Are you facing bankruptcy and are scared of all the legal stuff that you do not quite understand. You will need a bankruptcy attorney who can solve your credit problem and save you from possible fiscal downfall.

Lawyers who specialize in dealing with bankruptcy cases are known as bankruptcy attorneys. Finding such a lawyer is now easier than before, you will need to log on to the internet and simply use websites that provide you a list of attorneys and lawyers according to your geographical region. This helps you locate lawyers quite easily and you will end up saving a lot of time.

Let alone single lawyers, you can find firms that deal in bankruptcy so you will have a complete organization backing you and serving your purpose for solving your financial crisis problem. These attorneys have been included in the list because they are one of the best in that region. You can not just trust these people, you can also check out about them with their previous clients who have consulted them about their financial problems.

Bankruptcy attorneys can save you from imprisonment, auctioning of your assets, your credit rating from falling down drastically, etc. these attorneys are well versed with the legal books that concern the personal finance laws. These attorneys also have contacts with all credit companies, therefore are well equipped to help you out with your credit problems.

Your bankruptcy attorney will charge you certain amount of commission, this too will be payable in parts if you cannot afford it at that point of time. You can decide with the attorney how much needs to be payable and at what time and date. You can build your positive credit rating once you are out of the financial crisis.

Finding bankruptcy attorneys need not be through someone you know. Finding them online can protect yourself and not let your financial problems be known to the world. Online you can save this embarrassment and can work secretly without giving stress to your family.

Online through these websites you can check out reputation and experience of your chosen attorney. This will help you remain discreet, you can also check out openly provided information by prior clients who have used services of this attorney. Bankruptcy attorneys will also help you in reducing rate of interest on your accrued credit card bills, help you in avoiding complete payment of your credit overdue, instead you can reach a settlement and pay only some part of the loan instead of paying the complete amount. This method has saved a great many families from reaching complete bankruptcy.

You can use services also for understanding the law for personal finances better, and also for finding out whether you are being outsmarted by the finance companies as regards to interests. This will help you in understand and saving your money at the same time not being taken by the finance companies for a ride. Bankruptcy attorneys can help you save yourself from financial disaster.

Ryan Luv
http://www.articlesbase.com/national,-state,-local-articles/bankruptcy-attorneys-700341.html

There are basically two kinds of credit cards. There are unsecured credit cards and there are secured credit cards. A secured credit card depends on you depositing some money in an account first. You can then use the credit card up to the limit of what is in your account. An unsecured credit card does not depend on an account. It depends on your ability to pay your monthly fee. That is the kind of credit card that most people have and it is the kind that most people want.

If you have a bad credit history it will be difficult to get an unsecured credit card from most of the major providers. But having a credit card is a vital part of modern life. It can be very difficult to manage your financial affairs without one. If you want to make purchases on line, or buy tickets over the phone a credit card is essential.

So if you have made some mistakes in the past, and most of us do, how can you get an unsecured credit card? Surprisingly enough there are companies that specialize in this niche market. They provide unsecured credit cards for people with a bad credit history.

Obviously this is going to be more expensive than an unsecured credit card for customers whose credit rating is perfect. But it may be a useful option if you feel that you need a credit card like everyone else has in their wallet

The Imagine card is a credit card for people with a bad credit history. It is based on the principle that people who have made mistakes should be given the chance to rebuild their credit record. All applications will be accepted. Everyone gets a chance to try again.

It is run by Mastercard. So it has the backing of one of the big companies. Imagine is not some fly-by-night operation.

If you take out an Imagine card you will be given a low credit limit of $70 or $300 and you will have to pay an annual fee of $155. This seems expensive. But you have to compare it to other sources of credit.

The low credit limit will protect you from going over your limit. It may not seem much but it will enable you to make many essential purchases for which cash is not appropriate.

The main advantage is that it is a “real” credit card that will enable you to rebuild your credit rating. If you keep up the annual fee and the monthly repayments your credit record will improve month by month.

Over time the annual fee, which is the credit card company’s insurance, may be dropped. Once they are sure that you have developed a pattern of regular payments they will have confidence in you. That is what you need to achieve.

An Imagine credit card is a learning curve for you. You will be developing good financial management skills that will help you manage a higher credit limit. The temporary annoyance of having a low limit credit limit will soon be over.

This a medium term strategy for repairing your credit rating. One mistake does not need to mean that you are permanently scarred. There is life after bad debt.

Abhishek Agarwal
http://www.articlesbase.com/credit-articles/unsecured-credit-cards-getting-an-unsecured-credit-card-inspite-of-bad-debts-703512.html

With the world economy in meltdown, each person is asking one question: “How is this going to affect me?” (Or affect us, if you have a family to feed.) Redundancies are already a global fact of life.

In December 2008, the US unemployment rate rose to 7.2 per cent, with more than 11 million people unemployed. In the United Kingdom, redundancies are hitting “white collar” workers – those in consultancies and management. Between June and November 2008, more than 22,000 people working in these areas lost their job. There have also been significant cutbacks in the leisure industries – tourism, hospitality, amusement and sports – largely because of the drop in the amount of discretionary spending available in most homes.

Who will survive?
During an economic downturn, businesses are at risk. Turnover is less and cashflow is tighter. Profitability is reduced, because business activity slows and there is more competition between firms for the small amount of business available.

If you are a small or medium business owner, you will already be taking steps to minimize the potential impact of the recession by attending to debt consolidation or reduction; taking a proactive approach to business management; reviewing costs; and ensuring asset protection is in place.

Employees can take similar steps to protect their personal assets and their wellbeing against the threat of redundancy.

Reduce debt
Make sure you know exactly how much you owe, and to whom. Now is the time to pay off your credit cards if you can and to dispose of all but the most important ones – three is possibly enough to ensure you maintain your good credit rating. Once you have paid consumer debt, accumulate as much cash as you can.

Become proactive
Rather than waiting for the worst to happen, take control of your life by looking realistically at your assets and thinking laterally. Do you have a hobby that you can use to make money? Are you prepared to work at times when others prefer not to – nights, or holidays? Not afraid of “dirty work” that others won’t touch? If you work in an industry where staff numbers are dwindling, are you able to re-train and embrace another career?

Review costs
Taking control means knowing exactly how you spend the money you have. Are there things you can do without? What does that daily cappuccino really cost? Are you spending too much on the power bill? On “toys” like a pleasure boat, or a TV in the bathroom? What other overheads do you and your family have? Most people can simplify their lives if they try, especially if they develop a taste for things that are free – hiking, visiting the library, gardening. By saving, you can often accumulate as much money as by taking on extra work.

Protect your assets

This is where you focus on the positive aspects of your life. Since you are your greatest asset, it makes sense to protect your health. Get sufficient exercise, eat healthy food, cut back on alcohol and tobacco, sleep soundly. Attend to the maintenance of your home – your second biggest asset.
And take good care of your family and friends, because we all need each other. Developing excellent communication skills will always stand you in good stead, whatever the economic climate!

SearchPooch.com
http://www.articlesbase.com/strategic-planning-articles/the-economy-and-your-job-749804.html

Depending upon which home insurance company you are choosing, the price you pay for your home insurance can vary by thousand of dollars. Here are some important tips that can help you to choose the best home insurance without making you confused since there are thousands of home insurance policies available in the market.

A home insurance generally refers to an insurance policy which is a combination of all the protections for yourself and your home. In fact many home insurance policies even protect you from any sort accidents that can occur in your home. This is the reason a home insurance policy is often referred to as homeowners insurance. It is considered to be the largest investment of all and this is the reason it is very essential for you to choose the best policy to protect your home. A home insurance policy can cover various conditions including coverage against theft, lightening, fire, smoke, ice, snow or even frozen pipes.

Some important tips can make your work easy in choosing the best home insurance policy. Firstly, keep in mind to visit many home insurance companies and obtain their individual quotes. The best way to save money would be to visit no less than ten insurance companies so that you can easily figure out the best deal after you compare all the quotes. This can save you hundreds of dollars ranging from $500 to $1100 on your yearly premium that you have to pay for the home insurance you choose. You can even log into a comparison website where you can find different rate quotes from various insurance companies and after comparing those quotes, you can choose the best one for your home. Many comparison websites also offer advice from insurance experts on call helping you to get your queries answered on the spot.

You can even raise the deductible so that you can easily save nearly 30% on the premium you pay for the insurance company. If you are planning to buy your home insurance and auto insurance, try to purchase both the insurance policies from the same company since consolidation helps you to save nearly 30% on your insurance. Another good tip for getting a healthy amount discounted from your premium would be to purchase and install dead-bolt locks, window locks, burglar alarms and other security lights for your home.

Before applying for the home insurance, please be sure that you are insuring only your home and not the land. Many insurance companies will try to convince you to insure both your home and land, but always remember insuring your land is totally useless. Another tip would be to apply for a senior discount if you are more than 55 years. Don’t forget to submit the proper age proof for availing the discount.

Lastly, check that you have a good credit rating since nowadays many insurance companies use credit reports to determine your risk factor. Therefore prepare a healthy credit report and check that you have all types of invalid entries removed to obtain a good home insurance policy from the company.

Adi Azar
http://www.articlesbase.com/finance-articles/tips-to-chose-your-home-insurance-713112.html

5 Things to Do Before You Even Think about Divorce

Summary — There are a number of things you should do before you take any action on your divorce. These 5 things are critical if you blow it on one of these you may have really made a huge mistake.

