Indian Life Insurance Market and Corporate Performances: A Study of Selected Firms

In the pre-reform era, Life Insurance Corporation of India (LICI) dominated the Indian life insurance market with a market share close to 100 percent. But the situation drastically changed since the enactment of the IRDA Act in 1999. At the end of the FY 2012-13, the market share of LICI stood at around 73 percent with the number of players having risen to 24 in the countrys life insurance sector. One of the reasons for such a decline in the market share of LICI during the post-reform period could be attributed to the increasing competition prevailing in the countrys life insurance sector. At the same time, the liberalization of the life insurance sector for private participation has eventually raised issues about ensuring sound financial performance and solvency of the life insurance companies besides protection of the interest of policyholders. The present study is an attempt to evaluate and compare the financial performances, solvency, and the market concentration of the four leading life insurers in India namely the Life Insurance Corporation of India (LICI), ICICI Prudential Life Insurance Company Limited (ICICI PruLife), HDFC Standard Life Insurance Company Limited (HDFC Standard), and SBI Life Insurance Company Limited (SBI Life), over a span of five successive FYs 2008-09 to 2012-13. In this regard, the CARAMELS model has been used to evaluate the performances of the selected life insurers, based on the Financial Soundness Indicators (FSIs) as published by IMF. In addition to this, the Solvency and the Market Concentration Analyses were also presented for the selected life insurers for the given period. The present study revealed the preexisting dominance of LICI even after 15 years since the privatization of the countrys life insurance sector.

Global Financial Crisis: Exploring the Special Role of U.S. Banks and Regulations

Financial markets have suffered the greatest dislocation following the truly seismic significance of the global financial crisis. Regulators argue that the banking sector played a particularly special role in triggering the causes of the subprime debacle, thereby leading to the occurrence of the global financial crisis. Banks previously functioned as only a financial intermediary, but certain developments in the international banking sector like deregulation, technological progress, consolidation and competition, securitisation and financial innovation, resulted in banks being involved in subprime lending activities and hence, a reason behind the financial turmoil. The aim of this paper is to scrutinise the special role of banks in the global financial crisis and to stress on the need for increased regulation and their implications on the banking sector. The current study will thus contribute to the examination of the salient features of the global financial crisis and provide regulatory suggestions for the banking sector and the government as a whole.

Role of Trust and Service Quality in E-Banking

Online banking or e-banking refers to doing banking by using technologies like Internet for checking account balances, transferring money from one account to another or paying bills of different utilities by sitting anywhere through just a click. It enables access to banking transactions more conveniently and economically and is available 24×7. After the availability of Internet, e-banking services are now conducted through a secure website operated by local banks and include online enquiry, e-payments, e-transfer etc. Thus, the objective of this paper is to measure the role of trust and service quality in generating customer satisfaction. The data for the study were collected from 144 bank managers of both public and private sector banks operating in Jammu city and has been analyzed by factor analysis and regression analysis. The findings of the study revealed that majority of the bank managers are happy with their banks for providing such innovative services to their customers which reduces their work load and provide better opportunities to their clients for managing financial transactions.

Analysis of Financial and Operational Performance of Banking Sector Consolidations: Indian Case Study with Mergers and Acquisition

The present paper analyses the impact of M&As on productivity and profitability of consolidation in the Indian Banking sector. It examines the performance of the two banks based on the financial ratios in the pre and post-merger period. The collection of data covers financial performance of selected banks from 2004-05 to 2014-15. The statistical tools are arithmetic mean, standard deviation, t-test, and p-value etc. to analyze the various financial ratios before and after the mergers. 14 ratios are used to compare pre and post-merger financial performance evaluation of consolidated banks. The analysis of ICICI Bank concluded that Net Profit Margin, Operating Profit Margin, Return on Capital Employed, Return on Net Worth, Interest Coverage, Deposit per Employee, and Credit Deposit Ratio have shown an improvement after the merger but in case of other parameters there is no significant improvement in the performance. The analysis of State Bank of India reveals there is no significant improvement after the merger. The study indicates that the banks have been positively affected when distinguished between pre-mergers and post-merger period.

A Road Less Travelled: Is India Ready for Islamic Banking?

Islamic Banking is an emerging model of banking which is currently practiced in several countries, such as Malaysia, Indonesia, Afghanistan, Bangladesh, and the United Kingdom. Its most intriguing aspect is that this banking system works on a purely no interest basis. Given the fact that India is a country with one of the largest Muslim population in the world, we believe it is important to understand the awareness, acceptability, and feasibility of introducing this system of banking in India. This paper primarily aims at discussing the legal viability of introducing such a system in India, given the laws present in the country, as well as gathering information on how forthcoming the population will be towards this banking system. For this purpose, a sample of the population was chosen from Pune and New Delhi, and surveyed with the help of a simple questionnaire, leading to the inference that most people are open to the concept of interest-free banking but are hesitant in accepting the Islamic ideology behind it.

