Using Hofstra University Application Essay Samples

Utilizing Hofstra University Application Essay SamplesWhen you are composing your future school application article, having a broad library of Hofstra University application exposition tests is significant. It guarantees that you don't bomb your school affirmation paper, just as giving you certainty when composing your own essay.Writing an article can be an overwhelming undertaking for a few and this is the reason there are such huge numbers of individuals who set aside the effort to discover a library brimming with papers from specialists, including the most elite - exposition tests. This can make the activity a lot simpler in light of the fact that you will as of now know about the configuration of your future paper and how the different composing styles work with each other.When you are prepared to compose your future school application exposition, you need to be certain that you have the trust so as to give an elegantly composed article. You have to set up your thoughts and ensur e that you realize how to utilize your sentences to recount to the story and to make your article intriguing. The most ideal approach to get this all off the beaten path is to take a gander at some Hofstra University application exposition tests before you start writing.One of the primary things that you need to do when you are getting ready for your school paper is to ensure that you spread the important data for your article in the first place. This is the foundation of any article, and the part will assist you with recounting to your story as an understudy. The principal thing that you have to do is locate your three essential focuses and afterward begin recounting to your story in your essay.The first thing that you need to think about when you are composing an article is the thing that kind of school you are joining in and what sort of school is your future school. Remember this data while you are glancing through the different themes that are accessible for your article. A sig nificant number of the expositions are as of now pre-set dependent on your school data, so you might need to consider finding out about that before you begin to consider how you will move toward different pieces of your essay.The next thing that you need to know when you are composing your school application article is the way you will move toward the point. This is the most significant piece of the exposition, and it is important that you pick your words cautiously. This implies you should be sure that you realize how to utilize appropriate punctuation and spelling when you are composing your school application article. A portion of the tips that you will learn incorporate utilizing appropriate spelling for first and last names, ensuring that the correct terms of warmth are utilized all through the paper, and realizing how to appropriately address a kindred colleague during the affirmations process.The most significant piece of the school application article, in any case, is the ti tle and the presentation. This is the part that permits your peruser to discover what your exposition is about and what it is about specifically. Ensure that your title and presentation are solid and distinct, and make certain to make your peruser need to proceed on the remainder of your essay.Writing a school application article doesn't need to be troublesome or overpowering on the off chance that you utilize the correct composing style and strategies. Knowing about Hofstra University application paper tests is vital to having the certainty and aptitude expected to compose an incredible exposition. Ensure that you take in everything that you can from the assortment of tests that are accessible, and prepare to compose your future school paper that will get you took note.

Persuasive Essay Topics For 4th Graders

<h1>Persuasive Essay Topics For fourth Graders</h1><p>Performing some examination and investigation of the subject of an enticing article is a magnificent method to improve grasp on powerful composing strategies. Think about four distinctive point thoughts: work preparing, hazardous sicknesses, computerized innovation, and how to be a mindful parent. These themes are profoundly established in human instinct and give an extraordinary beginning stage to influential essays.</p><p></p><p>A parent's main responsibility is to deal with their kids and set genuine models. While it's imperative to inspire your perusers with the significance of the current subject, it's additionally essential to give fascinating substance that allures them to need to find out additional. This is particularly evident when discussing parental caregiving.</p><p></p><p>Life-undermining sicknesses are another tremendous theme that should be dealt wit h truly. A few people truly need to figure out the real story and have a ton of conversation with you. You have to introduce your data such that causes to notice the issue being referred to. Giving genuine realities is an incredible spot to start.</p><p></p><p>The best way to genuinely compose a compelling enticing exposition is to do look into, get your thoughts and realities straight, and afterward blend this data in with basic data and feelings. It's extremely simple to get enveloped with the subtleties of these subjects, yet on the off chance that you approach them from the earliest starting point, you'll know precisely what to state and how to state it. Learning the essentials will make your composing style simpler to remember and incorporate into your presentations.</p><p></p><p>Once you've considered your four fundamental enticing exposition points, it's a great opportunity to limit them down to explicit subjects. In this model, the initial two are very expansive. A few scholars may attempt to handle an entire arrangement of subjects in a single article. Notwithstanding, in case you're going to give introductions, you need to ensure that every one can remain solitary and not conflict with the other ones.</p><p></p><p>You need to guarantee that every theme can remain all alone and that you can give applicable data inside your subject. How about we utilize the above case of dangerous ailments once more. In the event that you needed to discuss the qualities of the infection itself, you would utilize clinical terms from the news, for instance. On the off chance that you were managing a malady that is ordinarily deadly, you would presumably look to somebody who realizes the measurements to give insights regarding the illness and the measurements related with it.</p><p></p><p>With these themes as a main priority, you'll be prepared to begin composing an enticing ex position. Each piece ought to be adjusted in substance and afterward join it with realities and feelings to come to your meaningful conclusion all the more impressive. It is very hard to compose influential papers, yet on the off chance that you adhere to these guidelines, you'll have the option to compose quality pieces that will end up being your trademarks.</p><p></p><p>In end, recall that enticing exposition themes come in all shapes and sizes. It is critical to remember the various kinds of themes and how they fill in just as a similar general classifications of things. In the event that you need to be fruitful, you should take as much time as necessary when conceptualizing and consider what you need to say.</p>

What Are PEO Essay Topics?

