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Internal Marks : 30
UNIT-I
Nature, components and determinatnts of business environment; basic
nature of Indian economic system; relation size and growth of public and
private corporate sector, social responsibility of business; broad features of
India's now economic policy.
UNIT-II
Trend and pattern of industrial growth; review of industrial policy
developments; industrial licensing policy; liberalisation of the private sector;
trends and issues in corporate management; growth and problems of the
small scale sector; public sector reforms and privatisation the problem of
industrial sickness; MRTP Act, SICA and Industrial Disputes Act.
UNIT-III
Development banks for corporate Sector (IDBI, IFCI, ICICI) - trends pattern
and policy; regulation of stock exchanges and the role of SEBI; banking
sector reforms, challenges facing public sector banks; growth and changing
structure of non bank financial institutions; problem of non performing
assets in Indian Banks.
UNIT-IV
Trend and pattern of India's foreign trade and balance of payments; latest
EXIM policy-main features; policy towards foreign direct investment;
globalisation trends in Indian economy; role of MNC's; India's policy
commitments to multilateral insitiutions - IMF, World Bank and WTO.
NOTE : The question paper will be set by the external examiners. The external
examiner will set 8 questions in all, selecting not more than two questions
form each unit. If a case study in included in the question paper then it will
carry marks equivalent to two questions. The candidates will be requited to
attempt five questions in all, selecting atleast one question from each unit.
However, in question paper (s) where any deviation is required, special
instructions will be issued by the Chairman, PG Board of Studies in
Mangement.
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UNIT I
Q.
b) External Environment
External Environment
Internal Environment
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a)
Research
Development
Financial
Resources
Internal
Environment
Human
Resources
Objectives
of Business
b)
Technological
Capabilities
Work
Environment
Managerial
Policies
External Environment
Micro Environment
Macro Environment
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ii)
v)
vi)
Financial
Resources
Economic
Environment
Political
Environment
Macro
Environment
Human
Environment
Socio Cultural
Environment
Natural
Environment
Technological
Environment
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i)
ii)
b)
c)
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vi)
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ii.
Ownership
Private
Mixed
Public
Market
Mixed
Command
Market-Mixed
Mixed-Private
Market-Public
Command-Mixed
Market Economy :
In a market economy two societal units play important roles :
The Individual
The Company
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The key factor that makes the market economy work is consumer
sovereignty. Consumer sovereignty is the freedom of consumer to influence
production by exercising their power of choice regarding purchases.
Companies are free to make economic decision. The demand and supply
ensure proper allocation of resources.
Market Economy implies a degree of economic freedom from :
Command economy :
In a command economy the govt. co-ordinates the activities of the different
economic sector. Goals are set for every enterprise in the country. The govt.
determines how much is produced by whom and for whom.
In this economy the govt. is assured to be a better Jude of How resources
should be allocated than are business or consumed. As a result of the recent
changes few countries strict central planning today. Ex-North Korea, Russia.
Mixed Economy :
In actually, no economy is either purely market determined as completely
centrally planned. In practice, however what mixed economy generally have a
higher degree of govt. intervention and also a greater degree of govt.
intervention.
Countries in the mixed categories would be partly free mostly not free.
Examples of partly free are : Hungry, Israel, and Taiwan.
Examples of Mostly not free are : India, Mexico, and Brazil.
Mixed economies are characterized by different mixtures of market and central
planning control and public and private ownership of resources.
Q.
Ans:1990s public sector expenditure gave some stimulus to demand for the
production of large industry. The private corporate sector also soaked up cheap
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finance from State agencies, and enjoyed partial protection from imports of
finished goods. Despite this comfortable environment, the underlying paucity
of domestic demand reflecting the condition of the vast majority of people
restricted the rate of industrial growth in India. And the nature of demand (i.e.,
for what types of products) skewed the pattern of growth, away from items of
mass consumption such as cheap textiles, and toward elite consumption. This
skewed, import-dependent pattern of production restricted employment
creation by industry; and the sluggish growth of industrial employment in turn
restricted the market for mass consumption goods.
Thus when spells of rapid growth occurred, they were distorted and selflimiting. The high industrial growth rates of the 1980s were unleashed by the
relaxation of controls on industry, imports, and external borrowing. Given the
Indian elites insatiable desire for foreign goods, and the propensity of Indian
big business to operate as merchants rather than as industrialists, this
relaxation was accompanied by a surge of foreign collaborations; this resulted
in large imports and large trade deficits; this was in turn funded by foreign debt
(not coincidentally, international banks in this period were hunting for
borrowers). This culminated in the debt crisis of 1990-91. The further
liberalisation post-1991 unleashed another bout of growth in the mid-1990s
oriented toward elite demand; this petered out by the late 1990s, and was
followed by another bout of stagnation.
It is yet to be seen how long the present bout of growth can be sustained.
The proponents of the current policies argue that it is broad-based compared to
earlier such bouts, that Government finances are in better shape, and that
long-term trends in the international economy (in particular the growth of
outsourcing) imply that growth of services exports will continue indefinitely.
