Crime and Voilence in Jamamica Essay

The Primary Factors Contributing to Crime and Violence in Jamaica. Jamaica is a society which has been affected by crime and violence over the past years, and is continuously been affect by this phenomenal. Crime and violence involves the intent or use of psychological and physical force or power against oneself or another to do harm (Hoffman, 2009). Jamaica is a country plagued by crime and violence, especially in urban areas. Jamaica since 1977 has become the Caribbean nation with the highest homicide rate in its citizenry and continues to hold this position (Harriott, 2007.) The primary contributing factors for crime and violence in Jamaica is a challenge to identify as crime and violence can thrive in so many environments. However the proximate or primary factors can be classified as; corruption, demographics, unemployment, destabilized family, weak justice system, an interconnecting network of criminal gangs, drugs running, politics and the police. According to Harriott, Demographics are a background factor which is contributing to crime and violent in Jamaica. In Jamaica the age group 15-29 is held responsible for most of the violent crimes committed within the country. In particular males in this age group are the prime offenders, they are also prime victims. Over the past years the age group 15-29 has being expanding rapidly. As a result the factor behind our high crime rate is the huge population of ages 15 -29. Due to this high percentage in the age group 15-25 there is an increase in juvenile and violent crime especially where there is the availability of guns. Harriott further stated that we currently experiencing the worst demographic factor for m 1985, and this will continue until 2020 where we are expected to see an 87 per cent decline of its 1995 size. Urbanization is the second factor, which in order to understand the demographics factors one must associate the two factors. Coming from being 30 per cent urban in 1960, Jamaica was about 60 per cent urban in the year 2000. There is also a process of secondary urbanization in St James (3.7 per cent), Mandeville (3.1 per cent), St Ann (2.4 per cent), and Kingston and St Andrew (2.3 per cent) which had the largest percentage increase in population between 1996 and 1998. From these figures above one can say that there is a decline in the rural population and an increase growth for secondary urbanization, in the tourist and bauxite towns of Montego Bay, Mandeville, and Ocho Rios. All parish capitals are experiencing urbanizations; as a result the high risk group (ages 15-29) is being increasingly compacted in dense, poor, urban neighborhoods, (Slums). This problem points to potential for high crimes rates in Kingston and St Andrew and St Catherine, which is also exported to other developing urban centers. High rate of youth employment is also one of the leading factors of crime and violent in Jamaica. The rate of unemployment in Jamaica is 17.5 per cent. . Unemployment in Jamaica especially among Jamaican teen leads to poverty, idleness, low self-esteem, frustration, and eventually crime and violence according to Don Anderson survey. Employment is seen as the way to survive so without work youths tends to be weaken and consequently this leads to idleness, which leads to badness, gang wars, and crime and violence. Youths also admits that they would have less time and energy to steal and commit other crimes if they were working. Harriott stated that in 1998 the unemployment rate for 14-29 age groups was 26.5 per cent. This rate consists of 18.9 per cent young males, and 35 per cent young females. (Anderson 1998). The unemployment rate for young males (14-29) in Kingston Metropolitan Area was 17.8 per cent in 1998, compared to 26.5 per cent in other towns and 17 per cent in rural areas. In St A Andrew and Kingston there is a pressure on young males for economic support form baby mothers, mothers, siblings and other family members. This is one of the reasons for robbery, car theft, pick pocketing in the Corporate Area. (Gayle 1999). The high unemployment rate in other rapidly urbanizing inner-city areas such as Ocho Rios, May Pen, Mandeville, Montego Bay and Savanna-la-mar, also will lead to crime disaster as in Kingston and St Andrew. Employment is seen as very beneficiary and not been employed in Jamaica especially its youths can lead to crime and violence among males, and teenage pregnancy and dependency on men, abuse and domestic violence for female. Destabilized family structure including poor parenting can also be look at as a factor that contributes to crime and violence in Jamaica. Jamaican society has been often referred to as a matrifocal society. Many families are female headed households without the