Category: MBA Seminar Topics

Introduction to Indian Automobile Industry Seminar Topic:

The automobile industry includes different types of automobile companies. Each and every company has its own importance and has developed a lot in the recent time period. This development leads to the heavy competition in the automobile industry and there are many top companies, which are under the automobile industry that sells cars. The companies like Toyota, Ford, Tata Motors, Maruti, Hyundai, Chevrolet, Skoda, Mahindra vehicles, Honda, BMW, Benz suppliers are the top automobile industries in India. These companies are offering different types of cars with high quality, high price, low price and fuel-efficient cars 

But recently in the year 2008 a new car called Tata Nano was introduced by Tata Motors which is the cheapest car in the world and it is one of the greatest achievements of Tata motors which is offering the car only for one lakh Indian rupees (approx. $ 2100 CAD). The automobile industry is playing a significant role within the growth and development of the economic standards of the country.  The automobile industry is the combination of the transport sector as well as the industrial sector and for this reason the automobile industry is playing a vital role in developing these industries 

Consumer behavior is a process of identifying how the individuals buy the products, how they will prefer the products and the reasons why they buy the specific products. Generally, there are different types of factors that will impact the buying behavior of the consumers such as the psychological, social, economical, environmental, anthropological etc.

The buyer or consumer continues to be a mystery.  For this reason, the buyer’s mind has been termed as a black box, which should be opened by the seller to be a successful marketer 

Introduction to NPA Of The Banks Future:

The commercials banks future image is more than the banks of the public sector will be observed to be flushed. Finally in the future, by observing the Trend Line recommends that the NPAs of the banks related to the public sector will decrease in the gross figure and net figures marginally over the subsequent coming years in the future. This is because of the higher provisions, and these provisions are been provided through the banks of public sector.

In NPAs, the real issue that needs to be identified is that though the percentage of the NPAs is observed to be declined over the years but absolute figure observed in real to be in maximizing way. In future years, it is interesting to observe that the NPAs both in terms of absolute figures and in terms of percentage of public sector banks in this vein. And the banks should follow certain measures in facing the problems related to the non-performing assets.

And the banks should make use of the acts which are allotted to them in order to recover the loans or assets by following certain measures within the recovery process and should even allot some ethics and principles to the recovery agents within the recovery process. The recovery process should not spoil the relationship between the banks and the customers.

The Indian banks should consider the Non-performing assets as the serious issues and should be able to face them without affecting the economy of the banks.

This study provides the detailed information on the problem called Non-performing assets which is been faced by the banks and the financial institutions. The non performing asset is considered as the significant problem which is showing the major impact on the economy of the banks and the financial institutions. According to this study it is been concluded that there are different types of reasons for the causes of non-performing assets and they are not even taking the measures to solve this problem. Most of the banks are not considering the non performing asset as the problem, for this reason there is a rapid increase in the existence of the non performing assets.

There are different reasons for the existence of the non performing asset problem such as the improper selection of the genuine customers, the inappropriate guidance by the management to the customers, the lack of awareness of the banking procedure to the customers, the non payments the pending loans and debts by the customers and many more. In order to overcome all these problems the government related to those specific countries has established some of the legal acts to the banks in order to recover their loans and debts. By making use of these acts the banks should initially send the notification to that customer regarding his due payments and dates, and even after receiving these notifications if the customers are not paying the loans and debts in the specified time, then the banks as well as the financial institutions can make use of these acts and can take any sort of legal and illegal actions on the customers. Another measure to reduce this problem is to planning and implementing the efficient recovery process. The banks and financial institutions will appoint the recovery agents in order to recover their loan amount and these recover agents will visit the customers place and will explain the payment modes and due dates, in some situations in order to handle typical customers the recovery agents will take some illegal actions on them, so to solve this the banks should allot certain principles to the recovery agents while dealing with the customers, the recovery process should recover the loan amounts but should not spoil the relationship between the banks and the customers.

