The Corinthia Palace Hotel Company Ltd Company Tourism Essay

The Corinthia Palace Hotel Company Ltd Company Tourism Essay With 380 million international arrivals annually and market share of more than 40% of global tourism Europe commands the position as the number one tourist destination European Commission Vice-president Antonio Tajani- Journal of the Institute of Tourism Studies Dec 2010 pg 30. Company History Corinthia Palace Hotel Company Ltd is a Maltese registered company that owns The Corinthia Palace Hotel and Spa. The hotel enjoys a central location in the San Anton area. This Boutique style hotel neighbours both the Official Residence of the President of the Republic of Malta and the San Anton Botanical Gardens. Initially in 1920s, the site was a private residence called Villa Refalo, which was later sold to the Pisani family in 1959. (IL-Haddiem, 1968). The villa was transformed into the Corinthia Restaurant in the 1962. The company name Corinthia stems from the trademark columns that remain a prominent feature in the Villa Corinthia Restaurant. The restaurant prospered and was particularly popular with both locals and expatriates on field breaks from Libya. The success of this fine dining restaurant led the Pisani family to engage the services of architect Dom Mintoff, who designed and supervised the building of one of the finest hotels of its time. The hotel was amongst one of the first five star hotels in Malta to have full conference facilities in addition to 141 rooms, 11 suites, Garden Spa and 5 food and beverage outlets. The official opening of the hotel in the June of 1968, was conducted in the presence of then Minister of Education, Culture and Tourism, Doctor George Borg Olivier, His Excellency Duke of Edinburgh and renowned actor Roger Moore. The success of this enterprise has set the foundation for Corinthia Group of Companies, as we know it today. The group is organised into four business units, each of which plan and implement well-defined strategies driven by single objective of continued growth. The unanimity of purpose, to achieve our founders vision, towards expanding the Corinthia Portfolio Internationally, is driven by Mr Alfred Pisani himself. To date the company owns or operates sixteen hotels in nine countries. Mission Our Mission is to provide our guests with the craftsmanship of care Company Philosophies The company philosophy is primarily based on the core values, mainly integrity, honesty, trust and respect, which form the foundation of relationships within the Corinthia Group as well as with our customers and business partners. Definition of an Industry. There are numerous sources that provide a definition of an Industry, however, the succinct description in The Oxford English Dictionary of an industry is as follows :- a particular form or branch of economic or commercial activity Snapshot of the Tourism Industry in Malta Economic Performance According to its 2010 report  [1]  , Travel and Tourism contributes towards 19.4% of the GDP (EUR1,151.4 million) with a forecasted increase of a further 3.6 % by 2020. Export earnings from International Visitors is expected to reap in the region of à ¢Ã¢â‚¬Å¡Ã‚ ¬ 777 million with a forecasted growth to à ¢Ã¢â‚¬Å¡Ã‚ ¬ 1443.4 million in 2020. Currently, 23.7% of the labour market are employed in industry related occupations and it is anticipated that this will rise to 28.9 % by 2020. These statistics substantiate that Travel and Tourism is perceived to remain one of the key engines for growth for the Maltese Economy. Tourist Performance Although the National Statistics Office has not issued the official statistics for 2010 Parliamentary Secretary for Tourism estimated that the total number of Tourists to the island was in the region of 1.3 million  [2]  . This is an .1 million increase on 2009 figures  [3]   Capacity : The National Statistics Office December news release Collective accommodation establishments :Oct 2010 reported that there are a total of 158 accommodation establishments on the Maltese Islands which equates to a total bedstock of 17,966 . During the month of October statistic report that the total amount of non resident arrivals in109,581 visitors who stayed an average stay of 6.3 nights. 5 Star Hotels on the Island Currently , there are a total of fifteen accommodation establishments that are classified with a 5 star rating. During the month of October, this accommodation tier enjoyed an occupancy of 73 %. Having an information at hand is invaluable when assessing the viability of an industry. The World Travel and Tourism Council uses set Indices which can be valuable to ascertaining an Industrys attractiveness and future economic potential. The use of PESTLE to scan the Broad Environment for drivers of change There are numerous characteristics or strategic elements that can influence the life cycle of the local tourism industry. One organisation, acting independently, may have very little influence on the broad environment: however, the forces in this environment can have a tremendous impact on the organisation (Enz, C.A, 2010).p16  [4]  . Consequentially, if one was to consider this statement in todays local business scenario, it consolidates the school of thought that theres a limited likelihood that organisations have opportunities to influence the broad environment. However, according to The principle of Enactment