that modification does not take place without individuals altering their view, attitude, and behavior. It has been well known in psychosomatic research that a stressful psychological condition starts when individuals find that their values are contradictory with their acts - something known as cognitive conflict. The implication for this discovery for organizations is that if employees have faith in its general use and it is in accordance with their personal life goals, they will be likely to modify the behavior. Employees must as well appreciate the function of their actions in the â€Å"unfolding drama of the company’s fortunes and believe that it is worthwhile for them to play a part† (Duncan & Covey, 2012, p. 122). It is not sufficient to inform human resources that they will have to do things in a different manner. Anybody leading a key change plan should take the time to â€Å"think through its story† (Duncan & Covey, 2012, p. 123) - factors that

Banking Essay Example | Topics and Well Written Essays - 1250 words

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Dissection and graded - Assignment Example These factors might prevent people from participating in the screening tests. Various factors are found to be dominantly effecting people’s decision of participating in the screening tests. The two possible reasons include awareness and health beliefs. As screening is a process of identifying risk of diseases in presymptomatic individuals for effective therapy or primary prevention to evaluate the risk factors (Shickle & Chadwick, 1994). Depending upon the concepts and beliefs people decide to take part in screening procedures. Nowadays people are aware of both things, the pros of screening tests and the cons. Because of increasing adverse effects reported due to screening procedures the awareness has been increased therefore; people do not wish to participate in screening procedures. People are more aware of the adverse consequences like fear, depression, anxiety, etc. which occur due to undertaking screening tests, this hinders in their decision of participating in screening tests. Health beliefs of some individuals influenced by their culture or traditions also prevent people from participation (Government of Western Australia, 2014). People consider the screening tests to be waste of money as they do not find them useful. As studies have proven screening tests have not found effective in decreasing the risk of diseases therefore, people do not consider them as useful or result oriented. Surveys have proved that most people do not consider themselves to be sick or have any risk of disease which prevents them from taking part in screening tests. People also consider the screening procedures to be unsafe and may result in doing harm to their bodies which makes them fearful. Having proper awareness and guidance about one self and knowing whether screening is necessary or not prevent individuals from facing series of adverse outcomes. In order to overcome screeningitis the public health

International Production And Governance Essay Example | Topics and Well Written Essays - 1500 words

International Production And Governance - Essay Example As a result, a steady increase got registered in the output of world trade. The above situation presents a similar case to one of the pillar causes of the Financial Crisis of 2008: mortgage lending in the United States of America. According to Murphy (2010), the availability of credit with low rates of interest encouraged people to seek loans. The upward trend in prices of houses further prompted them to invest in houses and homes. This trend, coupled with standards of lending that seemed relaxed encouraged the exploits. As such, when the financial crisis hit, a lot of lending institutions suffered. The genesis of the crisis, as thus, lay in the marketing policies of the mortgage market. The freestyle and casual manner in which the mortgage financing options and paperwork got done exposed the financial markets to high levels of risk. The lowered standards of accessing and the use of the word of mouth in confirming ability to repay the mortgage led to many people buying houses they could not afford (Murphy 2010). As thus, when the financial crunch descended the financiers suffered. This affected the ways in which international governance and production got looked at, in matters financial. The handling of financial affairs got a wake-up call. All the procedures and paperwork got a thorough look up before issuance of not only mortgages and loans, but also other financial transactions. Tangible, and in some cases physical property, got attached as evidence of the ability to repay loans, Murphy (2010). According to Nayyar (2006), the last half of the past century underwent unprecedented expansion and growth in flows, in international trade. World exports experienced astronomical increases, from $61billion in the 1950s to $883billion (1975) and $6338 billion at the turn of the century. Through this epoch, more growth got observed in world trade than in output. This explains the trend that results when the conditions that favor economic

Why i want to go to University of Miami Essay Example | Topics and Well Written Essays - 500 words