<h1>What Are PEO Essay Topics?</h1><p>PEO Essay Topics is the points that understudies decide for their PEO tests, tests are the subject of your exposition. There are different paper subjects that you can browse and the fundamental one is the subject of the PEO, a particular name for PEO Essay Topics.</p><p></p><p>The point of PEO article themes is to assist understudies with composing papers on their own point. Your PEO test will be reviewed dependent on the nature of your exposition. While picking PEO exposition themes, ensure you mull over how you can move your learning forward.</p><p></p><p>Choose a point that is identified with the subject that you are expounding on and a topic master in the field will have the option to furnish you with thoughts on what your point ought to be about. An elegantly composed article will assist you with having a superior comprehension of your subject and set yourself up for the test that you will be taking. Your educator will utilize your exposition to choose whether or not you passed your PEO exam.</p><p></p><p>You can likewise pick points that you are learned about. This will assist you with getting a thought of what the test is about and what sort of inquiries you will be confronted with. You should observe any issues or focuses that you will be stood up to with during the test and address them in your paper. It is significant that you think of a thought of how to take care of these issues and address them.</p><p></p><p>Many understudies attempt to take on various PEO expositions simultaneously so as to become familiar with the subject and addition additional focuses for the test that they are going to take. One approach to accomplish this is to peruse the same number of themes as you can and pick the best point. Some PEO courses have mock test meetings and it is during these that understudies can really attemp t various subjects and improve their scores. Others have a test before the genuine article with the goal that understudies can see which point would be simpler for them to compose about.</p><p></p><p>The subject of your exposition must be picked cautiously so you don't wind up rehashing data that is as of now been secured. Ensure that you incorporate an audit of the data that has been shrouded in your subject and leave some space for questions that will require replying. At last, your point ought to be one of a kind enough with the goal that it gets a great deal of attention.</p><p></p><p>When picking PEO paper subjects, ensure that the theme that you are picking is the real subject of the PEO test. There are numerous schools that don't require this and your educator may request that you compose on a point that is totally inconsequential to the test that you are taking. Other PEO tests may have distinctive evaluating measures relying u pon the PEO test that you are taking. An understudy may be approached to compose on a theme that is totally not the same as the subject that they are studying.</p><p></p><p>Be cautious while picking points as there are a few points that will get you zero focuses yet others can get you up to three or four. Attempt to keep the themes as applicable as could be expected under the circumstances and just pick points that are pertinent to the assessment that you are taking. Likewise attempt to discover themes that could give you additional credit on the off chance that you are taking the test for an educator and for boasting rights.</p>

How to Use Essay Samples to Make Your Writing Process Easy

Instructions to Use Essay Samples to Make Your Writing Process EasyIn composing your paper, you will have the chance to utilize exposition tests. These can be utilized to direct you in the kinds of data that you have to remember for your work. Try not to be reluctant to find support from this composing method.There are two sorts of article tests that you can utilize. One is a composed exposition that was composed by a grown-up and afterward changed over into content. The other kind is a composed paper that was composed by you and afterward changed over into content. It is significant that you comprehend which sort of exposition test you will utilize in light of the fact that it will directly affect the way that you ought to compose your essay.Before you choose which paper tests you will utilize, you should consider what the task of the article will be. This will assist you with figuring out which sort of exposition test you should utilize. For instance, if the task will be a composed exposition, you should utilize a paper test that is composed by somebody who has experience doing this sort of writing.On the other hand, if the task will be a composed article, you should utilize article tests that are composed by experts. While there are a wide range of kinds of exposition tests accessible, there are three regular sorts. One sort is paper tests that were composed by a grown-up and afterward changed over into text.A second kind of article test is one that was composed by you and afterward changed over into content. There are a wide range of sorts of articles that you can use to compose your own exposition on. You can utilize article tests from different magazines and online sources. When you have a thought for a paper point, you can discover an article test that will assist you with composing the essay.The third sort of exposition tests is one that was composed by you and afterward changed over into content. This can be a genuine case of how an expert would compos e the article since it will give you the best thought of what is expected to compose an exposition. By utilizing this sort of article test, you will have the option to make an elegantly composed bit of writing.While paper tests can be utilized to control you in the kinds of data that you have to remember for your work, try not to be hesitant to find support from this composing technique. There are various diverse article models that you can use to assist you with composing your own paper. You ought to know that this article style will directly affect the way that you ought to compose your essay.When you are taking a paper, you will have the chance to utilize exposition tests. These can be utilized to manage you in the sorts of data that you have to remember for your work. Try not to be hesitant to find support from this composing strategy.