presence of a male figure. Children from these household manifest a number of internalizing and externalizing behavior problems, including sadness, depression, delinquency, aggression, sex role difficulties, early initiation of sexual activity and teen pregnancy, as well as poor social and adoptive functioning and low self-esteem. The absence of guidance in parental or societal role models leaves a gap which is filled by peer groups, particular among men. According to the Grace Kennedy Foundation lecture (1991), ‘peer group’ actually replaces mother and fathers as the controlling agents. Traditional role models become replaced by gun and this result in the emergence of Dons and Robin hoods. Low self-esteem is also a consequence of poor parenting. Youths with low self-esteem carve respect from peers and others, and if been disrespected this can fuel problems among individuals. Harriott however stated that countering this however is the gun, which notes â€Å"the ultimate guarantor of respect†. With this in view the inner-city don become role model for youths, ‘not only because of their ability to command and dispense largess, but Corruption is also a crucial primary factor. According to Harriott, police that reduce unjust inequalities are likely to reduce some categories of violent crime, but research findings cast some doubts that in Jamaica they would have contribute to the murder rate due to corruption. Transparency international, measured the degree to which corruption exist among public officials and politicians, and produce an annual corruption index. For 2005 Jamaica attained a score of 3.6 out of 10 and rank 64 out of 159 countries surveyed. Organizational crime in Jamaica has been facilitated by corruption, relationship between ordinary criminal gangs and the major political institutions. Harriott further stated that gangs are key pla yers in the processes of political mobilization on the streets, securing electoral victories, and in consolidating power -often because of their hold on communities of the urban poor. This relationship leads to a flourishing of corruption, and plunder of the resources of the state. Corruption facilitates serious crimes, and endemic corruption, ensures the freedom of action to build successful criminal enterprises. This is most problematic and yet most evident in police service where corruption is endemic and institutionalized. From interviews which were conducted by Special Task on Crime selected JFC personnel from different ranks expressed the view that the majority of their senior officers were corrupt within the Force. Some of these corrupt practices among members of the force include: Contract killing or â€Å"murder for hire, tampering with biological exhibits, e.g. urine samples, dropping charges, including serious offences, planting evidence, providing escort for illegal drugs etc. A weak Criminal Justice System also facilitates criminal activities within the country. Where there are high levels of corruption and influence easily immunizes high-end criminals against police action. This is certainly the case in Jamaica. Moreover, the criminal justice system is, in one respect, antiquated and overload and thus unable to effectively respond to the more sophisticated criminal groups. Harriott stated that associated institutions, including the existing body of laws, are also, in some respects, antiquate for dealing with crime. The case-load of the investigative units of the police is a good indicator of the degree of immunity from law enforcement (not crime-fighting) that is enjoyed by criminals. For effectiveness, the number of investigators should be greater than the number of cases to be investigated. Instead, a single divisional homicide investigator is, for example, burdened with a case-load of twelve to fifteen homicides, and this was in 2000(PERF 2001,49). Not surprisingly, in 2004, the clear-up rate for murder 9 the number of arrests as a percentage of all reported murders) was 44.8 per cent, and the clear-up rate of violent crimes, that is, the most serious offence against person (murder, shootings, rape and robbery aggregated) was 39.8 per cent (PIOJ2005, 24.30). For serious crimes, the clear-up rates are poor, and given the case-loads ratios, the conviction rates are unsurprisingly low. In the case of murder, the conviction rate is estimates at less than 20 per cent. As a result the justice system in Jamaica is very weak in frightening against crime. Jamaica can be described as an interconnecting network of criminal gangs, drugs running, politics and the police. Therefore Gangs, Drugs and Politics can also be discussed as primary contributing factors to crime and violence in Jamaica. There are about forty- nine active gangs in Jamaica, but only a small number (14 per cent) are highly organized. According to Harriott the highly organized gangs are deeply involved in the following activities: trafficking cocaine, marijuana and crack, both locally and overseas. It is also said that there is a significant Colombian drugs activity in Jamaica. Another major criminal activity for criminal gangs is protection and extortion rackets in business district in Inner-city areas. Business places pay funds to gangs in order for security, that their business and their customers are not robbed. This money is an important source of income for violent criminal gangs. According to Harriott this is extortion, which is a contributor to violent crimes in Kingston and St Andrew. It is also claimed that highly organized gangs operate a quasi-judicial system, complete with â€Å"hearing† witness and a rough schedule of punishment, including incarceration and the death penalty. Theses criminal gangs are also allegedly engaged in the large scale illegal importation of goods such as red peas, onio ns and cooking oil. Harriott stated that is may not directly constitute violent crime, nonetheless strengthens these groups economically, weakens legitimate firms, etc. major gangs are said to be connected to the major political parties. This relationship between gang and political parties stands to be beneficial to both sides. In election gangs secure votes for political parties, and keep the peace during civil disturbances, which the most important benefit for gang’s from political parties is protection from police. According to Harriott the main criminal gangs and the political parties have major stake in maintaining the existing corrupt relationship. Jamaica has been significantly affected by violence and crime. Violent crimes are one of Jamaica’s major issues, for the past twenty year. According to Harriott the country has experience an overwhelming increase in murders and related assaults. The World Bank noted that crime is undermining growth, threatening human welfare, and impeding social development. Therefore the government and citizens of Jamaica has to take serious measures to reduce or eliminate the primary factors contributing to crime and violence. According to Harriott the only long term sustainable solution to the violent crimes problem in Jamaica is the recovery of the formal economy. Therefore the government must continue its programme of macroeconomic management. This may have short term negative social consequences, but in the end will lead to more job creation and a reduction in crime. Harriott further stated that the government must embark on a programme, however limited of formal economic activities in the inner city. The government could also develop a programme of physical upgrading in the inner city. This could involve fixing drains, improving sanitation, roads surfaces and housing, and beautification. This could add real value to properties in the inner city, as well as generating employment and improving the already and demoralizing physical environment. The failure of the educational system, for both the employed and unemployed have to be rectified also. One the government needs to find the causes of the high male drop- out rate. The NPC could also develop a special task force on education and training, and a mandate to begin the necessary and urgent programme of restructuring and reprogramming. The most immediate measure which can be taken by the government is to control gun and ammunition. Reference Government of Jamaica. (2007). National Security Policy – Towards a Secure and Prosperous Nation. Kingston: Government of Jamaica. Gutierrez, I. M. (2009). Development and implementation of crime and violence observatories: A tool for public policy. III Inter-American Forum on Violence Prevention and Citizen Security: Addressing Crime and Violence in the Latin American and Caribbean Region. Kingston. Jamaica: Jamaica Conference Centre. Harriott, A. D. (2008). Bending the trend line: The challenge of controlling violence in Jamaica and the high violence societies of the Caribbean. Harriott, A.D.(2008). Organized Crime and Politics in Jamaica: Breaking the Nexus. Kingston: University of the West Indies Press. Harriott, A.D. Understanding Crime in Jamaica; New challenges for public policy. Kingston: University of the West Indies Press. Hoffman, J. S. (2009). Engaging citizens in crime and violence prevention: Emerging approaches. III Inter- in American Forum on Violence Prevention and Citizen Security: Addressing Crime and Violence the Latin American and Caribbean Region. Kingston, Jamaica: Jamaica Conference Centre. McLean, J., Harriott, A., Ward, E., Buchannan, J., and Karia, R. 2008. Jamaica Community-Based Policing Assessment. Kingston: Jamaica Constabulary Force and USAID.