Why i want to go to University of Miami - Essay Example A balanced way of combining both theoretical and practical approaches of education makes a big difference between University of Miami and other universities. And since the major I choose is business analysis, this combined method of education is very important for me to obtain my specialty properly and on a high level. The reason of this is quite obvious: being a good business analytic requires to practice a lot with a huge massive of data, but to be able to process the information you need to know how to do it, to be theoretically versed. I believe that University of Miami can give me an opportunity to acquire all the indispensable knowledge to become a real professional in my chosen realm. Also, which is very important in studying process, the professors of the university are excellent professionals and I had a chance to ascertain this while studying in the university. The university hires ones of the best, so it’s not strange that its alumni occupy high positions in best co mpanies worldwide. In addition, as for a foreign student, it is quite important fact for me that the university accepts a lot of foreign students into studying process; I consider this as a great opportunity to establish international contacts with future professionals in economics, which might be useful in my further career. During my undergraduate program in University of Miami in the summer of 2012 I practiced in Guo sen Securities, a Chinese state-owned investment bank headquartered in Shenzhen. Analyzing a lot of financial documents I realized that the knowledge I had acquired in university were practically very useful for me to handle with all the responsibilities I had within the scopes of the internship. In the university I learned how to estimate and prevent financial risks, make capital budgets, develop lasting conceptual frameworks, and analyze future ideas in the financial arena. I saw, that my knowledge and skills were in a high level for an intern, so I’m

Discuss the benefits and drawback of fair value accounting measurement Assignment

Discuss the benefits and drawback of fair value accounting measurement vis--vis other measurements with respect to enhancing the quality of financial information - Assignment Example The accounting system demands an estimation of fair market value in order to demonstrate the present value of future cash flows (Penman, 2007). Many financial analysts are of the opinion that the fair value accounting has significantly contributed to the reasons behind financial crisis of 2008 (IMF, 2009). In this paper the statement will be critically evaluated to justify such argument. The paper will also analyse the benefits and drawbacks of fair value accounting in comparison with other measurements in order to enhance quality of financial information. Many critiques have argued that apart from the reasons such as subprime mortgage, excessive debt and default credit swaps that had mainly caused for financial crisis of 2008, fair value accounting which is also known as mark to market accounting has significantly contributed towards the crisis through producing deceptive data and defective financial statements (Laeven and Huizinga, 2009). However, though there has been much substantiation regarding asset fire sales and downward spirals in financial markets, supporting evidences that may prove the accounting system’s function in igniting the crisis are negligible. Such discussion can be based on the following myths. Some critiques have argued in favour of FVA that the assets reported under historical cost in the company’s balance sheet have no relation to their current value. The values of most of such assets are documented at their purchasing price with adjustments for depreciation (for building, plant and machineries etc.) or appreciation (bonds and other fixed maturity investments) of those assets (Bonaci, Matis and Strouhal, 2010). However, such valuation may not be appropriate in current market scenario. For example, value of a company owned building may hold more value in present market than its depreciated book value as calculated under historical cost. Hence, even under historical accounting, importance of fair value has been established

Political Economic Situation of HK Research Paper

Political Economic Situation of HK - Research Paper Example The China National Tourism Administration has stopped tourists under package tours from visiting HK. The results have been the shortcomings in the economy as 30 percent of Chinese visitors travel via package tours. However, the stoppage of package tours is a temporary measure and does not point to the long-term structural change in China. It does not also mean that the Chinese government would cut the Individual Visitors Scheme   as it is one of the China’s bigger plans for integration with Hong Kong. Therefore, the movement has no long-term impacts on the economy. However, its long-term political and social effects can lead to long-term economic results.Nonetheless, protests that have become more frequent are likely to erode the appeal of Hong Kong to global firms. Hang Seng index, the local stock market benchmark, has tumbled over 9% since hitting a peak in six months in September. The Hong Kong Monetary Authority revealed that banks have closed down 44 branches because of the protests. The situation of the city can thus push away investors as most sectors, as the financial markets are not operating normally. Most people who could be working are in the streets, protesting. According to the Citigroup economist, investors and businesses are in an environment; that is increasingly creating higher operational risks. The movement seems disorderly to most foreigners and has thus created a negative perception of Hong Kong and mainland China.Despite the results of the protests, Chinese government has shown no sign of relenting.

