IJRIM Apirl 2012 Issue

IJRIM
Volume 2, Issue 4 (April 2012)
(ISSN 2231-4334)
ROLE OF REGIONAL RURAL BANKS IN GROWTH, EMPLOYEMENT, INCOME AND DEVELOPMENT OF RURAL POPULATION
Suman*
ABSTRACT
Evolution of an effective institutional credit structure, which can meet the credit needs of the rural economy, has been one of the basic objectives of credit policy in India. Commercial banks have little interest in rural areas, these banks concentrated on deposits rather than credits. The nationalization of major commercial banks also did not improve the situation to any great extent. Less than 1% villages availed financial facilities from commercial banks. So there was strong need for the establishment of Regional Rural Banks. The rapid expansion of Regional Rural Banks has helped in reducing substantially the regional disparities in respect of banking facilities in India. Generation of additional sources of income and employment in rural population has been the main objective of Regional Rural Banks. Regional Rural Banks are setup to take banking to door steps of rural households, to avail easy and cheaper credit to weaker rural section and to generate employment in rural areas. The banks are striving hard to provide best banking service in its command area. Government should take some effective remedial steps to make Gramin Banks viable. Keywords: Growth; employment; income; development.
*Haryana College of Education, Ellenabad. International Journal of Research in IT & Management http://www.mairec.org 1
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Evolution of an effective institutional credit structure, which can meet the credit needs of the rural economy, has been one of the basic objectives of credit policy in India. The reserve bank of India has policy of institutionalization of rural credit in India. All India rural credit survey report recommended the three tier cooperative credit system, viz. state cooperative bank , district central cooperative bank , and primary cooperative societies, at state , district , and village level respectively. The cooperative credit societies, over a period of time, emerged as the main stay of rural credit structure and made substantial progress in terms of volume loan advanced and territorial coverage. The subsequent nationalization of 14 major commercial banks in June 1969 carried the process further. The nationalization of major commercial banks also did not improve the situation to any great extent. Less than 1% villages availed financial facilities from commercial banks. The cooperative movement suffers from a number of weaknesses and inadequacies. Due to inadequate working of Primary Agricultural Cooperative Societies suffers from over dues, limited coverage of rural areas, less mobility of resources, improper management, biased interests, poor progress, inadequate coverage to the small and marginal farmers and limited assess to weaker sections of rural and remote areas. Commercial banks have little interest in rural areas, these banks concentrated on deposits rather than credits. Thus they provide for the flight of funds from the rural to the urban. So there was strong need for the establishment of Regional Rural Banks. The government had stipulated that public sector banks should strive to achieve a credit deposit ratio of at least sixty percent in their rural and semi urban branches. In 1975 government of India appointed a working group under the chairmanship of Shri M. Narasimham to review the flow of institutional credit especially to the weaker sections of the rural community. M. Narasimham commission recommended the setting up of state sponsored, regionally based and rural oriented Regional Rural Banks. The government established by ordinance & then legislation rural financial institutions called Regional Rural Banks. RRBs are setup under the REGIONAL RURAL BANKS ACT OF 1976. Out of which 50% capital share owned by government of India, 35% owned by sponsored commercial bank 15% owned by state govt. OBJECTIVES To take banking to door steps of rural house holds particularly in banking deprived rural area, to avail easy and cheaper credit to weaker rural section who are dependent on private lenders,
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to encourage rural savings for productive activities, to generate employment in rural areas and to bring down the cost of purveying credit in rural areas.
GROWTH PERFORMANCE
The number of branches has been substantial increase during last few years. The reason for slow expansion of branches Gramin Bank can be traced to the better banking facilities provided by commercial Banks. The progress of deposit mobilization can be attributed to the pace of branch expansion. A comparatively better indicator of deposit mobilization is deposits per branch as deposits can simply be increased by opening more branches in rural areas. Moreover, promotion of the culture of good customer services will help in mobilizing the deposits. The high rates of growth in credit deployment are due to rapid growth in its branches. Moreover, much of the lending by the Gramin Bank is confined to the I.R.D.P. schemes which highlight its involvement in rural development programme. Decline in Credit-Deposit Ratio can be attributed to the unfavorable environment created by political parties by announcing the waiving of loans. This has created an environment of uncertainty for the financial institutions due to which their lending operations have declined. Performance of the Gramin Bank clearly reveals that they have made satisfactory progress in carrying out their social objectives i.e., to take banking to door steps of rural households particularly in banking deprived rural area, to avail easy and cheaper credit to weaker rural section who are dependent on private lenders, to encourage rural savings for productive activities, to generate employment in rural areas and to bring down the cost of purveying credit in rural areas. Pattern of expenditure comprise of interest paid on deposits and borrowings, salary, provident fund and gratuity contribution and other establishment expenses, comprising of rent, taxes, insurance, electricity, stationery, allowances, law charges, postages, telegram and stamps, telephone and internet bills, repair, auditor fees, depreciation etc. total income is divided into three components viz. interest and discount, commission, exchange and brokerage and other receipt. The main source of income is the interest earned on loans and advances and on deposits kept with the sponsoring and other banks. Share capital and reserve fund form part of the owned resources of the Gramin banks and depend upon the adequacy of the net profits earned by these banks. This is the important source of finance available to the RRBs. The higher the percentage of savings and current deposits in total deposits, the better will be the impact on banks profitability. Most cheapest source of funds are current deposits but require high liquidity whereas fixed deposits are costly source of finance as the highest rate of interest is required to be paid on them. International Journal of Research in IT & Management http://www.mairec.org 3
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Borrowing is obtained from the financial institutions like NABARD, IDBI and from sponsoring banks. Productivity could be augmented by controlled branch expansion, proper man power planning, exercising control over operating costs and through improving the quality of credit business.
EVALUATION
Misutilisation of Credit: Three major type of Misutilisation: No purchase of asset Resale of the asset Sanction of loan on borrowers own asset
Participation Cost: Participation cost consists of payment made or expenses incurred at various stages of filling of application form to the stage of formally joining into the scheme. Each and every beneficiary has to pay participation costs in one or the other. The form and cost varied from scheme to scheme and beneficiary to beneficiary. Factor Responsible for Non-repayment: Inadequacy of income, unwillingness to repay, higher family consumption, prefer repayment of private borrowing over repayment of bank loans, lack of efforts by Bank staff has been found to be the basic reason for non-repayment of the loan, death of animals, borrowers illness and dispute with bank staff respectively. Nowadays political announcements become major reason for non-repayment. Impact on income: Thus supply of bank finance has proved to be a means of increasing income in the post loan period as compared with that of pre loan period. Impact on employment: Generation of additional sources of income and employment has been the main objective of RRB. The various schemes financed by bank help in providing employment to the beneficiaries either for the full year or seasonal.
SUGGESTIONS
Government should encourage & support banks to take appropriate steps in rural development. Involvement of panchayats, SHG, NGO and other local bodies. Efforts should be made to ensure that the non-interest cost of credit to small borrowers is kept as low as possible. Policy should be made by government for opening more branches in weaker and remote areas of state. International Journal of Research in IT & Management http://www.mairec.org 4
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The interest paid ratio can also be reduced by changing the composition of deposits in favour of the savings and current deposits. Productivity can be improved by controlling the costs and increasing the income. To participation cost, subsidy should be adjusted towards the end of the transaction for which loan assistance is sanctioned. Government should take firm action against the defaulters and shouldnt make popular announcements like waiving of loans.
CONCLUSION
To conclude, the rapid expansion of RRB has helped in reducing substantially the regional disparities in respect of banking facilities in India. The efforts made by RRB in branch expansion, deposit mobilization, rural development and credit deployment in weaker section of rural areas are appreciable. RRB successfully achieve its objectives like to take banking to door steps of rural households particularly in banking deprived rural area, to avail easy and cheaper credit to weaker rural section who are dependent on private lenders, to encourage rural savings for productive activities, to generate employment in rural areas and to bring down the cost of purveying credit in rural areas. Thus RRB is providing the strongest banking network. The banks are striving hard to provide best banking service in its command area. Government should take some effective remedial steps to make Gramin Banks viable.
REFERENCE
1. Annual report of Haryana Gramin Bank 2007-08. 2. Chippa, M.L., Commercial Banking Development in India A study in regional disparity, Printwell publishers, Jaipur, 1987. 3. Various issues of RBI. Monthly bulletins. 4. Dantawala, M.L., Regional Rural Banks: A Classification, Economics and Political Weekly, Vol.13, No.42, Oct.21, 1978. 5. Gariwala, Bharat, Performance by Regional Rural Banks, Financial Express, 1988. 6. Government of Haryana, Economic and Statistical Organization, Statistical Abstract of Haryana, Chandigarh, 1976-90 7. Government of India, Report of the Working Group on Regional Rural Banks (1986), New Delhi. 8. M. Narasimhan. Report of the committee on the financial system. Technical report, Reserve Bank of India, 1991. 9. Malhotra, Rakesh (2002): Performance of Indias Regional Rural Banks (RRBs): Effect of the Umbilical Cord. URL: http://www.alternativefinance.org.uk/rtf/rrbsmalhotra.rtf. 10. Pai, Panandikar, V.A., Regional Rural Banks, Economics Times, June 26, 1982
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11. Ramanaa Murty, D.V., Regional Rural Banks: An Assessment of Performance, Southern Economist, No.16 (7), August 1, 1977. RBI, All India Rural Credit Survey, Vol. II, Chapters VIII and IX, Bombay, 1954. 12. RBI: Monthly Bulletin. 13. Report of the committee to Review Arrangements for Institutional Credit and Rural Development (CRAFICARD) (1981), RBI, Bombay. 14. Report of the expert committee on consumption credit, New Delhi, April, 1976. 15. Reserve Bank of India, Report on the Functioning of Public Sector Banks, 1978, Bombay. 16. Sinha, D.P., Role of Regional Rural Banks in Rural Development, Khadi Gramodyog, 24(9), June, 1978. 17. Varde and Singh, 1982 Profitability Performance of RRBs. pp. 247-56. 18. Wadhwa, charan, D., Rural Banks for Rural development, Macmillan India Ltd.,1980.
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A STUDY FOR PERISHABLE INVENTORY CONTROL SYSTEM WITH THE HELP OF A MODEL BASED ON FUZZY DYNAMIC PROGRAMMING
Saloni Srivastava* Dr. R.K. Shrivastava**
ABSTRACT
In this paper, we consider a model in which backlogging is not allowed, since the items in the inventory are perishable. To analyze perishable inventory system with crisp transformation function, we apply fuzzy dynamic programming technique. In this paper we consider both objective function and constraints are as fuzzy sets. By applying fuzzy dynamic programming, the existence of optimal solution for perishable inventory system approach is studied. In a fuzzy environment, to illustrate the optimal decision, numerical examples and sensitivity analysis are discussed.
*Department of Applied Science and Humanities, Sachdeva Institute of Technology, Farah, Mathura. **Department of Mathematics, Agra College, Agra. International Journal of Research in IT & Management http://www.mairec.org 7
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1. INTRODUCTION It is found that the decision making problems such as inventory control systems and service facility systems, metaheuristic algorithm [6] and fuzzy dynamic programming have been used in a good amount. Bellman and Zadeh in 1870, considered the classical decision model and suggested several models for decision making in a fuzzy environment. The application of fuzzy set theory in mathematical programming was done by Bellman R.E. and L.A. Zadeh [2] and Zimmermann H.J. [9]. Development and applications in the field of fuzzy dynamic programming deal by Kacprzyk [4], Esogbul and Bellman [3] and Zimmerman [8, 10,11]. In fact the traditional economic criterion i.e. maximization of profit or minimization of cost models are useful in many real inventory problems. On the other hand there are many inventory problems for which the economic criterion model are not applicable including reservoir operation problems as well as some retail inventory problems. To incorporate the expert knowledge with fuzzy membership function only fuzzy criterion models are used, and therefore these models are closer to the spirit of modern decision-making thinking [7], than the existing inventory models. Let us consider a multistage decision making inventory control system in which reorder quantities are the decision variables and are the different states inventory level at the
beginning of the period k of the system. At the beginning of each stage, a reorder of for items is to be done and the decision maker should be able to evaluate the final state. Since items in the inventory are perishable, we assume that backlogging is not allowed. The following questions should be able to be answered by the decision maker, which states are the best?, which states are qualified and which states are too bad? Another important issue in perishable inventory control system is due to the nature of the stock. The objective of the problem is to minimize the stock almost zero at the end of the planning horizon. In this paper, our aim is to concentrate on inventory systems having perishable items and also to construct a fuzzy dynamic programming model for these types of inventory systems. We also focus on the optimal inventory control for this kind of inventory system is obtained as a natural extension of ordinary inventory control system. For different values of perishable parameter are obtained by optimal schedules, the final inventory with low or zero level.
2. DEPICTION OF THE MODEL (FUZZY)