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 | |

Exam 06044100

Part A: 1. Organization’s commitment to social responsibility takes the form of policies or pronouncements on what the organization intends to do to address its social impact in the community where it operates, which includes its stakeholders, suppliers and the general public.As such, a key requirement in implementing an organization’s commitment to social responsibility is the buy-in from the board and the top executives which make the policies, and the support of the middle-management and employees which will implement the policies. To do this, the board and top executives must understand the firm’s effects as an organization, and everyone else must have a clear grasp of the direction where it is going.Implementation involves the day-to-day operations, processes, activities, decisions and practices which will ensure that the organization’s socially responsible commitments and policies are carried out and met The main obstacles to implementing socially re sponsible policies are ,lack of clarity in policy statements, lack of a supporting structure system, processes and organization financial constraints programs and projects must have appropriate funding,lack of coordination among activities, lack of understanding and support from implementers middle management and employees.Some specific actions that can be taken towards increased social responsibility's are. Come up with ways for the organization to integrate socially responsible policies into day-to-day operations and individual activities. This can be done by involving middle managers, employees, and other key players in brainstorming sessions. Develop a strong communication plan : Internally, focus on motivating factors such as how social responsibility can be a source of competitive advantage for the organization in terms of low production cost, improved product value, and build-up of customer loyalty.Externally, focus on making commitments public, not only to gain public attent ion, but to inform the public of what it is doing in terms of improving product value and customer service. Set measurable targets and continuously . Celebrating achievements can be a source of inspiration and increased commitment to social responsibility. 2. Departmentalization is the process of grouping activities, customers, or job functions into specialized groups of an organization to create better coordination. All large companies have multiple departments. These departments are specialized units that carryout pecific functions for a company. Most organizations have the functional departments of human resources, accounting, sales, and information technology. Types of Departmentalization 1) Functional: Groups of employees based on work performed (engineering, accounting, information systems, human resources). 2) Product: Groups of employees based on major product areas in the corporation ( woman's footwear, men's footwear, and apparel and accessories). 3) Customer: Groups of em ployees based on customer’s problem and needs (wholesale, retail, government). ) Geographic: Groups of employees based on location served North, South, Midwest, East). 5) Process: Groups of employees based on the basis of work or customers flow ( testing, payment) 3. Is a scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). SWOT analysis means analyzing strengths, weaknesses, opportunities and threats.The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates. It is a useful strategic planning tool. It is based on the assumption that if managers carefully review internal strengths and weaknesses and external threat and opportunities, a useful s trategy for ensuring organizational success can be formulated. As such, it is instrumental in strategy formulation and selection. Strength. A firm's strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage.It is an important organizational resource which enhances a company, competitive position. Some of the internal strengths of an organization are Distinctive competence in key areas ,Manufacturing efficiency like exclusive access to high grade natural resources, Skilled workforce, Adequate financial resources,Superior image and reputation such as strong brand names. -Economies of scale -Superior technological skills -Insulation from strong competitive pressures -Product or service differentiation -Proprietary technology such as patents and resultant ost advantages from proprietary know-how -favorable access to distribution network. Part B: . 1. Six Sigma at many organizations simply means a measure of quality that strives for n ear perfection. Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects (driving toward six standard deviations between the mean and the nearest specification limit) in any process – from manufacturing to transactional and from product to service. The statistical representation of Six Sigma describes quantitatively how a process is performing. . The balance of trade of a nation is the difference between values of its exports and imports. When exports are greater than imports, the nation is said to have a balance of trade surplus. On the other hand, if imports are greater than exports, the nation is said to have a balance of trade deficit. Exports and imports that figure in the balance of trade concept arise in the context of trade with other countries. Exports are the value of goods and services produced in the United States and sold to other countries . 3.Perception is the process by which you become aware of objects and events in the externa l world. Perception occurs in five stages: (1) stimulation, (2) organization, (3) interpretation-evaluation, (4) memory, and (5) recall. 4. A decentralized organization is one in which decision making is not confined to a few top executives but rather is throughout the organization, with managers at various levels making key operating decisions relating to their sphere of responsibility. Decentralization is a matter of degree, since all organizations are decentralized to some extent out of necessity. . Bounded rationality is the idea that in decision-making, rationality of individuals is limited by the information they have, the cognitive limitations of their minds, and the finite amount of time they have to make a decision. It was proposed by Herbert A. Simon as an alternative basis for the mathematical modeling of decision making, as used in economics and related disciplines; it complements rationality as optimization, which views decision-making as a fully rational process of fin ding an optimal choice given the information available.Thus the decision-maker is a satisfies, one seeking a satisfactory solution rather than the optimal one. 6. Although an early study, this is still often referenced. It is notable that the two factors correlate with the people-task division that appears in other studies and also as preferences. Consideration is the people-orientation and Initiating Structure is the task orientation. Initiating Structure is the degree to which a leader defines and structures his or her role and the roles of the subordinates towards achieving the goals of the group. . Think of negative punishment as Removing Something pleasant with the goal of decreasing a behavior. Think of negative reinforcement as Removing Something unpleasant with the goal of Increasing the target behavior. 8. A system is commonly defined as a group of interacting units or elements that have a common purpose. The units or elements of a system can be cogs, wires, people, compute rs, and so on. Systems are generally classified as open systems and closed systems and they can take the form of mechanical, biological, or social systems.Open systems refer to systems that interact with other systems or the outside environment, whereas closed systems refer to systems having relatively little interaction with other systems or the outside environment such as food and air and return other substances to their environment. 9. Basic tasks and functions of management include planning, organizing, staffing, motivating and controlling business and its activities. 10. Appraisals are most often used as a punitive tool, but they can be a very powerful management tool. Appraisals can help you find the areas that most motivate your employees and how to help them improve.By understanding the areas that most motivate your employees, the appraisals can provide you with the most important tool to guide your staff. 11. A group is said to be in a state of cohesion when its members pos sess bonds linking them to one another and to the group as a whole. Social norms are described by sociologists as being laws that govern society’s behaviors. Although these norms are not considered to be formal laws within society, they still work to promote a great deal of social control. Social norms can be enforced formally through sanctions or informally through body language and non-verbal communication cues.

