Tag: Financial Institutions and Markets BMS Notes

Setting Goals

Integrated Marketing Communication (IMC) is an approach to brand communications where the different modes work together to create a seamless experience for the customer. Customers are presented with a similar tone and style that reinforce the brand’s core message. The ultimate goal is to make all aspects of marketing communication; advertising, sales promotion, public relations, direct marketing, personal selling, online communications and social media work together as a unified force, rather than in isolation. This synergy between different marketing elements maximizes their cost effectiveness.

The cost effectiveness of mass media due to fragmentation has forced integrated marketing communications to the forefront of modern marketing. As consumers spend more time online and on mobile devices, the goal for marketing teams should be for all exposures of the brand to tie together so they are more likely to be remembered. Increasingly the strategies of brands cannot be understood by looking solely at their advertising. Instead they can be understood by seeing how all aspects of their communications ecosystem work together and in particular how communications are personalized for each customer and react in real time.

Common IMC Objectives

In addition to considering recent market, consumer and technological shifts, brands must assess their marketing budget and target audience when setting IMC goals. An IMC strategy with a budget of $2 million will be radically different in size, scope and reach than a marketing budget of only $2,000. Thus, smaller businesses with tiny IMC budgets may rely heavily on social media advertising and word-of-mouth networks to increase brand presence and generate new leads, rather than more expensive television and billboard advertising.

Despite varying budgets, product features and benefits, and consumer behaviors, organizations typically set and work towards the following goals when implementing IMC strategies:

• To develop brand awareness
• To increase consumer or business demand for a product category
• To change or influence customer beliefs or attitudes
• To enhance purchase actions
• To encourage repeat purchases
• To build customer traffic to physical stores, websites or other marketing channels
• To enhance firm/brand image
• To increase market share
• To increase sales
• To reinforce purchase decisions

IMC strategies may seek to achieve one, many or all of these objectives throughout the course of a campaign. Once strategies have been implemented, they are not changed unless major new events occur. Only changes in the marketplace, new competitive forces, or new promotional opportunities should cause companies to alter strategies and reassess IMC goals.

Objectives of Integrated Marketing Communications

• Provide information: provide necessary information for consumers to help them make buying decision.
• Create demand for products: to stimulate people to desire what they do not have and inspire them to earn the money to acquire items.
• Communicate value: convey a product’s benefits in a memorable way
• Communicate product uniqueness: illustrate their brand’s unique qualities to build preference in their target markets.
• Close the sale: move buyers to action the first time and reinforce their positive experience
• Build relationships and loyalty

Objective Setting

• Setting specific objectives should be an integral part of the promotional planning process. This section discusses the value of objectives and distinguishes among marketing, behavioural, and communication objectives for optimal IMC planning. Value of Objectives
• Advertising and promotional objectives are needed for reasons such as communication function. Planning and decision making, and measurement and evaluation of results.

Communication Function

• Many people are involved in the planning and development of an IMC program including client personnel and contracted agencies.
• The program must be coordinated within the company, inside the ad agency, and between the two. Potential problems can be avoided if all parties have written approved objectives to guide their actions and serve as a common base for discussion.

Planning and Decision Making

• All phases of a firm’s promotional strategy should be based on the established objectives, including budgeting, creative, and media decisions as well as supportive programs such as direct marketing, public relations/publicity, sales promotion, and/or reseller support.

Measurement and Evaluation of Results

• Setting specific objective provides a benchmark against which the performance of the promotional campaign can be measured.
• One characteristic of good objectives is that they are measurable; they specify a method and criteria for determining how well the promotional program is working.

Marketing Objectives

• Marketing objectives are generally stated in the firm’s marketing plan and are statements of what is to be accomplished by the overall marketing program within a given time period.
• Marketing objectives are usually defined in terms of specific, measureable outcomes such as sales volume, market share, profit, or return on investment.