How to Write a Christian Essay

<h1>How to Write a Christian Essay</h1><p>How to compose Christian traditional training article test? This isn't a simple errand. A paper test is significantly simpler to compose, in the event that you comprehend the nuts and bolts. A paper test will likewise mention to you what is anticipated from you when composing one.</p><p></p><p>You can begin with learning essential data on syntax and accentuation. Syntax and accentuation are the most significant things for an understudy in the study hall. You have to see how to peruse and compose accurately. Syntax and accentuation are educated in high school.</p><p></p><p>In your examination for Christian paper tests, make certain to inquire about how to spell, underwrite, and make basic sentences. Most Christian old style instruction papers are composed for secondary school understudies. All they need to learn is the manner by which to peruse, spell, and compose appropriately. They couldn't care less how to make a sentence sound right or how to underwrite, they simply need to realize how to appropriately utilize the English language.</p><p></p><p>The next thing you have to think about how to compose a Christian exposition tests is to realize how to structure your thoughts so as to fit into the subject. What will this article be about? In what manner will it demonstrate that Christianity is true?</p><p></p><p>You need to tell the world that Christianity is valid by indicating them an example of one Christian paper. To assist you with arranging out the structure of your article, read through some Christian old style instruction paper tests, perceive what number of the understudies are in the class, and inquire as to whether you will fit it into the topic.</p><p></p><p>Remember, when you're composing Christian great training exposition, you should attempt to abstain from utilizing the b ook of scriptures. Continuously utilize different wellsprings of data, for example, history, society, and the occasions of our reality. It's alright to compose Christian exemplary training article utilizing the holy book as a source of perspective. Be that as it may, you ought not begin your Christian great exposition utilizing the book of scriptures as a reference.</p><p></p><p>Try to remember something new for your Christian exemplary article. Discover something other than what's expected that can give your insight into Christianity in a new and energizing look. At the point when you add something new to the article, you show your insight into Christianity is something beyond a book.</p><p></p><p>Some understudies may advise you to compose a Christian exemplary paper on God. This is an incredible method to settle on a good choice about how to structure your Christian paper. Peruse some Christian traditional instruction exposition tes ts to get thoughts on the most proficient method to finish the task.</p>

Argumentative Persuasive Essay Topics

<h1>Argumentative Persuasive Essay Topics</h1><p>Argumentative convincing article themes are one of the most significant components in any contentious exposition. It is critical to express a reality, however to clarify why that reality ought to be contemplated in more detail. The purpose of contentious article points is to make perusers think, not simply read. So as to do this, you should persuade your peruser to think before they take any action.</p><p></p><p>The type of pugnacious influential exposition points are changed. You can look over an inquiry, a rundown, or a model. It is indispensable that your themes are deserving of both thought and treatment. You ought to have achieved two things when you wrap up this article: the theme and the exposition itself are magnificent. In the event that you have not cultivated these objectives, you have to chip away at them, in light of the fact that doing in any case will prompt a horrible factious e ssay.</p><p></p><p>So how would you approach creating contentious, powerful exposition subjects? I will talk about three of the best systems for beginning. Each will require a smidgen of imagination, however each can create an exceptionally viable factious essay.</p><p></p><p>The first procedure is to take your inquiry and put it into an inquiry and answer position. In the event that you are attempting to convince a peruser to think, this is an extraordinary method to do it. You are additionally being straightforward all the while, in light of the fact that in actuality you can't persuade somebody on the off chance that they realize that you know nothing about the subject. You may not have to demonstrate that you know something explicit, in light of the fact that the peruser will as of now be interested about it.</p><p></p><p>Once you answer the inquiry, you should offer a clarification. At that point you utiliz e an account or two to back up your clarification. You may likewise think that its accommodating to embed a story in your contentious paper. Obviously, you have to ensure that your accounts are genuine and not over the top. Keep in mind, individuals are substantially more liable to tune in to what they see, as opposed to what they hear.</p><p></p><p>An model is an incredible method to move toward factious powerful paper subjects. Basically use models and draw in your peruser in conversations. To make it work, you should be inventive. Absolutely never give an inappropriate impression with your models, yet rather use pictures and recordings. You ought to likewise attempt to utilize your experimental writing abilities, regardless of whether it implies taking a stab at something new.</p><p></p><p>Finally, the most impressive article for factious influential papers is the one that is both engaging and significant. This is frequently very ha rd to do, however is totally justified, despite all the trouble. At the point when you're composing, you have to ensure that your crowd doesn't get exhausted with the composition. On the off chance that they are, you are damned. You have to keep them intrigued by the exposition all through, with the goal that when you're set, they will have a solid feeling of a solid contention that they can not effectively dismiss.</p><p></p><p>These three procedures are for the most part awesome techniques for composing compelling contentious influential paper subjects. It requires some investment, yet when you are effective, the outcomes are fulfilling. Obviously, recollect that regardless of how great your pugnacious paper is, it won't win a contention. It is just intended to engage and educate.</p>