There are many steps to take to protect yourself in a divorce. This article will get you started. Your best bet is to talk to a lawyer before you do anything.

1. Talk to a Marriage Counselor or other professional who may be able to help you save your marriage.

Even if you don’t think there’s hope for the marriage, “divorce counseling” can help you discover what went wrong, how to cope, and how to pick up the pieces and go on. Don’t wait for your spouse to participate. If you don’t know how to find a qualified counselor, our firm will be glad to recommend one or you can check out the directory of professionals at stayhappilymarried.com. Your employment, social or religious contacts might also provide leads.

2. Talk to an attorney before you do anything.

Even if you don’t end up hiring an attorney to handle your separation or divorce, you would be well advised to get as much information as you can before you even discuss divorce with your spouse. There’s a lot to know about divorce in North Carolina . . . our laws are complex and even the simplest situation can be very confusing to families already in distress. Actions you take now may very well affect the outcome of your divorce (see #3) and you need to understand your options ahead of time . . . not some time down the road when it may be too late to alter the outcome. Click here to find attorneys who are well versed in the intricacies of North Carolina divorce law.

3. Do not move out of the marital home without talking to an attorney first.

Leaving the house without a good reason may cause you to pay alimony or may result in your inability to collect alimony. If you leave the house, you may also be unable to return until after a court divides the property. This process might take more than a year. The best advice is to stay in the house until after you talk with an attorney unless your spouse is violent. If your spouse is violent, you must take all steps necessary to protect yourself and your children.

4. If you have been involved in any extramarital affairs, talk to a lawyer before you discuss this with your spouse or anyone else.

In this case, honesty may not be the best policy. In addition to the fact that adultery is illegal in some states, admission of an affair can have other dire consequences. If your spouse is a candidate for alimony, any illicit sexual behavior on your part (during the marriage . . . which includes the time you are separated) could end up costing you thousands in additional alimony payments.

5. Take concrete steps to safeguard your assets before you and your spouse begin discussing divorce.

One of these steps is to take possession of certain assets during separation, especially those assets you wish to be using, such as furniture and vehicles, and those assets that might be liquidated by your spouse, including precious gems and stones, other collectibles, cash, and bearer bonds.

Another self-protective step is to file what is known as a Lis Pendens in the Deeds Office of any county where you and/or your spouse own real property. The lis pendens puts third parties on notice of your claim to have an interest in the real estate against which the lis pendens is docketed. The lis pendens is basically a notice of pending litigation that may affect real property. A properly recorded and served lis pendens clouds the title to the property, preventing an effective sale of the property behind your back. The rules regarding a lis pendens contain very specific requirements, all of which are spelled out in section 1-116 and the following sections of the North Carolina General Statutes.

A third possible step to protect the assets of your marriage is to get an injunction restraining your spouse from transferring or otherwise disposing of any property covered by the restraining order. Your attorney can also use an injunction to get your separate property returned to you, where your separate property is in the possession of your spouse and the spouse refuses to give it to you. The equitable distribution statute also provides a means for you to obtain an interim distribution of marital property, pending a final resolution of the property matter. Such an interim allocation could, for instance, give you much needed funds on which to live.

Other protective measures you might consider in your divorce planning include: (1) protecting your own credit rating by freezing or closing joint cards and by blocking your spouse’s access to other joint credit such as a home equity loan; (2) closing joint bank accounts and opening accounts in your own, individual name; (3) changing the name of the responsible party on utility and other bills; and (4) spending where possible your spouse’s separate property first, marital property next, and your own separate property last.

While this list will help you get started on the right track, it is by no means a complete list of all the things you need to do and know if you are considering a divorce. For more information about the rights and duties of separating and divorcing husbands and wives visit one of our Raleigh divorce lawyers. You’ll find a complete law library, downloadable divorce forms, a legal fee calculator, a child support calculator, lists of professionals who can help you and stories from people just like you who have survived divorce.

Lee Rosen
http://www.articlesbase.com/law-articles/5-things-to-do-before-you-even-think-about-getting-a-divorce-701265.html

As we mentioned in previous articles everybody knows that banks are a major consumer lender, they represent over 70% of all consumer loans in the market. In fact, besides banks there are many other financial institutions that offer consumer loans in the market. Some of them offer cheaper interest rates to attract customers. It is your responsibility to find out, so you can pay very little interest and save some money. In this article, we will discuss types of consumer loans.

1. Personal line of credit
Banks, trust companies, and credit unions may offer their creditworthy customers a personal line of credit as a convenient substitute for personal loans, usually 10,000 to 15,000 dollars. Sometimes, they may also require some types of collateral for this type of credit such as the equity of your home if your want to have a larger personal line of credit.

2. Overdraft protection
Overdraft protection, available at banks, trust companies, and credit unions, allows deposit accounts to become overdrawn to a set limit, usually $1,000 to protect customers against sudden overdrawn from their account and NSF charge (over $35). This overdraft becomes a loan and is subject to interest rates as high as, or higher than those charged on credit card loans.

3. Credit card cash advances
Credit cards issued by any financial institution give card holders the option of obtaining a loan, called a cash advance without making a special application each time funds are needed. Interest here is calculated daily and begins at once at rates usually higher than a line of credit or a personal loan depending on the interest rate on the card holder agreement.

4. Demand loans
A customer of a financial institution with a good credit rating may arrange for a demand loan by signing an agreement to repay the loan in full at a certain date, with interest (usually .05% higher than prime rate) due monthly with the condition that the lender has the right to recall a demand loan at any time.

5. Installment loans
Installment loans offered by financial institutions to borrowers with certain conditions such as a set interest rate, a maturity date, a repayment schedule, and certain security requirements.

I hope this information will help. If you need more information, you can read the complete series of the above subject at my home page:

http://lifeanddisabitityinsuranceunderwriter.blogspot.com/
http://personalfinance22.blogspot.com/

http://medicaladvisorjournals.blogspot.com

Kyle J. Norton
http://www.articlesbase.com/personal-finance-articles/personal-finance-and-money-management-22-types-of-consumer-loans-676941.html

As the banking industry continued to hemorrhage in 2008, 25 U.S. banks failed. Among them were Washington Mutual and IndyMac, the first- and third-largest bank failures in U.S. history, respectively, but there were also scores of smaller regional banks throughout the nation.

According to the American Bankers Association, 98% of the nation’s 8,500 banks are considered well capitalized, making the chance of any one bank going bankrupt highly unlikely. Still, bank failures increased markedly in 2008 and will likely continue in 2009 under current economic stresses.

Most U.S. banks are insured by the Federal Deposit Insurance Corporation (FDIC), so in the case of a bank failure, any one individual’s bank deposits, up to $250,000 at any individual institution, are protected by the FDIC. (The coverage limit, which Congress increased last year due to the banking crisis, will remain in force at least through December 31, 2009, but may then revert back to $100,000 if Congress takes no further action.)

But what happens to your mortgage, car loan or credit card account if the bank that loaned you that money goes out of business? Could their loss be your gain?

Unfortunately, you are still on the hook for any and all debt you have incurred. If your bank fails, you’ll need to pay close attention to how you handle your loan payments in the ensuing months.

Here’s what to do:

1. Continue making your monthly payments on time, and as usual. Don’t fool yourself into thinking that the upheaval of a bank failure is an excuse to skip payments. Doing so will only hurt your credit, as late payments will be reported to the credit bureaus; if you skip payments on a credit card account, late payments could also increase your interest rate.

In the event of a bank bankruptcy, the FDIC will assume control of the bank until it finds a stronger bank willing to buy the assets of the failed bank. Because your loan is a legal contract, neither the FDIC nor any bank that buys the failed bank can change the terms of your loan, and you, as borrower, are still bound by the same terms to repay the loan as originally agreed

Credit card account terms, however, are not fixed like a house or car loan. If another bank purchases a failed bank’s credit card accounts, the new bank is not required to honor the interest rate or other terms of the original account, like annual fees, over-limit fees or late fees. Still, it’s in the new bank’s interests not to reshuffle the deck, because making radical changes could trigger an exodus as the old bank’s credit card customers reject the new terms en masse

In short, most credit card holders won’t notice any changes in how they can use their cards, but if you could be considered a borderline credit risk by the takeover bank, it’s possible they’ll change your account terms or even close it. Cardholders with a high credit score have the least to worry about.

Financial planner and author Suzie Orman advises keeping copies of your cancelled checks and loan payments for at least six months following the takeover of your bank to avoid potential problems if your payments aren’t recorded during the transition. (If that were to happen, you would then need to check your credit report to ensure the takeover bank has not reported your payments as late or delinquent.)

If you’re already delinquent on your mortgage payments, there’s a chance that bank foreclosure proceedings will be temporarily stopped, giving you a chance to negotiate an agreement on payments that help you stay in your home.

2. Read your mail and any correspondence concerning your bank’s failure. It’s important to be aware of any changes regarding to whom you write your checks and where you mail them, but continue writing your checks and mailing payments to the same address until you are notified otherwise. Be careful, bank failures represent another opportunity for scammers looking to steal money from unsuspecting bank customers by concocting bogus emails or websites redirecting your payments.

Check the FDIC website for specific details on how accounts and loans at each of the banks that failed in 2008 are being handled.

