The growth of Black money is shown in the graph embedded below.
Black Money in Indian context
Many people confuse black money with
A parallel economy is one which is illegal and runs opposite to legal economy. However in Indian case the legal and illegal economy are interlaced together. The legal economy emerges out of illegal and vice versa.
An illegal economy is one which completely originates out of illegal activities. However in Indian case legal and illegal economy is interlaced.
Irregular economy is one which is run by irregular institutions. Irregular institutions are those which influence regular/formal institutions for economic advantage.
It is one in which income is hidden from tax authorities. However Indian tax laws itself are full of flaws and let people hide their income easily.
Why Black Money
In Indian context the generation of black money occurs due to the interactions between the triad.
There is a constant conflict between capital and labor markets, the unorganized sector which always has been taken advantage of and a realization that manipulation of policies can win the market place has led to the growth of black money in India.
Major chunk of black money in India is invested in Real Estate and Share markets as in both these markets capital gains can exceed more than 30% mark. Both are ideal conduits for circulating black incomes
Conduits for black money
Hawala: Illegal movement of money is done through a process called Hawala. An initial transaction can be a remittance from a customer (CA) from country A, or a payment arising from some prior obligation, to another customer (CB) in country B. A hawaladar from country A (HA) receives funds in one currency from CA and, in return, gives CA a code for authentication purposes. He then instructs his country B correspondent (HB) to deliver an equivalent amount in the local currency to a designated beneficiary (CB), who needs to disclose the code to receive the funds. HA can be remunerated by charging a fee or through an exchange rate spread. After the remittance, HA has a liability to HB, and the settlement of their positions is made by various means, either financial or goods and services.
Economics of Gold: The next best option for investing black money is Gold. India is the highest consumer of gold in the world! In the early 90s, import and export of gold was restricted as the government realised that saving
Marketing Of Financial Services Channels Of Distribution Sbi Economics Essay
Financial products act as an investment avenue and provide the required financial security to the investors based on the risk-return profile of the financial products. In the past, traditional financial products were offered in India through government initiatives by Public Sector Banks (PSBs) (deposit account, credit account), Life Insurance Corporation (LIC), and postal department (recurring deposit, National Saving Certificate, Kisan Vikas Patra). However, in recent years with the advent of liberalization of financial services industry, diverse financial products have been introduced through participation of private and foreign entities in addition to the public sector enterprises. These include products such as debit and credit cards by banks, open-end and closed-end mutual fund schemes (Exchange Traded Funds (ETFs), Index Funds, Systematic Investment Plans (SIP), sector funds, etc.), life and non-life insurance schemes (Unit Linked Investment Plans (ULIPs), pension plans, children education plans, etc.). It further includes shares and debt securities offered by various entities, investments in which are mainly facilitated by the brokerage houses. This has led to rising competition through introduction of innovative and attractive products, regulatory initiatives and growth in the investor base along with increased marketing activities in the financial sector.
Channels of distribution used by SBI State Bank of India enjoys the largest banking franchise in India. Along with its 7 Associate Banks, State Bank Group has the unrivalled strength of over 14,500 branches across the country, arguably the largest in the world.
The distinction of channels in the SBI is: Personal distribution systems include all channels like agencies of different models and brokerages, bancassurance, and work site marketing.
Direct response distribution systems are the method whereby the client purchases the insurance directly. This segment, which utilizes various media such as the Internet, telemarketing, direct mail, call centers, etc., is just beginning to grow.
Distribution channels – SBI SBI is using this process for the distribution of services SBI has 2 main distribution channels i.e Branch banking and Non-branch banking. In branch banking there is 2 more distribution into rural and urban, it means the bank have the branches in rural and urban areas. In non branch banking there is also rural and urban distribution, but the rural area further divided into three channels Business Correspondent Model, Business Facilitator Model and electronic transfer of funds. In Business Correspondent Model the bank use network of NGOs, post offices etc and in Business Facilitator Model the bank use the handheld devices like cash-in and cash-out. In Electronic Transfer of Funds the bank use many tools like internet banking, phone banking, credit card, ATM, smart cards, direct selling agents etc. in urban areas bank is not using Business Correspondent Model, Business Facilitator Model but Electronic Transfer of Funds. Other channels are:
Tap the Kiosks under CSC scheme across the country.
Finger Print device is provided by the bank.
Organizing Campaigns at village level to educate rural customers about various financial offerings of SBI.
Organizing meetings with village residents at Gram Panchayat level along with Village Sarpanch, wherein the Sarpanch introduces the BC (CSPs)