Sansmaran - June - Indian Ca - GNIMS...Study of Challenges faced by SME’s with Respect to Human Resource Processes GNIMS - Resear ch Journal “SANSMARAN” - Vol. 4, Issue - 1 -

GNIMS - Research Journal “SANSMARAN” - Vol. 4, Issue - 1 - June 2014 1

SGPC’sGuru Nanak Institute of Managment Studies

Research Journal “Sansmaran”Vol. 4 • No. 1 • June 2014 • BiannualISSN No. 2278-7801

Editor-in-Chief :Mr. M. Krishnan, Director - in - Charge

Associate Editor :Ms. Kuljeet G. Kahlon

Editorial Team :Dr. Jyotinder KaurMr. Imran SiddiquiMr. Kapil BhopatkarMr. Unmesh Alwani

Review Board :Ms. Gurjeet MultaniDr. Y. V. KamathDr. Sameer PhanseMr. Sameer S. Salunkhe

Advisory Board :Dr. Ajit Singh

Dr. Vijay Khole

Dr. R. T. Sane

Disclaimer :The Editorial Committee has taken utmost care to providequality editorial articles in the journal. However, thejournal is not responsible for the representation of facts,adaption of material, interview with person and personalview of author contained in the article.

Published by :SGPC’s Guru Nanak Institute of Management StudiesKing’s Circle, Matunga, Mumbai - 400 019.Tel. : +91 22 2404 3927 / 28 • Telefax : +91 22 2404 3933

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Table of Contents

Message from Vice - Chairman - GNIMS 02

Message from Management Nominee 03

Message from Director - in - Charge 04

Study of Challenges faced by SME’s with Respect to 06Human Resource ProcessesSebatina Mary S Kumar

Importance of Emotional Intelligence, Creativity 14and Innovation in VUCA EnvironmentJharana Pandya

Spritual Quotient An Innovative HR asset to win the 18Emerging Challenges of OrganizationsAmrit Parmar

Impact of E-Learning in Library : An Overview 26Kuljit Gill

Functionality Level Analysis of Alternate Banking 28Delivery ChannelsM. Krishnan

Customer Centric Practices 37Allan D’Souza

Rationality of Financial Market 39M. Krishnan

Convoluted multiple-factor approach to evaluate 44Performance of South Asian Equity MarketsDr. Suyash Bhatt

Marketing Strategies of Google and Apple 52M. Krishnan

Safety and Security about online Share Trading 54Deepak Patil

2 GNIMS - Research Journal “SANSMARAN” - Vol. 4, Issue - 1 - June 2014

In today’s time Innovations play an increasingly vital role in the transformation of the society.

The transformation of society from agrarian to industrial and now to information and knowledge

has largely been brought about as a result of the accumulation and increasingly sophisticated

deployment of knowledge.

Innovation Management is the management of innovation processes. It refers both to product and

organizational innovation. Innovation Management includes a set of tools that allow managers

and engineers to cooperate with a common understanding of processes and goals.

The emergence of the knowledge based economy, increasing convergence towards a global

village, and the intensification of competition have profound implications for organizational

growth, adaptability, sustainability and survival. For many organizations and countries alike,

innovation and knowledge management are no longer luxury items, but rather necessities and a

means of sustaining economic development and competitiveness.

Sardar Gurinder Singh Bawa

Vice Chairman

Guru Nanak Institute of Management Studies, Mumbai

MESSAGE FROM VICE CHAIRMAN - GNIMS


‘Sansmaran’ meaning reminiscence is a management journal of the Institute catering to theresearchers and writers on contemporary theoretical and empirical research, articles, case studies,current affairs, etc. covering areas such as finance, HR, marketing, government policies, industryscenario, consumer behavior, competition, environment, systems, etc.

‘Sansmaran’ is a bi-annual theme based journal. The themes of the earlier issues were strategicmanagement, stress management, e-commerce and knowledge management. The theme of thecurrent issue is Innovation.

The matrix for survival at individual level as well as at the corporate level has indeed becomecomplex. In today’s globalized world, every individual and organization needs to compete tosurvive and grow. Innovation is widely accepted as key factor for making the organizationsuccessful. Similarly, inventive thinking coupled with domain knowledge and management skillscan help an individual to compete and succeed in life.

We take immense pleasure to share the research papers and articles of the contributors in thisissue which we are confident you would find useful. We sincerely acknowledge the enthusiasticsupport extended by all contributors and thank all the research scholars and supporting personnelwho have helped in bringing out this issue.

We are confident that students, faculty, researchers and corporate and others would continue toshare their experiences in their domain areas and send their papers for publication in futureissues of ‘Sansmaran’.

Wish you all success in your endeavours.

Dr. R. K. Patheja

Management Nominee

MESSAGE FROM MANAGEMENT NOMINEE


MESSAGE FROM THE DIRECTOR-IN-CHARGE

“Learning gives creativity, Creativity leads to thinking,

Thinking provides knowledge, Knowledge makes you great.”

Former President of India, Dr. APJ Abdul Kalam

The key to success is Innovation. Progress achieved by mankind is the result of new discoveries and

inventions. Inventions are the result of creativity. Creativity is nurtured by inquisitiveness. It is fortified by

thinking and research.

Innovations in Information and Communication Technology have brought profound changes in the world

economy speeding up the process of globalization thereby bringing nations and people closer. This has

resulted in intense competition in the corporate world. To be competitive and to survive, they would need to

continuously invest in research and development. There is therefore an imperative need for educational

institutions and industry collaboration for research and innovation.

Dr.Abdul Kalam, said, “The management of knowledge in the 21st century is beyond the capacity of a single

individual. The amount of information that we have around us is overwhelming. The management of

knowledge, therefore, must move out of the realm of the individual and shift into the realm of the networked

groups. The students must learn how to manage knowledge collectively. When the information is networked,

the power end utility, the information grows as squared as predicted by Metcalfe’s Law. Information that is

static does not grow. In the new digital economy information that is circulated creates innovation and

contributes to national wealth.”

Education to be effective in the emerging scenario must enable development of full-fledged capacities

among the students for national development through capacity building, capacity for research and enquiry,

capacity for creativity and innovation, capacity to use right technology, entrepreneurship and Moral Leadership.


Harnessing the thought processes for benefit of mankind is education. This edition is yet another small step

in that direction. It includes a research study done by one of our talented student. Going forward we would

showcase more such research works of our young fertile minds. The current issue covers diverse topics

contemporary in nature. We hope the readers would find them interesting and useful.

‘Sansmaran’ is a management research journal providing a platform for researchers in academia and industry,

research houses, students, writers, authors for sharing their contemporary, theoretical, empirical and

experiential and application based research works and thought based articles in all areas of management.

We thank all the authors for their intellectual research contributions. We also thank all the supporting

personnel for bringing out this issue well in time. We are sanguine that with your continued patronage this

publication would grow in size and stature.

We invite research papers, case studies, articles, book reviews, interviews, etc. for publication in future

editions of ‘Sansmaran”.

M. Krishnan

Director - in - Charge


Introduction :

HRM is a way of management that links people-relatedactivities to the strategy of a business or organization. Humanresources are the source of achieving competitive advantage

because of its capability to convert the other resources (money,machine, methods and material) in to output (product/service).The competitor can imitate other resources like technology

and capital but the human resource are unique. Severalscholars have noted that managing people is more difficultthan managing technology or capital.

Human resources management is the backbone of every type

of business organization. The triumph of every organizationdepends upon the worth of persons it employs. Humanresources management helps in spotting the exact individual

for the precise job.

Human resources ensure the workforce embraces the

company’s philosophy and business principles. From theperspective of a small business, creating a cohesive workenvironment is imperative.

The HR function is a critical element for growth of any

company. An organization cannot build a good team of workingprofessionals without good Human Resources. The keyfunctions of the Human Resources Management (HRM) team

STUDY OF CHALLENGES FACED BY SME’sWITH RESPECT TO HUMAN RESOURCE PROCESSES

Sebatina Mary S Kumar

Student, MMS - HR - 2012 - 14, GNIMS

ABSTRACT

Small and Medium Enterprises (SMEs) are showing their impact on national and regional economies

throughout the world. They provide large scale employment. But, little importance is given to the Human

Resource processes. Small-scale industrial sector plays a dominant role in the economic development of

both developed and developing countries.

SMEs are in general labor intensive. Whenever we think about an HR department we think about large

firms. Small firms also need HR department. Performance and effective human resource management enables

the entrepreneurs to improve the quality of their production.

The Small and Medium Scale Enterprises being very volatile in nature take high amount of risk. It is therefore

important for them to address the uncertainty through reliable and loyal work force which can shoulder

them in good and bad times. The SME’s face challenges with respect to people management processes.

This project is an endeavor to study the various HR processes that are carried out in a company and also

what are the challenges that a company faces with respect to these processes.

Keywords: Human Resource Process, SMEs, Challenges Faced.

include recruiting people, training them, performanceappraisals, motivating employees as well as workplacecommunication, workplace safety, and much more.

Micro, Small and Medium Enterprises

Small-scale industries have been playing an important role for

development of the Indian economy. These small-scaleindustries not only help to create employment opportunities,but also generate income, investment and savings in the

economy. Further, these industries may also help in developingregional economy, promotion of export potential, promotionalof market facilities, development of infrastructural facilities

etc.

Small-scale industries also help in eradicating poverty,

unemployment problems. The opportunities through SMEshave been helping to provide employment opportunities torural, urban masses, generating income, and raising the levels

of living.

The SME sector has the potential to emerge as an engine totake the economy to the desired destinations of globalization,employment generation, equal distribution of income, acquiring

competitive edge and high rate of economic growth.

Even as the Indian MSME sector forays into new and emerging

Study of Challenges faced by SME’s with Respect to Human Resource Processes


business areas, a greater number of these enterprises areplanning the global business landscape to tap new marketsand identify attractive investment opportunities. This global

push is guided by Indian industry’s recognition of the need todo business more effectively in an interconnected world.

Indian MSMEs are penetrating deep into the developedmarkets and foraying into developing and emerging marketswhere their products and services are seen as most appropriate

and affordable.

Literature Review :

SCMS JOURNAL OF INDIAN MANAGEMENT- January -March 2012

Main problems of small enterprises related to HRM areattracting talent, motivating employees and retaining keyemployees as small enterprises lack resources to advertise for

positions, pay salaries in the range of large organizations andtrain employees. More than other business and technologyissues, people issues are more likely to be taken for granted

by SMEs as people management is not a technical matter forSMEs necessitating specialists

Owners of SMEs do not normally adopt state-of-the-art peoplemanagement practices. SMEs do not feel like revamping

existing organizational structure, especially when they knowthat the status quo is delivering the output. HRM isunresponsive or not tailored to their needs, and it is considered

too costly an activity to carry for a SME.

Review: Research studies have shown that maller, medium

size and newly started business units do not have any formalHR policies and the proprietors/owners of the units directlydeal all HR matters and found that there were significant

differences between larger and smaller organizations withrespect to HR systems and practices.

In reality, working in SMEs does not involve much paper work,policies, procedures, systems, rules, regulations and strategies,

and even the presence of a HR manager is missing. HR issuesare not considered to be critical for growth and survival ofSMEs.

ATTRITION IN SMES: THE CAUSES - Bibhu Prasad Kar,Amalesh Sharma and Sourav Bikash Borah

The SMEs sector in India has certainly been very prevalent of

employment in recent years but one of the biggest issues it isfacing is the remarkable rise in attrition rate. There could besome common attrition factors across sectors but every

organization needs to know the specific reasons for attrition.

Due to their limited size, many small and medium enterprises(SMEs) cannot justify full-time HR professionals in their

organizations. Thus, the complex and time consuming natureof many HR activities can result in a significant drain on existingmanagerial resources.

Few factors that affect the attrition which include employeeturnover, commitment, motivation, changes in work place,

training and development etc. These finding are valid for theemployees who stay in the organization for long time. Theprobable reasons of attrition, although cannot be modeled

explicitly, are important to find for success of the SME sector.

Review: the research paper states that the due to the complexand time consuming nature of HR, it is a significant drain onthe managerial resources. But, Hr activities play an important

role in controlling the attrition rate.

FUTURE OF HUMAN RESOURCE MANAGEMENT (HRM)IN SMES- Article by Ankita Agarwal, November 24, 2012

It is often said, the future belongs to Small and Medium-sizedEnterprizes (SMEs). Not only because they contribute directlyto the economy in terms of output and employment, but also

because they act as the ladder of success for many large firms.The SMEs are largely characterized by being small in size intheir market operations and reach. They have limited access to

finance and technology and normally do not have any formalorganizational structures. However, the situation is changingfast and the SMEs are making their systems at par with larger

organizations, especially the financial systems. The SMEs havewell realized their scope in future, but one aspect that is stillvery much neglected relates to the Human Resource

Management (HRM) in SMEs.

The SMEs usually do not follow any formal HRM practices.The ownership and management generally coincide and theowner does not possess any formal management training. The

employer-employee relationships are largely based on mutualtrust and understanding. Most of the times, no formalemployment contract is signed with the employees and the

terms and conditions of employment are only verbally agreedbetween the employer and the employees. There is no strictcompliance to the labor laws and the employees are also often

happy with mutually discussed terms and conditions, providedthey are paid enough. The negligence of HRM can be assessedby the fact that most of the SMEs do not even have a separate

HR department also. A survey conducted by Confederation ofIndian Industries (CII) in the year 2007 revealed, around 80%of the small and 20% of the medium-sized enterprises in India

did not have any formal HR department. A large number ofSMEs still pay their employees in cash and there are no propersystems for payroll accounting, employee recruitment,

selection and training.



Review: the article clearly states that the SMEs are negligenttowards the importance of HR. This situation has to change inthe coming year as HR form an integral part of the business

process. HR department is also a strategic business partner.Hence, SMEs should also focus on the HR activities carriedout in the company.

Objective :

Ø To study about the SME sector in Mumbai

Ø To study the Human Resource practices in small andmedium enterprises.

Ø To study the challenges faced in Human Resourcepractices by SME’s.

Ø To recommend ways of improving the HR processes in

SME’s.

Scope :

Ø It covers randomly chosen small and medium

enterprises in Mumbai.

Ø The approach of the study has been from the viewpoint of finding the challenges in the HR processesand proving a solution to it.

Limitations :

Ø The study pertains to only 6 SMEs in Mumbai and thefindings of this study have been generalized to all

SMEs.

Ø It does not cover any specific sector of SME’s.

Ø The time limit of the project was 1 month.

Ø Due to confidentiality of data the respondents were

hesitant to share complete information.

Research Question :

“What are the challenges faced by SMEs with respect toHuman Resource Processes?”

Research Methodology :

Ø Research Design- The type of Research used in this

study is Descriptive Research Design.

Ø Sources of Data- Collection of the data is of primaryimportance the research process. The sources of dataare primary and secondary data.

Ø Date Collection Instrument-

a. Primary Data: The Primary Data was collectedusing interview technique. The questions were

based on various HR practices and thechallenges faced by the companies.

b. Secondary Data: The secondary Data wascollected from various books on HRM, alreadyworked projects, records and websites.

Ø Population- Population includes all people or items withthe characteristic one wishes to understand. The

population is Small and Medium enterprises in Mumbai

Ø Sampling Method- The sampling method used in thisstudy is convenience sampling which is a category ofnon probability sampling.

Ø Sample Size- The sampling frame includes the export,

advertising and PR companies in Mumbai. The samplesize is 6 companies.

Data Analysis :

1. Dedicated person to manage HR

Interpretation: Out of the 6 companies only 1 companyhas a dedicated person for HR and the remaining companiesdo not have a dedicated person for HR. The HR tasks are

carried out by the CEO, Business Head, Accountants andadministration department.

• Company 1 (PR): The CEO and accountant carries outthe HR processes.

• Company 2 (Media): The individual department head

and Business head carry out the HR functions.

• Company 3 (Event Management): They have a

dedicated person to carry out the HR practices.

• Company 4 (Media): The Business Head andaccountant carry out the HR function. Company 5: TheCEO of the company carries out the HR function.

2. HR tasks performed in the company

Interpretation: All 6 companies perform the task of recruitment,document collection, salary processing and rewards and

recognition. Company 5 (Export) does not conduct any trainingprograms for its employees. Performance appraisal is doneonly in Company 2 (Media) and Company 3.



3. Sources of recruitment

Interpretation: All the companies use employee referralsto source candidates. Job portals are used by 3 companies.Campus recruitment is used by 2 companies. Only 1 company

uses social media to source candidates.

4. Selection Process

Selection process of Company 1 (PR), Company 2 (Media),Company 3 (Event Management), Company 5 (Export) andCompany 6.

Interpretation: The selection process of the abovementioned companies are same. They have two rounds ofinterview after the screening of CVs. The candidate is

selected after the two rounds of interview and an offer letteris given to the candidate. An induction program is conductedafter the acceptance of the offer letter.

Selection process of Company

Company 4 gives assignment to the candidate and he/she isasked to present the assignment. The candidate is given an

offer letter after he is assessed based on the presentation ofthe assignment.

5. Labor Consultant

Interpretation: From the above diagram it can be interpreted

that the companies do not have a labour consultant.

6. Leave and Attendance policy

Ø Company 1 (PR) does not have a leave policy in the

company. They have a register for attendance.

Ø Company 2 has 10 to 12 sick leaves and 28 paid leavesin a year.

Ø Company 3 has 6 casual leaves, 6 compensation offand 8 sick leave. They maintain the attendance in a

register.

Ø Company 4 gives its employees 9 sick leave, 9 casual

leave and holiday on second Saturday of every month.They also have 10 declared holidays. Privilege leaveand vacation leave is provided to employees who are

working in the organization for more than 3 years. Theattendance record is maintained in the excel sheet bythe accountant

Ø Company 5 (Export) has 15 long and 15 short leaves in

a year. They have a register to maintain the attendancerecord.

Screening Cvs

1st Round Interview

2nd Round Interview



do not have an HR department to carry out thefunctions of HR. The CEO, accountant, business head,department head and the administration department

take care of the HR processes.

2. The following are the roles performed by the person

who undertakes HR roles and responsibility.

3. The tasks of recruitment, documentation, salaryprocessing and performance reward system is carriedout by all the organizations.

4. Little importance is given to performance appraisal.

It has been seen that employees in SMEs are notappraised at regular intervals.

5. Some organizations also have grievance handling andmentor- mentee programs.

6. All organizations use employee referral to sourcecandidates as the existing employees will get candidates

who suit the culture of the organization. Theorganizations also believe that it reduces the time inscreening CVs.

7. A company called Company 2 (Media) uses social mediato source candidates for their organization.

8. The other sources of recruitment that are used are job

portals and company website.

9. The selection process of SMEs is similar. They havetwo rounds of interview after the screening of CVs.The 1st round of interview is conducted by the business

head and the 2nd round of interview is conducted bythe CEO or the director of the company.

10. Some companies also give an assignment to thecandidate and ask them to present to evaluate them.

11. Most of the companies do not have a labor consultant.

12. Most of the companies have leave and attendancepolicy. Few companies do not have a leave policy. Aregister is maintained in most of the SMEs for

attendance record.

13. In most of the companies the salary is processed bythe accountant and the CEO or Director of thecompany.

14. Most of the companies provide travel allowance to

the employees. Very few companies provide insurance.Few companies also provide mobile billreimbursement, Leave travel allowance and petrol

allowance.

15. Some of the fun activities or employee engagement

activities done by the company are birthdaycelebration, lunch parties, picnic, weekend movies,celebrate occasions and team outing.

16. Most of the companies provide incentives as a partof their performance reward system. Very few

companies give an appreciation mail or employee ofthe month award to its employees.

