SREI India Financial and SWOT Analysis

SREI India Financial and SWOT Analysis OBJECTIVE OF THE PROJECT: To develop and understanding of the Non-Banking Financial Institutions (NBFIs) and their business operations in India. To do a detailed research on SREI Equipment Finance Private Limited, its market share and the SWOT analysis. To thoroughly review SREIs credit appraisal and credit management process. To understand the risk management process of the company. To gain a detailed knowledge of the parameters that affects various risks. To determine weightages and scores for designing and developing risk assessment model based on market forces for assessing SREIs Customers. METHODOLOGY: In order to achieve the said objectives, will be to go through the entire NBFs history, thrust areas; growth opportunities, present scenario. This will be the ongoing process and will be done using internet, news and books. To understand the functioning of SREI pertaining to credit risk management and appraisal process followed for financing large corporates (risk exposures more than Rs.5 crores). Factual data, credit appraisal memorandum prepared by the company and the credit risk policy of the company will be referred in this regard. Then comes the technical part of conducting Balance Sheet Analysis, Ratio Analysis and Cash Flow Analysis. To propose a statistical credit rating model, data have been collected from credit officers and the relationship managers in the institution. Financial ratios were used to measure the strength of the customer. Score model for assessing risk to convert responses to scores. Weighted average method applied to assign appropriate importance to various parameters. LIMITATIONS OF THE STUDY: The study will only be focusing on the LARGE CORPORATES (risk exposure more than Rs.5 crores) not the retail and SME sectors of SREI. Study is on the basis of first-hand information collected from employees/head of the division of the company that might be incorrect or biased. Duration of the internship imparts the pressure of covering this vast spectrum in a limit period of 14 weeks. The accuracy of the Risk Assessing Model depends on the accuracy of information provided by the customer. The risk rating model doesnt take into the consideration where in the company doesnt follow the rules norms strictly. The relationships with the customers are given more importance. INDUSTRY ANALYSIS: Structure of Indias Financial Services Industry: The RBI, the central banking and monetary authority of India, is the central regulatory and supervisory authority for the Indian financial system. SEBI and IRDA regulate the capital markets and insurance sector, respectively. A variety offinancial intermediaries in the public and private sectors participate in Indias financial sector, including the following: Commercial banks; NBFCs; Specialised financial institutions like NABARD, EXIM Bank, SIDBI and TFCI; Securities brokers; Investment banks; Insurance companies; Mutual funds; and Venture capital. NON-BANKING FINANCIALCOMPANIES: Non-banking financial companies (NBFCs) are fast emerging as an important segment of Indian financial system. It is an heterogeneous group of institutions (other than commercial and co-operative banks) performing financial intermediation in a variety of ways, like accepting deposits, making loans and advances, leasing, hire purchase, etc. They raise funds from the public, directly or indirectly, and lend them to ultimate spenders. They advance loans to the various wholesale and retail traders, small-scale industries and self-employed persons. Thus, they have broadened and diversified the range of products and services offered by a financial sector. Gradually, they are being recognized as complementary to the banking sector due to their customer-oriented services; simplified procedures; attractive rates of return on deposits; flexibility and timeliness in meeting the credit needs of specified sectors; etc. The working and operations of NBFCs are regulated by the Reserve Bank of India (RBI) within the framework of the Reserve Bank of India Act, 1934 (Chapter III B) and the directions issued by it under the Act. As per the RBI Act, a non-banking financial company is defined as:- (i) a financial institution which is a company; (ii) a non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner; (iii) such other non-banking institution or class of such institutions, as the bank may, with the previous approval of the Central Government and by notification in the Official Gazette, specify. NBFCs VsBANKING SECTOR IN INDIA: Non-Banking Finance Companies (NBFCs) are an integral part of the countrys financial system complementing theservices of commercial banks. The main reason attributed to the growth of NBFCs is the comprehensive regulation of thebanking system. Other factors include higher level of customer orientation, lesser pre/post sanction requirements andhigher rates of interest on deposits being offered by NBFCs. NBFCs have traditionally been extending credit across various parts of the country through their geographical presence,with NBFCs being a supplier of credit to segments such as equipment leasing, hire purchase, and consumer finance. Theseare areas which warrant infusion of financing due to the existing demand-supply gap. NBFCs have been a more flexiblesource of financing and have been able to disburse funds to a gamut of client, from the local common man to a varietyof corporate client. NBFCs are also able to accelerate the pace of decision making to disburse funds, customise andtailor their products according to the client needs and take on excess risks on their portfolio. NBFCs can be divided intodeposit taking NBFCs, i.e., which accept deposits from public and non-deposit taking NBFCs being those which do notaccept deposits from public. The activities carried out by NBFCs in India can be grouped as under The types of NBFCs registered with the RBI are:-  § Equipment leasing Company: is any financial institution whose principal business is that of leasing equipment or financing of such an activity.  § Hire-purchase Company:is any financial intermediary whose principal business relates to hire purchase transactions or financing of such transactions.  § Loan Company: means any financial institution whose principal business is that of providing finance, whether by making loans or advances or otherwise for any activity other than its own (excluding any equipment leasing or hire-purchase finance activity).  § Investment Company: is any financial intermediary whose principal business is that of buying and selling of securities. Now, these NBFCs have been reclassified into three categories:-  § Asset Finance Company (AFC)  § Investment Company (IC) and  § Loan Company (LC). Under this classification, AFC is defined as a financial institution whose principal business is that of financing the physical assets which support various productive/economic activities in the country. GOVERNMENT ROLE IN PROMOTING INFRASTRUCTURE FINANCE: Infrastructure is expected to be a key area of growth in a developing country like India. The Government has been activelypromoting the countrys infrastructure through a sustained focus on area like power, roads, ports and urbantransportation. Private sector participation through public private partnerships as well as privately funded projects isbeing encouraged in order to enable quick scale up of governments efforts and better management. As per PlanningCommissions estimates the investments in infrastructure during the Tenth Plan aggregated to Rs. 4, 52,900 crores whichis expected to increase to Rs. 11, 25,000 crores in the Eleventh Plan. The chart below describes the anticipated andestimated investments under the two plans respectively. PROJECTED INVESTMENT IN INFRASTRUCTURE in the 11th FIVE YEAR PLAN: COMPANY PROFILE: A started operation in 1989, Srei is a leading infrastructure focused private sector Non-Banking Financial Company (NBFC) in India. It is currently the only institution in India offering holistic infrastructure solutions financing, advisory services development. Milestones Achieved: 1989 Started operations and identified the infrastructure sector as its core Business area. 1992 Initial Public Offering with listing on all major stock exchanges. 1997 IFC, FMO DEG invested as strategic equity partners Promoters stake. 2002 Conceived Quippo, Indias first equipment bank. 2004 All India presence, currently 63 offices. 2005 First Indian NBFC to be listed on the London Stock Exchange. 2006 Geographical expansion into Russia; equity partners EBRD, DEG, FMO. 2007 Joint venture with BNP Paribas Lease Group, 100% subsidiary of BNP Paribas. 