Basel Norms in India free essay sample

Technical Paper – Course on General Management and Communication Skills, Institute of Chartered Accountants of India Batch 129 Basel II Implications on Indian Banks Group Members Rahul Sharma (ERO0097549) Abhishek Tulsyan (CRO0137558) Sikha Kedia (ERO0105399) Gourav Modi (ERO0016925) Praveen Didwania (ERO0110131) Index of Contents Topics Page No. I. Introduction A. B. C. D. E. F. G. Background Functions of Basel Committee The Evolution to Basel II – First Basel Accord Capital Requirements and Capital Calculation under Basel I Criticisms of Basel I New Approach to Risk Based Capital Structure of Basel II First Pillar : Minimum Capital Requirement Types of Risks under Pillar I The Second Pillar : Supervisory Review Process The Third Pillar : Market Discipline 3 3 3 3 3 4 4 II. The Three Pillar Approach A. B. C. D. 5 5 6 6 7 7 7 III. Capital Arbitrage and Core Effect of Basel II A. Capital Arbitrage B. Bank Loan Rating under Basel II Capital Adequacy Framework C. Effect of Basel II on Bank Loan Rating IV. Basel II in India A. Implementation C. Impact on Indian Banks D. Impact on Various Elements of Investment Portfolio of Banks E. Impact on Bad Debts and NPA’s of Indian Banks D. Government Policy on Foreign Investment E. Threat of Foreign Takeover 8 8 9 10 10 10 V. Conclusion A. SWOT Analysis of Basel II in Indian Banking Context B. Challenges going ahead under Basel II 11 11 13 13 VI. VII. References The Technical Paper Presentation Team 2 I. Introduction: A. Background Basel II is a new capital adequacy framework applicable to Scheduled Commercial Banks in India as mandated by the Reserve Bank of India (RBI). The Basel II guidelines were issued by the Basel Committee on Banking Supervision that was initially published in June 2004. The Accord has been accepted by over 100 countries including India. In April 2007, RBI published the final guidelines for Banks operating in India. Basel II aims to create international standards that deals with Capital Measurement and Capital Standards for Banks which banking regulators can use when creating regulations about how much banks need to put aside to guard against the types of financial and operational risks banks face. The Basel Committee on Banking Supervision was constituted by the Central Bank Governors of the G-10 countries in 1974 consisting of members from Australia, Brazil, Canada, United States, United Kingdom, Spain, India, Japan, etc to name a few. The ommittee regularly meets four times a year at the Bank for International Settlements (BIS) in Basel, Switzerland where its 10 member Secretariat is located. B. Functions of the Basel Committee The purpose of the committee is to encourage the convergence toward common approaches and standards. However, the Basel Committee is not a classical multilateral organisation like World Trade Organisation. It has no founding treaty and it does not issue binding regulat ions. It is rather an informal forum to find policy solutions and promulgate standards. C. The Evolution to Basel II – First Basel Accord The First Basel Accord (Basel I) was completed in 1988. The main features of Basel I were: †¢ †¢ †¢ Set minimum capital standards for banks Standards focused on credit risk, the main risk incurred by banks Became effective end-year 1992 The First Basel Accord aimed at creating a level playing field for internationally active banks. Hence, banks from different countries competing for the same loans would have to set aside roughly the same amount of capital on the loans. D. Capital Requirements and Capital Calculation under Basel – I Minimum Capital Adequacy ratio was set at 8% and was adjusted by a loan’s credit risk weight. Credit risk was divided into 5 categories viz. 0%, 10%, 20%, 50% and 100%. Commercial loans, for example, were assigned to the 100% risk weight category. To calculate required capital, a bank would multiply the assets in each risk category by the category’s risk weight and then multiply the result by 8%. Thus, a Rs 100 commercial loan would be multiplied by 100% and then by 8%, resulting in a capital requirement of Rs8. E. Criticisms of Basel – I Following are the criticisms of the First Basel Accord (Basel I):†¢ †¢ It took too simplistic an approach to setting credit risk weights and for ignoring other types of risk. Risks weights were based on what the parties to the Accord negotiated rather than on the actual risk of each asset. Risk weights did not flow from any particular insolvency probability standard, and were for the most part, arbitrary. 