organisations do not have to submit to the existing forces in the environment. (St.John, Harrison ,2010)  [5]  . One example of how this is validated in the local context, is through management agreements that hoteliers have formed with Internationally renowned Brands. In contrast, the Corinthia Palace Hotel, has established its own brand called Corinthia Hotels International Ltd (CHI Ltd). The strategic choice to create a Maltese Brand is a means to differentiate between the International brand names such as Hilton, Inter Continental, Marriot and Starwood Hotels that currently operate on the Island. Through a concept of backward integration the Corinthia Brand has eliminated having to pay substantial contributions to third party Management Companies by forming its own unique Brand. Additionally, it has been able to penetrate the International Tourism Industry by offering Management Contracts to overseas operators in the Industry. The task of measuring competitiveness is full of complexities as there are numerous forces at play. Therefore, it is of paramount importance to have a thorough understanding of both the potential threats and opportunities available. This will then provide the basis for which a company responds to trends and influences by integrating its resources to achieve a strategic advantage on its competitors. Local firms competing within the Tourism Industry invariably have similar resources available to them. Additionally, each will be challenged by similar forces. Therefore, it is safe to assume that most will pursue similar strategies. However, the company that best acclimatises itself through capitalising on its strengths, its unique resources and capabilities is more likely to be successful. All organisations formulate business plans that will enable the firm to use its core competencies to achieve its mission, goals and strategies. PESTLE Analysis Therefore, in order for any business enterprise to adapt to the broad environmental forces it is common practice to analyse key indicators in the macro environment by situational analysis. The four areas that are believed to influence and form the context in which the firm operates are as follows :- Political Forces Economical Forces Socio cultural Forces Technological Forces The Political Environment can significantly influence an industry and organisations. Economic Performance Political Scenario in Malta The tou The Maltese Government recognises that Tourism is a key contributor to the Maltese Economy. The government has collaborated with Public Employment Services, Educational Institutions and Social partners to invest and improve on the current skills set of the current labour market. The broad environment. Forces within both the Broad and Task environment are critical determinants for strategy formulation for any organisation. However, the core of a firms business environment is formed by its interaction and between three key stakeholders and their impact on the market place :- Customers, Suppliers, Competitors. This is more commonly known as the Task Environment. All contemporary organisations within all Industries face forces that can significantly affect profitability. If a firm understands these forces, then it can develop a business level strategy that allows the business to either take advantage or protect itself from these forces, which in turn allows the firm to be consistently profitable.'(Ahlstrom.D,2009)  [6]  . Although many business models exist, most companies use the framework of environmental understanding established by Economist Michael Porter to measure potential of an in Industry. Porters Five Forces Model In the March- April 1979, one of the most cited authors in Business and Economics, Professor Micheal. E. Porter, published an article in the Harvard Business Review, titled How Competitive Forces Shape Strategy.  [7]  . In this article he wrote : Competition in an industry is rooted in its underlying economics, and competitive forces exist that go well beyond the established combatants in a particular industry. Customers, suppliers, potential entrants, and substitute products are all competitors that may be more or less prominent or active depending on the industry. The state of competition in an industry depends on five basic forces. The collective strength of these forces determines the ultimate profit potential of an industry. This article formed the basis of Porters Five Forces Model. This user friendly model is now widely applied by many organisations to formulate the firms business level strategy. Corinthia Palace Hotel is no exception. Key strategic decision makers within the company use this model in their business plan to represent their analysis of the dynamics of the competitive structure and each forces influences the Maltese Tourist Industry . Bargaining Power of Customers Bargaining Power of Suppliers Threat of New Entrants The Threat of Substitute Products or Services Function The hotel has two primary functions which are to provide accommodation and catering services to travellers. Market Although perceived as a business hotel, the main market is leisure travellers. The tour operator and Leisure Segments constitute approximately 64% of the hotels market share. The company enjoys amongst the highest customer retention rate within the Corinthia group, averaging in the region of 20%. Suppliers