Determining a Budget

As with all business activities, marketing budgets help the planning of actual operations by forcing managers to prioritize activities and consider how conditions might change. Marketing also encourages managers to take steps now, so they can deal with problems before they arise. It also helps coordinate the activities of the organization by compelling managers to examine relationships between their own operation and those of other departments, which is a key component of integrated marketing. The essential purposes of budgeting include:

• To control resources
• To communicate plans to various responsibility center managers
• To motivate managers to strive to achieve budget goals
• To evaluate the performance of managers
• To provide visibility into the company’s performance

Marketing plans are resource driven and they affect the budget. Therefore, two big budgeting decisions should be resolved up front:

How shall these efforts be funded? For example, 70% will be reallocated through cost reductions by consolidating programs and 30% will come from new funding.

For example, 70% will advance the reputation of the company and 30% will build “steeples” the critical core themes that make a difference, which are usually only built one at a time.

Measuring Success

The final stage of any marketing planning process is to establish targets or standards so that progress can be monitored. Accordingly, it is important to put both quantities and timescales into marketing objectives and corresponding strategies. for example, to capture 20 percent by value of the market within two years.

Continuous monitoring of performance against predetermined targets is of utmost importance. More important is the enforced discipline of a regular formal review. As with forecasts, the best or most realistic planning cycle will revolve around a quarterly review. Best of all at least in terms of the quantifiable aspects of the plans is a quarterly rolling review. This involves planning one full year ahead each new quarter. While this absorbs more planning resources, it also ensures that plans use the latest information. Moreover, both the plans and their implementation tend to be more realistic.

The most important elements of marketing performance which are normally tracked include:

• Sales Analysis: Sophisticated organizations track sales in terms of “sales variance” the deviation from the target figures which allows an immediate picture of deviations to become evident.
• Market Share Analysis: Market share is an important metric to track. Though absolute sales might grow in an expanding market, a firm’s share of the market can decrease, which bodes ill for future sales when the market starts to drop. Market share is tracked through parameters including overall market share, segment share, relative share, annual fluctuation rate of market share, and the specific market sharing of customers.
• Expense Analysis: The key ratio to watch in this area is usually the “marketing expense to sales ratio.” This may be broken down into elements including advertising to sales and sales administration to sales.
• Financial Analysis: In theory, the “bottom line” of all marketing activities should be net profit. Key ratios include gross contribution to net profit, gross profit to return on investment, and net contribution to profit on sales. There can be considerable benefit in comparing these figures with those achieved by other organizations, especially those in the same industry.

Economic literature makes a distinction between so-called ‘bank-oriented’ systems in which financial institutions are the predominant source of financing and a ‘market-oriented’ model whereby funds are raised primarily via the securities markets. In the former, banks are responsible for channelling funds from savers to borrowers, particularly non-financial corporates. By performing this intermediation role, banks constantly ‘monitor’ the borrowers on behalf of the deposit holders, a function which could not be conducted individually by each of those deposit holders or lenders.

In a market-oriented system, the companies are more inclined to issue securities (shares, bonds, etc.). Savers purchase these securities directly through distribution networks or banks. However, the key difference is the absence of any financial intermediary that alters the nature of the security issued.

Although both forms of financing coexist in all jurisdictions, countries differ in terms of the relative weight of each model. The synthetic proxies often used to determine the system bias include the stock of bank credit outstanding with the private sector and the market value of the securities equity shares and fixed income (bonds and notes)  issued by private enterprises. In order to facilitate a comparison between countries, these indicators are usually measured against the value of a country’s gross domestic product (GDP).

A comparison using those benchmarks confirms that the US is the most market-oriented system, while the banks dominate the financial systems in Europe. Specifically, the European banking system, measured by its volume of assets or their weight in GDP, is nearly three times the size of the US system. Conversely, the percentage of listed securities’ market values over GDP in the US is much higher. This can be partially attributed to the fact that the US system is more specialised in direct financing via the markets.

Bank-based vs Market-Based Economies

In countries such as Japan, France and Germany, where banks provide around 20% of the corporate financing, it is known that banks are making significant effort to develop a relationship banking culture, with long-term loans and preferential interest rates for clients with a ‘good history’. These economies can be called Bank-Based Economies.