3 †¢ †¢ †¢ The requirements did not account for the operational and other forms of risk that may also be important. Except for trading account activities, the capital standards did not account for hedging, diversification, and differences in risk management techniques. Advances in technology and finance allowed banks to develop their own capital allocation models in the 1990’s. This resulted in more accurate calculation of bank capital than possible under Basel I. These models allowed banks to align the amount of risk they undertook on a loan with the overall goals of the bank. Internal models allow banks to more finely differentiate risks of individual loans than is possible under Basel – I. It facilitates risks to be differentiated within loan categories and between loan categories and also allows the application of a capital charge to each loan, rather than each category of loan. F. New Approach to Risk-Based Capital †¢ †¢ †¢ By the late 1990’s, growth in the use of regulatory capital arbitrage led the Basel Committee to begin work on a new capital regime (Basel II) Effort focused on using banks’ internal rating models and internal risk models June 1999: The Basel Committee issued a proposal for a new capital adequacy framework to replace Basel I. In order to overcome the criticisms of Basel – I and for adoption of the new approach to riskbased capital, Basel II guidelines were introduced. G. Structure of Basel – II Basel – II adopts a three pillar approach: †¢ †¢ †¢ Pillar I Minimum Capital Requirement (Addressing Credit Risk, Operational Risk Market Risk) Pillar II Supervisory Review (Provides Framework for Systematic Risk, Liquidity Risk Legal Risk) Pillar III Market Discipline Disclosure (To promote greater stability in the financial system) II. The Three Pillar Approach The first pillar establishes a way to quantify the minimum capital requirements. The main objective of Pillar I is to align capital the adequacy ratios to the risk sensitivity of the assets affording a greater flexibility in the computation of banks individual risk. Capital Adequacy Ratio is defined as the amount of regulatory capital to be maintained by a bank to account for various risks inbuilt in the banking sy stem. The focus of Capital Adequacy Ratio under Basel I norms was on credit risk and was calculated as follows: Capital Adequacy Ratio = Tier I Capital+Tier II Capital Risk Weighted Assets Basel Committee has revised the guidelines in the year June 2001 known as Basel II Norms. Capital Adequacy Ratio in New Accord of Basel II: Capital Adequacy Ratio = Total Capital (Tier I Capital+Tier II Capital) Market Risk(RWA) + Credit Risk(RWA) + Operation Risk(RWA) *RWA = Risk Weighted Assets Calculation of Capital Adequacy Ratio: Total Capital: Total Capital constitutes of Tier I Capital and Tier II Capital less shareholding in other banks. Tier I Capital = Ordinary Capital + Retained Earnings Share Premium Intangible assets. Tier II Capital = Undisclosed Reserves + General Bad Debt Provision+ Revaluation Reserve+ Subordinate debt+ Redeemable Preference shares Tier III Capital: Tier III Capital includes subordinate debt with a maturity of at least 2 years. This is addition or substitution to the Tier II Capital to cover market risk alone. Tier III Capital should not cover more than 250% of Tier I capital allocated to market risk. A. First Pillar : Minimum Capital Requirement B. Types of Risks under Pillar I . Credit Risk Credit risk is the risk of loss due to a debtors non-payment of a loan or other line of credit (either the principal or interest (coupon) or both). Basel II envisages two different ways of measuring credit risk which are standarised approach, Internal Rating-Based Approach. The Standardised Approach The standardized approach is conceptually the same as the present Accord, but is more risk sensitive. Un der this approach the banks are required to use ratings from External Credit Rating Agencies to quantify required capital for credit risk. The Internal Ratings Based Approach (IRB) Under the IRB approach, different methods will be provided for different types of loan exposures. Basically there are two methods for risk measurement which are Foundation IRB and Advanced IRB. The framework allows for both a foundation method in which a bank estimate the probability of default associated with each borrower, and the supervisors will 5 supply the other inputs and an advanced IRB approach, in which a bank will be permitted to supply other necessary inputs as well. Under both the foundation and advanced IRB approaches, the range of risk weights will be far more diverse than those in the standardized approach, resulting in greater risk sensitivity. 2. Operational Risk An operational risk is a risk arising from execution of a companys business functions. As such, it is a very broad concept including e. g. fraud risk, legal risk, physical or environmental risks, etc. Basel II defines operational risk as the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. Although the risks apply to any organization in business, this particular risk is of particular relevance to the banking regime where regulators are responsible for establishing safeguards to protect against systematic failure of the banking system and the economy. Banks will be able to choose between three ways of calculating the capital charge for operational risk – the Basic Indicator Approach, the Standardized Approach and the advanced measurement Approaches. 3. Market Risk Market risk is the risk that the value of a portfolio, either an nvestment portfolio or a trading portfolio, will decrease due to the change in value of the market risk factors. The four standard market risk factors are stock prices, interest rates, foreign exchange rates, and commodity prices. The preferred approach is VAR(value at risk). C. The Second Pillar : Supervisory Review Process Supervisory review process has been introduced to ensure not only that banks have adequate capital to support all th e risks, but also to encourage them to develop and use better risk management techniques in monitoring and managing their risks. The process has four key principles – a) Banks should have a process for assessing their overall capital adequacy in relation to their risk profile and a strategy for monitoring their capital levels. b) Supervisors should review and evaluate bank’s internal capital adequacy assessment and strategies, as well as their ability to monitor and ensure their compliance with regulatory capital ratios. c) Supervisors should expect banks to operate above the minimum regulatory capital ratios and should have the ability to require banks to hold capital in excess of the minimum. ) Supervisors should seek to intervene at an early stage to prevent capital from falling below minimum level and should require rapid remedial action if capital is not mentioned or restored. D. The Third Pillar : Market Discipline Market discipline imposes strong incentives to banks to conduct their business in a safe, sound and effective manner. It is proposed to be effected through a series of disclosure requirements on capital, risk exposure etc. so that market participants can assess a bank’s capital adequacy. These disclosures should be made at least semiannually and more frequently if appropriate. Qualitative disclosures such as risk management objectives and policies, definitions etc. may be published annually. 