Let us assume there is some merit in these arguments. Regardless of whether
or not growth continues, however, the pattern of industrial development taking
place has some striking features which we need to note. These features help us
understand whether, either now or in the future, the present trends will
translate into the betterment of the people of India.
In fact the pattern of corporate sector growth, whether in industry or
services, not only fails to pull up the rest of the economy; the present pattern of
growth is based on exclusion, the fencing-off of the growth sectors from the
rest of the economy.
Q.
How is it being
Ans. Fifty year ago the business was considered very good for earning profit to
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its owner but now a days the situation is completely changed. Today the
businesss responsibility is not limited to its owner but it has assumed large
dimension. Business has to look to the interest of other parties like
shareholders, employees, competitors, consumers, suppliers, government,
community and world etc. The responsibility of business which includes the
satisfaction of these parties along with the owner is called the social
responsibility of business.
Social Responsibility of business towards various parties of the society :
Managers have a social responsibility towards various parties of the society. In
Indian corporates almost every firm fulfilling this responsibility towards
shareholders, competitors, employees, consumers, suppliers, government etc.
For example : LG company fulfill their responsibility towards various parties of
the society. LG company provide different variety of product to consumer at
low cost and also provide quality product to the customer. On the other hand
the company fulfill the responsibility towards employees. It provide incentives
to the employees as well as various facilities. The company pay tax to the
government at time and follow the rules and regulations of the government. So
we can say that the Indian Corporates fulfilling the social responsibility
towards various parties of the society.
The main responsibility of various parties in the society is explained are as
follows :
i)
ii)
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v)
vi)
Towards Self : A managers towards his own self may also considered.
They are the following :
a)
b)
c)
d)
viii) Towards World : A manager has also responsibility towards the world.
The following responsibility is explained as follow :a)
Q.
To do business honestly.
Ans. Meaning of New Economic Policy : Since July 1991, the government
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Liberalisation
Privatisation
Globalisation
Libearlisation
1.
Globalisation
2.
Privatisation
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ii)
3.
iv)
v)
Advantages of Privatisation :
1.
2.
3.
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4.
5.
6.
7.
8.
Demerits :1.
2.
3.
4.
5.
ix)
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UNIT II
Q.
Ans. Government of India announced its new industrial policy on July 24,
1991. The main aim of the policy is to be liberalise the Indian industrial
economy from administrative and legals controls. Its main aim is to increase
industrial efficiency to the international level.
Main features of New Industrial Policy : The main features of New Industrial
Policy is explained are as follows :1.
2.
3.
4.
5.
Foreign Capital : The limit of foreign capital investment has been raised
from 40% to 51% equity. Now a days a country encourage the foreign
capital. Now our government is welcoming foreign investment.
6.
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7.
8.
9.
10. Reservation for Small Scale Industries : Under new industrial policy
production of 239 items has been reserved for Small Scale Industries.
Large industries and medium enterpeises will not be allowed to go in for
their production.
11. New Definition of Micro, Small and Medium Enterprises : In new
definition both manufacturing and service enterprise are covered in
meaning of micro, small and medium enterprise. The investment limit
have been fixed. This is explained are as follow :a)
ii) Small Enterprise - above Rs. 25 Lakh and upto Rs. 5 Crore
iii) Medium Enterprise
b)
ii) Small Enterprise - above Rs. 10 Lakh and upto Rs. 2 Crore
iii) Medium Enterprise
c)
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Merit of New Industrial Policy : The main merit of new industrial policy is
explained are as follow :1.
2.
3.
4.
5.
6.
7.
Increase in Production.
Increase in Welfare of Workers.
Increase in Exports
Increase in Competitions.
Balance Regional Development.
Increase in efficiency of public sector.
Provide proper significance to Small Scale Industries.
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3.
4.
5.
2.
3.
4.
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2.
3.
4.
5.
Q.
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j)
k)
Q.
Ans.Sustainable development will steadily advance over the next 10 years, with
six major trends influencing industry world-wide, according to a new
Pricewaterhouse Coopers report, Corporate Responsibility: Strategy,
Management and Value. The challenge of creating strategies that meet
immediate needs without sacrificing the needs of future generations will be
driven by the growing influence of :
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Communication.
The global media may influence which issues
governments and industries focus on and accelerate the speed of changes
in policy and behaviour.
what
Ans. The main problems of small scale industries are related to finance and
credit.
Problem of finance : All kinds of business enterprises require sufficient funds
in order to meet their fixed as well as working capital requirements. Finance is
one of the critical inputs for growth and development of the micro,small and
medium enterprises. They need credit support not only for running the
enterprise and operational requirements but also for diversification,
modernization/upgradation of facilities, capacity expansion, etc.
Problem of credit : Inadequate access to credit is a major problem facing
micro, small and medium enterprises. Generally, such enterprises operate on
tight budgets, often financed through owners own contribution, loans from
friends and relatives and some bank credit. They are often unable to procure
adequate financial resources for the purchase of machinery, equipment and
raw materials as well as for meeting day-to-day expenses. This is because, on
account of their low goodwill and little fixed investment, they find it difficult to
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Financing
Promotion
Development
Co-ordination
SIDBIs major operations are in the areas of (i) refinance assistance (ii)
direct lending and (iii) development and support services.