For developing the model we have to consider the following notations and assumptions. Let be the state variable representing the inventory level at the beginning of period k, where . Considering an inventory model of n 8
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, where ,
periods then the order quantity in each period k is assumed to be fuzzy variable is the set of values permitted for the decision. Most of the cases where and are the fundamental units of inventory. for
is the crisp is the deterministic demand in period k are
transformation function where and
denotes the quantity of perished items in period k.
fuzzy constraints on the decision variables representing the goal reordering quantity that should decrease as steadily as possible. , i.e., the perished quantity is
proportional to inventory on hand at each period k, where
is the perish ability parameter and
, is the fundamental unit of inventory (pocket). Let us consider denotes round off value of z. Let
be the fuzzy goal,
representing the decision that the inventory is very low at the end of the planning horizon. To solve the problem we propose the fuzzy dynamic programming technique of Bellman and Zadeh (1970). They explained that th basic type of fuzzy dynamic programming problem based on symmetric decision model is one in which the objective function as well as the constraints are fuzzy. The fuzzy objective function is characterized by its membership function and so are the constraints. To optimize the objective function subject to the constraints defined in the fuzzy environments, we use an optimal decision as a selection of activities that simultaneously satisfy the objective function and constraints. Here we assumed that the constraints are non-interactive and hence the logical and corresponds to the intersection (of fuzzy sets). The intersection of fuzzy constraints and objective function which is fully symmetric can be obtained under the decision in a fuzzy environment in this model. 2.1. EXPLANATION AND NOTATIONS [ BELLMAN AND ZADEH ] (1970) In a space of alternatives Z, consider a fuzzy goal be combined to form a decision correspondingly and fuzzy constraints . Let and and
which is a fuzzy set given by . This definition can be extended to r goals
and s constraints hand
in a logical manner. On the other . The intersection of fuzzy
seta is defined in the possibility sense by the min-operator. Traditional dynamic program was introduced by Bellman in 1957, which is actually contain the problem as a multistage decision process with n stages and the optimal policy has to be determined recursively. Let us
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, the decision variable , stage rewards .
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, a reward
consider the state variable function
and transformation function
Fig.1. The basic fuzzy dynamic programming structure The formulation of the problem is described as:
Such that
and
. It is to be noticed that all variables
rewards and transformations are supposed to be crisp. Theorem: The fuzzy dynamic programming problem , where
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and . be the crisp state variables where
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Subject to the fuzzy constraints decision Proof : Let
, has the optimal maximizing
is the set of values permitted for the state variables and be the crisp decision variables where decisions. For each stage membership function characterized by the membership function is the set of possible have the be
, let the fuzzy constraints
. Similarly the fuzzy goal
. As we know that the logical operator is given
and is used a intersection in the statement of the theorem, the fuzzy decision set by . The membership function of the fuzzy set
by using the min-
operator for the aggregation of the fuzzy constraints and the goal can be obtained as:
Hence the membership function of the maximizing set
is given by:
Since, an arbitrary function of
, where C is a constant and f is , the above membership can be also be written as: s
By the use of above recursive function, the optimal decision set
can be obtained.
3. SOLUTION PROCEDURE
The general solution procedure of solving inventory control problem by fuzzy dynamic program [5] approach is described STEP 1: Using the forward calculation, we can calculate the lower and upper as:
STEP 2 : From backward calculation the bounds
and
are computed as:
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STEP 3 : The final bounds are computed as follows:
STEP 4 : From the above, compute
STEP 5 : For the specific
, observing the table for
, we get the optimal pairs
with positive values. For each pair from the table for schedules.
select the corresponding pairs to get all possible optimal
and continuing this process, till
4. NUMERICAL EXAMPLE
The general procedure explained in the above mentioned theorem is applied for the periodic review perishable inventory problem with number of periods n = 4. Assume the demand occurs in each be . At the beginning of
each period, the inventory on hand is of perishable in nature. The number of items perished in each period k may be directly proportional to the inventory on hand in that period. Therefore, we consider
, where is the perishable factor i.e. & is the
fundamental unit of inventory. Here, we take system, and
for non-perishable inventory
case is a perfect perishable inventory system which is non-existence. We consider lies between 0 & 1, i.e. .
that it is necessary that the value of
Case 1: In our problem, if we assume that constraints on the decision variable
, let the membership function of the fuzzy is given as:
; where k = 1, 2, 3, 4
The membership function of fuzzy goal