17. All companies give their employees an increment, butnot all companies give an annual increment. In some

companies increment is based on the performance whilein few it is an annual increment.

18. Most of the companies do not have training programsdesigned for its employees. They only have on the job

training as they feel training programs do not bring thedesired result in the employees and hence a waste oftime and money.

19. The following are the major challenges faced by SMEsin human resource management-

Ø Non availability of desired candidates.

Ø Finding the right candidate for the right job.

Ø Retaining employees in the organization.

Ø High employee turnover because of low salary.

Ø Lack of experienced candidates.

Ø Employees expect high salary.

Ø In case of marketing firms, employees show

unwillingness to travel.

Ø Employees do not wish to wait after office hoursto complete work.

Ø The employees take time to accept the newemployees.

Ø Acceptance to change is less among theemployees especially working in export firms.

Ø Unequal distribution of work creates problems

among employees

Ø The employees lack training.

Ø Most of the companies did not have an

appraisal system in place.

Recommendation :

1. Recruitment

Most of the companies have said that they face

challenges with respect to recruitment. They find



difficulty in sourcing candidates for a vacancy. TheSMEs should tap into multiple sources for mosteffective results. Though employee referrals can pool

in desired candidates it is important to make theemployees understand that they should providereferrals only of those candidates who would be fit

for the organization’s culture. The companies cananalyze which source of recruitment is most effectiveand give more importance to those sources.

2. Training

To make the training programs of an organization

effective, it is important to do a training need analysis.

An employee’s training program should be designed

based on the training need analysis. The company

should choose the right trainer to train its employees.

The trainer can be an internal or external trainer. A

training program is not complete without evaluation.

The effectiveness of the training programs will be based

on the evaluation of the training program. Evaluation

helps in bringing about required changes.

3. Performance appraisal

There should be an appraisal system in the

organization. It helps the employees to know what are

their strengths and weakness. It will help them to

overcome the weaknesses. This will help the employees

to perform better.

4. Leave policy

One of the companies does not have a leave policy.

They do not get any leave in a year except the bank

holidays. The salary of the employee is deducted if

he/she takes a leave. This affects the motivation level

of the employee. The companies should have a leave

policy.

5. Employee engagement programs

In SMEs the lack of employee motivation is a majormanagement deficiency. Keeping employees satisfiedon the job is another important human resourceactivity in the SMEs. The heart of the motivation

process lies in ensuring and maintaining smooth andharmonious working and personal relationships amongits employees. An Employee engagement programsnot only helps in bringing a sense of belongingnesstowards the company but also improves personalrelation among employees.

6. Retaining employees

The employee turnover of the company is high in SMEsbecause the salary given to the employees are not ascompetitive as it is in other sectors. The HR has to play

a major role in retaining the employees by providingthem a good working environment. The workingenvironment plays an important role in retaining the

employees.

7. Need for HR department

The companies can overcome the challenges withrespect to carrying out HR processes by appointing aHR person to carry out the tasks and responsibility.Currently the processes are handled by the departmentheads and the owner of the company, appointing a HRperson would let the company concentrate on its corebusiness and at the same time look after its employees.

Conclusion :

The study has revealed that the SMEs face challenges withrespect to managing people. Having a dedicated HR person totake care of the HR processes would reduce the problems.SMEs largely require focusing on recruiting individuals withthe appropriate skills, using suitable evaluation proceduresthat verify the candidate’s expertise. The difficult task ofunderstanding the employees and leading and empoweringthem can be done effectively by the HR department. The HRwill contribute immensely to the growth of SMEs. They willprove to be an effective business partner. Hence it importantto have a HR professional to look into the HR processes of

the companies.

Bibliography :

Books

Ø K Aswathappa (2002), Human Resource and Personnel Management 3rd edition, Tata Mc Graw Publishing Company.

Ø VSP Rao and CB Mamoria (2012), Human Resource Management 30th edition, Himalaya Pblishing House.



Research Papers and Articles

Ø Krishna Kishore, Mousumi Majumdar, Vasanth Kiran (2012), Innovative HR Strategies for SMEs

Ø Pankaj M. Madhani, Amulya M. and D. Anand, Samuel Iteba Onchoke and S.B. Akas, (2012), SCMS Journal of Indian Management.

Ø Article by Ankita Agarwal, November 24, 2012, Future Of Human Resource Management.

Ø Bibhu Prasad Kar, Amalesh Sharma and Sourav Bikash Borah, 2011, Attrition in SME’s,

Websites

Ø Need and functions retrieved from http://smallbusiness.chron.com/ten-reasons-human-resources-department-important-25554.html

Ø Sector overview retrieved from http://www.ifc.org/wps/wcm/connect/


: Guidelines for Authors:

The Sansmaran Research Journal of invites the original Research Papers, Case Studies and Book Reviews from bothacademicians as well as practitioners on different issues related to both corporate and empirical library. Submittedmanuscripts will be peer reviewed. Double blind review system will take about three months and the Journal reservesthe right to make necessary editorial amendments in the final manuscript to suite Journal’s format. There is no submis-sion fee.

Submission Requirements :

v Submitted manuscripts must be original work that is not under submission at another journal or under consider-ation for publication in any other form. In case the authors have received financial/technical assistance forcompleting the manuscript, they should acknowledge the same in the manuscript so as to avoid conflicts ofownership.

v After submitting the manuscript, until the editorial decision is communicated or if the manuscript is accepted forpublication, without prior approval from the editor, authors cannot publish the manuscript in other publication.

v Maximum length of the manuscript should be between 4000-6000 words.

v Authors should send two electronic copies of the manuscript via e-mail attachment as a Microsoft Word docu-ment file at [email protected] .

v One file should contain Title Page which should provide the names of all the authors, their institutional affilia-tion, mailing address, e-mail id and Fax/telephone number.

v One separate page including title of the manuscript, an abstract of no more than 200 words followed by JELCodes and upto 6 Key Words should be included in both the files. Author’s identity or institutional affiliationshould not appear on this page.

v The text should be double spaced and should be typed in Times New Roman style with a font size of 12 pts and1 inch margin all around. Use standard indentation for paragraphs.

v Footnotes should appear at the bottom of the page on which they are cited/ referenced.

v Tables and Figures should be numbered in Roman Numerals and can appear either in the body of the manuscriptor at the end of the manuscript. Sources of data used in both tables and figures should be duly acknowledged asa footnote to the same. In case some abbreviations and acronyms are used in the tables and figures, these shouldbe duly described in the main body text of the manuscript where they have been cited/ referenced/ interpretedand well as in the footnotes of the table/ figure.

v A sampling of the most common entries in reference lists appears below. Please note that for journal articles,issue numbers are not included unless each issue in the volume begins with page one. Hence, it is The Journal ofFutures Markets, 24, 513–532, not The Journal of Futures Markets, 24(6), 513–532. Entries not exemplifiedbelow are modeled in the Publication Manual. Please note that italics are removed from references in the printedpublication (this is a departure from the Publication Manual style).


Introduction :

Today’s leaders may be educated, knowledgeable and

experienced but many are still struggling to keep theircompanies competitive in the current climate. Their expertiseand scientific methods will not help them to predict the future

in our modern, ambiguous, complex and ever-evolvingenvironment. In these challenging times of economic crisis,leaders will often exert caution, make careful, low risk

decisions and focus on cutting costs to keep their companyafloat. However, at a time when constant change has becomea way of life, there is also a realisation that these strategies

will not be effective in the long-term.

Steve Jobs once famously said: “The cure for Apple is notcost-cutting. The cure for Apple is to innovate its way out ofits current predicament”. And that is what leaders have to do:

innovate to find a way out of problems. Innovation has againbecome a buzz word in the business world. Proactiveorganisations have succeeded in a competitive environment.

It is up to leaders to promote the conditions for creativityand instil a culture of innovation in their organisations. Buthow should they do that?

Psychological constructs of creativity and innovation havebeen widely researched in the organisational context.

Creativity is associated with generating new ideas andconcepts by individuals, whereas innovation refers to theirsuccessful implementation in practice, often by groups or

IMPORTANCE OF EMOTIONAL INTELLIGENCE, CREATIVITY ANDINNOVATION IN VUCA ENVIRONMENT

Jharna PandyaSr. Manager - HR - Indoco Remedies Ltd., Alumni of GNIMS

ABSTRACT

Before the 21st century, emotions had no place in business. They were considered to be a forbidden topic in

business. Leaders were considered to be a Transactional Leaders i.e. task master and were only considered

with the work and there had no place for emotions in the business. With increase in globalisation, and

there was a change in motivational needs of employees, which brought about a revolutionary change in

the People orientation across the industry. In today’s scenario i.e. VUCA i.e. Volatile, Uncertain, Complexity

and Ambiguity environment leaders have recognised the importance of Emotional Intelligence (EI) for the

success of the organisation. A number of research studies have established relationship between Emotional

Intelligence, effective leadership, team success and employee performance. Instead, management is waking

up to the fact that their success is directly related to their ability to work productively with employee

emotions. They are realizing that emotions directly influence competitive advantage in today’s marketplace.

Keywords: Stress Relief, Innovation in HR

organisations. Therefore, all innovation starts with creativity.However, as they are both separate constructs, creativity andinnovation require different conditions in order toflourish.There are many research indicates that emotion

influences flexible, thorough and careful thinking, creativeproblem solving and decision making- all of which areelements of innovation (Isen, U of Stanford 2000).This paper

is to study how Emotional Intelligence of a Leader can fosterCreativity and Innovation.

Human Brain

As we all know our human brain is divided into two completeseparate hemispheres.Each hemisphere process information

differently.

A case study has been done by Fiona Graetz (2002) that

highlighted the relationship between the role, skills and levelof emotional intelligence of organizational leadersvis-à-

vis the capacity to stimulate and engender strategic thinking

within an organization.

It suggests that the elements of left-brain thinking reflectsthe planning side of strategy making (need for logic,analysis, attention to detail, focus on meeting deadlines,etc.), while right-brain thinking reflects the thinking(creative, inquisitive, intuitive, entrepreneurial)component of strategy making(Graetz et al., 1998; Graetz,

1996). To adequately meet the three criteria of creativity,


plausibility and consistency, balanced input is required fromboth left- and right-brain thinking styles. Emotionalintelligence clearly reflects a “whole-brained” approach to

thinking and behaving. A case study has been done by FionaGraetz (2002) that highlighted the relationship between therole, skills and level of emotional intelligence of

organizational leadersvis-à-vis the capacity to stimulate andengender strategic thinking within an organization.

It suggests that the elements of left-brain thinking reflectsthe planning side of strategy making (need for logic, analysis,attention to detail, focus on meeting deadlines, etc.), while

right-brain thinking reflects the thinking (creative,inquisitive, intuitive, entrepreneurial) component of strategymaking(Graetz et al., 1998; Graetz, 1996). To adequately

meet the three criteria of creativity, plausibility and consistency,balanced input is required from both left- and right-brainthinking styles. Emotional intelligence clearly reflects a “whole-

brained” approach to thinking and behaving.

In other words, an emotionally intelligent person who embodiesall these attributes is adept at drawing on the four differentquadrants of the brain depending on the demands of

situational context. Therefore, to nurture strategic thinkingcapabilities amongst organizational members, leaders must helpthem to develop emotional intelligence to enhance both left-

brain and right-brain thinking skills.

Emotional Intelligence

Emotional intelligence is defined as a person’s self-

awareness, self-confidence, self-control, commitment andintegrity, and a person’s ability to communicate, influence,initiate change and accept change (Goleman, 1998).

Emotional intelligence is the ability to identify, use,

understand, and manage ones emotions in positive andconstructive ways. It is about recognizing our own emotionalstate and the emotional states of others. Emotional

intelligence is also about engaging with others in ways thatdraw people to you.

Core abilities of Emotional Intelligence :

Emotional intelligence consists of the following coreabilities

1. Self-awareness : The ability to recognize your ownemotions and how they affect your thoughts and

behaviour, know your strengths and weaknesses, andhave self-confidence. In an article of “IntuitiveIntelligence” by Malcolm Cadwell he revealed that

what we perceive in the blink of an eye is as right aswe can find out after the month of the rational analysis.

This indicates that emotional brain needs to be fast indecision making process and summarising all theinformation from gut feelings.

2. Self-management : The ability to control impulsivefeelings and behaviours, manage your emotions in

healthy ways, take initiative, follow through oncommitments, and adapt to changing circumstances.

3. Social awareness: The ability to understand theemotions, needs, and concerns of other people, pick

up on emotional cues, feel comfortable socially, andrecognize the power dynamics in a group ororganization.

4. Relationship management : The ability to develop and

maintain good relationships, communicate clearly,inspire and influence others, work well in a team, andmanage Conflict.

Creativity and Innovation :

Creativity is one of the most precious asserts of modernbusiness life. On one hand art is seen as the purest form of

creativity by some and in the other hand innovation in scienceas most functional.

Creativity is defined as a psychological behaviour whichrequires an individual with an attitude and certain abilities tocombine some previous knowledge by following certain

process with an aim to produce an idea.

Innovation is the creation of better or more effective products,processes, services, technologies, or ideas that are acceptedby markets, governments, and society. In business and

economics, innovation is the catalyst to growth. In theorganizational context, innovation may be linked to positivechanges in efficiency, productivity, quality, competitiveness,

market share, and others. Innovation is what gives life to abusiness in a market economy. Innovation drives growth andopportunity in new markets and breathes life into a mature

industry.

Thus this indicates that there is a direct relationship betweenEmotional Intelligence and the ability to Innovate. There areseveral ways EI connects with Creativity and it is a complex

process. Emotional Intelligence can be applied to each andevery stage of Innovation

First focusing on Individual Creativity , the individual needsto recognize the creative challenge and immerse thyself inanything that might give relevant to the solution. This is an

example of good self-management.

After immersion, it is the unconscious parts of the brain thathave the widest networks of association, and that put novel

Importance of Emotional Intelligence, Creativity and Innovation in VUCA Environment


elements together in a new way to find a creative insight. Ittakes a combination of self-awareness and self-managementto switch off the immersion and its goal-focus and switch into

free association. It’s in that free floating state that many of ourbest ideas come to us, from the unconscious. That’s why somany great inspirations and insights have occurred while

people are doing something else – like showering or taking awalk etc. Once the individual get a creative insight that can beuseful, the final stage will be implementation.

That typically involves getting other people excited and onboard with your idea to follow it through. This means that

being able to communicate it forcefully and persuade –relationship and empathy skills – become important.

When it comes to teams, the group EI is very important forcreativity. People are most free to offer their most innovative

ideas and insights when there is an atmosphere of high trust. Ifthey are afraid of the dismissals, they keep their ideas tothemselves. Then there’s implementing the best ideas. That

takes a high level of collaboration and harmony, which helpany teams work at their best. And the key to these is team withhigh Emotional Intelligence. Thus higher the Emotional

Intelligence of the team higher is the trust levels.

Example : Google is an organisation which gives theiremployees self –direction . The culture of the organisationfosters each employee to work on individual projects by givingfree time.

Google believes creative means breaking a problem limit

working under orders of managers and by explore unchartedterritories. Once the creative idea is generated it is discussedand persuades to the team members with empathy .Thus

culture that can foster Creativity Innovation along withEmotional Intelligence of Leadership & Team which developshigh trust within the team plays a major role in an success of

the organisation.

Conclusion:

For any organisation to have a competitive advantage in the

VUCA environment need to inculcate the following:

1. Enabling Creativity :

For creativity to take place, an individual must feelappreciated, positive, safe, free from stress and threatsto their identity, knowing that their new ideas will be

appreciated not ridiculed. The job characteristics alsoinfluence levels of individual creativity and these are:skill variety and challenge, meaning and impact of the

task, freedom, autonomy in how to perform the joband feedback. And also should focus on motivationi.e .individuals need to be motivated to think creatively.

So this is the first tip for leaders wanting to promotethe conditions for creativity - it all starts with creatinga culture of respect with the right balance of support,

variety and challenge, in which individuals can createsafely and feel appreciated.

2. Enabling Innovation

To take advantage of the creative ideas of individuals,and to foster an organisational culture of innovation,there are four key areas on which leaders should

concentrate:

• Embrace diversity - Each of us has a naturaltendency to prefer, hire, notice, reward, developand trust people who are ‘like us’. This leads us

to ‘think alike’ (not creatively!). To truly fosterinnovation, a variety of differing perspectivesis needed: people with different backgrounds,

experiences, knowledge bases, skills, genders,ages, ethnicity, professional orientations andlevels within the organisation.Along with

diverse workforce it requires an appropriatemanaging and creating inclusive climate in whicheveryone can perform to their potential.

• Embrace the challenge and change - Change isoften seen as threatening. Many of us resist

change and we seek to protect ‘tried and tested’ways of doing things or we defend our ownpoints of view. Such attitudes lead to loss of

motivation, reduced morale, unnecessarycompetitiveness and a decrease inperformance.

• However, in today’s world, change is here to

stay. Relying on ‘tried and tested’ solutions isoften impossible. Innovation is a challenge andconstitutes a threat to the status quo because

implementing new ideas requires change.Therefore to foster innovation, leaders mustcreate a culture in which both challenge and

change are accepted as norms and sought after.

• Devote the time - Innovation will only happen

when people are explicitly given time and spaceto be innovative. We may want innovativesolutions but paradoxically we are often too

busy, hectic and pressurised to truly achievethem. Of course, some amount of pressure isnecessary for inn ovation, however in the long-

term, reflexivity (having the time to reflectupon objectives, strategies and processes) is



one of the key predictors of innovation andperformance in groups and individually. Thebenefit of allowing teams or individuals to

reflect on what they do is invaluable.

• Communicate openly - Communication is

vital at all levels and at all times, even whenthings are difficult. Innovation can only survivein the long-term in an environment where

communication is open, challenge is welcomeand processes are transparent.


3. Developing Emotional Intelligence in Employeesby creating awareness about the below mentionedsteps :

• Practice deep and focused listening whencommunicating with another employee.

Summarize and feed back what you think youheard the individual say to you. Ask questionsto identify emotions and feelings.

• Practice noticing body language or nonverbal

communication.

• Observe your own reactions to an employee’scommunication and focus on your ownemotions.


Innovations in HR

These days in all the public and private sectorscompanies there is a commitment of Innovation.

Innovation is more important in some industries, in othersit’s critical. Innovation in products, processes, maps,Information technology, HR has flooded the crowdedmarket places of the world. Each industry and everycompany has a unique definition of Innovation that has beenaltered to fit the company’s interest and strategic aims.

The question is - What is Innovation?

“Innovation is the process of problem solving those results

in new and better ideas,” says Debbie Delaney. Asking forinput from employees and rewarding the most creative answerwith praise will encourage innovation on a personal level. Once the desired atmosphere has been established, employeeswill naturally offer creative solutions and recommendations. In regards to innovation, HR has two goals: become innovativeitself to achieve its’ department’s specific goals and fosterinnovation in the company at large to help create a desiredcorporate culture. HR professionals across the globe are usinginnovative tools like “Spiritual Quotient “to win over theemerging challenges of the organizations.

In the end, innovation is a comparative term. Only being

SPIRITUAL QUOTIENT AN INNOVATIVE HR ASSET TO WIN THEEMERGING CHALLENGES OF ORGANIZATIONS

Amrit ParmarPhd Scholar, JJTU

Abstract :

The results of most researches in the field of application of Spiritual Quotient in management prove that

this behavior of an employee or an employer is due to lack of understanding of personal sense in life andthe meaning of work in their life cycle. The study focuses on the main objective for both the employee and

the employer, how to make the situation comfortable for each other by using the Spiritual Quotient as anHR asset at the right moment of work station challenge.