6 III. Capital Arbitrage and Core Effect of Basel II Regulatory arbitrage is where a regulated institution takes advantage of the difference between its real (or economic) risk and the regulatory position. Securitization is the main means used by Banks to engage in Regulatory Capital Arbitrage. Example of Capital Arbitrage is given below: A. Capital Arbitrage †¢ Assume a bank has a portfolio of commercial loans with the following ratings and internally generated capital requirements – AA-A: 3%-4% capital needed – B+-B: 8% capital needed – B- and below: 12%-16% capital needed Under Basel I, the bank has to hold 8% risk-based capital against all of these loans To ensure the profitability of the better quality loans, the bank engages in capital arbitrage, it securitizes the loans so that they are reclassified into a lower regulatory risk category with a lower capital charge Lower quality loans with higher internal capital charges are kept on the bank’s books because they require less risk-based capital than the bank’s internal model indicates. †¢ †¢ †¢ B. Bank Loan Rating under Basel – II Capital Adequacy Framework †¢ On April 27, 2007, the Reserve Bank of India released the final guidelines for implementation of the New Capital Adequacy Framework (Basel II) applicable to the Banking system of the country The new framework mandates that the amount of capital provided by a bank against any loan and facility will be based on the credit rating assigned to the loan issue by an external rating agency. This means that a loan and a facility with a higher credit rating will attract a lower risk weight than one with a lower credit rating. †¢ †¢ Illustration of capital-saving potential by banks on a loan of Rs 1000 million Rating Basel I Basel II Capital Saved (Rs Long Short Risk Capital Risk Capital Million) Term Term Weight Required* Weight Required Rating Rating (Rs Million) (Rs Million) AAA P1+ 100% 90 20% 18 72 AA P1 100% 90 30% 27 63 A P2 100% 90 50% 45 45 BBB P3 100% 90 100% 90 0 BB P4 P5 100% 90 150% 135 (45) below Unrated Unrated 100% 90 100% 90 0 *Capital required is computed as Loan Amount ? Risk Weight ? 9% C. Effect of Basel – II on Bank Loan Rating †¢ †¢ Banks would either prefer that the Borrower should get itself rated, or, It would prefer that the borrowing institution should pay a higher rate of interest to compensate for the loss. 7 To substantiate the above fact, following example is taken in respect of a strong company: Loan of Rating AAA is taken of Rs 100 Crores @ 12% interest rate Capital Adequacy Rating Risk % Capital Required Opportunity Ratio (Rs Crores) Interest lost by the Bank (Rs Crores) C. A. R. Unrated 100% 9. 00 1. 08 C. A. R. New 20% 1. 80 0. 22 Total Opportunity Interest lost by the Bank (Rs Crores) 0. 86 Hence, Banks would resort to the above-mentioned measures in order to reduce or curb this loss on opportunity interest. Worse affected by this action taken by Banks would be the weaker companies. They would either be charged a higher rate of interest on loans to compensate for the loss or would alternatively have to approach another bank charging a lower rate of interest. The ideal solution to this problem would be that a weaker company should get itself rated and also take steps in order to have a better credit rating. Credit Rating is an evaluation of credit worthiness of a person, company or instrument. Thus, it indicates their willingness to pay for the obligation and the net worth. IV. Basel II in India A. Implementation The deadline for implementing the base approach of Basel II norms in India, was originally set for March 31, 2007. Later the RBI extended the deadline for Foreign banks in India and Indian banks operating abroad to meet those norms by March 31, 2008, while all other scheduled commercial banks were to adhere to the guidelines by March 31, 2009. Later the RBI confirmed that all commercial banks were Basel II compliant by March 31, 2009. Keeping in view the likely lead time that may be needed by the banks for creating the requisite technological and the risk management infrastructure, including the required databases, the MIS and the skill up-gradation, etc. , RBI has proposed the implementation of the advanced approaches under Basel II in a phased manner starting from April 1, 2010 B. Impact on Indian Banks Basel II allows national regulators to specify risk weights different from the internationally recommended ones for retail exposures. The RBI had, therefore, announced an indicative set of weights for domestic corporate long-term loans and 8 bonds subject to different ratings by international rating agencies such as Moodys Investor Services which are slightly different from that specified by the Basel Committee (Table 1). C. Impact on various elements of the investment portfolio of banks The bonds and debentures portfolio of the banks consist of investments into higher rated companies, hence the corporate assets measured using the standardised approach may be exposed to slightly lower risk weights in comparison with the 100 per cent risk weights assigned under Basel I. The Indian banks have a large short-term portfolio in the form of cash credit, overdraft and working capital demand loans, which were un-rated, and carried a risk weight of 100 per cent under the Basel I regime. They also have short-term