Case 3 Study Example | Topics and Well Written Essays - 250 words

3 - Case Study Example Furthermore, the agent is under duty to avoid a conflict of interest between him and the principal. Thus, the agent should not indulge in negotiations from which he will benefit, at the expense of the principal (Harley, 2009). In our case, it is apparent that the appointed agents (Harris and Danzil) violated the laws guiding agency contracts, through engaging in negotiations that created a conflict of interest between them and the Principal (Investor). By establishing a corporation that was interested in the same transaction that they were undertaking for the principal, they violated the law of contracts (Harley, 2009). Since the corporation formed by the agents ended up negotiating and purchasing the business, then the principal, in our case, the Investor has a right to sue the agents for a breach of contract. The agents are then required to pay damages for the loss they caused to their principal (Harley, 2009). Therefore, the investor should terminate the contract between him and Harris, on the grounds of Harris breaching the contract, and seek legal redress for payment of damages by Harris and

Answer to a question from previous selected source Research Paper

Answer to a question from previous selected source - Research Paper Example This paper critiques and reviews the approach to research on medication errors conducted so far. However, Ferner (2009, p.616) also further noted that lack of use of certain algorithms by hospitals, such as the Bayes Theorem, hinders the efficiency of medication error recognition and research. He also discussed the use of numerical methods to assess errors, such as the causality assessment, again focusing on systems analysis of research on medication errors. He focused on failures in design and organization, which then lead to error on behalf of researchers. Ferner (2009) focused on the analysis of scientific method design, which leads to errors in medication error research. Ferner (2009, p.615) pointed out implicitly that design is a problem in research by pointing out the comparison between spontaneous reporting and search by an algorithm. The fact that hospitals do not use the Bayes Theorem is beyond the power of a researcher, who is then limited by the organizational structure of a hospital. Instead of analyzing the medication errors committed in hospitals, Ferner (2009) analyzed how errors take place in research on medication errors. His focus was on the organizational and design flaws of the research methods. Besides only focusing on how researchers commit mistakes while counting errors, he also pointed out that sometimes organizational flaws or algorithms can lead to error in research. Thus, though his work resembles expert opinion, Ferner (2009) went beyond only stating his opinion on counting medication errors, or evaluating the obtained data. He provided an analysis of failures, improvements and recommendations for every step in research on medication

