Industrial Development Bank of India was set up to accelerate the development of the country. A number of financial institutions came into existence after independence and were catering to a variety of needs of the industry. There was a lack of co-ordinating different institutions and it led to overlapping and duplication in their efforts. At the same time some gigantic projects of national importance were not getting required financial assistance. It was in response to this need that the Industrial Development Bank of India (IDBI) was established in 1964 as a wholly owned subsidiary of Reserve Bank of India. The bank was to act as an apex institution co-coordinating functions of all the financial institutions into a single integrated movement of development banking and supplementing their resources for industrial financing and as an agency for providing financial support to all worthwhile projects of national importance whose access to existing institutional Continue reading
Business Finance
Business Finance is that business activity which is concerned with the acquisition and conservation of capital funds in meeting financial needs and overall objectives of business enterprises.
Critical Evaluation of IAS 37
The International Accounting Standards Committee (IASC) issued IAS37 Provisions, Contingent Liabilities and Contingent Assets in September 1998. It replaced parts of IAS10 Contingencies and became operative for annual financial statements covering periods beginning on or after 1 July 1999. The objective of this standard is to ensure that appropriate recognition criteria and measurement bases are applied to provisions, contingent liabilities and contingent assets and that sufficient information is disclosed in the notes to enable users to understand their nature, timing and amount. The key principle of IAS37 is that a provision should be recognized only when a liability exists. Planned future expenditures are not recognized as provisions or contingencies, even if the board of directors has authorized them. IAS37 prescribes the accounting and disclosure for all provisions, contingent liabilities and contingent assets, except those resulting from executory contracts, except where the contract is onerous. Executory contracts are contracts under which Continue reading
Marakon Model of Shareholder Value Creation
The Marakon model was developed by Marakon Associates, a management consulting firm known for its work in the field of value-based management. According to Marakon model, a firm’s value is measured by the ratio of its market value to the book value. An increase in this ratio depicts an increase in the value of the firm, and a reduction reflects a reduction in the firm’s value. The model further states that a firm can maximize its value by following these four steps: Understand the financial factors that determine the firm’s value Understand the strategic forces that affect the value of the firm Formulate strategies that lead to a higher value for the firm Create internal structures to counter the divergence between the shareholders goals and the management’s goals. 1. Financial Factors The first step in this model is to identify the financial factors that affect the value of the firm. Continue reading
Development of Bank Payment Systems
As there is no single recipe for effective development of a national payment system, countries undergoing a reform process are frequently faced with questions relating to issues such as involvement and initiative for development of national payment systems, infrastructures needed and the supporting institutional arrangements, areas of priorities and so on. In order to give the necessary assistance and advice on the planning and implementation of reforms in national payment systems to the concerned authorities, the Committee on Payment and Settlement Systems (CPSS) has brought out a Report on Payment Systems Development (final Report in Jan 2006). The Report underlines that payment system development is a complex process that should be principally needs-based, not technology-based. Payment system reforms depend on parallel development of the banking system, institutional arrangements for payment services and payment infrastructures, and should therefore be a cooperative effort among the banking sector, regulatory agencies and other relevant Continue reading
Customer Services in Commercial Banks
Customer service is the service provided in support of a bank’s core products. Customer service often includes answering questions; handling complaints. Customer service can occur on site (as when an onstage employee helps a customer or answers a question) or it can occur over the phone or the Internet. Quality customer service is essential to building cordial customer relationship. Banking being a service industry, a lot depends on efficient and prompt customer service. Customer service is the most important duty of the banking operations. Prompt and efficient service with smile will develop good public relations reduce complaints and increase business. Why is Customer Service Important? Changing customer expectations: Today the customer is more demanding and more sophisticated than he or she was thirty years ago. The increased importance of customer service: With changing customer expectations, competitors are seeing customer service as a competitive weapon with which they differentiate their products Continue reading
The Role of the Management Accountant in Organizations
A management accountant’s duty is to provide information to users who are part of the organization from various levels. However, different levels of management has different information needs. Thus, a management accountant has to tailor the information for them. The first step that should be taken before the management accountant provides any type of information is that he should be clear and understand the company vision as the top, middle and bottom management of an organization. The top-level management is responsible for the long term strategic plan with strategic decisions for about 5 to 10 years time. Therefore the top management will create a mission, which will consist of a more specific goal that unifies company’s efforts. So, the management accountant should prepare budgets for top management accountant to decide which projects have to undertaken to achieve the company’s goals. Budget is a strategic plan that details the action that Continue reading