Taking into account the fact that a majority of such enterprises which are
at the lower-end of the sector are outside the ambit of institutional finance.
Hence, concerted efforts have been made by SIDBI to promote micro finance
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across the country to enable the unemployed persons to set up their own
ventures. There are more than 100 Micro Finance Institutions (MFIs) developed
by SIDBI that are engaged in implementation of its micro finance programme.
SIDBI has disbursed about Rs.1700 crore (cumulative) under its programme,
benefiting around 50 lakh beneficiaries.
At the State level, State Financial Corporations (SFCs) along with the State
Industrial Development Corporations (SIDCs) are the main sources of longterm finance for the sector. State Financial Corporations, the state-level
institutions have played an important role in the development of small and
medium enterprises in their respective states with the main objectives of
financing and promoting these enterprises for achieving balanced regional
growth, catalyse investment, generate employment and widen the ownership
base of industry.
Credit Guarantee Cover Fund Scheme for Small Industries was launched
jointly by the Government of India and SIDBI (on a 4:1 contribution basis) in
August 2000, with a view to ensure greater flow of credit to the sector without
collateral security. It picked up during the last two years of the Tenth Plan and
till the end of March 2007, 68062 proposals were approved and guarantee
covers for Rs 1705 crore were issued. up during the last two years of the Tenth
Plan and till the end of March 2007, 68062 proposals were approved and
guarantee covers for Rs 1705 crore were issued.
Policy Package for Stepping up Credit to Small and Medium Enterprises
(SMEs), was launched with the objective of doubling the flow of credit to this
sector within a period of five years. The measures in the policy package, inter
alia, include banks to achieve a minimum 20% year-on-year growth in credit to
the MSME sector and cover on an average at least 5 new MSMEs at each of their
semi-urban/urban branches per year
Q.
Ans. Introduction : Since the early 1990s, privatisation, in its many guises,
has become a cornerstone of economic reform strategies across the world
Increasingly, however, serious flaws are perceived to be accompanying the
privatisation model, particularly when it comes to the delivery of services which
have traditionally been provided by the state such as water, electricity,
education and health. Social priorities have been found to conflict with those of
private enterprise. Answerable to shareholders, private firms are rarely
interested in delivery to those on low incomes who cannot afford to pay. Rather
than simply reducing the role of the ineffective state, privatisation has
increasingly placed additional and new demands on the public sector,
especially in the monitoring of, and remedying of, private-sector performance.
While empirical research often finds in favour of the private sector,
research methods are typically skewed against the public sector by, for
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example, using such indicators as profit levels to show that private firms
perform better than state-run alternatives. Furthermore there are a growing
number of cases of effective state-led service providers, demonstrating that
ownership is not the defining determinant of enterprise performance.
Growth of private sector in India
The phenomenal growth of private sector of India can be attributed to
political will, financial reforms, usage of more advanced technology, young and
large English speaking working class. The 7-8 % of annual GDP growth rate
India is the one of the highest growth rate in the world. The last 15 years
witnessed a phenomenal rise of the growth of private sector in India. The
opening up of Indian economy has led to free inflow of foreign direct investment
(FDI) along with modern cutting edge technology, which propelled Indias
economic growth.
Previously, the Indian market were ruled by the government enterprises
but the scene in Indian market changed as soon as the markets were opened for
investments. This saw the rise of the Indian private companies which
prioritized customers need and speedy service. This further fueled competition
amongst same industry players and even in government organizations.
Further, the government of India also divested some of its enterprises to ensure
smooth operation of these companies which was otherwise were loss making. It
also went further and forged joint venture private Indian companies, especially
in sectors like, telecommunication, petroleum, housing and infrastructure.
This inculcated healthy competition and benefited the end consumers, since
the cost of service or products come down substantially.
B grade private Indian companies are also offering lucrative and
competitively priced products or service, whose quality is at par with A grade
companies. Big players of Indian markets have been forced to lower their price
bands to remain alive in the competition. Further, these big private Indian
companies are offering mouth watering benefits in the form of gifts, rebates and
even holding lucky draws to stay ahead in the race of market supremacy. Gone
are the days when brand loyalty, accounted for big customer base. Today,
general Indian customers are trendy, flexible and are extremely flexible with
their choice. Steady growth of private sector has sent a sense of urgency and
insecurity amongst main market players. Defensive methods of protection of
Brands against competitors are becoming popular. Legal instruments like
patents, trademarks, industrial designs and copyrights filing has increased
many fold and so is counter claim and litigation. Further, Mergers and
Acquisitions, collaborations and licensing has become a popular amongst
private Indian companies.
The best thing that has happened to the overall Indian market with the
growth of private sector is that it has helped to shed bureaucracy and lengthy
official process and supplemented it by customer eccentric service, good work
ethics, professionalism and transparency of accounts.
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Some positive effect of the growth of private sector in India are as follows :
Q.