Spiritual Quotient makes it possible for human beings to do creative, insightful, rule-making or breaking

thinking. It is known as spiritual intelligence and it is a combination of “Intelligence Quotient “and“Emotional Quotient”. Intelligence Quotient (IQ) primarily solves logical problems. Emotional Quotient

(EQ) allows us to judge the situation and behave appropriately. But both together are not able to explainthe full complexity of human intelligence & imagination. So, the question arises, how does Spiritual

Intelligence empowers today’s leaders to sustain and survive their companies in the challenging world ofthe 21st Century.

In the early part of the 20th century, IQ became a big issue, the measuring of our “Intelligence Quotient”

and in mid 90’s Daniel Goleman took the research of neuroscientists and psychologists and popularizedthe notion of another quotient to think spiritually and today if all the organizations are reaching to a level

in the market it is because of using the desired spiritual quotient at the right time. Companies cannot workefficiently without the SQ of the employees. And the level of SQ cannot be achieved without the blend of

Emotional Quotient (EQ) and Intelligent Quotient (IQ),

This paper will create an awareness and deep realization of the importance and impact of SpiritualIntelligence as the need of the hour. Recent thinking about leadership has taken us into the spiritual

dimension of life and work. The objectives of the paper are built up on the same line. They are: to understandthe different dimensions of Spiritual Quotient, to evaluate how Spiritual Quotient can be a better tool to

manage/lead the people effectively and to analyse the relevance of SQ to sustenance and survival of

companies in the new world order. The research is based upon the secondary sources.

Keywords: Spiritual Quotient, Emotional and Intelligence Quotient, Spiritual Intelligence, Relevance of SpiritualIntelligence.


innovative is not enough, for you to be more innovative. “Thegoal is thinking outside the box, doing something better thansomeone else in business, and high responsiveness to thedemands of the market,” says Alsen Hsien President of Take5 People a Human Resources solutions provider. Microsoftmarketed the tablet far before Apple unveiled the iPad. However, Apple’s creative interface and marketing approachgave the edge to the iPad over their competitor’s early entryinto the market place.

Similarly in Human Resource departments also these daysthere is a dedicated commitment of spiritual innovation andthat is nothing but a kind of quotient which makes it possiblefor human beings to do creative, insightful, rule-making orbreaking thinking. It is known as spiritual intelligence and canalso be called as Spiritual Quotient. Intelligence Quotient (IQ)primarily solves logical problems. Emotional Quotient (EQ)allows judging the situation and behaving appropriately. Butthey together are not able to explain the full complexity ofhuman intelligence & imagination.

Should HR be really innovative!!!

It is possible for HR to be innovative on its’ own. For example:holding special low-cost events or internal competitions toincrease worker satisfaction. However, the wiser use of HR isin conjunction with the goals of strategic management. “HRshould be considered a strategic business partner, not anindependent business unit,” says Delaney. HR is only onepart of a company’s corporate culture. While HR is a greatplace to start, cooperation between departments is necessary. For example, one company holds handlebar races at adesignated time. You can imagine the confusion if HR did notclear the event with the other departments! Workflow andproductivity would grind to a halt without as much as awarning!

An HR is the sole authority who has to use his emotionsalong with his intelligence to reach to a spiritual level beforetaking final decisions in the organization.

Developing an innovative atmosphere can come at the expenseof other elements of a company in the short and long term. The corporate benefits must be clearly developed and targetedto justify the costs of developing an innovative atmosphere.Weighing the potential benefits is critical when consideringthe importance of innovation. “HR should work with the largerbusiness to make a plan around specific needs”, says AllenWang Senior Consultant of HR division with Robert Walters. Now it is the company culture which instigates you to thinkspiritually and use this innovative tool to overcome thechallenges or sometimes even if the culture does not permityou to think rationally still you have to use this HR TOOL-

”SPIRITUAL QUOTIENT” to take care of the minutes and toearn the hours.

To become a truly innovative company, a drastic shift incompany culture is required. A targeted and strategic shift isimpossible to achieve if HR is thinking and acting alone. Anyinitiative must start at the top with long term goals in mind. Once top management agrees that innovation is important tothe long term goals of the company, HR can work withmanagement.

The Importance of Innovation

Innovation is an approach to problem solving that can helpyou and your company gain an edge in the marketplace. Simplyput innovation is important in all industries to varying degrees. HR can both foster innovation and be innovative in its approachto problem solving situations.

Hence after discussing a lot on innovation, though not everyaspect of HR but the article will enlighten us on SpiritualQuotient as an innovative HR ASSET to face the emergingchallenges of organizations.

Introduction :

We spend most of our active life at the “workplace”. Howmany of us think in a positive way to spend this time in a wayto derive comfort and satisfaction in our lives. We getchallenges in life every moment, how many of us take thechallenges in a smooth way and use the right kind of quotientat the spur of the moment to buy the time and move forward.As per Daniel Goleman yes we have to use our EmotionalQuotient as rightly said by him”. Emotional Intelligence is theunderlying premise for all management training”. More andmore companies are seeing that encouraging emotionalintelligence skills is a vital component of any organization’smanagement philosophy. You don’t compete with oneemployee alone but how well you use your people to achievethe target and stand one among all. An emotional competenceis a learned capability based on emotional intelligence thatresults in outstanding decision making at work place.

Many organizations emphasize on the importance of itsemployees and consider them as their most important asset. Inorder to gain the motivation and commitment of employeestowards organization, the organization has to nurture the mind,body, and soul of its employees. People’s spiritual needs areoften the elements that are overlooked. But recently thereappears to be a growing international trend that focuses onthis area at work.

In increasingly competitive times, where customer demandsare high, where the global marketplace is rapidly expanding,and where change appeared to be the only constant, many

Spritual Quotient An Innovative HR asset to win the Emerging Challenges of Organizations


organizations are, emphasizing the importance of itsemployees. These organizations believe in “Our people areour most important asset . But what is meant in these phrasesby the term “people ? Considering people as a whole or is itjust referred to their emotional, rational intelligence, theirskills likewise. Are organizations looking forward to peoplewho can be loaded with requisite information and canaccordingly take the decision or people who can blend theirexperience, intelligence and add value of spirituality in takingthe decisions and can be an example? According to Watkins,some organizations were beginning to emphasize moreexplicitly the value of the whole person. What seemeddifferent about this emphasis was its focus on the spiritualdimension.

Are organizations really looking forward to people who canbe the jewel stone for this organization tomorrow or how manyorganizations are really using their Spiritual Quotient whiletaking any final decision for either an employee or employeefor himself?

Spiritual Quotient as an HR innovation:

Spiritual Quotient is described as a measure that looks at aperson’s spiritual intelligence.

Spirituality was not an element that was regularly mentionedin many organizations but Neal suggested there was now agrowing interest in applying spirituality in the workplace. Outof the mist and chaos, was there an important new imperative;for organizations. Many commentators certainly indicated thata growth of interest in the spiritual dimension was taking place.This seemed to be international and involved many differentsectors including Social Work (Sheridan and Hemert), Health(White), Business (Asmos and Duchon), Management (Belland Taylor), Psychology (Assagioli), and Adult Learning(White). To evidence this recent growth, Kale and Shrivastavahad estimated that between 1999 and 2001 there had beenover 200 articles in management journals on spirituality. Theyhad also said that the Boston Globe in America had recentlyindicated a huge upsurge in the number of books on spiritualityin the workplace, which they equated to a $2.2 billion market.There were reports of hosts of companies incorporatingspiritual practices into their operations (see Bell and Taylor,Lamont, Davidson and Guillory. A report by Roffey Park –“The Management Agenda - found that 62% of UK publicsector workers now said that they would be interested indiscussing spirituality in the workplace. The first InternationalConferences on Organizational Spirituality took place in GreatBritain in 2002, and over 200 delegates attended. The Academyof Management, made up of 6,000 professors from around theworld, had approved spirituality in the workplace as an area ofbusiness study. Modules concerned with spirituality in the

workplace now formed part of postgraduate programmes andwere being considered on MBAs at various universities inthe UK. The key idea here is that people need to have meaningand value in their life and work, for example doing somethingthat makes a positive difference to other people’s well-being.Meaning and value depend very much on the beliefs and valuesthat underlie our motives, which in turn drive our behavior.“So, the deepest level of intelligence is Spiritual Intelligence(SQ) which has nothing to do with religion or any rigid beliefsystem. SQ is a process of personal insight and experience,not a package of beliefs.

SQ and its Significance at Workplace

Spiritual Quotient:

Spiritual Quotient(SQ) is described as a measure that looks ata person’s spiritual intelligence in the same way as intelligencequotient(IQ) looks at cognitive intelligence.IQ and EQ are theintegral part of Spiritual Quotient (SQ).Spiritual Intelligence isnot necessarily related to religion. According to Zohar,spiritual intelligence is about the human need and talent forfinding meaning in experience’s cannot be measured andquantified whereas EQ & IQ may be assessed. These days SQis considered as the main HR tool required as the highestgrowing need in the mankind. The authors contend that it isthe SQ of a person that set them apart from both machines andanimals. According to them SQ is about creativity andcompassion, self awareness and self esteem, flexibility andgratitude. Thus what was once espoused by the greatphilosophers of the likes of Swami Vivekananda are once againbeing exhorted as the valuable asset in organizations.

In the year 1990’s, Daniel Goleman discovered the findings inneuroscience and psychology based on importance ofEmotional Quotient (EQ) an ability to respond skillfully topleasure and pain keeping in mind the feelings of others andhimself. Daniel Goleman argued that EQ is the basic requirementfor proper use of IQ and argued that if the areas of our brainthat feel the emotions are damaged, the decisive thinking abilitywill be affected adversely.

In their book Spiritual Intelligence-The ultimate Intelligence,Zohar and Marshall discussed the scientific evidence for SQ.In the 1990’s, research by neuropsychologist Micheal Persingerand neurologist V. S. Ramchandran at the university ofCalifornia led to an identification of a “GOD SPOT” in thehuman brain. This idea is located among neural connectionsin the temporal lobes of the brain. During scans with positronemission topography, these neural areas light up wheneverresearch subjects are exposed to discussion of Spiritual topics.This is culture specific, with everyone responding to ideas ofGod and Buddhists and Hindus responding to certain symbols



.While the God spot does not prove the existence of God,but it does indicate that the brain is programmed to takeultimate questions from within and reach to a level of rationaldecisions.

We use spiritual intelligence to transform ourselves andothers, heal relationship, cope with grief, face the difficulttasks at difficult times, and move forward beyond conditionedhabits of the past. To develop high SQ, each person needs toapproach the task according to his/her personality.

Eight signs of high SQ

• Flexibility

• Self awareness

• An ability to face and use suffering

• An ability to be inspired by a vision

• An ability to see connections between diverse things

• A desire and capacity to cause as little harm as possible

• Tendency to probe and ask fundamental questions

• An ability to work against convention.

Advantages of Spiritual Quotient( SQ)

Tension free life, self awareness, support of and to society,less depression and self confidence

Spiritual Quotient is the study of social, investigative, artistic,realistic, contract and conventional aspect of the personalityto assess how balanced a person can be. Nowadays scholarsclaim that Spiritual Quotient is the ultimate intelligence of thehuman being and claim that this intelligence of human being isused to solve the ultimate problems be it in the personnel lifeor in organizations. So Spiritual Quotient is the ability to makevalue based decisions.

In the words of Mr. Ram Mohan, a Vedanta teacher, IQ and EQare inadequate in such issues.”Spiritual Intelligence” is aboutthe growth of human being. It is about moving forward in life,about having a direction in life, and being able to heal ourselvesduring the crisis and of all the resentment we carry.

Humans are essentially spiritual beings, they are evolved toquestion their own purpose/existence with questions like“Who am I”? and Spiritual Quotient is the ability to answersuch questions which leads to the personal growth of a person.“Spiritual Intelligence” motivates people to balance their workschedules. Spiritual Intelligence is a person’s capacity to (i)Acquire knowledge (i,e. learn and understand). (ii) Applyknowledge (solve problems) and (iii) Engage in abstractreasoning. It is the power of one’s intellect, and as such isclearly a very important asset of HR in the organizations to

accept the challenges positively, reasonably and overcomesuch crisis by right decisive ability.

Difference between SQ,EQ and IQ

The distinction made is that IQ and EQ explain extraordinaryevents by the terms”coincidence”,chance,accident which arethought as spontaneous chaos.SQ on the other hand, sees

these kinds of events as requiring a more subtle degree ofattention, assuming that they are planned by an infiniteconsciousness.

According to standard theory of emotions, emotions ofcreatures are natural, they are genetic, hormonal andinstinctive in nature Spiritual Quotient aims to encouragepeople to find ways of sensing channels of inspiration floatingin the universe.

Spiritual Quotient is totally different from IQ and EQ.

IQ solves logical problems, EQ allows us to judge thesituation and behave accordingly with the balanced emotions.while Spiritual Quotient asks whether this is worth being inthat situation’s has little connection to formal religion. Inorganizations these days all the decision making people shouldhave a strong Spiritual Quotient.

Zohar AND Marshall (2000) created the term Spiritualintelligence. The term derived from the Latin word “wind orbreathe “This is literally a wind which is blowing through us,the principle that literally makes us alive and humane. SpiritualIntelligence is the access to and use of meaning, vision andvalue in the way that we think and the decision that we make.It is the intelligence that makes us whole, that gives us ourintegrity, it is the soul’s intelligence, the intelligence of deepself, with which we ask fundamental questions and with which



we reframe our answers.Donah Zohar and Ion Marshall says,“While computers have IQ and animals can have EQ,it isessentially an SQ that sets human beings apart.

The great Bhagvad Geeta has provided several ways to enablea person to grow his or her “Spiritual Quotient “because Egois one of the obstacle standing one’s spiritual progress andadvancement in life. The issues related to Ego have to behandled with maturity by learning to limit it..That is why allour scriptures including Bhagvad Geeta have attributed thecause of most of the problems to this one single factor,I,e.Egoand therefore Geeta says to concentrate on the big “I”i,e.thehuman body related things only.

Practical Application of Spiritual Quotient at the Workplace

Kalhil Gibran, one of the best known poet philosophers of the19th century said, “Work is love made visible”, little did heknow he was foreseeing a time when spirituality would meetbusiness, and spiritual intelligence would find its way into theworkplace and onto the curriculum of the modern manager.

Mike George explains why a new kind of intelligence can makea difference to the way we manage work problems and leadothers. In an age where speed is the modern God, where manyorganizations are, by necessity, almost continuously renewingthem, and where choice, compulsion and flexibility rule in ahealthy job market, it seems a new and deeper intelligence isnecessary to help a manager manage better and a leader leadmore effectively.

The three conditions of spiritual intelligence or “SpiritualQuotient” at work

To the cynic who tends to see work only as a functionalprocess and the workplace as a place just to ‘get the job’done, spiritual intelligence is unlikely to register on their radar.To the more enlightened manager/leader who seeks to generatea cohesive team and release the deepest potential of eachindividual, it makes perfect sense. They know the true meaningof love in a workplace context is the energy of enthusiasm thatlives in the heart of every human being, but they also knowthat this energy only starts to flow into the process of ‘doing’when three conditions are satisfied – creativity, meaning andpurpose. Without the opportunity to be creative, and domeaningful actions towards a worthy and purposeful cause,the human spirit will not flow whole heartedly into and throughwhat the human body does.

The challenge to any manager/leader is to provide peoplewith the opportunity to participate in a creative process, showthem how they can make their work more meaningful andensure the purpose is clear and worthwhile.

Creativity, meaning and purpose are the three deepestmotivators for every human being. They are not psychological

or emotional processes, they abide in the territory of thehuman spirit, and they are the foundation of working withspiritual intelligence.. However these three characteristicsof a vibrant workplace are seldom found in reality. Why? Onesingle factor. The ego. It is the ego that blocks all formsof change, development and improvement at all levelswithin individuals, teams and organizations. It is the egothat suppresses enthusiasm, undermines positivity andpoisons interpersonal relationships with cynicism. Whilesome psychologies and many people believe the ego is avital driver of motivation, and therefore a source ofpassionate performance, spiritual intelligence revealsit to be the one and only enemy, the seed of all obstaclesto progress and the cause of all visible and invisibleconflict between people.

Built into the personal development of spiritualintelligence is the ability to kill the ego before it killscreativity, destroys meaning, distorts purpose andsabotages relationships.

In the meantime what does this new and yet ancientintelligence looks like in action.

Spiritual intelligence on the other hand, is necessary:

• to find and utilize the deepest inner resources fromwhich comes the capacity to care and the power totolerate and adapt

• to develop a clear and stable sense of identity as anindividual in the context of shifting workplacerelationships

• to be able to discern the real meaning of events andcircumstances, and be able to make work meaningful

• to identify and align personal values with a clear senseof purpose

• to live those vales without compromise and therebydemonstrate integrity by example

• to understand where and how each of the above issabotaged by the ego, which means being able tounderstand and influence ‘true cause’

Some of the outcomes of the development and practice ofspiritual intelligence include an ability to stay calm and focusedin the face of crisis and chaos, a more selfless and altruisticattitude towards others and more enlightened and relaxedperspective on life.

While many people think there is nothing spiritual about workand the workplace, there are many areas of working life inwhich spiritual intelligence can be applied. These are perhapsthree of the most important:



• Self awareness and personal effectiveness

• Managing Change and eliminating hurdles

• Interpersonal Understanding and developingrelationship

Self awareness and personal effectiveness

Self-awareness is the core competency of spiritualintelligence. Unfortunately it is never formally taught so wetend to learn it by accident, and even then to a shallow andsuperficial level. Most of us learn to believe we are onlyphysical/material beings, that life is a physical/materialexperience, hence the obsession with faces, forms, functionsand facts. It naturally follows that we believe our security isdependent on the physical/material components of life(money, property, objects etc) which, in turn, depend on ourjob. In fact, this material mindset creates feelings ofinsecurity, as everyone knows that job/money/property/thingsall come and go, and we have little or no control over whenthey do. This insecurity generates fear, otherwise known asstress, which then effects performance at work andrelationships within the workplace.

Managing change and eliminating hurdles

Resistance to change emerges through behaviors such ascontrolling, complaining, criticizing, withdrawing, denying,withholding and many others. The emotional content ofresistant behaviors is always fear and/or anger. Even whenthe changes are rationally understood to be good, some peoplestill create feelings of fear or resentment. Why? Attachment toa comfort zone, therefore an external dependency on the waythings is. All attachment is grounded in EGO. The ego is alwaysthe one and only barrier to positive change. The deepest ‘innerpattern’ within the consciousness of every human is to attachto something and identify with the object of attachment. The‘object’ can be a thing, an idea/belief or just a set of currentcircumstances. Then, when something happens to the ‘object’it feels like it is happening to the self (which of course it isnot). This is the deepest level to which spiritual intelligencecan see. When someone has learned to see and understandthis very invisible and intangible inner mistake, they can thenhelp others to see it and not make the same mistake. Thisliberates the self from fear and anger, which is stress at anemotional level, thus restoring full effectiveness in relation tothe task, and the process of working with others.

Interpersonal understanding and developing relationship

One of the foundations for healthy relationships is empathy.The building of an empathic relationship is difficult for manymanagers as it challenges them to reach beyond the facts andfunctions of a task, and into the feelings and emotions of the

person carrying out the task. In a culture which is largelytask focused, it is only in the last 10 to 15 years thatrelationship building has been perceived as an increasinglyimportant part of a managers remit. In what is now a muchmore fluid job market, where more and more peopleacknowledge that they don’t leave the organization, they leavetheir manager, retaining staff is one of many reasons whymodern managers need to understand others at a deeper level.Being able to recognize, understand and respond to theemotions of others requires a level of emotional literacywhich can only be developed by learning to recognize onesown feelings and emotions (self awareness again). This fallssquarely in the arena of emotional intelligence. However thereis another layer below, which is the ‘cause’ of the emotions.We tend to learn that the cause of our feelings and emotionsare external events and other people’s actions. But they arenot. All emotions are caused by the self. Seeing the originalcause, and understanding what it means, is the territory ofspiritual intelligence.