2008 Holistic Infrastructure Institution, financing, advisory services Development. Services: Ø Infrastructure Equipment Financing Leasing Ø Infrastructure Project: Financing, Advisory services and development Ø Insurance Broking Ø Venture Capital Ø Capital market Ø Sahaj e-village Ø Quippo Equipment Bank GROUP STRUCTURE: About Srei Equipment Finance Private Limited: Srei BNP Paribas (Registered name: Srei Equipment Finance Private Limited) is a 50:50 joint-venture between Srei Infrastructure Finance Limited, Indias leading and only private sector Non-Banking Financial Institution in the infrastructure space and BNP Paribas Leasing Solutions(BPLS), a wholly owned subsidiary of BNP Paribas, France. Srei BNP Paribas started its operation from January 01, 2008 with the infrastructure and construction equipment financing and insurance businesses and has further plans to expand its business to new verticals. Industry leader in the infrastructure and construction equipment financing, Srei BNP Paribas is aptly benefitting from the Indian expertise and insight of Srei and global leasing insight in diverse product classes of BNP Paribas. Srei BNP Paribas has deep insight on diverse equipment used in the infrastructure and construction sector and acts a valuable advisor to its customers. It has tied up with all the leading equipment manufacturers. Over the years, Srei BNP Paribas has been innovating new marketing programs bringing together the manufacturers and customers on a single platform, creating immense value and sharing this value with all the stake holders. Paison Ki Nilami and Srei BNP Paribas Partnership Week are two such prominent programs. Srei BNP Paribas has already started financing Technology Solutions (financing of IT equipment, software and services) and has effectively partnered with leading global IT vendors for financing their customers. It has also forayed into financing of new Equipment classes: Agriculture Equipment, Healthcare Equipment, Office Automation, and Equipment in Education sector etc. With its foray into new equipment classes, Srei BNP Paribas has become probably the one and only Company to offer complete Equipment Solutions. With a customer base of over 20,000, Srei BNP Paribas has grown from strength to strength enjoying a strong national presence with a network of 86 offices across India. VISION: To be the most inspiring global holistic infrastructure institution. MISSION: To be an Indian multinational company providing innovative integrated infrastructure solutions. CORE VALUES: Customer Partnership: At Srei, customer satisfaction is the benchmark for success. Srei delights its customers through a comprehensive range of financial services that are personalized, fast, reliable, convenient, quality driven, and yet cost effective. Integrity: Business integrity is a way of life at Srei. The company strongly stands by integrity in all its dealings and ensures strict adherence to the highest standards of business ethics. Passion for Excellence: Sreis passion for excellence is instrumental in positioning the company as the most innovative infrastructure solution provider in India. Respect for People: Srei acknowledges the fact that its people are its most valuable assets and accordingly provides the best possible work environment and treats them like family members. The company rewards excellence and initiative. Stakeholder Value enhancement: Srei is committed to earning the trust and confidence of all its stake holders. Its growth focus, the ability to constantly enlarge its product basket while controlling risk and reducing the cost of its services have resulted in enhanced value for its stakeholders. Professional Entrepreneurship: Sreis in depth knowledge of infrastructure financing business in India, coupled with its spirit of entrepreneurship, and helps the company to overcome the obstacles and complexities with professional expertise. MANUFACTURING PARTNERS: MARKET SHARE OF SREI BNP PARIBAS: Source: Company. MAJOR COMPETITORS: 1. MAGMA FINCORP LIMITED: Magma Fincorp Ltd (Magma) is a Kolkata based asset financing company. The company is engaged in financingof commercial vehicles, cars, construction equipment, tractors and utility vehicles.The companys target customers are mostly first time users and small entrepreneurs. The Company provides construction equipment finance across retail and strategic customer segments. In the retail segment, it focuses on first-time buyers and small customers. The Company has established contracts with large value vendors addressing multiple projects. It finances a range of construction equipment like excavators, backhoe loaders, compactors, compressors, cranes, tippers and drillers of prominent brands like JCB, Telcon, LT, Ingersoll-Rand, Caterpillar, ECEL, Escorts and Atlas Copco etc. Magma provides unsecured EMI-based loans to SMEs for working capital, business expansion and business maintenance. It has developed proprietary financial analysis tools to make safe credit assessments. The share of this segment is increasing in the total disbursements (5% in FY10). Going forward the company intends to maintain the proportion of these loans at 5% and would adopt a cautious approach while lending. In Commercial Vehicle Finance Segment, Magma provides loans on used commercial vehicles and construction equipment. Magma refinanced popular models of Tata Motors and Ashok Leyland. Magma Fincorp predominantly was engaged in financing of construction equipment and passenger cars, utility vehicles and commercial vehicles (CVs). These business verticals accounted for 90% of the companys disbursements in FY10. Recently the company has ventured into high-yield segments, viz; financing of used CVs, tractors and SME loans. Most of the loans disbursed are retail loans and have small ticket size except in the construction equipment segment. MFL has a concentrated focus on the under tapped semi urban and rural market to finance first time users, Small Road Transport operators, small contractors etc. 2. TATA CAPITAL: The Company was incorporated on March 8, 1991 and actively commenced business operations since September, 2007. The Company is a wholly owned subsidiary of Tata Sons Limited, the apex holding company of the Tatas. Their fund based businesses comprise Corporate Finance, Infrastructure Finance and Retail Finance fee based businesses comprise investment banking, broking and distribution, wealth management, private equity, treasury advisory, services relating to travel, forex and infrastructure. With the wide array of products and customized service, the commercial finance business, helps small, medium and large corporates grow their business. The companys team of handpicked professionals offers in-depth expertise to help customers keep pace with the changing marketplace and offer them appropriate solutions to meet their ever-growing financial needs. The companys management structure enables them to leverage relationships across lines of our businesses. Their product knowledge and multi-channel delivery model enhances the ability to cross-sell the companys services. TATA Capital is in the advanced stages of setting up institutional broking, insurance broking and rural finance businesses which would supplement the aforementioned lines of business. TATA Capital believes that the following are the key strengths: Unified financial services platform; Diversified and balanced mix of businesses; Experienced management team; Innovative solutions model; Respected brand; Controls, processes and risk management systems; and Access to capital. 3. LT FINANCE LIMITED: LT Finance Limited (LTF) is a subsidiary of Larsen and Toubro. It was incorporated as a Non-Banking Finance Company in November 1994. Through LTF, LT aims at making a strong foray in the ever-expanding financial services sector.LT Finance understands the intricacies of your business. We at LT Finance offer financing for your Construction Equipment in the form of term loans, working capital loan and operating lease facilities. In 1996, LT Finance had made a foray in financing of commercial vehicles. LT Finance offers financing Commercial Vehicles of all makes and sizes. We also undertake funding of the body for the Commercial Vehicles. LT Finance has an extensive network from where you can easily avail financing for your Commercial Vehicle. Advantages of partnering with LT Finance Presence in more than 70 locations Flexible repayment option Competitive interest rates Finance for used vehicles available Faster loan approval and disbursement A brief Comparison between SREI EQUIPMENT FINSNCE its Competitors: REASON FOR THE JOINT VENTURE WITH BNP PARIBAS LEGAL SOLUTIONS: Mr.HemantKanoria, Vice Chairman and Managing Director of SREI, termed this joint venture as a very significant step in the Indian Financial Services Market. â€Å"We are the largest player in the financing of infrastructure equipment and collaborating with BPLG will help in increasing our market share further and also expanding the product line into financing of agriculture, information technology, medical and other equipment.† Speaking at the occasion Mr. Bertrand Gousset, member of the Executive Committee of BPLG, in charge of Corporate Development, said, â€Å"We are delighted to be associated with the SREI group, who are the leaders in the financing of infrastructure equipment and provide a wide range of equipment finance products to large strategic clients as well as to retail customers, with pan-India coverage. This joint venture is very significant for us and we look forward to a long and prosperous association with them.† Mr. Sunil Kanoria said, â€Å"This joint venture signifies the coming together of two companies with the same shared values. Both SREI and BPLG are convinced that they are well positioned to build on the already strong platform established by SREI and that this will enable in reduction in cost of funds resulting in higher profitability.