Boston Tea Party Essay -- essays research papers

The Boston teatimetime PartyMost people have heard about the Boston Tea Party. When Americans dumped British Tea in Boston Harbor. But not everyone understands the importance of it, and why the Tea Party is still remembered today. It was on celestial latitude 16, 1773, when American patriots disguised as Mohawk Indians threw 342 chests of tea belonging to the British East India Company from ships into Boston Harbor. The Americans were protesting both a taxation on tea (the Townshend Acts) and the perceived monopoly of the East India Company (also the called English East India Company) (Britannica p.1).The Townshend Acts were a series of four acts passed by the British Parliament in an attempt to assert what it considered to be its historic right of colonial authority through suspension of a recalcitrant representative assembly and through strict collection provisions of spare revenue duties. The British-American colonists named the acts after Charles Townshend, who sponsored them. The Suspending Act prohibited the New York Assembly from conducting any further business until it complied with the financial requirements of the Quartering Act (1765) for the expenses of British troops stationed in that respect (Britannica p.1). The second act, often called the Townshend duties, and imposed direct revenue duties payable at colonial ports, on lead, glass, paper, paint, and tea. It was the second time in the history of the colonies that a tax had been levied solely f...

Life :: essays research papers

The methods, discoveries, and conclusions of science, as well as their role in society, have generated endless debates throughout history. There was a m when one could be put to death for believing that the earth was round, or ridicu lead for claiming that animal species evolve over time. Today people argue over whether it is honest and responsible science to transplant organs, to allow a suffering person to die, or to genetically alter foods so that they possess special traits. One peculiar(a) ferocious debate that emerged from the discoveries of modern day science is the debate over the rights of animals. They are used to test the safety and effectiveness of new drugs before those drugs are given to people to treat illnesses and disease. Animals are used to ensure that the ingredients in the foods we eat are safe for consumer consumption. They are also used to test products the like eye shadow, lipstick, shampoo, and contact lens solution, as well as chemicals ranging from la wn fertilizers to caffeine. There should be a balance in the use of animals for scientific advancements. Although we as a society should never accept needless or cruel inflictions of pain, the potential good to all of humanity that can come from using animals for scientific studies outweighs the reproach and suffering it may create. The HistoryWhile the debate might seem modern, animal testing and the concept of animal rights have both been around for a very long time. However, over the years, the views of people and society have changed. New ideas about what is and is not acceptable in animal testing have led to new laws and new scientific techniques. Animal testing as it is known today owes its existence to the scientific revolution of the late sixteenth and early seventeenth centuries. During this time, as the scientific point of view gained respect and Saunders 2the technology resulting from it exploded into everyday life, researchers began looking to animals for answers to que stions that they couldnt find anywhere else. During the eighteenth and 19th centuries, animal experimentation became increasingly popular among scientists. For the most part, no one considered animal testing to be immoral. However, one English Philosopher named Jeremy Bentham believed differently. As stated in People for the Ethical Treatment of Animals (PETA) website, In 1789, Bentham, referring to animals, asked The question is not can they reason?

Like the Government and Corporations, Man Essay examples -- American S

When I first read the The Power Elite by C. Wright Mills, I proverb the title and immediately approached it cautiously. I am a born skeptic, and to me the title conjured images of hippies passing around reefer talking about like, the Illuminati man. However as I read Article 56, chapter 13 of Understanding confederation An Introductory Reader, I was struck by rationally Mills approaches a complex and contentious subject. Particularly effective is his systematic approach of breaking his thesis down into observable facts and logical ideas. The Power Elite begins by defining who or what a power selected is. Mills then examines the crucial areas they dominate as well as the system that exists to support and propagate their influence. He ends by examining the situations that direct to the creation of the power elite group, how institutions contribute to their formation, and the historical context of the ever increasing concentration of power that has made this status realizab le. As I read this clause many passages and ideas seemed to jump out at me. The first is when Mills seeks to define who the power elite are and how they perceive themselves. Mills defines the power elite quite an broadly, They rule the big corporations, they run the machinery of the state...they direct the military establishment (Anderson et al. Page 465). However, it is what Mills says next that struck me as particularly poignant. He explains that the power elite do not unfeignedly see themselves as particularly powerful. Instead he says that they, are uncertain about their roles and that No matter how great their actual power, they tend to be less acutely aware of it than to the resistances of others to its use ( Anderson et al. Page 465). I find it humorous and some... ...posure of high level politicians, which is still incredibly disproportional to the amount of influence they have, most of the power elite are unknown outside of the circles of their colleagues and those in the know within their respective fields. In essence, the power elite have had such an influence on pop culture, and their celebrity distractions are so effective, that the general population no longer cares about the huge decisions and possible ramifications that are made for them on a daily basis. One is often left to wonder how much more Fahrenheit 451-ish our society can get.ReferencesAndersen, Margaret et al, comp.Understanding Society An Introductory Reader. 4th ed. Belmont, CA Wadsworth, 2011. 464-468. Print. Kendall, Diana.Sociology in Our Times. 8th ed. Belmont, CA Wadsworth, 2010. 166-179. Print.

Compare And Contrast: dune By Herbert And star Wars By Lucas :: essays research papers

Comp atomic number 18 and Contrast "Dune" by Herbert and "Star Wars" by Lucas     The bracing Dune by Frank Herbert, and the novel Star Wars by George Lucashave many comparisons and contrasts. Even though they were written more than 10years apart, they are both very entertaining.     In Dune the story takes place on a dry desert planet called Arrakis,where water is very scarce, and only the sizeable own it. Similarly, in Star Warsthe story starts out on a desert world called Tatooine, where water is veryscarce and expensive.     In Star Wars at that place is a mysterious power called the force that only afew people posses. It allows you to move objects, see in to the future, and overtake with people far out-of-door just by thinking it. Similarly, in Dune thereis a power that very few people posses. It let the people that knew how to useit communicate with their people when they were far away, and let the m see intothe future.     In Dune, there are people who live out in the desert called Freemen whoare scavengers and somehow brave out without water. Similarly, there is a smallscavenger race called Jawas who live out in the desert in the story Star Wars.     In Dune the briny reputation is a teenage boy whose father was killed bythe evil Vladmir, a powerful leader who he must confront and kill. The maincharacter finds out that Vladmir is related to him, he is his uncle. He similarlystarts to learn about a powerful force from someone close to him, his mother.Similarly, in Star Wars the main character is a teenage boy, whose father waskilled by the evil Darth Vader, whom he must confront. Darth Vader also turnsout to be related to the main character, his father. He also gets his firstteachings in the force from someone close to him, the man that was like an uncleto him.     In Dune, all the space flights and cargo transpo rtation were done by the

Louis Simpsons The Battle and Wilfred Owens Dulce et Decorum Est :: Comparison Compare Contrast Essays

When looking at poetry we notice many things. The language, meaning, and emotion all speak to us in many ways some the author may suck up not even intended. When we look at the subject of war there have been many poems documenting the horror soldiers feel at their surroundings. The tragedy and atrocity that happens in war have all been written about with great impact. When we look at Louis Simpsons The mesh and Wilfred Owens Dulce et Decorum Est we can read first hand of the experiences of soldiers. But when we compare these two poems we can clearly see that The Battle seems to have far-off greater impact than Dulce et Decorum Est.         The first thing that is noticeably different between these two poems in the language that they use. The Battle uses simpler, easier to understand language than Dulce et Decourum Est. The Battle has simple words deal thudded (line 3) and clammy (6) to describe the scene while Dulce et Decorum Est has words suc h as haunting (3) and sludge (2) to describe its scene. So although both poems can be understood it is slightly easier to read and understand The Battle and therefore its impact is easier to come to.         One thing that is similar in these poems is the subject matter of them. It is obvious that both poems are about war and the horrors of war. The Battle tells of soldiers preparing themselves for a great battle in the middle of a celestial orbit while Dulce et Decorum Est speaks of soldiers wearily returning to their camp only to be assaulted by gas and loose one of there own. Examples from The Battle can be seen in They halted and they dug. They sank like moles into the clammy earth between the trees. (4, 5) and At dawn the first shell landed with a crack (9). In Dulce et Decorum Est lines like Gas Gas Quick, Boys  (9) And As under a green sea, I saw him drowning. (14) Also show the horrors of war. These examples show that both of these p oems illustrate war and its atrocities.         A final difference that can be seen between these two poems is the style of the poems themselves.

Sexual Harassment and the Equal Employment Opportunity Commission (EEOC) :: Sexual Harassment Essays

Under Title VII of the Civil Rights Act of 1964, Sexual harassment is a form of grammatical gender discrimination. Federal law as well as various state fair-employment laws prohibit employers with 15 or more employees from treating members of one sex or race differently from members of the opposite sex or another race in terms, conditions, or privileges of employment. The statutory and regulatory laws govern the entire employment process from pre-employment activities such(prenominal) as recruiting, through an employees go with the organization, including termination. The prohibition against sex discrimination imposes responsibility upon employers to afford their employees an environment free from sexual harassment and from the fear that it may occur.The Equal Employment Opportunity perpetration (EEOC) can file lawsuits on behalf of victims of sexual harassment, women who take their accusations to court face even bigger obstacles than mere public disapproval. The legal process is long and embarrassing - it can be years from the first complaint to the final verdict and in the meanwhile, the woman is in a legal, professional and often financial limbo. Women atomic number 18 not entitled to collect damages under the Civil Rights Act - just back pay so many women dont see this process as worth the trouble. Even those, however, who do file a complaint and win a harassment case, may feel lost. Though, Title VII offers reinstatement to previous job, the man-to-man may be shunned or harassed by co-worker thus making conditions even more uncomfortable than they were beforehand. Common law tort lawsuits, such as intentional infliction of emotional distress and assault and battery, provide a remedy in certain types of sexual harassment cases that is totally subject of any of the statutes and governmental agencies. However, the solutions proposed might seem comprehensive in plans to lessen sexual harassment in the workplace and punishment of harassers, women still f ace dangerous obstacles in preventing harassment from continuing. The proposed measures fail to cover all aspects of harassment, though the truth is, it is virtually impossible to formulate a plan to do so.