investments in commercial papers in their investment portfolio, which also carried a 100 per cent risk weight. The RBIs capital adequacy guidelines has prescribed lower risk weights for short-tem exposures, if these are rated (Table 2). This provides the banks with an opportunity to benefit from their investments in commercial paper (which are typically rated in A1+/A1 category) and give them the potential to exploit the proposed short-term credit risk weights by obtaining short-term ratings for exposures in the form of cash credit, overdraft and working capital loans. The net result is that the implementation of Basel II provided Indian banks with the opportunity to significantly reduce their credit risk weights and reduce their required regulatory capital, if they suitably adjust their portfolio by lending to rated but strong corporate and increase their retail lending. According to some reports, most of the Indian banks who have migrated to Basel II have reported a reduction in their total Capital Adequacy Ratios (CARs). However, a few banks, those with high exposures to higher rated corporate or to the regulatory retail portfolio, have reported increased CARs. However, a recent study by New Delhi-based industry lobby group Assocham has concluded that Capital Adequacy Ratio (CAR) of a group of commercial banks, which were part of the study improved to 13. 48% in 2008-09 from 12. 35% in 2007-08, due to lower risk weights, implementation of Basel II norms and slower credit growth. 9 D. Bad debts and requirement of additional capital In this context, the situation regarding bad debts and NPA’s is very pertinent. The proportion of total NPAs to total advances declined from 23. 2 per cent in March 1993 to 7. per cent in March, 2004. The improvement in terms of NPAs has been largely the result of provisioning or infusion of capital. This meant that if the banks required more capital, as they would to implement Basel II norms, they would have to find capital outside of their own or the governments re sources. ICRA has estimated that, Indian banks would need additional capital of up to Rs. 12,000 crore to meet the capital charge requirement for operational risk under Basel II. Most of this capital would be required by PSBs Rs. 9,000 crore, followed by the new generation private sector banks Rs. 1,100 crore, and the old generation private sector bank Rs. 750 crore. In practice, to deal with this, a large number of banks have been forced to turn to the capital market to meet their additional regulatory capital requirements. ICICI Bank, for example, has raised around Rs. 3,500 crore, thus improving its Tier I capital significantly. Many of the PSBs, namely, Punjab National Bank, Bank of India, Bank of Baroda and Dena Bank, besides private sector banks such as UTI Bank have either already tapped the market or have announced plans to raise equity capital in order to boost their Tier I capital. E. Government Policy on foreign investment The need to go public and raise capital challenged the government policy aimed at restricting concentration of share ownership, maintaining public dominance and limiting foreign influence in the banking sector. One immediate fallout was that PSBs being permitted to dilute the governments stake to 51 per cent, and the pressure to reduce this to 33 per cent increased. Secondly, the government allowed private banks to expand equity by accessing capital from foreign investors. This put pressure on the RBI to rethink its policy on the ownership structure of domestic banks. In the past the RBI has emphasised the risks of concentrated foreign ownership of banking assets in India. Subsequent to a notification issued by the Government, which had raised the FDI limit in private sector banks to 74 per cent under the automatic route, a comprehensive set of policy guidelines on ownership of private banks was issued by the RBI. These guidelines stated, among other things, that no single entity or group of related entities would be allowed to hold shares or exercise control, directly or indirectly, in any private sector bank in excess of 10 per cent of its paid-up capital. F. Threat of foreign takeover There has been growing pressure to consolidate domestic banks to make them capable of facing international competition. Indian banks are pigmies compared with the global majors. Indias biggest bank, the State Bank of India, which accounts for onefifth of the total banking assets in the country, is roughly one-fifth as large as the worlds biggest bank Citigroup. Given this difference, even after consolidation of 10 omestic banks, the threat of foreign takeover remains if FDI policy with respect to the banking sector is relaxed. Not surprisingly, a number of foreign banks have already evinced an interest in acquiring a stake in Indian banks. Thus, it appears that foreign bank presence and consolidation of bankin g are inevitable post Basel II. V. Conclusion A. SWOT Analysis of Basel II in Indian Banking Context Strenghts †¢ †¢ Aggression towards development of the existing standards by banks. Strong regulatory impact by central bank to all the banks for implementation. Presence of intellectual capital to face the change in implementation with good quality. †¢ †¢ †¢ Weaknesses Poor Technology Infrastructure Ineffective Risk Measures Presence of more number of Smaller banks that would likely to be impacted adversely. †¢ Opportunities †¢ †¢ Increasing Risk Management Expertise. Need significant connection among business,credit and risk management and Information Technology. Advancement of Technologies. Strong Asset Base would help in bigger growth. †¢ †¢ Threats Inability to meet the additional Capital Requirements Loss of Capital to the entire banking system, due to Mergers and acquisitions. Huge Investments in technologies †¢ †¢ †¢ B. Challenges going ahead under Basel II †¢ The new norms will almost invariably increase capital requirement in all banks across the board. Although