† Mr.Amoudru, CEO of BNP Paribas India and Head of Territory, said The acquisition of a 50% stake in this joint-venture with SREI a highly recognised firm in equipment and infrastructure financing further evidences the willingness of the BNP Paribas Group to expand its presence in India in activities where it has a strong expertise. It represents another substantial capital commitment from the Group- the largest so far- in this country and testifies our confidence in the long term prospects of the Indian economy. SWOT ANALYSIS: LITERATURE REVIEW: FLOW OF THE PROCESS AT SREI: CREDIT APPRAISAL: Credit Appraisal is a process to ascertain the risks associated with the extension of the credit facility. It is generally carried by the financial institutions which are involved in providing financial funding to its customers.These financial institutions appraise the technical feasibility, economic viability and bankability including creditworthiness of the prospective borrower. Credit appraisal starts from the time a prospective borrower walks into the branch and culminates in credit delivery and monitoring with the objective of ensuring and maintaining the quality of lending and managing credit risk within acceptable limits. Credit appraisal involves analysis of liquidity position/ financial soundness of the company. Although, the analysis also covers understanding growth trends in revenues and earnings, and profit margins, more emphasis is required to be placed on liquidity-both long term and short term. There are basically two types of proposals that are received by the companies for funds. The first types of proposals are financing against new and first hand assets to be purchased (EQUIK) and the other proposals are financing against pre owned assets (REQUIK). Asset finance is generally divided into three departments depending upon the risk exposure*: Retail: Aggregate risk exposure not exceeding Rs.1 crore. SME (Small Medium Enterprises): Aggregate risk exposure between Rs.1 5 crores. Strategic: Aggregate exposure more than Rs.5 crores. *NOTE: Risk exposure to a client is determined by the summation of Net Finance Amount for the approval(s) being considered, together with all existing exposures to the client all related concerns in aggregate and residual Net Finance Amounts under all previous valid approvals for the Client pending part or full disbursement. SOME IMPORTANT TERMINOLOGIES: ASSET FINANCE: Asset Finance category includes secured business loan in which the borrower pledges as collateral an asset used in the conduct of its business. Asset finance also includes business in which a client takes an asset on lease for use in the conduct of his business for a defined period with or without right of onward sub lease the asset. ASSET COST: In case of Equik, the invoice values of the Asset including all duties and taxes which are not refundable or adjustable under drawback or otherwise any scheme. Spares, consumables, accessories auxiliaries, consultancy fees, installation and erection charges, etc. shall not be considered as part of asset cost. In case of Requik, Asset cost will be determined by the lowest of: Present Intrinsic Value of Asset as determined through a process by an expert approved by SREI. Actual purchase price to be paid by the consumer Current Insured Declared Value. MARGIN: Margin means the clients contribution on the Asset Cost payable upfront or any amount deposited with us as Security Deposit in relation to the transaction before the disbursement or release of facility. AIRR: Internal Rate of Return (IRR) by definition is the rate of return at which the Net Present Value of the stream of payments (repayment of installments and interest by the customer vis-à  -vis the actual disbursement made by the company) become equal to zero. FIRR: Financial IRR (FIRR) shall mean the transaction IRR without factoring any benefit available to Srei BNPP in terms of normal MOU entered into by srei BNPP with concerned manufacturer. Management fees/ RTE/ Commitment Charges collected upfront, an extra credit period, subvention or other cash incentives extracted from the manufacturer over and above those available workings. YIELD: Yield means the rate of return to Srei-BNPP from the transaction, factoring all the benefits available to Srei-BNPP under normal MOU and otherwise from the manufacturers/vendors. ETR (Excellent Track Record): ETR means peak delay of not more than 30 days and average delay of not more than 15 days for payment of dues in all existing and past accounts of the proposed customer. GTR (Good track Record): GTR means peak delay of not more than 45 days and average delay of not more than 30 days for payment of dues in all existing and past accounts of the proposed customer. PTR (Poor track Record): PTR means peak delay more than 45 days and average delay of more than 30 days for payment of dues in all existing and past accounts of the proposed customer. ANALYSIS OF CREDIT APPRAISAL MEMORANDUM: Credit risk of each individual transaction is studied and managed from the five different perspectives: Customer credit worthiness Asset quality Asset deployment Collateral security Facility type Background of the proponent/ management: The identification of the borrower is done properly through scrutiny of his antecedents, experience, competence, integrity, initiative etc. This may be done by obtaining status reports from previous bankers. In case of corporate, the management structure, the background of the top management needs to be scrutinized. KYC guidelines as framed by RBI are adopted by the company. Commercial Appraisal: The nature of the product, demand for the same, the existing and perceived competition in the segment, ability of the proponents to withstand the same, government policies governing the industry etc. need to be taken into consideration. Technical Appraisal: Technical appraisal of the project needs to be carried out for industrial activity proposals beyond the cut off limits prescribed from time to time. Such appraisal may be carried out in house by technical officers. Financial Appraisal: Apart from ascertaining the need based character of the limits requested for, the financial health of the proponents, ability to absorb unanticipated financial costs need to be looked into which would include scrutiny of the cost of the project, means of financing, financial projections etc. important performance indicators like profitability ratios, debt equity ratio, operating profit margin etc. need to be within acceptable parameters for that industries/ activities. INTRODUCTION TO RISK: The interpretation of the word risk will determine the approach to risk management. The word risk is interpreted in three distinct senses namely risk as hazard, risk as opportunity and risk as uncertainty. Risk as hazard is the most commonly used meaning of risk and it means likely financial losses arising from negative events such as control failures, bad publicity and loss of reputation. Risk management in this context would mean eliminating possibilities of losses from such negative events by putting in place adequate control systems. Risk as an opportunity means, taking risks and earning adequate returns on them. This implies the trade-off between risk and return. Here risk management, becomes risk optimization meaning maximizing the upside potential and minimizing the downside. Here capacity and ability to manage risk is used to increase shareholders value and achieve a competitive advantage. Risk, as uncertainty is basically a statistical concept, which assumes a normal distribution for future outcomes. Here risk management means narrowing the difference between the expected outcomes and actual results. Banks and other similar financial institutions need to manage the risk inherent in the entire portfolio as well as the risk in individual credits or transactions. The effective management of risk is a critical component of a comprehensive approach to risk management and essential to the long-term success of any banking organization. In simple words, risk is the possibility of losses associated with decrease in the credit quality of borrowers. In a financial institution, loss may stem from default due to inability or unwillingness of a customer to meet his commitments in relation to lending, trading, settlement and other financial transactions. A default reduces the present value of the loan and consequently the value of the banks business. Thus, it is imperative that these institutions have a robust risk management. MODEL BUILDING: Need for Study: A Risk Assessment Model (RAM) is necessary to avoid the limitations associated with a simplistic and broad classification of applicants into a good or bad category The comapny currently uses a judgemental risk assessing model. Grading System for Standardization of Risk: The grades (symbols, numbers, alphabets, and descriptive terms) used in the internal credit-risk grading system represent, without any ambiguity, the default risks associated with an exposure. The grading system will enable comparisons of risks for purposes of analysis and top management decision-making. The grading system is therefore, be flexible and should accommodate the refinement SREI India Financial and SWOT Analysis SREI India Financial and SWOT Analysis OBJECTIVE OF THE PROJECT: To develop and understanding of the Non-Banking Financial Institutions (NBFIs) and their business operations in India. To do a detailed research on SREI Equipment Finance Private Limited, its market share and the SWOT analysis. To thoroughly review SREIs credit appraisal and credit management process. To understand the risk management process of the company. To gain a detailed knowledge of the parameters that affects various risks. To determine weightages and scores for designing and developing risk assessment model based on market forces for assessing SREIs Customers. METHODOLOGY: In order to achieve the said objectives, will be to go through the entire NBFs history, thrust areas; growth opportunities, present scenario. This will be the ongoing process and will be done using internet, news and books. To understand the functioning of SREI pertaining to credit risk management and appraisal process followed for financing large corporates (risk exposures more than Rs.5 crores). Factual data, credit appraisal memorandum prepared by the company and the credit risk policy of the company will be referred in this regard. Then comes the technical part of conducting Balance Sheet Analysis, Ratio