“SAICHEN GLACIER” CASE OF INDIAN ARMY

We salute the spirit and the guts of the Indian Army Jawansmanning the highest battlefield in the world under extremelyharsh conditions. It is a well known fact that if Siachen Glacieris vacated by the army, Pakistan will move to these positions,just as they did in Kargil (1999), and the Indian Army will facea Herculean task in reclaiming these positions again. Thequestion of strategic importance of this glacier is no meaningto some, but vacating this glacier will surely allow Pakistanand China to link up and create havoc on India. India’s NationalSecurity begins here and should not be compromised at anycost. To the Jawans in Siachen and their commanding officers,keep up your spirits and guts. Jai Hind......!

The incredible story of how Col. Narendra Kumar secured theSiachen Glacier for India.

October 12, 2009 at 10:13pm.

In the army, they knew him as ‘Bull’ Kumar, awed as his mateswere by the strength of his thick, muscular neck. Col NarendraKumar earned this sobriquet at the National Defence Academy,then in Dehradun, during the first boxing match he fought. Hisrival was a senior cadet, S.F. Rodrigues, who went on to becomethe chief of army staff. Col Kumar lost the bout, but the ‘Bull’epithet stuck.

Since then, Col Kumar has done everything in his long militarycareer to justify the name his colleagues gave him. Like thebull, he loved a challenge, sniffs it even before others can seeit, and goes at it in a single-minded pursuit, indifferent toconsequences, full tilt, tail up. It was these qualities of his thatensured the Siachen glacier became an integral part of India.



The heroic story of Col Kumar dates to 1978, when he tooka major expedition to the inhospitable glacier. This was sixyears before India launched Operation Meghdoot to thwartPakistan’s designs on the Siachen glacier. He knew themountains well, commissioned as he had been into theKumaon Regiment and consequently having spent the betterpart of his military career surrounded by troops born andbred in the rugged hills of Kumaon. Yet glaciers aren’t juststunningly beautiful mountains cape: they can numb, daze andkill you. Col Kumar knew he was heading into unchartedterritory. “This was the first major expedition into theunknown,” reminiscing about it in his flat in Delhi.

What Kumar and his team planned was to reach the glacier’ssnout, its lowest point, where the ice melts into water, andthen trek up the 77 km of treacherous crevasses, mountains,passes and snow-covered peaks to reach the source. Thecolonel knew the stakes were high, that this mission coulddecide the future of India’s strategic outreach and establish acritical wedge between Pakistan-Occupied Kashmir and theswathe of Indian Territory the Chinese had occupied in theaftermath of 1962. “Our equipment wasn’t the best, we didn’thave any maps,” he recalls. “We were going in blind and all wehad was a rough idea of the peaks which had been named bythe British decades ago.”

Bound to each other by thick ropes, trekking across the harshterrain for weeks on end, Col Kumar became the first Indian toclimb the Sia Kangri peak, which offers a majestic view of theSiachen glacier. But there was also a surprise awaiting theteam-a Japanese mountain expedition facilitated by the Pakistanmilitary had a presence there. After a “sit-rep” (situationalreport) was dispatched to the army headquarters, the teamwent from peak to peak, staying ahead of snow avalanches tochart the area. Bull Kumar led other expeditions till 1984, losingfour toes to frostbite. His sacrifice wasn’t to go waste.

Cut to 1984: intelligence information convinced the armyheadquarters that the Pakistanis were planning to militarilyoccupy Siachen and the heights of the nearby Saltoro ridge. Ateam from the Indian army’s elite Ladakh Scouts had sighted aPakistani Special Forces unit from the sag in the Siachen area.This prompted the area army headquarters to immediately drawup plans for a major operation in the summer of 1984. Thefourth battalion of the Kumaon Regiment was assembled andequipped for Operation Meghdoot, which had as its bulwarkKumar’s maps, films and his knowledge of the area.

On April 13, 1984, Operation Meghdoot finally got under way.Air force choppers began to drop soldiers at Billfold La whichis today part of the Siachen Base Camp. For the first time inhistory, India had stamped its claim on the Siachen glacier.The sturdy Kumaonis then trekked up the glacier to secure

the two major passes-the Sia La and Gyong La-even as thePakistanis were scrambling their troops into the region. TheKumaonis moved up the Saltoro ridge, overlooking theapproach from Pakistan-occupied Kashmir, and Sia Kangrito establish posts that would give India the command of theglacier. With hands veritably frozen around their 7.62 mmrifles, Indian troops battled the elements to establish amilitary foothold in what would become the world’s highestbattlefield.

“At times, you face impossible choices on the glacier. Wealways moved in pairs, bound to each other by rope. At onepoint, my buddy fell into a crevasse. For 45 minutes, I grappledwith the idea of dying with him or cutting him loose and savingmy life or to hang with him till the cold killed us both. I am gladthat I never cut the rope.” In those 45 minutes, the buddycrawled up, the duo living to continue their foray from peak topeak. Such was the team spirit imbibed by the rigorous trainingin the Indian army.

To the west of the glacier were hostile Pakistani troops; on theeast and to the north stood the Chinese. Had Col Kumar beengiven a clearance, he’d perhaps have climbed the K2 peak inthe Karakoram ranges as well. But to reach K2, he’d have hadto traverse the Shaksgam valley, which the Pakistanis hadillegally ceded to China. So, India halted its advance onreaching the northernmost tip of the glacier, settling in on itsfrozen waste.

As Indian troops established more posts, a key base on theglacier was named Kumar Base: perhaps the only living Indianarmy officer to enjoy this singular honor. Thus India’s claim toSiachen was confirmed.

These incredible feats exhibited by Col Kumar cannot beachieved only through the intelligent quotient or the emotionalquotient of dying or the country, but an inner surge to reachthe epitome of spirituality by giving more for a wider cause &service for the country.

Conclusion

To conclude with Spiritual Quotient is the spectrum againstagainst which we assess the usefulness of one life path or theneed to change the particular direction one’s actions are takingas Johar and Marshall asserted that Spiritual Quotient is thebasis for emotional and rational intelligence. The concept ofSpiritual Intelligence is a journey that may not be achieved alla once. Consequently there are some individuals who may bemore advanced in their spiritual path than others. Spiritualgrowth is a faster growth for employees in theorganisations.Cultivating Spiritual Quotient involves makingan inventory by making conscious efforts about actions andthoughts that will further one’s spirituality.Zohar and Marshall



claimed that spiritual intelligence is cultivated through thesoul and not the brain. Spiritual Quotient can heal one’swounds and complete a person’s being. Spiritual Intelligencesurpasses the conscious mind and goes byond the EGO asexplained in Bhagwad Geeta.This sort of intelligence is notat all bothered or nothing to do with what society is talkingand dictating, instead it advocates tapping into our intuitionand our deep sense of meaning for our further learning and

References :

• http://businesscool.eu/2013/01/practical-application-of-spiritual-intelligence-in-the-workplace/networkhr.com/issue/35-strategy-innovation-in-hr-the-Vol.2 Issue 1, January 2012, ISSN 2249 8834 Online available at http://zenithresearch.org.in profitability-of-creativity/ Posted: January 24th, 2013 Ñ Filled under: Articles, Mike George Ñ 11 Comments by Brice Cantrell, May 2012

• Source: unloveablesteve @ Flicker

• S p i r i t u a l r o l e h t t p s : / / w w w . f a c e b o o k . c o m / p h o t o . p h p ? f b i d = 1 8 3 1 7 4 7 8 8 4 2 5 4 7 5 & s e t = a .183174785092142.46017.183173995092221 & type = 1 & theater of Indian Army in Siachen Glacier

growth.

There are evidences that workplace used “Spiritual Quotient”not only lead beneficial personal outcomes such as increasedpositive human health , mental peace and psychological wellbeing but it also deliver employee commitment, productivityand reduced absenteeism and make ready an employee to takeoff the plane of EMERGING CHALLANGES with this HRinnovative wings...SQ = EQ + IQ.


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Introduction :

Information Technology opens up the whole world ofknowledge and allows teaching and learning to take placebeyond traditional boundaries and resources of the school

and libraries . The information technology has two aspectsof retrieving correct information and able to disseminateto the right person and this is the information age

paradigm shift that has attached the concept of Libraryand Information Science . Libraries are the effectivetools in disseminating knowledge . It too has seen a

fundamental shift in the concept , manner and method bywhich the information managers deliver their sourcesand this is the practice of Learning , which has the

purpose of teaching , training and learning .

Technological advances have changed the way librariansand its staff , students ,educaters can learn and teach inthis new environment . E. Learning today can be complete

on-line degree programs or it can be continuing Learningclass . It can include face to face interaction or be doneentirely at a distance . E-Learning is an effective way to

acquire knowledge quickly to compete in the knowledgebased economy .

IMPACT OF E-LEARNING IN LIBRARY : AN OVERVIEW

Kuljeet KaurLibrary Manager, Guru Nanak Institute of Managment Studies, Mumbai - 400 019. [email protected]

Mr. Dinesh A SanadiLibrarian, St. Joseph College of Arts & Commerce, Thane

Dr. A. GanesanDirector, Library, PRIST UNIVERSITY, Vallam, District Thanjavur, Tamil Nadu - 613 403.

Dr. Daya SridharLibrarian, S.I.W.S. Wadala, Mumbai

ABSTRACT

During the last few years it has been seen , an almost exponential development and growth of the

digitalization , automation and the internet in the use of online communication for E-Learning by theuse of computer networks, multimedia , virtual classrooms etc. It provides faster learning at reduced

costs, increased access to learning and clear accountability for all participants in the learningprocess . E-Learning or Online Learning with its particular and unique features impregnates new

energy to Learning development especially the continuing Learning for LIS staff. This paper covers

the issues of developing E-Learning among the users of Library .

Keywords: E –Learning , web-based Learning , digitalization , LIS Staff

Meaning of E- Learning

E-Learning term covering the wide range of applicationsand processes such as web based Learning, computerbased Learning and virtual classrooms and it is basically

the online delivery of information , communication ,training and learning via internet, intranet, LAN/WAN, audio-video tapes, satellite broadcast or CD ROM etc. E-Learning

provides faster learning at reduced costs, increased accessto learning and clear accountability for al the users inthe learning process .

Need for E-Learning :Due to the social technological and economicaltransformation , Learning has become an important aspectof learning as globlisation encompasses local economies

like never before the development of a skilled workforced becomes an international concern .

E-Learning can introduce new paradigms that both enrichand improve the accessibility of Learning . The emergence

of online Learning is not only a matter of economic andsocial change but also of access . It promises openLearning for everyone irrespective of geographical

location or commitment , otherwise excluded moretraditional methods of learning . It offers us potentially


less expensive ,more convenient and richer ways ofbecoming educated and of coming into contact withmore diverse groups of fellow learns than ever before .

E-Learning and Library

Application of e-Learning to the libraries will be treatedby the most of the libraries as a threat to them and their

profession . But on the contrary it is not the end of theprofession but widening the profession . Traditionalknowledge organization techniques such as classification

and cataloguing are no longer effective and useful fordisseminating of information , on the other hand, thelibraries are in track with latest development and

applications of information technology skills are gettingmore importance . Hence it is need for the library andinformation professionals should reorient their skills .

Library and Information professional will have to beclosely associated with the networks and also becontributing information to network or number of

networks . E- Learning has revolutionized democratizedthe delivery and accessibility of Learning and has alsochanged how critical support services such as library and

information services are provided .

As far as E-Learning system is concerned some majorcomponents of it is Broad band technology , LatestSoftware tools , Scalable highly reliable servers , Webbased virtual Library , digital library etc. Digitalisation of

library takes place only by the concept of E-Learningsystem through internet . The internet not only providesE-Learning where questions are answered by the users ,

it also gives an enormous scope for discussions, exchangeof views , resulting into multidimentional research onthe subject .

Many libraries are in process of delivering the

information services and resources through the onlinechat rooms , email services , reference servicesteleconferencing and toll free number . Users at remoe

site must get the information resources supporting theirlearning computer services should be extended wuth fulltext document delivery . In a step ahead the E-Learning

the library can set up the Digital library which breaks allthe barriers of data transfer and large amount ofinformation in various forms i.e. text , audio , video

,graphic materials .

In the distance Learning programme learner can useforms to make research queries electronically . Referenceservices on the internet is going more popularily .

Reference Librarian with the help of internet can provideboth short range and long range information services

like Frequentallyasked questions,t o p i c a l

i n f o r m a t i o npages whethersubject ortopic

oriented, classspecific orgeneral in nature

can provideusers withinformation on

24 hours a day .There is one orthe other form

of network orcooperation isexisting in the form of associations or consortia such as

DELNET, CALIBNET, INFLIBNET etc. The effectiveelectronic transmissions of document demand helpsquicker inter library loans and information services .

Conclusion

E-Learning is not entirely new concepts but has grownas the WWW has developed in each country . In E-

Learning process the future libraries will emerge asactive bridge between the learners and information . E-Learning supported by Digital Library is very much

significant and critical in higher Learning and research .The Librarian can help in creating and developingrepositories and content management . Based on the

increased improvement in the technology driven libraryservices future of E-Learning is quite optimistic . E-Learning is here to stay and the success of it is critical

since it will decide how another communication revolutionin the form of satellite providers will impact Learning.

References

1. http:/mit.edu/

2. E-Learning for Libraries , Edith Salz , (1998)

3. www.intranetjournal.com/articles

4. Changing the paradigm: libraries, Learning and

networking , Alan Bundy ,(2003) .

5. www.presidentofindia.nic.in

E-Learning System

Web, HTML, HTTP

Internet, Chat Server, Net Meeting

Broadband Technology ,

VSAT , WAN, LAN etc.

Digital Library, Virtual Library

Distance Learning

E-Journals

E-Books

Search Engine

Websites

Staff-Training & Development

Users Learning, Web based OPAC, DDS etc.

Impact of E-Learning in Library : An Overview


1. Introduction

Indian banking industry has metamorphosed in the last twoand a half decades thanks to the economic and banking sectorreforms of the 1990s and developments in information and

communication technology. Alongside increase in branchbanking, networking on core banking platforms helped banksto provide banking services seamlessly across the country.

Leveraging ICT, banks are able to provide multiple alternatebanking delivery channels.

Plastic cards have made the wallet thinner with virtual cashin the pocket. Internet banking customers are a click away

from their accounts. Technology induction and newtechnology based channels have helped banks to reducetransaction costs simultaneously enhancing customer

service. Customers no longer need queue up in branchesfor banking services. They can do so using the alternatechannels available to them without being restricted to the

business hours of the bank.

With the advent of alternate channels such as ATMs, internet

banking, phone banking, mobile banking, multifunction kiosk,point of sale, etc. many new avenues are available forcustomers. ATMs have replaced bank tellers, thereby

considerably enhancing customer convenience inasmuch ascustomers can withdraw money anytime, anywhere. Withmore than 1 lac networked ATMs across the country, banking

services have come closer to the customers. On-line bankinghas ushered in virtual banking. Customers can easily accesstheir accounts in the comfort of their home or office.

Wireless mobile telephony and 3G has enabled banks toprovide mobile banking as a means of ‘banking-on-the-go’.

2. Literature Review

Banking reforms since the 1990s has made the Indian bankingsystem increasingly mature in terms of business process

transformations and the appetite for risk management (Aroraand Varma, 2005). According to them, deregulation,technological upgradation and increased market integration

are the key factors driving change in the financial sector.

Sanjay Tiwari (2005) studied the progress and paradigm shift

of financial institution and Indian banking and concluded thatuniversal banking with banking services under one umbrellahave emerged. As a result there are greater economies of

scale in the form of lower cost, higher output and betterproducts.

Banks must at once prepare for marketing approaches as also

FUNCTIONALITY LEVEL ANALYSIS OFALTERNATE BANKING DELIVERY CHANNELS

M. KrishnanDirector-in-Charge, Guru Nanak Institute of Management Studies, Mumbai

ABSTRACT

Information and Communication Technology has helped the banks in India to provide enhanced banking

services to customers. Apart from innovative technology based products and services, alternate delivery

channels such as ATMs, internet banking, mobile banking, multi-function Kiosks, etc. and variety of

technology based add-on products and services such as debit card, credit card, phone banking, etc. have

brought banking services closer to customers.

In recent times, banks have added a host of functions and features to their alternate banking channels for

customer convenience. The purpose of this research is to study the extent to which these functionalities in

the alternate channels are used by the customers. Research methodology comprised of primary research in

the form of field survey with the help of structured questionnaire covering the bank customers in Mumbai

to get qualitative and quantitative data of realistic tendencies of customers in the use of functionalities

focused to this research and secondary research in the form of research studies and articles which were

used for literature review and conceptual reference. Analysis of data and information collected from primary

sources as well as from published sources were made keeping the objectives of the study in mind.

Keywords: Alternate banking delivery channels, Internet banking, ATM, Customer education, Core banking


for relentlessly reviewing the range of products (M U Yibin,2010). The private banks like ICICI Bank and HDFC Bankhave set new trends in marketing strategies introducing

customized products. Modern delivery channels, such asATMs, telephone, internet and cluster banking, are helpingbanks deliver products, cost-effectively. Recent product

innovations in banks have used networking technology.

Dr. Uppal (2011) observed that the Indian banks have made

significant headway in making IT an integral part of theiroverall business process re-engineering. Delivery channelshave not only grown multifold but have also seen reasonable

degree of convergence for ultimate customer convenienceand better operational maneuverability. Dr Uppal in anotherstudy found that more than 50% of respondents were unaware

of e-channels; they need to be educated.

According to Habib (2012), Internet banking in India is at itsprimordial stage dominated by the Indian private and foreignbanks. The use of internet banking is limited to a few

customer segments. Internet banking is a mixed blessing inthe form of increased risk, confidence level reposed byconsumers and the problem of blending it with the physical

system (Pires and Aisbett, 2012). Mobile banking wasinitially limited to SMS or basic banking services used morefor quick reference to banking transactions and balances

(Vaidya, 2012). He concluded that with the advent of smartphones, mobile banking channel is capable of offeringmultiple dynamic functionalities. Munusamy, et al, (2012)

concluded that there are major differences between internetbanking users and non-users in terms of easier operability,convenience, reliability, safety, etc. They suggested that banks

should intervene and encourage non-users to change fromtraditional banking to internet banking.

Goyal and Thakur (2008) concluded that the challenges forbanks are in the areas of people, technology and competition.Banks must continuously invent new products and services.

Bhasin (2001) feels that security infrastructure is paramountin e-enabled services. Security considerations and fear ofusing new methods are major factors inhibiting the use of

internet banking in India (Goyal and Goyal, 2012).

Kukkudi and Deene (2006) concluded based on a field studyin Gulbarga that ATMs are used mostly in the age group of25-35 years majorly by men. 79% uses ATMs weekly; 85%

were aware of restrictions concerning ATM usage. The studyconcludes that ATMs should be popularized.

According to the Boston Consultancy Group (BCG) digitalinfluence study 2013-14, online shopping is expected to rise

from 6% in 2013 to 14% by 2016. 25% of travel andtourism-related sales in the country currently are digitally

driven. Of the total urban internet users, around 57% are of25 years and above, and 45% use only their mobile devicesto access the Internet. The study also said by 2016, the urban

Internet user base would rise to 47% from 28% in 2013.Apart from discounts, convenience, access to widerassortment, etc. are driving people to switch to online

shopping. Airline ticketing is leading with 25% sales on-line last year, as against 6% with regard to cars, though 32%searched online before buying. Only 8% of the mobile / PC

sales were online during the same period.

