Write off and Rescheduling.

Write off and Rescheduling of loan

Financial institutions are required to write off loans when they become delinquent by a certain amount. Bank loans that are usually altered to have longer maturities in order to assist the borrower in making the necessary repayments.

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Asset Liability Management.

Asset-Liability Management (ALM) Definition

Asset liability management (ALM) is the administration of policies and procedures that refers to financial risks considering interest rate, exchange rate and other factors that can affects to company’s liquidity. It manages the risks to acceptable level by monitoring and sets the competitive prices between assets and liabilities of a company.

The ALM functions extend to liquidity risk management, management of market risk, trading risk management, funding and capital planning and profit planning and growth projection.

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Loan Pricing

Loan Pricing Definition

Loan pricing is a critically important function in a financial institution's operations. Loan-pricing decisions directly affect the safety and soundness of financial institutions through their impact on earnings, credit risk, and, ultimately, capital adequacy. As such, institutions must price loans in a manner sufficient to cover costs, provide the capitalization needed to ensure the institution's financial viability, protect the institution against losses, provide for borrower needs, and allow for growth. Determining the effectiveness of loan pricing is a critical element in assessing and rating an institution's capital, asset quality, management, earnings, liquidity, and sensitivity to market risks.

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Bank of America

SWIFT / BIC Code and Routing Number of Bank of America

SWIFT code, BIC code of national and international branches of Bank of America have been placed here. Such as - USA, UK, Netherlands, Canada, Australia, Germany, Italy, Ireland, France, Japan, Thailand, Korea, India, Singapore and all other national branches etc.

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Working Capital Loan

Working Capital Definition

Working capital signifies money required for day-to-day operations of an organization. No business can run without the provision of adequate working capital. 

It has two types: 

1) Gross working capital that refers to as working capital means the total current assets;

2) Net working capital that the differences between current assets and current liabilities.

Definition of  Working Capital Loan 

A working capital loan is a loan used by an organization to cover day-to-day operational expenses. For example, a company is unable to generate the revenue to meet expenses incurred by day-to-day operations. In such case, company may apply for a working capital loan. A working capital loan covers only expenses incurred by existing capital, human resources, etc.

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Credit Planning and Term Loan.

Credit Planning and Term Loan's Substance

Credit planning is to set out procedures for defining and measuring the credit-risk exposure within the Group and to assess the risk of losses associated with credit extended to customers, financial investments and counter party risks with respect to derivative instruments. Term loan refers to asset based loan payable in a fixed number of equal installments over the term of the loan, usually for 1 to 5 years.

Credit Planning

A credit planning is to set out procedures for defining and measuring the credit-risk exposure within the Group and to assess the risk of losses associated with credit extended to customers, financial investments and counter party risks with respect to derivative instruments. The main aspects of a credit planning are- 

1) the terms and conditions on credit, 

2) customer qualification criteria, 

3) procedure for making collections, and 

4) steps to be taken in case of customer delinquency.

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Project

Project's General Information

A project is temporary in that it has a defined beginning and end in time, and therefore defined scope and resources that are ways of organizing resource. It is a group of individuals who are assembled to perform different tasks on a common set of objectives for a defined period of time. A project is refers to that a temporary group of activity designed to produce a unique product, service or a result. A project has defined by following aspects:

1) It is defined a beginning-end schedule and approach; 

2) Uses the resources to allocated works; 

3) Achieves the specific goals within an organized approach; 

4) Usually involves a team of workforce.

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Banking Terms for Agriculture Financing (short notes)

Short Notes for Agriculture Financing.

Abstract:

A written, chronological summary of all deeds, mortgages, foreclosures and other transactions affecting the title to a tract of land. Also called abstract of title.

Acceleration clause: 

A common provision of a mortgage or note providing the lender with the right to demand that the entire outstanding balance be immediately due and payable in the event of default.

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Important of micro credit

Importance of Micro-Credit in Agricultural Lending and Development

The farmers in Pakistan have always been in need of micro-credit in order to perform their social needs, in addition to purchase the farming inputs or making improvements on lands. But on other hand, they have always been refused to give enough micro-finance and credit. In this regard, neither the non-institutional sources (friends, relatives etc), nor the institutional sources (ADBP, Cooperative Banks, Commercial Banks, Provincial Revenue Department) have fulfilled the need of needs of the farmers. Most of the backwardness of agriculture sector is attributed to non-availability of funds. Therefore, to remove the paucity of funds with rural farmers, efforts will have to be made to mobilize more credit and finance towards farming sector. The question arises, who will provide funds to this sector when it is surrounded by;

1. Uncertainty of output and prices.

2. Poverty of the small farmers who are more than 50% in Pakistan and they lack the securities in order to get loans.

3. The friends and relatives provide the meager amounts as credits.

4. The recovery of loan from agriculture sector is a difficult job.

5. Majority of farmers are illiterate, rigid and orthodox and they do not know any thing about banking practice. As micro-credit is life blood of agriculture production.