Analysis and Cash Flow Analysis. To propose a statistical credit rating model, data have been collected from credit officers and the relationship managers in the institution. Financial ratios were used to measure the strength of the customer. Score model for assessing risk to convert responses to scores. Weighted average method applied to assign appropriate importance to various parameters. LIMITATIONS OF THE STUDY: The study will only be focusing on the LARGE CORPORATES (risk exposure more than Rs.5 crores) not the retail and SME sectors of SREI. Study is on the basis of first-hand information collected from employees/head of the division of the company that might be incorrect or biased. Duration of the internship imparts the pressure of covering this vast spectrum in a limit period of 14 weeks. The accuracy of the Risk Assessing Model depends on the accuracy of information provided by the customer. The risk rating model doesnt take into the consideration where in the company doesnt follow the rules norms strictly. The relationships with the customers are given more importance. INDUSTRY ANALYSIS: Structure of Indias Financial Services Industry: The RBI, the central banking and monetary authority of India, is the central regulatory and supervisory authority for the Indian financial system. SEBI and IRDA regulate the capital markets and insurance sector, respectively. A variety offinancial intermediaries in the public and private sectors participate in Indias financial sector, including the following: Commercial banks; NBFCs; Specialised financial institutions like NABARD, EXIM Bank, SIDBI and TFCI; Securities brokers; Investment banks; Insurance companies; Mutual funds; and Venture capital. NON-BANKING FINANCIALCOMPANIES: Non-banking financial companies (NBFCs) are fast emerging as an important segment of Indian financial system. It is an heterogeneous group of institutions (other than commercial and co-operative banks) performing financial intermediation in a variety of ways, like accepting deposits, making loans and advances, leasing, hire purchase, etc. They raise funds from the public, directly or indirectly, and lend them to ultimate spenders. They advance loans to the various wholesale and retail traders, small-scale industries and self-employed persons. Thus, they have broadened and diversified the range of products and services offered by a financial sector. Gradually, they are being recognized as complementary to the banking sector due to their customer-oriented services; simplified procedures; attractive rates of return on deposits; flexibility and timeliness in meeting the credit needs of specified sectors; etc. The working and operations of NBFCs are regulated by the Reserve Bank of India (RBI) within the framework of the Reserve Bank of India Act, 1934 (Chapter III B) and the directions issued by it under the Act. As per the RBI Act, a non-banking financial company is defined as:- (i) a financial institution which is a company; (ii) a non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner; (iii) such other non-banking institution or class of such institutions, as the bank may, with the previous approval of the Central Government and by notification in the Official Gazette, specify. NBFCs VsBANKING SECTOR IN INDIA: Non-Banking Finance Companies (NBFCs) are an integral part of the countrys financial system complementing theservices of commercial banks. The main reason attributed to the growth of NBFCs is the comprehensive regulation of thebanking system. Other factors include higher level of customer orientation, lesser pre/post sanction requirements andhigher rates of interest on deposits being offered by NBFCs. NBFCs have traditionally been extending credit across various parts of the country through their geographical presence,with NBFCs being a supplier of credit to segments such as equipment leasing, hire purchase, and consumer finance. Theseare areas which warrant infusion of financing due to the existing demand-supply gap. NBFCs have been a more flexiblesource of financing and have been able to disburse funds to a gamut of client, from the local common man to a varietyof corporate client. NBFCs are also able to accelerate the pace of decision making to disburse funds, customise andtailor their products according to the client needs and take on excess risks on their portfolio. NBFCs can be divided intodeposit taking NBFCs, i.e., which accept deposits from public and non-deposit taking NBFCs being those which do notaccept deposits from public. The activities carried out by NBFCs in India can be grouped as under The types of NBFCs registered with the RBI are:-  § Equipment leasing Company: is any financial institution whose principal business is that of leasing equipment or financing of such an activity.  § Hire-purchase Company:is any financial intermediary whose principal business relates to hire purchase transactions or financing of such transactions.  § Loan Company: means any financial institution whose principal business is that of providing finance, whether by making loans or advances or otherwise for any activity other than its own (excluding any equipment leasing or hire-purchase finance activity).  § Investment Company: is any financial intermediary whose principal business is that of buying and selling of securities. Now, these NBFCs have been reclassified into three categories:-  § Asset Finance Company (AFC)  § Investment Company (IC) and  § Loan Company (LC). Under this classification, AFC is defined as a financial institution whose principal business is that of financing the physical assets which support various productive/economic activities in the country. GOVERNMENT ROLE IN PROMOTING INFRASTRUCTURE FINANCE: Infrastructure is expected to be a key area of growth in a developing country like India. The Government has been activelypromoting the countrys infrastructure through a sustained focus on area like power, roads, ports and urbantransportation. Private sector participation through public private partnerships as well as privately funded projects isbeing encouraged in order to enable quick scale up of governments efforts and better management. As per PlanningCommissions estimates the investments in infrastructure during the Tenth Plan aggregated to Rs. 4, 52,900 crores whichis expected to increase to Rs. 11, 25,000 crores in the Eleventh Plan. The chart below describes the anticipated andestimated investments under the two plans respectively. PROJECTED INVESTMENT IN INFRASTRUCTURE in the 11th FIVE YEAR PLAN: COMPANY PROFILE: A started operation in 1989, Srei is a leading infrastructure focused private sector Non-Banking Financial Company (NBFC) in India. It is currently the only institution in India offering holistic infrastructure solutions financing, advisory services development. Milestones Achieved: 1989 Started operations and identified the infrastructure sector as its core Business area. 1992 Initial Public Offering with listing on all major stock exchanges. 1997 IFC, FMO DEG invested as strategic equity partners Promoters stake. 2002 Conceived Quippo, Indias first equipment bank. 2004 All India presence, currently 63 offices. 2005 First Indian NBFC to be listed on the London Stock Exchange. 2006 Geographical expansion into Russia; equity partners EBRD, DEG, FMO. 2007 Joint venture with BNP Paribas Lease Group, 100% subsidiary of BNP Paribas. 2008 Holistic Infrastructure Institution, financing, advisory services Development. Services: Ø Infrastructure Equipment Financing Leasing Ø Infrastructure Project: Financing, Advisory services and development Ø Insurance Broking Ø Venture Capital Ø Capital market Ø Sahaj e-village Ø Quippo Equipment Bank GROUP STRUCTURE: About Srei Equipment Finance Private Limited: Srei BNP Paribas (Registered name: Srei Equipment Finance Private Limited) is a 50:50 joint-venture between Srei Infrastructure Finance Limited, Indias leading and only private sector Non-Banking Financial Institution in the infrastructure space and BNP Paribas Leasing Solutions(BPLS), a wholly owned subsidiary of BNP Paribas, France. Srei BNP Paribas started its operation from January 01, 2008 with the infrastructure and construction equipment financing and insurance businesses and has further plans to expand its business to new verticals. Industry leader in the infrastructure and construction equipment financing, Srei BNP Paribas is aptly benefitting from the Indian expertise and insight of Srei and global leasing insight in diverse product classes of BNP Paribas. Srei BNP Paribas has deep insight on diverse equipment used in the infrastructure and construction sector and acts a valuable advisor to its customers. It has tied up with all the leading equipment manufacturers. Over the years, Srei BNP Paribas has been innovating new marketing programs bringing together the manufacturers and customers on a single platform, creating immense value and sharing this value with all the stake holders. Paison Ki Nilami and Srei BNP Paribas Partnership Week are two such prominent programs. Srei BNP Paribas has already started financing Technology Solutions (financing of IT equipment, software and services) and has effectively partnered with leading global IT vendors for financing their customers. It has also forayed into financing of new Equipment classes: Agriculture Equipment, Healthcare Equipment, Office Automation, and Equipment in Education sector etc. With its foray into new equipment classes, Srei BNP Paribas has become probably the one and only Company to offer complete Equipment Solutions. With a customer base of over 20,000, Srei BNP Paribas has grown from strength to strength enjoying a strong national presence with a network of 86 offices