Bookmaster

Bookmaster Case Case Study Questions MGMT357 Professor Janet Steinke March 10, 2013 Background The case intensitymaster explains how pull went to bookmaster to buy a book he wanted to enjoy reading. When Drew arrived at the bookstore and explained to the CRA what book he wanted. The CRA informed Drew that the book was instock and that thither were actually two copies of the book on the shelf. However, when Drew and the CRA went to the shelf to get the book there were no copies available.Drew would have to drive to another store that was 15 miles away to get the book. The CRA then suggested to Drew to buy the ebook which was almost $20 cheaper. Drew would have to download the ebook on his computer since the Kindle and iPads were likewise costly for him at the time. Kindle an Ipad both have many restrictions on their work and try to prevent piracy to maximize profits. Case Questions 1. Each participant in the above value chain makes money by creating value for the stakeholders. 2. 3 .The ebook has many advantages and disadvantages. the first advantage is the development, marketing, and decreasing costs for eReaders. The southward advantage is its sluttish accessible and can be read on any device if its an apple because they are linked together. The ternary advantage is that marketing the crossing is easier on line than in a book store. The first disadvantage is that the sale price is lower so the profit margin is relatively the same. The second disadvantage is that piracy is more common and the content is easier to duplicate.The third disadvantage is that competition is very high in the digital industry. The hard copy book also has many advantages. The first is that hardcopy books are easier to stay focused on because the web-surfing variable is eliminated. The second advantage is that you can jot down your thoughts while reading. The third advantage is hardcopy books are not subject to the failure of technology. Some disadvantages to hard copy books are as follows The cost to make the books are high.Books are harder to give birth around if you have more than a few with you. The third disadvantage is the costs of books are high. 4. The role of operations in the hardcopy value chain is to scar books. The role of operations in ebooks is to produce digital content and to store the content. 5. The other issues that are important on critiquing both of these is the futurity. Where are books headed in the future? It is important to try and forecast whether ebooks or hardcopy books will be a thing of the past.

Year Stpauls College

Institutions and somebodyal experience In this report I will talk of the Impacts of Institutions. Len this report I will refer to the book raw and Shawano redemption and a poem Power structures. Institutions have many author structures tort casing An Institution does not Just have one set power structure with all the rest equal. A power structure Is a mortal of higher power. For example youre principal or the warden in jail. Students Raw by Scott Monk shows divers(prenominal) levels of power structures in institutions. It shows the difference of a good power structure to help people.Tyson abuses his low phew kook raw shows that Tyson uses his size to taunt and bully the separate kids on the farm. Tyson taunts Brett by calling him a pretty boy. Tyson thinks he has the power to do so. Shawano inflammationemption. The men atomic number 18 free. The power structures got them there. They learned from others mistakes and guidelines from the hierarchy. The men are free. The power st ructures got them there. They learned from others mistakes and guidelines from the hierarchy. Shawano by frank dartboard has a different power structure . He Jail warden is all about control discipline and underneath the Job as warden he is as irrupt as all the other convicts In the Jail. And was al styles being beaten up and never t sometime(a) any one until the higher power stepped in and stopped It. * The daybreak sun at the end * Driving into the sunset Rebellion and protest (response to institutionalizing) Rebellion and protest git be a response to institutionalizing. Institutionalizing is where the person in the institution becomes addicted to it and cannot live outside the Institution. Outside the Institution Is onto place for them, they have become institutionalized.Also a key part of Institutionalizing is because the institution revised safety, security department and is a predictable place un care the big wide world. These people that have become dependent on the instit ution cannot survive without the routine, strong bounds and decision making being made for them. Shawano In Shawano Redemption the character Brooks Heathen saw himself as someone, in prison he had a lifetime there. He was being discharged and was not allowed to stay. Because of this he had to rebel. This is the only way theyll let me star (Shawano tofu Redemption). Prison was what en knew and en was Witt his trends.Brooks rebels by trying to take a life to stay in prison. He had to rebel, he had to become institutionalized. He did not want to leave because this was his home for his consentient life. Because of the institutionalizing when Brooks left prison he saw himself as a minority and did not have the respect and love he got in the prison. And an old man cant rebel or protest so he took his possess life. Letters from an Institution By Michael Ryan Poem Letters from an institution by Michael Ryan Id like to push them each somewhere the institution forces things upon the chara cters in the movie and the poem.He wants to rebel and push them away, they re hurting him. There is no starting again they are institutionalized. All they know is the institution. If they cant flee or rebel, they start to want to crazy they cant live without the rules forced upon them. Because they are so used to it they start to enjoy it, it becomes an addiction. As Red said in Shawano even now he has left the prison he still has to have to ask to pips. He has done it his whole life and cant stop now. Responsibilities of individuals within institutions The responsibilities of individuals within institutions is to fulfill the goal of institutions ideas.What we are looking at hear is the rehabilitation of individuals in institutions. Berets self-image impacts his whole time at the farm. subsequently the continuous pressure from his parents and the police, Brett is lost and confused, he sees that he has no responsibilities and does not belong anywhere. Brett looked at his fists and t hey were swollen from too many fights, he shook his head. Brett realizes that it is his debt instrument as an individual to change his life and do right. Before this point Brett does not want to be rehabilitated and does not see that he is responsible for his own actions.At the end of the book Brett sees that it is not the institutions responsibility to change him but that it is his and only he can change if he wants. Only you can help yourself (Raw). When he drives off into the morning sun he realizes the new day, a new beginning to be responsible and to take the consequences as he makes mistakes. Shawano Redemption. Unlike Brett in Raw, Andy Defense was innocent when he was put in Jail. He knew from the start of his two life sentences what he wanted and knew exactly how to get it. Even though he was doubted by Red when he bought his rock hammer waste of money if you ask me.Also the fact that Andy knew what he had to do to make his life easier. He went with the flow and knew what he had to do to escape. Brett from Raw did not know what he wanted and did not think it was his responsibility. Impact on self-image Your own self-image is how you see yourself. This can be particularly bad if your opinion of yourself is bad. But the opposite if it is good. It is how you see yourself through others eyes. For example how you think you look and if you think youre a DOD person or not. RAW Brett blames the world because he thinks eitherone hates him.During the book Brett is pressured by obstacles along the way causing negative thoughts about himself and the world. Its nard work UT I b its honest money (Raw) because Brett HTH KS the world hates him he automatically thinks that Josh is implying that he is a thief when he says this. Josh shows Bret how he sees himself as this person and how he automatically thinks everybody else sees him as this. This impacted Berets self-image in a positive way. Letters from an Institution This poem reveals how the life has been sucked o ut the character. He has only one way of doing things, the institutional way.This way, in which people are trained and forced to do the one thing even if they dont want to. l pretend a pharos with a little man inside. The character in the poem imagines himself as a free person. He has to dream because he has no other way of doing things. He sees himself as a sailor who tells old stories of the sea. He cant be who he wants. The character from the poem is strapped to his bed tightly and is uncomfortable. He wants to be free but is bound by the beds and is incapable of being what he dreams about himself. He can only use his imagination now and it doesnt outcome what everybody else sees him s.So he starts to like the needles and he starts to want to crazy (Letters from an Institution). After analyzing the texts Raw by Scott Monk, Shawano Redemption by Frank Dartboard and the Poem Letters from an Institution by Michael Ryan, I found that every person has a different personal experience in institutions. This report has confirmed my thesis that I believe that every person can and will have different experiences of institution to institution based on the approach they take to the institution. This is seen in Raw when Brett accepts responsibility and starts to amend his behavior and self-image.

Critically Assess Whether Strategic Hrm Leads to ‘High Performance’’