Arthur Miller’s “Death of a Salesman” Essay

Who does not want to live the perfect life, the American Dream? Throughout Arthur Miller’s Death of a Salesman, Willy Loman is in pursuit of this Dream. Willy focuses on the idealistic American dream his entire life, associating it with financial success, an excellent reputation and being well liked. He makes victims of his wife and of his sons by subjecting them to mistreatment and deprivation of a strong male role model. According to the Webster’s Dictionary a victim is one who is subjected to oppression, hardship or mistreatment. Willy puts far too much pressure on his elder son Biff, not enough on his younger son Happy, and he makes a â€Å"yes-woman† out of his doting wife Linda. Willy’s ideas of the American Dream outweigh the realistic trials and tribulations that need to be overcome in order to achieve the Dream. The American Dream is one of success and Willy views success as being well liked. He wants Biff to be well liked and hence puts much pressure on him to be popular. During Willy’s flashbacks to 1929, Willy encourages Biff to be a good football player rather than a good student. Willy pays so much attention to Biff and puts so much pressure on him to succeed and to be well liked that Biff does not have anything concrete (such as marks) as a backup. Willy believes that even though Bernard can get the best marks in school, that he will not survive in the business world because he is not well liked (Miller 33). Biff wants to live up to his father’s dreams. He wants his dad to be proud of him. Before the football game at Ebbets Field, Biff promises â€Å"to break through for a touchdown,† just for his dad (32). As a teenager, and right up until he catches Willy cheating, Biff does everything he can to get into Willy’s good books. He is the star football player and popular enough to order his friends around: â€Å"Fellas! Everybody sweep out the furnace room!† (34). Then, all of a sudden, things change. After finding Willy and Miss Francis together, Biff comes to the conclusion that his father is not as important as he makes himself out to be: â€Å"he [Mr. Birnbaum] wouldn’t listen to you [Willy]† (120). This is the turning point in Biff’s life because he becomes a victim of Willy’s actions. At this point, in a hotel room in Boston, Biff gives up on his life and the dream of success when he decides that he is â€Å"not going there [the University of Virginia]† (120). Willy has ruined his son’s chances at getting a good education and a  successful career. Willy puts so much emphasis on Biff’s success, that he neglects Happy. As a result, Happy feels the need to follow in Willy’s footsteps in order to gain the level of respect and attention from his father that is given to Biff. Happy feels this neglect as a teenager and feels the need to satisfy his dad: â€Å"I’m losing weight, you notice, Pop?† (33). Happy wants to be popular and well liked in order to get some positive attention from Willy. Even as an adult, Happy holds on to the need to impress his dad and to keep him content with his life. Happy wants Biff to lie to their father about seeing Bill Oliver because Willy â€Å"is never so happy as when he’s looking forward to something† (105). Happy wants Willy to be pleased with Biff because that would keep Willy happy and could stop him from having flashbacks and talking to himself. Success in business is one of Willy’s goals for the American Dream and thus, Happy wants to be a businessman because he is seeking his father’s approval. While in pursuit of the American Dream, Willy needs someone to support him and to agree with all of his decisions. Linda is there for him throughout the hard times. She guides him by being supportive of his decisions and even supports his lying. She knows that he goes to Charley to â€Å"borrow fifty dollars a week and pretend[s] to [her] that it’s his pay† (57). Linda allows him to feel important, at least in front of his own family. Not only does she defend him in front of their sons, but she also tries to keep the peace between her husband and Biff. Willy doesn’t appreciate this as he should, turning on her when she tries to get him to listen to Biff, telling her † don’t take his [Biff’s] side all the time† (65 ). Later, when she tries to comfort him, he tells her to â€Å"get to bed† (134). She endures him yelling, â€Å"stop interrupting† (64) without breaking down, only to ask him whether she â€Å"should?sing† (68) to soothe him. He has trained her to take his harsh words and act like nothing has happened. Linda is the glue that keeps the Loman family together as she tries to get Willy and her sons to speak calmly and peacefully and to see the best in each other. Ultimately, the Loman family is affected by the American Dream gone awry.  Willy Loman is very focused on this dream and his family’s success in business. Consequently, he mistreats his sons and his wife, making victims of them. His sons do not have a strong male role model who they can look up to during their maturing years. Instead, they have a daydreaming, failing salesman for a father, whose sole objective in life is to live the American Dream. He has also trained their mother to agree and comply with everything he says. The American Dream implies happiness and for Willy Loman that happiness is to die the death of a salesman. We have to wonder how the idea of death can bring happiness to someone’s life.