across India. VISION: To be the most inspiring global holistic infrastructure institution. MISSION: To be an Indian multinational company providing innovative integrated infrastructure solutions. CORE VALUES: Customer Partnership: At Srei, customer satisfaction is the benchmark for success. Srei delights its customers through a comprehensive range of financial services that are personalized, fast, reliable, convenient, quality driven, and yet cost effective. Integrity: Business integrity is a way of life at Srei. The company strongly stands by integrity in all its dealings and ensures strict adherence to the highest standards of business ethics. Passion for Excellence: Sreis passion for excellence is instrumental in positioning the company as the most innovative infrastructure solution provider in India. Respect for People: Srei acknowledges the fact that its people are its most valuable assets and accordingly provides the best possible work environment and treats them like family members. The company rewards excellence and initiative. Stakeholder Value enhancement: Srei is committed to earning the trust and confidence of all its stake holders. Its growth focus, the ability to constantly enlarge its product basket while controlling risk and reducing the cost of its services have resulted in enhanced value for its stakeholders. Professional Entrepreneurship: Sreis in depth knowledge of infrastructure financing business in India, coupled with its spirit of entrepreneurship, and helps the company to overcome the obstacles and complexities with professional expertise. MANUFACTURING PARTNERS: MARKET SHARE OF SREI BNP PARIBAS: Source: Company. MAJOR COMPETITORS: 1. MAGMA FINCORP LIMITED: Magma Fincorp Ltd (Magma) is a Kolkata based asset financing company. The company is engaged in financingof commercial vehicles, cars, construction equipment, tractors and utility vehicles.The companys target customers are mostly first time users and small entrepreneurs. The Company provides construction equipment finance across retail and strategic customer segments. In the retail segment, it focuses on first-time buyers and small customers. The Company has established contracts with large value vendors addressing multiple projects. It finances a range of construction equipment like excavators, backhoe loaders, compactors, compressors, cranes, tippers and drillers of prominent brands like JCB, Telcon, LT, Ingersoll-Rand, Caterpillar, ECEL, Escorts and Atlas Copco etc. Magma provides unsecured EMI-based loans to SMEs for working capital, business expansion and business maintenance. It has developed proprietary financial analysis tools to make safe credit assessments. The share of this segment is increasing in the total disbursements (5% in FY10). Going forward the company intends to maintain the proportion of these loans at 5% and would adopt a cautious approach while lending. In Commercial Vehicle Finance Segment, Magma provides loans on used commercial vehicles and construction equipment. Magma refinanced popular models of Tata Motors and Ashok Leyland. Magma Fincorp predominantly was engaged in financing of construction equipment and passenger cars, utility vehicles and commercial vehicles (CVs). These business verticals accounted for 90% of the companys disbursements in FY10. Recently the company has ventured into high-yield segments, viz; financing of used CVs, tractors and SME loans. Most of the loans disbursed are retail loans and have small ticket size except in the construction equipment segment. MFL has a concentrated focus on the under tapped semi urban and rural market to finance first time users, Small Road Transport operators, small contractors etc. 2. TATA CAPITAL: The Company was incorporated on March 8, 1991 and actively commenced business operations since September, 2007. The Company is a wholly owned subsidiary of Tata Sons Limited, the apex holding company of the Tatas. Their fund based businesses comprise Corporate Finance, Infrastructure Finance and Retail Finance fee based businesses comprise investment banking, broking and distribution, wealth management, private equity, treasury advisory, services relating to travel, forex and infrastructure. With the wide array of products and customized service, the commercial finance business, helps small, medium and large corporates grow their business. The companys team of handpicked professionals offers in-depth expertise to help customers keep pace with the changing marketplace and offer them appropriate solutions to meet their ever-growing financial needs. The companys management structure enables them to leverage relationships across lines of our businesses. Their product knowledge and multi-channel delivery model enhances the ability to cross-sell the companys services. TATA Capital is in the advanced stages of setting up institutional broking, insurance broking and rural finance businesses which would supplement the aforementioned lines of business. TATA Capital believes that the following are the key strengths: Unified financial services platform; Diversified and balanced mix of businesses; Experienced management team; Innovative solutions model; Respected brand; Controls, processes and risk management systems; and Access to capital. 3. LT FINANCE LIMITED: LT Finance Limited (LTF) is a subsidiary of Larsen and Toubro. It was incorporated as a Non-Banking Finance Company in November 1994. Through LTF, LT aims at making a strong foray in the ever-expanding financial services sector.LT Finance understands the intricacies of your business. We at LT Finance offer financing for your Construction Equipment in the form of term loans, working capital loan and operating lease facilities. In 1996, LT Finance had made a foray in financing of commercial vehicles. LT Finance offers financing Commercial Vehicles of all makes and sizes. We also undertake funding of the body for the Commercial Vehicles. LT Finance has an extensive network from where you can easily avail financing for your Commercial Vehicle. Advantages of partnering with LT Finance Presence in more than 70 locations Flexible repayment option Competitive interest rates Finance for used vehicles available Faster loan approval and disbursement A brief Comparison between SREI EQUIPMENT FINSNCE its Competitors: REASON FOR THE JOINT VENTURE WITH BNP PARIBAS LEGAL SOLUTIONS: Mr.HemantKanoria, Vice Chairman and Managing Director of SREI, termed this joint venture as a very significant step in the Indian Financial Services Market. â€Å"We are the largest player in the financing of infrastructure equipment and collaborating with BPLG will help in increasing our market share further and also expanding the product line into financing of agriculture, information technology, medical and other equipment.† Speaking at the occasion Mr. Bertrand Gousset, member of the Executive Committee of BPLG, in charge of Corporate Development, said, â€Å"We are delighted to be associated with the SREI group, who are the leaders in the financing of infrastructure equipment and provide a wide range of equipment finance products to large strategic clients as well as to retail customers, with pan-India coverage. This joint venture is very significant for us and we look forward to a long and prosperous association with them.† Mr. Sunil Kanoria said, â€Å"This joint venture signifies the coming together of two companies with the same shared values. Both SREI and BPLG are convinced that they are well positioned to build on the already strong platform established by SREI and that this will enable in reduction in cost of funds resulting in higher profitability.† Mr.Amoudru, CEO of BNP Paribas India and Head of Territory, said The acquisition of a 50% stake in this joint-venture with SREI a highly recognised firm in equipment and infrastructure financing further evidences the willingness of the BNP Paribas Group to expand its presence in India in activities where it has a strong expertise. It represents another substantial capital commitment from the Group- the largest so far- in this country and testifies our confidence in the long term prospects of the Indian economy. SWOT ANALYSIS: LITERATURE REVIEW: FLOW OF THE PROCESS AT SREI: CREDIT APPRAISAL: Credit Appraisal is a process to ascertain the risks associated with the extension of the credit facility. It is generally carried by the financial institutions which are involved in providing financial funding to its customers.These financial institutions appraise the technical feasibility, economic viability and bankability including creditworthiness of the prospective borrower. Credit appraisal starts from the time a prospective borrower walks into the branch and culminates in credit delivery and monitoring with the objective of ensuring and maintaining the quality of lending and managing credit risk within acceptable limits. Credit appraisal involves analysis of liquidity position/ financial soundness of the company. Although, the analysis also covers understanding growth trends in revenues and earnings, and profit margins, more emphasis is required to be placed on liquidity-both long term and short term. There are basically two types of proposals that are received by the companies for funds. The first types of proposals are financing against new and first hand assets to be purchased (EQUIK) and the other proposals are financing against pre owned assets (REQUIK). Asset finance is generally divided into three departments depending upon the risk exposure*: Retail: Aggregate risk exposure not exceeding Rs.1 crore. SME (Small Medium Enterprises): Aggregate risk exposure between Rs.1 5 crores. Strategic: Aggregate exposure more than Rs.5 crores. *NOTE: Risk exposure to a client is determined