Essay Question 1 Critic anyy assess whether strategic HRM leads to uplifted act Introduction There is a controersy whether the Strategic kind-hearted Resources Management (SHRM) leads to high performance. A general idea of SHRM is that the linkage of oversight and deployment of the individual within the tauten to the business overall and its environment whereas HRM is the activities that dash place under this area. Truss and Gratton (1994). It spotlights on long-term strategy.Two conjectural perspectives to the Strategic Human Resources Management (SHRM) exit surface be introduced and compared to determine whether they extinguish to high performance or not. First, the Universalist approach is one best focusing of dealing human resource to correct business performance. Second, the Contingency approach is to align HR policies and recitals with the details of business strategy to create a positive impact on business. In addition, twain examples a large corporation and a medium-size ships social club will be employd to illustrate both approaches practically.At the same time, there are issues associate with theoretical perspectives that need to be discussed. Such issues are the execution tasks as well as the measurement problems. After all, the question will be answered with analysing all of the above. The advantages and disadvantages of each approach will be identified by gathering imbibes of researchers. To the final stage, both approaches are being recognised if the linkage is existence to high performance and to the level of measure that are being noticed. contrasting approaches to SHRM * Universalist approachA Universalist approach is known as best practice human resource portion outment (HRM). This approach describes there is one best way to manage plenty in order to improve placemental performance. It argues that all organizations, regardless of sector, size or country, will benefit from identifying, gaining commitment to and implem enting a set a furcate of best HRM practices. The job of a researcher is to identify what the practices are, and a job of HR professional to implement them. For example, a research from Delery and Doty (1996) identify certain practices that improve organizational performance.The detailed components are high performance work systems (HPWS) Berg (1999) Appelbaum et al (2000), high commitment focus Walton (1985) Guest (2001a, 2001b) and high involvement management Wood (1999a). An other researcher by Jeffrey Pfeffer (1998) identifies that seven universally applicable practices will benefit all firms. The components include 1) Employment security, 2) Careful hiring, 3) Self-managed teams and decentralized decision-making, 4) comparatively high compensation, 5) Extensive training, 6) Low status distinctions and barriers, 7) Extensive sharing of financial and performance information.The implication is that when a coherent bundle of HR practices is outlined, the integrated HR practices w ill impact positively on organizational performance. The best practice HRM sees there is one best way of managing people and that is appropriate across all circumstances. * Contingency Approach On the other hand, the Contingency approach is known as best-fit HRM. It takes account of factors such as organizational size, location, sector, strategy and the nature of work. Baird and Meshoulams (1998) model advocates that HRM approaches will differ giving to varied life-cycle stages.These life cycle stages ranges from start-up to maturity. While an organization is growing and maturing over time, it becomes gradually complex. Therefore, more sophisticated HR structures and policies are needed. This approach focuses on two types of fit and line management integration. The first type is External fit and it is commonly known as vertical fit. It is in coherence and alignment with business strategy and foreign market factors. When HR policies and practices are aligned to strategic focus, per formance will improve.Porters (1985) strategic options on 1) Cost Leadership, 2) Differentiation and Innovation and 3) Focus are adopted. The second type is Internal fit and it can also take to horizontal fit. HR policies and practices are all fit together so that they are in coherence. They are also mutually reinforcing and are use continuously. Jeffrey Pfeffers (1998) seven practices are adopted. Lastly, thread management integration is when line managers act as a critical character in implementing HRM strategy. Best-fit HRM suggests that the best to manage people will vary depending on organizational circumstances, and hence, the link to business strategy is key. Empirical evidence of SHRM model * A large company macadamize The UK quarrying company Tarmac has over 12500 employees at present. The operations function is key to overall companys performance. It needs the support of finance managers, regularise managers and HR managers. A finance manager delivers financial and ma nagement accounts to contribute the strategic decision-making process by forecasting financial performance.A zone manager manages operative performance. They meet and improve targets for cost, quality, deli real, safety and business ethics channelizen in key performance indicators (KPIs). Lastly a HR manager ensures business managers apply HR policies and procedures. The companys goal is to achieve objectives by motivating all individuals working together as one team across the business units and functions. for each one objective has its strategies. The followings practices are to achieve Engage employees and Act Responsibly objectives.Firstly, Tarmac focuses on a high level of employee involvement and encourages high employee commitment to the organization so that workers feel they are trusted and treated in an open and positive attitude. For example, employees regularly discuss with managers about their viewpoints within development teams. This helps workers feel part of the wi der team, strengthens employee engagement and commitment to the company. Secondly, team-working practices create a closer supervision and a flat hierarchy. A coaching style manager develops employees to manage themselves rather than to manage each task.Employees suggestions are offered, and this contributes to improvements in organizational performance. An example of Tarmac targets and measures a decline in waste. In 2010, eighteen workshop-training sessions were held for all site employees on CO2 awareness and energy. All district managers were involved in the programme. Some external experts from Carbon Trust were also invited to support the rollout of the training programme. As a result, Tarmac gained benefit from 500 energy and CO2 reduction. Overall, Tarmac adopted a high commitment strategy to meet the objectives.Therefore, it improved the companys performance. * A small-medium size company i-LEVEL i-Level is one of the most innovative digital media companies and is ranked th e Sunday Times 100 best companies to work for in 2004. It has a size of workforce of 60 employees. The i-Level company has a high level of financial performance. There was a 33 per cent increase in lettuce per annum. Their guiding principles are used as a framework. This is to ensure the internal fit and the external fit of company. The company is at the growing stage which a lot of the recruitment effort is on discovering the potential staff. -Level frequently seeks appropriate employees to be supported to work with the company. To fit HR policies and practices together, i-Level uses physical arrangements to remove top-down hierarchy in order to encourage employees participation, communication, creativity, self-managed teams and organisational values. As a result, a complete, open plan office is the environment where employees conduct their normal day-to-day operations. Moreover, i-Level sees apply is significant for performance. 15 per cent of the companys pre-tax profit is kept for performance bonuses from 2003 to 2004.Mean bit, the company argues pay is not their primary motivating force. On the other hand, the company aligns with business strategy and external environment by providing training courses for technical skills in media advertising. The company also offers an unusual training budget. There is an annual allowance provided for personal training and development purposes that are no obvious relation with work. The belief is to develop the skills and interests of workers in ways not studied before. This is anticipate to enhance i-level workers innovative thoughts at work through practices outside the companys work area.To summaries, i-LEVEL achieves competitive advantage through innovation and which competes in very tight labour markets. It adopted Porters strategic option of Focus and Pfeffers 7 practices to enhance the companys performance. Additional issues to reflect * Problems of implementation Line managers are central HRM performers in th e organization, and they play a vital role in implementation of HR policies and practices. They influence their teams performance in a direct manner. A fall of factors account for the line management problem. Firstly, it seems there is devolution to line managers.For instance, line managers do not want the responsibility of being a line manager or do not have enough time to deal with it accurately. They might not have the skills to treat HR issues successfully or are unaware of recent developments in view of HRM. Some managers do not consider a long-term view of the company or are inefficient for making policy in this area. Secondly, McGovern et al (1997), Marchington (2001) and Hutchinson and Purcell (2003) identify there are differences amid espoused and actual policies that are relatively recognized to line managers.For example, some policies are normative rather than positive. Some descriptions of policies and practices are in general terms rather than analytical about act ual situations. Hence, managers are unable to implement them specifically to meet the companys goals. Furthermore, a broader issue, the line manager jobs in firms become progressively complex collect(p) to new firms structures. For instance, virtual and network companies have less clear line manager characters than the layered hierarchical company. One observable implication is pressure for minify the size of the HR department.There will be a cut down in numbers of HR professionals. Ultimately, these factors all expunge the organizational performance due to unsuccessful implementation of HR policies and practices. * Problems of measurement Fitzgerald (1991) and Neely (1998) stated that performance measurement is a key issue in guaranteeing the effective implementation of a firms strategy. However, using inadequate measurements is poor in supporting managements business objectives. The followings are the circumstances. Scientists use large-scale data groups made self-completed qu estionnaires.This will lead to two problems. First of all, there is dependence on one person, to represent the whole group. Secondly, there is dependence on a design of questionnaires. For example, respondents are answering yes or no questions rather than giving thoughts and opinions. This type of questions may generate a less accurate result. Moreover, there is uncertainty of how the data should be gathered, presented and analysed. The major problem is mis-reporting single respondents. Respondents may have limited knowledge of the area and use of policies.Furthermore, the measures of performance commonly take account of the financial performance, whereas there is a a few(prenominal) findings focus on the broader issue of employee attitudes and well-being. Equally, there are matters to the range of HR practices. For instance, a report shows statistics of whether a company has self-managed teams, some may look at the proportion of workers running in a self-managed team. Lastly, Atki nson (2005) suggests that the measurement of productivity in the service sector can be exceptionally challenging.It is always easy to get typical, comparable financial statistics. To sum up, the measurement of data are related to the level of relevance to business performance. Critical analysis of the beyond * Best practice Pros Cons Research states there is a positive link between the HR practices and organisational performance. Firstly, Huselid (1995, p. 667) discovered that the degree of returns for investments in High Performance Work Systems is significant. In fact, A one standard deviation rise in High Performance Work Systems practices is associated with a comparative 7. 5 per cent drop in labour turnover. On per employee base, $27,044, $18,641 and $3814 more in sales, more in market value and profits respectively. Secondly, the workplace employee relation survey (Cully et al 1999) indicates that there is 14 per cent of organisations adopted high commitment strategy. In cont rast, researcher (Delery 1998) also emphasized deadly bundles of practices need to be avoided. For example, it occurs to managers giving reward based on individual performance while they are working as a team.Furthermore, Boxall and Purcell (2003, p. 64) commented while multi-national companies make the effort standardise their practices across nations, national perspective and organisational sectoral perspectives show criticism on the effectiveness of these practices. Marchington and Grulis (2000, p. 1117) argue the most common example is in labour intensive organisations recognise costs are expensive when they use these practices. To summaries the best practice approach, Guests (1987) argues that there is no best practice.At the same time, he also suggests a set of best practices such as high commitment management is the route to survival of UK business. This leads to an argument that in order to enhance company performance, managers must alter their HR policies and practices to t he framework that is operational. The indication comes to best-fit approach. * Best-fit Pros Cons Thompson (2000) conducted two studies of firms in the UK aerospace industry. His first study in 1997 showed that with higher levels of value added per worker encourages greater diffusion of innovative working practices with their non-management employees.These organisations are towards to more heavily engaged in specialist production for niche markets and hired technical and professional workers. The second study in 1999 showed evidence that organizations introduced a larger number of high performance work practices had much enhanced business performance. As a result, companies moving from less than five to more than six innovative practices created a 34 per cent increase in value added per worker. On the other hand, Miles and Snow (1984) align suitable managerial types to three genetic strategies of prospector, defender and analyser.If managerial properties and skills are aligned to company strategy, there will be a higher level of link to organisational performance. Thomas and Ramaswamy (1996) offered such support. As a result, performance in aligned firms was statistically excellent. In comparison, (Purcell 1999 p. 35) outlines that a number of successful organisations features that are unable to model. These are the cultural norms that have been developed gradually over a long period associated with accomplishment. It is easy to identify the key factors that drive to success. Especially when the organisations are large and complex.Imaginably the major problem is that many organisations exist at bottom complex external environments with multiple contingencies that are not to be ignored or recognized. * Comparing both approaches Each approach has advantages evidence and disadvantages evidence. It could be argued that different approaches can apply in different sectors. For example, Guest (2001) advocates that there is the possibility that a high commitment m anagement is most applicable in manufacturing i. e. Tarmac, while strategic choice for fitting with business strategy, is more credible in the service sector i. . i-LEVEL. As a whole, critically discuss the link between SHRM and performance. Evidence from Patterson et al (1997) examined sixty-seven manufacturing businesses in the UK for a period. The outcomes were 19 per cent of profitability and 18 per cent of the variation in productivity could be qualified to HRM practices. This demonstrated HRM practices has a positive impact on organisational performance. Conclusion In summary, SHRM consists of a number of practices and is an organization level analysis of how HRM systems impact on performance.Two theoretical perspectives outline different views. The best-practice approach defines there is one best way of managing people. It is appropriate across all circumstances. Whereas best-fit approach terms the best to manage people will change depending on organizational circumstances. I t highlights the essence of linking business strategy. Tarmac was used as an example. It applied the best practice approach and adopted a high commitment strategy to meet the objectives. Hence Tarmac improved its firms performance.I-Level was used an example to describe the competitive advantage the company had achieved through innovation while competing in extremely tight labour market. It adopted Porters strategic option of Focus and Pfeffers 7 practices to enhance the firms performance. Empirical evidences show both organisations are successful with adopting different approaches to their specific, targeted firms. These firms had a positive impact on performance. This can be concluded that SHRM has a clear link to business performance practically. In depth, other issues such as implementation and measurement roblems are considered. Problems of implementation affect the organizational performance due to unsuccessful implementation of HR policies and practices in line management. On the other hand, problems of measurement are valued on the theme of how easy and difficult the data is to represent and most importantly the level of relevance to business performance. If the relevance is slight, it may have little or no impact on business performance. In the final stage of comparing both approaches, many researchers point of views is gathered. Best-practice approach has advantages and disadvantages.It seems to argue that high commitment management is the route to successful business performance. On the other hand, the advantages and disadvantages of best-fit approach suggest that applying this approach can be rigid and inflexibility due exists of complex external environments. Furthermore, in recent arguments, the product labour market seems to be emerged to a new post-industrial age where employers will tend to hire self-employed workers to carry out specific, time-limited projects for companies. This is due to the prediction of radical change.It can lead to a vi ew that best-fit approach should to be managed appropriately. This means practices should be adequate in different companys life-cycle stage and align with different strategies. So that, it can feasibly enhance the organizational performance. Finally, strategic human resources management gives evidences, views, researches and facts to enhance organizational performance. However, the degree of high performance in context varies in different organizations under their circumstances. Hence, it does not necessary impact to high performance.

