Non-banking Financial Companies Research Articles

Financial Fragility in Retail-NBFCs

This study examines the financial fragility of the Retail Non-Banking Financial Companies (Retail-NBFCs) sector. We show that the liquidity crunch in Retail-NBFCs stemmed from their over-dependence on short-term wholesale funding from Liquid Debt Mutual Funds (LDMFs) and the low level of high-quality liquid investments in the LDMF sector. While such reliance worked well in good times, it generated significant short-term debt rollover problems for Retail-NBFCs during times of stress. The key reason for the inability of Retail-NBFCs to roll over commercial paper was the transmission of systemic risk from Retail-NBFCs to the LDMF sector. Anticipating defaults by Retail-NBFCs, mutual fund investors exited from the LDMF sector. The low levels of high-quality liquid assets in the LDMF sector were insufficient to withstand the concerted redemption pressure by investors and made the LDMF sector reluctant to roll over short-term debt of Retail-NBFCs. We develop a robust tool (Health Score) to estimate financial fragility in a Retail-NBFCs and find that it can predict the constraints on external financing (or rollover risk) faced by these firms.

Financing constraints of public–private partnership projects in India

PurposeThe purpose of this paper is to identify the problems faced by banks, lenders, financial institutions, public authority, developers and concessionaires in course of financing of public–private partnership (PPP) road projects. Subsequently, the reasons that contribute to these problems were analyzed to come up with recommendations for mitigation of these problems.Design/methodology/approachThe methodology adopted is based on identification of financing problems and the reasons thereof, from a systematic and critical review of literature. Financing details including problems faced and reasons behind were extracted from details of one port, one airport and one road project. Data pertaining to financing of PPP road projects have been collected for completed (five projects) as well as projects under implementation (five projects) during a time interval of four months, starting from December 2018 to March 2019. The chosen three projects for case studies were executed in airport project at Kolkata in four years, offshore container terminal at Mumbai port in six years and Tuni Ankapali road project in three years. This period attains importance, as simultaneous progressive development and innovation in the PPP mode of project execution was taking place rapidly.FindingsThe commercial banks in India dominate in providing debt to the PPP infrastructure projects, especially in the road sector. The non-banking financial companies and other intermediaries were still in their infancy then, and a corporate bond market was growing steadily, though slowly. Financing problems faced by the developers resulted in unwarranted time and cost overruns emanating from delay in land acquisition and grant of approvals, with these being the two major barriers to private sector participation. Even schedule overrun finally resulted in increased construction and financing cost.Originality/valueDemand for upgradation, building and expansion of transportation infrastructure (roads) exists to keep pace with economic development. Problems like lack of a developed market for financing, inadequate institutional capacity, lack of personnel having domain expertise and absence of exclusive legislation to govern the implementation of PPP road projects are encountered by the sponsors and developers. Delay in land acquisition and environment clearance inhibits any decisive action by the lenders and investors, as these two are integrally linked to the decisions to be taken with respect to the financing of projects. Investors and bankers are generally apprehensive of their investment getting locked in or ending up as non-performing assets. Identification and proposed mitigation of these problems may likely smoothen the rough edges for the financing of projects, resulting in smoother implementation.

Exploring the Machine Learning Algorithm for Prediction the Loan Sanctioning Process

Extending credits to corporates and individuals for the smooth functioning of growing economies like India is inevitable. As increasing number of customers apply for loans in the banks and non- banking financial companies (NBFC), it is really challenging for banks and NBFCs with limited capital to device a standard resolution and safe procedure to lend money to its borrowers for their financial needs. In addition, in recent times NBFC inventories have suffered a significant downfall in terms of the stock price. It has contributed to a contagion that has also spread to other financial stocks, adversely affecting the benchmark in recent times. In this paper, an attempt is made to condense the risk involved in selecting the suitable person who could repay the loan on time thereby keeping the bank’s non-performing assets (NPA) on the hold. This is achieved by feeding the past records of the customer who acquired loans from the bank into a trained machine learning model which could yield an accurate result. The prime focus of the paper is to determine whether or not it will be safe to allocate the loan to a particular person. This paper has the following sections (i) Collection of Data, (ii) Data Cleaning and (iii) Performance Evaluation. Experimental tests found that the Naïve Bayes model has better performance than other models in terms of loan forecasting.