end of the planning horizon is given by:
representing the decision to have a low stock at the
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Let
be the initial stock or level at the beginning. The inventory level which is supposed to be zero , be given by and . We are only concerned . In the following table, the bou-
and the permitted state values for the reorder quantities that of the possible inventory levels be given by
the support of fuzzy constraint set nded decision variables i.e. lower-bound
and upper-bound
are obtained. Here
k 1 2 3 4 55 45 35 25 85 75 65 55
For the different intermediate stages we find upper and lower bounds using the transformation function by the following three steps: Step1: Calculation of the k 1 2 3 4 5 ---10 0 0 ---Table 1 Step 2 : Assuming bounds as: k 1 2 3 4 5 0 0 0 5 ---Table 2 International Journal of Research in IT & Management http://www.mairec.org 13 120 105 80 55 15 and stating with , we get the upper and lower ---40 55 60 ---and for the state variable are as follows
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25
30
35
40
45
50
55
5 10 15 20 25 30 35 40 45 50 55
0 0 0 0 0 0 0 0 0 0 1/4
0 0 0 0 0 0 0 0 1/2 1/2 1/2
0 0 0 0 0 0 0 3/4 1/2 1/2 1/4
0 0 0 0 0 0 3/4 1/2 1/4 1/4 0
0 0 0 0 3/4 3/4 1/2 1/4 0 0 0
0 0 0 1/2 1/2 1/2 1/4 0 0 0 0
0 0 1/4 1/4 1/4 1/4 0 0 0 0 0
0 0 1/4 1/2 3/4 3/4 3/4 3/4 1/2 1/2 1/2
With the help of step 3 and above two tables, we have the following upper and lower bounds are: k 1 2 3 4 5 0 10 0 5 ---Table 3 0 40 55 55 15
Within the lower and upper bounds, the optimal Stage1 :
and
are as follows:
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Stage 2 :
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35
40
45
50
55
60
65
0 5 10 15 20 25 30 35 40 45 50 55
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0
Stage 3 :
45
50
55
60
65
70
75
10 15 20 25 30 35 40
0 0 0
0 0 0 0
0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
0 0
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Stage 4 :
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55
60
65
70
75
80
85
1/4
1/4
1/4
Case 2 : If the perishable factor k 1 2 3 4 5
, then we have
0 10 0 5 ----
0 40 45 20 15
By the above way Stage 1 :
25
30
35
40
45
50
55
5 10 15 20
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0
0 1
0 1
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Stage 2 :
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35
40
45
50
55
60
65
0 5 10 15 20 25 30 35 40 45
0 0 0 0 0 0
0 0
1 1 0 0
0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0
1 1
Stage 3 :
45
50
55
60
65
70
75
10 15 20 25 30 35 40
0 0 0
0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
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Stage 4 :
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55
60
65
70
75
80
85
Case 3 : Let the perishable factor be k 1 2 3 4 5
, then we get
0 10 0 5 ----
0 40 35 30 15
By the above way: Stage 1 :
25
30
35
40
45
50
55
5 10 15 20 25 30
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0
0 0 0
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Stage 2 :
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35
40
45
50
55
60
65
0 5 10 15 20 25 30 35
0 0 0 0
0 0
0 0 0 0 0
0 0 0 0 0 0 0 0
Stage 3 :
45
50
55
60
65
70
75
10 15 20 25 30 35 40
0 0
0 0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
Stage 4 :
55
60
65
70
75
80
85
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, using the above concepts , an
Optimal Schedule : For various values of perishable parameter

optimal schedule are formed as :
When CASE 1 : (0,55) 0 45 CASE 2 : (0,60) 0 45
(10,60) 5 50 (15,55) 5 50
(15,50) 5 45 (15,50) 5 45
(15,55) 5 60 (15,55) 5 60
CASE 3 : (0,55) 0 45
(10,60) 5 50
(15,55) 5 45
(20,50) 5 60
When CASE 1 : (0,60) 0 45 CASE 2 : (0,60) 0 45
(15,60) 10 50
(15,50) 10 45
1 (15,55) 10 60
(15,60) 10 50
(15,50) 10 45
(10,55) 5 60
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It is to be noted that, we could get the optimum schedule for each for various values of perishable parameter in other way the cases with inventory level low or zero gives the optimal inventory.
5. PERCEPTIVE ANALYSIS
A range of perishable rates have been compared by the optimal schedules. We have shown . This indicates that as increases, that the final inventory position become zero for the optimal schedule become more accurate and crisp. 6. RESULT We consider only those problems which are perishable inventory control decision problems, further which are solved by using fuzzy dynamic programming. Perceptive analysis done by determining the appositively of different schedules . This also
extended to solve inventory control problems with partial and full backlogging.
7. REFERENCES
[1] Bellman, R., 1957, Dynamic programming Princeton. [2] Bellman, R., and Zadeh, L.A., 1970, Decision makin in a guzzy environment management science 17, B 141-164. [3] Esogbue, A. O., and Bellman, R. E., 1984, Fuzzy dynamic programming and its extensions, In Zimmermann et al 147-167. [4] Kacpizyk, J, 1983, Multi stage decision-making under fuzziness, vertag TUV Rheinland, Koln, Germany. [5] Kacpizyk, J and Esogbue, A.O., 1996, Main development and applications, Fuzzy dynamic programming, Fuzzy sets and systems, 81, 31-45. [6] K. Thangavel, M.Karnan, P.jaganathan, Pethalakshmi, R.Siva Kumar And Geetha Ramani, Ant Colony Algorithms In Diverse Combinational Optimization Problems A Survey, International Journal on Automatic Control System and Engineering, vol.6, no. 1, pp 7-26, 2005. [7] Turban, E, 1998, decision support and expert systems, second edition, Macmillan, Newyork. [8] Zimmermann, H.J., 1983, Fuzzy mathematical programming Computational operation Research, 10, 291-298. [9] Zimmermann, H.J., 1985, Applications of Fuzzy set theory to mathematical program, Information Science, 36, 29-58.
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[10] Zimmermann, H.J., 1991, Fuzzy set theory and its applications, second edition, Kluwer Academic publishers, Netherlands. [11] Zimmermann, H.J., 2000, An application-oriented view of modeling uncertainty, European journal of Operation Research, 122, 190-198.
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IMPACT OF PERFORMANCE APPRAISAL ON EMPLOYEES ATTITUDE