Therefore, the financial needs of farmers can not be under-estimated and they will have to be provided more funds, despite all of the problems attached with agriculture credit. Therefore, to provide more credit and finance to farmers in future we will have to depend upon the experiences of West as well the experience of  Bangladesh in the form of  Greeman Bank. Thus the future of credit and farming in agriculture will be bright if farmers are given the loans;

1. In terms of agriculture inputs along with consultancy services - 

The case of supervised credit, This can better be done through NGOs working at village level, They will follow less tedious loaning procedure and they will have complete supervision over the funds used and output produced.

2. The loans given by NGOs and micro-financing institutions like Greeman bank will advance smaller amounts. The recovery of such advancing is also easy when the bankers are having a gross root link with the villagers.

3. The Commercial Banks and Agricultural Development Bank should come forward to rescue the dying farmers of Pakistan. They must relax the loaning conditions; loans be advanced on personal security, instead of physical security; the greater contact be maintained between the banking staff and the poor rural borrowers; and State Bank of Pakistan should provide cheaper loan to commercial banks so that they could lend the funds to farmers at cheaper rates.

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Supervised Agriculture Credit

Importance of Micro-Credit in Agricultural Lending and Development

The farmers in Pakistan have always been in need of micro-credit in order to perform their social needs, in addition to purchase the farming inputs or making improvements on lands. But on other hand, they have always been refused to give enough micro-finance and credit. In this regard, neither the non-institutional sources (friends, relatives etc), nor the institutional sources (ADBP, Cooperative Banks, Commercial Banks, Provincial Revenue Department) have fulfilled the need of needs of the farmers. Most of the backwardness of agriculture sector is attributed to non-availability of funds. Therefore, to remove the paucity of funds with rural farmers, efforts will have to be made to mobilize more credit and finance towards farming sector. The question arises, who will provide funds to this sector when it is surrounded by;

1. Uncertainty of output and prices.

2. Poverty of the small farmers who are more than 50% in Pakistan and they lack the securities in order to get loans.

3. The friends and relatives provide the meager amounts as credits.

4. The recovery of loan from agriculture sector is a difficult job.

5. Majority of farmers are illiterate, rigid and orthodox and they do not know any thing about banking practice. As micro-credit is life blood of agriculture production.

Therefore, the financial needs of farmers can not be under-estimated and they will have to be provided more funds, despite all of the problems attached with agriculture credit. Therefore, to provide more credit and finance to farmers in future we will have to depend upon the experiences of West as well the experience of  Bangladesh in the form of  Greeman Bank. Thus the future of credit and farming in agriculture will be bright if farmers are given the loans;

1. In terms of agriculture inputs along with consultancy services - 

The case of supervised credit, This can better be done through NGOs working at village level, They will follow less tedious loaning procedure and they will have complete supervision over the funds used and output produced.

2. The loans given by NGOs and micro-financing institutions like Greeman bank will advance smaller amounts. The recovery of such advancing is also easy when the bankers are having a gross root link with the villagers.

3. The Commercial Banks and Agricultural Development Bank should come forward to rescue the dying farmers of Pakistan. They must relax the loaning conditions; loans be advanced on personal security, instead of physical security; the greater contact be maintained between the banking staff and the poor rural borrowers; and State Bank of Pakistan should provide cheaper loan to commercial banks so that they could lend the funds to farmers at cheaper rates.

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Agricultural credit and policy

Problems of Agriculture Credit and Agriculture Credit Policy.

There is need to discuss the issues which are obstructing the supply of credit to farming sector-

1. Uncertainty element in agriculture:

In Pakistan the agriculture cannot be industry. More than 50% of the cultivable land is consisted of uneconomical holdings. The farmers are illiterate, they follow the orthodox techniques of production and fail to make investment in farm due to poverty. They cannot store their produce. The farmer is poor because he is poor. Above all, our agriculture sector is furnished with uncertainty. We have floods as well as droughts. The rains are untimely. The pests badly affects the crops. The financial position of the farmers remains weak. Not to talk of ADBP and Commercial Banks even the Cooperatives are not prepared to give loans to farmers. Thus because of poor financial status, more affects of natural uncertainty in agriculture, the commercial banks an other financial institutions are not prepared to lend to farmers. They think that the cost of advancing loans to farmers are more than their revenues. The relation which existed between banks and industry and commerce is missing in case of banks and farmers. The farmer who is poor and illiterate can not frequently visit the banks as the businessmen do. The supervised credit scheme could not be successful in the presence of our socio-economics set-up.

2. Lack of Securities: 

If we sum the area of small farmers and medium sized farmers their share is 92% of total cultivable area. In such area most of the farms are commonly owned. While borrowing the farmers have to pledge their lands.

But in our rural society land is like the mother of the farmer and he is not prepared to be separated from it. He will prefer not to get the loan rather mortgaging the land. If he is prepared to pledge the land, it will be difficult to ascertain its value as we do not have efficient market for the sale and purchase of lands. It is too difficult to eject the farmers from his land, if he fails to pay the debt. The farmers lacking the pass books will not be able to draw upon the banks.