by the summation of Net Finance Amount for the approval(s) being considered, together with all existing exposures to the client all related concerns in aggregate and residual Net Finance Amounts under all previous valid approvals for the Client pending part or full disbursement. SOME IMPORTANT TERMINOLOGIES: ASSET FINANCE: Asset Finance category includes secured business loan in which the borrower pledges as collateral an asset used in the conduct of its business. Asset finance also includes business in which a client takes an asset on lease for use in the conduct of his business for a defined period with or without right of onward sub lease the asset. ASSET COST: In case of Equik, the invoice values of the Asset including all duties and taxes which are not refundable or adjustable under drawback or otherwise any scheme. Spares, consumables, accessories auxiliaries, consultancy fees, installation and erection charges, etc. shall not be considered as part of asset cost. In case of Requik, Asset cost will be determined by the lowest of: Present Intrinsic Value of Asset as determined through a process by an expert approved by SREI. Actual purchase price to be paid by the consumer Current Insured Declared Value. MARGIN: Margin means the clients contribution on the Asset Cost payable upfront or any amount deposited with us as Security Deposit in relation to the transaction before the disbursement or release of facility. AIRR: Internal Rate of Return (IRR) by definition is the rate of return at which the Net Present Value of the stream of payments (repayment of installments and interest by the customer vis-à  -vis the actual disbursement made by the company) become equal to zero. FIRR: Financial IRR (FIRR) shall mean the transaction IRR without factoring any benefit available to Srei BNPP in terms of normal MOU entered into by srei BNPP with concerned manufacturer. Management fees/ RTE/ Commitment Charges collected upfront, an extra credit period, subvention or other cash incentives extracted from the manufacturer over and above those available workings. YIELD: Yield means the rate of return to Srei-BNPP from the transaction, factoring all the benefits available to Srei-BNPP under normal MOU and otherwise from the manufacturers/vendors. ETR (Excellent Track Record): ETR means peak delay of not more than 30 days and average delay of not more than 15 days for payment of dues in all existing and past accounts of the proposed customer. GTR (Good track Record): GTR means peak delay of not more than 45 days and average delay of not more than 30 days for payment of dues in all existing and past accounts of the proposed customer. PTR (Poor track Record): PTR means peak delay more than 45 days and average delay of more than 30 days for payment of dues in all existing and past accounts of the proposed customer. ANALYSIS OF CREDIT APPRAISAL MEMORANDUM: Credit risk of each individual transaction is studied and managed from the five different perspectives: Customer credit worthiness Asset quality Asset deployment Collateral security Facility type Background of the proponent/ management: The identification of the borrower is done properly through scrutiny of his antecedents, experience, competence, integrity, initiative etc. This may be done by obtaining status reports from previous bankers. In case of corporate, the management structure, the background of the top management needs to be scrutinized. KYC guidelines as framed by RBI are adopted by the company. Commercial Appraisal: The nature of the product, demand for the same, the existing and perceived competition in the segment, ability of the proponents to withstand the same, government policies governing the industry etc. need to be taken into consideration. Technical Appraisal: Technical appraisal of the project needs to be carried out for industrial activity proposals beyond the cut off limits prescribed from time to time. Such appraisal may be carried out in house by technical officers. Financial Appraisal: Apart from ascertaining the need based character of the limits requested for, the financial health of the proponents, ability to absorb unanticipated financial costs need to be looked into which would include scrutiny of the cost of the project, means of financing, financial projections etc. important performance indicators like profitability ratios, debt equity ratio, operating profit margin etc. need to be within acceptable parameters for that industries/ activities. INTRODUCTION TO RISK: The interpretation of the word risk will determine the approach to risk management. The word risk is interpreted in three distinct senses namely risk as hazard, risk as opportunity and risk as uncertainty. Risk as hazard is the most commonly used meaning of risk and it means likely financial losses arising from negative events such as control failures, bad publicity and loss of reputation. Risk management in this context would mean eliminating possibilities of losses from such negative events by putting in place adequate control systems. Risk as an opportunity means, taking risks and earning adequate returns on them. This implies the trade-off between risk and return. Here risk management, becomes risk optimization meaning maximizing the upside potential and minimizing the downside. Here capacity and ability to manage risk is used to increase shareholders value and achieve a competitive advantage. Risk, as uncertainty is basically a statistical concept, which assumes a normal distribution for future outcomes. Here risk management means narrowing the difference between the expected outcomes and actual results. Banks and other similar financial institutions need to manage the risk inherent in the entire portfolio as well as the risk in individual credits or transactions. The effective management of risk is a critical component of a comprehensive approach to risk management and essential to the long-term success of any banking organization. In simple words, risk is the possibility of losses associated with decrease in the credit quality of borrowers. In a financial institution, loss may stem from default due to inability or unwillingness of a customer to meet his commitments in relation to lending, trading, settlement and other financial transactions. A default reduces the present value of the loan and consequently the value of the banks business. Thus, it is imperative that these institutions have a robust risk management. MODEL BUILDING: Need for Study: A Risk Assessment Model (RAM) is necessary to avoid the limitations associated with a simplistic and broad classification of applicants into a good or bad category The comapny currently uses a judgemental risk assessing model. Grading System for Standardization of Risk: The grades (symbols, numbers, alphabets, and descriptive terms) used in the internal credit-risk grading system represent, without any ambiguity, the default risks associated with an exposure. The grading system will enable comparisons of risks for purposes of analysis and top management decision-making. The grading system is therefore, be flexible and should accommodate the refinement

Solvong the Education Equation

Josh Irish English 101 6 March, 2013 Solving the Education Equation ?The myth of education in America works like a broken function box; what we are putting in is not coming out complete, thus leaving an unsolved equation. This unsolved equation is the education system in America, which continuously crams numbers into the function, without yielding any results. This myth America has constructed has been debated by many, benefited few, and has encompassed us all. It was created by the culmination of false goals by a system that does not cater to society as a whole or been proven successful.The original mission statements of public education in a democracy set out by Horace Mann were to â€Å"Equalize all conditions of men, in order to balance the wheel of the social machinery† (Mann 116). I believe that the America’s current public education system is not fulfilling these goals set for all citizens of this nation. ?There are numerous projected goals of American education that have been set out, in writing, by the trusted officials of America’s government. These goals are aimed at creating a thriving society occupied by well rounded individual citizens.In Horace Mann’s address to the Massachusetts board of education he states, â€Å"It may be safely affirmed that the common school, improved and energized as it can easily be, may become the most effective and benignant of all forces of civilization† (Mann 117). Mann was suggesting that education can be very adaptable, suiting all facets of society to be the sole beneficiary creating good citizens. I believe that his vision was and is still true if America follows his advice, creating a system more adaptable around its constituents.I believe the main goals of education in a democracy should include individual empowerment, creating honest citizens, equal opportunity for success, and political knowledge of your government. In regards to political knowledge, Michael Moore in idiot nat ion states, â€Å"A nation that goes out of its way to remain ignorant and stupid, is not one that should be running the world – at least not until its citizens can locate Kosovo(or any other country it has bombed) on the map† (Moore 129). This shows just about how little Americans seem to know about their own government’s practices and decision making.The apathetic attitude many Americans have towards politics as well shows disregard for their own well being, since the government’s decisions will inevitably affect them. regarding success, John Gatto states that â€Å" We have been taught in this country to think