Volume 4  •  Number  8  •  August  2010

Regional Rural Banks (RRBs) : Performance Analysis

Agriculture and rural development form an integral part of India's development strategy, even in these days of electronic and telecommunication revolution that is having an edge over other development instruments. Rural development has been a sine qua non in the process of accelerating the pace of economic development and significantly improving the standard and quality of living of rural households. It is needless to emphasize that credit is a vital input for accelerating the pace of development of the rural economy through financing of agriculture and allied activities. Rural infrastructure and poverty alleviation programmes are meant for the weaker sections of the rural population.Majority of the rural folk are not able to meet their day-to-day requirements from their own sources of income, not to speak of investments in other productive enterprises for improving their economic conditions. Therefore, they have to depend on various financial agencies for arranging funds for making investment. Rural credit in India is a part and parcel of its economic development. Rural population is composed of agricultural producers, tenant cultivators, village artisans and landless labours. All these categories are in need of credit.

Dr.M.Selvakumar
Assistant Professor
Post Graduate Department of Commerce
Ayya Nadar Janaki Ammal College
Sivakasi,Tamil Nadu
umaselvakumar@yahoo.co.in

The concept of Reverse Mortgage (RM) is gaining momentum in India with the Finance Minister P. Chidambaram giving his nod in the Union Budget for 2007-08. Subsequently, the National Housing Bank (NHB), a subsidiary of the Reserve Bank of India (RBI), released the guidelines. This had led several banks to announce their intentions to launch the scheme. Taking the lead, Dewan Housing Finance Limited (DFHL) followed by Punjab National Bank (PNB) and Bank of Baroda (BOB), States Bank of India (SBI), etc. announced the scheme aimed at senior citizens.In a regular mortgage, a borrower mortgages his new/existing house with the lender in return for the loan amount, the same is charged at a particular interest rate and runs over a predetermined tenure. The borrower then has to repay the loan amount in the form of Equated Monthly Installments (EMIs), which comprise of both principal and interest amounts. The property is utilized as a security to cover the risk of default on the borrower's part.

N.Sravanthi
Associate Professor
Department of Business Management
St.Ann's PG College For Women
Hyderabad
sravanthi_stanns@yahoo.co.in

Technical And Financial Parameters Effect Concession Period: A Study

Inadequate transport infrastructure has been recognized as an impediment to the industrial and economic progress of any country. Governments worldwide invariably must cope with the widening gap between needed investments and available budgetary resources. They increasingly attempt to involve the private sector in the financing, design, construction, and operation of major infrastructure projects, with a view to exploit the private initiatives to implement public projects. In this context, the BOT concept is becoming a popular mode of privatization of transport infrastructure development (Tiong 1990)1.In recent years, governments in many countries have begun privatizing transportation infrastructure sectors .Some of the forces driving this movement include a scarcity of public resources, an increase in the demand for better service and a political trend toward the deregulation of infrastructures from public monopoly. Although the discussion and case study relate to conditions in municipalities in India, the inferences are likely to be of interest to transport infrastructure managers in developing countries and to those interested in the globalization of BOT projects.

Swapan Kumar Bagui
Ph.D Scholar
Department of Civil Engineering
Bengal Engineering & Science University
Howrah,West Bengal
swapanbagui@gmail.com

Dr.Ambarish Ghosh
Professor
Department of Civil Engineering
Bengal Engineering & Science University Howrah,West Bengal

 

Disinvestment Of Public Sector Undertakings In India-An Impact Study

In the post independence era, the newly elected Government of our country felt the need for rapid industrialization and rebuilding the nation from its under developed state caused by the British rule. With this end in view, the Government took the lead and introduced five year plans to achieve progress in industry, agriculture, health, education and many other allied sectors contributing to economic development. Governments at central and state level set aside a large portion of its resources for the purpose of promoting Public Sector Undertakings(PSU) which are owned and controlled by the Government. During this period, large number of PSU's sprang up in entire spectrum of industrial activities ranging from infra development to food and agriculture based sectors. Being a mixed economy, the Government also encouraged private investment in industrial field. The key feature of business activity during that period was the absence of competition between public and private sector through a system of reservation, licensing and import barriers. This has gradually reduced the efficiency of both public and private sector of our country in the later years.