They have to go registers and pages for the sake of registration of this lands where lot of formalities and malpractices exist. In such situation, they prefer to move to “Informal Sector” for borrowings. The cattle do not serve as good security. They can not be transported easily and their health standard will be affected. The unharvested crops can also serve as security. But the problem of estimation of crop will rise there. If the debtor does not pay the borrowed money he will lose his position. The personal security loans are also taken away by the big landlords as no body is prepared to give security of small farmers.

3. Non-Institutional Credit: 

So many farmers in Pakistan do not have any way out except to go for non-institutional credit. But the friends and relatives are limited source, they fail to supply enough funds. They could not provide loans for consumption and limited production purposes. They hardly provide developmental loans. Then, the farmers move to landlords and commission agents to get the loans. The landlords provide loans to marginal extent. Hence the commission agents help the farmers, but they provide the loans on the promise that the borrowers will sell the crops to them. They give low price for the produce and exploit the farmers. Hence, the non-institutional loans are also advanced in lesser amount.

4. Improper Use of Agriculture Credits: 

So many experts are of view that agriculture credit will be least beneficial if they fail to increase the agriculture output, increase the cultivable area and improve the lot of farmers. But in our country, the productive use of agriculture loans is limited. Most of loans taken by the farmers are for social needs and consumption. The farmers are prepared to sell their seeds, bulls and plows to perform their horse and cattle show fairs, marriages and funerals ceremonies. Thus agriculture loans are fail to alter the lot of small farmers. The burden of debt on them goes on to increase and they may leave this would even without making payment of such loans. Against small loans, the big loans taken away by the landlords are diverting towards power, prestige, litigation and politics. Thus the agriculture loans are not bringing changes in our agriculture sector. In certain cases, the agriculture loans are becoming responsible for increasing inequalities in rural sector.

5. Complicated Procedure and Strict Conditions:

The farmers have to face very strict conditions and complicated procedures while getting the loans. They have to give their pass-books where all the information regarding land are entered. According to Rural Credit Survey (1985), the farmers with land of 60 acres and above had the pass-books while 1% of the farmers with less than 2 acres were having pass-books. Thus, the farmers who were not having pass-books how they could get the loans. Again, the official formalities, the behaviors of surveyors and strict conditions of Bank obstruct the small farmers to get loans. Again, the weak financial position and higher interest rate also hamper loaning on the part of farmers.

6. Recovery of Credit: 

The process of recovery of loans is very much low. As told earlier that due to financial position the small farmers fail to pay back the loans. The big landlords make their credits to be written-off. The farmers should have repaid their loans after harvesting. But this does not happen. The Bank Officers and employees of cooperatives are found wandering in the village to find the debtor so that they could recover the loan. Often the arrest warrants are issued. But the process of loan recovery limited, as the farmers hardly care for repayment of loans and arrest warrants.

Measures to Remove Problems of Agriculture Credits.

Following measures are adopted to remove the problems of agricultural credit.

1. The uncertainly elements in agriculture be minimized. The farmers must be hardworking so that they could utilize the farms efficiently. As a result, the agriculture production increases and agriculture sector will become profitable in this way, the flow of agriculture credit will go up.

2. The provision of agriculture loans be linked with productive capacity and efficiency of land, rather securities.

3. The farmers be provided with complete package of agriculture inputs instead of just loans as the case of supervised credit. Therefore, this scheme should be effectively implemented.

4. The better advisory services be provided regarding agriculture marketing. In this way, the farmers could be able to get fair prices of their produce and easily repay loans.

5. A revolution in agriculture sector be brought about so that people could pay more attention on developmental works, rather social traditions.

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Agricultural Financing

Definition and meaning

A field of work in which people aim to improve the access of the agriculture industry, including farmers and all related enterprises, to efficient, sustainable financial services. Agricultural finance can be dealt at both micro level and macro level. Macro finance deals with different sources of raising funds for agriculture as a whole in the economy. It is also concerned with the lending procedure, rules, regulations, monitoring and controlling of different agricultural credit institutions. Hence macro-finance is related to financing of agriculture at aggregate level.

Micro-finance refers to financial management of the individual farm business units. And it is concerned with the study as to how the individual farmer considers various sources of credit, quantum of credit to be borrowed from each source and how he allocates the same among the alternative uses with in the farm. It is also concerned with the future use of funds. 

Therefore, macro-finance deals with the aspects relating to total credit needs of the agricultural sector, the terms and conditions under which the credit is available and the method of use of total credit for the development of agriculture, while micro-finance refers to the financial management of individual farm business.

Nature and Scope

Agricultural finance can be dealt at both micro level and macro level. Macro-finance deals with different sources of raising funds for agriculture as a whole in the economy. It is also concerned with the lending procedure, rules, regulations, monitoring and controlling of different agricultural credit institutions. Hence macro-finance is related to financing of agriculture at aggregate level. 