Luxury Brand Economy Effect Essay

Monaco is a small country, but well known all over the world. All over the world it is known as a place of luxury. Every year a lot of tourists visit Monaco to have a good vacation visiting casinos, luxury restaurants and off course to do a shopping in a most known, luxury brands. In Monaco you can find a lot of different luxury boutiques for every taste; you can find everything from luxury cars to a luxury clothes and accessories. During the course of Luxury audit services we study a lot about the services in luxury stores. So our goal was to divide into groups and to do an audit of few stores. Our group was a big enough for such a mission, so we were thinking how to do it in a better way. And once we got a good idea. According to the information we received during the seminar with Guillaume Rose, in Monaco there are a lot of Russian millionaires, and they are always â€Å"invited guests† in different places. So we decided to split our group on two smaller groups and to compare the experience received in Gucci store and in Celine which are situated in the heart of Monaco, near the Casino and Hotel de Paris. I will share with you the Russian experience. I asked my friend, she is from Russia, for some help in this mission. Our story was that we family couple came from Russia for my friend’s wedding and as we already bought a new skirt for my wife we need to buy a new bag, which must be one of the last collections. And the second part of our group was native French with two different scenarios in two stores. As we will see next we received a little bit different experiences. Gucci store audit Firstly we decided to audit one of the most famous brands in the world, Gucci. At 12. 00 we entered the store. Before entering the store, we noticed that the showcase was clean, with good lighting, but there were no goods exposed. Entering the store, I noticed that the main glass door was all in hand prints and it was just 12. 00. Going to the store and pretending a married couple, we were arguing about the fact that my wife has already a bunch of bags and for what reason she is looking for one new. Staff in the store noticed us at once and ran to the side waving their heads as a greeting. Only the guard who was near the enter greeted us in a very polite form. We were walking through the shop for 3 minutes and a half and it gives us a good opportunity to study the store. We noticed that the reception area was clean as it is required, but there were not enough light, it gives to the store a much groomed look. And also no music and even no fresh flowers in the store. After 3 minutes and a half we meat a sales person who greeted us and introduced himself as a David. He asked us a few open questions in order to know what we are looking for. After he listened our story he was interesting in our previous experience with Gucci brand. We pretend that we don’t know anything about Gucci. He told us some information about the brand about its uniqueness and heritage. After that David proposed a few bags, he explained the value of that model and brought all the colors for that model. Also he guaranteed that the model will be in a trend for the next few years. What was not really very good it’s a careless handling of the bag and he put them on one big heap. And what impressed me very much is that he even don’t show the inner part of the bag, on my opinion it is very important to know how it is inside the bah which you are going to buy for a big amount of money. As I was pretending a husband who is not really happy to buy a new bag, I asked about the discount, and I get an answer in very polite form that there is no discount at all in Gucci store in Monaco. My pretending wife was asking me to buy the bag she liked and I was strong on my opinion. So a after that dialogue with my wife he proposed to book the bag till the evening for the case if I will change my mind. This was very polite from his side. But he doesn’t accompany us to the door and didn’t offer to giva us a business card and to right down us into the customers database. Totally we spend in the store 26 minutes. So in conclusion I can say that the experience I have received together with my pretending wife was far different from the French experience of my group mates. Celine store audit. The second we decided to audit was the Celine also situated in the heart of Monaco. Our story was the same, we were looking for a bag which will be good to my â€Å"wife’s† new skirt which we have bought for a wedding we are invited here in Monaco. The showcase was very clean with good exposition of some goods. When we entered the store we noticed staff talking together near the cash machine, although all of them greeted us in their store. The area of the class was very clean , there were enough light, giving a good look to the goods represented in the store. After a minute and 20-30 seconds of waiting we meat a vendor, she was Russian so we were able to speak on our native language. It impressed me very much, so I was ready to buy everything in that store. She was asking a lot of open questions, to get more information about our needs and it was great, because after that she proposed a few models which were facing all our needs. She was very listening, so it helps her to understand our needs. She explained everything about the product, how to clean it and how to use it to leave it in a new condition. Of course she valued the model and showed a few others and different colors. She knows the material and the price for that bag without looking anywhere. But what upset me she didn’t spoke about the brand, because we don’t know anything about that brand, except that it is a luxury and expensive brand. As the bag we liked the most she proposed to book it till the next day midday, so that we can think about purchasing it. She remains courtesy even in the case of not buying that bag. She put our names in database and proposed her help for any other matters. She accompanies us to the door and wish a good day for us. We spend in that store 23 minutes and the felling was like we spend there almost an hour, the experience we received in the Celine store was great dispute of some moments. Conclusion As our group was divided for two smaller groups in order to compare different experiences. As Russian group visiting the Gucci store we received almost a great experience. Points to improve, I would recommend to put some products on a showcases, it is needed to clean the entry glass door and if there is such a need to clean it every hour. They need to put more lights in the store, because it was too dark. Some fresh flowers will do only a good role and some soft music will be very great. And of course some training course for the staff. Celine experience was really great and there is nothing to speak about. I wish them to continue in that way. The experience we received during these audits was one of the greatest. We were participating in the process not just as a customer’s but almost as professionals who can notice almost everything in the store. Thanks to Ozzy Monaco for a great course.