Television and Cultural Change Essay Example | Topics and Well Written Essays - 1500 words

Television and Cultural Change - Essay Example One can dispute this claim by looking at the UK TV programme, ‘Crossroads’. With time, the definition of social classes has become dilute, as people no longer act in ways that show their social belonging. This paper seeks to explore the history of social class, taste and capitalism. At the end, be able to establish whether there is a link between the different phenomena. In the twelfth century, most people lived in, the villages, as opposed to the few who lived in the towns. The town dwellers consisted of skilled labourers who the nobles paid for their upkeep for the various jobs they did. A great pandemic reduced the population significantly and led to few skilled labourers in towns. The nobles wooed people from the villages to come work in the towns by giving the skilled labourers a wage for the work done. With time, skilled labourers in the towns became rich, were able to leave the skilled labour, and became traders. This led to the development of trade to the extent that different nations traded with each other. Merchants came up, and they started investing their money to buy goods and sell them in a different place. This was how capitalism started and developed. Capitalism is a financial system where individuals or corporations solely do investment and make profits. In this economy, the private sector has the right to produce, dispense and exchange wealth without any interference. In capitalism, the government does not control or interfere with the making or distribution of the wealth of individuals (Holland, 1997). The system that controls the economy is the market prices of the goods as well as the profits incurred. Unlike the working class, the people that belong to the capitalism class do not get wages and money for their abilities. Instead, the capitalism class gets money and profits from what they produce and

Depiction of women in the advertisements from 1950 to 2005 Essay

Depiction of women in the advertisements from 1950 to 2005 - Essay Example This "Depiction of women in the advertisements from 1950 to 2005" essay outlines how the advertisements and their depiction of women altered and reflected society throughout history, from 1950 to 2005. It was found out that in 1970, advertisements emphasised that a woman’s place was in the home, though there were 29 million women in the labour force at that time. Women were shown as independent only when inexpensive items or simple decisions were involved, sending the message that women do not make important decisions or do important things. It was observed that Women were generally isolated from their sex within the ads, thus signalling that women are dependent and constantly require men’s protection. In addition, Women were often found in decorative roles having little relationship to the product, thus saying that men regards women primarily as sexual objects and are not interested in them as people. In contrast, the portrayal of men (Lovdal, 1989) was as independent people who are intelligent and fully involved in a career. Men, shown in authoritative positions, were depicted 78% of the time in out-of-home settings. Belknap and Leanord II (1991) analysing women's magazines from 1940-70, discovered that the feminine ideal was one of child-bearer, child-rearer and homemaker, with the advertisements depicting women as possessing characteristics of passivity and dependency. For example, in the advertisement shown here, the quote runs, â€Å"you trust it’s Quality†, implying that the woman as a nurse or helper is someone you can trust.

