| COVER
STORY
Retail
Banking Emerging Issues in Home Loans - - Katuri Nageswara Rao and Yash Paul Pahuja
There
is a huge opportunity for banks in the housing sector due
to the high demand-supply gap. Higher volume of bank finance
to the housing sector is posing many challenges for banks.
Falling margins, rising asset-liability gap, increasing NPAs
are some of the major emerging challenges. To reduce the asset-liability
gap, banks need to start accepting long-term deposits. The
initiatives of National Housing Bank to bring into existence
a Mortgage Guarantee Company is a welcome move.
© 2005 IUP. All Rights Reserved
OPERATIONAL
ISSUES
Managerial Autonomy for PSBs: Some Unresolved Critical Issues - - S Bhaskaran
While
the government has provided freedom to banks in many operational
areas like HR, interest rates, etc., there still exist some
major issues that need to be addressed. They are: Higher shareholding
of the government, appointment of top officers, not having
the discretionary power to choose different business areas,
etc. Such issues have to be addressed immediately due to rising
competition and expected consequences of Basel II.
© 2005 IUP. All Rights Reserved
BANKING
SCENARIO
Money Laundering: Lurking Dangers - - C Rama Gopal
All
banks in India are adopting sophisticated technology to remain
competitive and to stay in the business. But banks, especially
small banks are more vulnerable to money laundering. There
is a need for technology and strategies which will prevent
money laundering. The question is whether all banks are sufficiently
equipped to handle money laundering, and whether they are
geared up, with lurking risks and inherent dangers of technical
sophistication, to meet the challenges.
© 2005 IUP. All Rights Reserved
REGULATION
Need
for Reforms in DICGC - - PV Sharma
Deposit
Insurance and Credit Guarantee Corporation (DICGC) recently
increased the premium for deposit insurance due to the increasing
risk of bank failures. But that is not the only issue today,
there is a need for wide-scale reforms in DICGC to ensure
that the objective for which it was established is achieved.
The major reform processes required are: Timely settlement
of compensations, compulsion of premium payment by banks in
the interest of depositors,etc.
© 2005 IUP. All Rights Reserved
REGULATION
From
Fixed to Float: Fear no More - - Cem Karacadag, Rupa Duttagupta, Gilda Fernandez and Shogo
Ishii
Some
emerging markets like Brazil, Chile, Israel and Poland recently
adopted the flexible regime for exchange rate management (ERM).
In spite of benefits like better protection against external
shocks, greater monetary policy independence, etc., many developing
countries are hesitating to adopt it. An orderly exit from
the peg system needs advance preparation and good timing.
The question is whether these countries shift before or after
liberalizing their capital account convertibility. they need
sound macroeconomic and structural economies to adopt a flexible
system. this article tries to alleviate the fears about the
floating rate.
© 2005 IUP. All Rights Reserved
TECHNOLOGY
Core Banking Solution for Banks: The Indian Experience - - AK Mohanty
Using
Core Banking Solution (CBS) banks can provide all their services
like ATM, debit cards, tele-banking, internet banking, etc.,
through a single channel. CBS helps connect all branches and
offices to the central host. It helps manage the enormous
data under the Basel II environment, besides helping banks
comply with evolving supervisory practices. Despite the huge
benefits, some banks have failed to implement CBS due to the
fear of complexities in operations and the massive costs involved.
© 2005 IUP. All Rights Reserved
RECOVERY
MANAGEMENT
From
NPA to CDR: A Win-Win Approach - - Suhas Rane and Rajorshi Roy
Rising
NPAs in the banking industry have given birth to the Corporate
Debt Restructuring(CDR) mechanism, where a lender and a defaulted
borrower come together and settle their accounts. This procedure
not only helps the defaulted borrowers save time from legal
hassles and procedural delays, but it is also the opportunity
for banks to turn their NPAs into good assets. It is a God-sent
mechanism for corporates who genuinely want to settle their
accounts.
© 2005 IUP. All Rights Reserved
SCENARIO
New
Thrust Areas in Post Banking Reforms Process - - AK Mohanty
A
changing environment due to globalization and innovation is
forcing banks to change their focus. This article provides
a set of 4 Ps, personal computer, personnel, peers and people,
on which banks should focus. This will make Indian banks globally
competitive and help in a smooth implementation of Basel II.
Besides focusing on these 4Ps, banks should continue the current
process of reforms in product innovation, process reengineering
and customer capturing.
© 2005 IUP. All Rights Reserved
SCENARIO
Financial
Services: Loosening Belt to Enjoy the Amenities - - Kannan R
This
article elucidates the various financial service procedures
and processes. Financial service companies offer a variety
of loan packages with discounted schemes enabling the customer
to fulfill his or her dreams. This article also explains certain
limitations faced by customers.
© 2005 IUP. All Rights Reserved
FARM
CREDIT
Farm Credit: Need for Radical Change in Mindset and Strategy - - SN Ghosal
To
fulfill the changing needs of farmers and to uproot private
moneylenders, there is a need for a radical change in the
mindset of financial institutions, especially banks. The present
model of Self Help Groups (SHGs) needs to be adapted to suit
Indian villagers. Activities like project identification,
technical assistance, financing the project, marketing the
produce, etc., should be brought under one umbrella.
© 2005 IUP. All Rights Reserved
FARM
CREDIT
Roles of the Banking Sector in Indian Agriculture: A Paradigm
Shift
- - Deepak Kumar
A
changing environment and government policies are forcing banks
to lend more to the agricultural sector. Both private and
public banks are now involving themselves in a lot of agri-based
lending activities. Besides financing traditional activities,
banks are also involved in training and setting up consultancies,
agri clinics, the export and marketing of agricultural produce,
etc. The tie up of HDFC with NAFED and SBI with Cargill India
will see a new revolution in the agricultural sector in India.
© 2005 IUP. All Rights Reserved
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