Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Uttar Pradesh
India 201303
Subject Name
Study COUNTRY
Roll Number (Reg.No.)
Student Name
ASSIGNMENTS
PROGRAM: MFC
SEMESTER-II
:
:
:
:
INSTRUCTIONS
a) Students are required to submit all three assignment sets.
ASSIGNMENT
Assignment A
Assignment B
Assignment C
DETAILS
Five Subjective Questions
Three Subjective Questions + Case
Study
Objective or one line Questions
b)
c)
d)
e)
MARKS
10
10
10
Signature :
Date
:
_________________________________
_________________________________
Financial Services
ASSIGNMENT- A
Attempt these five analytical questions
Q1.
What do you do you understand by the term Credit Rating Agency?Explain there
major function?
Q2.
Q3.
Q4.
What do you mean by Consumer Credit ? Explain the types of Consumer Credit?
Q5.
What do you understand by Venture Capital? Explain the scope of Venture Capital?
Assignment B
Q1.
Q2.
What do you mean by Initial Public Offer? Explain the different type of entry norm
to make an IPO?
Q3.
CASE STUDY
Case study:
HSBC's Restructuring in India
Period: 1999-2004 Organization: HSBC India Pub Date: Countries: India Industry: Banking
Abstract:
The case discusses the operations of HSBC Group in India and the measures taken by
HSBC India in recent times to achieve a faster growth.
It discusses in detail the reorganization program launched by Booker, the CEO of HSBC
India to transform the conservative institution into an aggressive, performance-oriented
one.
The case discusses in detail various internal reorganization measures including the
introduction of new work principles, downsizing, organizational reshuffling and greater
focus on potential growth areas.
Background
The Hong Kong and Shanghai Banking Corporation Limited (HSBC) entered India as early
as 1959. Despite being one of the oldest and well-established foreign banks, HSBC had
been lagging behind local private sector banks and other foreign banks in India in terms
of business network and growth. HSBC's competitors and industry experts regarded it as
a conservative bank that lacked competitive spirit.
Commenting on HSBC, the head of direct sales of one of its rival banks said, "HSBC isn't
seen as being as aggressive as its rivals in the market. It has extremely good
relationships with its branch customers and serves them very well, but it is just not seen
as being aggressive in the rest of the market." HSBC's complacency was reflected in the
bank's financial performance.
Local private sector banks like ICICI and HDFC were far ahead of HSBC in all business
segments. When benchmarked against foreign banks, HSBC fared badly. HSBC's net
profits fell by over 25 per cent for two consecutive years in the fiscal 2000-01 and 200102, while rival banks like Citibank3 posted a rise of 37 per cent in profits for the same
period.
On November 2002, Niall S K Booker (Booker) was appointed Group Manager and Chief
Executive Officer (CEO) of the HSBC Group in India.
Booker soon realized that HSBC India followed a conventional approach to doing business
and retained its old bureaucratic structure and culture. He believed that the much
criticized laidback work culture was the reason for the lacklustre financial performance of
the bank.
Booker decided to transform the bank's work culture so that HSBC could shed its
bureaucratic and conservative image and gear up to face new challenges. He wanted
HSBC India to be proactive and aggressive like its competitors.
To achieve this, Booker concentrated on giving the bank a new direction by launching a
major restructuring program.
HSBC is a leading global player in the banking and financial services industry. It is the
third largest bank in the world in terms of market capitalization it provided a
comprehensive range of financial services, namely, personal financial services,
commercial banking, corporate investment banking, private banking and other related
businesses. HSBC was established in 1865 to finance the growing trade between Europe,
India and China. Scotland-born Thomas Sutherland (Sutherland), who worked for the
Peninsular and Oriental Steam Navigation Company, established the bank.
He found that there was considerable demand for local banking facilities in Hong Kong
and on the Chinese coast. Sutherland established a bank in Hong Kong in March 1865,
and another in Shanghai after a month. The banks' headquarters were at Hong Kong.
Soon, the bank opened branches around the world. The emphasis continued to be on
strengthening the presence in China and the rest of the Asia-Pacific region. By the end of
the century, HSBC emerged as the foremost financial institution in Asia.
World War I (1914-1919), however, brought disruption and dislocation for many
businesses. The 1920s saw a revival with HSBC opening more branches. During World
War II (1941-1945), the bank was forced to close many branches and its head office was
temporarily shifted to London. After the war, the headquarters was shifted back to Hong
Kong.
The post-war political and economic changes in the world compelled the bank to analyze
and reorient its strategy for continued business growth. The acquisition of the Mercantile
Bankand the British Bank of the Middle East (BBME) in 1959 laid the foundation for the
present day HSBC Group
HSBC in India
HSBC's origins in India could be traced back to October 1853, when the Mercantile Bank
of India, London and China was established in Mumbai.
Starting with an authorized capital of Rs 5 mn, the Mercantile Bank soon opened offices
in London, Chennai (India), Colombo, Kandy, Kolkata (India), Singapore, Hong Kong,
Canton and Shanghai.
In the next 10 decades, the Mercantile Bank steadily expanded its geographical network
and service offerings, keeping pace with the evolving banking and financial needs of
customers. The Mercantile Bank was acquired by the HSBC Group in 1959. The head
office of Mercantile Bank at the Flora Fountain building in Mumbai continued to be the
head office of the HSBC Group in India.