Micro-finance refers to financial management of the individual farm business units. And it is concerned with the study as to how the individual farmer considers various sources of credit, quantum of credit to be borrowed from each source and how he allocates the same among the alternative uses with in the farm. It is also concerned with the future use of funds. Therefore, macro-finance deals with the aspects relating to total credit needs of the agricultural sector, the terms and conditions under which the credit is available and the method of use of total credit for the development of agriculture, while micro-finance refers to the financial management of individual farm business.

Significance of Agricultural Finance

1) Agriculture finance assumes vital and significant importance in the agro–socioeconomic development of the country both at macro and micro level.

2) It is playing a catalytic role in strengthening the farm business and augmenting the productivity of scarce resources. When newly developed potential seeds are combined with purchased inputs like fertilizers & plant protection chemicals in appropriate / requisite proportions will result in higher productivity.

3) Use of new technological inputs purchased through farm finance helps to increase the agricultural productivity.

4) Accretion to in farm assets and farm supporting infrastructure provided by large scale financial investment activities results in increased farm income levels leading to increased standard of living of rural masses.

5) Farm finance can also reduce the regional economic imbalances and is equally good at reducing the inter–farm asset and wealth variations.

6) Farm finance is like a lever with both forward and backward linkages to the economic development at micro and macro level.

7) As agriculture is still traditional and subsistence in nature, agricultural finance is needed to create the supporting infrastructure for adoption of new technology.

8) Massive investment is needed to carry out major and minor irrigation projects, rural electrification, installation of fertilizer and pesticide plants, execution of agricultural promotional programmes and poverty alleviation programmes in the country.

Need for Agricultural Credit.

Credit is required in every type of business and agriculture is not exception of it. The need for agriculture credit becomes more important when it moves from traditional agriculture to modern agriculture. The agriculture sector at present is best with number of handicaps. The land holding is very small. The population is growing at a fast rate. 

Agricultural labour is often underemployed. Production suffers from weather risks. The capacity of farmers to save and invest is very low. The agricultural productivity is low due to low use of inputs. The farmers therefore, need credit to increase productivity and efficiency in agriculture. This need is increasing over the years with the rise in use of fertilizers, mechanization and rise in prices. Briefly the need for agricultural credit can be summed up as follows -

1. Purchase of new inputs: 

The farmers need finance for the purchase of new inputs which include seeds, fertilizers, pesticides, irrigation water etc. If the seed of high yielding varieties and other modern inputs are made available to the farmers they can increase productivity not only of land but also of labour.

2. Purchase of implements: 

Credit is required by the farmers for the purchase of tractors, threshers, harvesters, water pumping sets etc. The use of appropriate machinery in land will increase production by growing more than one crop on the same piece of land at the same time.

3. Better management of risk: 

Credit enables the farmers to better manage the risks of uncertainties of price, weather etc. They can borrow money during raining days and pay back the loans during peak years of crops.

4. Permanent improvement in land: 

Credit also helps the farmers to make permanent improvements in land like sinking of wells, land reclamation, horticulture, rotation of crops etc.

5. Better marketing of crops: 

If timely credit is available to the farmers, they will not sell the produce immediately after the harvest is over. At that time the prices of agricultural goods are low in the market. Credit enables the farmers to withhold the agricultural surplus an sell in the market when prices are high.

6. Facing crises: 

The credit is required by the farmers to face crisis. The crisis can be caused by failure of crop, drought of floods.

7. Balanced development: 

Agricultural sector generally remains neglected compared to industrial sector in the country. For balanced development, it is essential that credit should be provided at concessional rates to the agriculture sector so that it should also expand and help in “take off” process of the country.

Types of Agricultural Credit

Agriculture requires the following three types of credit -

1. Short-Term Credit: 

The short term credit ranges upto one year. The farmers need short term credit for meeting the working capital arrangements of agriculture. For instance, they need short term credit for the purchase of seeds, fertilizers, pesticides, bullocks and other casual expenses. Sometimes short term credits are also raised for paying rents, revenue and also meeting the financial requirements of the family. The short term credit is repaid after marketing the produce of next crop.

2. Medium Term Credit: 

The medium term loan extends from 1 to 5 years. The farmers require medium term credit for the purchase of cattle, purchase of implements, improvements in water courses etc. The loan is obtained on the security of movable and implements.

3. Long Term Credit: 

The duration of long term credit exceeds five years. The farmers need long term credit for making improvements of permanent nature in land such as sinking of tubewells, reclamation of land, building, purchase of machinery and implements etc.

Sources of Agricultural Credit.

