Risk management by indian banks

Risk management by indian banks Case analysis: Risk management by Indian banks The banking and financial crises in recent years in emerging economies have demonstrated that, when things go wrong with the financial system, they can result in a severe economic downturn. From this perspective, financial sector reforms are essential in order to avoid such costs. These reforms have become the tools for banks to manage risk. Some of the tools are: 1) Interest Rate Scenario The first important issue that I would like to highlight relates to interest rates. Interest rates reflect strongly to inflation rates, there has been a distinct downward drift in the inflation rate during the second half of the 1990s, which is now at around half the level as compared with the first half of the 1990s. Both the popular measures of inflation the Wholesale Price Index (WPI) and the Consumer Price Index (CPI) have shown a definite fall in the recent period. This is clearly reflected in the downward trend in nominal interest rates. The banks have also reduced their deposit rates. But the lending rates of banks have not come down as much. While banks have reduced their prime lending rates (PLRs) to some extent and are also extending sub-PLR loans and effective lending rates continue to remain high (Table 1 and Chart 1). 2) Lending to Small and Medium Enterprises Banks have now understood the problems with lending large organizations. The large organization not only reduces the interest rates by bargaining but also makes default payments by which banks are under tremendous risk, and hence banks are now making a move to provide more loans to small and medium enterprises. 3) Revival of Long-Term Financing The development finance institutions (DFIs) were set up in the 1950s to provide medium and long-term finance to the private sector. Many of these institutions were sponsored by the Government. DFIs were expected to resolve long-term credit shortages and to acquire and disseminate skills necessary to assess projects and banks creditworthiness. The current trend is of DFIs converting themselves into banks. In this context, the future of long-term lending acquires great importance. 4) Non-Performing Assets As of March 31, 2002, the gross NPAs of scheduled commercial banks stood at Rs.71,000 crore, of which the NPAs of public sector banks constituted Rs.57,000 crore. The absolute amount of NPAs continues to be a major drag on the performance of banks. Banks uses the process of securitisation of assets to remove NPAs from the balance sheets. 5) Investing in government securities: In the current interest rate environment, banks are finding it more profitable to invest in government securities. In 2001-02, trading profits of public sector banks more than doubled to Rs.5,999 crore from Rs.2,250 crore in 2000-01. The net profits of these banks during these two years were Rs.4,317 crore and Rs.8,301 crore respectively and this includes an additional Rs.1,365 crore and Rs.1,547 crore from forex operations. The Reserve Bank has been encouraging banks to be proactive in risk management and banks have been directed to maintain a certain level of Investment Fluctuation Reserve (IFR). TABLE 1 : REAL INTEREST RATES Year Weighted Weighted Average Average Inflation Rate Real Interest Rate Ended Average Average Cost of Cost of WPI Manufact- CPI-IW Borrowers Central Depositors March Lending Interest Rate Aggregate Time uring Price Government Rate of of Central Deposits Deposits SCBs Government of SCBs of SCBs Securities 1 2 3 4 5 6 7 8 9=(2-7) 10=(3-6) 11=(5-8) 1990-91 15.0 11.4 8.1 10.6 10.3 8.4 4.6 6.6 1.1 6.0 1991-92 16.5 11.8 7.1 9.1 13.7 11.3 13.5 5.2 -1.9 -4.4 1992-93 16.8 12.5 7.7 9.6 10.1 10.9 9.6 5.9 2.4 0.0 1993-94 16.5 12.6 6.9 8.7 8.4 7.8 7.5 8.7 4.2 1.2 1994-95 16.1 11.9 6.4 7.0 12.5 12.2 10.1 3.9 -0.6 -3.1 1995-96 17.1 13.8 6.9 8.5 8.1 8.6 10.2 8.5 5.7 -1.7 1996-97 16.9 13.7 7.6 9.4 4.6 2.1 9.4 14.8 9.1 0.0 1997-98 16.3 12.0 7.3 8.8 4.4 2.9 6.8 13.4 7.6 2.0 1998-99 15.5 11.9 7.4 8.9 5.9 4.4 13.1 11.1 6.0 -4.2 1999-00 15.0 11.8 7.1 8.6 3.3 2.7 3.4 12.3 8.5 5.2 2000-01 14.3 11.0 6.8 8.1 7.2 3.3 3.8 11.0 3.8 4.3 2001-02 13.9 9.4 7.0* 8.3* 3.6 1.8 4.3 12.1 5.8 4.0 Average 1990-91 to 1995-96 16.3 12.3 7.2 8.9 10.5 9.9 10.4 6.5 1.8 -0.3 1996-97 to 2001-02 15.3 11.6 7.2 8.7 4.8 2.9 6.8 12.5 6.8 1.9 Table 2 : Comparative Position of International Real Interest Rates Country / Money Long-term Prime Rate Inflation Rate GDP Growth Period Average Market Rate G-sec Yield United States 1991 to 1996 1.50 3.71 4.40 3.09 2.58 1997 to 2001 2.73 3.20 5.73 2.46 3.37 United Kingdom 1991 to 1996 4.05 5.30 4.25 3.25 1.92 1997 to 2001 3.40 2.77 3.46 2.57 2.76 Germany 1991 to 1996 3.63 4.09 9.04 2.85 3.20 1997 to 2001 1.99 3.17 7.75 1.57 1.75 Japan 1991 to 1996 2.00 2.78 3.57 1.16 1.74 1997 to 2001 0.09 1.40 2.07 0.13 0.69 Korea 1991 to 1996 7.50 7.21 3.16 5.99 7.35 1997 to 2001 4.79 5.85 6.74 3.82 4.31 Thailand 1991 to 1996 3.71 5.78 7.74 4.97 8.17 1997 to 2001 3.22 4.65 6.98 3.44 -0.20 China 1991 to 1996 N.A. N.A. -2.09 12.32 11.61 1997 to 2001 N.A. N.A. 6.28 0.23 7.93 India 1991 to 1996 3.43 N.A. 6.57 10.52 5.41 1997 to 2001 3.40 5.87 7.62 5.08 6.14 Hungary 1991 to 1996 N.A. N.A. 5.11 25.04 -1.63 1997 to 2001 N.A. N.A. 4.13 12.29 4.52