Dr. U.S.S. Shrivastav* Nimisha Sapra**
ABSTRACT
Performance appraisal is a widely recognized process, yet efforts to study and examine its effect on attitudinal outcomes are scarce. The present study addresses this research gap. The study is based on secondary research which involves reviewing and critically analysing the scholarly literature that addresses issues similar to this research problem. The study will contribute to the body of knowledge on performance appraisal and thus will benefit the HRM practitioners and HRM scholars.
*Supervisor, Ph.D. (Finance), M.B.A. International Trade, Executive Director International Institution of Management Delhi. **Nimisha Sapra, Research Scholar, Department of Management, Singhania University, Pacheri Bari, Distt. Jhunjhun, Rajasthan. International Journal of Research in IT & Management http://www.mairec.org 23
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Employee Evaluation: Its a dirty job, but somebodys got to do it. Jerry Jensen
INTRODUCTION
Performance appraisal (PA) has remained an important topic of investigation among organizational researchers (Poon, 2004:322). It is an unavoidable element of organizational life (Brown, 1988; Longenecker & Fink, 1999). There are many decisions in modern organizations that depend on performance appraisals, and they are widely used in most organizations (Burkhalter & Buford, 1989; Davis, 2001; DeNisi, 1996; Wanguri, 1995). They are an important piece of the process by which organizations attempt to direct themselves (Kreitner, 1998; Landy and Farr, 1983), and they have been considered a key component in the success of organizations for most of the twentieth century (Grote, 2002; Pettijohn, & Kent, 2001; Rasch, 2004; Starcher, 1996). Performance appraisal allows organizations to inform their employees about their rates of growth, their competencies, and their potentials. It enables employees to be intentional in creating their individual developmental goals to help in their personal growth. There is little disagreement that if performance appraisal is done well, it serves a very useful role in reconciling the needs of the individual and the needs of the organization (Cleveland, Landy, & Zedeck, 1983; Conry & Kemper, 1993; Grote, 1996). If used well, performance appraisal is an influential tool that organizations have to organize and coordinate the power of every employee of the organization towards the achievement of its strategic goals (Grote, 2002; Lewis, 1996). However, if performance appraisal is not done well, Grote suggests the process can become the object of jokes and the target of ridicule. This paper identifies the impact of performance appraisal on employees attitude and identifies challenges facing the existing appraisal system.
EFFECT
OF
PERFORMANCE
APPRAISAL
FEEDBACK
ON
EMPLOYEES ATTITUDE
An attitude could be defined as a learned predisposition to respond in consistently favourable or unfavourable manner with respect to a given object (Kreitner and Kinicki, 1992, p.98) [14]. Attitudes are formed throughout the time, can be changed and may be influenced by a manager. One of tools for initiation of attitude change is performance appraisal. Performance appraisal process is incomplete without the feedback given to the employee about his appraisal and his performance. But the way of giving as well as receiving the
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feedback differs from person to person and their way of handling and their outlook towards the issue. According to a popular saying: A successful man is one who can lay a firm foundation with the bricks others have thrown at him. Archer North suggests that mere individual recognition, that is to say appraising performance, can lead to higher job satisfaction and reduced absenteeism and turnover rates. In fact, there is evidence that human beings will even prefer negative recognition in preference to no recognition at all. To show effects of performance appraisal on employee attitudes, a study by Gabris and Mitchell, made in an organization with a quarterly performance appraisal system, which focused on Matthew effect, will be used. Matthew effect is said to occur where employees tend to keep receiving the same appraisal results, year in and year out. That is, their appraisal results tend to become self-fulfilling: if they have done well, they will continue to do well; if they have done poorly, they will continue to do poorly. They explored an extent of frustration rising from biased performance appraisal. The workforce was divided into two groups: thosewho had been given high appraisal results consistently, and those who had low results consistently. When the groups were asked if the appraisal system was fair and equitable, 63 per cent of the high performers agreed, compared to only 5 per cent of the lower performers. The groups were asked if their supervisors listened to them. Of the high performers, 69 per cent said yes, while among the low performers, 95 per cent said no. Finally, when asked if their supervisors were supportive, nearly half of the high performers agreed that they were, while none of the low performers agreed. It is a cardinal principle of performance appraisal that employees should have the chance to improve their appraisal results especially if their past results have not been so good. It is a very serious flaw in the process of appraisal if this principle is denied in practice.
EFFECT OF GOOD PERFORMANCE APPRAISAL ON EMPLOYEES ATTITUDE

Organisational development and personal development are both served when reasonably high goals are set. People feel good about themselves and their employer when they do things that stretch their abilities and when they get recognition for those achievements. A performance appraisal system is a means for both setting and recognizing the achievement of goals or International Journal of Research in IT & Management http://www.mairec.org 25
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standards and also helps individuals in planning their own career development. Performance appraisals that genuinely encourage career growth demonstrate that an organisation is doing its share to help individuals advance, which further boost the employee morale. Performance appraisal if effectively done offers an excellent opportunity perhaps the best that will ever occur for a supervisor and subordinate to recognize and agree upon individual training and development needs. During the discussion of an employees work performance, the presence or absence of work skills can become very obvious even to those who habitually reject the idea of training for them. Performance appraisal can make the need for training more pressing and relevant by linking it clearly to performance outcomes and future career aspirations. Thereby, helping employees in identifying areas of weaknesses and strengths, increasing awareness of job requirements and finally helping them in improving their performance.
IMPACT OF POOR PERFORMANCE APPRAISAL ON EMPLOYEES ATTITUDE

Oberg warns, negative feedback from performance appraisal not only fails to motivate the typical employee, but also can cause him to perform worse. Only those employees who have a high degree of self-esteem appear to be stimulated by criticism to improve their performance. According to study by Baron, destructive criticism, which is vague, ill-informed, unfair or harshly presented will lead to problems such as anger, resentment, tension and workplace conflict, as well as increased resistance to improvement, denial of problems, and poorer performance. Mentioned implications should be dealt with big attention. It may be suggested that an appraiser should delineate performance appraisal process to a person appraised not as an opportunity to criticize him, but primarily as a way for explaining what could be done better and how could he (and thus the whole company) perform better in future. Bannister notes, it is important that the appraiser be well-informed and credible. If it is so, employees are more likely to view the appraisal process as accurate and fair. They also express more acceptances of the appraisers feedback and a greater willingness to change. Bacal recommends that when talking to an employee about a problem, one should phrase his comments in terms of preventing the problem from recurring, by using the inappropriate performance as a jumping off point, explaining why it is problematic, and then quickly moving on to preventing re-occurrence. This moves the focus from blame to improvement. He also suggests a cooperative, dialogue approach for managers. This approach puts the International Journal of Research in IT & Management http://www.mairec.org 26
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manager and employee on the same side, and working towards the same goals is getting better and better. Employee may feel noticed, more self-confident, proud that he or she is working with the boss, and thus may be motivated to perform even better. Mere fact of talking with his supervisor might be very important.
CONCLUSION
The above discussion reveals that performance appraisal is an important part of an organisation but the performance appraisal process is incomplete without the feedback given to the employee about his appraisal and his performance. The positive performance appraisal feedback involves, inform and motivates employees and also helps in creating improved supervisor employee communications. An effective performance appraisal feedback also helps in integrating the employee personal and organizational goals but on the other hand poor performance appraisal not only fails to motivate the employee but also can cause him to perform worse. The management of those staff who fails to meet the identified and communicated performance standards expected by the organization is one of the most challenging aspects of management (Goodhew et al, 2007). To overcome the challenge, Armstrong and Baron (2005) went on to outline five steps which should be identified as part of the appraisal process for managing poor performance; 1. Identify and agree the problem, 2. Establish the reasons for underperformance, 3. Decide and agree on the action required, 4. Resource the action via training as required, 5. Monitor performance and provide feedback. If performance continues to be below the standards agreed, then the process can be repeated and the ultimate sanction of dismissal applied if required.
RECOMMENDATIONS
Based on the above literature, the following recommendations have been suggested: 1. Training should be provided to both the evaluators and the employees. 2. Transparency in the implementation of the system. 3. Provision of continuous feedback to employees on their performance. 4. Disciplinary measures should be taken on supervisors who do not provide continuous feedback to employees.
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5. Companies should consider adoption of a new system of assessing performance such as multi rater feedback or 360 degree feedback, to remove the biasness and subjectivity reported on the part of the supervisors.
BIBLIOGRAPHY
1. Allan, P.1994. Designing and implementing an effective performance appraisal system, Review of business, Vol. 19 No.2, p.2 and 6. 2. Boice, D.F. and Kliener, B.H. 1997. Designing effective performance appraisal systems, Work Study, Vol.46 No. 6, pp. 197-203. 3. Brown, M. And Heywood, J. 2005. Performance appraisal systems determinants and change. British journal of industrial relations, Vol. 43 No. 4, pp.659-79. 4. Cintron Rosa and Forrest Flaniken, Performance appraisal: A supervision or leadership tool, International Journal of Business and Social Science, Vol.2 No.17. 5. Longenecker, C.O. and Fink, L.S. (1999), Creating effective performance appraisals, Industrial Management, Vol. 41 No.5, pp. 18-24. 6. M Strebler, Tackling poor performance, Institute for employment studies, 2004. 7. Poon, J.L.M., 2004, Effects of performance appraisal politics on Job satisfaction and Turnover, Personnel Review, Vol. 33 No.3
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COMBINING CAPTCHA AND GRAPHICAL PASSWORDS FOR USER AUTHENTICATION