Credit in the farm sector is available from following two sources -

1. Non-Institutional Sources/ Informal Sources: 

The major non-institutional sources of farm credit are money lenders, friends, relatives, shopkeepers and commission agents. Before 1947, the money lenders mostly non-Muslims were the main suppliers of loans to the farmers. After partition, however their importance has decreased to a great extent and the short term credit needs of the farmers are met from commission agents, friends and relatives which supply roughly 50% of total rural borrowing. The traders and commission agents advance loans to the farmers for short period. These loans are provided mostly for productive purposes before the maturity of crops. The commission agents force the farmers to sell the produce to them which generally is purchased at low rates. The lenders of the informal sources (friends, relatives etc) have certain advantages over the formal credit sources. The informal lenders usually know the borrowers personally. They require little security for advancing loans. The loan are given for consumption as well as production purposes. The lenders are approachable at all times. They are also lenient in rescheduling loans. However, informal lenders are also accused of charging higher rates of interest. They extract monopoly profits from the borrowers.

2. Institutional Sources / Formal Sources: 

The major institutional sources of agricultural credit are Zarai Taraqiate Bank Limited (ZTBL) formally known as Agricultural Development Bank of Pakistan, State Banks, Commercial Banks, Cooperative credit and Taccavi Loans.

A. Zarai Taraqiate Bank Limited (ZTBL) formally known as Agricultural Development Bank of Pakistan (ADBP): 

The ZTBL was established in 1961 through merger of Development Finance Corporation and Agricultural Bank of Pakistan. The ZTBL is an important source for supply of credit to agricultural sector in Pakistan. The ZTBL provides short, medium and long term credits for farm and off farm activities. The bank have five windows of investment. 

(1). Development loans 

(2) Production loans 

(3) Agri-business loans 

(4) Cottage industry loans and 

(5) Off farm income to farmers generating activities loans.

B. Commercial Banks: 

Commercial Banks were introduced into the field of agricultural credit under the Banking Reform Act of 1972. The Banks, since then, are providing loans to the farmers for meeting their short and medium term requirements. The loans are advanced to the farmers against the security of land, crops, fixed assets and even on personal security. Commercial Banks disburse agricultural credits for the purchase of inputs, cattle, tractors, dairy farming, installation of tubewells etc. Banks provide loans under the Supervise Credit Scheme and outside the Supervise Credit Scheme.

C. Cooperatives: 

The cooperatives are oldest institutional sources of farm credit in Pakistan. The performance of cooperatives in the spread and utilization of credit to the small farmers is not satisfactory. The loans are mostly utilized by big farmers who have got their pocket societies registered with their cooperative department.

D. Taccavi Loans: 

Taccavi loans are handled by the Provincial Revenue Department. Necessary funds are allocated for different areas each year in the provincial budgets. The Taccavi loans are primarily given to the farmers for meeting emergencies such as flood, earthquake, famine etc. The farmers take these advances in the spirit of gift or relief given in the calamity and are not serious in repaying them. Now this source is now occupying insignificant position in the disbursement of overall credit to the farmers. Agricultural loans are being made available to the farmers at low mark up.

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Depreciation and Inflation

Depreciation

When a currency depreciates, this means that the currency has decreased in value when compared to another nations currency. Depreciation happens in countries with a floating exchange rate. A floating exchange rate means that the global investment market determines the value of a country's currency.

The exchange rate among various currencies changes every day as investors reevaluate new information. While a country's government and central bank can try to influence its exchange rate relative to other currencies, in the end it is the free market that determines the exchange rate. As of 2012, all major economies use a floating exchange rate. Depreciation occurs when a country's exchange rate goes down in the market. The country's money has less purchasing power in other countries because of the depreciation.

Devaluation

Devaluation of currency is an active economic strategy. It is sometimes used when countries are badly in debt. This occurs when a country lowers the official value of its currency in relation to foreign currencies. This is intended to raise the price of imported goods and increase the value of the country's exported goods. This can be a risky economic move because it can spark hyperinflation.

Devaluation happens in countries with a fixed exchange rate. In a fixed-rate economy, the government decides what its currency should be worth compared with that of other countries. The government pledges to buy and sell as much of its currency as needed to keep its exchange rate the same. The exchange rate can change only when the government decides to change it. If a government decides to make its currency less valuable, the change is called devaluation. Fixed exchange rates were popular before the Great Depression but have largely been abandoned for the more flexible floating rates. China was the last major economy to openly use a fixed exchange rate. It switched to a floating system in 2005.

Difference Between Depreciation and devaluation of currency .

Both currency depreciation and currency devaluation end up with a currency that is worth less than it previously was in comparison to the currencies of other countries. The difference is in how the currency comes to be worth less.

* Depreciation occurs only in countries that allow their exchange rates to float. That is, these countries allow supply and demand to determine the value of their currency relative to the currencies of other countries. Depreciation occurs when the forces of supply and demand cause the value of their currency to drop. 

By contrast, devaluation occurs only in countries that do not allow their exchange rates to float.  These countries governments control the official value of their currency. They typically use government money to buy or sell currency so as to keep the exchange rate where the government wants it to be. Devaluation occurs when a government decides that it needs to have its currency be worth less.  It then allows its currency to become weaker.

* In general, depreciation is considered to be a better thing because it happens naturally where devaluation is artificial. 

devaluation is taking the exchange rate from equilibrium to a disequilibrium situation; fix the exchange rate below its equilibrium value; create a situation where demand for the currency exceeds supply of the currency.