There are also countries where the borrowing-lending activities take place through organized markets, such as London Stock Exchange, in the UK, or New York Stock Exchange in USA. These are known as Market-Based Economies. Although banks are present in these countries, they are highly competitive, the relationship with lenders and borrowers is purely limited to the transactions of granting loans or taking deposits and loans are usually granted on short-term.

The competition between the bank-based financial system and the market-based one is starting to lose terrain nowadays, due to globalization. The clear separation between the two types of financial systems is slowly fading, since banks have become active players on the organized markets. In addition, banks are constantly changing the way they are operating as financial intermediaries, moving from the ‘brick and mortar’ concept of bank towards an almost exclusive electronic presence.

Financial sector development in developing countries and emerging markets is part of the private sector development strategy to stimulate economic growth and reduce poverty. The Financial sector is the set of institutions, instruments, and markets. It also includes the legal and regulatory framework that permit transactions to be made through the extension of credit. Fundamentally, financial sector development concerns overcoming “costs” incurred in the financial system. This process of reducing costs of acquiring information, enforcing contracts, and executing transactions results in the emergence of financial contracts, intermediaries, and markets. Different types and combinations of information, transaction, and enforcement costs in conjunction with different regulatory, legal and tax systems have motivated distinct forms of contracts, intermediaries and markets across countries in different times.

A well-functioning financial system has complete markets with effective financial intermediaries and financial instruments allowing:

• Investors to move money from the present to the future at a fair rate of return;
• Borrowers to easily obtain capital;
• Hedgers to offset risks; and
• Traders to easily exchange currencies and commodities.

The five key functions of a financial system in a country are:

(i) Information production ex ante about possible investments and capital allocation.

(ii) Monitoring investments and the exercise of corporate governance after providing financing.

(iii) Facilitation of the trading, diversification, and management of risk.

(iv) Mobilization and pooling of savings.

(v) Promoting the exchange of goods and services.

Financial sector development takes place when financial instruments, markets, and intermediaries work together to reduce the costs of information, enforcement and transactions. A solid and well-functioning financial sector is a powerful engine behind economic growth. It generates local savings, which in turn lead to productive investments in local business. Furthermore, effective banks can channel international streams of private remittances. The financial sector therefore provides the rudiments for income-growth and job creation.

Well-functioning financial systems are characterized by financial instruments that help people solve financial problems, liquid markets with low trading costs (operationally efficient), timely financial disclosures resulting in market prices that reflect available information (informationally efficient), and therefore prices that move primarily with changes in fundamental value instead of liquidity demands. Well-functioning markets ultimately lead to efficient allocations, which use resources where they are most valuable.

Deepening and broadening of financial access should be an important public policy objective. Better financial access translates into robust economic growth, as more firms are able to make profitable investments. It also enhances financial stability, for example, by allowing firms to hedge their risks, or more easily obtain refinancing if in financial distress. Lastly, broader access to finance also reflects the values of social justice by contributing to equal economic opportunities.

To achieve a fundamental increase in financial access, public policy should target its main Determinants institutional and financial system development.

The principal institutional dimensions are:

• Well defined commercial property rights, including:
  • Effective contract enforcement;
  • Collateral pledging and claiming mechanisms;
  • Bankruptcy procedures; and
  • Investor protection and corporate governance systems.
• An environment that fosters transparency, including adequate accounting principles and other mechanisms enabling credible disclosure.

The principal financial system dimensions are:

• Efficient financial regulation and supervision;
• An ownership structure of financial institutions, reflecting:
• A clear and focused role for state financial institutions, if they exist;
• The degree of foreign ownership reflecting the country-specific benefits and costs; and
• Controls on the negative effects of bank-industry cross-ownership.
• An entry and competition policy that balances entry opportunities with preserving the charter value of financial institutions;
• Crisis resolution tools, such as deposit insurance, liquidity support mechanisms, effective financial institutions bankruptcy procedures; and
• Financial infrastructure, such as the payments system and credit databases.