of success as synonymous to, or at least dependent upon schooling, but historically that isn’t true in either an intellectual or a financial sense† (Gatto 150). This alludes to the common phrase money doesn’t buy happiness, in comparison to â€Å"schooling† not automatically bringing â€Å"success†.This is the m ain myth of our education system, which falsely advertises the transition of schooling into success. ?With every projected goal the government has for education, there are just as many ways our democracy is not fulfilling them. For starters, schools are massively overcrowded with an increasing student to teacher ratio, creating less interaction and communication between the two. On top of this problem, teachers are being highly underpaid although they must work harder trying to account for the larger amount of students.These problems stem from the fact that our education system is not adequately funded and resources are hard to come by. Michael Moore states the hypocritical nature of political funding in Idiot Nation when he says â€Å"The ultimate irony is that the very politicians who refuse to fund education in America are the same ones that go ballistic over how kids have fallen behind the Japanese, Germans, and just about every country with running water and an economy not bas ed on the sale of Chiclets† (Moore 138).Another problem we face is the current system being designed to merely push students along until the end, whether they are ready or not, based on George bush’s No Child Left Behind initiative. John Gatto reveals a solution to this in Against School when he states â€Å"If we wanted we could easily jettison the old, stupid structures and help kids take an education, rather than merely receive schooling. we could encourage the best qualities of youthfulness simply by being more flexible†¦ and giving each student what autonomy he or she needs in order to take a risk every now and then† (Gatto 149).The clearest problem we can see in education system is the separation of social classes within schools. schools are clearly still a separate and still unequal institution when you examine the differences between working class, middle class, affluent, and elite schools in America. Each of these levels of schools has a hidden curr iculum of work designed for that specific social class’s educational upbringing. Working class schools follow steps of procedure, involving mechanical behavior, with little decision or choice making. In Middle class schools, work is getting the right answer.Therefore one must follow directions to get the right answers, and accumulate right answers to get a good grade. In affluent schools, students work independently with creative activity, and are asked to express ideas and concepts. This also involves individual thought and expression rather than listening to others. Lastly, elite schools develop ones analytical, intellectual powers by work that challenges both reason and logic through problems. All these levels of curriculum between schools correspond to students’ future â€Å"designation† or career path in society’s workplace.Jean Anyon describes this complex in Social Class and the Hidden Curriculum of Work when she says â€Å"Public schools in compl ex industrial societies like our own make available different types of educational experience and curriculum knowledge to students in different social classes† (Anyon 170). The hidden curriculum of schools in our public education system is clearly a problem and the biggest obstacle to creating equal opportunities for all students in America. ?Education creates empowerment. In theory, yes, this statement is true.However in the current state of education in America, this is false advertisement when you include the obstacles such as overcrowded schools, incompetent teachers, outdated information sources and hidden curriculum in schools. In order to make that statement more than a myth we need to become aware of the industrial complex that our government has made public education into and start changing the system. We as a nation must demand adequate funding for schools, relevant information sources and diminish class from being intertwined with our education.We live in a thriving , complex society that has become an idiot nation due to our passivity and apathetic attitude towards education. We must wake up and take back the very foundation of the American dream, our education. Once our nation achieves this we will solve the equation of the education system and function properly as a country. Works Cited Anyo, Jean. â€Å"Social Class and the Hidden Curriculum of Work. † Rereading America: Cultural Contexts for Critical Thinking and Writing. 8th ed. Boston: Bedford of St. Martin's, 1992. 70. Print. Gatto, John. â€Å"Against School. † Rereading America: Cultural Contexts for Critical Thinking and Writing. 8th ed. Boston: Bedford of St. Martin's, 1992. 149. Print. Gatto, John. â€Å"Against School. † Rereading America: Cultural Contexts for Critical Thinking and Writing. 8th ed. Boston: Bedford of St. Martin's, 1992. 150. Print. Mann, Horace. â€Å"Report of the Massachusetts Board of Education. † Rereading America: Cultural Context s for Critical Thinking and Writing. 8th ed. Boston: Bedford of St. Martin's, 1992. 116.Print. Mann, Horace. â€Å"Report of the Massachusetts Board of Education. † Rereading America: Cultural Contexts for Critical Thinking and Writing. 8th ed. Boston: Bedford of St. Martin's, 1992. 117. Print. Moore, Michael. â€Å"Idiot Nation. † Rereading America: Cultural Contexts for Critical Thinking and Writing. 8th ed. Boston: Bedford of St. Martin's, 1992. 129. Print. Moore, Michael. â€Å"Idiot Nation. † Rereading America: Cultural Contexts for Critical Thinking and Writing. 8th ed. Boston: Bedford of St. Martin's, 1992. 138. Print.

Feminist Perspective of the Role of Lady Madeline Essay

â€Å"The Fall of the House of Usher (1939)†, arguably Edgar Allan Poe’s most famous short story, is a tale centered around the mysterious House of Usher and its equally indiscernible inhabitants. These subjects are plagued with physical and mental degradation – the Usher siblings suffer from various abnormal ailments and unexplained fears, while the house itself seems to be tethering on the edge of collapse. The gothic elements in the story are distributed generously, and the plot is increasingly ridden with the supernatural as it progresses. Lady Madeline, Roderick Usher’s twin sister, is a key element in the story. She suffers from a disease much like catalepsy, a disease that subjects her to seizures and insensitivity to various stimuli. Roderick himself, on the other hand, suffers from an â€Å"acuteness of the senses† and a strong belief that the house is somehow alive and conscious of its surroundings. Roderick has not parted from the house in years, and has instead elected to keep himself inside to pore over literature and art, rather than threaten his sanity by overwhelming his senses. The siblings are very similar, not only in their appearance, as they are twins, but in their problems as well. They are both suffering from similarly mysterious diseases, and are both aware of the underlying sexual tension in their relationship. Early in the story, the readers are made aware of the age-old Usher tradition that has kept the Usher family ‘pure’. In other words, incestuous relationships were the norm for them. However, by no means was Madeline and Roderick’s relationship condoned by the rest of society. This essay will examine the story from a feminist perspective, focusing on understanding the narrating styles of the male author, and the actions of the characters in the book. It will also look specifically at the ways that women have suffered from social conventions throughout the years, and compare it to Madeline’s struggles in the story. Women & Poe Males are the dominant gender in the text, both in terms of dialogue and in description. The complete absence of a female voice in the text, save for several moans and groans from Madeline scattered throughout the story, is  pointedly apparent. Throughout the story, Madeline never utters a single word – what the readers know of her is severely limited by the vague descriptions given of her and the way she is treated. Not only do males dominate the text in terms of their presence, but there is also a greater sense of regard among the male characters themselves than there is between Madeline the the male characters. They seem to regard her ailments less seriously than they do of Roderick’s, giving Roderick’s much more detail and explanation than that of Madeline. Roderick’s description, on the other hand, seems to go on an on, reaching into Poe’s treatment of Madeline after her apparent death is a representation of the author’s strangely violent attitude towards women. Like in a number of his other works, women are subject to strange and horrific treatment after their deaths. Berenice was buried alive, and had all her teeth pulled. Ligeia sees the death of two women, and a perverse return of one of them. One could conclude that Poe had misogynistic tendencies, though the fact that Madeline did rise up in power could be seen as support for an opposing perspective. Women in Victorian Society Understanding the circumstances behind the treatment and portrayal of Madeline also demands an understanding of how women were expected to act, especially as reflected in nineteenth century literature. At that time, women were expected to adhere to certain well-defined virtues, centered around the virtures of submissiveness and domesticity. To some extent, a woman’s value depended quite largely on her physical attributes. This refers not only her physique, but also to her abilities in carrying