Serv Qual Parameters of Financial Institutions in Nanded District

The customer satisfaction is very important parameter while studying marketing strategies. The customers are said to be satisfied if their needs, want and desires are fulfilled by the product. Hence this customer satisfaction leads to customer loyalty, customer retention and customer relationship management. The customer satisfaction is measured through linear or multiple regression through relative importance of each variable is understood in banks and NBFCs in Nanded district. For this purpose a sample has been drawn from managers, employees and customers of banks and non-banking financial companies respectively

Predicting Financial Solvency of Commercial Borrowers: The Case of Non-Banking Financial Companies

Credit risk can be effectively managed by evaluating and predicting the credit worthiness of a customer or a corporate. Credit scores are calculated to assess the credit worthiness. It helps the financial institutes to know the amount and dimensions of risk involved in different credit transactions. Credit scoring helps the financial institutes to decide whether or not to lend. It also helps in deciding the price of a particular exposure, the appropriate credit facility and different risk tools. This research paper focuses on identifying the triggers of credit default. It also focuses on checking and predicting the financial solvency of the borrowers of non-banking financial companies and assigning the credit worthiness to these companies. The data is collected from a Mumbai based NBFC. The data for the study are extracted from balance sheet and profit &loss statement of these companies. The data includes the financial ratio variables for forty companies. Altman's Z-score is used to find credit worthiness and DuPont technique is used to find the main causes of financial distress. The results of this research highlights that the borrowing companies having a lower return on equity (ROE) are prone to be in distress zone. This research would help the financial institutions to identify the most likely defaulter companies and to segment the clients/companies in safe, grey and distressed zones. The results are robust to sub-samples.

Social Media and Financial Institutions in the Indian context

This paper aims to identify the extent to which social media is used by Indian financial institutions (FIs) for various purposes including generating financial awareness. We consider a total 32 FIs which are listed with Bombay stock exchange (BSE)/national stock exchange (NSE), India; 22 of them being banks and ten non-banking financial companies (NBFCs). Managers of all the FIs were interviewed using self-administered questionnaire. The result shows that Facebook, Twitter and LinkedIn are the most widely used social media platforms for exploring new markets, developing new ideas, selling financial products, connecting with the customers and customer relationship management (CRM). Further, banks and NBFCs are found to adopt these media pages to post important financial announcements, which increases customer's interest in investment options. The study provides a view on social media usage in terms of cost reduction and customer satisfaction. However, there are some risks associated with social media such as reputational risks, operational risks, data and information risks etc. Furthermore, managerial discussions highlighted their contribution to the use of social media to increase financial literacy.

Social media and financial institutions in the Indian context

This paper aims to identify the extent to which social media is used by Indian financial institutions (FIs) for various purposes including generating financial awareness. We consider a total 32 FIs which are listed with Bombay stock exchange (BSE)/national stock exchange (NSE), India; 22 of them being banks and ten non-banking financial companies (NBFCs). Managers of all the FIs were interviewed using self-administered questionnaire. The result shows that Facebook, Twitter and LinkedIn are the most widely used social media platforms for exploring new markets, developing new ideas, selling financial products, connecting with the customers and customer relationship management (CRM). Further, banks and NBFCs are found to adopt these media pages to post important financial announcements, which increases customer's interest in investment options. The study provides a view on social media usage in terms of cost reduction and customer satisfaction. However, there are some risks associated with social media such as reputational risks, operational risks, data and information risks etc. Furthermore, managerial discussions highlighted their contribution to the use of social media to increase financial literacy.