Business Correspondents as Catalysts of Financial Inclusion Empirical Evidences from North Bengal

In recent years the approach for financial inclusion in India has been to make provisions for every person to have access to a bank account and avail essential financial services. While implementing the recent programmes, it was realized that it was not possible to reach the milieu with brick and mortar bank branches in every nook and corner of the country, rather it is better that the bank makes efforts to reach the doorsteps of the people through business correspondents and business facilitators. The aim of the Business Correspondent (BC) model is to develop and sustain the association between unbanked populace and the formal financial system. However, the BC model introduced in India by RBI in 2006 has many problems, as found out by some studies. The present study is an empirical investigation into the systems and problems of Business Correspondent field workers in North Bengal. The study was taken up in the three districts of North Bengal which has a very low level of financial inclusion. Through extensive field research the authors try to find out what functions BCs actually perform in the field and importance of the functions as perceived by them and assess the problems inherent in the systems and the difficulties encountered by the field level workers through Importance Performance Analysis. The authors also try to gauge the financial benefits those accrue to the field level BCs from their operations and assess the viability of the financial inclusion strategies in this respect. The authors have used 32 operational indicators in attempt to analyze the problems in an Importance- Performance Analytical format and identified the areas which need to be concentrated on.

Weather Derivatives A Need for Indian Farmers?

Weather affects the performance of many industries/sectors. The notable examples are agriculture and energy. The weather sensitivity sometimes results in huge financial losses. Financial engineering thus came up with solutions like weather insurance and weather derivatives. Weather Insurance products have been targeted at and sold to the farmers of India – but the success of these remains questionable. The reason for the failure could be attributed to lack of clarity/awareness about the product, infrastructural issues and inherent issues with the category of insurance products. Weather derivatives, in comparison, are a new class of products. Though, they are virgin to Indian soil, these have been successful abroad. Weather derivatives are regarded a better, low-cost, sustainable alternative system of agriculture risk management. These contracts can be designed with good deal of flexibility to help farmers manage drought risk by making a payment when rainfall in a given period goes below a certain pre-agreed level. Besides the developed countries, these contracts are already in operation in some developing countries, too, for instance, Morocco, Mexico, Ukraine, Mangolia, and Romania due to their numerous advantages. The derivatives cover events with highly probability or low risk– which insurance does not cover. Also, the problems of adverse selection and moral hazard are not seen in derivatives. This paper aims to compare and contrast the concepts of weather insurance and weather derivatives. Taking a cue from the episode of weather insurance, the article suggests ways that might lead to the success and widespread acceptance of weather derivatives in India.

An Analysis of Web Home Page Disclosure Practices of Top Public and Private Indian Banks

Internet is a very powerful communication device to disclose financial and non-financial information. Almost every company today maintains its website and disseminates their information voluntarily. Internet is very exciting medium to disclose information in the form of presentation. It has become most frequently used source of information. This paper tries to examine the web home page disclosure practices of top public and private Indian banks and try to find out the relationship between the disclosure score and size of bank by using the sample of 20 banks which constitute of top public and private sector banks. The results show that there is positive relationship between the disclosure score and size of bank.

Examining the Hedging Effectiveness of Futures Contracts over Pre and Post Financial Crisis Period: Evidence from National Stock Exchange of India

Present study examines the efficiency of futures contracts in hedging unwanted price risk over highly volatile period i.e. June 2000 - December 2007 and January 2008 – June 2014, pre and post-financial crisis period, by using S&PC NXNIFTY, CNXIT and BANKNIFTY for near month futures contracts. The hedge ratios have been estimated by using five methods namely Ederingtons Model, ARMA-OLS, GARCH (p,q), EGARCH (p,q) and TGARCH (p,q). The study finds that hedging effectiveness increased during post crisis period for S&PC NXNIFTY and BANKNIFTY. However, for CNXIT hedging effectiveness was better during pre-crisis period than post crisis. The study also finds that time-invariant hedge ratio is more efficient than time-variant hedge ratio.

Assessment of Demographic Differences Regarding Customer Value in Life Insurance Corporation

Aim of this paper is to assess the empirically demographic differences among the customers regarding customer value in Life Insurance Corporation. It is a fact that life insurance players in J&K have realized that their business advantage depends on customer value. The study is based upon the primary data obtained from customers of LIC belonging to various districts of J&K through quota sampling. A questionnaire was framed containing items of demographics and statements measuring customer value based upon seven point Likert scale. The findings indicate that the demographic variables viz., age, qualification, occupation wise, there is no significant difference regarding customer value in the perception of customers of LIC. However, district wise respondents do differ in their opinion regarding customer value in Life Insurance Corporation.