Dr.M.K.Ramakrishnan
Lecturer
Zamorin's Guruvayurappan College
Calicut,Kerala

mk_zgc@yahoo.co.uk

Sandhya R.
Research Scholar
Department of Commerce
Zamorin's Guruvayurappan College
Calicut,Kerala
 

Managing Crisis To Recovery: The Road Ahead For India

According to Prof. James Van Horne of Stanford University, credit crisis in US, often caused or accompanied by real estate collapses, occurred on an average once every 14 years from 1800 to 1970s and once every 8 years since 1970. During the panic of 1819, real estate speculation involved farmland on the Ohio frontier. In the panic of 1837, there was a real estate bubble along the Mississipi. The panic of 1873 and 1893 involved investments in land near rail lines. The crash of 1929 was preceded by the bursting of real estate bubbles in Florida & Southern California. After 9/11, American people were encouraged to spend in the spirit of patriotism to help restart the failing economy. To fuel that spending, in the extraordinary political and psychological climate of that time, U.S. policy makers actively encouraged levels of borrowing and lending that would never have been allowed otherwise. Federal reserve cut interest rate to 1%, the financial services industry sensed that a lot of money could be made and went over-vigorously in real estate, seemingly unaware that low interest rate could be disguising larger risks. Commercial banks and investment banks lent for house purchases and consumer loans to borrowers who were not really equipped to repay. The easy lending pushed up housing prices, which then went up still higher, when speculators bought houses on the expedition of further price increases. The price rose significantly because of easier access to funds/loans as also historically low interest rate, looser lending, low appraisal standards and documentation. When the easy lending initially slowed and eventually stopped during 2006-07, housing prices peaked. However, once interest rates began to rise and housing prices started to drop moderately, refinancing became more difficult.Defaults and foreclosure activity increased dramatically as easy initial terms expired, home prices failed to go up as anticipated, and interest rates reset higher and this triggered a global financial crisis through 2007 and 2008. In the world economic forum annual meeting in Dalian, a Chinese participant remarked, "The teachers have made big mistakes." (Martin Wolf, Financial Times, Sep 14' 09).

Divya Srivastava
Research Scholar
Faculty of Management Studies
Banaras Hindu University
Varanasi,Uttar Pradesh
divyasri_28@rediffmail.com

Dr.Shashi Srivastava
Lecturer
Faculty of Management Studies
Banaras Hindu University
Varanasi,Uttar Pradesh
 

Significant Level of Financial Risk On Capital Structure

Finance is to play a vital role in all organizations and so, it leads the finance department to be a team player which is constructively involved in all operations of the sector. While analyzing the financial problems of an organization, the principal contents of the financial management can be said to be, i) How large should enterprises be and how fast should it grow? ii) In what form should it hold assets? And iii) What should be the composition of its liabilities? These three questions deal with the major financial problems of the firm. As such, the financial manager is concerned with the solution of three major problems relating to financial operations of the firm corresponding to investment, financing and dividend decisions. Of these three decisions, the most important decision to be made by the financial manager is decisions on financing. Broadly, finance personnel must decide when, where, and how to acquire funds to meet the investment needs of the firm. The central issue before the finance personnel is to determine the proportion of equity and debt with the effects of financial and operating risk factors. The combination of debt and equity is known as the capital structure of the firm. The finance personnel must strive to obtain the best financing combinations or the optimum capital structure for the firm.

Dr.K.Jothi
Faculty of Commerce
Karpagam University
Coimbatore,Tamil Nadu

jothikrishnasamy@yahoo.co.in