* However, depreciation implies a lower equilibrium exchange rate following an increase in supply of the currency or a decrease in the demand of the currency.

depreciation and appreciation is for floating exchange rate and devaluation and revaluation is only for fixed exchange rate  hope that helps.

Types of Inflation

There are two types of inflation.

1. Demand pull inflation.

2. Cost plus inflation.

Demand Pull Inflation

A situation where the demand for goods and services rises faster than the supply of goods and services. This excess demand increases the prices of the goods and services hence creating inflation.

Can be simply said as  Too much money chasing too few goods . 

Basic cause comes from the demand side. Some factors that cause these demand pull inflation are excessive foreign investment, expansionary fiscal policy e.g increase in government expenditure), expansionary monetary policy( eg. Increase in money supply),easy access to credit , deficit financing and others. Due the increase in aggregate demand which cannot be met by corresponding increase in aggregate supply because there is no more unemployed resources to be drawn into production.

Cost Push Inflation

Cost push inflation simply arises from increased cost of production. The increased cost of production can be due to aggressive trade unions seeking for higher wages/ allowances, etc , increases in the prices of local raw materials or imported raw materials or products or services. Due to increased cost of production, manufacturers have to increase their prices of their goods/products to compensate the increased costs in raw materials or labor hence creating inflation.

For example, in Malaysia, due to the oil crisis in 1973-1974 and 1979-1980, cost of production increased sharply and which increased the price level and cause cost push inflation.

Finally it is expressed that Demand-pull inflation is caused by excess demand.  When the people as a whole get more money they are able to pay more for goods and services (unless more goods and services are produced).  Economists talk about more money "chasing" the same amount of goods and services.  This causes shortages and prices rise.

Cost-push inflation is caused by disruptions in supply.  These disruptions cause increases in the price of production.  That leads to inflation.  For example, a rise in the price of oil causes practically all production to become more expensive.

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Motivation

** Definition of Motivation.

Motivation means influencing and enhancing other to do or not to do any act or job for achieving goals and objectives  of any organization.

Motivation is a psychological feature that arouses an organism to act towards a desired goal and elicits, controls, and sustains certain goal directed behaviour. 

It can be considered a driving force; a psychological one that compels or reinforces an action toward a desired goal. For example, hunger is a motivation that elicits a desire to eat. Motivation is an inner drive to behave or act in a certain manner. 

It's the difference between waking up before dawn to pound the pavement and lazing around the house all day. These inner conditions such as wishes, desires, goals, activate to move in a particular direction in behaviour.

** Types of Motivation?

Motivation means influencing and enhancing other to do or not to do any act or job for achieving goals and objectives  of any organization.There are two types of motivation are given below with a diagram & detail : 

 Financial motivation:

1. Salary.

2. Part of share.

3. Bonus.

4. Financial safety.

5. Medical facilities.

6. Accommodation facilities.

7. Promotion and prizing.

8. Rationing.

9. Canteen.

10. Arranging education facilities for the children of employees.

11. Transportation facilities.

Non Financial motivation:

1. Perfect working environment.

2. Job security.

3. Job satisfaction.

4. Attracting jobs.

6. Admire for better work.

7. Partake to management.

8. Training facilities.

9. Perfect judgement.

10. Good will of organization.

11. Refreshment facilities.

12. Organizing cultural programme.

13. Well behave showing.

** Maslow’s need hierarchy theory.

Maslow’s need hierarchy theory:

Maslow divided the human demand into five categories and he declared that, if it is possible to satisfy those five categories of demand those are come or created to human being chronologically, then every person become highly motivated in their work.

1. Biological and Physiological needs- 

air, food, drink, shelter, warmth, sex, sleep, etc.

2. Safety needs -

protection from elements, security, order, law, limits, stability, etc.

3. Belongingness and Love needs-

work group, family, affection, relationships, etc.

4.Esteem needs-

self-esteem, achievement, mastery, independence, status, dominance, prestige, managerial responsibility, etc.

5.Self Actualization  needs-

realising  personal  potential,  self fulfillment,  seeking  personal  growth  and  peak experiences

** Herdgeberdge’s motivation theory.

In 1959 Frederick Herzberg built up the Two Element hypothesis of inspiration. His examination demonstrated that certain variables were the genuine sparks or satisfiers. Cleanliness elements, conversely, made disappointment on the off chance that they were missing or insufficient. Disappointment could be forestalled by upgrades in cleanliness figures however these upgrades would not the only one give inspiration. He presumed that such components as organization strategy, supervision, interpersonal relations, working conditions, furthermore, compensation are cleanliness considers instead of helpers. As indicated by the hypothesis, the non-attendance of cleanliness elements  can make work disappointment, however their vicinity does not inspire or make fulfilment. 

Herzberg demonstrated that to really inspire a worker a business needs to make conditions that make him or her vibe satisfied in the work environment. 