T. S. Ravi Kiran* Y. Rama Krishna**
ABSTRACT
Text passwords have been widely used for user authentication, however, it is well-known that text passwords are insecure for a variety of reasons .Graphical password schemes are believed to be more secure and more resilient to dictionary attacks than textual passwords, but more vulnerable to shoulder surfing attacks. Many recognition-based graphical password schemes alone, in order to offer sufficient security, require a number of rounds of verification, introducing usability issues. In this paper we suggest a hybrid user authentication approach combining CAPTCHA (Completely Automated Public Turing tests to tell Computers and Humans Apart) and graphical passwords to provide increased security. Keywords: CAPTCHA, Graphical Passwords, User Authentication, Phishing, Security
*Lecturer, Department of Computer Science, P.G.Centre, P.B.Siddhartha College of Arts & Science, Vijayawada. **Assistant Professor, KITE Womens College of Professional Engineering Sciences, Shabad, India. International Journal of Research in IT & Management http://www.mairec.org 29
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Authentication is indeed at the heart of any secure system; a user has to be authenticated before he/she can be involved in online transactions, enter a secured vault, open a safe or reach his/her email account[1]. If sensitive information or unauthorized access is given to a wrong identity, the entire security of one system will collapse. Generally, the most common and convenient authentication method is the traditional alphanumeric password. However, their inherent security and usability problems [2, 3] led to the development of graphical passwords as an alternative. To date, there have been several graphical password schemes, such as [4, 5, 6, 7, 8]. They have overcome some drawbacks of traditional password schemes, but most of the current graphical password schemes remain vulnerable to spyware attacks. Most current graphical password schemes require users to enter the password directly, typically by clicking or drawing. Hence, passwords are easily exposed to a third party who has the opportunity to record a successful authentication session CAPTCHA (Completely Automated Public Turing tests to tell Computers and Humans Apart) is a program that generates and grades tests that are human solvable, but beyond the capabilities of current computer programs [9]. CAPTCHA is now almost a standard security mechanism for addressing undesirable or malicious Internet bot programs and major web sites such as Google, Yahoo and Microsoft all have their own CAPTCHAs. The rest of the paper is organized as follows. Section 2 briefly reviews related work. Sections 3 present our scheme. Conclusions and future work are addressed in section 4.
RELATED WORKS
There are many different ways a user can be authenticated by a system. This section looks at a number of different authentication systems to analyze their strengths and weakness. Alphanumeric Passwords An alphanumeric password is an authentication mechanism that utilizes letters, upper and lower case, numbers and some special characters such as exclamation marks and pound signs. A combination of all of these is used to form a string the user enters into a computer to authenticate themselves. Passwords of this nature are generally held to follow two guidelines; they must be memorable allowing the user to authenticate quickly and easily and that they must be secure [10].Alphanumeric passwords utilize recall which from the statement above is much harder for a user to remember their password. This means that in general users will be inclined to create an easily remembered password, which again reduces the security of the
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system. This point is further highlighted by the need to regularly change passwords to effectively 'reset' any attempts to steal a user's password Biometrics One alternative to the use of alphanumeric passwords is the use of biometrics. Biometrics is the utilization of uniquely and personally identifiable biological and physical information [11]. This authentication method does not rely on user password selection so does not fall foul of the failings described above. Also, as this mechanism makes use of the personal attributes of the user as opposed to a password it is not possible to shoulder surf this technology. There are many biometric systems in place today such as the use of finger prints or voice recognition. Authentication takes place by comparing previously stored information against the information a user provides when they wish to authenticate. To many this may seem like the logical choice when it comes to replacing alphanumeric passwords with a far more secure system, but it too has flaws Graphical Passwords Graphical passwords can be largely classified into three categories: recognition-based, cuedrecall, or recall-based. In recognition-based graphical passwords, users are required to recognize and then select a set of preselected images from a larger set. In cued-recall, the images cue the user, for example, to click a set of points on an image. In recall-based, users are required to recall a password without any cues, a graphical password is the use of a picture, a part of a picture or several pictures together to authenticate a user. Graphical passwords have by in large been attributed to Blunder [12, 13] his system required a user to click several points on an image, the points were then compared with the stored version and the user was authenticated or the authentication failed and the user was rejected. Whilst alphanumeric passwords rely on a single stage many graphical passwords systems require the user to pass a number of stages or challenges to authenticate. This raises an important issue relating to how long it takes to authenticate and how long a user feels is too long to authenticate. PassFaces This system was developed by Real User Corporation [14] and makes use of the human ability to recognize faces. To register with the system the user selects four faces from a large bank of available choices. When a user wishes to authenticate themselves they are presented with an array of nine faces, arranged in three rows of three. One of the faces is part of the user's password while the other eight all act as decoys. The user then touches the face to select it and the system then displays the next set of faces. The challenges continue until the International Journal of Research in IT & Management http://www.mairec.org 31
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user has selected four faces, it is at this point that the user passes or fails authentication. There are a number of issues with this system; some relate to security and others relate to usability. The main usability concern, which is becoming more and more redundant as network speeds increase, is the time it could take to load the faces. This issue is particularly relevant when the authenticating server is based in a remote location, as is likely to be the case with public space interactions. Draw-a-Secret Unlike the PassFaces system this is a recall based authentication method. To log in using this method the user must reproduce an image on a grid which is displayed on the screen. The system registers pen down and pen up events and the order in which the parts of the grid are touched between these events occurring which the author of refers to as a stroke [15]. The 'password' that is stored by the system is not the drawing itself but is instead the record of strokes the user has performed. As the system does not record the exact drawing but instead a representation of the drawing it is possible to inexactly reproduce the image but still achieve authentication. PassPoints This system is a direct descendant of Blonder's system where the user has to touch several points on the screen in order to gain access to the system. As with Draw-a-Secret a background image is used to help the user remember the location of their points. This again is a recall based method of authentication, with the twist that the image acts as a cue to assist with the task of recollection [16]. This system effectively falls between a pure recognition based and a pure recall based system. To register with the system the user must select an image they wish to use and then select the points they wish to authenticate with. This again brings the issue of allowing user selection as it has been shown that here too users are inclined to choose images that they associate with. The other major issue is that the image must not be too cluttered or too sparse.
PROPOSED SCHEME
The proposed scheme is a combination of CAPTCHA and recognition-based graphical password which is less subjective to phishing attack. Password can be created during user registration or after registration and be changed any time after creation. A graphical password policy is defined by displaying an interface which contains Random text CAPTCHAs and images. Figure 1 illustrates the proposed interface.
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Figure 1 Interface of proposed scheme The users choose combination of CAPTCHA and images as their graphical passwords. For each round of verification, the specified number of text CAPTCHAs and images are randomly selected by the system from a database. A user then chooses a specified number of text CAPTCHAs and images as her graphical password .This process repeats for the specified number of rounds. If the user does not like a particular set of images, he may request a new one or upload her own images to be included in the selection process. In the register phase, users are required to select and remember CAPTCHAs and images as their password. To be authenticated, users need to distinguish his/her CAPTCHA-images .The user must correctly select all images (one or more) pre-registered for this account in each round of graphical password verification. The user as usual enters a user name and authentication begins. In password verification, the proposed scheme displays the interface of CAPTCHA and Images and the user chooses out her preregistered combination of CAPTCHAs and Images. After the user completes verification, if correct he is granted account access. Otherwise, access is denied.
CONCLUSION
Our proposed scheme offers some advantages in countering common attacks against text passwords, such as naive key logging and phishing. In this paper, we have presented a new approach to protect users password against spyware attack. Our main contribution is that we introduce CAPTCHA into the realm of graphical passwords to resist spyware programs. From a security viewpoint, this exploration is expected to advance the development of
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graphical passwords. Our future work concentrates on improving the login time and memorability.
REFERENCES
[1] L. V. Ahn, M. Blum, Nicholas J. Hopper and J. Langford, CAPTCHA:CAPTCHA: Using hard AI problems for security, In the Proceedings of Eurocrypt03, pp. 294-311, 2003, available at: http://www. captcha.net/, Visited on Sep. 27, 2005. [2] M. Akao, S. Yamanaka, G. Hanaoka, et al., Personal entropy fromgraphical passwords: Methods for quantification and practical keygeneration, IEICE Trans. On Fundamentals of Electronics Communications and Computer Sciences, E87A (10), pp. 2543-2554, Oct. 2004. [3] D. Davis, F. Monrose, and M. K. Reiter, On User Choice in Graphical Password Schemes. In the 13th USENIX Security Symposium, 2004. [4] R. Dhamija and A. Perrig, Deja Vu: A User Study Using Images for Authentication. In the 9th USENIX Security Symposium, 2000. [5] I. Jermyn, A. Mayer, F. Monrose, M. Reiter, and A. Rubin, The Design and Analysis of Graphical Passwords. In the 8th USENIX Security Symposium, 1999. [6] D. Klein, Foiling the Cracker: A Survey of, and Improvements to, Password Security. In the 2nd USENIX Security Workshop, pp. 514, 1990. [7] M. Orozco and A. El Saddik, Signature Identification with Haptic devices, In proceedings of the IEEE International Conference on Virtual Environments, Human-Computer Interfaces, and Measurement Systems, Giardini Naxos, Italy, Jul. 2005. [8] J. Ortega-Garcia, J. Bigun, D. Reynolds, J. Gonzalez-Rodriguez, Authentication gets personal with biometrics. In Signal Processing Magazine, IEEE Volume 21, Issue 2, pp. 5062, Mar. 2004. [9] J. Ortega-Garcia, J. Fierrez-Aguilar, J. Martin-Rello, and J. Gonzalez-Rodriguez, Complete signal modeling and score normalization for function-based dynamic signature verification, In Proc. 4th Int. Conf. Audio and Video-Based Person Authentication, AVBPA 2003, LNCS 2688, pp. 658-667, Jun. 2003. [10] B. Pinkas and T. Sander, Securing Passwords Against Dictionary Attacks. In Proceedings of the ACM Computer and Security Conference (CCS 02), pp. 161-170. ACM Press, Nov. 2002. [11] R. Plamondon and S. N. Srihari, On-line and off-line handwriting recognition: A comprehensive survey, IEEE Trans. Pattern Anal. MachineIntell.,vol. 22, no. 1, pp. 63-84, Jan. 2000. International Journal of Research in IT & Management http://www.mairec.org 34
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[12] Reachin Technologies, available at: http://www.reachin.se, Visited on Jan. 3rd, 2006. [13]S. Chiasson. Usable Authentication and Click-Based Graphical Passwords. PhD thesis, Carleton University, Ottawa, Canada, January 2009. [14]S. Chiasson, A. Forget, R. Biddle, and P.C. van Oorschot. Influencing Users Towards Better Passwords: Persuasive Cued Click-Points. In Proc. of HCI08, September 2008. [15]S. Chiasson, P.C. van Oorschot, and R. Biddle. Graphical Password Authentication Using Cued Click Points. In Proc. of ESORICS07, volume 4734, pages 359374, September 2007. [16]D. Davis, F. Monrose, and M. Reiter. On User Choice in Graphical Password Schemes. In Proc. of 13th USENIX Security Symposium, August 2004.
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LIBERALIZATION OF BANKING SECTOR AND ITS IMPACT ON INDIAN ECONOMY

