strategies of growth & time and cost

7/29/2019 Strategies of Growth & Time and Cost

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PRUDENTIAL NORMS

MARKET DISCIPLINE

BENCH MARKING BY INTERNATIONAL STANDARDS

UNIVERSAL BANKING

TECHNOLOGY IN BANKING

H.R.D. IN BANKINGTHE ROLE OF ECONOMISTS


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Strong & resilient financial system key pre-requisites forfinancial stability & economic progress.

This has been supported concurrency by heighteued

market discipline, pre-active & comprehensive supervision

of financial system.The New Basel Accord rests on three mutually reinforcing

pillars:-

1. Minimum capital requirement

2. Processes of supervisory review3. Market discipline


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Processes of transparency & market disclosure of critical

information describing the risk profile, capital structure &

capital adequacy are assuming increasing importance in the

emerging environment.

Banks are currently required to disclose in their Balance Sheet.

Information on maturity profiles of Assets & Liabilities.

Providing Information on capital, provisions, share holdings of

the government, value of investments in India & Abroad.


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An Important development in this regard has been the move to

set up universally accepted standards & codes for Bench

Marking Domestic Financial System.

There are three levels at which action is necessary :-1. Legal

2. Policy & Procedure

3. Market Practices by Participants


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Banks have undertaken traditionally non banking activitiessuch as :-

1. Investment Banking

2. Mortgage Financing Securitisation

3. Particularly Insurance


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In the Banking Sector it can reduce costs, increase volumes &

facilitate customized products.


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Factors such as skills, attitudes & knowledge of personnel

play a critical role in determining the ability of banks to deliver

value to customers.

H.R.M Strategies include managing change commitment,

achieving flexibility &improving the team work.


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Today's operational aspects of the functioning of banks are

attracting intensive research by professional economists in

measuring & modeling different kinds of risks faced by banks,

the behaviour of risk return relationship associated with port

folios & the impact of fluctuations in financial market.


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INTRODUCTION

Delays & cost overruns in public sector investmentscan raise the capital-output ratio in the sector &

elsewhere, bringing down the efficacy of investments.

Yet there are no estimates of the delays & cost

overruns & of their opportunity cost.

A study arrives at rough estimates of the delays and

cost overruns, and the opportunity cost in terms of the

extra capital X time that is used up. Cost overruns (at80%) and the extra `capital X time' incurred (about

190%) are very large; even after removing the

increase due to inflation!


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Cont

The Public Sector (PS) occupies an important place in the Indian

economy. As a leading sector, a substantial part of the autonomous

investments arise therein. These investments pull (and push) along

other investments in the private corporate and small and cottage

industries

Delayed investments, have the evident effect of lowering

the growth rates from planned ones. If cost overruns are pervasive nd

increase the cost of investment in real terms, they raise the capital -

output ratio in the PS, an effect which can spread to other sectors if

the PS raises the prices of its output, since much of the output of the

PS constitutes input to the private sector and to itself. The

transmission mechanism is through price increases of investment and

intermediate goods at a higher rate than price increases of other goods


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Extent of delays and cost

overruns :

Delays in project implementation and the attendantcost overruns have become a regular feature of publicsector projects.

Delays have been there right from the early sixties

One of the motivations in setting up the ProgrammeImplementation Ministry was to monitor and report onproject implementation related to public sectorinvestments.

Since the mid-sixties delays and cost-overruns haveincreased, trends in delays and cost overruns in publicsector projects are difficult to compile because theinformation is not available.


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Cont

As on March 31, 1987, there were 290 medium &

large projects in the Public Sector under

implementation.

They include only projects sponsored by thecentral Government.

Of these, 186 had cost overruns. Similarly, 162

projects had time overruns or were anticipated to

have time overruns.


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REASONS or PROBLEMS

Poor project design & Implementation

Inadequate funding of projects

Bureaucratic indecision Lack of coordination between

enterprises

Faulty appraisal by the government..


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Cont

Thin spread of financial resources

Technical and other incompetencies

Problem with foreign technicalcollaborators

Delays on the part of contractors and

equipment suppliers.

Failure of coordination by the

government


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strategies of growth & time and cost

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