Limitations of Two Factor Theory:

1.The two factor theory overlooks situational variables.

2.Herzberg  assumed  a  correlation  between  satisfaction  and  productivity.  But  the  research  conducted  by Herzberg stressed upon satisfaction and ignored productivity.

3. No comprehensive measure of satisfaction was used. An employee may find his job acceptable despite the fact that he may hate/object part of his job.

4. The   theory   ignores   blue collar   workers.Despite   these   limitations,   Herzberg’s   Two Factors theory   is acceptable broadly.

Motivational factors	Maintenance
Improvements. Progress. Success. Achievements. Job responsibilities. Duties. Possibility to improvement. Recognition.	Relationship between to level and lower level. Relationship between supervisor and workers. Relation with colleagues. Relation with management. Job facilities. Job security. Job satisfaction. Working environment. Job dignity. Salary.

** Various theories of motivation

Instinct Theory of Motivation: 

According to impulse speculations, individuals are propelled to act in specific ways since they are developmentally modified to do as such. A case of this in the creature world is occasional relocation. These creatures don't figure out how to do this, it is rather an innate example of inspiration. The motivator hypothesis proposes that individuals are inspired to do things on the grounds that of outside prizes. For instance, you might be inspired to go to work every day for the money related prize of being paid. Behavioural learning ideas, for example, affiliation and fortification assume a critical part in this hypothesis of inspiration. 

Incentive Theory of Motivation: 

As indicated by the drive hypothesis of inspiration, individuals are spurred to take certain activities keeping in mind the end goal to diminish the inside strain that is brought about by unmet needs. For instance, you may be persuaded to drink a glass of water with a specific end goal to diminish the inner condition of thirst. This hypothesis is helpful in clarifying practices that have an in number organic part, for example, yearning or thirst. The issue with the drive hypothesis of inspiration is that these practices are not generally persuaded simply by physiological needs. For instance, individuals regularly eat notwithstanding when they are not so much hungry 

Drive Theory of Motivation: 

The excitement hypothesis of inspiration recommends that individuals take certain activities to either lessening or increase levels of excitement. At the point when excitement levels get too low, for instance, a man may watch and energizing motion picture or go for a run. At the point when excitement levels get too high, then again, a man would most likely search for approaches to unwind, for example, pondering or reading a book. 

Arousal  Theory  of  Motivation: 

As indicated by this hypothesis, we are spurred to keep up an ideal level of excitement, in spite of the fact that this level can fluctuate in view of the individual or the circumstance. 

Humanistic  Theory  of  Motivation:

Humanistic speculations of inspiration are in light of the thought that individuals too have solid intellectual motivations to perform different activities. This is broadly outlined in Abraham .

Theory X

In this theory, which has been demonstrated counter-viable in most advanced practice, administration accept representatives are intrinsically apathetic and will maintain a strategic distance from work on the off chance that they can and that they innately aversion work. Therefore of this, administration trusts that labourers need to be firmly managed and far reaching frameworks of controls created. A various levelled structure is required with slender compass of control at every last level. As per this hypothesis, representatives will demonstrate little aspiration without a tempting impetus prog smash and will stay away from obligation at whatever point they can. As per Michael J. Dad, if the hierarchical objectives are to be met, Theory X administrators depend intensely on danger and pressure to pick up their worker's consistence. Convictions of this Theory lead to doubt, profoundly prohibitive supervision, and a reformatory air. The Theory X director tends to trust that everything must end in accusing somebody. He or she supposes every planned representative are just out for themselves. Typically these administrators feel the sole purpose of the worker's enthusiasm for the occupation is cash. They will accuse the individual first as a rule, without addressing whether it might be the framework, arrangement, or absence of preparing that merits the fault. A Theory X administrator trusts that his or her employees do not by any means need to work, that they would rather dodge obligation and that it is the chief's business to structure the work and empower the worker. One noteworthy blemish of this administration style is it is significantly more liable to bring about dis-economies of Scale in substantial organizations.

Theory Y

In this theory, administration expects representatives may be yearning and self – spurred what's more, work out self-control. It is trusted that representatives make the most of their mental and physical work obligations. As per Papa, to them work is as natural as play. They have the capacity for imaginative critical thinking, however their abilities are underused in many associations. Given the best possible conditions, hypothesis Y supervisors trust that representatives will figure out how to search out and acknowledge obligation and to exercise self -control and self - heading in fulfilling targets to which they are conferred. A Theory Y supervisor trusts that, given the right conditions, a great many people will need to do well at work. They trust that the fulfilment of making a decent showing is a solid inspiration. Numerous individuals translate Theory Y as a positive arrangement of convictions about labourers. A nearby perusing of The Human Side of Enterprise uncovers that McGregor just contends for directors to be interested in a more positive perspective of labourers and the possibilities that this makes. He imagines that Theory Y directors are more probable than Theory X supervisors to add to the atmosphere of trust with representatives that is needed for human asset advancement. It's human asset improvement that is an essential part of any organization. This would incorporate chiefs corresponding straightforwardly with subordinates, minimizing the contrast between predominant- subordinate connections, making an agreeable domain in which subordinates can create and utilize their capacities. This atmosphere would incorporate the sharing of choice making so subordinates have say in choices that impact them. This hypothesis is a positive perspective to the workers, implying that the superintendent is under a considerable measure less weight than somebody who is to impacted by a theory X administration style.