Genetic of Hereditary angioedema Research Paper

Genetic of Hereditary angioedema - Research Paper Example Mutation can result from alteration or modification in the nucleotide sequence. In line with this, Type-III individuals involve mutation in F12 gene which codes for coagulation factor XII (Hageman factor). Since Type-III is estrogen dependent, this type of HAE occurs only among the female population. Up to date, only Faiyaz-Ul-Haque et al. (2010) conducted a study with regard to HAE among the Middle Eastern Arab patients. HAE is a rare kind of hereditary disorder (Kesim et al., 2011). Therefore, healthcare professionals should study the genetic etiology of this disease by determining its genetic components that have occurred in different geographical region across the world. To assist the healthcare professionals in their study of HAE in UAE, a literature review will be conducted to identify the genetic etiology of HAE. Literature Review HAE can result from the functional deficiency of the C1 esterase inhibitor (C1INH) protein (Gosswein et al., 2008; Papadopoulou-Alataki et al., 2008 ). Basically, C1INH is an inhibitor that activates the proteases C1r and C1s. C1INH is also responsible for activating the coagulation Factor XII (responsible for checking the formation of bradykinin) and the plasma kallikrein (Duan et al. 2009; Bell et al., 2008; Gosswein et al., 2008). Pappalardo et al. (2008) explained that deficiency of C1INH is actually caused by the mutations in its structural gene. Using a genetic screening method for C1INH gene (SERPIN1G) in Italy, Pappalardo et al. (2008) found out that the presence of amino acid residues, which are important in protein function, could trigger mutations in the C1INH gene. Also related to the functional deficiency of C1INH, Papadopoulou-Alataki et al. (2008) revealed that â€Å"a new missense mutation in exon 2 of the C1INH gene, c.1A>G; p.Met-22Val (p.Met1Val)†, is common among patients with HAE. A study carried out in Greece by Speletas et al. (2009), with 11 HAE cases from 3 unrelated families, displayed diminished C1 inhibitor antigen levels when analysis was performed for SERPING1 mutations. The findings recognized conversion of TC to AA as the main cause of alteration. This toggle can turn the codon as a stop signal to terminate the polypeptide. However, the second family exhibited W482X mutation, while the third family displayed missense mutation M1V, signifying diversity in mutation in the area. Genetic mutation analysis in similar manner was performed in a Turkish family by Bork et al (2011), suggesting that HAE individuals with normal C1-inhibitor possess two missense mutations in codon of coagulation factor 12 gene in a few families, while in others, deletion of 72 base pairs (bp) was recognized. The study instituted deletion of 48 base pairs of exon 9, (otherwise responsible for coding amino acids 324 to 340), together with 24bp deletion of intron 9. Deletion of 72 bp was situated in the same F12 gene region as the missense mutations p.Thr328Lys* and p.Thr328Arg* accounted earlier, s ignifying a close linkage between F12 gene mutations altering the FXII proline. The mutation in the region was associated with proline rich sequence of FXII protein and HAE cases with normal C1-ING (Bork et al., 2011). Duan et al. (2009) also performed genetic analysis of FXII and bradykinin catabolic enzymes in Type-III

Moving Away from Traditional Transaction-Based Financial Information Essay

Moving Away from Traditional Transaction-Based Financial Information to Technologically Based Non-Financial Information - Essay Example Many businesses have in the recent times shifted their focus from using the traditional transaction-based financial information towards using technologically based non-financial information (Agresti, 2002). This has been largely due to the fact that the traditional approaches usually limit themselves through the definition of their cost behaviors in the terms of their production along with sales level (Burns and Baldvinsdottir, 2007). The traditional methods were mostly utilized for the purposes of giving reports when the valuations of the items in their income statements and balance sheets (Zhou, 2012). The method also had so many restrictions as the statements prepared were supposed to comply with the GAAP principles. As a result of being outdated in their practices the governing body of the management discipline brought more technological advances that would have helped in resolving the issue (Cooper, 2009). Additionally, in the recent past there has been a great shift by the mana gements of businesses across the globe towards the use of technologically based non-financial pieces of information (Burns and Baldvinsdottir, 2007). ... These two types of change within the management field are evident simultaneously across many businesses along with organizations (Burns and Baldvinsdottir, 2007). Reports indicate that such an occurrence might occur because both of these changes may be subjected to the same types of normative pressures though they are basically mutually independent (Agresti, 2002). The management accounting profession has in the modern world changed their views on various aspects that affect their operations. For instance, less emphasis has recently been placed on the acquisition of technical knowledge along with the traditional skills of doing business (Burns and Baldvinsdottir, 2007). The new work of the management accountant thus relies on his ability of interpreting non-financial information for the benefit of a business entity or organization (O’Sullivan, 2010). This has made the management accountants new work to be described as involving the offering of consultancy services to the inter nal operations of a business. Change within the management profession has also been driven by the fact that the accountants are currently being involved in the support of decisions and offering of professional advice to the organization (Agresti, 2002). The advice provided is on the strategic along with operational issues of an organization and the application of special technical skills for the benefit of the organization (Cooper, 2009). The issue of leadership is directly related to the management profession and this implies that the methods applied by the professionals in the field have to change. The change should therefore be aimed at providing an increase in the collaborations beyond the financing option and working in teams that have multiple purposes in a