Although the FDIC insures bank accounts, experiencing a bank failure when your personal savings are involved is still unsettling, and most customers would prefer to avoid that possibility altogether. To protect yourself:

1. Be sure your bank is FDIC-insured.
2. Be sure that your deposits at any one bank, whether they’re certificates of deposit, money market accounts or savings and checking accounts, don’t exceed the $250,000 FDIC coverage limit.
3. Be cautious about opening any one-year or longer-term CDs that exceed $100,000 before December 31, 2009. Unless Congress acts to continue the extension of the FDIC coverage limit to $250,000, a CD over $100,000 may not be fully insured after that date.
4. Check the strength of any institution with which you’re considering banking by visiting an online bank rating service. Although many bank failures can’t be anticipated, understanding the overall strength of your bank can be helpful in assessing the risks.

Dawn Handschuh
http://www.articlesbase.com/loans-articles/are-you-off-the-hook-for-your-loan-if-your-bank-goes-belly-up-740601.html

If there’s a proverb that captures the outlook for the U.S. economy in the New Year, it’s the one that says: “It’s always darkest before the dawn.”

Regardless of any formal announcement of whether or not the United States drops into an actual recession, the ongoing credit crisis guarantees a contraction of the American economy by virtually every measure we know. That period of darkness will be marked by a dramatic slowdown in economic activity, as well as by rising unemployment, additional declines in U.S. stock prices, and constant volatility. It could last as long as 12-18 months.

But when the dawn does come, it will be one to remember. If U.S. President-elect Barack Obama gets it right – and I have every reason to believe that he will – then investors will be presented with the greatest investment opportunity of our generation. At that point, shares of American companies will be at such low levels that wholesale buying by individuals, mutual funds, pension funds, institutional money managers, and foreign-controlled sovereign wealth funds, will generate gains that will not only make us whole, they will make us rich once again.

A Market Mandela

Creating an analysis of the U.S. economy’s outlook for the New Year is akin to creating a mandala, a geometric work of art whose pattern, symbolically or metaphysically, represents a microcosm of the universe from the human perspective. In some Buddhist temples, mandalas are made of tiny colored beads, painstakingly created by several monks as a form of meditation. In celebration of the ever-changing nature of the universe, the mandala is then joyously shaken by its creators, until it is once again nothing more than chaos embodied in a box of colored beads.

Regardless of the big picture, analysis of a mandala – or the economy – always starts at the center and emanates outward. With the U.S. economy, that centerpiece is credit. The credit crisis has shaken the complex mandala that is our economy and transformed the United States economy into chaos. It’s complex because this economic-forecast mandala derived its form from thousands of individual pieces – in the case of the economy, from scores of data points, many of which are currently dark and foreboding.

The credit crisis we are experiencing results from the contraction – or worse, the cessation – of lending. Under normal circumstances, institutions and markets freely facilitate capital movement between lenders and borrowers. But that’s not happening, now.

Because of a lack of transparency into the balance sheets of borrowers holding such complex and illiquid securities as collateralized debt obligations, credit-default swaps, and non-performing loans, and because of increasing recessionary fears affecting businesses and households, lenders don’t want to increase their loan exposure. Banks are holding onto the cash and liquid securities they control, using them as a cushion against their own potential losses. The U.S. Treasury Department’s direct-to-bank capital injections do not alter these banking realities. In fact, as a Money Morning investigative story recently demonstrated, instead of using these taxpayer-provided infusions to increase their lending, these banks are using the money to finance takeover deals.

The Recipe for a Recession

Whether or not the United States is technically in a recession ultimately will be divined by the National Bureau of Economic Research (NBER). The business-cycle dating committee of this privately run, nonprofit economic research group is right now studying five factors in an attempt to determine if the United States has entered a recession and, if so, when that downturn started, MarketWatch.com reported. Those five factors are:

• Gross Domestic Product (GDP).
• Industrial production.
• Employment
• Income.
• Retail sales.

Regardless of any formal announcement by the NBER of whether we’re in a recession, the credit crisis guarantees a general contraction of economic activity, by every measure.

“Any doubt that we’re officially in a recession can be put aside,” Anthony Karydakis, former chief U.S. economist for JPMorgan Asset Management (JPM) – and now a professor at New York University’s Stern School of Business – recently wrote in Fortune magazine. “The rapid deterioration of labor markets points to a sharp decline in hours worked and output in the fourth quarter. This is likely to lead to a decline in personal consumption to the tune of 5.0% or so for that period. Since [consumer spending] makes up about 70% of the economy, the stage has already been set for real GDP to shrink at a more than 4.0% rate in the fourth quarter.”

Confirmation of that belief is evident by looking at each of the NBER’s five key indicators.

• Gross Domestic Product (GDP): The U.S. Commerce Department estimated that the U.S. economy, as measured by GDP, rose 0.9% in the first quarter. In the second quarter, GDP advanced an estimated 2.8%. For the third quarter, GDP declined an estimated 0.3%. My own econometric models suggest that GDP actually contracted at a 1.5% pace in the third quarter and will decline another 2.75% in the fourth quarter. For the year, that would mean the U.S. economy actually fell 0.55%. The U.S. economy last posted a full year’s negative GDP in 1991, when it declined 0.2%. Verdict: Recession.
• Industrial Production: This measure of output by the nation’s factories and mines dropped 2.8% in September, and a very steep 6.0% in the third quarter. Verdict: Recession.
• Employment: The U.S. Bureau of Labor Statistics announced Friday that October’s unemployment rate was 6.5%, a jump of 0.4%, which was double what most economists expected, and also its highest level in 14 years. The economy has now lost a total of 1.2 million jobs since the beginning of the year, with nearly half of those losses occurring in the last three months alone, pointing to an acceleration in the pace of erosion in labor markets. Karydakis, the Stern School professor, wrote in
  Fortune : “By way of comparison, during the 2001 recession and in the sluggish growth that followed in 2002-03, the unemployment rate reached a peak of only 6.3%, in June 2003. We’ve already exceeded that mark and, given that we are still in the early phase of the current recession, the unemployment rate should be expected to push toward the 7.5% range – and possibly higher – during the next three months to six months.”
  Verdict: Recession.
• Income: Personal income increased $24.5 billion, or 0.2%, and disposable personal income (DPI) increased $25.7 billion, or 0.2%, in September. Personal consumption expenditures (PCE) decreased $33.6 billion, or 0.3%. Excluding the rebate payments made to U.S. taxpayers under the Economic Stimulus Act of 2008, DPI increased $30.3 billion, or 0.3%, in September, and increased $44.0 billion, or 0.4%, in August. Verdict: Too close to call.
• Retail Sales: October retail sales are coming in well below already-diminished expectations, and some reports have been downright depressing – including The Neiman Marcus Group Inc. -26.8%; The Gap Inc. (GPS) -16%; The Nordstrom Group (JWN) -15.7%; J.C. Penny Co. Inc. (JCP) -13%; Kohl’s Corp. (KSS) -9%; Ltd. Brands Inc. (LTD) -9%; Target Corp. Inc. (TGT) -4.8%; and Wal-Mart Stores Inc. (WMT) +2.4%. In a report last week, Moody’s Investors Service (MCO) projected that the retail sector’s woes will continue into 2009 as consumers cut back on buying apparel, footwear and accessories “in order to save money for essentials.” The credit rating firm said in a separate report that holiday spending “will prove even weaker than expected,” amid October’s financial-market swoon. Verdict: Recession.

If U.S. exports are taken out of the GDP calculations going back to January, it’s apparent that there has been very little domestic growth in the economy. And when revisions are finalized in the next few months, we’ll be looking back at the recession that we’re all but certain is upon us right now. Until the credit markets are freed up and borrowers are extended credit at reasonable rates, it’s unlikely that credit, the centerpiece of the economy, will be anything other than a major cog in the wheel.

There are some signs of a thaw, but not anytime soon. The U.S. Federal Reserve’s lowering of the Fed Funds target rate to 1.0%, and coordinated rate reductions by the Bank of England and the European Central Bank, as well as other major world-wide central banks, may start to ease the stranglehold gripping the worldwide credit markets. The London interbank offered rate (Libor), a critical interest rate against which trillions of dollars of mortgages, bank loans and derivatives are priced, dropped to 2.39% last week from a high of 4.82% on Oct. 10.

The prospect of President-elect Obama’s choosing a different means of attacking the credit crisis will be closely watched and, by itself, may create an air of confidence that perceptions will change. But changed perceptions will not be enough.
The truth about our economic outlook is that it is predicated on demonstrably better transparency. If U.S. banks follow the lead of their European counterparts, which have recently been freed from fair-value, mark-to-market accounting, and which may retroactively mark assets to “internal models” back to July, then balance-sheet clarity will continue to be cloaked in darkness. Lack of confidence in the banking system will persist, especially among the banks themselves. The first order of attack needs to be the creation of a fundamental leadership position that leads to an open, transparent and accountable measure of balance sheet assets and liabilities. As long as failing banks are being propped up, this cycle of credit contraction will persist.

The outlook for the economy is inextricably tied to the price of oil. The run-up of benchmark crude this summer to the record $145 a barrel level, and its subsequent fall to half that level, has wreaked havoc throughout the economy. Similarly, the run-up in commodity prices, and their subsequent fall, also has caused a lot of damage. Together, the dramatic rise and fall in the pricde of oil and other commodities is a harbinger of greater volatility in the future.