Indian Banking Sector

A affirm is an institution that deals in money and its substitutes and provides sepa grade pecuniary services. depones discipline to deposits and make loans or make an investment to derive a profit from the difference in the refer rank nonrecreational and charged, respectively. In India the banks argon universe segregated in different groups. Each group has their own benefits and limitations in operating in India. Each has their own dedicated target grocery store. Few of them simply reverse in coarse celestial sphere mend others in both rural as well as urban. Many heretofore be moreoer catering in cities.Some are of Indian origin and some are foreign mulcters. Indias thrift has been one of the stars of global stinting science in raw-fangled years. It has jumpn by more than 9% for three years running. The economy of India is as diverse as it is large, with a way step forward of major(ip) welkins including manufacturing industries, agriculture, textiles a nd handicrafts, and services. Agriculture is a major component of the Indian economy, as e preciseplace 66% of the Indian population gain grounds its livelihood from this area. Banking sphere of influence is considered as a booming sector in Indian economy recently.Banking is a vital system for maturation economy for the nation. However, Indian banking system and economy has been facing various challenges and problems which put across to discussed in other parts of project. Indian wedgeING SYSTEM Without a sound and workive banking system in India it stomachnot admit a healthy economy. The banking system of India should not save be hassle free but it should be able to meet spick-and-span challenges posed by the technology and any other external and internal factors. For the outgoing three decades Indias banking system has several outstanding achievements to its reliance.The approximately striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the farming. This is one of the primary(prenominal) reasons of Indias increment process. The organisations regular form _or_ system of presidential term for Indian bank since 1969 has paid rich dividends with the nationalization of 14 major secluded banks of India. Not long ago, an disc all over holder had to wait for hours at the bank counters for getting a draft or for withdrawing his own money.Today, he has a choice. Gone are days when the most efficient bank transferred money from one branch to other in two days. Now it is simple as instant messaging or dial a pizza. Money has become the order of the day. The first bank in India, though conservative, was dumbfound up in 1786. From 1786 saving(a)s bank today, the journey of Indian Banking System derriere be segregated into three distinct phases. They are as mentioned below Early phase from 1786 to 1969 of Indian Banks nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms. New phase of Indian Banking System with the advent of Indian Financial Banking Sector Reforms after 1991. afterwards 1991, downstairs the chairmanship of M Narasimham, a committee was set up by his name which worked for the liberalization of banking practices. The country is flooded with foreign banks and their ATM stations. Efforts are be put to give a satisfactory service to customers. Phone banking and net banking is introduced. The entire system became more convenient and swift. Time is addicted more grandness than money.This resulted that Indian banking is growing at an astonishing rate, with Assets expected to reach US$1 trillion by 2010. The banking industry should focus on having a pocket-sized cast of large players that sight compete globally and can achieve expected goals rather than having a large number of fragmented players. KINDS OF BANKS Financial requirements in a modern economy are of a diverse nature, distinctive variety and large magnitude. Hence, different types of banks amaze been instituted to cater to the varying needs of the community.Banks in the organized sector may, however, be classified in to the following major forms oCommercial banks oCo-operative banks oSpecialized banks oCentral bank COMMERCIAL BANKS Commercial banks are joint stock companies dealing in money and belief. In India, however at that name is a mixed banking system, prior to July 1969, all the mercenary banks-73 scheduled and 26 non-scheduled banks, except the severalize bank of India and its subsidiaries-were under the control of surreptitious sector. On July 19, 1969, however, 14 major 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. At present, there are 20 nationalized banks plus the state bank of India and its 7 subsidiaries constituting in the familiar eye(predicate) sector banking which controls over 90 per cent of the banking condescension in the country. 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 SPECIALIZED BANKS There are change forms of banks catering to some special needs with this unique nature of activities. There are thus, oForeign exchange banks, oIndustrial banks, oDevelopment banks, oLand development banks, oExim bank. billhookinal BANK A central bank is the apex financial institution in the banking and financial system of a country.It is regarded as the highest pecuniary authority in the country. It acts as the leader of the money foo dstuff. It supervises, control and regulates the activities of the commercial banks. It is a service oriented financial institution. Indias central bank is the Reserve Bank of India established in 1935. A central bank is usually state owned but it may in addition be a buck private organization. For instance, the Reserve Bank of India (RBI), was started as a shareholders organization in 1935, however, it was nationalized after independence, in 1949. It is free from parliamentary control.CHALLENGES FACED BY INDIAN BANKING INDUSTRY The banking industry in India is undergoing a major transformation due to changes in frugal conditions and continuous deregulation. These multiple changes happening one after other has a ripple effect on a bank trying to graduate from completely regulated sellers food market to completed deregulated customers market. oDE canon This continuous deregulation has made the Banking market extremely competitive with great autonomy, operational flexibility, and decontrolled interest rate and liberalized norms for foreign exchange.The deregulation of the industry coupled with decontrol in interest rates has led to entry of a number of players in the banking industry. At the like time signd incorporated credit off take thanks to sluggish economy has resulted in large number of competitors battling for the same pie. oNEW RULES As a result, the market place has been redefined with rising rules of the game. Banks are transforming to universal banking, adding new channels with lucrative pricing and freebees to offer. Natural fall out of this has led to a series of innovative mathematical product offerings catering to various customer segments, specifically sell credit. EFFICIENCY This in turn has made it submit to look for efficiencies in the business. Banks need to access low appeal funds and simultaneously improve the efficiency. The banks are facing pricing pres sure, squeeze on beam and make believe to give thrust on retail asset s. oDIFFUSED CUSTOMER LOYALTY This entrust definitely feign Customer preferences, as they are bound to pit to the value added offerings. Customers have become demanding and the loyalties are diff employ. There are multiple choices the wallet share is reduced per bank with demand on flexibility and customization. prone the comparatively low switching be customer retention calls for customized service and hassle free, flawless service delivery. oMISALLIGNED MINDSET These changes are creating challenges, as employees are made to reconcile to changing conditions. There is resistance to change from employees and the Seller market mindset is yet to be changed coupled with Fear of uncertainty and Control orientation. Acceptance of technology is slowly creeping in but the utilization is not maximized. oCOMPETENCE GAPPlacing the right skill at the right place volition determine success. The competency open frame needs to be addressed simultaneously other clean there give be missed op portunities. The focus of people will be on doing work but not providing solutions, on escalating problems rather than solving them and on dis constitute customers instead of victimisation the opportunity to cross sell. STRATEGIES OPTIONS WITH BANKS TO COPE WITH THOSE CHALLENGES Leading players in the industry have embarked on a series of strategic and tactical initiatives to sustain leadership.The major initiatives include oInvesting in state of the art technology as the back jam of to ensure reliable service delivery oLeveraging the branch network and sales structure to mobilize low cost underway and savings deposits oMaking aggressive forays in the retail advances segment of home and personal loans oImplementing organization wide initiatives involving people, process and technology to reduce the jumbleed costs and the cost per transaction oFocusing on gift based income to compensate for squeezed spread, (e. . CMS, trade services) oInnovating Products to capture customer mind share to begin with and later the wallet share oImproving the asset quality as per Basel II norms INDIAN ECONOMY The Indian Economy is consistently posting robust gain numbers in all sectors leading to impressive growth in Indian gross domestic product. The Indian economy has been stable and reliable in recent times, while in the last few years its experienced a positive upward growth trend.A consistent 8-9% growth rate has been supported by a number of favorable economic indicants including a huge influx of foreign funds, growing reserves in the foreign exchange sector, both an IT and real(a) estate boom, and a flourishing metropolis market. All of these positive changes have resulted in establishing the Indian economy as one of the largest and fastest growing in the world. The process of globalization has been an integral part of the recent economic progress made by India.Globalization has played a major role in export-led growth, leading to the enlargement of the job market in India. As a new Indian middle class has developed around the wealth that the IT and BPO industries have brought to the country, a new con stateer base has developed. International companies are to a fault expanding their operations in India to service this massive growth opportunity. The same thing has followed by international banks that are entering in Indian market and pulling their huge investments in Indian economy. This is helping to accelerate the growth of Indian economy.Economy can be studied from two points of views ?MICRO economic POINT OF VIEW The branch of economics that analyzes the market expression of individual consumers and firms in an attempt to understand the decision-making process of firms and ho theatrical roleholds. It is concerned with the interaction between individual buyers and sellers and the factors that influence the choices made by buyers and sellers. In particular, microeconomics focuses on patterns of fork up and demand and the determination of price and output in individual markets.Microeconomics looks at the humbleder picture and focuses more on basic theories of generate and demand and how individual businesses decide how much of something to produce and how much to charge for it. ?MACRO ECONOMIC POINT OF VIEW It is a field of economics that studies the behavior of the aggregate economy. Macroeconomics examines economy-wide phenomena such(prenominal) as changes in unemployment, national income, rate of growth, gross domestic product, ostentatiousness and price trains. Macroeconomics looks at the big picture (hence macro). It focuses on the national economy as a whole and provides a basic knowledge of how things work in the business world.For example, people who study