Neeli Pramila and Dr. Abdul Azeem (2012) examined the

loyalty phenomenon for e-banking. Pallab Sikdat1 andMunish Makkad (2013) observed that several factors suchas person’s demography, motivation and behaviour towards

different banking technologies and individual acceptance ofnew technology, etc. determine the customers’ attitudetowards on-line banking. For customers to use internet

banking regularly they must acquire a certain level ofcomfort with technology.

Dr. Santosh Singh Basi (2014) observes that the most popularE-finance services are ATMs, Credit and Debit Cards and On-

line Banking. While customers believe quality, convenience,information access, delivery time have improved they sorelymiss the personal touch. He goes on to observe that there is

a huge chunk of population who are unaware of E-financeand here lies the huge challenge and big potential for financialinstitutions to reach out to them and spread awareness. Safety

and security of sensitive financial information are a realconcern of customers and therefore steps should be taken toensure safety and thereby earn the trust and faith of customers

in E-Finance. Infrastructure issue such as power, lowbandwidth connection, poor connectivity needs to beaddressed seriously. Stricter cyber laws are required to deal

with cyber crimes to reduce anxiety of customers.

From the above reviews we find that the studies mostly rely

on survey evidences which are exploratory in nature. Theavailable literature and research reveal that people are stillskeptical as regards usage of alternate banking channels.

Their preferences, prejudices and perceptions to alternatedelivery channels and services depend on multiple factorsincluding emotional and psychological ones. The reviews

indicate that banks would need to feel the pulse of customerson a regular basis to make these alternate channels moreeffective.

3. Rationale of the present study

In recent times banks have added a host of features and

functionalities to alternate banking delivery channels to makethem more robust. Literature reviews show that much of the

Functionality Level Analysis of Alternate Banking Delivery Channels


research work is centered on the effectiveness andconvenience of these channels at gross level in a genericway. There is a perceived gap in understanding the extent of

usage at the granular functionality level in each of thesechannels especially because a host of new functionalitieshave been added in recent years. Banks can benefit only if

customers use optimally each of the facilities embedded inthem lest their efforts become infructuous. The researchstudy examines this gap. It looks at the extent of use of

alternate banking channels by drilling down to thefunctionality level. The study also looks at the factorsinfluencing / inhibiting the use of these alternate channels

and the causal reasons for customer responses.

4. Objectives of the Study

Literature reviews highlight the need for functionality level

assessment of usage of alternate banking channels. Againstthis background, the objectives of this research are asfollows:

i) To study the number and range of functionalities used

by customers in Net Banking and ATM

ii) To examine the customer attitude and perceptionstowards internet banking and ATM

iii) To examine and analyze the influencing / inhibiting

factors in the use of internet banking and ATM

iv) Recommendations and Strategies for increasing useof internet banking and ATM

5. Research Methodology

Research Design

Research design used for the study is based on primary fieldsurvey and conclusions are on the basis of the analyses ofthe data using SPSS Version 17.

5.1 Coverage of the Study

This research covers the bank customers of all the scheduledcommercial banks in Mumbai. For the purpose of this study

two alternate banking delivery channels viz., Internet Banking(IB) and ATM are considered. This study examines thecustomer usage of these two alternate channels with the help

of a field survey using structured questionnaire followed byinterview. This study covers 26 functionalities in the internetbanking and 11 functionalities of the ATM to examine the

extent of their usage. The functionalities include informationbased, transaction based and value added services.

5.2 Universe, Sampling Design, Sample Size and DataSources

Data and information were gathered from primary sources

by means of field survey using structured questionnairescontaining dichotomous and multiple choice questionscovering bank customers on random sample basis in Mumbai

and from secondary published sources.

The Universe comprised of the bank customers of Mumbai

city and suburbs. For sample size calculation, ‘Sample SizeCalculator’ from the portal www.surveysystem.com/sscale.htm was used. The population of bank customers in

Mumbai and its suburbs can be considered as large andassuming normal distribution. Using Sample Size Calculatorat 95% confidence level with confidence interval of 8, the

sample size works out to 146. For the study, sample size of150 bank customer respondents was considered. Random,purposive and convenience sampling methods were followed

keeping the objectives of the study in mind..

Primary sources included personal interviews for open endedquestions. The respondents were interviewed at their homesand offices as well as bank branches. Secondary sources

included books, journals, newspapers, websites, and researchstudies. They are used for literature review and conceptualreference.

5.3 Methodology and Survey Instrument

Questionnaire consisted of four parts. First part was designedto capture bank customer respondents’ demographic features.

Second part was designed to capture the functionality levelusage of IB and ATM. Third part comprised of 6 factorsconcerning IB and ATM. Bank customer respondents have to

assign a score between 1 to 5 based on their perceptions ofthe factor with 1 denoting ‘least satisfaction’ and 5 denoting‘maximum satisfaction’ for that factor. Fourth section

covered problems / difficulties, if any, experienced by therespondents and their suggestions for improvement. Thequestionnaire was beta tested and thereafter finalized.

5.4 Reliability and Equivalence of 6 factors

Alternate Cronbach’s N ofChannel Alpha Items

ATM .807 6

IB .706 6

The reliability of the 6 factors was checked by usingCronbach’s Alpha (Table 1). Reliability means coherence,

stability and dependability of the questionnaire result. Theresult of the Cronbach’s Alpha showed the overall reliabilitycoefficient of the 6 items above 70% for both IB and ATM.

This shows that the factors achieved high internal consistency,good inner coherence and the index reliability can beaccepted.



The Hotelling’s T-squared test was used to find the mean

equivalence of the 6 items (Table 2). The results confirmthat there is significant difference among the means ofvarious factors at 5% level of significance. This shows that

items differed among each other and they conveyed differentmeanings to the respondents.

5.5 Data Analysis

Data were analyzed with the help of SPSS version 17. It wasimplicitly assumed that the factors followed a multivariatenormal distribution. Computerized analysis was done at three

different stages. In first stage, simple frequency tables wereprepared for demographic profiling and to assessfunctionality level extent of usage. In stage two, descriptive

statistics was applied for factor-wise analysis. Results ofthe above analyses are presented in Tables and suitableinferences are highlighted below.

6. Results of the study

6.1 Demographic Profile of the Sample Bank CustomerRespondents

About 55% of the sample bank customer respondents of 150

were male and the remaining were female. 46% of therespondents were in the age bracket of 30 years and below,while nearly 45% were in the age bracket of 31 years to 50

years. The rest of the respondents were above 50 years ofage. 44% of the respondents were from services sector while28% were working in government organizations. Occupations

of 28% of the respondents were business, professional andothers. About 37% of the respondents were graduates with22% post graduates. 25% of the respondents were

professionally qualified with 15% undergraduates. AnnualIncome of about 51% of the respondents was below Rs.10lacs.

6.2 Analysis of Functionality Level Usage ofATM and Internet Banking

Table 4 gives the frequency distribution of usage of 11

functionalities of ATM. From the Table, it can be observedthat the ATMs are essentially used for cash withdrawals andmajorly for information based services such as mini-

statement and balance enquiry. It is evident from the Tablethat ATMs are seldom used for transaction basedfunctionalities such as utility bill payments, credit card

payments, insurance premium, mobile top-up, etc. Cashdeposit and credit card payment are few and far between.ATMs are also not used for other value added services such

as cheque book request, etc.

Frequency distribution of the functionality level usage ofinternet banking is given in the Table 5. Three-fourths of the

respondents use

internet bankingfor credit cardpayment and

two-thirds usethe same for air/ rail ticketb o o k i n g .

Internet bankingis majorly usedfor basic

i n f o r m a t i o nb a s e dfunctionalities

such as account statement view / print / download. About40% of the respondents use internet banking for fundstransfers / third party payments. Less than one-third of

respondents use it for hotel booking, tax payments, utilitybills payments, etc. Many functions are poorly used or notused at all.

6.3 Factor-wise Satisfaction Index

Tables 6 and 7 give the factor-wise mean and standard

deviation of the respondents’ perceptions of the six factorsfor ATM and IB.

While the respondents overall (average) perception score is3.7767 for ATM for that of IB it is 3.5433. On a 5 pointscale, mean score of 4 (or very close to 4) can be considered

as satisfactory. There are only 2 factors in ATM (‘Availability’and ‘ATM Layout’) whose mean score are above 4 and just 1



factor (‘Online Portal Availability’) very close to 4 for IB.

If we compare the factor means with the respective overall

mean then we observe some factors above the overall meanand some below. Factor perceived means above the overallperceived mean indicate perception for the factor higher than

the overall mean. On the other hand, factor perceived meansbelow the overall perceived mean are the factors that requirecorrective actions at once for improving the overall

perception level of the bank customer respondents.

Table 8 gives the relative position of the factor means vis-à-vis the overall mean.

‘Safety & Security’ and‘Cleanliness’ emerge as the

focus areas for ATM. For IB,‘Safety & Security’ and ‘Speed’are areas of concern.

7. Discussions

At first the alternate banking channels services were restrictedto basic information based banking services such as account

information, balance enquiry, mini-statement, etc. With

superior technology, availability of enhanced securities andfirewalls, banks provide transaction based functionalities such

as funds transfer within and across banks, account opening /closing, downloading historical account statements, paymentsuits, etc.

Closer examination of the bank customers’ responses and

field interviews reveals the following:

• The overall customer satisfaction index for both ATM

and IB are below 4 (on a 5 point scale) at 3.7767 forATM and at 3.5433 for IB. Both indexes can thereforebe considered as less than satisfactory. The



satisfaction index of safety & security is the lowestfor both ATM (3.1933) and IB (2.5267). Safetyconcerns are paramount among the customers and

would need to be be addressed effectively.

• ATMs and IB have eliminated long tiresome waiting

lines. Customers however are not using the full rangeof functionalities available in these. ATMs arepredominantly used as cash dispensers. Utility

payments such as electricity bills, phone bills, etc.are largely done by cash, cheque. Insurance premiumsare done by cheque / demand draft. Credit card

payments too are largely done by cash, cheque.

• Many customers are apprehensive of using alternatechannels especially for making payments because ofperceived risks. They do not also use ATMs for utility

payments, etc. due to fear / lack of trust on the safetyand security of such online payment systems.

• IB has made banking convenient but is still used sub-optimally. Customers encounter problems while using

internet banking due to which many still prefer to godirectly to the bank. Many of the functions availablein IB are not used. Customers do not use payment

suits for making payments of utility bills, taxpayments, mobile refills, insurance premia, etc. dueto fear and lack of trust in on-line payment system.

• Some customers are still not comfortable withcomputers and internet and find it difficult to use IB.

They apprehend that if they click a wrong button thatwould lead to monetary loss. This act as deterrent.Some customers continue to worry whether they have

executed the transaction properly. More often thannot they go to the bank to update their passbook todouble check their internet banking transaction was

correctly done.

• Some customers complain that internet banking is slowand time-consuming and the internet banking websitetakes a long time to get started. Connectivity problem

and speed are other irritants.

• Customers continue to visit bank branches for

transactions that can be done through ATM and IB.This is a case in point for customer awareness andeducation.

• Safety and security of the sensitive financial

information are the real concerns of customers thatinhibit use of both ATM and IB. In addition, customersdesire a neat and clean ATM. Poor connectivity and

speed is frustrating to customers using IB.

• It was also found that customers have not used manyof the facilities due to lack of knowledge, fear of on-line frauds, mistakes while typing account numbers

resulting in perceived monetary loss, etc. While somecustomers make funds transfer between own accounts,they are apprehensive of making third party payments.

Another interesting fact that emerged during the fieldinterviews was that some customers felt that newfunctions may entail additional charges or penalties

if they abort before completing the transaction due tomistakes.

• Customers fear about the many frauds, scams andunethical happenings in ATM and IB and other alternatechannels which are reported in newspapers and other

media. They fear that their accounts could besimilarly compromised due to phishing, accounthacking, pharming, vishing, glitches in the software,

proxy websites, virus attacks, etc. According to themthere are very few instances of the fraudsters beingcaught and punished while the customers lose their

life savings and banks do little to help them.

• Some customers find the internet banking site of banksoverloaded with information with multiple options andhence confusing and at times frustrating!

• Internet speed, connectivity issues and low bandwidthare some of the other concerns for on-line banking.

• Even some tech-savvy customers who are on the ‘net’

most of the time in the office and at home, wonderwhether the financial transaction put through by themthrough IB would be safely and correctly processed

over internet.

• There is a big disconnect between the range of add-onfunctions and services available in alternate channelsand consumer reticence in using them.

• Not many customers are aware of the various functionsin ATM and IB except a few routine ones they use.

They feel that banks should give them training andassurance in the safe use of the various functionalities.

• Indian bank customers are becoming increasinglytech-savvy but paradoxical it may seem that they prefer

using ATM and IB more for information content thanas transaction medium with younger generation beingno exception.

8. Strategies and Recommendations

• Banks must aggressively persuade customers to useall the available functions in ATM and IB so as to



improve their hits and to reduce footfalls in branches.

• The satisfaction index of both ATM and IB are below

4. Banks should take steps to improve the satisfactionlevel to beyond 4. It is evident that multi-prongedaction needs to be initiated to push the satisfaction

index to above 4 overall and individually at the factorlevel which is going to be a challenge. This wouldrequire harmonious collaborative efforts of all

stakeholders synchronizing each others actions tobring about desired improvements in overall servicedeliverables and facilties.

• As and when banks introduce new functionalities in

ATM and IB, they should simultaneously advise andeducate customers to use and migrate to new functionsso that the desired conversion rate is achieved in

shortest possible time.

• Banks should remove the fear of cyber frauds fromthe minds of customers by educating them on properuse of the technology in a safe and secure manner.

They should constantly advise customers on the stepstaken to improve the safety and security of thealternate channels.

• Banks should look into the volume management andcapacity constraints to ensure that their systems do

not slow down due to increase in traffic.

• Banks should use CRM effectively and studycustomers’ usage of alternate channels and guide andpersuade them towards alternate channels.

• Banks should provide on-line banking tutorials onalternate channels.

• Banks should regularly look into security risk, system

outages, cyber attacks, etc. They have to continuallysupervise and upgrade security safeguards; ATMsshould be kept neat and clean with proper security

arrangements.

• Threat of intrusion and internal sabotage arechallenges that require constant vigil.

• Cyber laws need to be strengthened; data protectionlaws should be effective.

• Operational risk of the alternate channels should bemonitored constantly. Banks should set up firewalls

against misuse of internet banking. They shouldconstantly review and update the electronic securitysystems around the alternate channels, carry out

frequent special audits of the alternate channels.

• ICT systems are prone to failure due to malfunctionof electronic components. Proper disaster recoveryprocedures within set recovery time objectives should

be put in place.

• Security aspects like multi-layer, multi-factor

authentication deployed to ensure safety and securityof platforms would need constant monitoring andupgrading to prevent their misuse.

• ATM counters some times do not function during peak

hours due to non-availability of cash, power / machinebreakdown, etc. Banks should have centralized cashloading system and continuous monitoring of the

working of ATMs. To prevent misuse of ATM cardsand to improve the security, banks should introducebio-metric ATMs. This will eliminate the need for

password.

• The increasing use of electronic channels is resultingin increasing incidences of cyber frauds. Thestrongest deterrent for such frauds is a strong internal

control framework.

• ATMs and IB with their full range of functionalities

are still a new concept to customers. Banks shouldtherefore provide training to customers in their branchpremises and show ‘demo’ of how to operate each

function in these channels separately for different agegroups, occupation, and income brackets, etc.

• Banks should train and sensitize there own staff onalternate channels so that they in turn can train their

customers. Bank staff should also be encouraged touse all the functions and features of alternate channels.

• Banks should also sensitize customers to take propercare of their ATM cards, PIN, user id and password.

• Apprehensions of customers to cyber frauds shouldbe addressed by educating them not only in the use of

these services but also on the steps taken to securethe transactions.

• Banks should identify functionalities with low usageand the causes for low usage and strategize to mark

up their use through appropriate interventions.

9. Conclusion

Technology has greatly helped the banking sector to enhance

banking services to their customers. Banks have set up manyalternate banking channels to extend banking services beyondthe brick and mortar branches. But the study reveals that

customers continue to use ATM and IB in conventional way.



ATMs are popular among customers predominantly as cashdispensers. Other transaction based functions in ATM arenominally used. Similarly, IB is used more as information

medium than for putting through financial transactions. Inother words, IB is still used more for basic information basedfunctions. Many consumers are apprehensive of using these

mediums for transaction based functions because of theperceived risk of frauds. Banks would need to address thisissue effectively if they have to remain customer centric.

It is evident from the study that even in metropolitan citylike Mumbai where customers are tech-savvy and their

awareness is perceived to be fairly high ATM and IB are sub-optimally used and many of the functionalities are poorlyused or not used at all. There is need to sensitize customers

and allay their apprehensions through education and guidance.It is imperative that banks take steps to mark up the usage ofATM and IB at functionality level beyond the threshold.

10. Limitations, Significance and Scope for FurtherResearch

Time and resource were major constraints of this study. In

order to be able to generalize the findings, it is suggestedthat similar studies are conducted in other cities, regions andstates as well.

Findings and conclusions of the study provide an experientialinsight into customer behaviour in use of ATM and IB, in

particular, and alternate channels, in general, at functionalitylevel. It would be useful to banks and researchers inunderstanding customer attitude and psyche in extent of use

of alternate channels at the granular level. This study focusedonly on ATM and Internet Banking among the alternatechannels. Future research can expand the scope to other

channels. Additionally, future research could also focus oncomparative analysis of customer perceptions vis-à-vis thatof the bank staff to identify the differences with the aim to

reduce them to minimum.

Pan India research using SPSS and better statistical andsampling techniques would definitely help further researchin this area especially because there is a distinct push towards

taking the alternate channels to rural India for inclusivegrowth. The challenges of conversion and acceptance thenare going to be greater.

References

1. Chipalkatti N, Rishi M (2007), “A post reform assessment of the Indian banking sector: profitability, risk and transparency

2. Dr R K Uppal (2011), Banking with Technology to meet 21st century challenges, Kunal Books, ISBN 978-93-80752-10-5

3. Dr Santosh Singh Bais (2014), “Customer’s Perception About E-Finance”, International Journal of Scientific Research, May 2014, Pp60-62

4. Goyal V M., Goyal G., (2012), “Customer Perception towards Internet banking w.r.t private and foreign banks in India”, InternationalJournal of Computing & Business ResearchISSN 2229-6166, Proceedings of ‘I-Society 2012’ at GKU, Talwandi Sabo Bathinda (Punjab)

5. Habib S., (2012), “Internet Banking in India Consumer Concerns and Bank Marketing Strategies”, Research Journal of Management

Sciences, Vol 1(3), 20-24, October, ISSN 2319-1171

6. Minakakis l., Rao b., (1999), “Competing in online markets: Financial services as a case in point”, Electronic Markets, 9(4), Pp 263-268

7. Munusamy J., Annamalah S., Chelliah S., (2012), “A Study of Users and Non-Users of Internet Banking in Malaysia”, InternationalJounral of Innovation, Management and Technology, Vol.3, No.4, August 2012

8. Neeli Pramila, Dr Abdul Azeem (2012), International Journal of Trend in Economic Management and Technology, Vol 1, Issue 6

9. Pallab Sikdar1, Munish Makkad (2013), International Journal of Engineering, Business and Enterprise Applications (IJEBEA) 5(1),June-August

10. Pires G D., Aisbett J., (2002), “The Relationship between Technology Adoption in business-to-Business Markets: The Case Study of E-Commerce”, Industrial Marketing Management, 32(4) 291-300

11. Shrivastava M P, Singh S R, “Indian Banking in the New Millennium”

12. Sultan Singh, “Banking Sector Reforms”, Kanishka Pub, Delhi

13. Vaidya S R., “Emerging Trends on Functional Utilization of Mobile Banking in Developed Markets in Next 3-4 Years”, International

Review of Business research Papers Vol.7, No.1, January 2011, Pp.301-312

14. www.rbi.org

15. www.ibef.org

16. IBA Publications

17. Handbook of Statistics of Indian Economy, RBI Publication, 2013



CUSTOMER CENTRIC PRACTICES

Allan D’SouzaVice Principal & Head - Department of Commerce & Accountancy, Guru Nanak Khalsa College of Arts,

Science and Commerce, Matunga, Mumbai - 400 019. • E-mail : [email protected]

ABSTRACT

The Paper critically analyses the evolution and the positioning of the customer in a globalised scenario.