Introduction of Banking Sector - Free Essay Example

Sample details Pages: 14 Words: 4322 Downloads: 2 Date added: 2017/09/16 Category Economics Essay Type Argumentative essay Tags: Economy Essay Globalization Essay Did you like this example? GENERAL INTRODUCTION ABOUT THE SECTOR The Indian economy is emerging as one of the strongest economy of the world with the GDP growth of more than 8% every year. This has given a great support for the development of banking industry in the country. Due to globalization, competition among the banks has drastically been increased. As India has a substantial upper and middle class income hence the banks have immense opportunities to increase their market shares. The consumer being on the receiving end is in the comfortable position but the banks trying to increase their market share have to continuously add value for consumers in order to increase market share and sustain their growth. BANKING SECTOR The banking sector is the most dominant sector of the financial system in India. Significant progress has been made with respect to the banking sector in the post liberalization period. The financial health of the commercial banks has improved manifolds with respect to capital ad equacy, profitability, and asset quality and risk management. Further, deregulation has opened new opportunities for banks to increase revenue by diversifying into investment banking, insurance, credit cards, depository services, mortgage, securitization, etc. Liberalization has created a more competitive environment in the banking sector INDUSTRY PROFILE a) ORIGIN AND DEVELOPMENT OF THE INDUSTRY The origin of banking in India is traceable in ancient time through the modern banking hardly 200 years old. The main function of bank is to accept deposits and grant loans. There is evidence of these functions being performed by a section of the community in the Vedic periods. There are many references of debt in the Vedic literature. During the Ramayana and Mahabharata areas banking, which was a side business during the Vedic period, become a fulltime business activity for the people. During the smriti period, which followed the Vedic period and the Epic age, bankers performed the f unction of the modern banks. The members of the Vaish community carried on the banking business and Manu speaks of earning through interest as the business of Vaishays. He accepted deposits from the public, granted loans against pledges and personal security, granted simple open loans, acted as bailee for his customers, subscribed to public loans by granting loans to kings, acted as treasurer and banker to the state and managed the currency of the country. Indigenous bankers used to maintain a regular system of accounts and borrowers used to sign the loan deeds. Banking in India originated in the last decades of the 18th century. The oldest bank in existence in India is the State Bank of India, a government-owned bank that traces its origins back to June 1806 and that is the largest commercial bank in the country. Central banking is the responsibility of the Reserve Bank of India, which in 1935 formally took over these responsibilities from the then Imperial Bank of India, rel egating it to commercial banking functions. After Indias independence in 1947, the Reserve Bank was nationalized and given broader powers. In 1969 the government nationalized the 14 largest commercial banks; the government nationalized the six next largest in 1980. Currently, India has 88 scheduled commercial banks (SCBs) 27 public sector banks (that is with the Government of India holding a stake), 31 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 38 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 per cent of total assets of the banking industry, with the private and foreign banks holding 18. 2% and 6. 5% respectively. Early history Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India, which started in 1786, and the Ban k of Hindustan, both of which are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. For many years the Presidency banks acted as quasi-central banks, as did their successors. The three banks merged in 1925 to form the Imperial Bank of India, which, upon Indias independence, became the State Bank of India. Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and still functioning today, is the oldest Joint Stock bank in India. It was not the first though. That honour belongs to the Bank of Upper India, which was established in 18 63, and which survived until 1913, when it failed, with some of its assets and liabilities being transferred to the Alliance Bank of Shimla. When the American Civil War stopped the supply of cotton to Lancashire from the Confederate States, promoters opened banks to finance trading in Indian cotton. With large exposure to speculative ventures, most of the banks opened in India during that period failed. The depositors lost money and lost interest in keeping deposits with banks. Subsequently, banking in India remained the exclusive domain of Europeans for next several decades until the beginning of the 20th century. Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire dEscompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches in Madras and Pondicherry, then a French colony, followed. HSBC established itself in Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, and so became a banking center. [pic] The Bank of Bengal, which later became the State Bank of India. The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahore in 1895, which has survived to the present and is now one of the largest banks in India. Around the turn of the 20th Century, the Indian economy was passing through a relative period of stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrial and other infrastructure had improved. Indians had established small banks, most of which served particular ethnic and religious communities. The presidency banks dominated banking in India but there were also some exchange banks and a number of Indian joint stock banks. All these banks operated