The institutional and financial system development policies are necessary to achieve a fundamental increase in financial access, and should, therefore, be regarded as a priority. However, there can be a number of problems in their implementation. Firstly, even the best fundamental development policies, especially those targeting institutional improvements, may have very long gestation periods. The government may have the need to provide more immediate transitory solutions. Secondly, there can be genuine market failures restricting access to finance, which cannot be resolved by improving the overall economic environment, but may require more targeted and direct government interventions.

When fundamental financial access policies do not work due to long gestation, genuine market failures, or political opposition governments may choose to correct for the lack of market-based finance by the public provision of missing financial services. Undoubtedly, well-designed interventions by a “noble” and efficient government can indeed provide transitory solutions to complement long-term development policies and correct financial market failures. But, in practice, governments are commonly not fully “noble,” but influenced by special interests. The efficiency of governments is also commonly limited by bureaucratic incentive structures.

As a result, even when market failures create a theoretical field for social welfare improving interventions, practical government failures may in fact be more distortionary than the market shortcomings they were intended to address, and render public involvement undesirable. Put differently, market failures by themselves do not warrant public intervention. Recognizing its limitations, government should act only if it can address the economic imperfection better than the market. In practice, however, governments around the world are often excessively interventionist, in which case their policies may compromise rather than improve social welfare.

Regulatory Perspective

Despite the recognized risks and costs, public financial institutions are an important part of the financial landscape around the world. Public financial institutions are commonly associated with developing countries, which turn to them when their growing real sector potential seems to outrun financial system capacities. In practice, however, public financial institutions exist and are often prominent even in the most financially developed countries.

The establishment of government financial services is typically a political decision on which financial regulators may have only limited influence. Therefore, they view the decision on the creation, preservation, or liquidation of public financial institutions as given. The relevant question is how the regulators should respond to such decisions. The response should seek to maximize possible benefits of enhanced financial access, while seriously acknowledging potential costs and risk, and seeking to contain them. While possibly not having direct authority, regulators may contribute to the public discussion on the rationale and optimal design of public financial institutions.

Conflicts of interest pose significant reputation and legal risks to corporate finance professionals. In investment banking, and M&A in particular, there is a higher risk of bad press and civil litigation than is the case with other areas of corporate finance.

Because of the higher risk of conflict problems arising, investment bankers must be particularly careful in identifying, assessing, and managing conflicts of interest in connection with such transactions.

In many cases, investment banks can easily identify conflicts.  In other cases, important conflicts may not be as readily identifiable. It is not possible to provide a comprehensive definition of what constitutes a “conflict of interest” but the phrase generally refers to circumstances in which:

• A firm has more than one interest in a transaction
• The existence of those multiple interests may compromise, or have the appearance of compromising, the bank’s ability to provide independent financial advice to its clients or impair the bank’s ability to satisfy the legitimate expectations of those clients.

Conflicts of interest in investment banking:

• The bank or an affiliate has more than one client who is interested in the outcome of a transaction or potential transaction
• The bank or an affiliate is a lender to, or investor in, one of the parties to a transaction or potential transaction
• The bank knows material non-public information about a party or potential party to a transaction that it is unable to share with its client.

How to Avoid Conflicts of Interest

• To mitigate reputation and legal risks associated with transactional conflicts of interest, it is a good idea to avoid:
• Providing financial advisory services for any transaction to two competing interests
• Making equity investments in any transaction with two competing interests
• Providing or arranging financing in connection with a take-over of a client
• Advising a client in connection with an unsolicited bid from another client

Industrial Credit and Investment Corporation of India (ICICI) was established in 1955 as public limited company under Indian Company Act, for developing medium and small industries of private sector.

Role of ICICI:

The important objectives of the ICICI are as follows:

(i) To provide loans to industrial projects in private sector.

(ii) To stimulate the promotion of new industries.

(iii) To assist the expansion and modernization of existing industries.

(iv) To provide Technical and managerial aid to increase production.

Functions of the ICICI

In order to accomplish the above objectives, the Corporation performs the following functions:

1. Providing finance in the form of long-term or medium-term loans or equity participation.
2. Sponsoring and underwriting new issues of shares and other securities,
3. Guaranteeing loans from other private investment sources.
4. Making funds available for reinvestment by revolving investment as rapidly as possible.
5. Providing project advisory services i.e. offering advice:

• To private sector companies in the pre-investment stages on government policies and procedures, feasibility studies and joint venture search, and
• to central and state governments on specific policy related issues.