Interest Rate Sensitivity of Non-banking Financial Sector in India

Executive Summary Before financial liberalization, interest rates were administered and exhibited near-zero volatility. The easing of financial repression in the 1990s generated experiences with interest rate volatility in India. Administrative restrictions on interest rates in India have been steadily eased since 1993. This has led to increased interest rate risk for financial firms. Most research studies have almost exclusively focused on the developed countries especially the banking sector of the United States. The present study attempts to examine the interest rate risk of non-banking financial institutions in India by using the methodology of panel regression and generalized autoregressive conditional heteroscedasticity (GARCH) (1, 1) model for the period from 1 April 1996 to 30 August 2014. The sample used in the study consists of all non-banking financial companies (NBFCs) listed in the S&P CNX 500 index which has continuous availability of share prices over the study period. The study also examines the impact of unanticipated changes in interest rate on stock returns of NBFCs. The Box–Jenkins methodology is applied to calculate unanticipated changes in interest rate variable, autoregressive integrated moving average (ARIMA) (24, 1, 0) model. The time series used in the present study is found to be stationary at the first logarithmic difference. Stock returns exhibit significant exposure with both market returns and interest rate changes. The interest rate sensitivity of large, medium, and small financial institutions is also found to be different. Estimation results for the variance equation in GARCH (1, 1) model suggest that the volatility for individual firm stock returns is time-variant. The ARCH and GARCH coefficients are found to be significant, providing evidence against using traditional model (ordinary least square (OLS)) that assumes time-invariant volatility. This implies that the market has a memory longer than one period and volatility is more sensitive to its own lagged values than it is to new surprises in the market. This study also investigates the possible determinants that account for cross-sectional variation in the interest rate sensitivity of NBFCs. It is found that the size of the firm is the preferred determinant that accounts for cross-sectional variation in the interest rate sensitivity of finance companies. When unanticipated changes in interest rate are used in lieu of actual interest rate changes, not much difference is observed in the significance coefficients. The only significant difference observed is in the magnitude. The impact of actual interest rate changes is more than the impact of unanticipated interest rate changes in absolute terms. This difference in the magnitude of impact arises because actual data incorporate movement in both anticipated and unanticipated components of interest rate. Hence, NBFCs managers and regulators should adopt policies and strategies to avoid the transmission of interest rate risk in their stock returns.

Does Legal Status Affect Performance of Microfinance Institutions?: Empirical Evidence from India

Transformation of non-government organizations (NGOs) to shareholder-owned microfinance institutions (MFIs) is an on-going debate in the field of microfinance research. Institutionalists support the transformation, whereas welfarists argue that NGOs are better conduits in serving poor clients. Prior studies on the impact of legal status of MFIs on their performance document mixed results. This study empirically investigates the extent to which the transformation is justified by examining the impact of legal status on the performance of MFIs in India. Using both univariate ( t-test and rank-sum test) and multivariate (random effect model) regression analysis on a dataset of 57 MFIs over the period of six years from 2008–2009 to 2013–2014, the study finds that the NGOs have better financial and sustainability performance than non-banking financial companies (NBFCs), but with respect to social performance both are indistinguishable. Further, the former has lesser costs of operation and better portfolio quality than the latter. Therefore, NGOs outperform NBFCs with respect to all dimensions of performance except for social performance where both are equally efficient. In conclusion, the transformation of NGOs to NBFCs may not improve the performance of Indian MFIs. These findings are expected to have substantial practical implications for managers of MFIs and for policymakers in framing policies for Indian MFIs.

Women on Board and its Impact on Performance: Evidence from Microfinance Sector

The board of directors is the most imperative facet of corporate governance for any corporation as it is responsible for approving financial decisions, policy formulation as well as strategic decisions. Consequently, their composition is a solemn issue for the company at all times. Recent years have evidenced a steep amplify in the board diversity by enhancing the representation of women in corporate leadership. Diverse boards with individuals having different background perhaps tends to be more innovative and make better decisions. It could enhance the boards’ functioning, sharpen strength and bring a more diverse perspective. Meanwhile, the participation of women in decision-making is one of the most divergent factors which has been given a push in the form of law with enactment of The Company Act, 2013. Thus, this study mainly illustrates the relevance of women in microfinance and empirically examines the association between participation of women on board and in senior management with the performance of microfinance industry, using a sample of 50 Non-banking Financial Companies–Microfinance Institutions (NBFC–MFIs). It is evident that there is a positive and significant impact of women as board members with the financial performance and of senior management with social performance in context to Indian MFIs. Thus, it is suggested that MFIs should think about the femininity on board and in senior management to improve financial viability and social performance to achieve sustainable growth.

