1. Write an essay in about 200 words on any one of the topics given below. (5×3 = 15 Marks)
a. Micro finance in India b. How useful the government schemes are?
c. Need of banking reforms
2. Read the following passage carefully and answer the given questions. While answering each question please mention the sub-question number correctly. (3×5=15 Marks)
Xandersol, a new, potentially lethal drug, is being blamed for numerous illness and the deaths of six Anchorstown residents. According to water and sewer authority officials, the drug has somehow found its way into the city water system, resulting in the contamination of household drinking water for thousands of local residents. The question lies not in determining how, but, more importantly, where the drug entered the city water system; once the leak is found it can quickly be contained. Experts agree that, given the relative scarcity of Xandersol in amounts large enough to affect an entire community, the leak could only have occurred in the following three locations – the Griffen Pharmaceuticals Production Facility (GPPF), the Waste Pharmaceuticals Processing Plant (WPPP), or the Riverdale Testing Center (RTC).
Support for the claim that Xandersol entered the city water system at the GPPF is widespread. According to a recent poll, an overwhelming majority of local residents (nearly 80%) believe this to be the case. Marcia Downing, a mother of three, advocates that the GPPF is to blame. “It seems pretty obvious that the leak happened at the GPPF, “she says. “Just ask around. Nearly everyone on the block will tell you so. I mean, I don’t understand what the big mystery is. If everyone says it’s true, then it’s probably true. Strength in numbers,” she says. “That’s what my mom used to say. “As a result of the disaster, Marcia has had to take off work to care for her children, whom she believes have been adversely affected by the contaminated water. “I’ve taken off three days since the disaster. And those are unpaid days. I don’t have the luxury of paid sick days like some people.” She shakes her head. “You know things are bad when you can’t even drink the water.”
While support for the claim that Xandersol entered the water at the GPPF is popular, this theory lacks the support of widely recognisable figures such as bug name actor Evert Milkin. Milkin, on location for a shoot for his upcoming blockbuster movie, had a chance to spend two days in Achorstown. Upon being warned about the drinking water problem, he decided to investigate for himself. Milkin was shocked at what he found. He purports to have discovered a dried pool of Xandersol residue collected about the entrance of a city sewer opening just outside the WPPP. Acting upon these findings, Milkin has galvanized many to support the calm that the Xandersol entered the city water system at the WPPP. Alyssa Davis, one of Milkin’s newest followers, explains, “If a nationally recognised and highly respected actor like Milkin tells you it’s true, you can rest assured it most definitely is. “Milkin says that he won’t comment on his plans to indict the WPPP for negligence, but he says that the “wheels are in motion.” Since Milkin’s investigation, the WPPP has come under increased scrutiny. But that is not to say the RTC is not also feeling the heat.
According to local engineer Todd Severs, the RTC is the one at fault. “It should be pretty clear to everyone that the RTC is responsible for the disaster. Just take a look at their past record. In the last two years alone, the RTC has incurred 16 citations for noncompliance with federal and state drug testing standards. “Severs continues, “Make no mistake, a corporation like that is the one to turn your attention to in a situationlike this.” In recent days, Severs statements have begun to resonate with the public. When confronted with growing concern, the RTC issued the following statement in its defence: “We of the RTC are troubled by the recent accusations regarding our involvement in the contamination of the city water system. While we understand that much of this blame stems from our poor record of upholding testing standards. We would like to remind local residents of the simple, yet important facts: The RTC has been testing the drugs that the people have come to depend on. What is more, we have done it on a shoestring budget. Many of our employees are forced to work under meagre circumstances – circumstances that few would put up with unless they weren’t so dutifully driven to carry out this noble endeavour. Several of our employees are barely able to clothe their children and put food on the table. In our quest to carry out this noble endeavour, several of our employees are barely able to clothe their children and put food on the table. In our quest to create safe, helpful, reliable drugs, regardless of the hardships we suffer, it seems we have now become completely unappreciated.”
Reports of those adversely affected by Xandersol are on the rise. In desperation, residents have resorting to fitting out their taps with makeshift Xandersol filters. For many, it seems no solution is on the horizon. In passing, we conducted a final interview with a man pushing a cart who, despite our efforts, evades identification. “Instead of wasting time blaming everybody,” says the man, “why not just check all three?” It seems he is referring to the GFFC, WPPP, and RTC – the three potential leak sites. “I’m thirsty”, he continues, moving away. “You wouldn’t happen to have any bottled water, would you?”