Anheuser-Busch

Anheuser-Busch is the largest brewer of beers and other malt beverages in the United States, boasting such brands as Budweiser, Michelob and Bacardi. The brands are divided up into sub-categories, which target every different type of malt beverage drinker.For example, Budweiser includes the original, Bud Light, Bud Ice, Bud Ice Light and Bud Ice Light, in addition to others. Anheuser-Busch’s focus on product differentiation has become their unique competency and has contributed to their overall success. The beverages have a wide range of flavors, package sizes, prices and calorie content.In essence, Anheuser-Busch strives to meet the needs of every malt beverage drinker, no matter his or her individual tastes. While the emphasis on differentiation is the company’s strength, in many ways it is also a weakness. It would be impossible for retailers, restaurants and bars to carry every single Anheuser-Busch brand, which means that the most popular brands, such as Budweiser, are easy to find while the lesser-known varieties, such as Michelob Honey Lager, would require some research to locate.In addition, brand awareness is limited because the marketing efforts focus on the more popular brands. In spite of this, Anheuser-Busch creates value for the customers by delivering a quality product at affordable prices. A malt beverage drinker can customize his or her experience by choosing the product that best suits their budget, calorie requirements and quantity needs. Anheuser-Busch is infinitely successful in their marketing efforts. Primarily, the annual Superbowl commercials are anticipated beforehand and talked about later.The commercials range from the ordinary (a history of the company) to the extraordinary (talk show host Conan O’Brien being talked into doing a racy foreign commercial).These commercials have inspired catchphrases, such as â€Å"Whazzzup! † and the infamous talking frog phenomenon. Anheuser-Busch is not only the leader of malt beverages, but also the leader of product advertising. Links: You Tube Conan O’Brien Commercial: http://www. youtube. com/watch? v=HazUvFXY2X4&feature=PlayList&p=593B9A455D27422B&index=15&playnext=3&playnext_from=PL Anheuser-Busch Website: http://www. anheuser-busch. com/