Follow the Money

Follow the money. Capital rapidly inflated the tech-stock bubble. When that bubble burst, capital flowed into and flooded the hard-asset world of real estate. When that bubble burst fast, speculative money dove into oil and commodities. When the U.S. and world economies looked weak, those bubbles burst. The looming threat of inflation this past summer instantly gave way after the drop of oil, gold, metals and agricultural commodities. And now, deflation is seen as the looming threat on the horizon.

Which threat should we worry about?

The answer is – both. The prospect for near-term deflation seems all too real. As raw material prices fall and finished good prices fall due to a lack of purchasing power resulting from lack of credit and world-wide recessionary fears, the U.S. consumer has fundamentally changed his or her collective psychology. Is U.S. consumerism, which is responsible for 70% of GDP, in full retreat? If it is, as all measures project, then it’s likely that government stimulus efforts will overshoot their intended mark.
Just look at what the United States has done already as it battles this financial crisis. It has:

• Handed out more than $150 billion in stimulus rebate checks.
• Floated a $700 billion financial bailout rescue plan – almost $160 billion of which has already been placed.
• Bailed out American International Group Inc. (AIG), to the tune of $125 billion.
• Covered JP Morgan Chase & Co.’s bet on taking over
  The Bear Stearns Cos. – to the tune of $29 billion.
• Looked to lend struggling automakers $25 billion.
• Agreed to guarantee depositors at all banks.
• Stepped in to buy commercial paper that no one else will buy.
• Guaranteed money-market-fund investors.
• And backstopped the Federal Deposit Insurance Corp. (FDIC), Fannie Mae (FNM) and Freddie Mac (FRE).

And now we’re getting wind of another stimulus package and more help for everyone.

If, in six months to a year, the credit markets are facilitating borrowers again, the massive buildup of U.S. debt will result in a falling dollar and higher interest rates.

That spells inflation.

A massive re-inflation of the economy portends another flood of speculative money into oil and commodities. The cycles are increasingly condensed, more volatile and will be increasingly more disruptive.

Welcome to the brave new world of global finance and speculation.

The Federal Reserve’s balance sheet has ballooned from $900 billion to more than $1.8 trillion. That’s 13% of GDP. The Treasury Department has telegraphed its intention to float $550 billion of debt in the fourth quarter and estimates it will have to float another $368 billion in the first quarter of 2009. Our national debt will then be close to 49% of GDP.

If there is an easing of credit in the economy, and borrowers come to market with the pent-up demand that has not been met for the past year, the competition for funds will raise interest rates. Higher interest rates will counter any stimulus effect from government programs.

Who will buy U.S. Treasury debt if the world is less apprehensive about credit quality? Lenders will once again seek higher returns, potentially forcing the Treasury Department to increase its rates. The potential of this event may sink the dollar if investors perceive that the U.S. economy is stagnant and the world is awash in dollars. The yield curve – the spread between the Treasury’s two-year and the 10-year paper – has been steepening. A steepening yield curve, where short-term borrowing costs are low and long-term rates considerably higher, is good for banks that borrow short and lend long.

But if the perception of risk diminishes, and the perception of future inflation increases, the yield curve will invert and the threat of rising rates will cause a sell-off in the short end of the curve and a rush into longer-dated maturities. Any increase in short-term interest rates would be painful for struggling banks. An inverted yield curve would be devastating, and inevitably would lead to more bank failures.

Home on the Range …

At the core of the U.S. economy sits a desperately ailing piece of the mandala – the U.S. housing market. The once bright prospect of home ownership, which historically formed a beautiful economic picture, right now doesn’t exist. For most Americans, the family home constituted the bulk of their wealth. Or at least it did. And this family financial portrait will get worse before it gets better, since the real estate collapse is far from over. Goldman Sachs Group Inc. (GS), for instance, projects another 15% drop in housing prices.

I think that’s conservative. Mortgage rates are actually rising as Fannie and Freddie have to pay higher interest on their short-term notes and bonds. Thirty-year fixed-rate mortgage paper averaged 6.47% last week, up from its 52-week low of 5.36%. The 15-year fixed paper was trading at 6.18%, up from its 52-week low of 4.91% (based on Bankrate.com (RATE) rate surveys). This trend is definitely not our friend. As housing prices continue to fall, and inventories stagnate and grow in many areas, homeowners are increasingly underwater and are increasingly entertaining foreclosure as a viable economic alternative to indentured servitude.
The Hope for Homeowners Plan, which looks to lower interest rates and reduce principal on mortgages, and which makes homeowners pay a share of the appreciation on their home to their lender when they sell it, was initiated in October and was expected to garner some 400,000 takers. As of last week, according to The Wall Street Journal, there had been only 42 takers. That’s not a misprint – 42 – I even checked with The Journal.

In the real estate realm, the proverbial “other shoe” hasn’t dropped yet, but certainly is dangling – and that’s commercial real estate. As homeowners writhe in agony and stop spending, retailers will go out of business, businesses of all stripes will suffer and commercial real estate will implode. The leverage left over from just the private equity foray into commercial real estate in the acquisitive 2006-2007 period is staggering. Refinancing will be impossible. Banks are stuck with hundreds of billions of dollars of leveraged loans that they took on as bridge and mezzanine financing from the private-equity shops alone, at the time believing they would be able to securitize those loans and sell them off to investors.

There’s no chance of that, now.

One deal in particular illustrates this entire mess. Private equity behemoth The Blackstone Group LP (BX) took Hilton Hotels Corp. private for $26 billion. Blackstone put up $6 billion of its own money as equity and borrowed the other $20 billion from Bear Stearns, Bank of America Corp. (BAC), Deutsche Bank AG (DB), Goldman Sachs, Morgan Stanley (MS), Merrill Lynch & Co. Inc. (MER) and Lehman Brothers Holdings Inc. (OTC: LEHMQ).

Based on a current analysis of the deal at the multiple of seven times projected cash flow that the market currently puts on Starwood Hotels & Resorts Worldwide Inc. (HOT) – Hilton’s nearest rival – if Blackstone values its property comparably, it will have to mark its Hilton holdings down 50%, because it paid 13 times projected cash flow. That wipes out all of Blackstone’s equity in the deal. What’s more, the $4 billion portion of the loan that Bear Stearns took on, courtesy of JP Morgan Chase casting off Bear’s orphaned liabilities, now sits on the Fed’s balance sheet – and isn’t likely to go anywhere anytime soon.

Until the real estate cycle completes its implosion and begins to stabilize, there’s nothing that will fundamentally alter the outlook for the economy. This is Ground Zero. President-elect Obama must resist creating only a political solution to the overwhelming economic problem of declining house prices and declining real estate prices in general. Any attempt to put a band aid on this economic plague will only delay the day of reckoning. I regret deeply the conclusion that the lake must be drained before we can realistically climb out of it. But there just aren’t enough ferrymen to get us all to shore.

Always a Silver Lining – My Forecast

The outlook for the economy is not rosy – and that’s an understatement. But there is a silver lining. Even in the near term, the stock market will present innumerable wealth-creation opportunities.

• First, there are plenty of shorting opportunities out there now, and more will present themselves in the future.
• Second, in due course – in perhaps 12-18 months – we will be presented with the investment opportunity of our generation. If President-elect Obama gets it right, and I believe he’s got the potential to bring us all together and get the country through this (and if you’re reading this Mr. President-elect, I’d like to put in my vote for [New York Fed President] Timothy Geithner as next U.S. treasury secretary), American companies will be able to be purchased so cheaply that fortunes will be made. The recovery will not only make us whole, it will make our people and our nation rich again.

I have absolutely no doubt that the United States will lead the world back into balance. The sea change that has arrived is the result of the conservative experiment having lost its true moorings, pushing the economy into disaster. Not that a wholesale swinging of the pendulum to the other side would be good. In fact, it would be disastrous. We have the potential to end up with a new, fair, transparent and judiciously regulated environment where capital formation can again spread its wings and the U.S. economy can fly.

There are new hands reaching into the colorful box of beads that comprise the American landscape and economy. From any human perspective, the United States is more than a microcosm of the universe; it is the center of the world as we know it. It will take time to construct the new mandala. We all need to meditate on the process to ensure that the design we embrace will ultimately be inclusive, forward-looking and – like all great art – an inspiration to all who view it.

[Editor’s Note: Contributing Editor R. Shah Gilani has toiled in the trading pits in Chicago, run trading desks in New York, operated as a broker/dealer and managed everything from hedge funds to currency accounts. In his recent investigation of the U.S. credit crisis, Gilani was able to provide insider insights that no other financial writer or commentator could hope to match. He drew upon the experiences and network of contacts that he developed through the years to provide Money Morning readers with the “real story” of the credit crisis – and to propose an alternate plan of action. It’s a perspective on the near-financial meltdown that more than a quarter-million readers have read in Money Morning alone – to say nothing of the hundreds of other Internet outlets worldwide that have picked up and published Gilani’s unique insights.