Now answer the following questions:
a. How Xandersol proved to be deadly for the residents?
b. On what ground Marcia was blaming GPPF for the contamination of water?
c. What was the cause of Milkin’s shock and how did it change the opinion of a few of his followers?
d. How did RTC defend itself for the blames that were put on it regarding the contamination of water?
e. According to the passage, residents were in great desperation. What remedies do you suggest?
3. Write a précis of the following passage in about 150 words. Give a suitable title.
Retail banking is a service for two types of individuals: savers and borrowers. Services offered under this include savings and current accounts, mortgages, personal loans, debit cards, and credit cards. It acts as an intermediary between two sets of people in society: preponers and postponers. Preponers are the borrowers who prepone their buying without having money today. On the other hand, postponers are the savers who postpone their buying despite having the money today. The term is generally used to distinguish these mass-market banking services from investment banking, commercial banking or wholesale banking.
Retail banking is analogous to a one-shop for as many financial services as possible on behalf of retail clients. Some retail banks have even made a push into investment services such as wealth management, brokerage accounts, private banking and retirement planning. Multiple advantages for the banks are acquisition of a huge customer base, multiple product offerings, better pricing and profitability, scope for cross selling and up selling financial as well as related products for increased per customer revenue and of course better risk proposition. The forces that are shaping the Personal Financial Services (PFS) in Asia are the continuing surge of new customers entering the banking system, the explosive growth of consumer credit at 30 percent per annum and the emerging need for wealth management due to increasing affluence.
With rising income levels, India is becoming an increasingly attractive market for retail financial products. In addition to consumer credit, payment products such as credit and debit cards will drive growth, depending on issuer’s ability to penetrate second tier towns and segments such as self employed.
Current offerings will be inadequate to capture these opportunities, leaving a gap for innovative players to fill in. RBI had constituted the Jalan committee to examine the fit and proper criteria, business plans, corporate governance practices, etc, of new bank license applicants. Over two-dozen aspirants from the private and public sectors, including Anil Ambani-led Reliance Capital, Aditya Birla Nuvo well as Non Bank Financial Companies (NBFCs) such as Shriram Finance, Religare, L&T Finance and IDFC, have applied for bank licenses. Financial inclusion remains a key issue as far as retail banking is concerned. The bottom of the pyramid remains underserved and therefore it represents an attractive opportunity for the bankers to en-cash. While retail banking offers phenomenal opportunities for growth, the challenges are equally daunting.
1. (a) Micro Finance in India Micro finance has proved to be extremely effective as a means of improving the economic condition and empowering the rural poor through participatory credit lending schemes. Micro finance helps the poor in various ways, not only by improving their economic condition, but also by means of the attendant benefits that a higher income level has on factors like health, education, economic and social status of women, and the general standard of living.
The basic institutions involved are Self-Help Groups (SHGs) and Micro Finance Institutions (MFIs). SIDBI and NABARD are prominent Indian apex organisations through which the government is funnelling its investments in micro finance. NABARD and SIDBI follow different models for making credit available to MFIs. Commercial banks, regional rural banks and cooperatives have also ventured into this field because of the high rates of repayment (above 85%) in micro credit activities. With the growing effectiveness and popularity of micro credit, MFIs have spread their networks far and wide in an effort to service more people. This results in the present Management Information Sytems (MIS) coming under pressure. MIS used at present in MFIs are either manual or relatively primitive software. Presently, there is no standardised software developed specifically for micro finance activities in India to identify the needs and expectations of MFIs.
The study revealed that what MFIs really need is an inexpensive, user friendly, customisable and rugged software system, which can record social parameters for further analysis at the macro level. The aspect of security is extremely important. Other vital requirements are that the system should be upgradable, adaptable to portable systems like smart cards and hand-held devices, and networked for transfer of data over the internet or telephone to a central server. Once the pressing IT needs of the microfinance sector are met, it can extend its reach and range of activities and improve its functioning, thus playing a major role in poverty alleviation.
(b) How useful the Government Schemes Are? A good businessman is one who will make you part with your money for a product or service and then have you believe that he gave you something worth a lot more for next to nothing. Recently the government has launched new social security schemes. The schemes, which include accident insurance, life insurance and a pension plan, supposedly target people from the economically deprived and the unorganised sections, who are neither covered by any form of insurance nor get any. But there is a catch. Only people who have a bank account can avail of these schemes. Out of a population of 1.2 billion, we only have 150 million with bank accounts and, of these, a good third don’t have any credit balance. Since 80% - 90% do not have bank accounts, the Govt.’s new “social security” schemes do not apply to them either.