The change in attitude and relationship of the consumer due to ever evolving dynamic environment that is

cross breeding cultures and traditions needs to be understood in order to satisfy the ever changing consumer

needs. The failure of branding as a marketing tool to sustain market share is apparent with the flood of

competitive brands which outdo each other

The paper evolves a module to face these challenges by understanding the customer’s psychological needs

to develop and endure the bond between corporate and customer.

To quote Chanakya, Truth keeps the earth in its place, truth makes the sunshine, truth blows the air and

thus truth is the prime force.

Keywords: Evolution, Dynamic environment, Cross breeding cultures, Psychological needs, Faith

The adage “The Customer is KING” did hold in the past ,was

lost momentarily during the transition from closed,monopolistic, dictatorial ,regimental and rigid domesticeconomies to world markets nick named “Global Markets”

The breakup of the union of the soviet socialistic republic isa phenomena of this change what is referred to asGLOBALISATION.

The ever evolving globalised phenomena has posed new

challenges and driven further the horizon in customerrelationship.

Let us acknowledge that the customer has become the know-all and the thee-all. The question posed is , How? Well theanswer is simple. Accessibility to new Information

Technological inventions and innovations ,that providedetailed information about products and services, theirorigins, their competitors, prices, quality, features content

and most important their easy availability. This has made iteasy for customers to make choices without any obligationsnor any reservations.

The age of offering guru-dhakshina to the guru,

acknowledging his services that were rare and important forthe growth of the human mind and body seems to be a memoryof the past, that we can all cherish but not continue in an ever

evolving dynamic environment that is cross breeding culturesand traditions. Place the customer for the shishya and youfind the situation the same for the enterprising entrepreneur.

The much hyped term Branding used by the elite and so called

upper class that was used to entice the customer is a fallacythat no longer can be sustained as market changes have shownus, to site a case is that of Tide a detergent having eaten into

the share of Surf a brand that was very popular.

In all this maze let us not lose heart since challenges alwaysoffer solutions to the enterprising, the darkness ends withthe light of a new dawn .The dawn of understanding of a new

age where understanding the customers psychological andphysiological needs will help in building and nurturing anenduring bond between corporates and customers what we

can refer to as customer relationship.

The horizon that is proposed in this paper is a module for

building customer relationship through better understandingof the customer and his needs by defining his road toprosperity.

The module is built on two important corner stones:

(I) Needs on Date and (II) Faith

These can we built by enriching and enduring customerrelationship whatever be the limit to which technological

inventions can stretch the customers imagination andknowledge to finding solutions to building this enduringbond.

The module is classified into Five stages that are interrelated

and woven:


Stage I —Creating a Vision of Prosperity

Stage II—Understanding the Needs of our customers

Stage III—Setting a Time frame to achieve them

Stage IV—Persevering to achieve the vision

Stage V – Endurance through faith

Stage I Creating a Vision of Prosperity

In this stage we need to enhance the vision of our customers,help them in improving the quality of their life a vision eventhough once believed to be impossible can be made a reality.

To fructify this vision we need to have an understanding thatthe “Quality of life is directly proportional to the self image“.We need to entrust them with this vision that we are not

mere marketers or sales men but prophets that can enhancetheir lives through the products or services that we aim tosell and that we expect them to buy .The product should have

the ability to transform their self image from a commonerto that of a King.

Stage II Understanding the Needs of our customers

Assessing and analyzing the needs of the customers throughresearch, that in turn helps in developing the product

,understanding its utility and its power to transform one’slife towards the goal of prosperity .Till this realization ofbeing prosperous does not enrich our customers our vision

will not enthuse our customers.

Stage III Setting a time frame to achieve the goals

Setting targets in terms of time that can be referred to as

goals that work as the path of pray to attain the vision andtransform it into a reality. This is important as with the passageof time visions shift to either a lower or higher level that can

cause a shift in the utility of the product that we need tomarket.

Stage IV Persevering to achieve the Vision

Persevere with the vision by adopting measures that will buildconfidence of the customers and a self belief that the visionset out is achievable , that will enhance the life of the customer

in the belief that they are just not customers ,butinvestors into a product that will reap them benefits fora long time to come.

Stage V Endurance through faith

Faith as they say has an immense power to move mountains

that has been so well depicted and revered in the holy books

.The faith that is spoken here is that the customer who has

bought your product should feel empowered by the use of

the product ,there should not be any betrayal of trust .To quote

Chanakya ,Truth keeps the earth in its place ,truth makes

the sunshine , truth blows the air and thus truth is the

prime force. The faith that the country, the company, the

product and the customers will all benefit from its use.

Conclusion: The above module relates that bonding an

enduring customer relationship involves the understanding

of the psychology, the physiology, cultural and religious

habits and education levels and the ethos, so as to endure a

relationship that is bonded with trust and faith.

Customer Centric Practices


Introduction :

Stock market is often considered as the barometer to

measure the country’s economic strength. But the foundationof the stock market depends on the efficacy and interplay ofvarious factors - intrinsic and extrinsic, qualitative and

quantitative.

Despite the vagaries of stock market with its ups and downs,

it fascinates one and all. Market movements seemingly

behave like the proverbial Indian rope trick. Stocks often

remind one of the TV ad ‘owners pride, neighbors envy’. There

is constant battle of the ‘bulls’ and the ‘bears’. Interestingly,

the Nobel Prize in Economic Sciences 2013 has been

awarded to three American economists viz., Eugene Fama,

Lars Peter Hansen and Robert Shiller for their seminal works

on the “empirical analysis of asset prices” but with

conflicting views about the rationality of financial markets

– how markets function and assets such as stocks are priced.

What is unique about the three awardees is that all three have

divergent views of the market. While Fama says market is

efficient, Shiller has the contradictory view that market is

inefficient and Hansen is midway between the two. Though

Fama, Hansen and Shiller make a seemingly incongruous

group of prize winners, viewed in terms of their contributions

to the financial market they are a more cohesive group. All

three have studied how the values of financial assets change

over time and on the methods by which this can be measured.

Laureates Theses

In the 1960s, Fama showed that it is extremely difficult to

predict stock price changes in the short run. Market pricesreact astonishingly fast to new pieces of information. Stockprice swings are unpredictable, following a “random walk”

model.

Shiller showed that what is true over short period of time isnot necessarily true over longer time horizons. Accordingto him asset prices are aggregate of expected changes in pay-

offs such as dividends in the case of stocks. But dividendsvary much less than stock prices. As a result future pricemovements are easier to predict. When price-dividend ratio

is high, prices tend to fall and vice-versa. This relationshipis true not only for stocks but also for other assets like bonds.

Hansen shared the Noble prize for the development ofeconometric models to test theories of asset pricemovements on empirical data. He developed the generalized

method of moments estimation in 1982. He deployed hisinnovative method to analyze how asset pricing works. It hassince become a workhorse of econometric analysis and is

generally used by other social scientists.

The research works of the three laureates has had wide impactwell beyond their field of study. Index funds in financialmarkets is the result of Fama’s market efficiency theory.

Shiller along with economist Karl Case developed the monthlyCase-Shiller index. Asset managers use this important toolto measure house prices in America. Hansen’s statistical

models are used in many fields by social scientists.

RATIONALITY OF FINANCIAL MARKET


ABSTRACT

Nobel Prize for Economic Sciences 2013 was awarded to three American scientists “for their empirical

analysis of asset prices.” The Nobel Committee has said that the three laureates have laid the foundation

for the current understanding of asset prices. It relies partly on fluctuations in risk and risk attitudes, and

partly on behavioral biases and market frictions. Their research works spanning over five decades have

resulted in divergent views on working of financial markets and pricing of assets such as stocks. Their

research showed that in the short term it is difficult to predict asset prices. But over longer time horizons

prices can be predicted in broad terms.

Keywords: Financial Market, Noble Prize Committee, Index Funds, Random Walk, Global Recession, Stock

Market


Market Behaviour

Eugene Fama in the 1960s demonstrated that stock price

movements are incredibly hard to predict in the short-term.New information affects prices almost immediately. Fama’sconclusion was therefore that the market is efficient.

On the other hand, in the early 1980s, Robert Shiller

discovered that it is possible to predict stock prices over alonger time zone say three to five years. Contrary to theperception, corporate dividends fluctuate much less

compared to stock prices. He found from his studies thatthe ratio of prices to dividends tends to fall, when it is highand vice-versa. This behavior of stocks also holds good for

bonds and other assets. He belongs to a group of behaviouraleconomist and says that human beings are irrational andillogical and are prone to mood swings and therefore

concluded that market is inefficient.

In 1982, Hansen demonstrated that Shiller’s results couldnot be fully explained within the then-current models. Hetherefore developed a statistical method for testing this type

of theory. This method is now used within all economicsresearch. For rational investors, high future returns are rewardfor keeping risky assets during unusually risky times.

Hansen’s statistical method is particularly well suited forevaluating rational theories of asset pricing. Hansen and otherresearchers found that variations of these theories helpexplain asset prices.

The three economists “laid the foundation for the current

understanding of asset prices.” “It relies in part onfluctuations in risk and risk attitudes, and in part on behavioralbiases and market frictions.” The findings of the researchers

have had profound impact in the financial market andregulator intervention.

Bubbles and 2008 Financial Crisis

The award for Economic Sciences 2013 to the three laureatescomes five years after the financial crisis that led to recessionin the US which later spread to other world economies.

Shiller and Fama have serious differences of opinion on

‘bubbles’. Robert Shiller gained a measure of fame havingpredicted two financial bubbles. He predicted the decline ofstock prices of 2000 and the sub-prime mortgage debacle

that began in 2007. Shiller warned about the “stock bubble”in the 1990-era and about high home prices before the fall inhousing values that to a large extent led to the recession.

S&P / Case-Shiller home price indexes doubled between 2000

to mid-2006, and later declined 35 basis points during thefinancial crisis. It showed episodes when assets were

overvalued. Shiller was concerned about the rapid rise inhousing prices and called it the bubble and warned that pricescould fall by 40%. He showed that median home prices were

6 to 8 times greater than median income. The home priceswhen adjusted for inflation produced very low returns of lessthan 1% per year. Housing prices peaked in 2006 and the

housing bubble burst in 2007 that greatly contributed to theglobal recession. According to Shiller the rise in theinformation technology shares in the 1990s was not

sustainable in the long run. In the same way, he warned formany years about the housing bubble in the US.

According to Shiller investors “can be irrational and that assetsfrom stocks to housing can develop into bubbles.” He saidthat “rational models of the stock market, in which stock

prices reflect rational expectations of future payouts, are inerror.” By combining logic, statistics, and data he concludedthat stock markets are prone to ‘irrational exuberance’.

Shiller said the 2008 financial crisis “reflected mistakes and

imperfections in our financial system…” Fama howeverargues that the 2008 financial crisis was triggered byhappenings in the economy, including a fall in housing prices

and the onset of a recession and in no way negates his thesisthat markets are efficient.

According to Fama, stock market price movements follow a“random walk,” making it “impossible for any investor, evena professional, to gain an advantage”. He showed that the so-

called value and small-cap stocks have higher returns thanthe growth stocks. Therefore, he rejected the notion thatmarkets often produced bubbles. According to him, Shiller

“has been consistently pessimistic about prices,” so given along enough horizon, Shiller is bound to be able to claim thathe has foreseen any given crisis.

The sub-prime housing crash that began in 2006 is considered

as proof that prices had climbed to irrational heights. On thebasis of Shiller’s diagnosis of the problem, it is believed thatfuture bubbles could be predicted and that it should be

possible to identify asset bubble before collapse. But Famaand his other economists of efficient markets theory,completely discounts this view. Eugene F. Fama said he still

did not believe there had been a bubble. He says “I don’teven know what a bubble means. These words have becomepopular. I don’t think they have any meaning.”

Predictability

Fama, coined the term “efficient markets” to explain his viewthat asset price movements could not be foreseen because

prices fully reflected all available information. The theoryin the words of the economist Burton Malkiel, is that “a

Rationality of Financial Market


blindfolded monkey throwing darts at a newspaper’s financialpages could select a portfolio that would do just as well asone carefully selected by experts.” This has been repeatedly

experimented sometimes by involving actual monkeys!There are many stock brokers and financial advisors whoclaim that they can offer investments that will consistently

beat the market averages. Fama’s well-established theoryhas influenced millions of investors contributing to thepopularity of index funds that hold broad, diversified baskets

of equities – a staple for risk averse investors.

Shiller demonstrated an important limitation of markets

operating efficiently. He showed that the volatility of stockprices was larger than the volatility in corporate dividends.He also found that some of those irrational variations fell

into predictable patterns.

Fama is among the economists who have also documentedother patterns of predictable price movements. He explainsthese patterns as a form of compensation for the greater risk

associated with some assets. Shiller, on the other hand, arguesthat the predictability of prices reflects irrational butrepeating patterns in human behavior. He is among a group

of behavioural economists who are integrating behavioraltheories from psychology and other social sciences intorigorous models of economic activity.

Shiller in his book “Market Volatility” (1989) said that theassertion stock prices were rational was “one of the most

remarkable errors in the history of economic thought.”“Mass psychology may well be the dominant cause ofmovements in the price of the aggregate stock market.”

Hansen’s Work and Asset Price Behaviour Analysis

Hansen’s work explores the implications of dynamic

economic models in which decision makers face uncertainenvironments. His generalized method of moments is atechnique for evaluating relationships among explanatory

factors that allows social scientists to work around theabsence of some kinds of information. It frees economistsfrom the need to make a range of empirically improbable

statistical assumptions thereby broad-basing the postulations,allowing them to focus on other hypotheses and associationsin their work. His econometric techniques for analyzing data

and asset price help researchers to test their various theorieson market movements. It allows them to assess the coreeconomic implications of their models and theories in their

field. Andrew Lo, Professor of Finance at MIT, Sloan Schoolof Management said that “the choice of having Hansencomplement the two extremes of efficient markets and

inefficient markets is the perfect balance between the two.”

According to him, the Nobel Committee’s decision in givingaway the award to Fama and Shiller underscores the messagethat “financial markets can be efficient most of the time but

every once in a while they break down and then we need todevelop better analytics to be able to understand them.”

Implications on Financial Market

The findings of the three researchers have importantimplications for financial regulation, investment strategy, andeconomic policy

Fama’s seminal theory of rational, efficient markets led to

the deregulation of financial market since 1980s. Thecomplacence about rising home prices in the US in the 2000ssimilarly reflecting the view that prices are inherently rational

contributed to the continuation of deregulation of thefinancial market. In the aftermath of the crisis and Shiller’stheory of irrational, inefficient market behavior and other

proponents of behavioural economics (integrating psychologyinto economic models) resulted in intensification of financialregulation.

The path breaking researches done by the three laureatesreshaped the way economists and investors look at how

markets work. The individual researches of the threeeconomists collectively describe the financial marketbehaviours. Stock and bond prices move randomly and

erratically in the short term but with greater predictabilityover longer periods. As the Nobel Prize committee said“these findings showed that markets were moved by a mix of

rational calculus and irrational behavior. “

Indian Scene

Indian Stock Market has an important place among the stock

markets of the world. With India on the cusp of becoming aneconomic powerhouse, it is a key destination for foreigninstitutional investors. Since the economic reforms of 1991,

Indian stock market has grown in size and stature. Accordingto Goldman Sachs, the economic growth of India couldoutpace that of china by 2015 and could continue to grow at

a fast clip over the next five decades.

The sub-prime crisis in the US in June 2007 which triggeredrecession in the US market quickly spread to other Europeancountries adversely affecting their economies as well. The

consequent global meltdown termed as ‘global recession’engulfed complete world economy with varying degrees ofrecessional impact which was evident the world over from

downturn in jobs, falling stock markets, industry productioncutbacks, salary cuts, etc.

At first it was thought that the fallout of the crisis will be



limited to only the financial sector of advanced economies.At the most there would be a shallow effect on emerging

economies like India. Indian economy withstood the furyfor sometime but soon buckled under the weight of the globalrecessionary trends as can be seen from the Graph which

depicts the BSE 500 index time series analysis from July2001 to June 2013.

Since last five years the Indian stock market behaviour hasbeen turbulent. Global recession adversely affected Indianindustries. Indian companies having major outsourcing deals

from the US are the first ones to suffer adversely impactingtheir share prices. Exports suffered due to reduced demandin US and Europe. Currency exchange fluctuations further

aggravated the situation. Companies with big ticket deals inthe US saw their profit margins shrink. Constrictions in themargins of IT companies and BPOs forced them to cut their

overseas assignments resulting in layoffs. Resultantly ITstocks decreased pulling down the Sensex. The fall in theDow Jones Industrial Average in the US resulted in fall in the

Sensex in the Indian stock market.

Recession apart there were several other collateral factorsdepressing the market. Deceleration in the industrial activity,particularly in the manufacturing and infrastructure sectors

and moderation in the services sector mainly in theconstruction, transport, and communication, trade andhospitality slowed down the Indian economy and the Indian

stock market. GDP growth slumped from above 9% before2008 to below 6% in recent years. RBI has forecast baselineGDP growth of 5.4% in 2014.

Poor job prospect, cut back on expansion plans, pay cuts andretrenchments depressed market sentiments. Reduction in

capital inflows and significant outflows due to economicslowdown further aggravated the market sentiments andbehaviour. Surfacing of mega-scams, corruption scandals

and the resultant policy paralysis of the government weresome other factors to affect the Indian stock marketnegatively.

Thanks to demographic shift, a large number of young Indians

are looking towards the Indian stock market as an investmentoption notwithstanding the inherent risks in investing in stockmarket especially in equities. Gen Y is moving away from

the traditional and safe investment options to more riskyinvestments including investing in stock market with a viewto realizing higher returns in shorter time window.

Stock market movements are bidirectional and can moveeither way perceptibly. Investor sentiments and perceptions

affect the stock market movements. Nevertheless, individualinvestors especially the younger lots do not mind investingin stocks.

Indian economy is still largely agrarian. Hence the stock

market is affected by erratic monsoon. Recent generalelections (in April - May 2014) resulted in a decisive mandatewith expectations of a strong and stable government. This

has resulted in ballooning of expectations. While the electionresults generally had a positive impact on the stock market,the West Asia war, high inflation and Portuguese bank crisis

and other uncertainties have pulled the market down. Whilethe general budget announced in July 2014 received a ‘thumbsup’ from general public as evident from various poll results

of leading newspapers, it received ‘thumbs down’ from stockmarket with one of the reason being news of the Portuguesebank failure!