in different segments of the economy. The exchange banks, mostly owned by Europeans, concentrated on financi ng foreign trade. Indian joint stock banks were generally undercapitalized and lacked the experience and maturity to compete with the presidency and exchange banks. This segmentation let Lord Curzon to observe, In respect of banking it seems we are behind the times. We are like some old fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome compartments. The period between 1906 and 1911, saw the establishment of banks inspired by the Swadeshi movement. The Swadeshi movement inspired local businessmen and political figures to found banks of and for the Indian community. A number of banks established then have survived to the present such as Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India. The fervour of Swadeshi movement lead to establishing of many private banks in Dakshina Kannada and Udupi district which were unified earlier and known by the name South Canara ( South Kanara ) district. Four nationalised banks started in this district and also a leading private sector bank. Hence undivided Dakshina Kannada district is known as Cradle of Indian Banking. From World War I to Independence The period during the First World War (1914-1918) through the end of the Second World War (1939-1945), and two years thereafter until the independence of India were challenging for Indian banking. The years of the First World War were turbulent, and it took its toll with banks simply collapsing despite the Indian economy gaining indirect boost due to war-related economic activities. At least 94 banks in India failed between 1913 and 1918 as indicated in the following table: |Years |Number of banks |Authorised capital |Paid-up Capital | | |that failed |(Rs. Lakhs) |(Rs. Lakhs) | |1913 |12 |274 |35 | |1914 |42 |710 |109 | |1915 |11 |56 |5 | |1916 |13 |231 |4 | |1917 |9 |76 |25 | |1918 |7 |209 |1 | Post-independence The partition of India in 1947 adversely impacted the economies of P unjab and West Bengal, paralyzing banking activities for months. Indias independence marked the end of a regime of the Laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted into greater involvement of the state in different segments of the economy including banking and finance. The major steps to regulate banking included: †¢ In 1948, the Reserve Bank of India, Indias central banking authority, was nationalized, and it became an institution owned by the Government of India. †¢ In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) to regulate, control, and inspect the banks in India. †¢ The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no tw o banks could have common directors. However, despite these provisions, control and regulations, banks in India except the State Bank of India, continued to be owned and operated by private persons. This changed with the nationalisation of major banks in India on 19 July, 1969. Nationalisation By the 1960s, the Indian banking industry has become an important tool to facilitate the development of the Indian economy. At the same time, it has emerged as a large employer, and a debate has ensued about the possibility to nationalise the banking industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of the GOI in the annual conference of the All India Congress Meeting in a paper entitled Stray thoughts on Bank Nationalisation. The paper was received with positive enthusiasm. Thereafter, her move was swift and sudden, and the GOI issued an ordinance and nationalised the 14 largest commercial banks with effect from the midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described the step as a masterstroke of political sagacity. Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval on 9 August, 1969. A second dose of nationalization of 6 more commercial banks followed in 1980. The stated reason for the nationalization was to give the government more control of credit delivery. With the second dose of nationalization, the GOI controlled around 91% of the banking business of India. Later on, in the year 1993, the government merged New Bank of India with Punjab National Bank. It was the only merger between nationalized banks and resulted in the reduction of the number of nationalised banks from 20 to 19. After this, until the 1990s, the nationalised banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy. The nationalised banks were credited by some, including Home minister P. Chidambaram, to have helped the Indian economy withstand the global financial crisis of 2007-2009. Liberalisation In the early 1990s, the then Narsimha Rao government embarked on a policy of liberalization, licensing a small number of private banks. These came to be known as New Generation tech-savvy banks, and included Global Trust Bank (the first of such new generation banks to be set up), which later amalgamated with Oriental Bank of Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, revitalized the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%, at present it has gone up to 49% with some restrictions. The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People not just demanded more from their banks but also received more. Currently, banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true. With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. One may also expect MAs, takeovers, and asset sales. In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them. In recent years critics have charged that the non-government owned banks are too aggressive in their loan recovery efforts in connection with housing, vehicle and personal loans. There are press reports that the banks loan rec overy efforts have driven defaulting borrowers to suicide. BANKING SYSTEM The oxford dictionary defines the bank as â€Å"an establishment for the custody of money, which it pays out, on a customers’ order. † A banking company in India has been defined in the banking companies Act 1949, as â€Å"one which transacts the business of banking which means the accepting, for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdrawals by cheque, draft, order or otherwise. The banking system in an integral sub-system of the financial system. It represents an important channel of collecting small savings from the households and lending it to the corporate sector. The Indian Banking system has the Reserve Bank of India (RBI) as the apex body for all matters relating to the banking system. It is the’ central bank’ of India. It is the banker to all other banks. Classification of banks: 1. Non-scheduled Banks: These are banks, which are not included in the Second schedule of the Banking Regulation Act, 1965. It means they do not satisfy the conditions laid down by that schedule. They are further classified as follows: *Central Co-operative Banks and Primary Credit Societies. *Commercial Banks. 