Vehicle Routing and Container Loading Problem Research Paper

Vehicle Routing and Container Loading Problem - Research Paper Example To optimize on the supply chain operation, researchers developed solutions for the vehicle routing problem (VLP) and also the container loading problem (CLP). It is impossible to optimize the routing process only and fail to optimize the CLP process. Likewise is impossible to develop solutions for CLP without developing VLP solutions. This paper suggests the use of an integrated approach to solve the routing problem. Several methods have been put across by different mathematician to help tackle the routing and packing problems. Some of these methods include the formulation of mathematical models, the use of algorithms as well as the integration of the two methods. This paper suggests the use of an integrated vehicle routing and container packing problem with the use of generic algorithms. G= (VA) which represents the complete graph with V representing the nodes and A representing the arc set, the vertex set V is described by V= and 0 represent the depot and represent the nodes. K represents the number of available vehicles. The vehicles are defined by their length, width and height. These dimensions are defined as HK, MK, WK,LK which represent the height , weight, width and length of the vehicle. the cost of vehicles to travel from point i to j is given by Cijk, the traveling time for the vehicle from the point i to j is given by tijk, the service time of vehicle K at node i is given by Sik, the cargo type is represented by, the length of the cargo is represented by lp, while the cargo width is represented by wp. The weight of the cargo is given by mp. The time taken to load cargo to the track is given by tdpk, while the time taken to unload the cargo is given by tupk. The demand for the cargo at a given node (n) is represented by Dp(i). The number of cargo delivered by vehicle K is given by. Setting the constrains Clients; the model assumes that the clients are distributed within a given geographical area. Some clients are near the deport while others are situated away. Deport: the model assumes that there is one deport to serve these clients Vehicles; the vehicles are the same, that is they are homogenous Vehicle capacity; the capacity constrains for the vehicle are given by weight that the vehicle can carry and the volume of the vehicle. The volume of the vehicle is defined by setting (length by width by height of the vehicle). The correct definition involves defining

Timberland’s Corporate Social Responsibility Essay Example for Free

Timberland’s Corporate Social Responsibility Essay Timberland’s exercise of its corporate power in society is very much so positive. The have contributed many great things to the world around them as they see fit. Jeffrey Swartz, the grandson of the founder and the last member of the family to serve as CEO said, â€Å"At Timberland, doing well and doing good are not separate efforts. Every day, everywhere, we compete in the global economy. At the center of our efforts is the premise of service†¦Ã¢â‚¬  (Lawrence Anne T. ) Timberland only went further to prove this statement by Swartz. The social responsibly contributed by the New Hampshire Company is apparent and influentially responsible. Large companies can and are very influential to other companies because they set the pace. Not only with profit, but also with social responsibility, smaller companies follow after the actions of larger companies. Timberland is aware of this â€Å"big brother† image and is handling itself very well. Timberland has made both economical and social contribution to the United States and its neighboring countries. They have mastered the balance of public help. In September 2011, Timberland celebrated its centennial birthday with a service event called â€Å"Serv-a-Polooza† (Lawrence Anne T.). The event was held at its corporate headquarters in New Hampshire. Volunteers worked with Habitat for Humanity and framed houses in its corporate parking lot to be shipped for final assembly in Missouri to assist the suffering families in tornado- devastated Joplin, Missouri. They also created a new outdoor community gathering and performance space, built an outdoor classroom at a local elementary school, and improved the high school athletic facilities in Newmarket, New Hampshire. Lastly, volunteers worked on â€Å"greening† a community for a local nonprofit organization, transforming the meeting space for local disabled veterans, and knitting blankets for families affected by the Missouri tornadoes. (The Timberland Company ) Timberland and its volunteers have made substantial social contributions. Helping the state of Missouri shows the optimistic side of larger  corporations, which can often be misconstrued as negative entities. Timberland is making a great difference. Timberland has also prepared economical influences. Over the past years, Timberland has focused more on its effective sustainability. By the end of 2010, they had installed LED lighting in its stores in the United States and directed its European stores to purchase renewable energy, which in return reduced its carbon emissions by thirty-eight percent. Shortly after that accomplishment, Timberland set new sustainability goals for the following year. The company unveiled the plan to reduce its carbon emissions by fifty percent of total energy consumption. Timberland established a baseline for its supply chain emissions and challenged all of its suppliers to meet level two of the Global Social Compliance Program standards (Lawrence Anne T.). The programs that Timberland have pursued are not in lieu of self-interest. The standards and changes that the company has set fourth simultaneously benefit the company and its surroundings. Both the economical and social changes and contributions not only benefitted the company as a whole but also the people that the programs were initially for. The emissions sustainability efforts were economically beneficial because it supports health standards for the surrounding community where the Timberland factories are located as well as their suppliers. The programs that Timberland set effectively on their centennial birthday, in Missouri, were put in place in lieu of the Missouri residents and their families. The social responsibility initiatives of Timberland are focused on the appropriate problems but can focus on a different aspect. The programs set fourth in Missouri were great but Timberland can aim to assist other states besides their native state. Many programs went into play in Missouri because tats where Timberland’s â€Å"home† is. These efforts are great but are narrowed in on one place. Timberland’s efforts should be widespread around the United States. Timberland is off to a great start but shouldn’t be settled only in their place of comfort. Widespread efforts will go along way and open the doors for other volunteers, financial and non-financial support. VF Corporation should continue to support the initiatives of Timberland because they are headed in the right direction. Timberland’s efforts are creditable and honest. They have set a standard for other companies to follow. Being a larger and well know company is crucial because you’re always in the limelight. This limelight is the reporting mark that smaller and upcoming companies seek direction from. If Timberland continues with its practically good efforts, corporate entities would have a more positive perception. Timberland has set fourth great efforts with their economic and social contributions. They have properly set initiatives that are both beneficial to their surrounding communities as well as the company itself. Timberland’s exercise of its corporate power in society is very much so positive. The have contributed many great things to the world around them as they see fit. Bibliography Lawrence, Anne T., and James Weber. Business and Society: Stakeholders, Ethics, Public Policy. Fourteenth ed. Print The Timberland Company . Corporate Social Responsibility Report. 2001. .