this branch of economics would be able to interpret the latest Gross Domestic Product figures or explain why a 6% rate of unemployment is not needs a bad thing. Thus, for an overall perspective of how the entire economy works, you need to have an understanding of economics at both the micro and macro levels. ECONOMIC SYSTEMS An economic system is loosely defined as countrys plan for its services, bang-ups produced, and the exact way in which its economic plan is carried out. In general, there are three major types of economic systems prevailing around the world they are Market Economy oPlanned Economy oMixed Economy MARKET ECONOMY In a market economy, national and state governments play a minor role. Instead, consumers and their buying decisions jam the economy. In this type of economic system, the assumptions of the market play a major role in deciding the right path for a countrys economic development. Market economies aim to reduce or discriminate entirely subsidies for a particular industry, the pre-determination of prices for different commodities, and the amount of regulation irresponsible different industrial sectors.The absence of central planning is one of the major features of this economic system. Market decis ions are mainly dominated by supply and demand. The role of the government in a market economy is to simply make sure that the market is stable enough to carry out its economic activities properly. PLANNED ECONOMY A mean economy is in addition sometimes called a mold economy. The most important aspect of this type of economy is that all major decisions related to the production, distribution, commodity and service prices, are all made by the government.The planned economy is government reckoned, and market forces have very little say in such an economy. This type of economy lacks the kind of flexibility that is present a market economy, and because of this, the planned economy reacts slower to changes in consumer needs and fluctuating patterns of supply and demand. On the other hand, a planned economy aims at using all functional resources for developing production instead of allotting the resources for advertising or marketing. MIXED ECONOMY A mixed economy combines elements o f both the planned and the market economies in one cohesive system.This means that certain features from both market and planned economic systems are taken to form this type of economy. This system prevails in some(prenominal) countries where neither the government nor the business entities control the economic activities of that country both sectors play an important role in the economic decision-making of the country. In a mixed economy there is flexibility in some areas and government control in others. Mixed economies include both capitalist and socialist economic policies and often a renegade in societies that seek to chemical equilibrium a wide range of political and economic views. IMPORTANT BANKING AND ECONOMIC INDICATORS CASH RESERVE dimension Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with RBI. If RBI decides to change magnitude the percent of this, the available amount with the banks comes down. RBI is using this system (increase of CRR rate), to drain out the lush money from the banks. The amount of which shall not be less than three per cent of the total of the Net Demand and Time Liabilities (NDTL) in India, on a fortnightly basis and RBI is em kinged to increase the said rate of CRR to such higher rate not exceeding cardinal percent of the Net Demand and Time Liabilities (NDTL) under the RBI Act, 1934. STATUTORY LIQUIDITY RATIO In terms of Section 24 (2-A) of the B. R. Act, 1949 all schedule Commercial Banks, in addition to the average daily quietus which they are necessitate to maintain in the form of. oIn cash, Or oIn gold valued at a price not exceeding the current market price, Or oIn unencumbered approved securities valued at a price as qualify by the RBI from time to time. ?REPO RATE Repo rate, also known as the official bank rate, is the discounted rate at which a central bank repurchases government securities.The central bank makes this transaction with commercial banks to reduce some of the sh ort-term liquidity in the system. The repo rate is dependent on the level of money supply that the bank chooses to fix in the monetary scheme of things. Repo rate is short for repurchase rate. The entity borrowing the security is often referred to as the buyer, while the lender of the securities is referred to as the seller. The central bank has the power to lower the repo rates while expanding the money supply in the country. This enables the banks to exchange their government security holdings for cash.In contrast, when the central bank decides to reduce the money supply, it implements a rise in the repo rates. At times, the central bank of the nation makes a decision regarding the money supply level and the repo rate is driven by the market. The securities that are being evaluated and sold are transacted at the current market price plus any interest that has accrued. When the sale is concluded, the securities are later on resold at a predetermined price. This price is comprised of the original market price and interest, and the pre-agreed interest rate, which is the repo rate. ?BANK RATEBank rate is referred to the rate of interest charged by phase modulation banks on the loans and advances. Bank rate varies based on some defined conditions as laid down the governing authority of the banks. Bank rates are levied to control the money supply to and from the bank. From the consumers point of view, bank rate ordinarily denotes to the current rate of interest acquired from savings certification of Deposit. It is most frequently used by the consumers who are concerned in mortgage Some uncouthest types of bank interest rates are as follows oBank rate on CD, i. e. , on certificate of deposit Bank rate on the credit of a credit card or other kind of loan oBank rate on real estate loan ?INTERBANK RATE The rate of interest charged on short-term loans made between banks. Banks borrow and lend money in the interbank market in order to manage liquidity and meet the requirements placed on them. The interest rate charged depends on the availability of money in the market, on prevailing rates and on the specific terms of the contract, such as term length. Banks are required to hold an adequate amount of liquid assets, such as cash, to manage any potential withdrawals from clients.If a bank cant meet these liquidity requirements, it will need to borrow money in the interbank market to pinnacle the shortfall. Some banks, on the other hand, have excess liquid assets above and beyond the liquidity requirements. These banks will lend money in the interbank market, receiving interest on the assets. There is a wide range of published interbank rates, including the LIBOR & MIBOR, which is set daily based on the average rates on loans made within the capital of the United Kingdom interbank market & Mumbai Interbank Market. ?GROSS DOMESTIC PRODUCTThe monetary value of all the finished not bad(predicate)s and services produced within a countrys borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and populace consumption, government outlays, investments and exports less imports that occur within a defined territory. GDP = C + G + I + NX Where ?C is equal to all private consumption, or consumer spending, in a nations economy. ?G is the sum of government spending. ?I is the sum of all the countrys businesses spending on capital. ?NX is the nations total net exports, calculated as total exports minus total imports. NX = Exports Imports) GDP is commonly used as an indicator of the economic health of a country, as well as to gauge a countrys standard of living. ?INFLATION Inflation can be defined as a rise in the general price level and therefore a fall in the value of money. Inflation occurs when the amount of buying power is higher than the output of goods and services. Inflation also occurs when the amount of money exceeds the amount of goods and services available. As to whether the fall in the value of money will chance upon the functions of money depends on the degree of the fall.Basically, refers to an increase in the supply of currency or credit relative to the availability of goods and services, resulting in higher prices. Therefore, inflation can be measured in terms of percentages. The percentage increase in the price index, as a rate per cent per unit of time, which is usually in years. The two basic price indexes are used when measuring inflation, the producer price index (PPI) and the consumer price index (CPI) which is also known as the cost of living index number. ?DEFLATION It is a condition of falling prices accompanied by a decreasing level of employment, output and income.Deflation is and the opposite of inflation. Deflation occurs when the total pulmonary tuberculosis of the community is not equal to the existing prices. Consequently, the supply of money decreases and as a result prices fall. Deflation can also be brought about by institutionalize contractions in spending, either in the form of a reduction in government spending, personal spending or investment spending. Deflation has often had the side effect of increasing unemployment in an economy, since the process often leads to a lower level of demand in the economy. ?DISINFLATIONWhen prices are falling due to anti-inflationary measures adopted by the authorities, with no corresponding decline in the existing level of employment, output and income, the result of this is disinflation. When acute inflation burdens an economy, disinflation is implemented as a cure. Disinflation is said to take place when deliberate attempts are made to curtail expenditure of all sorts to lower prices and money incomes for the benefit of the community. ?REFLATION Reflation is a office of rising prices, which is deliberately undertaken to relieve a depression.Reflation is a means of motivating the economy to produce. This is achieved by increasing the supply of money or in some instances reducing taxes, which is the opposite of disinflation. Governments can use economic policies such as reducing taxes, changing the supply of money or adjusting the interest rates which in turn motivates the country to increase their output. The situation is described as semi-inflation or reflation. ?STAGFLATION Stagflation is a stagnant economy that is combined with inflation. Basically, when prices are increasing the economy is deceasing.Some economists believe that there are two main reasons for stagflation. Firstly, stagflation can occur when an economy is slowed by an unfavourable supply, such as an increase in the price of oil in an oil importing country, which fly the coops to chevvy prices at the same time that it slows the economy by making production less profitable. In the 1970s inflation and recession occurred in different economies at the same time. Basically, what happened was that there was plenty of liquidity in the system and people were spending money as quickly as they got it because prices were going up quickly.This gave rise to the import reason for stagflation. ?FOREIGN INSTITUTIONAL INVESTMENTS Foreign Institutional Investors (FIIs), Non-Resident Indians (NRIs), and Persons of Indian Origin (PIOs) are allowed to invest in the primary and secondary capital markets in India finished the portfolio investment scheme (PIS). Under this scheme, FIIs/NRIs can acquire shares/debentures of Indian companies by means of the stock exchanges in India. The ceiling for overall investment for FIIs is 24 per cent of the paid up capital of the Indian company and 10 per cent for NRIs/PIOs.The limit is 20 per cent of the paid up capital in the case of public sector banks, including the State Bank of India. ?FOREIGN EXCHANGE RESERVES Foreign exchange reserves (also called Forex reserves) in a strict sense are only the foreign currency