IIFCL is a wholly-owned Government of India company set up in 2006 to provide long term finance to viable infrastructure projects through the Scheme for Financing Viable Infrastructure Projects through a Special Purpose Vehicle called India Infrastructure Finance Company Ltd (IIFCL), broadly referred to as SIFTI.

The sectors eligible for financial assistance from IIFCL are as per the Harmonized list of Infrastructure Sub-Sectors as approved by the Government and RBI and as amended from time to time. These broadly include transportation, energy, water, sanitation, communication, social and commercial infrastructure.

IIFCL has been registered as a NBFC-ND-IFC with RBI since September 2013.

The authorized and paid up capital of the company as on 30th September 2015 stand at Rs 5,000 Crore and Rs 3,900 Crore, respectively.

On a standalone basis, IIFCL has made cumulative gross sanctions of over Rs 63,800 Crore under direct lending to more than 360 projects and has made cumulative disbursements of over Rs 45,000 Crore, including disbursements under Refinance and Takeout Finance, till 30th September 2015.

• It was set up in 2006 to provide long term debt for infrastructure projects.
• It provides financial assistance to commercially viable projects, which includes projects implemented by public sector company, private sector company; or private sector company selected under Public Private Partnership (PPP) initiative.
• IIFCL raises funds from domestic as well as external markets on strength of government guarantees.

Credit Enhancement Scheme

Under the Credit Enhancement Scheme, IIFCL provides its partial credit guarantee to enhance the credit rating of bonds issued by infrastructure companies to AA or higher for refinancing of existing loans. IIFCL can undertake credit enhancement to the extent of 20% of Total Project Cost (40% of Total Project Cost with backstop guarantor) subject to a maximum of 50% of the total amount of Project Bonds.

Credit enhancement enables channelization of long term funds from investors like insurance and pension funds in such bonds. Asian Development Bank (ADB) is providing backstop guarantee facility to IIFCL for up to 50% of IIFCL’s underlying risk.

In September 2015, first bond issue of Rs 451 Crore, with credit rating enhanced by partial credit guarantee provided by IIFCL under the scheme, was successfully placed. IIFCL is working on many more such transactions.

For institutions

Refinance Scheme

IIFCL provides refinance to banks and other eligible financial institutions (FI’s) for their loans to infrastructure projects.

Under the refinance scheme, till 30th September 2015, IIFCL has made cumulative disbursements of over Rs 6,200 Crore.

Subsidiaries

IIFC (UK): IIFC (UK), a wholly-owned subsidiary of IIFCL, was set up in April 2008 to provide financial assistance in foreign currency, for the import of capital equipment, to Indian companies implementing infrastructure projects in the country. Till 30th September 2015, IIFC (UK) has made cumulative disbursements of over USD 1.6 billion.

IIFCL Projects Ltd (IPL):IPL, a 100% subsidiary of IIFCL, was set up in 2012 to provide advisory services including project appraisal and syndication services, as well as project development services involving conducting feasibility studies, project structuring, financial structuring and development of detailed business cases.

IIFCL Asset Management Company Ltd. (IAMCL): IIFCL formed a 100% subsidiary asset management company viz. IAMCL to manage the IIFCL Mutual Fund (IDF). In Feb 2014, IIFCL Mutual Fund launched its maiden IDF scheme through private placement. On full subscription, the scheme achieved the distinction of being the first IDF Mutual Fund in the country to be listed on the Bombay Stock Exchange (BSE).

IIFCL MF (IDF) is currently in the process of launching two new schemes, both rated “AAA MF-IDF” by two domestic credit rating agencies, with one focused on infrastructure sectors with a fund size of up to Rs 1,500 crore and the other focused on Green initiative (Solar and wind energy, waste-to-energy, water and sanitation etc.) with a fund size of upto Rs 1,000 crore.