Low Fat Cheese Market - Global Industry Analysis Essay Example for Free

Low Fat Cheese Market Global Industry Analysis Essay Low fat cheese contains lesser amount of saturated fat and reduces the level of low-density lipoprotein (LDL) cholesterol which is responsible for an increase in the risk of heart disease. Normal cheese has 30-40% saturated fat whereas low fat cheese, produced from skimmed milk contains 7-15% saturated fat. Commonly available cheeses such as cheddars, mozzarella, provolone and others, depending on the process and the country where they are produced, are easily available in the market today. Low fat cheese is also available in various forms as a healthy alternative to regular cheese. Low fat cheese has almost all the applications that normal cheese has. Some of the products where low fat cheese is used are pizzas, sandwiches, hotdogs, and salads. The geographical market segments are North America, Europe, Asia Pacific, and the Rest of the World (RoW). Highest cheese consumption is seen in Europe while North America’s consumption is comparatively less. One of the key drivers for the growth in the demand for low fat cheese is the growing health consciousness among the people. Normal cheese is said to have higher amounts of fat as well as sodium. Moreover, much attention is given to the diet of children keeping in mind the adverse affects of cheese on the body in the long run. Also, cheese is a part of the culture in many countries, where it is consumed on a daily basis. One of the restraints to the low fat cheese market is its taste after the reduction of fat and sodium as the flavor of cheese depends on these two components. Some types of cheese like mozzarella, cottage cheese (paneer), and Swiss cheese have low salt and fat content naturally, compared to other cheese that contain artificially reduced salts. The major players in the market are now focusing on reducing fat and salts from cheese such as in American cheese which has a high amount of these components. Some of the major producers of low fat cheese are the Lactalis Group, Kraft Foods Group Inc., Fromageries Bel S.A., Bongrain S.A., Arla Foods and others. This report is a complete study of current trends in the market, industry growth drivers, and restraints. It provides market projections for the coming years. It includes analysis of recent developments in technology, Porter’s five force model analysis and detailed profiles of top industry players. The report also includes a review of micro and macro factors essential for the existing market players and new entrants along with detailed value chain analysis. This report provides pin-point analysis for changing competitive dynamics It provides a forward looking perspective on different factors driving or restraining market growth It provides a technological growth map over time to understand the industry growth rate It provides a seven-year forecast assessed on the basis of how the market is predicted to grow It helps in understanding the key product segments and their future It provides pin point analysis of changing competition dynamics and keeps you ahead of competitors It helps in making informed business decisions by having complete insights of market and by making in-depth analysis of market segments It provides distinctive graphics and exemplified SWOT analysis of major market segments About us Transparency Market Research (TMR) is a market intelligence company providing global business research reports and consulting services. Our exclusive blend of quantitative forecasting and trends analysis provides forward-looking insights for thousands of decision-makers. TMR’s experienced team of analysts, researchers, and consultants use proprietary data sources along with various tools and techniques to gather and analyze Our data repository is continuously updated and revised by a team of research experts so that it always reflects the latest trends and information Our Approach †¢ Our research reports cover global markets, present analysis and forecast for a period of five years. Respondents are led through a questionnaire to gather quantitative and qualitative inputs on their operations, performance, strategies and views on the overall market, including key developments and technology trends.