Best talent management strategies of gold loan non-banking financial companies

Many organizations are realizing that it is equally important to attract talent as it is to attract customers. This is as a result of the competitive scenario in the marketplace and the challenges encountered in recruiting available top talents as well as the risks of losing them to competitors. Talent is one of the key elements behind the success of many firms because of its contribution towards the growth of human resource. However, an understanding that each and every talent has a set of needs different from the other and the development of strategies to match these is also very essential. Therefore, this study examines the different talent management strategies that are being practiced in an organization using three leading Gold Loan NBFCs and their effects on organizational performance. The survey was carried out among 450 respondents of these organizations in Kerala State using stratified random sampling method. A quantitative technique and descriptive research design were adopted for the study. The research hypotheses of the study were tested by using multiple regression analysis as the statistical tool. Through the results, it has been revealed that; performance appraisal, reward and recognition, training and development, career development, succession planning, recruitment and selection and employee engagement have effects on organizational performance and are as well positively related. Finally, it is recommended that in order for organizations to retain their talents and to improve their overall performance, it is important that they ensure higher levels of talent management strategies in the organization and also introduce more extensive training and development programmers.

Comment on “Infrastructure and Connectivity in India: Getting the Basics Right”

In India, infrastructure facilities such as roads, railways, ports, power stations, and information and communications technology (ICT) have not been developed sufficiently to catch up with India's rapid economic growth. Inefficient infrastructure has been pointed out as being a supply-side bottleneck. India must improve both its hard and soft infrastructure. The central government doubled its investment in the infrastructure sector from $US 500 billion in the 11th Five Year Plan (2007–2008 to 2011–2012) to $USD 1 trillion in the 12th Five Year Plan (2012–2013 to 2016–2017). But the investment is not enough to meet infrastructure financing. Public–private partnerships (PPP) were encouraged to mobilize more savings from the private sector. Commercial banks and non-banking financial companies (NBFCs) have been the two major source of non-budget debt financing for infrastructure projects. The share of infrastructure in gross bank credit rose from 6% in March 2007 to 11% in March 2011. However, banks face asset liability mismatches because they finance long-term infrastructure loans through deposits of a shorter maturity. Moreover, the share of gross non-performing loans (NPL) and restructured standard advances to the infrastructure sector in total advances to the sector increased from 5.1% in March 2010 to 22.8% in March 2015. Banks are reluctant to extend credit to the infrastructure sector. The total resources of NBFCs are limited because they are not deposit taking institutions. The private sector cannot depend on banks and NBFCs to expand investment in infrastructure projects. Singh and Kathuria (2016) recommend a strengthening of the bond market and mobilizing insurance and pension funds through the bond market to finance private investment in infrastructure. In India, PPP projects fell in the 12th Five Year Plan period. Many projects have suffered large time and cost overruns, and they have been unable to meet expectations regarding transparency and accountability. Many large infrastructure companies have accumulated debt. As the net debt of Indian infrastructure companies increased from 3 trillion rupees in 2010 to over 6 trillion rupees in 2014, private investment in infrastructure decreased from over $US 70 billion to less than $US 20 billion during the same period (Wall Street Journal 2015). While the Ministry of Road Transport and Highways has awarded contracts for 8000 km of national highways in 2014–2015, only about 700 km was awarded on build-operate-transfer (BOT) (Live Mint 2015). Infrastructure development through PPPs has reached a dead end. It seems that infrastructure financing as well as the institution of PPPs might have some problems. Singh and Kathuria (2016) conclude that “the first and foremost goal of involvement of the private sector should be to achieve efficiency gains as compared to purely procurement”. The PPP framework should be rebuilt to promote PPP projects. PPP is a good strategy to construct, operate, and maintain infrastructure facilities efficiently. However, the purpose of private companies is profit maximization. It is not always consistent with the optimization at the national level due to the fallacy of composition. Airport and port projects can attract private investment easily because investors can expect stable international standard income from foreign customers. The private sector might actively invest in infrastructure development in urban areas because it can expect enough income from users to recover the investment. On the other hand, the private sector might hesitate to invest in a sector where it cannot expect enough profits. The private sector can compensate the public sector but it cannot substitute for it. In order to develop infrastructure, the government must take the initiative in both investment and planning. This does not conflict with PPP, but might encourage it. Although huge fiscal deficits have constrained the increase of public investment in infrastructure, investment from the private sector will not be induced without it. The Golden Quadrilateral connecting the four major cities of Delhi, Mumbai, Chennai and Kolkata, and the North-South and East-West corridors have almost been completed. Their costs were funded largely by the government's special petroleum product tax revenues and government borrowing. The project tried to upgrade, rehabilitate and widen major highways. In 2015–2016 the government proposed a hybrid annuity model, which provided fiscal support from the government and took away the traffic risk from the investor. Consequently, the government received more bids in 2015–2016 (Live Mint 2015). Without government support and initiative, the private sector which has accumulated debt will not invest in infrastructure even if they get finance. Second, a master plan for infrastructure should be produced to make efficient logistics from the viewpoint of the national economy and to express sector-wise and area-wise priorities. Scarce government resources should be allocated according to the plan. Priorities expressed by the government may give a good signal to the private sector and encourage investment in the high priority projects. High priority should be given to projects which might reduce logistics costs effectively.