Projects get financed from IIFL:

Following sectors projects are eligible for financing from IIFCL:

• Power;
• Warehouses;
• Gas pipelines;
• Cold storage chains;
• Fertilizer Manufacturing Industry
• Infrastructure projects in Special Economic Zones;
• International convention centres and other tourism infrastructure projects;
• Road and bridges, seaports, railways, airports, inland waterways and other transportation projects.
• Urban transport, water supply, sewage, solid waste management and other physical infrastructure in urban areas.

The Ministry of Corporate Affairs is an Indian government ministry. It is primarily concerned with administration of the Companies Act 2013, the Companies Act 1956, the Limited Liability Partnership Act, 2008, Insolvency and Bankruptcy Code, 2016 & other allied Acts and rules & regulations framed there-under mainly for regulating the functioning of the corporate sector in accordance with law. It is responsible mainly for regulation of Indian enterprises in Industrial and Services sector. Ministry is mostly served by the Indian Corporate Law Service officers’ cadre (ICLS). These officers are being selected through Civil Services Examination Conducted by UPSC. Brilliant talent pool of the country serves MCA in different capacities. The highest post of DGCoA is being fixed at Apex Scale for the ICLS.

Primary Role:

• Administering the Competition Act of 2002 to prevent practices that adversely affect competition, promote and sustain competition in markets, and to safeguard consumer interests through the Commission established under the Act.
• Supervising the three professional bodies, namely the Institute of Chartered Accountants of India (ICAI), Institute of Company Secretaries of India (ICSI), and the Institute of Cost Accountants of India (ICAI), established under the different Acts of Parliament.
• Executing the functions of the Central Government with respect to the administration of Partnership Act, 1932, the Companies (Donations to National Funds) Act, 1951 and the Societies Registration Act, 1980.

Autonomous Bodies

• Indian Institute of Corporate Affairs (IICA)
• National Foundation of Corporate Governance (NFCG)
• National Foundation of Corporate Social Responsibility (under IICA)

Professional Bodies

• Institute of Company Secretaries of India (ICSI)
• The Institute of Chartered Accountant of India (ICAI)
• Institute of Cost Accountants of India (ICoAI)

Statutory Bodies

• Insolvency and Bankruptcy Board of India (IBBI)
• National Company Law Tribunal (NCLT)
• National Company Law Appellate Tribunal (NCLAT)
• Investor Education and Protection Fund Authority (IEPFA)
• National Financial Reporting Authority NFRA)
• Competition Commission of India (CCI)

Attached Offices

• Serious Fraud Investigation Office(SFIO)

Stakeholders:

• The corporate sector, which includes all companies and LLPs
• Professionals, the likes of whom include Cas, CSs, ICWAs, Advocates, etc
• Investors
• Banks
• Other Government Ministries/Departments
• State Governments
• Citizens of India

Functions

• Incorporation of a company.
• Checking the availability of a name proposed by a new company and approving the name-change of the existing company (also read – Fast Company Name Approval, Removal of Company Name from MCA Database
• Registration of companies that are unregistered.
• Registration of a place of business in India by a company incorporated in India.
• Registration for changing the objects of a company.
• Conversion of Private Company to Public Company and vice versa.
• Conversion of unlimited company into a limited company, i.e. limited by shares/guarantee.
• Registration of a Prospectus.
• Registration of charge creation/modification and the satisfaction of charge.
• Condonation of delayed filing of charge creation/modification and satisfaction of charge.
• Extension of time for holding Annual General Meeting (AGM).
• Registration of Court, NCLT or RD order.
• Issuing of certified copies of company documents.
• Issuance of Director Identification Number (DIN).
• Change in particulars of Director Identification Number (DIN).
• Conversion of a company into Limited Liability Partnership.
• Shifting of a registered office of the company from one state to another.
• Shifting of a company’s registered office from one RoC to another within the state.
• Granting licenses to Section 8 Companies.
• Making decisions connected with the appointment/reappointment, as well as remuneration/waiver for excess remuneration paid to managing/whole-time director(s) or manager.
• Investor Grievance Redressal/CPGRAMS (Centralized Public Grievance Redressal and Monitoring System).
• Other grievances or complaints related to MCA-21.
• Seeking status of Company as dormant.
• Seeking status of the company as active.
• Registration of intimation concerning the appointment of a manager.
• Condonation of delay under section 460 of the Companies Act, 2013.
• Acquiring/Associating/Updating DSC (Digital Signature Certificate).
• Enquiring DIN (Director Identification Number) and verifying the DIN PAN details of the Director.
• Services related to master data.
• LLP services.
• Services related to e-filing.
• Handling of complaints.
• Documentation services.
• Fee and Payment Services.
• Investor Services.

