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COVER
STORY
Indian
Economy : Growing Risks on the Horizon
-- Katuri Nageswara Rao
The
Indian economy though prospering is exhibiting signs of growing
risks. Poverty alleviation, farm sector reforms and rising
asset prices are areas of concern. Managing rising reserves,
higher interest rates and inflation besides overvalued rupee
also poses formidable challenges. The Indian economy is on
the fast-track growth trajectory, reflected by rising bank
credit into diversified sectors, resilience in the farm sector,
impressive performance in the services and manufacturing sectors,
rise in exports and massive inflows through Foreign Direct
Investment (FDI) and Foreign Institutional Investment (FII)
routes.
© 2007 IUP . All Rights Reserved
REGULATION
Basel
II Revisited
-- T N Rama Kumar
India
has implemented the Risk Based Supervision (RBS) framework
which evaluates the risk profiles of banks through the analysis
of twelve specific risks. National regulators like the RBI
can specify risks different from those internationally recommended
for retail exposures. As per the present RBI guidelines, the
new Basel norms are applicable only to scheduled commercial
banks. The Governor of RBI himself had admitted as much when
he talked about the asymmetry in regulatory regime among the
broad segments of the financial sector, viz banking, securities
and insurance sectors. There was also the likelihood of regulatory
arbitrage among these broad segments.
© 2007 IUP . All Rights Reserved
REGULATION
Housing
Finance Sector in India : An Overview
-- P Sreelakshmi
While housing finance is experiencing exponential growths,
the menace of bad loans cannot be ignored. These loans require
better monitoring, fair assessment of property and compliance
with end-use principles. Housing has always been an important
agenda for the Government of India. The reason is simple.
It is the visible result of the developmental plans implemented
by the government. Also, it generates national income by creating
employment and helps the individuals in their socioe-conomic
development.
© 2007 IUP . All Rights Reserved
PRODUCTS
Challenges
for SMEs and Opportunities for Banks
-- Reena Ray
The SME sector has been gaining an importance with higher
contributions to the GDP of the nation. Banks are not able
to provide timely and adequate credit to this sector. Banks
need to adopt a positive attitude in this regard. Of late
Small and Medium Enterprises (SMEs) have been at the center
of all the forums and discussions and are drawing interest
of everyone-from Government to politician to banker to the
common man. This is because, SMEs play a major and vital role
in the development of any economy (irrespective of the level
of development), specially in the economies of those countries
where poverty, population and unemployment are of great concern.
© 2007 IUP . All Rights Reserved
SCENARIO
Banking
Sector Reforms : Conception to Revolution
-- Vishal Kumar and Savita
Financial
Sector Reforms set in motion in 1991 have greatly changed
the face of Indian Banking. The banking industry has moved
gradually from a regulated environment to a deregulated market
economy. The pace of transformation has been more significant
in recent times with technology acting as a catalyst. While
the banking system has done fairly well in adjusting to the
new market dynamics, greater challenges lie ahead.
© 2007 IUP . All Rights Reserved
MICROFINANCE
Microfinance
Regulation in Latin America
-- S Rajagopalan
This article discusses the major institutional and operational
aspects of microfinance regulation in Latin American countries.
In these countries, the legal structure of microfinance institutions
is either in the form of joint stock company, cooperative
or private non-cooperative entity. The ownership belongs to
individuals or institutions.
© 2007 IUP . All Rights Reserved
STRATEGY
Change
Management in Banking Sector : Indian Scenario
-- T V Prakash Rao and Cynthia Menezes
India is the second largest developing economy in the
world and the banking sector has a greater role to play in
the socioeconomic development of our country. Increased customer
expectations, global competition and technology have brought
about remarkable changes in the banking sector. This article
aims at bringing out the change management, process changes
and the paradigm shift that is happening in the banking sector.
© 2007 IUP . All Rights Reserved
STRATEGY
Emerging
Opportunity for Indian Banking : Developing Special Economic
Zone for Agriculture
-- S N Ghosal
To transform the rural economy into a prosperous and sustainable
remunerative economy it would be desirable to create SEZ for
farming. It may be initially started for horticulture, floriculture,
pulses and oilseeds, etc., where adequate export potentiality
exist as that way in principle the SEZ concept will remain
intact.
© 2007 IUP . All Rights Reserved
STRATEGY
Restructuring
Commercial Banks in India
-- Sivasankar
There
is a need for amalgamation of banks into 5 or 6 banks, each
looking after a geographical area. The rural branches and
branches located in semi-urban centers with a population of
less than 50,000 can be merged with the existing Regional
Rural Banks or by floating new ones wherever necessary. Regional
Rural Banks shall be the sole financial institutions in rural
areas.
© 2007 IUP . All Rights Reserved
STRATEGY
Universal
Banking in India
-- Manoj Kumar Joshi
The introduction of banking and financial sector reforms
has blurred the distinction between commercial and investment
banks. One after another, Development Financial Institutions
(DFIs) are adopting universal banking paradigm by incorporating
a host of services and products in their portfolios. This
helps them achieve synergy, greater economic efficiency in
the form of lower costs and higher productivity. Many reports
of RBI also favor universal banking practices.
© 2007 IUP . All Rights Reserved
RISK
MANAGEMENT
Business
Process Management : An Effective Tool for Operational Risk
Management
-- T Vijay Kumar
Business
Process Management (BPM) is the understanding, visibility
and continuous improvement of business processes. With the
help of BPM, an organization can identify business process-specific
key operational risk indicators. BPM streamlines the entire
process of Operational Risk Management. Business processes
are complex, dynamic and intertwined throughout the organization.
Everything that happens within organizations today is a business
process. Some processes (like opening of a new account) are
relatively easy to structure, because each instance is much
like the previous. Other processes (such as new product review
process involving business, risk management and internal control
functions) are more difficult to structure because a wide
array of contributing factors make each release different.
© 2007 IUP . All Rights Reserved
TECHNOLOGY
E-Service
as a Tool for Marketing of Financial Services
-- B Manoharan
With
the adoption of superior technology, financial services have
undergone a metamorphosis. E-Broking has become a reality
with immense benefits to the investors, especially in terms
of lower transaction cost, transparency and convenience. Brokers
are also benefited by better risk management, greater business
potential and lower costs.
© 2007 IUP . All Rights Reserved
BOOK
REVIEW
Making
Globalization Work The Next Steps to Global Justice
-- Author : Joseph Stiglitz Reviewed by V U Divakar
Stiglitz's
book is thought-provoking and tries to bring the reader to
the very crux of the ailing globalization process. He highlights
the findings of the World Commission on the Social Dimension
of Globalization, which startlingly uncovered the rise of
unemployment in many regions of the world, except South Asia,
the US, and the European Union during 1990-2002. Stiglitz
is concerned that the rules of globalization are unfair and
that they are drafted to benefit the advanced industrial nations
due to which some of the poor countries are worse off.
© 2007 IUP . All Rights Reserved
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