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Financial Inclusion And India Economics Essay

The Indian growth story has been chartering exponential graphs since quite some time and there is little doubt that the potential for further growth is only getting bigger with each passing day. The demographic dividend is a significant factor behind the optimism prevailing in the economy as policy makers realize the significant competitive advantage on account of the same. Channelizing this demographic dividend might well be the biggest challenge confronting our ambitious plans to take on the world and make our mark on the global economy.
Financial Inclusion therefore, assumes paramount importance in the light of the aforementioned vision. With the majority of the masses still outside the purview of the financial system, it remains to be seen how soon can the Indian economy bring these neglected few into the folds of the ‘burgeoning’ economy and utilise their services in generating significant and lasting momentum in our growth plans. It is therefore no surprise when one observes the prevailing belief in the current global economic scenario – the more developed the society is, the greater the thrust on empowerment of the common person and low income groups.
In simple terms, financial inclusion is delivery of banking services at an affordable cost to the vast sections of disadvantaged and low income groups. It is an integral policy feature for not just the governments of the developing world but also the developed ones. Unrestrained access to public goods and services is the sine qua non of an open and efficient society. As banking services are in the nature of public goods, it is essential that availability of banking and payment services to the entire population without discrimination is the prime objective of the public policy.
The costs of financial exclusion are varied and consist of increased travel requirements, higher incidence of crime, and general decline in investment, difficulties in gaining access to credit or getting credit from informal sources at exorbitant rates, increased unemployment, etc. It therefore seems plausible to state that financial exclusion is the stepping stone to social exclusion.
The dismal record of the Indian economy in attracting the ‘neglected few’ to the banking folds can be attributed to the following reasons: remote, hilly and sparsely populated areas with poor infrastructure, lack of awareness, low incomes/assets, social exclusion, illiteracy, distance from branch, branch timings, cumbersome documentation and procedures, unsuitable products, language, staff attitudes etc. These factors are instrumental in the high transaction costs and the accompanying procedural hassles. The sorry situation is worsened further by the easy access to ‘informal’ sources of credit – say, the moneylenders who lend at exorbitant rates.
Bank nationalization in India marked a paradigm shift in the focus of banking as it was intended to shift the focus from class banking to mass banking. The rationale for creating Regional Rural Banks was also to take the banking services to poor people. There are certain under-banked states such as Bihar, Orissa, Rajasthan, Uttar Pradesh, Chattisgarh, Jharkhand, West Bengal and a large number of North-Eastern states, where the average population per branch office continues to be quite high compared to the national average. The new branch authorization policy of Reserve Bank encourages banks to open branches in these under banked states and the under banked areas in other states.
Thankfully, for our economy, the policy makers are slowly but surely stepping up the efforts for a major push towards financial inclusion. The RBI has been at the forefront of this landmark movement with a slew of welcome measures. In November 2005, banks were advised to make available a basic banking “no-frills” account with low or nil minimum balances to expand the outreach of such accounts to vast sections of the population. Also, in order to ensure that persons belonging to low income groups, both in urban and rural areas do not encounter difficulties in opening bank accounts, the know your customer (KYC) procedures for opening accounts has been simplified for those persons with balances not exceeding Rs 5000 and credits in the accounts not exceeding Rs.100000 in a year.
In January 2006, banks were permitted to utilise the services of non-governmental organisations (NGOs/SHGs), micro-finance institutions and other civil society organisations as intermediaries in providing financial and banking services through the use of business facilitator and business correspondent (BC) models. The BC model allows banks to do “cash in – cash out” transactions at the location of the BC and allows branchless banking.
In view of their vast branch network (45000 rural and semi urban branches) public sector banks and the regional rural banks have been able to scale up their efforts by merely leveraging on the existing capacity. Financial Inclusion is now being viewed by these banks as a huge business opportunity in an overall environment that facilitates enterprise and growth. It provides them a competitive advantage and defines a clear niche for their growth.
The National Bank for Agriculture and Rural Development (NABARD) has been an active player in India’s quest towards 100% financial inclusion. NABARD has an able partner in the Indian Institute of Banking