Mental Illness Analysis of Film Session 9 (2001)

Mental Illness Analysis of Film Session 9 (2001) Erica Moghtader Session 9: Mental Illness Analysis Deemed as one of the major cult films of all time, Session 9 invokes terror in the most realistic way possible- through abnormal psychology. In the end of the story, the character Mary Hobbes’ evil personality alternate, Simon, chillingly states when asked where he lives to the psychologist: â€Å"I live in the weak and the wounded, Doc (Anderson, 2001). Statements such as this lead to the notion that anyone could end up in a situation with, or actually like, the main character Gordon. In this paper I will discuss the various characters’ mental illnesses shown in Session 9 along with their symptoms, portrayal, and treatment amongst peers. This intense psychological horror film, directed by Brad Anderson, is centered on the restoration of a large mental asylum, built in 1871 and closed in 1985. Gordon Fleming (Peter Mullan), owner of an asbestos removal company, agrees to restore the building in an impossible turnaround time of one week. Gordon hires a crew: Phil (David Carusoe), Hank (Josh Lucas), Jeff (Brandon Sexton III), and Mike (Stephen Gevedon). Mike, secretly listens to nine old recorded therapy sessions that he found, which focused on patient #444 Mary Hobbes. Each employee has personal issues that get in the way of the job, and in combination with stress, it leads to the pinnacle of the story. The movie ends with all characters dead except Gordon, who has made patient room #444 his home. Considering the aforementioned synopsis, there are three characters that portray mental illness throughout the movie. Gordon, the main character, seems disturbed from the beginning of the movie. As the scenes unfold, symptoms of schizophrenia begin to arise. In one of the first scenes as Gordon and Phil tour the asylum for an asbestos removal bid, Gordon has his first auditory and visual hallucination. As Gordon intently focuses on a specific room, #444, he sees a shadow move across his face while hearing â€Å"Hello, Gordon† (Anderson, 2001). Both kinds of hallucinations go on throughout the movie, in particular when his hallucination eggs him on to kill his wife and baby: â€Å"Do it, Gordon!† (Anderson, 2001). In the final scenes of the movie, the voice reappears repeating the same statement as he murders all the employees. Susan Nolen-Hoeksema (2011) deliberates that schizophrenic auditory hallucination such as these â€Å"often have a negative quality, criticizing or threatening the individuals or telling them to hurt themselves or others† (p. 223). Persecutory delusion for ms towards the end of the movie when Gordon believes that Phil is lying about a certain phone call because he thinks Phil killed/hurt Hank. Catanotic excitement is also displayed as Gordon runs aimlessly throughout the asylum looking for Hank, whom had been missing for days. There were several scenes that contained avolition. Many times Gordon sat â€Å"daydreaming† in the cemetery, room 444, and in front of his home. Gordon also presented a symptom of sleepwalking, or somnambulism, when he gave Hank a frontal lobotomy. Dr. Prakash Masand (1995) associated sleepwalking with schizophrenia: â€Å"The prevalence of somnambulism is 1 to 6 percent in the general adult population, although a higher incidence has been reported in patients with schizophrenia, hysteria and anxiety neuroses.† Not only did Gordon suffer from a mental illness, so did his nephew Jeff. Jeff, a young chap who needed a job, suffered from situational phobia. In particular he suffered from nyctophobia or in layman’s terms, fear of the dark. On his first day in the asylum, the breaker flips and in turn Mike asks Jeff to go down in the basement to turn it on. Jeff directly tells him he has nyctophobia and will not go down. When he is forced to go down in the basement the first time and has to walk through a slightly dark room, he hurriedly remedies the problem. At the end of the movie in the tunnels, as the lights slowly go out putting Jeff in complete darkness, he has a severe panic