deposits held by central banks and monetary authorities. However, the term in popular usage commonly inc ludes foreign exchange and gold, SDRs and IMF reserve positions. This broader figure is more readily available, but it is more accurately termed official reserves or international reserves.These are assets of the central bank held in different reserve currencies, such as the dollar, euro and yen, and used to back its liabilities, e. g. the local currency depicted objectd, and the various bank reserves deposited with the central bank, by the government or financial institutions. Large reserves of foreign currency allow a government to manipulate exchange rates usually to stabilize the foreign exchange rates to provide a more favorable economic environs. ROLE OF BANKS IN DEVELOPING OF ECONOMY A safe and sound financial sector is a prerequisite for bear on growth of any economy.Globalization, deregulation and advances in information technology in recent years have brought about significant changes in the operating environment for banks and other financial institutions. These instit utions are eventd with increased competitive pressures and changing customer demands. These, in turn, have engendered a rapid increase in product innovations and changes in business strategies. While these developments have enabled improvement in the efficiency of financial institutions, they have also posed some serious risks.Banks play a very useful 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 developing countries may be viewed thus oPromoting capital formation oEncouraging innovation oMonetsation oInfluence economic occupation oFacilitator of monetary constitution Above all view we can see in briefly, which are given belowPROMOTING CAPITAL FORMATION A developing economy needs a high rate of capital formation to acceler ate 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 amentiferous purposes. ENCOURAGING variety 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. MONETSATION Banks are the manufactures of money and they allow legion(predicate) 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 mo ldiness be replaced by the modern commercial banks branches. INFLUENCE ECONOMIC ACTIVITYBanks 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. FACILITATOR OF fiscal 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 powerful implementation of monetary policy. Under-developed countries cannot afford to ignore this fact.A fine, an efficient and comprehensive banking system is a crucial factor of the developmental process of economy. RESERVE BANK OF INDIA AS A REGULATORY INSTITUTION IN INDIAN ECONOMY The RBI was established under the Reserve Bank of India Act, 1934 on April 1, 1935 as a private shareholders bank but since its na tionalization in 1949, is fully owned by the Government of India. The Preamble of the Reserve Bank describes the basic functions as to regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability in India and generally, to operate the currency and credit system of the country to its advantage.The twin objectives of monetary policy in India have evolved over the years as those of maintaining price stability and ensuring adequate flow of credit to facilitate the growth process. The relative focus between the twin objectives is modulated as per the prevailing circumstances and is articulated in the policy statements by the Reserve Bank from time to time. Consideration of macro-economic and financial stability is also subsumed in the mandate. The Reserve Bank is also entrusted with the management of foreign exchange reserves (which include gold holding also), which are reflected in its balance sheet.While the Reserve Bank is essentially a monetary authority, its founding statute mandates it to be the manager of market borrowing of the Government of India and banker to the Government. The Reserve Banks personal matters are governed by a Central Board of Directors, consisting of fourteen non-executive, independent directors nominated by the Government, in addition to the Governor and up to four delegate Governors. Besides, one Government official is also nominated on the Board who participates in the Board meetings but cannot vote. IMPORTANT FUNCTIONS PLAYED BY RESERVE BANK OF INDIA IN ECONOMY MAIN FUNCTIONS oMONITORY AUTHORITY The Reserve Bank of India formulates implements and monitors the monetary policy. Its main objective is maintaining price stability and ensuring adequate flow of credit to plentiful sectors. oREGULATOR AND SUPERVISOR OF FINANCIAL SYSTEM Prescribes broad parameters of banking operations within which the countrys banking and financial system functions. Their main objective is to maintain public trustf ulness in the system, protect depositors interest and provide cost-effective banking services to the public. MANAGER OF EXCHANGE CONTROL The manager of the exchange control department manages the Foreign throw centering Act, 1999. Its main objective is to facilitate external trade and kick inment and promote orderly development and maintenance of foreign exchange market in India. oISSUER OF THE CURRENCY The person who is issuer issues and exchanges or destroys currency and coins not fit for circulation. His main objective is to give the public adequate quantity of supplies of currency notes and coins and in good quality. oDEVELOPMENTAL ROLEThe reserve bank of India performs a wide range of promotional functions to support national objectives. The promotional functions are such as contests, coupons, maintaining good public relations, and many more.. oRELATED FUNCTIONS There are also some of the relating functions to the above mentioned main functions. They are such as Banker to th e Government, Banker to banks etc. ?BANKER TO THE GOVERNMENT It performs merchant banking function for the central and the state governments also acts as their banker. ?BANKER TO THE BANKS Maintains banking accounts of all scheduled banks. ?SUPERVISORY FUNCTIONSThe Reserve Bank act, 1934 and the Banking Regulation act, 1949 have given the RBI wide powers of supervision and control over commercial and co-operative banks, relating to licensing and establishments, branch expansion, liquidity of their asset, management and methods of working, amalgamation, reconstruction, and liquidation. The RBI is authorized to carry out periodical inspections of banks and to call for returns and necessary information from them. The supervisory functions of the RBI have helped a great deal in improving the standard of banking in India to develop on sound lines and to improve the methods of their operation. PROMOTIONAL FUNCTIONS With economic growth presumptuous a new urgency since Independence, the ra nge of the Reserve Banks functions has steadily widened. The bank now performs a variety of developmental and promotional functions, which, at one time were regarded as outside the normal scope of central banking. The RBI was asked to promote banking habit, extend banking facilities to rural and semi-urban areas, and establish and promote new specialized financing agencies. PROBLEMS FACED BY INDIAN ECONOMY Macro-economic environment in India has taken a serious turn since the beginning of the year.Unprecedented rise in common prices, surge in inflation and continued fast growth in money supply (M3) have forced the government and RBI to take real fiscal and monetary measures leading to liquidity tightening, significant rise in interest rates and slowdown in economic growth. Economic shocks are events which adversely affect the economy and the governments macroeconomic objectives such as growth, inflation, unemployment and the balance of payments. CERTAIN PROBLEMS FACED BY INDIAN E CONOMY oFALL IN savings RATIO The savings ratio is the % of income that is saved not spent.A fall in the savings ratio implies that consumer spending is increasing often this is financed through increased borrowing. do OF FALL IN SAVINGS RATIO ?HIGHER LEVEL OF CONSUMPTION This results in increase in Aggregate Demand. The increase in AD will cause an increase in economic growth and lower unemployment. However, rising Aggregate Demand may cause inflation. Inflation will occur when growth is faster than the long run trend rate. This is now a potential problem in the India. Inflation has recently gone above 12% ? sweep through AND BUST A fall in the savings ratio is usually accompanied by a rise in self-confidence.It is the rise in confidence which encourages borrowing and consumers to run down savings. Therefore, there is always a danger that a falling savings ratio can be a trumpeter to a boom and bust situation. ?ECONOMY MORE SENSITIVE TO INTEREST RATES With a fall in the savings ratio interest rate changes will have a bigger effect in reducing spending. This is because levels of borrowing are higher and therefore a rise in interest rates has a significant impact on increasing interest repayments. Also, higher rates will not be increasing incomes from savings as much. ?BALANCE OF PAYMENTWith higher levels of consumer spending, there will be an increase in imports. Therefore this will lead to deterioration in the current account. The current account deficit could put downward pressure on the exchange rate in the long term. However, some people argue a fall in the savings ratio is not a problem, but, it is just a reflection of strong economy and booming housing market, which increases scope for equity withdrawal. oINFLATION Inflation is posing a serious challenge to the economic growth of India. Since Jan08 onwards, inflation in the country has surged by 8. 2% to hit a 13-year high of 12%.M3 growth in the economy too continued to remain strong at 20% (in July0 8), well above the RBIs comfort level of 17%. The WPI inflation rate flared up during the period driven by significant increase in the prices of commodities, primary articles and manufactured products, even though very small part of global crude price increase has been passed on to the Indian consumers. oGLOBAL RECESSION It appears that Europe, Japan and the US are entering into recession. Falling house prices, crisis in the financial system, and lower confidence could lead to a sharp downturn, with the worst still to come.Many argue that Indias growth is not so dependent on growth in the West. However, the Indian stock markets have been hit by the global crisis. Indias growing service sector and manufacturing sector would be adversely impacted by a global downturn. oRISE IN CRUDE PRICES How global crude prices would behave probably has no easy answers however we believe that the current challenging and uncertain macro-economic conditions does not lead Indian financials into a stat e of crisis. But continued rise in crude prices and its resultant impact on inflation, interest rates and government finances has the potential to do so.Hence, crude price remains the mainstay risk to our positive stance on the Indian financials. In the last couple of months oil prices have surged by 45% from US$ 100 to US$ 145 (and now back to US$ 115). India before long imports 70% of its crude requirement, resulting in pressure on government coffers on back of rising crude prices. oDEPRICIATING INR Surge in crude prices has severely impacted current account deficit of the country. This coupled with the outflow of FII investments has resulted in INR to depreciate sharply against dollar further fueling inflation. IMPACT OF ECONOMIC PROBLEMS ON INDIAN FINANCIALSThe current macro-economic conditions are expected to result in oSLOWDOWN IN citation GROWTH oIMPACT ON MARGINS OF BANKS oPREASURE ON quotation QUALITY SLOWDOWN IN CREDIT GROWTH While the rise in interest rates should lea d to a moderation in demand for credit, Indian banks too are workout caution while lending. Credit growth of 18% in FY09E and 17% in FY10E vs. 22% in FY08. Risks and uncertainties in the system have increased given the higher crude and commodity prices and its inflationary impact. This would curtail consumption, which would impact economic growth adversely.Further higher rates will not only impact the gainfulness of Indian corporate but also impact IRRs of various proposed capex projects. This coupled with elections next year could lead to some postponement of capex plans of corporate, leading to negative impact on demand for credit. Higher rates have particularly impacted retail loan growth. As can be seen in the exhibit below, retail loan growth has slowed down significantly from 26. 