Indian stock market is still highly skewed being urban-centric.It lacks depth. Indian investors too are largely inexperienced

and lack knowledge in investments. The large majority aretraditional in their outlook, conservative and averse to risk.The younger lot is different and do not mind splurging in

stocks. There is no dearth of analysts in India analyzing thestock market trends and behaviour. But the stock marketperformance seems to elude all these ‘experts’. While it is

true that the Indian stock market prices are reactingsurprisingly fast to new pieces of information and happeningin the country and across the world, it would be interesting

to study the behaviour pattern and resultant performanceusing the econometric model of Hansen’s generalized methodof moments taking into account the geographic,

demographic, economic, Indian psyche, investor sentimentsand perceptions, government and economic policies,structural factors, cultural factors, the effect of news media,

psychological factors, herd behavior, etc.

Conclusion

Fama’s finding that it is difficult to forecast price movementsin the short run forms the basis of efficient market theory. Itled to the development of stock-index funds which have

become popular among risk averse investors. Shiller andHansen focused on longer term price swings (upwards and



downwards) and the extent to which they could be explainedby such elemental features such as dividend payouts onstocks, risk appetite of investors, etc.

The financial market can at once be irrational / inefficientand rational / efficient. The “irrational exuberance” of the

investors can create swings in the market. At the same timesince millions of individuals and institutions are activelyinvolved in the market, their decisions / actions collectively

are inherently efficient. The message therefore to theinvestors, especially individual investors, is to be realisticand ensure that their the investment portfolios are adequately

diversified. Stock market is akin to ice-skating. It requires

References

1. The Royal Swedish Academy of Sciences Press Release dated 14 October 2013, “The Prize in Economic Sciences2013”, Press Release, http://www.nobelprize.org/nobel_prizes/economic_sciences/laureates/2013/press.html

2. “Fama, Shiller, Hansen win Nobel prizes for Asset Price work”, http://www.bloomberg.com/2013-10-14/fama_hansen_shiller_share nobel_economics_ prize_academy_says.html

3. “The Nobel Prize is a three way split”, Economist, www.economist.com

4. Fama, Eugene F. (September–October 1965). “Random Walks In Stock Market Prices”. Financial Analysts

Journal 21 (5): 55–59

5. Fama, Eugene F. (1969), “Efficient Capital Markets: A Review of Theory and Empirical Work”, The Journal of Finance,

Vol. 25, No. 2, Papers and Proceedings of the Twenty-Eighth Annual Meeting of the American Finance AssociationNew York, N.Y. December, 28-30, 1969 (May, 1970), pp. 383-417, Published by: Blackwell Publishing for the AmericanFinance Association

6. Hansen Lars Peter, Sargent Thomas J. (1991), “Rational Expectations Econometrics”, Westview press, ISBN:

9780813378008

7. Hansen Lars Peter, Sargent Thomas J. (2009), “Handbook of Financial Econometrics”, North Holland, ISBN:

9780444535542

8. Hansen Lars Peter, Sargent Thomas J. (2009), “Recursive Models of Dynamic Linear Economies”, Princeton UniversityPress, ISBN: 9780691042770

9. Shiller R J., (1981), “Do Stock Prices Move Too Much to be Justified by Subsequent Changes in Dividends?”, TheAmerican Economic Review, June, Pp 421-436

10. Shiller R J., (2005), “Irrational Exuberance”, Princeton University Press, 2nd Ed

11. Shiller R J., (2003), “From Efficient Market Theory to Behavioural Finance”, Journal of Economic Perspectives,Vol.17, No. 1, Pp 83-104

12. www.businessweek.com

practice, patience and perseverance. Even then at the peakof performance one can skid.

As James Poterba, President of the National Bureau ofEconomic Research says it is praiseworthy of the Nobelcommittee for recognizing the work of these researchers

“without waiting in some sense for the complete resolutionof these different views.” This clearly underscores theimperfections in the market. As some wag says ‘perfection’

lie in ‘imperfection’! A multi-variate multi-dimensionalanalysis of the Indian stock market mixing behaviouraltheories with rigorous econometric models should throw up

some interesting conclusions.



Introduction :

Hong Kong has a free market economy highly dependent oninternational trade and finance - the value of goods andservices trade, including the sizable share of re-exports, is

about four times GDP. Hong Kong’s open economy left itexposed to the global economic slowdown, but its increasingintegration with China helped it recover from the downturn

more quickly than many observers anticipated. Hong Kongover the past few years has become increasingly integratedwith China through trade, tourism, and financial links. Hong

Kong has also established itself as the premier stock marketfor Chinese firms seeking to list abroad. The main index ofHongkong is Hang Seng . The Hang Seng Index, is a freefloat-

adjusted market capitalization-weighted stock market index inHong Kong. It is used to record and monitor daily changes ofthe largest companies of the Hong Kong stock market and is

the main indicator of the overall market performance in HongKong. These 43 constituent companies represent about 60%of capitalisation of the Hong Kong Stock Exchange. About

40% of the firms listed on the Hong Kong Stock Exchange arenow mainland Chinese companies. These firms account for60% of the Exchange’s market capitalization and over 70% of

turnover. During the past decade, as Hong Kong’smanufacturing industry moved to the mainland, its serviceindustry has grown rapidly and in 2009 accounted for more

than 90% of the territory’s GDP. Hong Kong’s natural resourcesare limited, and food and raw materials must be imported. GDPgrowth averaged a strong 4% from 1989 to 2008. Hong Kong’s

GDP fell in 2009 as a result of the global financial crisis, but arecovery began in third quarter 2009. Hong Kong continuesto link its currency closely to the US dollar, maintaining an

arrangement established in 1983.

Singapore has a highly developed and successful free-marketeconomy. It enjoys a remarkably open and corruption-freeenvironment, stable prices, and a per capita GDP higher than

that of most developed countries. The economy dependsheavily on exports, particularly in consumer electronics,information technology products, pharmaceuticals, and on a

growing financial services sector. Real GDP growth averaged6.8% between 2004 and 2008, but contracted 2.1% in 2009 as aresult of the global financial crisis. The economy has begun to

rebound in 2010 and the government predicts growth of 3-5%for the year. Over the longer term, the government hopes toestablish a new growth path that focuses on raising

productivity growth, which has sunk to 1% per year in the lastdecade. The major index of Singapore is STI (Strait TimesIndex). The Straits Times Index (STI) is a market value-weighted

stock market index based on the stocks of 30 representativecompanies listed on the Singapore Exchange. Launched in thewake of a major sectoral re-classification of listed companies

by the Singapore Exchange, which saw the removal of the“industrials” category, the STI replaced the Straits TimesIndustrials Index (STII), and began trading 31 August 1998 at

885.26 points, in continuation of where the STII left off. Then,it represented 78% of the average daily traded value over a 12-month period and 61.2% of total market capitalisation on the

exchange.

Malaysia’s economic record has been one of Asia’s best sinceits independence. Real gross domestic product (GDP) grew byan average of 6.5% per year from 1957 to 2005. Performance

peaked in the early 1980s through the mid-1990s, as theeconomy experienced sustained rapid growth averaging

CONVOLUTED MULTIPLE-FACTOR APPROACH TOEVALUATE PERFORMANCE OF SOUTH ASIAN EQUITY MARKETS

Dr. Suyash BhattPrin. L. N. Welingkar Institute of Management, Alumni of GNIMS • Email: [email protected]

ABSTRACT

This paper studies the relationship between four major exchanges in South Asia belonging to emerging

economies like China, Singapore, Malaysia and India. The South Asian Market is the fastest growing market in

the world. The study evaluates major exchange of these economies on the basis of Risk-Return analysis, Capital

Asset Pricing Model (CAPM), Correlation Coefficient, Alpha, Treynors Ratio and Optimal Portfolio. The MSCI

Emerging Market Index is taken as a benchmark for this study in calculation of Beta for CAPM.

Keywords: Risk-Return analysis, Capital Asset Pricing Model (CAPM), Correlation Coefficient, Alpha,Treynors Ratio and Optimal Portfolio.


almost 8% annually. High levels of foreign and domesticinvestment played a significant role as the economydiversified and modernized. Once heavily dependent on

primary products such as rubber and tin, Malaysia today is amiddle-income country with a multi-sector economy basedon services and manufacturing. The government continues

to actively manage the economy. Malaysia’s New EconomicPolicy (NEP), first established in 1971, was a 10-year planthat sought to rectify a situation whereby ethnic Malays and

indigenous peoples (“bumiputera”), who comprised nearly60% of the population, held less than 3% of the nation’swealth. The Malaysian economy went into sharp recession

in 1997-1998 during the Asian financial crisis, whichaffected countries throughout the region, including SouthKorea, Indonesia, and Thailand. Malaysia’s GDP contracted

by more than 7% in 1998. Malaysia narrowly avoided a returnto recession in 2001 when its economy was negativelyimpacted by the bursting of the dot-com bubble (which hurt

the ICT sector) and slow growth or recession in many of itsimportant export markets. The global financial crisis threwMalaysia into recession again in 2009, and the government

expects a contraction in GDP of around 3% for the year.Malaysian banks are well capitalized and have no measurableexposure to the U.S. sub-prime market. Bursa Malaysia

(KLSE) is an exchange holding company approved underSection 15 of the Capital Markets and Services Act 2007. Itoperates a fully-integrated exchange, offering the complete

range of exchange-related services including trading, clearing,settlement and depository services. Bursa Malaysia also hasa range of progressive products and services which covers

equities, derivatives, offshore listings and services, bondsand Islamic offerings.

India is developing into an open-market economy, yet tracesof its past autarkic policies remain. Economic liberalization,including reduced controls on foreign trade and investment,

began in the early 1990s and has served to accelerate thecountry’s growth, which has averaged more than 7% per yearsince 1997. India’s diverse economy encompasses traditional

village farming, modern agriculture, handicrafts, a wide rangeof modern industries, and a multitude of services. Slightlymore than half of the work force is in agriculture, but services

are the major source of economic growth, accounting for morethan half of India’s output, with only one-third of its laborforce. India has capitalized on its large educated English-

speaking population to become a major exporter of informationtechnology services and software workers. An industrialslowdown early in 2008, followed by the global financial crisis,

led annual GDP growth to slow to 6.5% in 2009, still the secondhighest growth in the world among major economies. India

escaped the brunt of the global financial crisis because ofcautious banking policies and a relatively low dependence onexports for growth. India’s fiscal deficit increased substantially

in 2008 due to fuel and fertilizer subsidies, a debt waiverprogram for farmers, a job guarantee program for rural workers,and stimulus expenditures. The government abandoned its

deficit target and allowed the deficit to reach 6.8% of GDP inFY10. Nevertheless, as shares of GDP, both governmentspending and taxation are among the lowest in the world. Over

the long-term, a growing population and changingdemographics will only exacerbate social, economic, andenvironmental problems. The oldest and major index of India

is BSE. The BSE Sensex or Bombay Stock Exchange SensitivityIndex is a value-weighted index composed of 30 stocks thatstarted January 1, 1986. The Sensex is regarded as the pulse of

the domestic stock markets in India. It consists of the 30 largestand most actively traded stocks, representative of varioussectors, on the Bombay Stock Exchange. These companies

account for around fifty per cent of the market capitalisationof the BSE.

Objectives of Study

1. To find if there is correlation between the four SouthAsian Markets.

2. To compare the performance of the four stock marketswith the emerging markets.

Literature Review

THOMAS C. CHIANG,SHUH-CHYI DOONG(2001) in theirstudy found that volatility is an important indicator of

performance of stock market. As per this paper volatility andreturns are positively related. However, the greater the volatilityhigher is the risk of investing in that markets. Volatility is

higher in Hongkong market and least in Singapore market butthe expected returns are also in that order which compensatesfor the extra risk. Also the SGX, KLSE and Hangseng are

significantly affected by unexpected volatility, which indicatesthere is a higher risk involved and the market movements areunpredictable. The asymmetric effect also impacts these

markets as far as daily returns are concerned. The asymmetriceffect helps in evaluating performance as if it is high, investorswould shy away from investing in these markets as returns are

unpredictable which will affect the performance of the markets.However, the effect has no impact on the monthly data whichis a positive point from a long term investors point of view.

BILL WAN-SING HUNG AND YAN-LEUNG CHEUNG(1995)in their study found that cointegration implies whether there

is a long term relationship among five Asian emerging markets.Cointegration is used by the foreign investors to diversify

Convoluted multiple-factor approach to evaluate performance of South Asian equity markets


risk. When the stock prices are taken in local currency, theresearch indicates that there is no cointegration among themarkets. However, if the weekly data is taken in dollars it

indicates there is cointegration. This may be because ofdepreciation of US dollar in that period. The effect of exchangerate risk is important because the equity returns relevant to

international investors, particularly the US investor, are returnsin US dollars, they include the returns from the local stockreturns and exchange rate fluctuations. Thus, we can conclude

that performance of these markets is interdependent on eachother (i.e correlation exists) if we take exchange rate risk intoconsideration. Thus, the benefits of international

diversification by investing in the Asian-Pacific region maybe limited.

SOENEN , LUC (2002) found through their study that theequity markets of Australia, China, Hong Kong, Malaysia, NewZealand, and Singapore are highly integrated with the stock

market in Japan. There is also evidence that these Asian marketsbecome more integrated overtime, especially since 1994.According to the report, higher import share as well as a

greater differential in inflation rates, real interest rates, andgross domestic product growth rates have negative effectson stock market comovements between country pairs.

Conversely, increased export share by Asian economies toJapan and greater foreign direct investment from Japan to otherAsian economies contribute to greater comovement.

SUCHISMITA BOSE AND PARAMITA MUKHERJEE

(2006)found that Indian index is most highly correlated withthe Singapore STI index, and is also very highly correlatedwith the stock index of Malaysia. Stock returns in India are

seen to be highly correlated with returns in major markets likeHong Kong, Singapore. More importantly, during the periodof our study, returns on the Indian BSE Sensex, is also seen to

exert considerable influence on stock returns in Japan andKorea, along with Taiwan and to an extent Malaysia, thoughwith a low probability. On the other hand, the degree of

integration found between different markets show that thereis still much scope for reaping benefits of portfoliodiversification, at least in the short term, by investing in Indian

markets, as integration of Asian markets is not of a very highorder leaving sufficient room for switching between maturemarkets like the US and the Asian markets and India.

MOHD TAHIR ISMAIL AND ZAIDI BIN ISA(2008) in theirstudy on VAR model, found that the three stock markets are

not cointegrated. Therefore, the authors assume the returnsdata are regime-dependent and they used the two regimemultivariate Markov switching vector autoregressive (MS-

VAR) model with regime shifts in both the mean and the

variance to extract common regime shifts behaviour fromthe return series. It is found that MS-VAR model with tworegimes manage to detect common shifts in all the stock

markets return series and this show evidence of comovementamong the three returns series. Furthermore, we also foundthat the MS-VAR model manage to capture a satisfactory

timing of the 1997 financial crisis that happen in the threecountries.

Research Methodology

• In order to evaluate the performance of south Asianequity markets we have compared it with the MSCIEmerging Markets Index.

• We have calculated the average return and risk for each

index.

• We have also found the inter correlation between the

South Asian markets to find out whether theirperformance is dependent on each other.

• We have found out the optimal portfolio so as to guidean investor in India in what proportion he should invest

in these markets

• We then calculated Beta value, to the find the change

in one index due to 1% change in MSCI index.

• We have also calculated Alpha to check theperformance of the Indices.

• In addition we have calculated Treynors ratio andSharpe ratios to check the performance of indices.

• We have also carried out the regression analysis tofind out how much each index contributes to the MSCI

index

Alpha has two applications in the capital market. They are asfollow:-

1. A measure of performance on a risk-adjusted basis.Alpha takes the volatility (price risk) of a mutual fundand compares its risk-adjusted performance to a

benchmark index. The excess return of the fund relativeto the return of the benchmark index is a fund’s alpha.

2. The abnormal rate of return on a security or portfolio inexcess of what would be predicted by an equilibrium

model like the capital asset pricing model (CAPM).According to first application, Alpha is considered torepresent the value that a portfolio manager adds to or

subtracts from a fund’s return. According to secondapplication, if a CAPM analysis estimates that aportfolio should earn 10% based on the risk of the

portfolio but the portfolio actually earns 15%, the



portfolio’s alpha would be 5%. This 5% is the excessreturn over what was predicted in the CAPM model. Apositive alpha of 1.0 means the fund has outperformed

its benchmark index by 1%. Correspondingly, a similarnegative alpha would indicate an underperformance of1%.

Jack Treynor that measures returns earned in excess of thatwhich could have been earned on a riskless investment per

each unit of market risk. The Treynor ratio is calculated asfollow: (Average Return of the Portfolio - Average Return ofthe Risk-Free Rate) / Beta of the Portfolio

In other words, the Treynor ratio is a risk-adjusted measure of

return based on systematic risk. It is similar to the Sharpe ratio,with the difference being that the Treynor ratio uses beta asthe measurement of volatility.

Data Analysis & Findings:

Figure 1: Average returns of the four south Asian markets :

The returns are calculated by taking into consideration theten year data (for Data refer Appendix: Table 1). From the above

graph we can see that India has given the maximum returnsfollowed by Singapore. The main reason for India giving highreturns is due to strong FII and FDI flowing into the economy.

Also the Indian economy has strong fundamentals, owing towhich the Indian markets were least affected by recession ascompared to other markets. During the recession period in

2008-2009 the Malaysian markets fell the least (22.59%)followed by India, Singapore and Malaysia. Also the recoveryin 2010 took place faster in Singapore followed by India,

Hongkong and Malaysia.

The returns are calculated by taking into consideration theten year data (for Data refer Appendix: Table 1). From the abovegraph we can see that India has the highest risk followed by

Singapore, Hongkong and Malaysia. India is the riskiestfollowed by Singapore, Hongkong and Malaysia. Howeverthe returns are also in that order which confirms with the

Markowitz theory that investors are risk averse and higherrisk needs to be compensated with higher returns.

Figure 2: Average Risks for the four South Asian Markets

Figure 3: Correlation among the four markets:

The returns are calculated by taking into consideration theten year data (for Data refer Appendix: Table 2). From the

above graph we can see that Singapore is highly correlatedwith Hongkong and Malaysian markets, whereas Hongkongis highly correlated with Singapore and Hongkong. India is

least correlated with Singapore and Malaysian markets withmoderate correlation with Hongkong markets. Thus theinvestor can get diversification benefits by investing in India

and other markets. Also Indian markets are least dependent onthe three Asian markets.

Figure 4: Graph of Alpha, CAPM & RFR for four markets

In this research paper, we have used it according to the secondapplication. We have first calculated the beta of the portfolioby using covariance of portfolio and MSCI index and variance



of MSCI index. We have calculated risk and return of theportfolio by giving weights to each country according tooptimam portfolio theory wher India is assighned weight of

0.94 and Malasyia is given the weight of 0.06 . The return ofMSCI and the portfolio for last 5 years are taken to calculatecovariance of the portfolio and MSCI, beta of the portfolio.

The beta is then used to calculate expected return of theportfolio through CAPM model which is then used tocalculate alpha of the portfolio. For beta of individual

country, we have first calculated covariance of country withMSCI index and then calculated beta. This beta is then usedto calculate beta of individual country. The beta is then used

to calculate expected return of the portfolio through CAPMmodel which is then used to calculate alpha of the eachcountry. The expected return of the portfolio is 4.66% using

CAPM model. ( beta of port folio is 0.24, return of marketof MSCI is -6%, risk free rate is 8%).

Alpha= actual return- expected return

Since more weight is given to India in the portfolio, theaverage return of portfolio is very high compared to return

of the CAPM model. Therefore the alpha of the portfolio isvery high. But when we compare the average return ofindividual country with the expected return of the portfolio,

then the alpha is lower for Singapore, Hong Kong, Malaysiabut higher for India. The reason is that the average return ofIndia in last 5 years is much more higher than other countries.