Pankaj Mishra* Dr. Surender Kumar Gupta**
ABSTRACT
The banking sector reforms in India were started as a follow up measures of the economic liberalization and financial sector reforms in the country. The banking sector being the life line of the economy was treated with utmost importance in the financial sector reforms. The reforms were aimed at to make the Indian banking industry more competitive, versatile, efficient, productive, to follow international accounting standard and to free from the government's control. The reforms in the banking industry started in the early 1990s have been continued till now. The paper makes an effort to first gather the major reforms measures and policies regarding the banking industry by the govt. of India and the Central Bank of India (i.e. Reserve Bank of India) during the last fifteen years. Secondly, the paper will try to study the major impacts of those reforms upon the banking industry. A positive responds is seen in the field of enhancing the role of market forces, regarding prudential regulations norms, introduction of CAMELS supervisory rating system, reduction of NPAs and regarding the up gradation of technology. But at the same time the reform has failed to bring up a banking system which is at par with the international level and still the Indian banking sector is mainly controlled by the govt. as public sector banks being the leader in all the spheres of the banking network in the country. Keywords: Liberalisation of Banking Sector, Indian Economy, Banking Sector Reforms Corporate Governance, Operational Flexibility, Functional Autonomy
*Research Scholar, Manav Bharti University Solan. ** Associate professor, Maharaja Agrasen Institute of Management and Technology, Jagadhri. International Journal of Research in IT & Management http://www.mairec.org 36
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In the early 1990s, the then Narasimha 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 set up 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 74% 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 (2010), 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 M&As, 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. International Journal of Research in IT & Management http://www.mairec.org 37
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REVIEW LITERATURE
Reddy (2000) Competition is sought to be fostered by permitting new private sector banks and liberal entry of branches of foreign bank. Competition is sought to be fostered in rural and semi-urban areas also by encouraging Local Area Banks. Some diversification of ownership in select public sector banks has helped the process of autonomy and thus some response to competitive pressures competition induced by the new private sector banks has clearly re-energized the Indian banking sector as a whole: new technology is now the norm, new products are being introduced continuously, and new business practices have become common place. The principles underlying these guidelines would also be applicable as appropriate to public sector. More important, this suggests that the competitive nature of the Indian banking system is not significantly different from banking system in other countries, particularly in view of the fact that nearly 75 percent of banking system assets is with state owned banks. The validation of monopolistic competition during the second sub-period suggests that the recent trends toward consolidation led to more rather than less competition in the banking sector. Dasgupta, Debajyoti (2001) analyses a comparative study of parameters like net profit and net worth of selected banks to assess their profitability vis-a-vis liberalization. Slow liberalization has so far given Indian corporate the luxury of learning slow and adapting gradually. It would be a mistake to believe that this luxury will last long. Rather Indian companies should use this breathing space to prepare themselves for the further changes that lie ahead. Saha, Gurudas (2001) in his study analyses that public sector banks have a better competitive edge that gets lost because of poor governance leading to human resource mismanagement and loss of productivity and profitability. The study analyses the major financial parameters of public and private sector banks and highlights the strategic importance of banking cost determination and cost management. Shirai, sayuri (2002) in her study on assessing the gradual approach to banking sector reforms in India reveals two important lessons. The first is that banks engagement in nontraditional activities and consequent increase in profits from these activities have helped to offset a decline in net interest income from advances. The second lesson is that banks should be prohibited from connected lending. Thus from the above discussion it becomes clear that most of the studies on profitability and efficiency of commercial banks in India are made in the pre-reforms era. There are also a few studies during the period of reforms, which International Journal of Research in IT & Management http://www.mairec.org 38
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attempt to reveal some partial findings on this subject that may not be able to assess the overall impact of banking sector reforms on efficiency and profitability of commercial banks in Indian. It is against this backdrop that the present study is undertaken to fill up this gap and make a modest contribution in the field of bank efficiency and profitability management. Singh (2003) analyzed profitability management of banks under the deregulated environment with some financial parameters of the major four bank groups i.e. public sector banks, old private sector banks, new private sector banks and foreign banks, profitability has declined in the deregulated environment. He emphasized to make the banking sector competitive in the deregulated environment. They should prefer non-interest income sources. Mohan (2004) The banking industry is transformed, global forces for change include technological innovation; the deregulation of financial services at the national level and opening-up to international competition and changes in corporate behavior, such as growing disintermediation and increased emphasis on shareholder value. Indian banking system and financial system has as a whole had to be strengthened so as to be able to compete. India has had more than decade of financial sector reforms during which there has been substantial transformation and liberalization of the whole financial system. It is an appropriate time to take stock and assess the efficacy of our approach. It is useful to evaluate how the financial system has performed in an objective quantitative manner. There has been importance because India's path of reforms has been different from most other emerging market economies: it has been a measured, gradual, cautious, and steady process, devoid of many flourishes that could be observed in other countries. The Indian debt market ranks third in Asia, after Japan and South Korea, in terms of issued amount. Outstanding size of the debt floatation as a proportion of GDP, however, is not very high in India. Moreover, although in terms of the primary issues Indian debt market is quite large, the Government continues to be the large borrower, unlike in South Korea where the private sector is the main borrower. The corporate debt market in the country is still at nascent stage. Factors such as lack of good quality issuers, institutional investors, supporting infrastructure and high cost of issuance, market fragmentation, etc. have been identified as the reason for lack of depth of the corporate debt market in India
OBJECTIVES OF THE LIBERALIZATION OF BANKING SECTOR IN INDIA