1.
1.
Born Sickness
2.
Achieved Sickness
Born Sickness: - Industrial units born sick are those which are destined
for disaster right from their conception due to various causes.
e.g Lack of experience of promoters, Lack of funds, Lack of good
location, Wrong plant layout.
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2.
Causes of Industrial Sickness : There are many causes for becoming sick
units. The main reasons of Industrial sickness is explained are as follows :
i)
ii)
iii)
iv)
v)
vi)
vii)
viii)
ix)
x)
Management Problems
Financial Problems
Labour Problems
Technological Factors
Personal Wasteful Expenditure
Faulty Demand Forecasting
Government Policy
Power Cuts
Shortage of Raw Material
Infrastructure Problems
Takeover by Management
Setting up of Industrial Investment Bank of India
Amalgamation with healthy units
Diversification
Research and Development
Soft Loans for Sick Units
Periodical Review
Avoid Excessive investment in Unproductive Capital Assets
Strick Penalties to persons responsible for sick units
Ans. MRTP Act stands for Monopolies and Restrictive Trade Practices Act,
1969. The MRTP Act has been replaced by the Competition Act 2002 on the
recommendations of the SVS Raghvan Committee. With the coming into effect
of the competition act 2002, the Monopolies and Restrictive Trade Practices
(MRTP) Act 1969 was repealed and the Monopolies and Restrictive Trade
Practices Commission was dissolved. The MRTP Act applies to the whole of
India except the state of Jammu and Kashmir.
Establishment of the Competition Commission : The Act provides for
the establishment of Competition Commission of India consisting of a
chairman and 2-10 members to be appointed by the Central Government and
having a term of five years. There is also the provision for the appointment of a
Director-General to assist the commission. The basic duties of the commission
as provided in the art are :132
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a)
b)
c)
Powers of the Commission : The commission has following powers which are
explained as follows :
a)
b)
c)
d)
e)
f)
SICA :
SICA 1985 was a special legislation enacted in public interest with the
twin objects of securing the timely detection of sick and potentially sick
companies and speedy determination and enforcement of remedial measures.
But some companies perceived SICA as an official exit route, thereby resulting
into losses to creditors and increased NPAs in the banking sector SICA, 1985,
was repealed by sick industrial companies (special provisions) Repeal Act,
2003. Many processions of SICA have been incorporated in chapter VIA
(Section 424A-424L) is a considerably diluted form. The article below is a
section wise Comparison between old provisions of SICA, 1985 and new
provisions in Companies Act, 1956 with explanatory remarks on it, which
indicates that the new Act has made an attempt to remove the bottlenecks and
curb the practice of turning an operationally fit company into a sick unit.
The objectives of this Act (SICA) as incorporated in its preamble, emphasises
the following points :
The SICA had been enacted in the public interest to deal with the
problems of industrial sickness with regard to the crucial sectors
where public money is locked up.
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Legal
b) Financial restructuring
Q.
(c) Managerial
2.
3.
4.
3. Gherao
2. Lockouts
Forms of Industrial
Disputes
Strikes
Lockouts
Gheroa
1.
2.
3.
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3. Institutional Causes
4. Political Causes
5. Recognition
6. Social Causes
1.
2.
3.
4.
5.
6.
Social Causes : Social cause is also cause which affect the industry or
firm. It is very important cause which is create the problem for firm.
Employment
Related
Issues
Causes of Industrial
Disputes
Administration
Causes
Political
Causes
Recognition
Institutional
Causes
Social
Causes
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UNIT III
Q.
What are the major source of finance for industrial sector in India?
Are those adequate.
Ans. Following are the main financial institutions which provide finance for
industrial sector in India.
A)
B)
C)
IFCI
A)
ICICI
IDBI
ii)
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iii)
iv)
v)
vi)
Criticism :
1.
2.
3.
4.
5.
B)
Functions of ICICI :
1.
2.
3.
4.
5.
6.
7.
8.
C)
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e)
f)
g)
Criticism :
1.
2.
3.
Conclusion :
In conclusion we can say that these institution provide finance for
Industrial Sector. These institution are not adequate for industrial sector.
These institution performing a significant role in promoting industrial
development, but these institution is not adequate. So for the development of
the industrial sectors new corporations are opened for promoting industrial
sectors
Q.
Why are stock exchanges essential ? What steps have been taken to
regulate stock exchange in India? Also explain the main reasons of
fluctuations in the Stock Market in India ?
2.
3.
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5.
6.
7.
8.
Guide the investors : The stock market guides the investors in choosing
securities by supplying the daily quotation of the listed dealings on the
stock exchange.
2.
3.
4.
Exchange Rate : Exchange rate is that rate at which one unit of currency
of a country can be exchanged for the number of units of current of
another country. It is also affected stock exchange.
5.
6.
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iii)
Registration of brokers.
If any stock exchange intends to renew its recognition it must once again
make an application to the control government in the aforesaid manner three
months before the expiry of the period of recognition.
The Central Government may withdraw the recognition granted to any
stock exchange at any time if it opines that the recognition granted is against
the interest of trade or public interest.
