COVER STORY

Reforms and After : Emerging Challenges

-- Katuri Nageswara Rao

Indian banking has become strong, stable and vibrant following banking reforms during 1991-92 and thereafter and it has acquired international standards with regard to capital adequacy and NPA percentage. Banks have become tech-savvy and have fine-tuned their risk management policies. The Reserve Bank of India (RBI) has taken up the issue of Real-Time Gross Settlements (RTGS) among various banks. Now banks and regulators have to face the challenges of consolidation, convergence and competition besides financial inclusion.

© 2008 IUP . All Rights Reserved

SOCIAL BANKING

Financial Inclusion : Changing Paradigms

-- Rajeswari Krishnan and Uma Vasan

Financial Inclusion provides access to loans and other financial services to the poor for their business. Its success depends on rural infrastructure, literacy rates and the linkages between banks and microfinance institutions and voluntary organizations. Yet another critical issue is the usage of technology for generating cost-effective transactions.

© 2008 IUP . All Rights Reserved

SOCIAL BANKING

Inclusiveness and Globalization : Some Out-of-box Solutions

-- V Jagan Mohan

Inclusive growth is not confined to financial inclusion alone. It involves infrastructure, digital, social and rural inclusiveness in a globalized financial environment. India needs inclusive growth for all the states.

© 2008 IUP . All Rights Reserved

RISK MANAGEMENT

Subprime Crisis : Risk Management Principles

-- Dr. Y G Sivaram

Risk is a regular phenomenon in financial markets. Risk gets accentuated when it is bundled, securitized and sold in the credit markets worldwide. The growth of subprime industry and increased appetite for risk from managed funds worldwide has finally led to increased delinquencies and foreclosures. This has brought to the fore the need for risk management principles, the appreciation for risk ex-posts witnessed in many derivative debacles like LTCM, Amaranth, Baring Bank, etc.

© 2008 IUP . All Rights Reserved

RISK MANAGEMENT

Taming Liquidity Risks : Lessons for Indian Banks from Japanese Bank Crisis

-- Prof. Ajay Pathak

Liquidity risk is the most difficult to manage in a banking system. The biggest problem is the inability to ascertain when and where such a risk is going to occur. The banks in Japan failed to understand the importance of `stress testing' under different scenarios of `back-end testing'. The overlapping of market, credit, operational and liquidity risks was never clear and resulted in crisis. Lack of `stress test' in Indian banks under different scenarios also indicates that long-term strategic contingency planning is not in place.

© 2008 IUP . All Rights Reserved

RISK MANAGEMENT

Organizational Systems and Controls for Effective Risk Management

-- T Vijay Kumar

Risk management requires a governance framework, defining of roles and responsibilities, internal control and communication, besides security and integrity of information.

© 2008 IUP . All Rights Reserved

SCENARIO

Will a Strong Rupee Wreak Havoc on India's Exports?

-- Dr. K M Bhattacharya and Mithradas Menon

The Indian business houses need to gear up and prepare themselves to tide over short-term and medium-term obstacles in the form of Rupee appreciation. Exchange parity or stability in the foreign exchange market is the domain of the Reserve Bank of India and the responsibility ultimately rests on its shoulders. However, what is imperative is dissemination of information and initiation of appropriate measures to guide the Indian trade and industry.

© 2008 IUP . All Rights Reserved

PRODUCTS

Bancassurance : A Growing Business

-- VIKAS SHROTRIYA

Banks are no more considered as the storehouses of money. In the present era of globalization, they are expected to provide a wide array of financial services. They not only provide loans but also cater to the contemporary and ever-changing needs of both the business organizations and individuals. With the changes announced by the Reserve Bank of India during 2000-01, commercial banks were permitted to undertake insurance business. Since then, bancassurance has been expanding. Bancassurance, in simple terms, is pursuance of insurance business by commercial banks. Looking at the vast potential of insurance business in India, many banks have entered into this sphere. The article discusses some aspects of bancassurance.

© 2008 IUP . All Rights Reserved

STRATEGY

Ownership Issues in Indian Banking Industry

-- Rakhi Singh and Deepak Nighoskar

Today, Public Sector Banks (PSBs) dominate the Indian banking scene. This dominance is the result of the nationalization of banks which was undertaken in 1969, and since then the banking infrastructure has expanded manifold. Market forces entered the Indian banking industry only after the initiation of widespread financial sector reforms at the beginning of the 1990s. With a focus on financial sector reforms, the Indian banking industry was subject to significant changes, change in ownership structure being one among them.

© 2008 IUP . All Rights Reserved

STRATEGY

Key Drivers of Bank's Revenue : Add-Value and Innovation

-- Dr. S N Ghosal

Many of the banks are becoming big by creating top-heavy bureaucracy with little linkage to the customers. Bank executives presently need retail management experience for expanding retail banking. In an era of explosion of expert knowledge, banks need to have superior knowledge management initiatives.

© 2008 IUP . All Rights Reserved

MICROFINANCE

Empowerment Through Microfinance

-- P Sreelakshmi and Niranjan Shetty

Inclusive growth in the context of globalization is not merely financial inclusion of the poor. It involves infrastructure inclusiveness, digital inclusiveness, social and rural inclusiveness.

© 2008 IUP . All Rights Reserved

MARKETING

Promotion Mix : A Weapon to Beat Competition in Banking Industries

-- Dr. P K Singh and Meenal Pachory

An appropriate promotion mix can be used not only to attract customers, but also to hold them by creating brand loyalty. Promotion mix is a combination of bank's various activities and other sales promotional instruments. It may be in various shapes like a press advertisement, a sales campaign, word-of-mouth, personal interaction, direct mailing to customer, etc. The fundamental objective of a promotion campaign is to persuade the customer to buy its products in preference to other similar products available in the market.

© 2008 IUP . All Rights Reserved

CASE STUDY

Empowering Women Through Self-Help Groups and Microcredit in India

-- Rashmi Malapur

Self-Help Groups (SHGs) focus on empowerment of women i.e., to be independent and equal, both economically and socially. They also bring about a change in the mindset of women and encourage them to plan for their future. This case study makes an attempt to analyze whether SHGs help poor women to empower themselves.

© 2008 IUP . All Rights Reserved

BOOK REVIEW

Operational Analysis of Regional Rural Banks

-- Authors: Dr. Shyam Charan Acharya and Dr. Ashok Kumar Mohanty Reviewed by T N Rama Kumar

Ever since its inception in 1975, the Regional Rural Bank (RRB) experiment in India has reached a figure of 196, catering to 492 districts with a branch network of 14,517.The book studies the performance of RRB in relatively poor states like Orissa. There are nine RRBs with 843 branches operating in Orissa and the study period is 1985-86 to 1999-2000.

© 2008 IUP . All Rights Reserved