2. Scheduled Banks: Scheduled Banks are banks, which are included in the second schedule of the Banking Regulation Act, 1965. According to this schedule a scheduled bank: Must have paid-up capital and reserve of not less than Rs. 5,00,000; Must also satisfy the RBI that its affairs are not conducted in a manner detrimental to the interests of its depositors. Scheduled banks are sub-divided as: *State – cooperative banks. *Commercial banks. State – cooperative banks: These are Co-operatives owned and managed by the state. Commercial banks: These are business entities whose main business is accepting deposits and extending loans. Their main objective is profit maximizat ion and adding shareholder value. These are further sub-divided as: *Indian Banks: These banks are companies registered in India under the Companies Act. Their place of origin is in India. These are also sub-divided as: State Bank of India and its Subsidiaries: This group comprises of the State Bank of India (SBI) and its seven subsidiaries viz. , State Bank of Patiala, State Bank of Hyderabad, State Bank of Travancore, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Saurastra, State Bank of Indore. Other Nationalized Banks: This group consists of private sector banks that were nationalized. The Government of India Nationalized 14 private banks in 1969 and another 6 in the year 1980. Regional Rural Banks: These were established by the RBI in the year 1975 of Banking Commission. It was established to operate exclusively in rural areas to provide credit and other facilities. Old Private Sector Banks: This group consists of banks that were established by th e privy states, community organizations or by a group of professional for the cause of economic betterment in their area of operations. Initially their operations were concentrated in a few regional areas. New Private Sector Banks: These banks were started as profit oriented companies after the RBI opened the banking sector to the private sector. These banks are mostly technology driven and better managed than other banks. Foreign Banks: These are banks that were registered outside India and had originated in a foreign country. Retail Banking According to investopedia. com, retail banking is typical mass-market banking where individual customers use local branches of larger commercial banks. Services offered include: savings and checking accounts, mortgages, personal loans, debit cards, credit cards, and so forth. Types Of Retail Banks 1. Private bank Private Banks is a bank that is not incorporated. Either an individual or a general partner(s) with limited partner(s) owns a non- incorporated bank. In any such case, the creditors can look to both the entirety of [the banks] assets as well as the entirety of the sole- proprietors/general-partners assets. These banks have a long tradition in Switzerland, dating back to at least the revocation of the Edict of Nantes (1685). 2. Commercial banking A commercial bank is a type of financial intermediary and a type of bank. Commercial bank has two possible meanings: Commercial bank is the term used for a normal bank to distinguish it from an investment bank. This is what people normally call a bank. The term commercial was used to distinguish it from an investment bank. Since the two types of banks no longer have to be separate companies, some have used the term commercial bank to refer to banks which focus mainly on companies. In some English-speaking countries outside North America, the term trading bank was and is used to denote a commercial bank. It raises funds by collecting deposits from businesses and co nsumers via checkable deposits, savings deposits, and time (or term) deposits. It makes loans to businesses and consumers. It also buys corporate bonds and government bonds. Its primary liabilities are deposits and primary assets are loans and bonds. Detailed information on banks sectoral exposure of credit reveals that over two-thirds of the credits flow has been on account of retail, housing and other priority sector loans. Banks credit flow exposure to large Enterprises continues to remain buoyant with recent indications that credit to agriculture and Micro credit has also picked up. The Investment Banking and Markets division brings together the advisory and financing, equity securities, asset management, treasury and capital markets, and private equity activities of the Group to complete the CIBM structure and provide a complete range of financial products to our clients. Increasingly, ECA financing is being considered by customers and we work closely with our project exp ort finance teams, both onshore and offshore, to provide structured solutions. Growth And Present Status Of The Industry Commercial banking can also refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses, as opposed to normal individual members of the public (retail banking). as in the Indian banking.. The most prominent on our minds in the context of banking these days, perhaps, are the implications arising out of the Basel II accord. Banks, as we all know, are subjected to more intense regulation as compared to the non-financial firms. This is probably because the banks possess certain special characteristics: Banks are much more