2.
At least 60% of each class of securities issued must be offered to the public
for the subscription and the minimum issued capital should be Rs. 3
crores.
2.
The minimum public offer for subscription must be at least 25% of each
issue and it must be offered through advertisement in newspapers at least
for a period of 2 days.
3.
A company having more than Rs. 5 crore paid up capital must list its
securities or more than the one stock exchange.
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4.
5.
A certificate to the effect that shares from promoters quota are not sold or
anferred for a period of 3 years must be submitted.
6.
The company must pay interest one the excess application money received
at the rates ranging between 4% and 15% depending on the delay beyond
10 weeks from the date of closure of the subscription list.
3.
Ans. Introduction : The Securities and Exchange Board of India was set up on
April 12, 1988. The primary objective of the SEBI is to promote healthy and
orderly growth of the securities market and secure investor protection. For this
purpose SEBI monitors the activities is not only stock exchange but also
merchant bankers. The SEBI Act provides for the establishment of a Statutory
Board consisting of six members. The chairman and two members are to be
appointed by the Central Government, one member to be appointed by the
Reserve Bank and two members having experience of securities market to be
appointed by the Central Government.
SEBI has divided its activities into four Operational departments namely
Issue Management and Intermediaries Departments, Primary Market
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Regulatory Function
b)
Development Function
Function
of SEBI
Regulatory
Function
a)
Development
Function
Regulatory Function :
i)
ii)
iii)
iv)
v)
Registration and regulation of stock brokers, sub-broker, merchant
bankers, underwriters, portfolio managers etc.
b)
Development Function :
i)
ii)
iii)
iv)
Training of intermediaries.
v)
Powers of the SEBI : The SEBI has following powers which explained are as
follows :1.
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2.
3.
4.
5.
6.
7.
Q.
Central Bank
or RBI
Commercial
Bank
Cooperative
Bank
Urban
Bank
Public Sector
Bank
State Bank
of India
Private Sector
Bank
Nationalised
Bank
Development
Bank
Rural
Bank
Foreign
Bank
Regional
Rural Bank
The banking sector is very important sector of the country. Through the
banking sectors a country can develop their economy.
The banking sectors provide loans to industries for the development of the
country.
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Challenges facing the Indian Banking Sector :- The Indian Banks are facing
certain problems which explained are as follows :1.
2.
3.
4.
5.
6.
7.
8.
9.
2.
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3.
4.
5.
6.
7.
8.
9.
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The working and operations of NBFCs are regulated by the Reserve Bank
of India (RBI) within the framework of the Reserve Bank of India Act, 1934
(Chapter III B) and the directions issued by it under the Act. As per the RBI Act,
a non-banking financial company is defined as:- (i) a financial institution
which is a company; (ii) a non banking institution which is a company and
which has as its principal business the receiving of deposits, under any scheme
or arrangement or in any other manner, or lending in any manner; (iii) such
other non-banking institution or class of such institutions, as the bank may,
with the previous approval of the Central Government and by notification in the
Official Gazette, specify.
Under the Act, it is mandatory for a NBFC to get itself registered with the
RBI as a deposit taking company. This registration authorises it to conduct its
business as an NBFC. For the registration with the RBI, a company
incorporated under the Companies Act, 1956 and desirous of commencing
business of non-banking financial institution, should have a minimum net
owned fund (NOF) of Rs 25 lakh (raised to Rs 200 lakh w.e.f April 21, 1999). The
term NOF means, owned funds (paid-up capital and free reserves,minus
accumulated losses, deferred revenue expenditure and other intangible assets)
less, (i) investments in shares of subsidiaries/companies in the same group/
all other NBFCs; and (ii) the book value of debentures/bonds/ outstanding
loans and advances, including hire-purchase and lease finance made to, and
deposits with, subsidiaries/ companies in the same group, in excess of 10% of
the owned funds.
The registration process involves submission of an application by the
company in the prescribed format along with the necessary documents for
RBIs consideration. If the bank is satisfied that the conditions enumerated in
the RBI Act, 1934 are fulfilled, it issues a Certificate of Registration to the
company. Only those NBFCs holding a valid Certificate of Registration can
accept/hold public deposits. The NBFCs accepting public deposits should
comply with the Non-Banking Financial Companies Acceptance of Public
Deposits ( Reserve Bank) Directions, 1998, as issued by the bank. Some of
the important regulations relating to acceptance of deposits by the NBFCs are:
They cannot offer interest rates higher than the ceiling rate prescribed by
RBI from time to time.
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Q.
2.
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documents and apply for loans and advances for fictitious purposes, they
also succeed in getting the loan in the name of a fictitious firm.
3.
4.
5.
Natural causes and calamities : Natural causes and calamities are also
responsible for the emergence of NPAs. For example a factor owner has
taken a loan for the improvement in functioning of the factory but during a
workers strike the factory has been demolished by the striking workers.
So this amount become NPA.
6.
7.
8.
1.
2.
3.