Cost of employee loyalty@Anand Finance

Subject area Organizational Behavior and Strategic Management. Study level/applicability MBA, Management/Executive development programs. Case overview This case study can be used effectively for understanding the nuances of employee loyalty, especially if there is a cost of employee loyalty. While Anand Finance is happy that its workforce has largely been loyal, the volatile, uncertain, complex and ambiguous times force it to chart new course of action. The newly appointed Business Head, Ashok Singh's challenges compound when he finds that there was not’t a single innovation or best practice adopted over the past three years. Given his mandate to make Anand Finance as the Walmart of financial services, can he aspire to rally the forces behind the new mission? This case study facilitates an interesting discussion on the significance of operational and strategic alignment at organizations in the backdrop of an interesting story of Anand Finance, one of the leading non-banking financial companies (NBFCs) in India. The non-alignment was noticed by Ashok Singh (Singh) who took over as the Business Head of Anand Finance. While the company boasted of long-standing employees, Singh was quick to notice that the company had been paying a cost for employee loyalty. What was the cost of employee loyalty? Singh could also sense that the company was in a state of active inertia. Expected to make Anand Finance Walmart for financial services by 2025, Singh had a big task at hand given the lack of strategic orientation of the employees. What would be the likely course of Singh's actions? As the case study deals with strategic dilemmas related to the organizational culture, it can be suitably used for organizational behavior and strategic management courses. This case study is meant highlight that even if an organization is operationally sound and successful, it cannot afford to be strategically disoriented, as its strengths may prove to be its weaknesses with changing business conditions. Expected learning outcomes At the end of this case discussion, the participants are expected to know the merits and demerits of employee loyalty and the implications of the same for organizational change; whether employees’ relatively longer stints at companies would contribute to active inertia (as defined by Donald N. Sull in Harvard Business Review article, “Why Good Companies Go Bad”); and the ways to align operational orientation with strategic mindset, especially in the case of employees who rose through the ranks and had been serving the company for relatively longer period. Supplementary materials Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

Operational self-sufficiency of select NBFC-MFIS of Andhra Pradesh

Operational Self Sufficiency (OSS), expressed in percentage terms, provides an indication as to whether a Microfinance Institution (MFI) is earning sufficient revenue (through interest, fee and commission income) so as to cover its total costs-financial costs, operational costs and loan loss provisions. MFIs can achieve OSS of 100%, either by increasing their operating income or by decreasing their total costs. This paper analyzed the Operational Self Sufficiency (OSS) of six select Non-Banking Financial Companies (NBFC)-MFIs, which have their headquarters in Andhra Pradesh. It has identified five factors that have an effect on the OSS of these MFIs, using the multiple regression analysis technique. These five factors are-Yield on Gross Loan Portfolio (Nominal), Total Assets, Cost per Borrower, Gross Loan Portfolio and Number of Active Borrowers. The study results indicated that an increase in the yield on gross loan portfolio and total assets of a MFI, resulted in the increase of OSS while an increase in the cost per borrower and number of active borrowers, decreased the OSS of the MFIs.