out household tasks. Women were traditionally seen as homemakers – people in charge of matters in the household, not outside. Men, of course, were seen as the mind and intellect of the household, and the one qualified to receive an education and work in the outside world. A woman’s mental ability was regarded as essentially limited to superficial sensing, while a man would have been seen as the one responsible for complex thought and reflection in a household. In a way, Madeline’s suppression by her twin brother and the way she generally presents herself reflects this. Madeline does not speak, and simply obeys the orders of everyone else in the house. Roderick, on the other hand, always has the final word. This is exemplified once again the  Roderick’s live burial of Madeline, in which Madeline could not do anything to change her fate. In the nineteenth century, the female daughter is seen as a critical supporting element of the family. She was expected to keep her aspirations and motivations rooted in maintaining and upholding the family and its name, from within the household. The way Madeline was buried, â€Å"half smothered in its oppressive atmosphere†, reflects the way she was smothered in Victorian society. The nature of their illnesses also reflect the gender roles of the era. While Roderick’s illness amplifies his senses, Madeline’s disease, described as â€Å"a settle apathy, a gradual wasting away of the person†, dampens hers, reducing her into an ‘barely-there’, almost ghostly, individual. Roderick is able to isolate himself from the outside world to spare him from the torture of his oversensitivty, however, Madeline is helpless towards hers. Madeline’s illness subjects her to physical degradation. On a mental level, she is suppressed by the gender roles and expectations of the time. Relationship between Madeline and the Other Characters Madeline’s burial represents the suppression she is subject to under Usher tradition, and under the ideals of her brother. She cannot truly be herself or express herself fully, because of the expectations she has to fulfill. Even from the start, she is trapped in the house, trapped under the shadow of her ancestor’s expectations, and trapped under the realization of what she and her twin brother would have to do to continue their family line in the traditional Usher fashion. Madeline has no freedom, both in life and in â€Å"death†. It is a feminist victory, then, to see Madeline emerge from the depths of her suppression to exact her revenge and exert her power over those who have suppressed her all her life. He then says that his sickness can be â€Å"traced to a more natural and far more palpable origin†Ã¢â‚¬â€namely, to his â€Å"tenderly beloved sister—his sole companion for long years—his last relative on earth.† Madeline’s display of power and ability to induce fear is an abrupt change in the dynamic among the characters. Instead of the silent, unregarded character she has always been portrayed as thus far, Madeline is finally clearly seen as a powerful figure, capable of breaking out of her constraints, both physical and mental, and exacting justice on her own. It is interesting to see that Madeline only manages to struggle out  of these constraints after her apparent death. Perhaps in only allowing Madeline to break free after her death signifies that for women, stepping out of the very well-defined social conventions of the day is as difficult as death itself. Furthermore, Madeline’s new appearance as a strong character over her brother’s meekness represents how women actually have the capability to rise up and over society’s expectations for them, when given the chance. In that final scene, while Roderick is â€Å"a victim to the terrors he had anticipated†, Madeline is fearful and intimidating, with her â€Å"lofty† appearance and the blood on her clothes displaying the kind of struggles she has experienced and conquered. Perhaps this point offers insight into why this invoked fear in the readers of the era – to see a woman assume such a powerful role would have seemed abnormally threatening. Another notable fact is that Roderick’s condition visibly deteriorates after the departure of Madeline from his daily life. It signifies that despite Madeline’s apparent weakness and low value, she does play a fundamental role in the Usher family. It suggests that she may have been a strong character from the start – but the readers just cannot immediately see it as it is shrouded by the lack of attention on her and descriptions of her. In essense, a feminist criticism of â€Å"The Fall of the House of Usher† reveals much about the nature of the characters and their relationships, as well as the reasons behind the circumstances and the characters’ subsequent actions. A prominent theme stems from the context of the story, the Victorian era. By knowing how women were expected to act, we see the reasons why she was treated a certain way, and why her response was far from active. Madeline’s final actions, however, reflect a different side of the female role, adding a very interesting twist to the story. Bibliography: â€Å"Early Nineteenth Century Attitudes Toward Women and Their Roles as Represented By Literature Popular in Worcester, Massachusetts.† Teach US History |. N.p., n.d. Web. 06 Nov. 2012. . â€Å"‘Sympathies of a Scarcely Intelligible Nature’: The Brother-Sister Bond in

The Benefits of a Postgraduate Year

While many students have discovered the benefits of a gap year between high school and college, some students choose to take a postgraduate or PG year after graduating from high school. Students can take advantage of this year-long program at their own private school or at another school. Many students attend a boarding school just for their postgraduate year, as boarding school allows these students to experience life away from home while still having the requisite structure and guidance from teachers and advisors. While the PG year has been traditionally known to support boys, an increasing number of girls are taking advantage of this important program. Here are some reasons students can benefit from a PG year at private school: Greater maturity It’s not news that students at both public and private four-year colleges are taking longer than ever to graduate from college. In fact, according to the ACT, only about half of all students graduate from four-year colleges within five years. In addition, also according to the ACT, about one-quarter of students at four-year colleges drop out and don’t return to school. Part of the reason for this high drop-out rate is that students don’t arrive on campus ready for independent college life. A PG year allows students to develop maturity by living on their own in a structured environment. While students at boarding schools must advocate for themselves and take responsibility for their work without their parents’ constant guidance, they have advisors and teachers who help them structure their time and who help them when needed. Better chances for college acceptance. While parents are often afraid that students who defer going to college for a year are fated never to go, the colleges themselves prefer to accept students after a so-called â€Å"gap year.† Colleges find that students who travel or work before college are more committed and focused when they arrive on campus. While a PG year isn’t technically the same as a gap year, it can also help students have an additional year of experience, and it can help them be more attractive to colleges. Many private schools offer PG programs that allow students opportunities to play sports, travel, and even participate in internships, all of which can greatly increase a students chances of getting into the college of their choice. Better academic skills. Many students who go on to be great college students simply don’t come into their own until later in high school. The later developmental curve tends to be particularly true of boys. They simply need one more year to build their academic skills when their minds are better able to learn and improve. Students who have learning disabilities may derive particular benefit from a PG year, as they may need time to assimilate new skills and improve their ability to advocate for themselves before confronting the independent world of college. A PG year at a boarding school will allow these types of students the ability to advocate for themselves in the supportive world of a high school, in which there are deans and teachers looking out for them, before being expected to do most of this work completely on their own in college.   Ability to build one’s athletic profile. Some students take a PG year so that they can add luster to their athletic profile before applying to college. For example, they may attend a boarding school known for excellence in a particular sport before applying to college to play that sport. Some boarding schools not only have better teams, but they also tend to attract the attention of college sports scouts. The extra year of school and training can also help players improve their strength, agility, and overall mastery of the sport. Private schools offer qualified college counselors who can help with the college search, too.   Access to better college counseling. Students who take a PG year may also enjoy access to better college counseling, particularly if they take their gap year at a top boarding school. A student applying to college from these types of boarding schools will benefit from the school’s experience and long record of admissions to competitive colleges, and the resources at these schools may be better than what the student had at his or her previous high school. Article edited by  Stacy Jagodowski