leveraged than the other firms due to their capacity to garner public deposits. The asset liability structure of the banks is also different from not only the non-financial firms but also the financial firms. To illustrate, the risk in an insurance company arises mainly from the liabi lity side of the balance sheet in the form of insurance claims whereas for the bank the risk mainly comes from the diminution of asset values (for example, illiquid loans that are not fully recoverable). The deposits which constitute a major part of the liability of banks are repayable on demand, unsecured and their principal amount does not change in value whereas the loans of a bank are illiquid and there can be erosion in the value of loans or of other assets. The liquidity transformation by an insurance company is in the reverse direction as compared to a bank. The balance-sheet structure of an insurance company is the least likely to give rise to systemic risk, whereas banks due to their typical asset liability mismatches i. e. long term assets funded by short term liabilities, may be prone to ‘run’ and pose a very high degree of potential systemic risk. The resolution costs of systemic bank insolvencies and significant problems can be substantial weighted diffe rently. Basel I proposals forced the banks to look at credit risk and regulatory capital more closely than they had done earlier. As banks found ways to arbitrage regulatory capital, some of the provisions of Basel I became less relevant. Simultaneously, banks in the G-10 countries developed newer approaches to manage credit risk by building portfolio models for pricing, provisioning and allocating economic capital for the credit portfolios. These developments made the weaknesses in the Basel I framework more apparent and this set the stage for the creation of International Convergence of Capital Measurement and Capital Standards: A Revised Framework, popularly known as Basel II. The Basel Committee on Banking Supervision has observed that the fundamental objective in revising the 1988 Accord has been, and I quote, to develop a framework that would further strengthen the soundness and stability of the international banking system while maintaining sufficient consistency that c apital adequacy regulation will not be a significant source of competitive inequality among internationally active banks. The (Basel) Committee believes that the revised Framework will promote the adoption of stronger risk management practices by the banking industry, and views this as one of its major benefits. Future Of The Industry Reflecting on future prospects in banking, immediate focus has to be on the cleaning up of the remnants of undercapitalized banks, while concentrating on improvements in the rural co-operative credit system. It is also necessary to ensure improvements in their governance and financial management. In the banking system as a whole, a healthy credit culture encompassing appropriate pricing, quality of service, financial inclusion and contract enforcement would be vital. The Reserve Bank of India has, in the service of our country, a proven track record and professionalism, which have lent it considerable credibility – both domestically and gl obally. This credibility enables the RBI to confidently carry the reforms forward to credibly maintain price and financial stability, while enabling self-accelerating equitable growth at elevated levels. The Indian financial sector is ready for consolidation, said 95 per cent of the respondents. Given the increased competition, and the implementation of Basel II norms in the near future, the banking industry of the country would be better off with six to seven banks as big as State Bank of India, said the survey. However, voluntary mergers are better than forced ones. A majority of the public sector banks also demanded more autonomy to fix salary levels proportionate to performance. In order to improve employee productivity it is essential to offer competitive compensation packages at all levels, the survey said. About 92 per cent of the public sector banks respondents voiced that they do not have sufficient autonomy to offer attractive incentive packages to employees to ensur e commitment levels. Some banks also said that in one-years’ time, banks should be permitted to issue preference shares. According to the survey, some of the strengths of the banking industry are regulatory systems, economic growth, technological advancement, risk assessment systems and credit quality. Areas that need improvement include diversification of markets beyond big cities, human resources systems, size of banks, high transaction costs, infrastructure and labour inflexibilities. As per the survey some strategies that can help India achieve a world class banking system are consolidation, strict corporate governance norms, regional expansion within the country and outside, higher FDI limits and Free Trade Agreements with countries where India has comparative advantage in banking sector. Availability and reach of quality products is confined to just big cities. Thus it is essential now to expand the gamut of banking services both within India as well as outside, the survey said. However, banks in India are yet to effectively leverage technology. ICICI Bank has been acknowledged to be among the first to explore new mediums like Internet. India has among the lowest penetration of retail loans in Asia. Though the sector has been growing at around 15 per cent, there is still a huge opportunity to tap into. Interest rates on retail loans have been dropping rapidly too. For instance residential mortgages slumped by 7 per cent over the last four years. The entry of a number of banks in India in the last few years has helped provide increased coverage and a number of new products in the market, says Kamath. Banking sector today is estimated to be at Rs 17 trillion and total deposits are estimated at Rs 13 trillion. Don’t waste time! Our writers will create an original "Introduction of Banking Sector" essay for you Create order