Also other three countries risk free interest rate is very lowcompared to India. Therefore, their CAPM return are lowerand therefore their alpha are higher. Otherwise, their alpha

would have been much lower. We can also see that ratio issame for Singapore and Hong kong which shows that theyare behaving in the same way i.e the both markets are highly

correlated. Malaysia is little lower but it can also be concludethat it has high correlation with Singapore and Hong Kong.(For Data refer Table 3, Table 4, Table 5, Table 6 of Appendix)

Figure 5 : Graph of Treynor Ratio, Return, RFR & Beta forfour markets

For our research , we have first calculated the beta of the

portfolio by using covariance of portfolio and MSCI indexand variance of MSCI index. We have calculated risk andreturn of the portfolio by giving weights to each country

according to optimal portfolio theory where India is assignedweight of 0.94 and Malaysia is given the weight of 0.06 .The return of MSCI and the portfolio for last 5 years are

taken to calculate covariance of the portfolio and MSCI, betaof the portfolio. The beta is then used with averge return ofportfolio to calculate treynor’s ratio of the portfolio. For

beta of individual country, we have first calculated covarianceof country with MSCI index . This is then used to calculatebeta of individual country. The beta is then used with averge

return of each country to calculate Treynor’s ratio of theeach country.

Table 8 : Treynor Ratio, Return, RFR & Beta for four markets

Here we can see that the ratio is higher for India. The reasonis that the return are higher compared to other market andthe beta is lower than other markets. Higher the Treynors

ratio, better it is. We can also see that ratio is same for

Singapore and Hong Kong which shows that they are behavingin the same way i.e the both markets are highly correlated.

Malaysia is little lower but it can also be conclude that it hashigh correlation with Singapore and Hong Kong. (For Datarefer Table 3, Table 4, Table 5, Table 6 of Appendix)

Figure 6: Beta with respect to MSCI emerging markets Index:

As can be seen from the above graph the beta for Singaporeand Hongkong are moderate whereas for Malaysia and India

it is very low(For Data refer Table 3, Table 4, Table 5, Table 6of Appendix). This indicates that Singapore and Hongkongare largely dependent on how emerging markets perform



whereas India and Malaysia are not much dependent on how

these emerging markets perform. The correlation is least forIndia which supports the fact that India was least affected byrecession when the returns of emerging markets fell.

Figure 7: Sharpe ratio for the four south Asian countries.

The Sharpe ratio or Sharpe index or Sharpe measure orreward-to-variability ratio is a measure of the excess return

per unit of risk in an investment asset or a trading strategy(For Data refer Table 3, Table 4, Table 5, Table 6 of Appendix).The Sharpe ratio is used to characterize how well the return

of an asset compensates the investor for the risk taken, the

higher the Sharpe ratio number the better. If we look at thegraph above the sharpe ratio is highest for India followed byMalaysia, Hongkong and Singapore. This indicates that by

investing in India you are better compensated for risk ascompared to investing in other three countries. However, thesharpe ratios are moderate to low for these countries

indicating that it is risky to invest in these countries. This isbecause of the fact that these are emerging countries,therefore uncertainty of returns are high.

Figure 8: Optimal Portfolio

The optimal portfolio gives the proportion in which youshould invest in these four countries so as to maximize

returns and minimize risk. Using excel solver and keepingreturn constant and objective to minimize the risk , weightswere found out. All such portfolios were plotted and CML

was drawn to find optimal portfolio.

Table 9 : Optimal Portfolio.

This indicates that you should invest in the above weights soas to maximize returns and minimize risk and to optimizethe sharpe ratio.

Table 10: Regression analysis of South Asian markets

Regression gives us a linear equation which gives us therelationship between dependent and independent variable.Regression gives us the best –fit line reflecting the

relationship between the two. The output below was runthrough SPSS taking MSCI Emerging market Index asdependent variable whereas taking Singapore index , Malaysia

Index, KLSE index and BSE index as independent variable.Here we get the regression equation as:M S C I = 0 . 6 8 0 8 * S i n g a p o r e + 0 . 2 3 7 * H o n g

Kong+0.327*Malaysia+-0.034*India

This equation indicates how much each independent variablecontributes to the changes in dependent variable. Thus, in thiscase, Singapore contributes about 68% ,Hongkong

contributes about 23.7%, Malaysia contributes to around32.7% and India contributes to around -3.4%. This indicatesthat all the dependent variables positively affect the MSCI

index except India. As can be seen Singapore contributesmaximum followed by Malaysia, Hong Kong and India. Theconstant here shows how much the MSCI index is dependent

on other countries and it indicates a strong negative


Model Unstandardized

Coefficients

B Std. Error 1 (Constant) -1.274 1.659 Singapore .680 .525 HongKong .237 .480 Malaysia .327 .534 India -.034 .378


relationship which indicates when other emerging marketsgo down, the MSCI index would be very largely affected.

Conclusion:

From this research paper we conclude several things aboutthe performance of the markets. Firstly, the Indian market isleast correlated with the three markets whereas Singapore is

References:

• Bose, S., & Mukherjee, P. (2006, January). A Study of Interlingages Between the Indian Stock Market and Some Other Emerging andDeveloped Markets. InIndian Institute of Capital Markets 9th Capital Markets Conference Paper.

• Chiang, T. C., & Doong, S. C. (2001). Empirical analysis of stock returns and volatility: Evidence from seven Asian stock markets

based on TAR-GARCH model. Review of Quantitative Finance and Accounting, 17(3), 301-318.

• Dawson, S. M. (1987). Secondary stock market performance of initial public offers, Hong Kong, Singapore and Malaysia: 1978–1984. Journal of Business Finance & Accounting, 14(1), 65-76.

• Hung, B. W. S., & Cheung, Y. L. (1995). Interdependence of Asian emerging equity markets. Journal of Business Finance &

Accounting, 22(2), 281-288.

• Ismail, M. T., & Isa, Z. B. (2008). Modelling Nonlinear Relationship Among Selected ASEAN Stock Markets. Journal of Data

Science. c, 6, 533-545.

• Johnson, R., & Soenen, L. (2002). Asian economic integration and stock market comovement. Journal of Financial Research, 25(1),141-157.

• Raj, J., & Dhal, S. (2008). Integration of India’s stock market with global and major regional markets. Bank for International

Settlements Press & Communications CH 4002 Basel, Switzerland, 202.

• Singh, T., Mehta, S., & Varsha, M. S. (2011). Macroeconomic factors and stock returns: Evidence from Taiwan. Journal of Economics

and International Finance, 2(4), 217-227.

• Yang, T., & Lim, J. J. (2004). Crisis, contagion, and East Asian stock markets.Review of Pacific Basin Financial Markets and

Policies, 7(01), 119-151.

highly correlated with these markets. Secondly, the ratioswhich are calculated show that India has outperformed themarkets followed by Honk Kong, Malaysia and Singapore.

The optimal portfolio also suggests you should invest in Indiaand Malaysia to maximize returns. Finally the regressionequation shows that MSCI index better reflects Singapore

followed by Hong Kong, Malaysia and India.





The growth story and marketing strategies of Google and

Apple make interesting study. Both have grown in size andstature but with contrasting marketing strategies. WhileApple uses market skimming strategy to tap its niche

customer base, Google adopts the volume game.

Apple is one of the leading mobile phone companies in theworld. The company has been rolling out new versions ofthe phone with better features leveraging the ever changing

technology world. Apple, under Steve Jobs, transformed themobile experience for its niche customers by deliveringsurfeit of products of excellence one after the other ranging

from iPod to iPhone series to iPad series to iCloud. Thecompany adopted market skimming strategy in pushing eachof these product ranges by targeting its loyal marquee

customers. The prices were pitched high to create aperception in the market that its products are significantlysuperior in technology and quality.

Google and its eco-system partners on the other hand adoptvolume strategy, i.e., selling in large volume with multiple

numbers of devices at all price points so as to attract andcover customers in every segment of the population. Applein terms of positioning its devices in the market has

succeeded in remaining a step ahead of Google with its

MARKETING STRATEGIES OF GOOGLE AND APPLE


ABSTRACT

Google and Apple have grown tremendously in the last two decades and have brought significant and

profound changes in the field of information and communication technology. Through series of innovations,

both the multinational companies have introduced a range of innovative products and services much to the

delight of the customers resulting in multiple channels of communication and entertainment. These have

brought paradigm shifts in people’s lifestyle and the way they communicate across the world. The paper

examines the contrasting marketing strategies of the two corporate in their pursuit to reach out to the

consumers.

Android eco-system by transforming a media device to a

phone to a tablet with enhanced user interface and contentsand apps. As per ABI Research, iPhone users at about 300million users are roughly one-third of the 900 million

Android users. Still Apple commands a market premium fromits loyal band of customers. For this strategy to work, Applehas to constantly innovate and be the first mover in each

product category so as to keep its marquee clients basecontented and loyal. Its loyal customers will not mind payinga premium price for new product launches as long as product

innovation occurs. What is significant and should be ofconcern to Apple is that its marquee customers who are priceinelastic is limited and forms a fraction of the potential

smartphone users in the world estimated at about 5.6 billionby 2019.

In recent times, there is a small but perceptible shift in Applemarketing strategy. Its foray outside its marquee client base

is evident by lowering of prices of some of its existingmodels and launching of low cost ‘c’ variations of its iPhoneseries and less fancier iPad mini. To attract customers on

the fringes of its marquee ring, Apple is using the operatorsubsidy model. They offer buy-back prices for old modelsto sell their newer versions to their existing clientele. It is

also trying to strengthen its non-device revenues by acquiring


Beats Audio which allows Apple to manage musicsubscription and recommendation market. In contrast,Google with its Android eco-system has stuck to volume

strategy.

Another interesting contrast is that while Apple has not come

up with a new product since iPad in 2010, Samsung, thepredominant Android devise maker has been rolling outseveral variants almost matching the features of Apple

iPhones. Surely a shake-up is required in Apple to squeezeout some juicy products to its marquee customers and thosein the fringes. It would therefore be interesting to see how

Apple would stay afloat in these emerging competition – willthey continue with their market skimming strategy throughinnovative products and selling them at a premium to its loyal

customers or shift focus to revenue generation from non-device sources and to volume strategy by selling low costvariants.

Google with its Glasses and Samsung with its Android

watches have taken a lead in wearable devices. It is reportedthat Apple too is looking in this direction having patentediWatch signaling plans to launch a watch-like wearable

device. The iWatch marks Apple’s first entry into personal

luxury goods market and will be the closest the company hascome to selling a fashion accessory. It is turning computersinto wearable fashion device and must-have items as

smartphones which are increasingly becoming commoditizeditems are losing their appeal.

While it may be too early to say whether ‘smartwatches’ willdisrupt the luxury Swiss watch industry, iWatch could havesome potential impact at lower price points if there is spurt

in demand for iWatches. It is speculated that iWatch wouldcontain many health and fitness sensors and access to featureslike messages and notifications through integration with

iPhone and iPad. It is also said that Apple is enlisting starathletes to test iWatch fitness technology. If iWatch comeswith power-packed features with same “status symbol power”

like most other products of Apple, it could give some elbowroom to Apple to pursue its market skimming strategy withits loyal marquee customers.

The above comparative study underscores the fact that in an

intensely wired world with marked changes in consumerpreferences and behaviour, companies have to mix and matchtheir marketing strategies to stay afloat.

Compiled from various blogs, news items from TOI and ET

Marketing Strategies of Google and Apple


SAFETY AND SECURITY OF ONLINE SHARE TRADING

Deepak PatilFaculty, Guru Nanak Institute of Management Studies, Mumbai - 400 019.

ABSTRACT :

The internet using community is increasing day by day. There is an uptick in online Share Trading aswell. Mobile and Internet convergence is changing things drastically benefitting common man. Onlineshare trading and Mobile share trading is helping people to trade directly instead of through brokers.

This Paper examines the safety and security aspects of online share trading.

Keywords: Stock Market, Online Share Trading, Cyber Frauds, SEBI

Over the decade of the 1990s, the equity market has acomplete transformation of the market design. All stock

exchanges in India switched to order matching by computers,which worked extremely well as compared with Traditionalhuman market makers which were utilized previously. the

depository agencies, eliminated the operationalvulnerabilities associated with physical share certificate. Inrecent years retail participation in Stock market is increasing

at steady due to stock market awareness among many Indianpeople. Online stock trading offer investors access to avariety of tools and research that just a few years ago were

only available through full service brokerage accounts. Thereis an acute rise in cases of cyber crimes, you should takeadequate precaution while trading online. So how can you

prepare yourself to make online day trading safer? Educationand practice are the key.

Online Trading Safe Online Trading Tips

Online Trading has also been exploited by hackers andfraudsters to deceive the Investor details and commit frauds.it is important for Investor to know that “SecUrity is

incomplete without U”. Investor need to follow securecomputing guidelines to avert any frauds or security breachesto their accounts, as keys to the internet trading accounts are

held by respective account owners in the form of Trading IDand Trading Password.

1. The Default password provided by the broker ischanged before placing of order. Ensure that passwordis not shared with others. Change password at periodic

interval. Memorise your PASSWORD, do not write itdown anywhere.

2. Avoid placing order from the shared PC’s / through

cyber cafés.

3. Log out after having finished trading to avoid misuse.

4. Ensure that one does not click on “remember me”option while signing on from non regular location.

5. Do not leave the terminal unattended while one is“signed-on” to the trading system.

6. Always visit your broker’s site by typing the Brokerwebsite address on to the browser’s address bar. Users

are encouraged to add the Broker’s URL to Favoritesor Bookmark in the user computer browser.

7. Protect your personal computer against viruses byplacing firewall and an anti-virus solution.

8. You should not open email attachments from peopleyou do not know.

9. Disable Auto complete forms in internet explorer and

clear all saved passwords.

10. Never select Auto fill option and save option forbrowsers.

11. Use virtual keyboard feature while logging into yourinternet Trading account.

12. Always type your confidential account information.Do not copy paste it.

13. Monitor your transactions Statement (Contract note)regularly.

14. Always logout when you exit Trading Account. Do not

directly close the browser.

15. Never disclose your account credentials like Email,


PAN, Email password, Login or transaction passwordsetc to anyone including broker’s representatives

Preventing Online Frauds

1. Do not provide photocopies of both the sides of thecredit card to anyone. The card verification value(CVV) which is required for online transactions is

printed on the reverse of the card. Anyone can use thecard for online purchases if the information isavailable with them.

2. Do not click on links in email seeking details of your

account, they could be phishing emails fromfraudsters. Most reputed companies will ask you tovisit their website directly.

3. While using a credit card for making payments online,check if the website is secure The CVV will also be

required.

4. Do not give any information to persons seeking creditcard information over phone

5. Notify your bank / credit card issuer if you do notreceive the monthly credit card statement on time. Ifa credit card is misplaced or lost, get it cancelled

immediately.

Online Trading safety measures suggested by SEBI

Capital market regulator SEBI (Securities and ExchangeBoard of India) has directed stock exchanges to ensure thatadditional security measures are taken by brokers offering

internet based trading (IBT) and securities trading usingwireless technology (STWT). SEBI has also asked forsystems to have adequate safety features against internal and

external attacks and has asked brokers to have an alternativechannel of communication with Investors that has adequatecapabilities to identify and authenticate Investors.

Email & SMS Alert from Exchanges.

SEBI receives complaints from investors against stockbrokers which include alleged unauthorized trading in their

accounts. SEBI through circular (CIR/MIRSD/15/2011)directed to exchanges to send direct trade confirmation alertto investor via Email and SMS.

SEBI has advised brokers to use two factor authenticationsfor a login session, one to get into the system and the other

to execute a transaction, where the two factors used shouldnot be the same.

Two Factor Authentication

“Two Factor Authentication” security process where Investor

need to include a second transaction password, which is sentas an instant SMS on their mobile phone to complete theOnline Security Transaction. Systems should log out

automatically in case there is no activity by the Investor duringa session to ensure safety, said SEBI. Brokers have been askedto implement these within nine months from the date of this

circular.

SEBI has also asked brokers to have disaster recovery centres

at another location so that brokers are able to deliver on-siteas well as from their remote sites. Exchanges have beendirected to have a system that monitors complaints on

unauthorised access using IBT (Internet Based Trading) andmake necessary amendments to their bye-laws, rules andregulations.

Post Trading

Every trade online or offline that takes place on the Exchange,

the trading member (Broker) issue contract note within 24hours from the date of execution of the trade. Generally,internet based Investors opt for Digital contract notes. Hence,

at the time of Investor registration Investor should providean email id which is regularly used. In case Investor wishesto receive physical contract notes, he may specify so in the

Investor registration document and cut off the email idcolumn. Investor needs to regularly check the contract notesand if any variation in the trades is found needs to take up theissue with the trading member immediately. Besides the

Contract Notes, trading member needs to issue quarterlystatement of funds and securities to the Investor and suchstatement can be digitally issued if Investor has opted for

digital document.

Conclusion

In this fast forward life, The Internet using community willincrease day by day. Online share trading is aiming a longinnings for sure. When mobile and Internet convergence take

place things will change drastically. Mobile share trading willfunction in full swing within years. Convergence oftechnology only means advantage to the common man. To

save cost, brokers are now promoting online trading. AInvestor who does not have an internet trading account has tocontact a dealer of a brokerage either in person or over the

phone to buy and sell stocks. This means establishment costsfor a broker in terms of hiring a dealer and establishing alocal office.

Apart from rise in online Trading there is also acute rise incases of cyber crimes like email threats, tampering with

source code, website hacking, phishing and credit card fraudin the last few years. In Mumbai, a total 49 cases were


registered under cyber crime, while the figure in 2011 roseto 86. In Maharashtra total crime register in 2012 rose to471 which is 53.9% greater than 2011. Age group of people

involved in cyber crime is between 18 - 45. What surpriseme is even minors are also involved in cyber crime around13 cyber crime cases register 2012.

The online trading systems in place today have robust securityfeatures that make them ultra secure. You do not have to worry

about somebody breaking in your account and running awaywith all your money. Technology aside, trading online canbecome very dangerous for people that are not properly

prepared. Secure Online trading is no joke.

Only sound IT and security knowledge can help you to secure

yourself from such cyber crime. SecUrity is incomplete

without U

Reference :

• http://www.thehindubusinessline.com

• http://www.sebi.gov.in/• http://www.bseindia.com

• http://www.nseindia.com• http://www.dnaindia.com (20-June-2012)

• http://cybercellmumbai.gov.in/• http://ncrb.gov.in

• http://www.icicibank.com


Innovation distinguishes between a leader and a follower.

- Steve Jobs

Without change there is no innovation, creativity, or incentive for improvement. Those

who initiate change will have a better opportunity to manage the change that is inevitable.

- William Pollard

There is no innovation and creativity without failure. Period.

- Brene Brown

Software innovation, like almost every other kind of innovation, requires the ability tocollaborate and share ideas with other people, and to sit down and talk with customersand get their feedback and understand their needs.

- Bill Gates

Exploration is the engine that drives innovation. Innovation drives economic growth.So let’s all go exploring.

- Edith Widder

Business has only two functions - marketing and innovation.

- Milan Kundera

Our future growth relies on competitiveness and innovation, skills and productivity...and these in turn rely on the education of our people.

- Julia Gillard

Most of us understand that innovation is enormously important. It’s the only insuranceagainst irrelevance. It’s the only guarantee of long-term customer loyalty. It’s the onlystrategy for out-performing a dismal economy.

- Gary Hamel

Quotes…

Documents

Sansmaran - June - Indian Ca - GNIMS...Study of Challenges faced by SME’s with Respect to Human Resource Processes GNIMS - Resear ch Journal “SANSMARAN” - Vol. 4, Issue - 1 -