The Ministry of Finance is a ministry within the Government of India concerned with the economy of India, serving as the Indian Treasury Department. In particular, it concerns itself with taxation, financial legislation, financial institutions, capital markets, centre and state finances, and the Union Budget.

Department of Economic Affairs

The Department of Economic Affairs is the nodal agency of the Union Government to formulate and monitor country’s economic policies and programmes having a bearing on domestic and international aspects of economic management. A principal responsibility of this Department is the preparation and presentation of the Union Budget to the parliament and budget for the state Governments under President’s Rule and union territory administrations. Other main functions include:

• Formulation and monitoring of macroeconomic policies, including issues relating to fiscal policy and public finance, inflation, public debt management and the functioning of Capital Market including Stock Exchanges. In this context, it looks at ways and means to raise internal resources through taxation, market borrowings and mobilisation of small savings;
• Monitoring and raising of external resources through multilateral and bilateral Official Development Assistance, sovereign borrowings abroad, foreign investments and monitoring foreign exchange resources including balance of payments;
• Production of bank notes and coins of various denominations, postal stationery, postal stamps; and Cadre management, career planning and training of the Indian Economic Service (IES).

The Foreign Investment Promotion Board (FIPB), housed in the Department of Economic Affairs, Ministry of Finance, was an inter-ministerial body, responsible for processing of FDI proposals and making recommendations for Government approval. FIPB is now abolished as announced by Finance Minister Arun Jaitley during 2017-2018 budget speech in Lok Sabha.

Department of Expenditure

The Department of Expenditure is the nodal Department for overseeing the public financial management system (PFMS) in the Central Government and matters connected with the finances. The principal activities of the Department include a pre-sanction appraisal of major schemes/projects (both Plan and non-Plan expenditure), handling the bulk of the Central budgetary resources transferred to States, implementation of the recommendations of the Finance and Central Pay Commissions, overseeing the expenditure management in the Central Ministries/Departments through the interface with the Financial Advisors and the administration of the Financial Rules / Regulations /Orders through monitoring of Audit comments/observations, preparation of Central Government Accounts, managing the financial aspects of personnel management in the Central Government, assisting Central Ministries/Departments in controlling the costs and prices of public services, assisting organizational re-engineering thorough review of staffing patterns and O&M studies and reviewing systems and procedures to optimize outputs and outcomes of public expenditure. The Department is also coordinating matters concerning the Ministry of Finance including Parliament-related work of the Ministry. The Department has under its administrative control the National Institute of Financial Management (NIFM), Faridabad.

The business allocated to the Department of Expenditure is carried out through its Establishment Division, Plan Finance I and II Divisions, Finance Commission Division, Staff Inspection Unit, Cost Accounts Branch, Controller General of Accounts, and the Central Pension Accounting.

Department of Revenue

The Department of Revenue functions under the overall direction and control of the Secretary (Revenue). It exercises control in respect of matters relating to all the Direct and Indirect Union Taxes through two statutory Boards namely, the Central Board of Direct Taxes (CBDT) and the Central Board of Indirect Taxes and Customs (CBIC). Each Board is headed by a Chairman who is also ex officio Special Secretary to the Government of India (Secretary level). Matters relating to the levy and collection of all Direct taxes are looked after by the CBDT whereas those relating to levy and collection of Customs and Central Excise duties and other Indirect taxes fall within the purview of the CBIC. The two Boards were constituted under the Central Board of Revenue Act, 1963. At present, the CBDT has six Members and the CBIC has five Members. The Members are also ex officio Secretaries to the Government of India. Members of CBDT are as follows:

• Member (Income Tax)
• Member (Legislation and Computerisation)
• Member (Revenue)
• Member (Personnel & Vigilance)
• Member (Investigation)
• Member (Audit & Judicial)

Department of Financial Services

The Department of Financial Services covers Banks, Insurance, and Financial Services provided by various government agencies and private corporations. It also covers pension reforms and Industrial Finance and Micro, Small and Medium Enterprise. It started the Pradhan Mantri Jan Dhan Yojana.