5% in FY07 to 13% in FY08. SLR Ratio of the system has started rising since mid FY08 and soon stands at 28. %. Given the expected negative impact on credit growth. IMPACT ON MARGINS OF BANKS During the past 18 months, CRR has increased by 400 bps to 9. 0% currently and RBI has also discontinued with interest payment on CRR balances. Every 50 bps hike in CRR generally negatively impacts margins by 5 bps. Till June08, most of the banks had restrained from hiking lending rates despite significant monetary tightening. However on account of recent measures by RBI, banks have resorted to hiking PLRs in July/August by 50-150 bps to preserve their margins.In fact in an environment, where liquidity is tight, interest rates are at elevated levels and risk premiums have increased, the banks tend to regain the pricing power. This would not only help the banks to adequately price in risks but also help protect their margins. Apart from hiking PLRs, banks are also resorting to reprising (in fact right-pricing) the loans that were sanctioned well below PLRs. Significant portion of fixed rate loans would also get re-priced over the period of 12-18 months. PRESSURE ON CREDIT QUALITY Higher le nding rates are expected to impact credit quality for the banking system.The uttermost of the impact on credit quality would also be bank specific given the loan mix (retail vs. corporate), proportion of unsecured lending, credit profile of corporate loan book and industry wise exposure. Indian banks fundamentals are relatively resilient with better risk management systems, dramatically improved asset quality, stronger recovery mechanisms (legal provisions) and with adequate capitalization and provisioning. withal Certain sectors (like real estate, airlines industry) might feel the stress due to the changing macro environment and rise in interest rates.Many companies where crude forms a key raw material component are expected to get hit more severely. Similarly, sectors like real estate and SMEs, which are interest rate sensitive, would face higher delinquencies if interest rates fortify further by 100-200 bps. NECESSARY INITIATIVES TAKEN BY RBI & MINISTRY OF FINANCE TO TACKLE EC ONOMIC PROBLEMS As most of economists feel that the most horrible problem which India is facing currently is inflation which has crossed 12%. To come out of these problems RBI and ministry of finance and other pertinent government and regulatory entities are taking various initiatives which are as follows RBI MONITORY POLICY With the introduction of the Five year plans, the need for give up adjustment in monetary and fiscal policies to suit the pace and pattern of planned development became imperative. The monitory policy since 1952 emphasized the twin aims of the economic policy of the government oSpread up economic development in the country to raise national income and standard of living, and oTo control and reduce inflationary pressure in the economy. This policy of RBI since the First plan period was termed broadly as one of controlled expansion, i. e. a policy of adequate financing of economic growth and at the same time the time ensuring reasonable price stability. Expansio n of currency and credit was essential to meet the increased demand for investment funds in an economy like India which had embarked on rapid economic development. Accordingly, RBI helped the economy to expand via expansion of money and credit and attempted to check in rise in prices by the use of selective controls. OBJECTIVES OF MONITORY POLICY ?PRICE STABILITY ?MONITORY TARGETTING ?INTEREST RATE POLICY ?RESTRUCTURING OF MONEY MARKET ?REGULATION OF FOREIGN EXCHANGE MARKET WEAPONS OF MONITORY POLICYCentral banks generally use the three quantitative measures to control the volume of credit in an economy, namely oRaising bank rates oOpen market operations and oVariable reserve ratio However, there are various limitations on the effective working of the quantitative measures of credit control adapted by the central banks and, to that fulfilment, monetary measures to control inflation are weakened. In fact, in controlling inflation moderate monetary measures, by themselves, are relati vely ineffective. On the other hand, drastic monetary measures are not good for the economic system because they may easily send the economy into a decline.In a developing economy there is always an increasing need for credit. Growth requires credit expansion but to check inflation, there is need to contract credit. In such a encounter, the best course is to resort to credit control, restricting the flow of credit into the unproductive, inflation-infected sectors and speculative activities, and diversifying the flow of credit towards the most desirable needs of productive and growth-inducing sector. It should be noted that the impression that the rate of spending can be controlled rigorously by the contraction of credit or money supply is ruin in the context of modern economic societies.In modern community, tangible, wealth is typically represented by claims in the form of securities, bonds, etc. , or near moneys, as they are called. Such near moneys are highly liquid assets, and they are very close to being money. They increase the general liquidity of the economy. In these circumstances, it is not so simple to control the rate of spending or total outlays merely by controlling the quantity of money. Thus, there is no immediate and direct relationship between money supply and the price level, as is normally conceived by the traditional quantity theories.When there is inflation in an economy, monetary restraints can, in conjunction with other measures, play a useful role in controlling inflation. FISCAL POLICY Fiscal policy is another type of budgetary policy in relation to taxation, public borrowing, and public expenditure. To curve the effects of inflation and changes in the total expenditure, fiscal measures would have to be implemented which involves an increase in taxation and decrease in government spending. During inflationary periods the government is supposed to counteract an increase in private spending.It can be clean noted that during a period o f full employment inflation, the aggregate demand in relation to the limited supply of goods and services is reduced to the extent that government expenditures are shortened. Along with public expenditure, governments must simultaneously increase taxes that would effectively reduce private expenditure, in an effect to minimise inflationary pressures. It is known that when more taxes are imposed, the size of the disposable income diminishes, also the magnitude of the inflationary gap in regards to the availability of the supply of goods and services.In some instances, tax policy has been directed towards restricting demand without restricting level of production. For example, excise duties or sales tax on various commodities may take away the buying power from the consumer goods market without discouraging the level of production. However, some economists point out that this is not a correct way of combating inflation because it may lead to a regressive posture within the economy. A s a result, this may lead to a further rise in prices of goods and services, and inflation can spread from one sector of the economy to another and from one type of goods and services to another.Therefore, a reduction in public expenditure, and an increase in taxes produces a cash surplus in the budget. Keynes, however, suggested a programme of compulsory savings, such as deferred pay as an anti-inflationary measure. Deferred pay indicates that the consumer defers a part of his or her wages by buying savings bonds (which, of course, is a sort of public borrowing), which are redeemable after a particular period of time, this is sometimes called forced savings. Additionally, private savings have a strong disinflationary effect on the economy and an increase in these is an important measure for controlling inflation.Government policy should therefore, include devices for increasing savings. A strong savings drive reduces the spendable income of the consumers, without any harmful effect s of any kind that are associated with higher taxation. Furthermore, the effects of a large deficit budget, which is mainly responsible for inflation, can be partially offset by covering the deficit through public borrowings. It should be noted that it is only government borrowing from non-bank lenders that has a disinflationary effect.In addition, public debt may be managed in such a way that the supply of money in the country may be controlled. The government should avoid paying(a) back any of its past loans during inflationary periods, in order to prevent an increase in the circulation of money. Anti-inflationary debt management also includes cancellation of public debt held by the central bank out of a budgetary surplus. Fiscal policy by itself may not be very effective in combating inflation therefore a combination of fiscal and monetary tools can work together in achieving the desired outcome. DIRECT MEASURESDirect controls refer to the regulatory measures undertaken to conver t an open inflation into a repressed one. Such regulatory measures involve the use of direct control on prices and limit of scarce goods. The function of price control is a fix a legal ceiling, beyond which prices of particular goods may not increase. When ceiling prices are fixed and enforced, it means prices are not allowed to rise further and so, inflation is suppressed. Under price control, producers cannot raise the price beyond a specified level, even though there may be a pressure of excessive demand forcing it up.In times of the severe scarcity of certain goods, particularly, food grains, government may have to enforce rationing, along with price control. The main function of rationing is to divert consumption from those commodities whose supply needs to be restricted for some special reasons such as, to make the commodity more available to a large number of households. Therefore, rationing becomes essential when necessities, such as food grains, are relatively scarce. Rat ioning has the effect of limiting the variety of quantity of goods available for the good cause of price stability and distributive impartiality.Another control measure that was suggested is the control of wages as it often becomes necessary in order to stop a wage-price spiral. During galloping inflation, it may be necessary to apply a wage-profit freeze. Ceilings on wages and profits keep down disposable income and, therefore the total effective demand for goods and services. On the other hand, restrictions on imports may also help to increase supplies of essential commodities and ease the inflationary pressure. However, this is possible only to a limited extent, depending upon the balance of payments situation.Similarly, exports may also be reduced in an effort to increase the availability of the domestic supply of essential commodities so that inflation is eased. In general, monetary and fiscal controls may be used to repress excess demand but direct controls can be more useful when they are utilize to specific scarcity areas. As a result, anti-inflationary policies should involve varied programmes and cannot exclusively depend on a particular type of measure only. RECENT INNOVATIONS IN INDIAN BANKING HDFC Banks Net Safe card is a one-time use card with a limit thats specified, taken from Tendons credit or debit card.Even if Tandon fails to utilize the full amount within 24 hours of creating the card, the card simply dies and the unspent amount in the temporary card reverts to his original credit or debit card. Welcome to one of the myriad ways in which bankers have been trying to innovate. Theyre bringing ATMs, cash and even foreign exchange to their customers doorsteps. Indeed, innovation has become the hottest banking game in town. Want to buy a house but dont want to go through the hassles of haggling with brokers and the mounds of paperwork? Not to worry.Your bank will tackle all this. Its ready to come every step of the way for you to buy a house. S tandard Chartered, for instance, has property advisors to guide a customer through the entire process of selecting and buying a house. They also lend a hand with the bunglesome documentation formalities and the registration. Dont fret if youve already bought your house or car you can do other things with both. You can leverage your new house or car these days with banks like ICICI Bank and Stanchart ready to extend loans against either, till its about five years old.Loans are available to all car owners for almost all brands of cars manufactured in India that are up to five years old. Last month, Kotak Mahindra Bank introduced a variant of the sweep-in account. If the balance tops Rs 1. 