Another measure is that the banks should verify and cross check the customer’s standards twice and thrice before allotting the loans and should clearly explain the payment procedure and should indirectly warn the customers regarding the acts and actions taken on them if the payments are not done in time. A strong banking sector is important for a flourishing economy. The failure of banking sector may have an adverse impact on other sectors. There is also a general prescription of 40% of net bank credit to priority sectors have lead to higher NPA, due to credit to these sectors becoming sticky. In the changed context of new prudential norms and emphasis on quality lending and profitability, managers should make it amply clear to potential borrowers that bank resources are scarce and these are meant to finance viable ventures so that these are repaid on time and relevant to other needy borrowers for improving the economic lot of maximum number of households . Hence, selection of right borrowers, viable economic activity, adequate finance and timely disbursement, correct end use of funds and timely recovery of loans is absolutely necessary preconditions for preventing or minimizing the incidence of new NPA.

The function of NPAs pressures the importance of the sound thinking of the system issues and macroeconomic variables pertaining to banks as well as the economy so as to resolve the problem of NPAs  beside with the considerably of a strong legislative framework and legal frame work. Clear understanding is not required but also it very important to utilize the foreign experiences for the local conditions in order to generate a tailor made solutions and this solution for all the stakeholders should be fair and transparent .      

It is also analyzed in these studies that in India the public sector bank’s expressed non-performing loans in terms of NPLs response to terms of macroeconomic condition variables, credit and bank size.  The results offer significant insights for lending behavior of bank. From perspective of policy, these results are aligned with method of policy to Indian banking sector, which in turn emphasizes on lending policy as well as suitable credit culture designed with appropriate financial as well as economic factors. The impact of business cycle on non-performing loans could be controlled with suitable lending in terms of capital requirement, maturity and loan interest rate.   

Introduction

Discussion is one of the most important parts of any research. Researcher has linked the theory with literature review and data analysis with empirical data. Researcher discussed the interviews responses based on the theories that have been presented. Detailed discussion of effects in Non-performing assets. 

Classification of assets for making provision:

For the purpose of making provisions for doubtful loans, banks need to classify them into following broad categories:

Performing assets

Non-performing assets

Performing assets:

Performing assets is also known as standard assets/loans where the interest or principal are not overdue beyond 180 days at the end of the financial year. Such business will not carry more than normal business risk.

Non-performing loans:

Any loan the repayment of which is overdue beyond 180 days or two quarters is considered as NPA. It is further classified into:

Sub-standard assets

Doubtful assets

Loss assets

Sub-standard assets:

Sub-standard asset is one which has been classified as NPA for period not exceeding two years. With effect from 31 March 2001 sub-standard asset is one, which has remained NPA

Doubtful assets:

A doubtful asset is one which has remained NPA for a period exceeding two years. With effect from 31 March 2001 an asset is to be classified as doubtful if it has remained NPA for a period exceeding 18 months. A loan classified as doubtful has all the weaknesses inherent in that classified as sub-standard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts conditions and values highly questionable and improbable.

Loss assets

A loss asset is one where loss has been identified by the bank or internal or external auditors or the RBI inspection but the amount has been written off wholly or partly. Bankable asset is not warranted although there may be some salvage or recovery value. The assets which have been wholly written off should not be reported in SBR. However, in case of partly written off assets, the amount of technical write off, if any, should be reduced from outstanding gross advances and all the assets will handed over to recovery agents for sale.

Now a day’s the Indian banks as well as the financial institutions are facing the problem called enlargement of the NPAs-Non-Performing Assets which is happened to be the uncontrollable aspect. In order to overcome this problem and control it many measures are been taken. Among all the existing steps the introduction of the securitization, the reconstruction of the financial assets as well as he enforcement of the security interest act 2002 by the parliament are some of the significant steps which are meant to eliminate or decrease the non performing assets.