Primark Is A Private Limited Company Economics Essay

According to the information given by the case study, Primark is a private limited company. As it indicates, it has shareholders with limited liability. This type of company may be incorporated under the laws of England, Wales, Scotland, the Republic of Ireland and certain Commonwealth countries. The shares of a private limited company may not be offered to the general public and because they are not on the stock exchange market.
(b) Private company is limited by shares and is not offered to the general public. Shareholders have limited liability.
A private company must have at least one director who is an individual and a secretary until April 2008.
It has both authorized share capital (the one declared to the Register of Companies) and issued share capital (the total of company’s shares existing hold by shareholders)
Private shares are transferred by private agreement between the buyer and the seller
Public company has limited liability and sells shares to the public. It can be an unlisted or listed company on the stock exchange market. It requires a minimum of two directors, who can be anyone.
Cooperative is a business organization owned, democratically controlled and operated equally by a group of individuals for their mutual benefit (which could be economic, social, and cultural.
Its membership is opened; anyone that satisfies certain non-discriminatory conditions can be member of a cooperative.
The economic benefits are distributed proportionally to each member’s level of participation in the cooperative (by a dividend on sales or purchases, rather than according to capital invested).
(c) Primark is part of the secondary or industrial sector. This sector includes the creation of finished tangible products through using primary sector’s production. Often divided into light and heavy industry, Primark obviously makes part of the light industry of the primary sector.
(d) There are 3 distinct sectors:
The primary sector making use of natural resources. We can enumerate agriculture, fishing or forestry.
The secondary sector are all manufactured and other processed goods (cf1(c))
And finally, the tertiary sector is the one producing services. It’s the sector that produces intangible products through knowledge, time, experience, attention, advice and discussion in order to improve productivity, performance, potential and sustainability.
We can also consider the quaternary sector which includes all the process of information such as education, research and development.
2. (a) My aim according to my appointment as an expert business consultant, is to give some advises to the Primark management in order increase its turnover by reducing some losses through instituting strategies. In order to response to the assessments given to me, I consider to implement 2 different strategies using different aspects which characterize the business actions. These actions will particularly concern the enterprise management. Business strategies are the match between internal capabilities and external relationships. Therefore stakeholders play a crucial role in implementing new and reliable strategies for a company. They describe how the organization responds to its suppliers, its customers, its competitors, and the social and economic environment within which it operates. To well define a company strategy, we need to evaluate and take in consideration its past actions and achievement. We also need to fix its future needs and achievements.
According to our case, it seems that Primark didn’t structure its organization to maximize its advantages. It could be explain by a misunderstanding of its relations between each of its stakeholders. That’s may be one of its principal error is the lack of control on its production but also the lack of distinctive identity according to its product. Those 2 criticisms are linked to its abroad suppliers. Primark choose them in order to make reliable economy on the production of its stuffs. But one of its evident error is to have chosen a non-distinctive production process which removes its production individuality concerning to its products quality. This can be explained through the fact that nowadays, most of the firms used to import their products from Asian suppliers that unify the products on the UK market. This lack of identity may be what explained why Primark can’t impose it on the European market through its other branches.
In order to resolve this problem link to its product itself, the UK firm, should turn its production process to local or regional. That will have for result to reduce some of its expenses link to the new taxations on imports that the UK government plan to levy and it will also create a more significant adding value with European Union label and recognition.
The corporate strategies could select different approaches to achieve its goals, primarily financial. It can axe its strategy on mergers and acquisitions, strategic alliances, joint ventures, tactics for diversification and growth, and the managing of corporate resources and capabilities.
Strategy on mergers and acquisitions
We can denote a distinction between mergers and acquisitions.
When a company takes over another and plainly establishes itself as the new holder, the purchase is called an “acquisition”. From a legal point of view, this means that the goal company still remains the same and the legal entity still remains as autonomous, even if it’s controlled by the new acquirer.
In the logic of the term, a merger happens when two firms agree to go forward as a sole new organization rather than remain separately owned and operated. This kind of action is more precisely referred to as a “merger of equals”. The firms are often have the same characteristics such as the same size, assets etc.
A merger is an agreement between both CEOs to join together for the best interest of their companies and when the deal is unfriendly (that is, when the target company does not want to be purchased) it is always regarded as an “acquisition”.
A merger could have the effect to improve financial performance through these followings:
Economy of scale: the joint company can reduce its fixed costs by removing duplicate departments or operations, reducing the costs of the company relative to the equal revenue stream, which have the outcome to increase profit margins.
Economy of scope: refers to demand-side changes by increasing or decreasing the scope of marketing and distribution of different types of products.
Increased revenue or market share: assumes that the buyer will captivate a major competitor and as a result increase its market power to set prices.
Cross-selling: the new joint company could touch new type of market by associated its activities and respective sectors. It can acquire and sell complementary products.
Synergy: may concern managerial economies such as the improved opportunity of managerial specialization or purchasing economies due to increased order size and associated bulk-buying discounts.
Taxation: an acquisition or a merger can have the aim to reduce tax liability. This can then be a save of money.
Vertical integration: Vertical integration occurs when an upstream and downstream firm merges (or one acquires the other). One reason is to internalize an externality problem, for example, the double marginalization which can occur when both the upstream and downstream firms have monopoly power and each firm reduces output from the competitive level to the monopoly level. Subsequent to a merger, the vertically integrated firm can reduce losses by setting the downstream firm’s output to the competitive level. This increases profits and consumer surplus. A merger that creates a vertically integrated firm can be profitable.
Hiring: some companies use acquisitions as an alternative to the normal hiring process.
Absorption of similar businesses under single management: similar portfolio invested by two different mutual funds namely united money market fund and united growth and income fund, caused the management to absorb united money market fund into united growth and income fund.
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