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borrowing customer before giving any loan to him so that there may not be
any difficulty in the recovery of loan. If any person looks to be doubtful,
full enquiry may be done.
4.
Less Political Pressure : The ruling party should not interfere in the
working of the banks. These measure is very important for the NPA.
5.
6.
7.
Drastic Measures : The drastic measures include filing suits in the civil
courts, filing suits in the recovery tribunals etc. If all other methods fail to
yield results the bank file the case for recovering their dues.
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UNIT IV
Q.
2.
3.
4.
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than
B)
C)
2.
3.
4.
Import of War Equipment : During the World War India import the large
amount of war equipment. These imports also caused disequilibrium in
the balance of payment.
5.
6.
7.
8.
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9.
10. More demand on Consumption Goods : In the post war period, demand
not only of foreign goods but also of Indian goods went up. Because of
increase in the population their demand within the country has gone up.
So export of these goods has gone down very much.
Suggestion to correct disequilibrium in the balance of payment : The
main factor of disequlibrium in balance of trade is the excess of imports over
exports. Following specific measures are suggested to correct disequilibrium
in the balance of payment.
1.
2.
3.
4.
5.
6.
7.
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9.
Q.
Ans. The New Exim policy was announced on August 31, 2004. This policy is
names as Foreign Trade policy 2004-09. The main objective of the policy is to
double our percentage share in world trade within the next five years. This
policy is designed to use foreign trade as an instrument for promoting economic
growth. This policy has launched new export promotion scheme and has given
emphasis on exports of agricultural sector, handicrafts, gens and jewellery,
handloom service sector, leather etc. In this policy various incentives have
been announced for promotion of exports.
Main Features of New EXIM Policy : Main features of New Exim Policy are
explained as follows :1.
2.
A new scheme called Vishesh Krishi Upaj and Gram Udyog Yojana
has been announced to boost exports of fruits, vegetables, flowers
etc.
To promote export of Medicinal plants and herbal products.
Import of capital goods for agricultural sector will be duty free.
Agri-export Zones set up in the early EXIM Policy.
Various
concessions and incentives are provided to these Agri-export Zones.
These zones help to promote export of agriculture products.
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c)
d)
3.
4.
b)
c)
d)
5.
1. 20% to 24%
5% of Exports
2. 25% to 99%
10% of Exports
15% of Exports
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started a new scheme named free trade and warehousing zones. This
scheme is aimed at making India a global trading centre. In this scheme
100% foreign direct investment is allowed, for setting these warehousing
zones. In these zones there is freedom to carryout import and export
transactions. Under this scheme an Indian Trader can buy and sell goods
anywhere in the world. By establishing these zones the image of India will
improve at international level. It will give a boost to Indias foreign trade.
6.
7.
8.
Procedural Simplification :
a)
b)
c)
d)
9.
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b)
c)
d)
Q.
Ans Meaning of FDI : FDI stands for Foreign Direct Investment. Foreign
Direct Investment is made by foreign companies. It established wholly owned
companies in another country. It manage them or to purchase shares of
companies in another country for the purpose of managing such companies.
In foreign direct investment the foreign investor who takes risk. It is solely
responsible for profit/loss of the company. The main feature of foreign direct
investment is that native companies are managed by the foreign companies. It
includes foreign collaboration. It may be of following types :
a)
b)
c)
Establishing Wholly
Owned Companies
Acquistion by
Purchasing Shares
Foreign
Collaborations
Availability of Capital.
Availability of Foreign Exchange.
Availability of Risk Capital.
Helpful in Export Promotion.
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v)
vi)
vii)
viii)
Increase in Employment.
Reduction in Inflation.
Availability of Foreign Technology.
Exploitation of Natural Resources.
Ans. Globalisation is the new buzzword that has come to dominate the world
since the nineties of the last century with the end of the cold war and the breakup of the former Soviet Union and the global trend towards the rolling ball. The
frontiers of the state with increased reliance on the market economy and
renewed faith in the private capital and resources, a process of structural
adjustment spurred by the studies and influences of the World Bank and other
International organisations have started in many of the developing countries.
Also Globalisation has brought in new opportunities to developing countries.
Greater access to developed country markets and technology transfer hold out
promise improved productivity and higher living standard. But globalisation
has also thrown up new challenges like growing inequality across and within
nations, volatility in financial market and environmental deteriorations.
Another negative aspect of globalisation is that a great majority of developing
countries remain removed from the process. Till the nineties the process of
globalisation of the Indian economy was constrained by the barriers to trade
and investment liberalisation of trade, investment and financial flows initiated
in the nineties has progressively lowered the barriers to competition and
hastened the pace of globalisation
Definition :
Globalised World - What does it mean?
Does it mean the fast movement of people which results in greater interaction?
Does it mean that because of IT revolution people can be in touch with each
other in any part of the world?
Does it mean trade and economy of each country is open in Non-Intrusive way
so that all varieties are available to consumer of his choice?
Does it mean that mankind has achieved emancipation to a level of where we
can say it means a social, economic and political globalisation?