Lending business is one of the significant and vital role which is been played by the banking sector. This process is been encouraged as it is showing the major impact on the funds which are been transferred through the system for a particular reasons and it will even lead to the growth and development in the economy. There are many existing defrauds within the lending business which leads to the risks in the credits that will take place when the borrower fails to complete the contractual requirements within the entire process.

The asset is categorized as the NPAs- non-performing asset in which the payments that are due in the form of the interest are not been paid by the borrower to the bank or a financial institutions. From the year 2004 if the payments are not received then the default status will be forwarded to the borrower. In the ongoing process if the credit facility is been offered by the bank to the borrower then it will happen to be non-performing, then there is a necessity of treating the entire credit facilities which are offered to the borrowers as the non performing excluding the fact that the existing credit facilities will have the performing status.

The growth of the non-performing assets will totally depends on the quality of managing or controlling the credit risk which is been faced by the particular banks which are taken into consideration.

The main significant aspect which the Indian banks lacking are having the sufficient protective measures during the set up of the evaluation responsibilities as well as having the successful post disbursement management. The banks which are taken into consideration must be capable of observing the loans in order to recognize the accounts which are possible to be the non-performing.

The global standard of the gross non-performing asset of the banking sector is nearly 5%, but especially in India it is more than this. This statement shows that there are no more existing chances that the non-performing assets of the Indian banks can be reduced or controlled.

Because of the increasing number of the non-performing assets the original borrowers are facing many problems within the process of increasing their existing funds from the banks. One of the main reasons is that the bank is not willing to provide the required funds or credits to the original borrowers and even if the funds are offered they will happen to be at high costs repay the losses which are happened to the lenders because of the existence of the higher levels of the non-performing assets. As a result the corporate will consider the funds by making use of the commercial papers of which the interest rate charged on the working capital is to high. By making use of the performance of the securitization and reconstruction of the financial assets as well as the enforcement of the security interest act 2002, the banks will be capable of issuing the notices or alerts to the defaulted customers to pay their balance amounts and after receiving this default message the borrower need to pay his dues within 60 days of time period.

Within this default period if at all the borrowers receives the notice or the alert from the particular bank as well as the financial institution then the protected assets which are specified in the received notice could not be traded as well as transferred without taking the permission from the lenders.

The main aim of this default notice is to update the borrower regarding his dues which are to be paid to the banks or the financial institutions; if the borrower doesn’t pay the due within the allotted time after receiving the default notice, and then certain actions will be taken on the borrower by considering the assets. Other than the assets the banks are even capable of handover the management of the company. As a result by making use of the aforementioned act the banks is capable using their authorities in orders to hand over the entire company or else the bank is even capable of changing the management of that particular company. 

Since the safety which comes under the above mentioned act will only offer the incomplete solution. The banks should recognize that they must move according to the actions within the process of disposing the assets. This is happened because of the uncertainty increases within the time period, and there is even other possibility that the recoverable value which belongs to the asset will even decrease as well as this facto will not obtain the best price. By making use of this securitization act 2002 the banks are capable of overcoming the problems of non-performing assets.

And after the establishment of the securitization act 2002, the banks can easily issue the default notices and alerts to the borrowers regarding their due payments and if they don’t repay the amount even after sending the default notice then the banks can take the typical and tough actions on the borrowers by making use of the aforementioned act. This will allow the banks to be relief from the typical borrowers. By the process of formulation of the asset Reconstruction Company which is under this act will even be helpful in removing the debt ridden assets in a reliable manner. One of the most successful way to remove the non-performing assets from the books which belongs to the weak banks can be done by moving them into the individual agency that will purchase the loans in order to create the self efforts for the recovery process. This act will be even helpful to recover the achieved non-performing assets than that of the price which is been paid initially. The non-performing assets levels of the Indian banks are more than that of the international standards. In order to overcome all these problems related to the non-performing assets the Indian banks should make sure that they should only offer the loans to the credit valuable customers.