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1.0 INDIAN BANKING SYSTEM

A banking company in India has been defined in the banking companiesact,1949.as one “which transacts the business of banking which means the accepting, for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdraw able by cheque, draft, order or otherwise.” Most of the activities a Bank performs are derived from the above definition. In addition, Banks are allowed to perform certain activities which are ancillary to this business of accepting deposits and lending. A bank’s relationship with the public, therefore, revolves around accepting deposits and lending money. Another activity which is assuming increasing importance is transfer of money – both domestic and foreign – from one place to another. This activity is generally known as “remittance business” in banking parlance. The so called forex (foreign exchange) business is largely a part of remittance albeit it involves buying and selling of foreign currencies.

Functioning of a Bank is among the more complicated of corporate operations. Since Banking involves dealing directly with money, governments in most countries regulate this sector rather stringently. In India, the regulation traditionally has been very strict and in the opinion of certain quarters, responsible for the present condition of banks, where NPAs are of a very high order. The process of financial reforms, which started in 1991, has cleared the cobwebs somewhat but a lot remains to be done. The multiplicity of policy and regulations that a Bank has to work with makes its operations even more complicated, sometimes bordering on illogical. This section, which is also intended for banking professional, attempts to give an overview of the functions in as simple manner as possible. Banking Regulation Act of India, 1949 defines Banking as “accepting, for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdraw able by cheques, draft, and order or otherwise.”

KINDS OF BANKS

Financial requirements in a modern economy are of a diverse nature, distinctive variety and large magnitude. Hence, different types of banks have been instituted to cater to the varying needs of the community.  Banks in the organized sector can be classified in to the following

1.      COMMERCIAL BANKS:-

Commercial banks are joint stock companies dealing in money and credit. In India, however there is a mixed banking system, prior to July 1969, all the commercial   banks-73 scheduled and 26 non-scheduled banks, except the state bank of India and its subsidiaries-were under the control of private sector. On July 19, 1969, however, 14mejor commercial banks with deposits of over 50 Corers were nationalized. In April 1980, another six commercial banks of high standing were taken over by the government.

2.      CO-OPERATIVE BANKS:-

Co-operative banks are a group of financial institutions organized under the provisions of the Co-operative societies Act of the states. The main objective of co-operative banks is to provide cheap credits to their members. They are based on the principle of self-reliance and mutual co-operation. Co-operative banking system in India has the shape of a pyramid a three tier structure, constituted by:

                                                                                            

3.      SPECIALIZED BANKS:-

There are specialized forms of banks catering to some special needs with this unique nature of activities. Foreign exchange banks, Industrial banks, Development banks, Land development banks, Exim bank     are important.

4. CENTRAL BANK:-

A central bank is the apex financial institution in the banking and financial system

of a country. It is regarded as the highest monetary authority in the country. It acts as the leader of the money market. It supervises, control and regulates the activities of the commercial banks. It is a service oriented financial institution.  India’s central bank is the reserve bank of India established in 1935.and it was nationalized in 1949.It is free from parliamentary control.

ROLE OF BANKS IN A DEVELOPING ECONOMY

Banks play a very important and dynamic role in the economic life of every modern state. A study of the economic history of western country shows that without the evolution of commercial banks in the 18th and 19th centuries, the industrial revolution would not have taken place in Europe. The economic importance of commercial banks to the developing countries may be viewed thus:

1.     PROMOTING CAPITAL FORMATION:-

A developing economy needs a high rate of capital formation to accelerate the tempo of economic development, but the rate of capital formation depends upon the rate of saving. Unfortunately, in underdeveloped countries, saving is very low. Banks afford facilities for saving and, thus encourage the habits of thrift and industry in the community. They mobilize the ideal and dormant capital of the country and make it available for productive purposes.

2.     ENCOURAGING INNOVATION:-

Innovation is another factor responsible for economic development. The entrepreneur in innovation is largely dependent on the manner in which bank credit is allocated and utilized in the process of economic growth. Bank credit enables entrepreneurs to innovate and invest, and thus uplift economic activity and progress.

3.     MONETSATION:-

Banks are the manufactures of money and they allow many to play its role freely in the economy. Banks monetize debts and also assist the backward subsistence sector of the rural economy by extending their branches in to the rural areas. They must be replaced by the modern commercial bank’s branches.

4.     INFLUENCE ECONOMIC ACTIVITY

Banks are in a position to influence economic activity in a country by their influence on the rate interest. They can influence the rate of interest in the money market through its supply of funds. Banks may follow a cheap money policy with low interest rates which will tend to stimulate economic activity.

5.      FACILITATOR OF MONETARY POLICY

Thus monetary policy of a country should be conductive to economic development. But a well-developed banking system is on essential pre-condition to the effective implementation of monetary policy. Under-developed countries cannot afford to ignore this fact.

 PRINCIPLES OF BANK LENDING POLICIES

The main business of banking company is to grant loans and advances to traders

as well as commercial and industrial institutes. The most important use of banks money is lending. Yet, there are risks in lending. So the banks follow certain principles to minimize the risk:

1.      SAFETY

Normally the banker uses the money of depositors in granting loans and advances. So first of all initially the banker while granting loans should think first of the safety of depositor’s money. The purpose behind the safety is to see the financial position of the borrower whether he can pay the debt as well as interest easily.

2.      LIQUIDITY

It is a legal duty of a banker to pay on demand the total deposited money to the depositor. So the banker has to keep certain percent cash of the total deposits on hand. Moreover the bank grants loan. It is also for the addition of short term or productive capital. Such type of lending is recovered on demand.

3.     PROFITABILITY

Commercial banking is profit earning institutes. Nationalized banks are also not an exception. They should have planning of deposits in a profitability way pay more interest to the depositors and more salary to the employees. Moreover the banker can also incur business cost and can give more benefits to customer.

4.      PURPOSE OF LOAN

Banks never lend or advance for any type of purpose. The banks grant loans and advances for the safety of its wealth, and certainty of recovery of loan and the bank lends only for productive purposes. For example, the bank gives such loan for the requirement for unproductive purposes.

5.     PRINCIPLE OF DIVERSIFICATION OF RISKS

While lending loans or advances the banks normally keep such securities and assets as a supports so that lending may be safe and secured. Suppose, any particular state is hit by disasters but the bank shall get benefits from the lending to another states units. Thus, he effect on the entire business of banking is reduced.

 OBJECTIVES OF THE STUDY

The following are the main objective of the studies.

1. To study the problem in financial crisis and money related query.

2. To evaluate banking is one of the most regulated businesses in the India.

3. To Analysis the role developing economy for the nation.

4. To study dynamic role in delivery and purchase of consumer durables.

 Scope of the Study

All persons need money for personal and commercial purposes. Banks are the oldest lending institutions in Indian scenario. They are providing all facilities to all citizens for their own purposes by their terms. To survive in this modern market every bank implements so many new innovative ideas, strategies, and advanced technologies. For that they give each and every minute detail about their institution and projects to Public. They are providing ample facilities to satisfy their customers i.e. Net Banking, Mobile Banking, Door to Door facility, Instant facility, Investment facility, Demat facility, Credit Card facility, Loans and Advances, Account facility etc. And such banks get success to create their own image in public and corporate world. These banks always accept innovative notions in Indian banking scenario like Credit Cards, ATM machines, Risk Management etc. So, as a student business economics I take keen interest in Indian economy and for that banks are the main source of development.

So this must be the first choice for me to select this topic. At this stage every person must know about new innovation, technology of procedure new schemes and new ventures.

 METHODOLGY

Theoretical study conducted on the basis of secondary data, collected from books, journal and annual reports.

2. BANK PROFILE:

Indian Bank

Name of the Branch               : Karaikal. [0090]

Date of Opening                     : 1971

District/Port Open                : Karaikal/Port Town.

Category/Size                         : Large.

Population                              : Urban.

Computerisation          : CBS.

Name of the Branch Head      : R.Muralitharan,(Senior Branch                                                                                 

                                                                            Manager)

Staff Strength                         Officers                : 06

                                                Award Staff : 06

                                                Sub Staff               : 03

Productivity                           : Rs. 281.39 Lacs.

Branch Classification            : Profit Centre.

Location of the Branch      : No. 96-98 Bharathiyar Road,

                                                  Karaikal-609607

Competition in the area        : Almost All Banks are functioning.

Potential Available                : Situated in a Commercial Area with a number of shops around Scope for trade finance. Branch has to tap more trade finance.

Computerised                         : ATM/CBS.

Commercial Activity             : Being a union territory, large commercial Industrial activities are on.

TARGETS vis-à-vis ACHIEVEMENTS

Rupees in Lacs

Particulars

31-03-2007

31-03-2008

30-06-2008

targets

target

actual

target

actual

target

actual

30-09-08

31-03-09

S.B

2900

2914

3343

2778

3400

3062

3557

4200

C.D

1610

1621

1814

924

2365

1700

1915

2200

T.D

4800

5281

5654

5890

6064

6099

5841

6400

TOTAL

9310

9816

10811

9592

11329

10361

11329

12900

ADVANCES

4389

3674

3883

3733

5487

5768

5487

6430

PROFIT

474

520

175

120

156

147

289

411

NPA LEVEL

320

368

379

601

457

604

478

581

SLIPPAGE

118

251

234

268

276

337

CASH REC.

40

62

38.33

13.01

40

18.98

121

200

UPGRADE

20

60

13.33

3.5O

16.65

5.52

26

47

IOB JEEVAN

224

432

385

543

600

HEALTH+

47

80

110

136

200**

** Number of Accounts.                                                * Cumulative Figures.

Source: Computed Balance sheet of Indian Bank

Inspection Report Rating:

Inspection Report dated

Business Growth

Profitability

Credit Mgt.