The accident insurance, styled as PradhanMantriSurakshaBimaYojana, will offer a renewable accidental death-cum-disability cover of Rs.2 lakh for a premium of Rs.12 per annum. The life insurance scheme, called PradhanMantriJeevanJyotiYojana, will offer a renewable one-year life cover of Rs.2 lakh for a premium of Rs.330 a year. The Atal Pension Yojana, is a pension scheme that is meant to focus on the unorganised sector and provide subscribers a fixed minimum pension of Rs.1000 to Rs.5000 per month starting at the age of 60 years, depending on the contribution option exercised on entering at an age between 18 and 40 years. The period of contribution by any subscriber under this scheme would be 20 year or more.
Very simply, this means that you will get back what you invest. One cannot say “more than what you invest” because, in all such schemes, you will get only a part of what your money would amount to after the interest on investments is factored in. From the sketchy details provided on these three schemes, it is clear that they are meant only for those with bank accounts, for those with money in their accounts and those willing to part with their money for any or all of them. The schemes, by themselves, are quite good, but neither are they new nor is there any budgetary input from the government. In short, the schemes are directly funded with the money invested by the participants. Then how can the government, and the Prime Minister, claim ownership of the schemes?
(c) Need for Banking ReformsWhile going ahead with the processes and procedures for allowing new banks, the RBI should, simultaneously, reopen the banking reforms agenda. If this is not done corporates and small borrowers will continue to disbelieve the banking system and find out escape roots for deploying their surpluses and meeting their financial needs.
Perhaps because of a sense of futility in the present coalition scenario, the government of India and the Reserve Bank of India (RBI), in the recent past, have been making sub-sector-specific or issue-based observations on financial sector reforms. Reforms to be successful need a holistic treatment. There appears to be a studied silence on structural reforms in the financial sector, except for passing references to additional banking licenses to private players or changes in regulatory environment for the NBFCs.
These are more with the interests of certain stakeholders in view than the overall health of the financial sector. It has to be said to the credit of RBI that the central bank effectively brought to the fore the real issues and concerns of all stakeholders in the financial sector, about new banking licenses. In the present scenario, the central bank should take initiative to reopen the banking reforms agenda which was kept in the backburner after allowing some banks in the private sector during the introductory years of financial sector reforms.
The need of the hour is to ensure that all players in the business of banking in the formal sector, namely, commercial banks, cooperatives and RRBs remain healthy and perform their assigned roles effectively and the informal sector, through which banks and NBFCs support microfinance needs, is also brought under financial discipline through regulatory arms such as RBI, NABARD and state governments.
2. (a) Xandersol proved to be quite deadly for the residents of Anchorstown. This potentially lethal drug leaked somehow and got mixed-up with the drinking water. With the contaminated water, it reached the households and caused very severe damage to the local folks.
(b) Marcia blamed GPPF for the contamination of the city water. She was not so sure about that but she made her statement on the basis of the prevailing perception of the most of the folks in the territory. She asserted that if people were blaming GPPF then it might be true.
(c) The cause of Milkin’s shock was his own investigation. He found a dried pool of Xandersol residue just at the entrance of a city sewer opening outside WPPP. When his remark aired then the opinion of the people started to change. A few of his followers started believing what he said was true as he was an icon.
(d) When RTC was blamed for the contamination of the city water by the breakage of Xandersol, the firm defended itself by saying that it knew that the accusation was due to its poor testing standard. The firm was working in a budgetary constraint and was testing the drugs that the people have depended upon.
(e) No doubt, the leak was a major mistake. This should not have taken place in any case. But, now, when this has taken place, residents must think of a solution. They must stop drinking the contaminated water and switch to packaged water. Also, the authorities must step-in and see for an immediate remedy in this matter.
3. Retail banking is a service for savings and current accounts, mortgages, personal loans, debit cards, and credit cards. The term is generally used to distinguish these mass-market banking services from investment banking, commercial banking or wholesale banking. Retail banking is analogous to a one-stop shop for as many financial services as investment services such as wealth management, brokerage accounts, private banking and retirement planning. Personal Financial Services (PFS) in Asia are the continuing surge of new customers entering the banking system, the explosive growth of consumer credit at 30% annum and the emerging need for wealth management due to increasing affluence. Financial inclusion remains a key issue as far as retail banking is concerned. Retail banking offers phenomenal opportunities for growth, the challenges are equally daunting.
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