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This is major improvement given that India is growth rate in the 1970s
was very low at 3% and GDP growth in countries like Brazil, Indonesia, Korea,
and Mexico was more than twice that of India. Though Indias average annual
growth rate almost doubled in the eighties to 5.9% it was still lower than the
growth rate in China, Korea and Indonesia. The pick up in GDP growth has
helped improve Indias global position. Consequently Indias position in the
global economy has improved from the 8 position in 1991 to 4 place in 2001.
When GDP is calculated on a purchasing power parity basis.
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th
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or less on all manufactured goods will be eliminated by 2005 and higher than
5% will be lowered to 8%. Starting 2010 the 8% tariffs will be lowered each year
until they are eliminated by 2015.
GDP Growth rate :
The Indian economy is passing through a difficult phase caused by several
unfavourable domestic and external developments; Domestic output and
Demand conditions were adversely affected by poor performance in agriculture
in the past two years. The global economy experienced an overall deceleration
and recorded an output growth of 2.4% during the past year growth in real GDP
in 2001-02 was 5.4% as per the Economic Survey in 2000-01. The performance
in the first quarter of the financial year is5.8% and second quarter is 6.1%.
Export and Import :
Indias Export and Import in the year 2001-02 was to the extent of 32,572
and 38,362 million respectively. Many Indian companies have started
becoming respectable players in the International scene. Agriculture exports
account for about 13 to 18% of total annual of annual export of the country. In
2000-01 Agricultural products valued at more than US $ 6million were
exported from the country 23% of which was contributed by the marine
products alone. Marine products in recent years have emerged as the single
largest contributor to the total agricultural export from the country accounting
for over one fifth of the total agricultural exports. Cereals (mostly basmati rice
and non-basmati rice), oil seeds, tea and coffee are the other prominent
products each of which accounts fro nearly 5 to 10% of the countries total
agricultural exports.
Where does Indian stand in terms of Global Integration?
India clearly lags in globalisation. Number of countries have a clear lead
among them China, large part of east and far east Asia and eastern Europe.
Lets look at a few indicators how much we lag.
Over the past decade FDI flows into India have averaged around 0.5% of
GDP against 5% for China 5.5% for Brazil. Whereas FDI inflows into China
now exceeds US $ 50 billion annually. It is only US $ 4billion in the case of
India
It is interesting to note the remark made last year by Mr. Bimal Jalan,
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Governor of RBI. Despite all the talk, we are now where ever close being
globalised in terms of any commonly used indicator of globalisation. In
fact we are one of the least globalised among the major countries - however
we look at it.
As Amartya Sen and many other have pointed out that India, as a
geographical, politico-cultural entity has been interacting with the
outside world throughout history and still continues to do so. It has to
adapt, assimilate and contribute. This goes without saying even as we
move into what is called a globalised world which is distinguished from
previous eras from by faster travel and communication, greater trade
linkages, denting of political and economic sovereignty and greater
acceptance of democracy as a way of life.
Consequences :
The implications of globalisation for a national economy are many.
Globalisation has intensified interdependence and competition between
economies in the world market. This is reflected in Interdependence in regard
to trading in goods and services and in movement of capital. As a result
domestic economic developments are not determined entirely by domestic
policies and market conditions. Rather, they are influenced by both domestic
and international policies and economic conditions. It is thus clear that a
globalising economy, while formulating and evaluating its domestic policy
cannot afford to ignore the possible actions and reactions of policies and
developments in the rest of the world. This constrained the policy option
available to the government which implies loss of policy autonomy to some
extent, in decision-making at the national level.
Q.
Indian Small Scale Sector can not survive the competition from
Large Scale Sector MNCs. Comment in the light of evidences
available in this content.
Ans. Indian small scale sector can not survive the competition from large scale
sector MNCs. This statement is correct. Because the small scale sector does
not have sufficient resource to survive the competition from large scale sector
MNCs. Before explaining the statement we discuss the meaning of small scale
enterprise and multinational company.
Small Scale Industry : Small scale industry has been defined as a unit
having investment upto Rs. 5 crore in plant and machinery. The government
made special provisions for promotion of small scale industries. Production of
239 items has been reserved for small scale industries. Large industries and
medium enterprises will not be allowed to go in for their production.
Multinational Corporations : Multinational corporation is that
corporation whose sphere of activity is spread over more than one country.
These corporations are known as several names e.g. Transnational
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2.
3.
Financial Superiority : The size of MNCs is very big and it hold a large
amount of financial resources. MNCs have capacity to start any type of
business which require a large amount of capital.
Domestic
enterprenures cannot start such ventures because of lack of capital. Due
to international image the MNCs raise financial resources from domestic
and foreign capital markets.
4.
5.
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Availability of Capital.
Availability of Latest Technology.
Increase the Exports.
Increase the Knowledge.
Availability of Marketing Services.
Increase the Competition.
Increase in Employment.
Availability of Foreign Exchange.
2. Ordinary Member
1.
2.
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1.
2.
Successes of IMF :
1.
2.
3.
4.
5.
6.
7.
8.
9.
Failure of IMF :
1.
2.
3.
4.
5.
6.
7.
Q.