NPA Mgt.

House keeping

Branch Image

Overall Rating

25.08.2003

B

B

C

C

B

B

B

12.02.2005

A

A

C

B

B

B

B

29.08.2006

B

A

B

A

B

A

A

Source: computed balance sheet.

STRATEGIC ISSUES IN BANKING SERVICES

Strategic Planning is the process of analyzing the organizational external and internal environments; developing the appropriate mission, vision, and overall goals; identifying the general strategies to be pursued; and allocated resources.

• Mission is an organization’s current purpose or reason for existing.

• Vision is an organization’s fundamental aspirations and purpose that usually appeals to its member’s hearts and minds.

• Goals are what an organization is committed to achieving.

• Strategies are the major courses of action that an organization takes to achieves goals.

• Resource Allocation is the earmarking of money, through budgets, for various purposes.

• Downsizing Strategy signals an organization’s intent to rely on fewer resources primarily human-to accomplish its goals.

Tactical Planning is the process of making detailed decisions about what to do, which will do it, and how to do it-with a normal time and horizon of one year or less. The process generally includes:

• Choosing specific goals and the means of implementing the organization’s strategic plan,

• Deciding on courses of action for improving current operations, and

• Developing budgets for each department, division and project.

TOTAL QUALITY MANAGEMENT

While Total Quality Management has proven to be an effective process for improving organizational functioning, its value can only be assured through a comprehensive and well thought out implementation process. TQM is, in fact, a large scale systems change, and guiding principles and considerations regarding this scale of change will be presented. Without attention to contextual factors, well intended changes may not be adequately designed. As another aspect of context, the expectations and perceptions of employees will be assessed, so that the implementation plan can address them. Specifically, sources of resistance to change and ways of dealing with them will be discussed. This is important to allow a change agent to anticipate resistances and design for them, so that the process does not bog down or stall. Next, a model of implementation will be presented, including a discussion of key principles. Visionary leadership will be offered as an overriding perspective for someone instituting TQM. In recent years the literature on change management and leadership has grown steadily, and applications based on research findings will be more likely to succeed. Use of tested principles will also enable the change agent to avoid reinventing the proverbial wheel. Implementation principles will be followed by a review of steps in managing the transition to the new system and ways of helping institutionalize the process as part of the organization’s culture. Finally, some miscellaneous do’s and don’ts will be offered.

Planned change processes often work, if conceptualized and implemented properly; but, unfortunately, every organization is different, and the processes are often adopted “off the shelf” “the ‘appliance model of organizational change’: buy a complete program, like a ‘quality circle package,’ from a dealer, plug it in, and hope that it runs by itself” (Kanter, 1983, 249). Alternatively, especially in the underfunded public and not for profit sectors, partial applications are tried, and in spite of management and employee commitment do not bear fruit. This chapter will focus on ways of preventing some of these disappointments. In summary, the purpose here is to review principles of effective planned change implementation and suggest specific TQM applications. Several assumptions are proposed:

1. TQM is a viable and effective planned change method, when properly installed

2. Not all organizations are appropriate or ready for TQM

3. Preconditions (appropriateness, readiness) for successful TQM can sometimes be created

4. Leadership commitment to a large scale, long term, and cultural change is necessary.

While problems in adapting TQM in government and social service organizations have been identified, TQM can be useful in such organizations if properly modified.

For survival, banks have to make efforts to improve their quality and competitiveness by planning and taking innovative in fall areas:

·     Increase emphasis on customer focused activities

·     Intro a “total quality” program

·     Developing differential value added services

·     Educating employees through involvement programs

·     Increase quality through management and system

·     Increase effectiveness of product development

·     Developing product with lower uses costs

TQM principles

·     Customer satisfaction

·     Plan-do-check-act (PDCA) cycle

·     Management by ‘fact’ – 5Ws (what, why, who, when, and where) + 1H(how) approach

·     Respect for people

TQM elements

·   Total employee involvement (TEI)

·   Total waste elimination (TWE)

·   Total quality control (TQC)

TQM focus areas

·   Customer satisfaction

·   Product quality

·   Plant reliability

·   Waste elimination

Benefits achieved through TQM

·     Increased focus on the customer

·     Mindset of ‘continuous improvement’

·     Better product quality

·     Better systems and procedures

·     Better cross-functional teamwork

·     Increased plant reliability

·     Waste elimination in offices and factories.

KNOWLEDGE MANAGEMENT

                According to Peter Drucker and Daniel Bell, the management Gurus knowledge is the only meaningful economic resource. Knowledge management can be defined as a systematic and integrative process of coordinating organization-wide activities of acquiring, creating, storing, sharing, diffusing, developing and deploying knowledge by individual and groups in the pursuit of major organizational goals. It also involves the creation of an interacting learning environment where organization members transfer and share what they know; and apply knowledge to solve problems, innovate and create new knowledge.

                Knowledge management is as much about people and culture as it is about technology. Knowledge management thrives only when the human communication network operates freely across the shortest path between the knowledge providers and knowledge seekers. There must be a culture that promotes and rewards the pooling together of knowledge resources. Thus organizations must build a culture that motivates people to create, share and use knowledge.

                After the preoccupation with system and procedures to collect data ad translate it into information, its time for firms to focus on the next plane- knowledge. Knowledge management is not a buzzword. Every knowledge management solution, if currently implemented, has definite measurable business benefits.

          Future business success increasingly depends on the retention and the creative use of the knowledge ideas and experiences of an organization and its employees. And in knowledge economy corporations need for workers will be more than the workers need for employer.

INNOVATION IN BANK

          Innovation drives organizations to grow, prosper and transform in sync with the changes in the environment, both internal and external. Banking is no exception to this. In fact, this sector has witnessed radical transformation of late, based on many innovations in products, processes, services, systems, business models, technology, governance and regulation. A liberalized and globalize financial infrastructure has provided an additional impetus to this gigantic effort.

           The pervasive influence of information technology has revolutionaries banking. Transaction costs have crumbled and handling of astronomical number of transactions in no time has become a reality. Internationally, the number brick and mortar structure has been rapidly yielding ground to click and order electronic banking with a plethora of new products. Banking has become boundary less and virtual with a 24 * 7 model. Banks who strongly rely on the merits of relationship banking’ as a time tested way of targeting and serving clients, have readily embraced Customer Relationship Management (CRM), with sharp focus on customer centricity, facilitated by the availability of superior technology. CRM has, therefore, become the new mantra in customer service management, which is both relationship based and information intensive.

          Risk management is no longer a mere regulatory issue.basel-2 has accorded a primacy of place to this fascinating exercise by repositioning it as the core of banking. We now see the evolution of many novel deferral products like credit derivatives, especially the Credit Risk Transfer (CRT) mechanism, as a consequence. CRT, characterized by significant product innovation, is a very useful credit risk management tool that enhances liquidity and market efficiency. Securitization is yet another example in this regard, whose strategic use has been rapidly rising globally. So is outsourcing.

TECHNOLOGY IN BANKING

          Nobel Laureate Robert Solow had once remarked that computers are seen everywhere excepting in productivity statistics. More recent developments have shown how far this state of affairs has changed. Innovation in technology and worldwide revolution in information and communication technology (ICT) have emerged as dynamic sources of productivity growth. The relationship between IT and banking is fundamentally symbiotic. In the banking sector, IT can reduce costs, increase volumes, and facilitate customized products; similarly, IT requires banking and financial services

to facilitate its growth. As far as the banking system is concerned, the payment system is perhaps the most important mechanism through which such interactive dynamics gets manifested. Recognizing the importance of payments and settlement systems in the economy, we have embarked on technology based solutions for the improvement of the payment and settlement system infrastructure, coupled with the introduction of new payment products such as the computerized settlement of clearing transactions, use of Magnetic Ink Character Recognition (MICR) technology for cheque clearing which currently accounts for 65 per cent of the value of cheques processed in the country, the computerization of Government Accounts and Currency Chest transactions, operationalisation of Delivery versus Payment (DvP) for Government securities transactions. Two-way inter-city cheque collection and imaging have been operationalised at the four metros. The coverage of Electronic Clearing Service (Debit and Credit) has been significantly expanded to encourage non-paper based funds movement and develop the provision of a centralized facility for effecting payments. The scheme for Electronic Funds Transfer operated by the Reserve Bank has been significantly augmented and is now available across thirteen major cities. The scheme, which was originally intended for small value transactions, is processing high value (upto Rs.2 crore) from October 1, 2001. The Centralized Funds Management System (CFMS), which would enable banks to obtain consolidated account-wise and centre-wise positions of their balances with all 17 offices of the Deposits Accounts Departments of the Reserve Bank, has begun to be implemented in a phased manner from November 2001.

          A holistic approach has been adopted towards designing and development of a modern, robust, efficient, secure and integrated payment and settlement system taking into account certain aspects relating to potential risks, legal framework and the impact on the operational framework of monetary policy. The approach to the modernization of the

payment and settlement system in India has been three-pronged:                  (a) consolidation, (b) development, and (c) integration. The consolidation of the existing payment systems revolves around strengthening Computerized Cheque clearing, expanding the reach of Electronic Clearing Services and Electronic Funds Transfer by providing for systems with the latest levels of technology. The critical elements in the developmental strategy are the opening of new clearing houses, interconnection of clearing houses through the INFINET; optimizing the deployment of resources by banks through Real Time Gross Settlement System, Centralized Funds Management System (CFMS); Negotiated Dealing System (NDS) and the Structured Financial Messaging Solution (SFMS). While integration of the various payment products with the systems of individual banks is the thrust area, it requires a high degree of standardization within a bank and seamless interfaces across banks.