PFRDA, Pension Fund Regulatory and Development Authority (PFRDA) is a statutory body which also works under this department.

Department of Investment and Public Asset Management

The Department of Disinvestment has been renamed as Department of Investment and Public Asset Management or ‘DIPAM’, a decision aimed at the proper management of Centre’s investments in equity including its disinvestment in central public sector undertakings. Finance Minister Arun Jaitley had announced the renaming of the Department of Disinvestment in his budget speech for 2016-17. Initially set up as an independent ministry (The Ministry of Disinvestment) in December 1999, the Department of Disinvestments came into existence in May 2004 when the ministry was turned into a department of the Ministry of Finance. The department took up all the functions of the erstwhile ministry which broadly was responsible for a systematic policy approach to disinvestment and privatisation of Public Sector Units (PSUs).

National Housing Bank (NHB), a Government of India owned entity, was set up on 9 July 1988 under the National Housing Bank Act, 1987. NHB is the apex financial institution for housing. NHB has been established with an objective to operate as a principal agency to promote housing finance institutions both at local and regional levels and to provide financial and other support incidental to such institutions and for matters connected therewith. The Finance Act, 2019 has amended the National Housing Bank Act, 1987. The amendment confers the powers of regulation of Housing Finance Companies (HFCs) to the Reserve Bank of India.

NHB registers and supervises Housing Finance Companies (HFCs), keeps surveillance through On-site & Off-site Mechanisms and co-ordinates with other Regulators.

Objectives

NHB has been established to achieve, inter-Alia, the following objectives:

• To promote a sound, healthy, viable and cost-effective housing finance system to cater to all segments of the population and to integrate the housing finance system with the overall financial system.
• To promote a network of dedicated housing finance institutions to adequately serve various regions and different income groups.
• To augment resources for the sector and channelise them for housing.
• To make housing credit more affordable.
• To regulate the activities of housing finance companies based on regulatory and supervisory authority derived under the Act.
• To encourage augmentation of supply of buildable land and also building materials for housing and to upgrade the housing stock in the country.
• To encourage public agencies to emerge as facilitators and suppliers of serviced land, for housing.

Functions:

• Regulation and Supervision of Housing Companies operating in India is one of the most important and foremost functions of this apex Institute, powers of which are derived from the National Housing Bank Act.
• Raising of Funds on large scale and onward refinancing to Housing Finance companies, Cooperative Banks and other housing agencies for onward lending to Individual and Infrastructure companies in Housing Segment.
• Ensure Housing Finance Companies meet regulatory Capital requirements as required by BASEL norms, have proper risk management framework in place, good governance practices, etc.

Role of National Housing Bank

National Housing Bank has a specific role that is inherited with the purpose behind its formation in the year 1988. Its major role and objectives are enumerated below:

• The first and foremost objective is to ensure the availability of adequate financing for Housing Infrastructure development as well as a seamless flow of liquidity to various Housing finance Institutes to ensure timely financing to various Income segments (Lower, Middle and Higher-Income group).
• Another important objective behind creation of this apex Institute is to ensure proper regulation and supervision of Housing Finance Companies operating in the Country, timely audit of them, ensuring their compliance with the relevant guidelines as well as ensuring the credit is made available by such organization at affordable rates to meet the objective of housing for all.
• Another important role National Housing Bank plays is in increasing the number of housing units in the country. To achieve this objective NHB plays a pivotal role in making available land for building Housing by acting as facilitator, ways, and means to enable companies in the Housing segment to raise funds as well as smoothening the entire function to bring in more efficiency and enhanced productivity.