Reggae Music A Musical Genre That Influenced Jamaican Music

Reggae is a musical genre that has revolutionized Jamaican music. Reggae originated in Jamaica in the late sixties, early seventies. It’s slow jerky rhythm and spiritual lyrics have influenced many artists, genres, cultures, and societies throughout the world. This had contributed to the advancement of new counterculture movements, especially in the United States of America, as well as Europe and Africa. In the late seventies, it had impacted western punk and rock/pop cultures, which had resulted in influencing artists such as Eric Clapton, and The Clash. In this same exact decade, it had inspired the first rappers in the United States, which had given rise to the hip hop culture. It had also influenced many singers from Africa. Reggae music grants not only relaxation, but carries a special message of love, peace, and unity. The rhythm of this music is based on the beating of the heart. Reggae music has created an understanding of the Jamaican lifestyle and their culture for t he rest of the world. Reggae musicians have become Jamaica’s healers, social correspondents, and prophets. Reggae’s roots stem from Jamaica’s historical conditions of Jamaican slavery and colonialism by different nations. Most of Jamaica’s population are descendants from Africa, who were brought by the English to Jamaica to work as slaves. Reggae’s lyrics discuss themes such as oppression, poverty, crime, economic shortages, racial discrimination, political violence, homelessness, and social injustice.Show MoreRelatedThe Musical Genre Of Reggae900 Words   |  4 PagesThe musical genre, reggae, was originally coined in the 1960s. Derived from rege-rege – Jamaican for â€Å"rags or ragged clothing† – the genre was used to describe the raggedy music style found in Jamaica at the time. Reggae incorporates the traditional Jamaican music such as mento and ska, rhythm blues, and rocksteady. 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The Landing Of Gallipoli And The World War I - 1510 Words

World War one is strongly linked with the landing of Gallipoli, yet the Australian experience of WW1 is a lot more than the 8 months of the Gallipoli campaign. It can be argued that the experiences of Australian soldiers on the Western Front in 1916, including the Battles of Fromelles and Pozieres, have been largely overlooked in accounts of World War One. The landing of Gallipoli has become legendary and all it represents connects with most Australians. Consequently, the Battles of the Western Front have been overlooked. Thus, most ordinary Australians have only heard of the story behind the landing of Gallipoli. This event has taken precedence in the public’s mind and has been the focal point of war memories and remembrance. World War†¦show more content†¦The Australian involvement in World War One is synonymous with the legend of the ANZACs. Consequently, the involvement of Australian soldiers on the Western Front between 1916 and 1918 has been greatly discounted in explanations of World War One. Ultimately the Gallipoli campaign was a military failure, however the sacrifice endured, lives lost and courage displayed cannot be disputed and should be remembered. According to Australian historian Hugh Dolan, the legendary story of the Gallipoli landing is filled with factual errors. According to Dolan a 1915 map kept at the Australian War Memorial highlights some of the errors of our understanding of the Gallipoli landing. Mr Dolan asserts that the landing at Gallipoli by the ANZACs was not a mistake and that through prior aerial surveillance the Australian officers were informed of the unforgiving Turkish landscape and the Turkish trenches. Mr Dolan argues that the Australian officers adjusted t he original British orders and were not blindly following British orders as previously believed (Smith, B, 2012). The main stage of combat in World War one was the Western Front, a military zone of trenches that stretched from the Belgian coast to the Swiss border. On the 19th of July 1916 Australians engaged in their first major attack on the Western Front, the battle of Fromelles. This attack was formed as a ploy to prevent the Germans from reinforcing their troops on the