attack. The DSM-5 states that Specific Phobia disorder can be diagnosed if the individual shows immediate fear, avoidance and out of proportion reaction to the phobic situation (Nolen-Hoeksema, 2011, p. 119). By the same token, patient Mary Hobbes also displays mental illness in the film. Although former, deceased patient Mary Hobbes never physically appears in Session 9, she makes quite an impression. Mary Hobbes was admitted into the asylum and diagnosed with dissociative identity disorder. She had been traumatized by her brother Peter after he scared her causing her to fall on her porcelain doll, which in turn severely cut up her chest. At this point Simon took over Mary and killed Peter with his new hunting knife. In the taped sessions of Mary’s therapy, she does not remember anything that happened, even hysterically stating: â€Å"Nothing happened! No! I can’t remember!† (Anderson, 2001). Susan Nolen-Hoeksema (2011) explains that people suffering from dissociative identity disorder usually report significant periods of amnesia when the other personalities are in control (p. 163). Mary displayed three different identities: the Princess as the child alter, which is often associated with the development of dissociative identity disorder; Billy, the protector alter, who protects the individual from trauma; and Simon, the persecutor alter, who often inflicts pain or punishment (Nolen-Hoeksema, 2011, p. 162). Subsequently, the treatment amongst the mentally ill characters was different than the sane characters. Depending on the situation, characters Gordon, Jeff and Mary were stigmatized or treated with compassion, At first Phil empathizes with Gordon over his fight with his wife. Phil then quickly takes advantage of the situation to get a bigger bonus; he discusses with Mike that they should force Gordon off the project due to his behavior/health. Phil knows Gordon is not in the state of mind to handle being removed, and even says so when he’s smiling to himself on the roof: â€Å"It’s gonna get ugly† (Anderson, 2001). Jeff is stigmatized from the moment he announced his phobia. Mike was irritated and called him names like â€Å"Mullet Head.† Phil completely disregarded Jeff’s phobia, which forced him to go down into the basement to fix the breaker in the dark. Though Jeff’s mistreatment did exasperate his illness, the mistreatment of Gordon by Phil led the persecutory delusions of Phil hurting Hank. Though I do not condone the mistreatment, there are several other aspects I do enjoy about Session 9. Session 9 is one of the best independent horror movies, winning best director at the Catalonian International Film Festival in 2001. Considering myself a horror buff since my early twenties, this is one of my favorites. In my opinion, movies are the scariest if they could really happen. The realistic production and general plot make this movie even scarier. As I compared the mental illnesses of the characters to factual data, I realized that the symptoms portrayed were very close to being true to form. Every time I have watched Session 9 I find different aspects to debate or admire. Now that I added abnormal psychology to my mental list, there are even more to ponder! In conclusion, various mental illnesses symptoms, portrayal, and treatment amongst peers were shown in Session 9. From Gordon’s schizophrenia to Mary’s dissociative identity disorder, to Jeff’s nyctophobia, Session 9 accurately portrays the symptoms and typical mistreatment of the mentally ill. Many fans of the movie think that Mary Hobbes was possessed by Genius Loci, an ancient ideology that a spirit is attached to a place, and in turn possessed Gordon. And in all actuality, who is to say something like a Genius Loci does not exist? Maybe one day science will mesh with the supernatural, or at least get along with each other. References Anderson, B. (Director). (2001).Session 9[DVD]. Masand, Prakash. (1995). Sleep Walking.American Family Physician. http://www.drplace.com/Sleepwalking_-_includes_patient_notes.16.21241.htm Nolen-Hoeksema, S. (2011). Abnormal psychology (6th ed.). Boston, MA: McGraw-Hill.