1. To develop a market-oriented, competitive, world-integrated, diversified, autonomous, transparent financial system. International Journal of Research in IT & Management http://www.mairec.org 39
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2. To increase the allocate efficiency of available savings and to promote accelerated growth of the real sector. 3. To increase or bring about the effectiveness, accountability, profitability, viability, vibrancy, balanced growth, operational economy and flexibility, professionalism and depoliticisation in the financial sector. 4. To increase the rate of return on real investment. 5. To promote competition by creating level-playing fields and facilitating free entry and exit for institutions and market players. 6. To ensure that the rationalization of interest rates structure occurs, that interest rates are flexible, market-determined or market-related, and that the system offers to its users a reasonable level of positive real interest rates. In other words, the goal has been to dismantle the administered system of interest rates. 7. To reduce the levels of resource pre-emptions and to improve the effectiveness of directed credit programmes. 8. To build a financial infrastructure relating to supervision, audit, technology, and legal matters. 9. To modernize the instruments of monetary control so as to make them more suitable for the conduct of monetary policy in a market economy i.e. to increase the reliance on indirect or market-incentives based instruments rather than direct or physical instruments of monetary control. Reforms have been liberalization, deregulation, marketisation, privatization, and
globalization, all of which convey reforms objectives in a clear manner. The basic premise underlying the reforms has been that the state ownership and regulation have harmed the financial system, particularly the banks and the investors, and that such regulation is no longer relevant and adequate. To use the well-known academic terminology, the objective of financial reforms has been to correct and eliminate financial repression; and to transform a financially repressed system into a free system. Financial sector reforms are said to be grounded in the belief that the competitive efficiency in the real sectors of the economy cannot be realized to its full extent unless the allocative efficiency of the private sector was improved. The main thrust of financial sector reforms was on the creation of efficient and stable financial institutions and markets, the removal if structural bottlenecks, introduction of new players and instruments, introduction of free pricing of financial assets, relaxation of quantitative restrictions, improvement in trading, clearing and settlement practices, promotion of institutional infrastructure, refinement of International Journal of Research in IT & Management http://www.mairec.org 40
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market micro-structure, creation of liquidity, depth, and the efficient price discovery process, and ensuring technological up gradation Impact of liberalization of banking sector reforms Repo rate and Reverse repo rate increased by 25 bps to 5.25% and 3.75% respectively, with immediate effect. Impact: Repo is the rate at which banks borrow from RBI and Reverse Repo is the rate at which banks deploy their surplus funds with RBI. Both these rates are used by financial system for overnight lending and borrowing purposes. An increase in these policy rates imply borrowing and lending costs for banks would increase and this should lead to overall increase in interest rates like credit, deposit etc. The higher interest rates will in turn lead to lower demand and thereby lower inflation. The move was in line with market expectations
Cash reserve ratio (CRR) increased by 25 bps to 6.00%, to apply from fortnight beginning from 24 April 2010. Impact: When banks raise demand and time deposits, they are required to keep a certain percent with RBI. This percent is called CRR. An increase in CRR implies banks would be required to keep higher percentage of fresh deposits with RBI. This will lead to lower liquidity in the system. Higher liquidity leads to asset price inflation and also leads to build up of inflationary expectations. Before the policy, market participants were divided over CRR. Some felt CRR should not be raised as liquidity would be needed to manage the government borrowing program, 3-G auctions and credit growth. Others felt CRR should be increased to check excess liquidity into the system which was feeding into asset price inflation and general inflationary expectations. Some in the second group even advocated a 50 bps hike in CRR. By increasing the rate by 25 bps, RBI has signalled that though it wants to tighten liquidity it also wants to keep ample liquidity to meet the outflows. Governors statement added that in 2010-11, despite lower budgeted borrowings, fresh issuance will be around Rs 342300 cr compared to Rs 251000 cr last year.
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Table 1: RBIs Indicative Projections (All Fig In %, YoY) 2009-10 targets 2009-10 Actual Numbers 2010-11 targets
(Jan 10 Policy) GDP 7.5
(Apr 10 Policy)
Expected at 7.2 by 8 with an upward CSO bias 5.5
Inflation (based on WPI, for 8.5 March end) Money Supply (March end) Credit (March end) Deposit (March end) Source: RBI 16.5 16 17
9.9
17.3 17 17.1
17 20 18
Growth: RBI revised its growth forecast upwards for 2010-11 at 8% with an upward bias compared to 2009-10 figure of 7.5%. It said Indian economy is firmly on the recovery path. RBIs business outlook survey shows corporates are optimistic over the business environment. Growth in industrial sector and services has picked up in second half of 200910 and is expected to continue. The exports and import sector has also registered a strong growth. It is important to note that RBI has placed the growth under the assumption of a normal monsoon. India could have achieved a near 8% growth in 2009-10 itself, if monsoons were better. Table 2 looks at growth forecasts of Indian economy for 2010-11 by various agencies. Table 2:Projections of GDP Growth by various agencies for 2010-11 (in %, YoY) 2009-10 RBI PMs Economic Advisory Council Ministry of Finance IMF Asian Development Bank OECD RBIs Survey of 7.5 with an upward bias 7.2 7.2 6.7 7.2 6.1 Professional 7.2 2010-11 8 with an upward bias 8.2 8.5 (+/- 0.25) 8 8.2 7.3 8.5
Forecasters Source: RBI International Journal of Research in IT & Management http://www.mairec.org 42
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Inflation: RBIs inflation projection for March 11 is at 5.5% compared to FY March-10 estimate of 8.5% with an upward bias (the final figure was at 9.9%). RBI said inflation is no longer driven by supply side factors alone. First WPI non-food manufactured products (weight: 52.2 per cent) inflation, increased sharply from (-) 0.4%in November 2009, to 4.7% in March 2010. Fuel price inflation also surged from (-) 0.7 per cent in November 2009 to 12.7% in March 2010. Further, contribution of non-food items to overall WPI inflation, which was negative at (-) 0.4% in November 2009 rose sharply to 53.3% by March 2010. So, overall demand pressures on inflation are also beginning to show signs. These movements were visible in March 2010 itself, pushing RBI to increase rates before the official policy in April 2010.
Monetary Aggregates: RBI has increased the projections of all three monetary aggregates for 2010-11. These projections have been made consistent with higher expected growth in 2010-11. Higher growth will lead to more demand for credit. Then management of government borrowing program will remain a challenge as well. High growth coupled with the borrowing program will need higher financial resources. Therefore, projections for money supply, credit and deposit are raised to 17%, 20% and 18% respectively. However, higher growth in money supply would also lead to build up of higher inflation and inflationary expectations.
The policy stance remains unchanged from January 2010 policy.
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Table 3: Comparing RBIs Policy Stance October 2009 Policy
January 2010 Policy
April 2010 Policy inflation Anchor inflation
Watch inflation trend and Anchor be prepared to respond swiftly and effectively
expectations, while being prepared to respond
expectations, while being prepared to respond
Monitor liquidity to meet credit demands of
appropriately, swiftly and effectively to further buildup of inflationary pressures.
appropriately, swiftly and effectively to further buildup of inflationary pressures.
productive sectors while
securing price and financial Actively manage liquidity Actively manage liquidity stability
to ensure that the growth in monetary rate and demand for credit by both the private and public
to ensure that the growth in demand for credit by both the private and public
Maintain interest
regime
consistent with price and financial stability, and
sectors is satisfied in a nondisruptive way.
sectors is satisfied in a nondisruptive way.
supportive of the growth Maintain an interest rate Maintain an interest rate process regime consistent with regime consistent with
price, output and financial stability. Source: RBI
price, output and financial stability.
Given the economic outlook, policy ahead is going to remain challenging. There are many trade-offs RBI has to manage. It needs to manage high inflation without impacting the growth process. The recent inflation numbers show rising demand side pressures on inflation. The market participants are already looking at an increase of around 100-150 bps by March 2011 end. The higher interest rates would make it difficult to manage the government borrowing program and also invite more capital flows. High interest rates could also lead to higher lending costs for the corporate sector. The challenges are not limited to domestic factors alone. The concerns remain on future outlook of advanced economies which complicates the policy process further. Other Development and Regulatory Policies In its Annual (in April) and Mid-term review (in October) of monetary policy, RBI also covers developments and proposed policy changes in financial system. Some of the developments announced in this policy are: New Products/Changes in guidelines International Journal of Research in IT & Management http://www.mairec.org 44
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Currently, Interest rate futures contract is for 10 year security. RBI has proposed to introduce Interest rate futures for 2 year and 5 year maturities as well.
RBI has permitted recognised stock exchanges to introduce plain vanilla currency options on spot US Dollar/Rupee exchange rate for residents
Final guidelines for regulation of non- convertible debentures of maturity less than one year by end-June 2010
RBI had proposed to introduce plain vanilla Credit Default Swaps in October 2009 policy. RBI would place a draft report on the same by end- July 2010
Earlier, banks could hold infrastructure bonds in either held for trading or available for sale category. This was subject to mark to market requirements. However, most banks hold these bonds for a long period and are not traded. From now on, banks can classify such investments having a minimum maturity of seven years under held to maturity category. This should lead banks to buy higher amount of infrastructure bonds and push infrastructure activity.
The activity in Commercial Papers and Certificates of deposit market is high but there is little transparency. FIMMDA has been asked to develop a reporting platform for Commercial Papers and Certificates of deposit.
Setting up New Banks
Finance Minister, in his budget speech on February 26, 2010 announced that RBI was considering giving some additional banking licenses to private sector players. NBFCs could also be considered, if they meet the Reserve Banks eligibility criteria. In line with the above announcement, RBI has decided to prepare a discussion paper on the issues by end-July 2010 for wider comments and feedback.
In 2004 seeing the financial health of urban cooperative banks, it was decided not to set up any new UCBs. Since then the performance of these banks has improved. It has been decided to set up a committee to study whether licences for opening new UCBS can be done.
In February 2005, the Reserve Bank had released the roadmap for presence of foreign banks in India. The roadmap laid out a two-phase, gradualist approach to increase presence of foreign banks in India. The first phase was between the period March 2005 March 2009, and the second phase after a review of the experience gained in the first phase. In the first phase, foreign banks wishing to establish presence in India for the first time could either choose to operate through branch presence or set up a 100% wholly-owned subsidiary (WOS), following the one-mode International Journal of Research in IT & Management http://www.mairec.org 45
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presence criterion. Foreign banks already operating in India were also allowed to convert their existing branches to WOS while following the one-mode presence criterion. However, because of the global crisis the second phase which was due in April 2009, could not be started. The global financial crisis has also thrown some lessons for policymakers. Drawing these lessons RBI would put up a discussion paper on the mode of presence of foreign banks through branch or WOS by September 2010.
CONCLUSION
The Indian banking sector has witnessed a remarkable shift in its operational environment during the last decade both qualitative and quantities were introduced with an objective to revitalize the banking sector and enable it to meet the future challenges. The reforms process undertaken by the government has been implementing in a phased manner to allow the banks to have a level playing field and to tune themselves with the changes. Liberalization of the sector has resulted in the advent of new generation banks in the private sector which have redefined the service spectrum of the banks. Profit maximization has always been subject constraint of acceptable level of risk. In a nutshell, it may be concluded that globalization has made the existing institutional arrangement of the banking sector deficient in many ways. The major issues related to international competitiveness consist of financial profitability. There has been a change in the perception of the government and RBI both. The government has raised the borrowing rates to make them competitive and realistic. The RBI has rationalized its organization by adding one more board to supervise the banks. The lending rates have been simplified. SLR and CRR reduced and the accounting practices have been changed. Restriction on expansion and entry of new private sector banks has been relaxed. Nevertheless, much is desired for a systemic approach to deal with endogenous and long term problems so that the banking sector ushers into the era of prosperity and comate with multinational institution.
REFERENCES
1. Ahluwalia, Isher J., Productivity and Growth in Indian Manufacturing, Oxford University Press, New Delhi 1991. 2. Ahluwalia, Isher J., Industrial Growth in India: Stagnation since the mid-sixties, Oxford University Press, New Delhi, 1995.
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3. Ahluwalia, Montek S., Indias Economic Reforms: An Appraisal, in Jeffrey Sachs and Nirupam Bajpas (eds.), India in the Era of Economic Reform, Oxford University Press, New Delhi, 2000. 4. State Level Performance Under Economic Reforms in India, by Anne Krueger (ed.), Chicago University Press (forthcoming). 5. Indias Vulnerability to External Crises: An Assessment, in Macro-economics and Monetary Policy: Issues for a Reforming Economy, Montek S. Ahluwalia, Y.V. Reddy and S.S. Tarapore (editors), Oxford University Press (forthcoming). 6. Bhagwati, J., and Srinivasan, T.N., Outward-Orientation on Development: Are the Revisionists Right, in Trade, Development and Political Economy, by Deepak Lal and Richard Snape eds. Palgrave, 2001. 7. Chaudhuri, Sudip, Economic Reforms and Industrial Structure in India, Economic and Political Weekly, January 12, 2002. 8. Davis, Jeffrey, Rolando Ossowski, Thomas Richardson, and Steven Barnett, Fiscal and Macroeconomic Impact of Privatization, IMF Occasional Paper 194, (2000). 9. www.rbi.com
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Volume 2, Issue 4 (April 2012)