          The setting up of the apex-level National Payments Council in May 1999 and the operationalisation of the INFINET by the Institute for Development and Research in Banking Technology (IDRBT), Hyderabad have been some important developments in the direction of providing a communication network for the exclusive use of banks and financial institutions. Membership in the INFINET has been opened up to all banks in addition to those in the public sector. At the base of all inter-bank message transfers using the INFINET is the Structured Financial Messaging System (SFMS). It would serve as a secure communication carrier with templates for intra- and inter-bank messages in fixed message formats that will facilitate ‘straight through processing’. All inter-bank transactions would be stored and switched at the central hub at Hyderabad while intra bank messages will be switched and stored by the bank gateway. Security features of the SFMS would match international standards.

          In order to maximize the benefits of such efforts, banks have to take pro-active measures to:

·     further strengthen their infrastructure in respect of standardization, high levels

·     of security and communication and networking;

·     achieve inter-branch connectivity early;

·     popularize the usage of the scheme of electronic funds transfer (EFT); and

·     Institute arrangements for an RTGS environment online with a view to integrating into a secure and consolidated payment system.

Information technology has immense untapped potential in banking. Strengthening of information technology in banks could improve the effectiveness of asset-liability management in banks. Building up of a related data-base on a real time basis would enhance the forecasting of liquidity greatly even at the branch level. This could contribute to enhancing the risk management capabilities of banks.

REGULATIONS AND COMPLIANCE

          Progressive strengthening, deepening and refinement of the regulatory and supervisory system for the financial sector have been important elements of financial sector reforms. In the long run, it is the supervision and regulation function that is critical in safeguarding financial stability. There is also some evidence that proactive and effective supervision contributes to the efficiency of financial intermediation.  Financial sector supervision is expected to become increasingly risk-based and concerned with validating systems rather than setting them. This will entail procedures for sound internal evaluation of risk for banks. As mentioned earlier, bank managements will have to develop internal capital assessment processes in accordance with their risk profile and control environment. These internal processes would then be subjected to review and supervisory intervention if necessary. The emphasis will be on evaluating the quality of risk management and the adequacy of risk containment. In such an environment, credibility assigned by markets to risk disclosures will hold only if they are validated by supervisors. Thus effective and appropriate supervision is critical for the effectiveness of capital requirements and market discipline.

          In certain areas, as for instance, in the urban cooperative banking segment, the regulatory requirements leave considerable scope for regulatory arbitrage and even circumvention. The problem is rendered more complex by the existence of regulatory overlap between the Central Government, the State Governments and the Reserve Bank. Regulatory overlap has impeded the speed of regulatory response to emerging problems. The need for removing multiple regulatory jurisdictions over the cooperative banking sector has been reiterated on several occasions. In this regard, the Reserve Bank has proposed the setting up of an apex supervisory body for urban cooperative banks under the control of a high-level supervisory board consisting of representatives of the Central governments, the State governments, the Reserve Bank and experts. The apex body is expected to ensure compliance with prudential requirements and also supervise on-site inspections and off-site surveillance.

          Recent developments in certain segments of the financial sector have also brought to the fore issues relating to corporate governance in banks. As part of on-going reforms, boards have been given greater autonomy to prescribe internal control guidelines, risk management and procedures for market discipline and accountability. It is extremely important that greater vigilance over adherence to these norms goes hand-in-hand with greater autonomy. Recent evidence of transgression of prudential guidelines by a few banks has raised the issue of the audit and supervisory functions of boards. As we move towards a more deregulated financial regime, these functions have to be transferred from either the Government or the Reserve Bank to bank boards. This imposes a greater responsibility and accountability on the bank management. It is in this context that a consultative group of directors of select banks and other experts has been set up to recommend measures to strengthen the internal supervisory role of boards. The objective is to obtain a feedback on how boards function vis-à-vis compliance with prudential norms, transparency and disclosure, functioning of the audit committee, etc., and to devise effective mechanisms for ensuring management discipline.

          Several other initiatives in improving the supervisory function have been undertaken, including a prudential supervisory reporting system for financial institutions, improvements in procedures for financial inspection, sensitizing the general public for better regulation of the activities of NBFCs and enactment of appropriate legislation to protect depositor interests in some States. Major legal reforms have been initiated in areas

such as security laws, the Negotiable Instruments Act, bank frauds and the regulatory framework of banking. The Reserve Bank has also accepted the principle of transfer of ownership to the Government in respect of some financial institutions in view of the conflict of interest that may arise in the conduct of its supervisory function. It is expected that these initiatives will pave the way for an efficient, and risk-based supervisory environment in India.

          The largest set of consolidated regulations that mandate integrity of data in India are the IT Act and SEBI’s clause 49 for listed companies. These regulations do not currently enforce the kind of security standards that are common in Europe and the US. In a global economy, however, no company is an island and India Inc is adopting US and European compliance procedures and certifications such as Sarbanes Oxley, Safe Harbour, BS, and ISO.

          Compliance, regulatory or otherwise, does not directly concern the IT department. In manufacturing for instance, compliance controls don’t really involve system security, and a large part of the quality control required by authorities cannot be imposed or enforced using IT. Companies that deal with sensitive information, financial services and BPOs, banks, MNC subsidiaries or those with plans to expand beyond Indian shores are all affected. These will continue to make strides towards compliance. For the mediumscale segment (Rs 100-300 crore turnover), security and audits are not a priority. This segment is comfortable with public mail servers, and exchanging information over not very secure connections.

CORPORATE GOVERNANCE – CODE OF CONDUCT

1. Need and objective of the Code

          Clause 49 of the Listing agreement entered into with the Stock Exchanges, requires, as part of Corporate Governance the listed entities to lay down a Code of Conduct for Directors on the Board of an entity and its Senior Management. The term “Senior Management” shall mean personnel of the company who are members of its core management team excluding the Board of Directors. This would also include all members of management, one level below the Executive Directors including all functional heads.

2. Bank’s Belief System

          This Code of Conduct attempts to set forth the guiding principles on which the Bank shall operate and conduct its daily business with its multitudinous stakeholders, government and regulatory agencies, media and anyone else with whom it is connected. It recognizes that the Bank is a trustee and custodian of public money and in order to fulfill fiduciary obligations and responsibilities, it has to maintain and continue to enjoy the trust and confidence of public at large.

          The Bank acknowledges the need to uphold the integrity of every transaction it enters into and believes that honesty and integrity in its internal conduct would be judged by its external behavior. The bank shall be committed in all its actions to the interest of the countries in which it operates. The Bank is conscious of the reputation it carries amongst its customers and public at large and shall endeavor to do all it can to sustain and improve upon the same in its discharge of obligations. The Bank shall continue to initiate policies, which are customer centric and which promote financial prudence.

A. General Standards of conduct

          The Bank expects all Directors and members of the Core Management to exercise good judgment, to ensure the interests, safety and welfare of customers, employees and other stakeholders and to maintain a cooperative, efficient, positive, harmonious and productive work environment and business organization. The Directors and members of the Core Management while discharging duties of their office must act honestly and with due diligence. They are expected to act with that amount of utmost care and prudence, which an ordinary person is expected to take in his/ her own business. These standards need to be applied while working in the premises of the Bank, at offsite locations where business is being conducted whether in India or abroad, at Bank-sponsored business and social events, or at any other place where they act as representatives of the Bank.

B. Conflict of Interest

          A “conflict of interest” occurs when personal interest of any member of the Board of Directors and of the Core management interferes or appears to interfere in any way with the interests of the Bank. Every member of the Board of Directors and Core Management has a responsibility to the Bank, its stakeholders and to each other. Although this duty does not prevent them from engaging in personal transactions and investments, it does demand that they avoid situations where a conflict of interest might occur or appear to occur. They are expected to perform their duties in a way that they do not conflict with the Bank’s interest such as :

· Employment /Outside Employment – The members of the Core Management are expected to devote their total attention to the business interests of the Bank. They are prohibited from engaging in any activity that interferes with their performance or responsibilities to the Bank or otherwise is in conflict with or prejudicial to the Bank.

· Business Interests – If any member of the Board of Directors and Core Management considers investment in securities issued by the Bank’s customer, supplier or competitor, they should ensure that these investments do not compromise their responsibilities to the Bank. Many factors including the size and nature of the investment; their ability to influence the Bank’s decisions, their access to confidential information of the Bank, or of the other entity, and the nature of the relationship between the Bank and the customer, supplier or competitor should be considered in determining whether a conflict exists. Additionally, they should disclose to the Bank any interest that they have which may conflict with the business of the Bank.

C. Applicable Laws

      The Directors of the Bank and Core Management must comply with applicable laws,regulations, rules and regulatory orders. They should report any inadvertent non -compliance, if detected subsequently, to the concerned authorities.

D. Disclosure Standards

      The Bank shall make full, fair, accurate, timely and meaningful disclosures in the periodic reports required to be filed with Government and Regulatory agencies. The members of Core Management of the bank shall initiate all actions deemed necessary for proper dissemination of relevant information to the Board of Directors, Auditors and other Statutory Agencies, as may be required by applicable laws, rules and regulations.