Non-Banking Financial Companies in India: Role in Economic Growth, Challenges and the Way Forward

Financial intermediaries like non-banking financial companies (NBFCs) have a definite and very important role in the financial sector, particularly in a developing economy like India. NBFCs play an important role in promoting inclusive growth in the country, by catering to the diverse financial needs of bank excluded customers. Further, NBFCs often take lead role in providing innovative financial services to Micro, Small, and Medium Enterprises (MSMEs) most suitable to their business requirements. The NBFC sector has continuously played a critical role in encouraging growth of the Indian economy and hence needs to be nurtured appropriately. This research paper mainly highlights the role of NBFCs in promoting economic growth of India. It also sets forth various strengths, opportunities, challenges and problems faced by this sector and the way forward.

Regulation of Non-Banking Financial Companies in India: Some Visions & Revisions

Non-Banking Financial Companies constitute an important branch of the finance sector. They pioneer in their cash deployment, accessibility to the markets and others to count. Tremendous progress during the 1980s and 1990s was due to rigorous efforts of the NBFCs world over. These instances also led to blurring dividing lines between banks and NBFCs with some privileges being reserved for the commercial banks. NBFCs are known for their higher risk taking capacity than the banks. Despite being an institution of attraction for the investors, NBFCs have played a significant role in the financial system. Many specialised services such as factoring, venture capital finance, and financing road transport were championed by these institutions. NBFC sector has more significantly seen a fair degree of consolidation, leading to the emergence of large companies with diversified activities. However, the recent financial crisis has highlighted the importance of widening the focus of NBFC regulations to take particular account of risks arising from the regulatory gaps, from arbitrage opportunities and from inter-connectedness of various activities and entities associated with the financial system. The regulatory regime is lighter and different than the banks. The steady increase in bank credit to NBFCs over the recent years means that the possibility of risks being transferred from more lightly regulated NBFC sector to the banking sector in India can’t be ruled out.

A Study of the Perceived Service Quality and its Dimensions in Private Sector Banks

The purpose of conducting this research was to explore how the of the private sector banks perceive the various dimensions of service quality. This research was mainly based on primary data which had been collected through a well-structured questionnaire (adapted from the PZB model of service quality). The questionnaire had been distributed to 300 respondents. This paper makes a useful contribution as there are very low number of studies that have been conducted in India on such dimensions like tangibility, reliability, responsiveness assurance and empathy. This research showed that perception of service quality varies from person to person and, bank managers need to conduct more researches in order to evaluate perceived service quality more strongly. Service sector is the lifeline for the social economic growth of a country. It is today the largest and fastest growing sector globally contributing more to the global output and employing more people than any other sector. For most countries around the world, services are the largest part of their economy. The real reason for the growth of the service sector is due to the increase in urbanization, privatization and more demand for intermediate and final consumer services. Availability of quality services is vital for the well being of the economy. The Indian Service sector covers a wide range of activities, such as transportation, communication, trading, finances, real estate and health, among others. Amongst these Indias financial sector is diversified and is expanding rapidly. It comprises of commercial banks, insurance companies, non-banking financial companies, mutual funds and other smaller financial entities. Ours is a bank dominated financial sector and commercial banks account for over 60 per cent of the total assets of the financial system. Indian Banking sector forms the backbone of the countrys economy. After nationalisation of banks in 1969 public sector banks came to occupy dominant role in the banking structure. Private sector banking in India received a flip in 1994 when Reserve Bank of India encouraged setting up of private banks as part of its policy of liberalisation of the Indian Banking Industry. Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. Private Banks have played a major role in the development of Indian banking industry. They have made banking more efficient and customer friendly. In the process they have jolted public sector banks out of complacency and forced them to become more competitive. In these banks most of the shares are in the hands of private owners. Like any other financial services, the banking industry, too, is facing a market that is changing rapidly. New technologies are being introduced and there is always a fear of economic uncertainties. In developing countries like India, it has become very important that banks determine the service quality factors, which are pertinent to the customers selection process, as with increased competition, with the advent of international banking, the trend towards larger bank holding companies, and innovations in the marketplace, are now having greater difficulty in selecting one institution from another. In order to provide excellent service quality, identifying the underlying dimensions of the service quality construct is the first step in the definition and hence provision of quality service and thus should be a central concern for retail bank managers as well as service management academicians and practitioners. Maintaining effective customer service helps to build and maintain customer relationship that is the key success in current banking scenario. Better service quality typically can help to get higher market share and better returns (Slu & Mou 2003). It is desirable for service providers to uncover what attributes consumers utilized in their assessment of overall service quality.