capital requirement for credit risk may go down due to adoption of more risk sensitive models such advantage will be more than offset by additional capital charge for operational risk and increased capital requirement for market risk. This partly explains the current trend of consolidation in the banking industry. Competition among banks for highly rated corporates needing lower amount of capital may exert pressure on already thinning interest spread. Further, huge implementation cost may also impact profitability for smaller banks. The biggest challenge is the re-structuring of the assets of some of the banks as it would be a tedious process, since most of the banks have poor asset quality leading to significant proportion of NPA. This also may lead to Mergers Acquisitions, which itself would be loss of capital to entire system. The new norms seem to favor the large banks that have better risk management and measurement expertise, who also have better capital adequacy ratios and geographically diversified portfolios. The smaller banks are also likely to be hurt by the rise in weightage †¢ †¢ †¢ 11 of inter-bank loans that will effectively price them out of the market. Thus, banks will have to re-structure and adopt if they are to survive in the new environment. †¢ Since improved risk management and measurement is needed, it aims to give impetus to the use of internal rating system by the international banks. More and more banks may have to use internal model developed in house and their impact is uncertain. Most of these models require minimum historical bank data that is a tedious and high cost process, as most Indian banks do not have such a database. The technology infrastructure in terms of computerization is still in a nascent stage in most Indian banks. Computerization of branches, especially for those banks, which have their network spread out in remote areas, will be a daunting task. Penetration of information technology in banking has been successful in the urban areas, unlike in the rural areas where it is insignificant. An integrated risk management concept, which is the need of the hour to align market, credit and operational risk, will be difficult due to significant disconnect between business, risk managers and IT across the organizations in their existing set-up. Implementation of the Basel II will require huge investments in technology. According to estimates, Indian banks, especially those with a sizeable branch network, will need to spend well over $ 50-70 Million on this. Computation of probability of default, loss given default, migration mapping and supervisory validation require creation of historical database, which is a time consuming process and may require initial support from the supervisor. With the implementation of the new framework, internal auditors may become increasingly involved in various processes, including validation and of the accuracy of the data inputs, review of activities performed by credit functions and assessment of a banks capital assessment process. Pillar 3 purports to enforce market discipline through stricter disclosure requirement. While admitting that such disclosure may be useful for supervisory authorities and rating agencies, the expertise and ability of the general public to comprehend and interpret disclosed information is open to question. Moreover, too much disclosure may cause information overload and may even damage financial position of bank. Basel II proposals underscore the interaction between sound risk management practices and corporate good governance. The banks board of directors has the responsibility for setting the basic tolerance levels for various types of risk. It should also ensure that management establishes a framework for assessing the risks, develop a system to relate risk to the banks capital levels and establish a method for monitoring compliance with internal policies. The risk weighting scheme under Standardised Approach also creates some incentive for some of the bank clients to remain unrated since such entities receive a lower risk weight of 100 per cent vis-a-vis 150 per cent risk weight for a lowest rated client. This might specially be the case if the unrated client expects a poor rating. The banks will need to be watchful in this regard. †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ We can conclude by saying that the Basel II framework provides significant incentives to banks to sharpen their risk management expertise to enable more efficient risk-return tradeoffs, it also presents a valuable opportunity to gear up their internal processes to the 12 international best standards. This would require substantial capacity building and commitment of resources through close involvement of the banks’ Top Management in guiding this arduous undertaking. Notwithstanding intense competition, the expansionary phase of the economy is expected to provide ample opportunities for the growth of the banking industry. The growth trajectory, adherence to global best practices and risk management norms are likely to catapult the Indian Banks onto the global map, making them a force to reckon with. VI. References 1. The Evolution to Basel II by Donald Inscoe, Deputy Director, Division of Insurance and Research, US Federal Deposit Insurance Corporation. 2. Basel II – Challenges Ahead of the Indian Banking Industry by Jagannath Mishra and Pankaj Kumar Kalawatia. 3. Basel II Norms and Credit Ratings by CA Sangeet Kumar Gupta. 4. The Business Line Magazine. 5. The Chartered Accountant – Journal of the Institute of Chartered Accountants of India. 6. www. bis. org 7. www. rbi. org. in 8. www. wikipedia. org 9. www. google. com VII. The Technical Paper Presentation Team Name of Member Email ID’s [emailprotected] org tulsyan. [emailprotected] co. in sikha. [emailprotected] com ca. [emailprotected] com [emailprotected] com 1. Rahul Sharma 2. Abhishek Tulsyan 3. Sikha Kedia 4. Gourav Modi 5. Praveen Didwania 13