E. Use of Bank’s Assets and Resources

      Each member of the Board of Directors and the Core Management has a duty to the Bank to advance its legitimate interests while dealing with the Bank’s assets and resources. Members of the Board of Directors and Core Management are prohibited from:

·   Using Corporate property, information or position for personal gain,

·   Soliciting, demanding, accepting or agreeing to accept anything of value from any person while dealing with the Bank’s assets and resources,

·  Acting on behalf of the Bank in any transaction in which they or any of their relative(s) have a significant direct or indirect interest.

F. Confidentiality and Fair Dealings

(i) Bank’s confidential Information

·   The Bank’s confidential information is a valuable asset. It includes all

trade related information, trade secrets, confidential and privileged information, customer information, employee related information, strategies, administration, research in connection with the Bank and commercial, legal, scientific, technical data that are either provided to or made available each member of the Board of Directors and the core Management by the Bank either in paper form or electronic media to facilitate their work or that they are able to know or obtain access by virtue of their position with the Bank. All confidential information must be used for Bank’s business purposes only.

·    This information includes the safeguarding, securing and proper disposal of confidential information in accordance with the Bank’s policy on maintaining and managing records. The obligation extends to confidential of third parties, which the Bank has rightfully received under non-disclosure agreements.

·   To further the Bank’s business, confidential information may have to be disclosed to potential business partners. Such disclosures should be made after considering its potential benefits and risks. Care should be taken to divulge the most sensitive information, only after the said potential business partner has signed a confidentiality agreement with the Bank.

·     Any publication or publicly made statement that might be perceived or construed as attributable to the Bank, made outside the scope of any appropriate authority in the Bank, should include a disclaimer that the publication or statement represents the views of the specific author and not the Bank.

(ii) Other Confidential Information

      The bank has many kinds of business relationships with many companies and individuals. Sometimes, they will volunteer confidential information about their products or business plans to induce the Bank to enter into a business relationship. At other times, the Bank may request that a third party provide confidential information to permit the Bank to evaluate a potential business relationship with the party. Therefore, special care must be taken by the Board of Directors and members of the Core Management to handle the confidential information of others responsibly. Such confidential information should be handled in accordance with the agreements with such third parties.

·   The Bank requires that every Director and the member of Core Management, General Managers should be fully compliant with the laws, statutes, rules and regulations that have the objective of preventing unlawful gains of any nature whatsoever.

·   Directors and members of Core Management shall not accept any offer, payment, promise to pay or authorization to pay any money, gift or anything of value from customers, suppliers, shareholders/ stakeholders etc that is perceived as intended, directly or indirectly, to influence any business decision, any act or failure to act, any commission of fraud or opportunity for the commission of any fraud.

4. Good Corporate Governance Practices

      Each member of the Board of Directors and Core Management of the Bank should adhere to the following so as to ensure compliance with good Corporate Governance practices.

(a) Dos

§ Attend Board meetings regularly and participate in the deliberations and discussions effectively.

§  Study the Board papers thoroughly and enquire about follow-up reports on definite time schedule.

§ Involve actively in the matter of formulation of general policies.

·     Be familiar with the broad objectives of the Bank and policies laid down by the Government and the various laws and legislations.

·     Ensure confidentiality of the Bank’s agenda papers, notes and minutes.

(b) Don’ts

·     Do not interfere in the day to day functioning of the Bank.

·     Do not reveal any information relating to any constituent of the Bank to anyone.

·     Do not display the logo / distinctive design of the Bank on their personal visiting cards / letter heads.

·     Do not sponsor any proposal relating to loans, investments, buildings or sites for Bank’s premises, enlistment or empanelment of contractors, architects, auditors, doctors, lawyers and other professionals etc.

·     Do not do anything, which will interfere with and/ or be subversive of maintenance of discipline, good conduct and integrity of the staff.

5. Waivers

·  Any waiver of any provision of this Code of Conduct for a

member of the Bank’s Board of Directors or a member of the Core Management must be approved in writing by the Board of Directors of the Bank.

The matters covered in this Code of Conduct are of the utmost importance to the bank, its stakeholders and its business partners, and are essential to the Bank’s ability to conduct its business in accordance with its value system.

ENTREPRENEURSHIP

      Entrepreneurship is the practice of starting new organizations, particularly new businesses generally in response to identified opportunities. Entrepreneurship is often a difficult undertaking, as a majority of new businesses fail. Entrepreneurial activities are substantially different depending on the type of organization that is being started. Entrepreneurship may involve creating many job opportunities.

      Many “high-profile” entrepreneurial ventures seek venture capital or angel funding in order to raise capital to build the business. Many kinds of organizations now exist to support would-be entrepreneurs, including specialized government agencies, business incubators, science parks, and some NGOs. Schumpeter (1950), an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation. Entrepreneurship forces “creative destruction” across markets and industries, simultaneously creating new products and business models and eliminating others. In this way, creative destruction is largely responsible for the dynamism of industries and long-run economic growth. Despite Schumpeter’s early 20th-century contributions, the traditional microeconomic theory of economics has had little room for entrepreneurs in their theories.

Characteristics of entrepreneurship:-

§   The entrepreneur, who has a vision and the enthusiasm for this vision, is the driving force of an entrepreneurship

§   The vision is usually supported by a set of ideas that have not been aware by the majority of the market/industry

§   The overall blueprint to realize the vision is clear, however details may be incomplete, flexible, and evolving

§    The entrepreneur promotes the vision with an influential passion

§   With a persistent and deterministic mindset, the entrepreneur devises a set of entrepreneurial strategies to thrive for the vision

PERFORMANCE AND BENCHMARKING

• PERFORMANCE MANAGEMENT:-

      Performance management is a systematic approach to improving worker productivity through a year-round, ongoing process of communicating and managing performance expectations. With Performance-based Management, performance improvement becomes the joint responsibility of employees and their managers. Generally there are two things which determine how successful a performance appraisal system is in place in an organization.

      1) The contents/design of the performance appraisal form and

      2) The manner in which Performance Appraisal is conducted.

      While organizations lay great emphasis on the contents/design part, spending much of time, money and energy on designing most suitable, objective, comprehensive formats, it serves no purpose if the appraising process is not conducted properly.

      Performance-based Management measures, evaluates and improves performance on the job. You can expect employee productivity to increase because performance assessments and performance feedback will always be job-related, even if the duties of a particular job expand or change. Furthermore, because this type of performance management focuses on productivity and not personality and since it involves ongoing, open, two-way communication between manager and employee, it greatly reduces many of the stereotypes, problems and anxieties associated with traditional labor-intensive

      A benchmark is a point of reference for a measurement. The term presumably originates from the practice of making dimensional height measurements of an object on a workbench using a graduated scale or similar tool, and using the surface of the workbench as the origin for the measurements.

      Benchmarks are designed to mimic a particular type of workload on a component or system. “Synthetic” benchmarks do this by specially-created programs that impose the workload on the component. “Application” benchmarks, instead, run actual real-world programs on the system. Whilst application benchmarks usually give a much better measure of real-world performance on a given system, synthetic benchmarks still have their use for testing out individual components, like a hard disk or networking device. Computer manufacturers have a long history of trying to set up their systems to give unrealistically high performance on benchmark tests that is not replicated in real usage. For instance, during the 1980s some compilers could detect a specific mathematical operation used in a well-known floating-point benchmark and replace the operation with a mathematically-equivalent operation that was much faster. However, such a transformation was rarely useful outside the benchmark. Manufacturers commonly report only those benchmarks (or aspects of benchmarks) that show their products in the best light. They also have been known to mis-represent the significance of benchmarks, again to show their products in the best possible light. Taken together, these practices are called bench-marketing.

       Users are recommended to take benchmarks, particularly those provided by manufacturers themselves, with ample quantities of salt. If performance is really critical, the only benchmark that matters is the actual workload that the system is to be used for. If that is not possible, benchmarks that resemble real workloads as closely as possible should be used, and even then used with skepticism. It is quite possible for system A to outperform system B when running program “furble” on workload X (the workload in the benchmark), and the order to be reversed with the same program on your own workload.

• BENCHMARKING:-

        Benchmarking (Comparing) is a selective method of finding out how and why some companies can perform tasks much better than other companies. There can be as much as a tenfold difference in the quality, speed and cost-performance of an average company versus a world-class company.

It involves the following seven steps

1) Determine functions to benchmark.

2) Identify the key performance variables to measure.

3) Identify the best-in-class companies.

4) Measure performance of best-in-class companies

5) Measures the company’s performance.

6) Specify programs and actions to close the gap

7) Implement and monitor results

      A company can identify “best practices” companies by asking employees, customers, suppliers and distributors what they rate as doing the best. Major Consulting Firms can also be contacted for this purpose. To keep costs under control, a company should focus primarily on benchmarking those critical tasks that deeply affect customer satisfaction and Cost Management and where substantially better performance is known to exist.

      Benchmarking is a process used in management and particularly strategic management, in which businesses use industry leaders as a model in developing their business practices. This involves determining where you need to improve, finding an organization that is exceptional in this area, then studying the company and applying it’s best practices in your firm. Benchmarking systematically studies the absolute best firms, then uses their best practices as