Ans. World Bank was founded on 1945. World Bank is also known as
International Bank for Reconstruction and Development. The main purpose of
the World Bank was the reconstruction of war-ravaged economics and
provision of necessary funds for the economic development of all developed and
underdeveloped countries.
Every member country of World Bank will
automatically become the member of the IMF. In the year 2005-06, 184
countries wee members of the World Bank. If a country member fail to
observes the rules of the World Bank, its membership can be terminated. Each
member country had to pay 20 percent of its quota at the time of membership.
Of it 18% was to be paid in own currency and remaining 2% was to be paid in
Gold. The balance of 80 percent of the capital subscription can be called by the
Bank as and when required.
Management of the World Bank : Management of the World Bank includes in
the following four boards/committee :
i)
ii)
Board of Governors.
Board of Executives.
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iii)
iv)
Advisory Council.
Loan Committee.
Board of
Governors
Advisory
Council
Management of
the World Bank
Board of
Executives
Loan
Committee
2.
3.
4.
Ans. World Trade Organisation was established on 1st January, 1995. It took
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over GATT. World Trade Oganisation was formed to promote free trade among its
member nations. The main objective is to promote trade among many nations in
goods and services by removing tariff and non tariff barriers. Tariff barriers
means import duties and non tariff barriers means import quotas, import
licensing etc. WTO is an International Trade Organisation which have set of
rules and principles. It includes trade in goods, trade of services, protection of
intellectual property rights, foreign investment etc.
Features of WTO : The main features of the WTO is explained as follows :
1.
2.
3.
4.
5.
6.
7.
8.
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JAN 2009
UNITI
1.
2.
UNITII
3.
4.
UNITIII
5.
Define Non Performing asset. Also discuss the steps taken by the commercial
banks in India to manage the NPAs.
UNITIV
6.
7.
UNITI
1.
2.
3.
4.
5.
UNITII
UNITIII
ICICI
UNITIV
6.
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7.
Define foreign direct ivestment. What steps should be taken to promote direct
foreign investment in India.
JAN 2008
UNITI
1.
2.
3.
4.
UNITII
UNITIII
5.
6.
What are the major challenges facing public sector banks? How these
challenges can be met.
Explain non-performing assets. Explain the reasons and remedies to tackle
this problem.
UNITIV
7.
8.
UNITI
1.
2.
What is the basic nature of indian economy? What changes have been
introduced by new economic policy?
Trace the growth of public section in India. What is the relationship between
sector and private sector in Indian economy?
UNITII
3.
4.
UNITIII
5.
6.
Discuss the major financial reforms with regard to the Indian industrial
sector. Are these reforms adequate?
Define non-performing assets. Give reasons for these assets in India. Suggest
remedial measures.
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UNITIV
7.
8.
UNITI
1.
2.
UNITII
3.
4.
UNITIII
5.
6.
Discuss the role of development banks for corporate sector in the new
economic policy regime.
Explain the challenges faced by the public sector banks in India. Also specify
the steps taken by them in this connection.
UNITIV
7.
8.
1.
2.
Bring out the salient features of the latest Exim policy of India.
Free trade is better or fair trade. Elaborate your answer.
JAN 2004
UNITI
What are the main components of business environment? Account for the
inherent dynamism of business environment.
What do you mean by social responsibility of business: Why should business
organisation be socially responsible?
UNITII
3.
4.
Explain the ways in which private corporate sector has been liberalised under
the new economic policy. Has liberalisation accelerated industrialisation
process in the country?
Explain the major public sector reforms that have been undertaken since
1991. Have these reforms improved the performance of public sector
enterprises?
UNITIII
5.
What is the function of development bank? Explain the leading policies and
Criteria of the IDBI.
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6.
Give an overview of banking sector reforms in india. How have these reforms
affected the performance of public sector bank?
7.
UNITIV
8.
JULY 2004
UNITI
1.
2.
UNITII
3.
4.
Are you in favour of liberalising Indian economy? If so, what role should be
played by Industrial licensing policy in this regard?
Which are the major steps taken to reform Indian economy? Are they
sufficient?
UNITIII
5.
6.
7.
Which are the main multilateral world institutions? What is the attitude of
India towards these institutions?
Write notes on the following.
(a) World Bank
(b) SEBI
UNITIV
8.
JAN 2003
UNITI
1.
2.
3.
4.
UNITII
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UNITIII
5.
What are the major sources of finance for industrial sector in India? Are those
adequate?
6.
Explain the main reasons of fluctuations in the stock market in India. What
steps have been taken to regulate stock market in India.
UNITIV
7.
8.
Discuss the position of Indias foreign trade. What measures are needed to
improve it?
Write short notes on
(a) Foreign direct investment
(b) WTO
JULY 2003
UNITI
1.
2.
UNITII
3.
4.
UNITIII
5.
6.
What are the objectives of development banks? Have they fullfilled their
objectives?
Is SEBI an effective control system to regulate the functioning of the capital
market?
UNITIV
7.
8.
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WORKSHEET
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WORKSHEET
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WORKSHEET
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