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ASSIGNMENTS
PROGRAM: MBA
SEMESTER-IV
Subject Name : Management of Financial Services Roll Number
(Reg.No.) :
Student Name :
INSTRUCTIONS
a) Students are required to submit all three assignment
sets.
ASSIGNMENT DETAILS MARKS
Assignment A Five Subjective Questions 10
Assignment B Three Subjective Questions + Case Study 10
Assignment C Objective or one line Questions 10
b) Total weightage given to these assignments is 30%. OR 30
Marks c) All assignments are to be completed as typed in word/pdf.
d) All questions are required to be attempted. e) All the three
assignments are to be completed by due dates and need to be
submitted for evaluation by
Amity University. f) The students have to attached a scan
signature in the form.
Signature : _________________________________ Date :
_________________________________ ( ) Tick mark in front of the
assignments submitted
Assignment A Assignment B Assignment C
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Management of 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. What do you mean by Book Building?
Explain the types of Book-Building? Q3. What do you mean by hire
purchase? 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. What do you mean by Financial Services? Mention in brief
following types of financial services? Q2. What do you mean by
Initial Public Offer? Explain the different type of entry norm to
make an IPO? Q3. What do you mean by Leasing? Explain the different
type of leasing?
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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 2001-02,
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
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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.
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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, nimble-footed
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
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ASSIGNMENT C
Q1. Approval from which body is required to start Factoring in
India ?
a)Central Government b)State Government c)State Bank of India
d)Reserve Bank of India
Q2. How can Factoring help a Business ?
a) Cash Inflow b)Low Costing c)Bad Debts Recovery d)Increase
Sales
Q3. Who is a Factor ?
a)Buyer b)Seller c)Agent of Buyer d)Agent of Seller
Q4. 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. An Invoice is valued at Rs.10,000 & the seller received
Rs.9000.
So what is the Advanced Rate in consideration with Factoring
?
a)9 % b)10 % c)90 %
d)100 % Q6. Book Building is a
(a) method of placing an issue (b) method of entry in foreign
market (c) price discovery mechanism in case of an IPO (d) none of
the above
Q7. Sell Reliance Petro Shares at Rs 60 This order is a (a) Best
rate order (b) Limit order (c) Discretionary order (d) Stop Loss
Order
Q8. Stock exchange helps in
(a) fixation of stock prices (b) ensures safe and fair
dealing
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(c) induces good performance by the company (d) all of the
above
Q9. Issue Management is a system under which concept of
Management?
a)Human Resource Management b)Financial Management c)Project
Management d)System Management
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?
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a)INITIAL PUBLIC OFFER
b)IN THE PUBLIC OFFER
c)INITIAL POSTAL OFFER
d)INTERNAL PUBLIC OFFER
Q14. Forex market deals with
(a) multi currency (b) only domestic currency (c) none of the
above
1. Q15. The _____________ of a company is the maximum amount of
share capital that the company is
authorized by its constitutional documents to issue to
shareholders.
a)Authorized capital
b)Issued capital
c)Reserve capital
d)Paid up capital
Q16. The type of lease that includes a third party, a lender, is
called:-
a.) Sale and leaseback b.) Direct leasing arrangement. c.)
Leveraged lease. d.) Operating lease.
Q17. Medium-term notes (MTNs) have maturities that range up to
?
a) one year. b) two years. c) ten years d) thirty years (or
more)
Q18. The term of the lease may be ?
a) Fixed b) Periodic c) Infinite Duration. d) ANY OF THE
ABOVE
Q19. Mutual funds are valued with help of their
(a) NAVs (b) NFO
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(c) IPO (d) None of the above
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 Building Process is completed with the help of a (a)
Book runner (b) Underwriter (c) Registrar (d) Lead manager
Q24. What is FVCIs?
a) Foreign Value Capital Investors. b) For Venus Capital
Investors. c) Foreign Venture Capital Investors d) Foreign Venture
Capital Institution.
Q25. Venture capital (also known as VC or Venture) is a type of
_____ capital?
a) private equity . b) Reserve. c) Preference. d) None of the
above.
Q26. Total amount of called up share capital which is actually
paid to the company by the members is called (a) Subscribed
capital
(b) Called up capital
(c) Paid up share capital
(d) None of the above
Q27. A shares par value is Rs 10 but it is issued at Rs 20 ,
then extra amount over par value is called
(a) Coupon
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(b) Interest
(c) Premium
(d) None of the above
Q28. Bad news about a company can pull down its stock prices.
This is called
(a) Market risk
(b) Non market risk
(c) Interest risk
(d) Callable risk
Q29. Debt/Income funds invest in
(a) Tax saving schemes
(b) Money Market Instruments
(c) High Rate fixed income bearing instruments
(d) Both debt and equity
Q30. Mutual Funds investor can not earn following return
(a) Dividend
(b) Capital Gain
(c) Increase in NAV
(d) Fixed interest earning
Q31. When approaching a VC firm, consider their portfolio:?
a) Business Cycle: Do they invest in budding or established
businesses?. b) Industry: What is their industry focus? c) Return:
What is their expected return on investment? d) All the above
Q32. Most venture capital funds have a fixed life of _____
years?
a) 10. b) 20. c) 30. d) 40.
Q33. HIRE PURCHASE IS ALSO CALLED.?
a) Closed-end leasing. b) PURCHASING. c) CREDIT PURCHASE. d)
LEASING.
Q34. Balanced funds provide:
(a) Steady return
(b) High return
(c) Increase volatility
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(d) None of the above
Q35. Stock exchanges should ensure:
(a) Active trading and insider information
(b) Active trading and transparency
Which of the following is true? (a) Both a and b
(b) Only b
(c) Only a
(d) Neither a nor b
Q36. Merchant bankers do not indulge in following activities
(a) Drafting of prospectus
(b) Appointment of Registrar
(c) Selection of Promoter
(d) Arrangement of underwriter
Q37. Private placement reduces ________________________ of
public issue:
(a) Cost
(b) Subscription
(c) Issue size
(d) None of the above
Q38. Every hire-purchase agreement shall state.
a) The hire-purchase price of the goods to which the agreement
relates. b) The date on which the agreement shall be deemed to have
commenced. c) The goods to which the agreement relates, in a manner
sufficient to identify them. d) All the above.
Q39. A person must be at least ___ years of age to enter into a
valid hire purchase.
a) 21. b) 30 c) 18 d) 15.
Q40. Preference shares means which fulfill the following two
conditions
a) It carries preferential rights in respect of dividend at
fixed amount and fixed rate
b) It does not carry preferential rights in regard to payment of
capital on winding up .
WHICH ONE OF THESE IS TRUE: (a) Both a and b
(b) Only a
(c) Only b
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(d) Neither a nor b.