The development and application of information system driven value creation in Indian financial services sector

Assessing IS/IT systems value creation is a prerequisite for organisations adopting such systems. While the focal point of connected research is predominantly on instruments, models, and methodologies, only moderate attention has been given to understand and improve the value realisation process of IS. We adopted the DeLone and McLean model of IS success for the design of a value realisation model of IS in the financial services domain. While this model has been originally contrived for the area of information systems, it basically conquers the process of value realisation. In executing so, it is not only well-founded but its practical application can been broadened to other areas too. Hence, this paper presents a re-specification of DeLone and McLean's IS success model as a value creation model, examining it empirically in the context of financial services. A conceptual framework is proposed from a comprehensive review of IS success and value creation literature that evaluates IS success and value. Six variables are employed to measure IS system success and value in financial services industries. This conceptual FS-IS value creation model is tested and validated using data collected from banking and non-banking Indian financial companies. Primary contributions of the study include a new financial services information system success value model and a validated rating scale to measure information system constructs and performance for use by banking and non-banking companies.

Community-based microfinance: the potential and challenges of self-reliant, self-help group cooperatives

Microfinance services in India are delivered through many channels: self-help and joint liability groups, banks, non-banking financial companies, cooperatives, and post offices. Cooperatives had lost ground but the introduction of new laws allows self-financed cooperatives to operate free of government interference. Using this law, self-help promoting institutions (SHPIs) have federated self-help groups (SHGs) into self-reliant cooperatives. This paper uses a case study of cooperatives in Karnataka State, India, to consider questions about enabling and limiting factors in promoting self-reliant cooperatives. The lessons show that when financial and managerial sustainability is achieved, member-owned institutions give the best financial returns to members from microfinance operations, besides giving decision-making power, and improving the positioning of women-owned organizations vis-à-vis formal financial institutions. Setting up governance and financial systems can, however, be constrained by low incomes and low literacy of members, and attitudes and rules of government and banks.

Drivers Of Securitisation In Indian Banking Industry - An Empirical Study

Conventionally, a business seeking funds either issues securities or borrows from the market. These avenues, however, must always be supported with sufficient collateral of the business. This limits the scope of getting sufficient finance through the conventional sources, and eventually creates a vacuum between the demand for and availability of funds. In consequence, the financial experts have devised a solution in the option of structured finance to fill up this demand-supply gap. Structured finance is a complex financing technique, tailored as per the risk-return and maturity needs of the investors. It is employed by banks, other financial institutions and corporations as an innovative source of funding and is the foundation of 'securitisation' creation of security in any financial transaction. Such securitized instruments are tailored according to the requirements of the prospective investors. This mechanism of securitization helps the institutions to raise finance by re-utilizing its idle assets and, enhancement of its liquidity position, asset quality and financial performance. Accordingly, this paper uses regression analysis in an attempt to find out the factors that influence the securitisation mechanism amongst a sample of banks and non-banking financial companies (NBFCs) from the Indian Banking Industry.