5 lakh, the excess runs into Kotaks liquid mutual fund. Even if the money is there only for the weekend, a liquid fund can earn you a clean 4. 5 per cent per annum, points out Shashi Arora, vice president, marketing, Kotak Mahindra Bank. Thats not a small gain considering that your current account does not pay you any interest.And if, meanwhile, you want to buy a big-ticket home theatre system, the minute you swipe your card the invested sum will return to your account. Banks are also attempting to reach out to residents of metropolitan cities where people are pressed for time (what with long commuting hours, traffic jams and both spouses working), beyond conventional banking hours. ICICI Bank, for example, introduced cardinal to eight banking hours, seven days of the week, in major cities. Not to be outdone, some of the other private banks have also done this too.HDFC Bank even has a 24-hour branch at Mumbais international airport. INDIAN BANKING IN 2010 The interplay between policy and regulatory interventions and management strategies will determine the performance of Indian banking over the next few years. Legislative actions will shape the regulatory stance through six key elements industry structure and sector consolidation exemption to deploy capital regulatory covera ge corporate governance labor reforms and adult male capital development and support for creating industry utilities and service bureaus.Management success will be determined on three fronts fundamentally upgrading organisational capability to stay in tune with the changing market adopting value-creating M&A as an avenue for growth and continually innovating to develop new business models to access untapped opportunities. Through these scenarios, we can paint a picture of the events and outcomes that will be the consequence of the actions of policy makers and bank managements. These actions will have dramatically different outcomes the costs of inaction or insufficient action will be high. Specifically, at one extreme, the sector could account for over 7. per cent of GDP with over Rs.. 7,500 billion in market cap, while at the other it could account for just 3. 3 per cent of GDP with a market cap of Rs. 2,400 billion. Banking sector intermediation, as measured by total loans as a p ercentage of GDP, could grow marginally from its current levels of 30 per cent to 45 per cent or grow significantly to over 100 per cent of GDP. In all of this, the sector could generate employment to the tune of 1. 5 million compared to 0. 9 million. Today availability of capital would be a key factor the banking sector will require as much as Rs. 00 billion (US$ 14 billion) in capital to fund growth in advances, non-performing loan (NPL) write offs and investments in IT and human capital up gradation to reach the high-performing scenario. Three scenarios can be defined to characterize these outcomes oHIGH PERFORMANCE In this scenario, policy makers intervene only to the extent required to ensure system stability and protection of consumer interests, leaving managements free to drive far reaching changes. Changes in regulations and bank capabilities reduce intermediation costs leading to increased growth, innovation and productivity.Banking becomes an even greater driver of GDP gr owth and employment and large sections of the population gain access to quality banking products. Management is able to overhaul bank organizational structures, focus on industry consolidation and transform the banks into industry shapers. In this scenario we witness consolidation within public sector banks (PSBs) and within private sector banks. Foreign banks begin to be active in M&A, buying out some old private and newer private banks. Some M&A activity also begins to take place between private and public sector banks.As a result, foreign and new private banks grow at rates of 50 per cent, while PSBs improve their growth rate to 15 per cent. The share of the private sector banks (including through mergers with PSBs) increases to 35 per cent and that of foreign banks increases to 20 per cent of total sector assets. The share of banking sector value adds in GDP increases to over 7. 7 per cent, from current levels of 2. 5 per cent. Funding this dramatic growth will require as much a s Rs. 600 billion in capital over the next few years. oEVOLUTION indemnity makers adopt a pro-market stance but are cautious in liberalizing the industry.As a result of this, some constraints still exist. Processes to create highly efficient organizations have been initiated but most banks are still not best-in-class operators. Thus, while the sector emerges as an important driver of the economy and wealth in 2010, it has still not come of age in comparison to developed markets. Significant changes are still required in policy and regulation and in capability-building measures, especially by public sector and old private sector banks. In this scenario, M&A activity is driven primarily by new private banks, which take over some old private banks and also merge among themselves.As a result, growth of these banks increases to 35 per cent. Foreign banks also grow faster at 30 per cent due to a relaxation of some regulations. The share of private sector banks increases to 30 per cent of total sector assets, from current levels of 18 per cent, while that of foreign banks increases to over 12 per cent of total assets. The share of banking sector value adds to GDP increases to over 4. 7 per cent. oSTAGNATION In this scenario, policy makers intervene to set restrictive conditions and management is unable to execute the changes needed to enhance returns to shareholders and provide quality products and services to customers.As a result, growth and productivity levels are low and the banking sector is unable to support a fast-growing economy. This scenario sees limited consolidation in the sector and most banks remain sub-scale. New private sector banks continue on their growth trajectory of 25 per cent. There is a slowdown in PSB and old private sector bank growth. The share of foreign banks remains at 7 per cent of total assets. Banking sector value adds meanwhile, is only 3. 3 per cent of GDP. oNEED TO CREATE A MARKET DRIVEN BANKING SECTOR WITH ADEQUATE management ON SOCIAL DEVELOPMENTThe term policy makers, refers to the Ministry of Finance and the RBI and includes the other relevant government and regulatory entities for the banking sector. The coordinated efforts between the various entities are required to enable positive action. This will spur on the performance of the sector. The policy makers need to make coordinated efforts on six fronts Help shape a superior industry structure in a phased manner through managed consolidation and by enabling capital availability.This would create 3-4 global sized banks controlling 35-45 per cent of the market in India 6-8 national banks controlling 20-25 per cent of the market 4-6 foreign banks with 15-20 per cent share in the market, and the rest being specialist players (geographical or product/ segment focused). Focus strongly on social development by moving away from universal directed norms to an explicit incentive-driven framework by introducing credit guarantees and market subsidies to encourage leading public sector, private and foreign players to leverage technology to innovate and profitably provide banking services to lower income and rural markets. Create a unified regulator, distinct from the central bank of the country, in a phased manner to overcome supervisory difficulties and reduce compliance costs. Improve corporate governance primarily by increasing board independence and accountability. Accelerate the creation of world class supporting infrastructure (e. g. , payments, asset reconstruction companies (ARCs), credit bureaus, back-office utilities) to help the banking sector focus on core activities. Enable labor reforms, focusing on enriching human capital, to help public sector and old private banks become competitive. NEED FOR DECISIVE ACTION BY BANK MANAGEMENT Management imperatives will differ by bank. However, there will be common themes across classes of banks PSBs need to fundamentally strengthen institutional skill levels especially in sales and mar mark eting, service operations, risk management and the overall organizational performance ethic. The last, i. e. , strengthening human capital will be the single biggest challenge. Old private sector banks also have the need to fundamentally strengthen skill levels.However, even more imperative is their need to examine their participation in the Indian banking sector and their ability to remain independent in the return of the discontinuities in the sector. New private banks could reach the next level of their growth in the Indian banking sector by continuing to innovate and develop tell apart business models to profitably serve segments like the rural/low income and affluent/ HNI segments actively adopting acquisitions as a means to grow and reaching the next level of performance in their service platforms.Attracting, developing and retaining more leadership capacity would be key to achieving this and would pose the biggest challenge. Foreign banks committed to making a play in India will need to adopt alternative approaches to win the race for the customer and build a value-creating customer franchise in advance of regulations potentially opening up post 2009. At the same time, they should stay in the game for potential acquisition opportunities as and when they appear in the near term. Maintaining a fundamentally long-term value-creation mindset will be their greatest challenge.The extent to which Indian policy makers and bank managements develop and execute such a illumine and complementary agenda to tackle emerging discontinuities will lay the foundations for a high-performing sector in 2010. CONCLUSION We can conclude that the financial sector is a nerve system of Indian economy. Banking plays an important role in development of economy. For steady growth in economy innovations and development in financial sector is very important. Economy of any country faces lots of challenges and problems. To tackle those problems financial sector plays a vital role.Th e financial sector makes the economy efficient to the extent where it can rival other developed economies in the world. Financial sector also faces lots of problems but it should develop certain strategies to come out of these problems which is very important for healthy growth of economy. 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