In the 1970s, HSBC decided to expand by acquisition and formation of its own
subsidiaries. HSBC introduced India's first automated teller machine (ATM) in 1987. In
2001, HSBC opened the first bank branch in Pune (Western India) that remained open all
365 days a year.
The Restructuring
On his appointment, Booker's approach was to focus on fine-tuning and executing
existing strategies, rather than experimenting with new plans. He intended to take it
slow and steady without radical changes.
He said that "the people issue" was very important to him. Therefore, the key
components of the restructuring programmers included introducing new work principles,
downsizing, organizational reshuffling and focus on new growth areas.
New Work Principles
HSBC's work culture was considered most bureaucratic among all foreign banks in India.
Reportedly, the top management had a laid-back attitude towards work. An insider said,
There is a bunch of people at the top who aren't very competent and who all play golf
together. It is basically an old boys'club.
The Benefits
The impact of the restructuring programme was reflected by the improved financial
performance of HSBC (Refer Exhibit IV and V for the financial highlights of HSBC).
For the financial year 2003-04, the assets per employee and net profit increased by 30
per cent; operating profit by 31 per cent and cost-to-income ratio came down from 47 to
43 per cent compared to the fiscal 2002-03. Personal financial services accounted for 36
per cent of total advances, against 31 per cent in the previous fiscal.
HSBC's retail assets doubled during this period from around a fourth to a third of its total
assets. HSBC expected that the retail business would grow by 40 per cent in the fiscal
2004-05. Home loans business grew by 100 per cent; and the branches' contribution
comprised 30 per cent
Looking Ahead
Notwithstanding the benefits reaped from the restructuring, HSBC was still a small player
in several financial services businesses including asset management, home loans, stock
broking, credit cards and retail banking in India.
For instance, HSBC Asset Management (India) Private Ltd. launched in December 2002,
had total assets under management amounting to Rs 540 bn by June 2004. Still, it was
only the 10th largest asset management company (AMC) in India. The slow growth of
advances was another problem for HSBC.
In the financial year 2003-04, HSBC's loan disbursals grew by just 4.67 per cent over the
financial year 2003 while for the same period, its competitors like Standard Chartered
and Citibank loan disbursals grew by 44 per cent and 11 per cent respectively. Moreover,
in spite of improved financial performance, the changes introduced by Booker did not go
well among top managers.
Question to review:Q.1 The need for old and well-established organizations to change their outlook and the
way they operate along with the changing times so as to compete with smaller, nimblefooted competitors successfully
Q.2Examine the restructuring program implemented by HSBC India to revive its financial
performance
Q.3Critically analyze the strategies adopted by Niall SK Booker to make HSBC India an
aggressive, performance-oriented organization
Q.4Chart a growth strategy for HSBC India in the near future
ASSIGNMENT C
Q1.
Q2.
a)Central Government
b)State Government
c)State Bank of India
d)Reserve Bank of India
How can Factoring help a Business ?
Q3.
a) Cash Inflow
b)Low Costing
c)Bad Debts Recovery
d)Increase Sales
Who is a Factor ?
Q4.
a)Buyer
b)Seller
c)Agent of Buyer
d)Agent of Seller
What kind of agreement do Factoring deals with ?
a)Cash Sales of Goods
b)Cash Sales of Fixed Asset
c)Credit Sales of Goods
d)Credit Sales of Fixed Asset
Q5.
Book
(a)
(b)
(c)
(d)
Building is a
method of placing an issue
method of entry in foreign market
price discovery mechanism in case of an IPO
none of the above
Q7.
Sell
(a)
(b)
(c)
(d)
Q8.
Q9.
Q10. ___________ refers to the process of generating, capturing and recording investor
demand for shares during an IPO (or other securities during their issuance process) in
order to support efficient price discovery.
a)Book building
b)Book keeping
c)Booking
d)Recording
Q11. What are the two types of obligations of merchant banker in issue
management?
a)Ex issue and pre issue
b)Pre issue and next issue
c)Pre issue and post issue
d)Post issue and next issue
Q12. The company shall ensure that:
a) The letter of offer, the public announcement of the offer or any other
advertisement, circular, brochure, publicity material shall contain true, factual and
material information and shall not contain any misleading information and must
state that the directors of the company accepts the responsibility for the
information contained in such documents.
b)the company shall not issue any shares including by way of bonus till the date of
closure of the offer made under these regulations
c) the company shall pay the consideration only by way of cash
d)All the above
Q13. What is IPO?
(d)
Q20. The SEBI __________lays down the overall regulatory framework for registration and
operations of venture capital Funds in India.
a) The SEBI (Venture Capital Funds) Regulation, 1996[Regulations].
b) GUIDELINES.
c) NORMS.
d) RECOMMENDATIONS.
Q21. Right issue is:
(a)
issue of securities by issue of prospectus to the public
(b)
Securities are issued through some selected investors.
(c)
Selling securities in the primary market by issuing rights to the existing
shareholders.
(d)
None of the above
Q22. Private placement has following advantage:
(a)
Flexibility and high cost
(b)
Accessibility and speed
(c)
High cost and speed
(d)
Speed and complexity
Q23. Book
(a)
(b)
(c)
(d)
(b)
(c)
(d)
Q28. Bad
(a)
(b)
(c)
(d)
Interest
Premium
None of the above
news about a company can pull down its stock prices. This is called
Market risk
Non market risk
Interest risk
Callable risk