Volume 2, Issue 4 (April 2012)

International Journal of Research in IT & Management http://www.mairec.org

Volume 2, Issue 4 (April 2012)

Volume 2, Issue 4 (April 2012)

Volume 2, Issue 4 (April 2012)

International Journal of Research in IT & Management http://www.mairec.org

Volume 2, Issue 4 (April 2012)

International Journal of Research in IT & Management http://www.mairec.org

Volume 2, Issue 4 (April 2012)

Volume 2, Issue 4 (April 2012)

2. DEPICTION OF THE MODEL (FUZZY)

International Journal of Research in IT & Management http://www.mairec.org

Volume 2, Issue 4 (April 2012)

is the crisp is the deterministic demand in period k are

transformation function where and

denotes the quantity of perished items in period k.

proportional to inventory on hand at each period k, where

is the perish ability parameter and

be the fuzzy goal,

which is a fuzzy set given by . This definition can be extended to r goals

and s constraints hand

in a logical manner. On the other . The intersection of fuzzy

International Journal of Research in IT & Management http://www.mairec.org

Volume 2, Issue 4 (April 2012)

consider the state variable function

and transformation function

. It is to be noticed that all variables

International Journal of Research in IT & Management http://www.mairec.org

Volume 2, Issue 4 (April 2012)

Subject to the fuzzy constraints decision Proof : Let

, has the optimal maximizing

, let the fuzzy constraints

. Similarly the fuzzy goal

. As we know that the logical operator is given

by using the min-

Hence the membership function of the maximizing set

Since, an arbitrary function of

By the use of above recursive function, the optimal decision set

STEP 2 : From backward calculation the bounds

are computed as:

International Journal of Research in IT & Management http://www.mairec.org

Volume 2, Issue 4 (April 2012)

STEP 3 : The final bounds are computed as follows:

STEP 4 : From the above, compute

STEP 5 : For the specific

, observing the table for

, we get the optimal pairs

select the corresponding pairs to get all possible optimal

and continuing this process, till

fundamental unit of inventory. Here, we take system, and

for non-perishable inventory

that it is necessary that the value of

Case 1: In our problem, if we assume that constraints on the decision variable

, let the membership function of the fuzzy is given as:

The membership function of fuzzy goal

representing the decision to have a low stock at the

International Journal of Research in IT & Management http://www.mairec.org

Volume 2, Issue 4 (April 2012)

are obtained. Here

Volume 2, Issue 4 (April 2012)

0 0 0 0 0 0 0 0 1/2 1/2 1/2

0 0 0 0 0 0 0 3/4 1/2 1/2 1/4