Theory Z

William Ouchi is an American educator of business administration who has worked at the Stanford business school and the Anderson School of Management at the University of California for a long time. He first came to noticeable quality in 1981 for his work on conquering any hindrance between American administration, then in decrease, and Japanese administration, then riding a blast. His conviction that American business could gain from the administration convictions of Japanese industry prompted his concept of Theory Z and his first book, "Hypothesis Z: How American Management Can Beat the Japanese Challenge". The book turned into a New York Times best- dealer and today positions as the seventh most broadly - perused business book in all US libraries. H 

is hypothesis is presently viewed as affecting the administration style of real associations, for example, IBM, Procter and Gamble and Hewlett Packard.



Pretty much as Douglas MacGregor's hypothesis X and Y were based on administration presumptions about individuals, so too is Ouichi's Theory Z approach. Here are 5 Theory Z standards.

1. Job Security :
The Japanese Theory Z methodology trusts that individuals are an extremely profitable asset to be lost when the economy has a downturn. In a subsidence, the Japanese don't fire individuals, they'll diminish their hours until things get. By difference, when a US organization is in a bad position, they squander no time laying individuals off furthermore, accordingly lose all the information, aptitudes, and skill that go mind with them.

2. Trust :
The Japanese feel that you ought to never give individuals motivation to doubt you. Unwaveringness is anticipated from all representatives. In American organizations, doubt and suspicion are endemic. On the off chance that a man or supplier is most certainly not conveying, the organization will go somewhere else for a superior arrangement.

3. Decision making :
There are two contrasts between the Japanese and American ways to deal with Decision making. In Japanese organizations, everybody gets included in the Decision making procedure as a component of their responsibility to the organisation. Subsequently, the procedure is moderate. In the US, Decision making is the obligation of the few as is snappy.

4. Team work :

In Japan, hierarchical achievement is seen as the consequence of Team work, so it is silly to compensate individuals. In the US, there is still a conviction that, in the event that you take the necessary steps and case the outcomes, you ought to get the reward.

5. Motivation and Target Setting:

The Japanese partnership once in a while sets individuals focuses as a method for propelling them. They trust that individual motivation originates from others in the group. Subsequently, it regularly takes years before a Japanese representative gets their first execution assessment and significantly more some time recently they are advanced. By complexity, the American partnership trusts that the part of management is to set their subordinates targets and guarantee that these are met, utilizing assessment and advancement as motivators and rewards

“ You can not motivate managers. They are self propelled. ” Comment on the statements.

Self impelled depicts something that moves, advances or follows up on its own energy without requiring outside help. Like whatever else, initiative capacity is conveyed all through a populace. Would you be able to be a decent pioneer without being a decent chief? As far as I can tell, the best pioneers are likewise incredible supervisors, and the best chiefs have solid administration capacities. To be fruitful, you must have both an enthusiasm for making strides your association and the capacity to drive your endeavors through to fruition. A few individuals are "normal" pioneers; others like to work competently inside of a well- Characterized setting and numerous individuals are some place in between. Natural pioneers have imperative center capacities; however they frequently require watchful preparing in the more functional parts of changing over an imaginative vision into a solid system of activity. All the time, they have to comprehend the length of the change life cycle so they don't belittle the significance of industriousness. The vast majority, in any case, can add to their initiative abilities by working at it. The procedure begins with the acknowledgement that authority requires "able to use both hands" exercises. The principal obstacle is perceives that excellence at the day-to- day is basic, however it is insufficient. The second is the need to peer inside yourself and choose whether you are willing to be uncomfortable for a delayed period while you conceptualize and lead the change. A definitive prize is the profound fulfillment that originates from seeing something new that wouldn't have been there in the event that you had not made it. When you choose to turn into a pioneer, you can add to the attributes you'll require by being insightful about the achievements that you want on your resume, and choosing to commit the time and consideration expected to accomplish them. Like whatever else, careful discipline brings about promising results. To be an incredible pioneer, you require a sure level of astuteness, yet not so much extraordinary virtuoso. You require a certain level of social aptitudes, yet not so much those of an awesome businessperson. Be that as it may, you do require an impulse to work at two levels: to be an extraordinary practitioner, and an incredible reflector. Above all, to be an awesome pioneer, you need to discover what you truly like. That is where the enthusiasm, duty, and honesty originate from. In my experience, the most essential hidden element in authority is whether a man has sought out and discovered an extraordinary match between what's in his or her heart, which is the thing that he or she truly appreciates, and the work circumstance. Consider the meaning of pioneers, "individuals who leave their foot shaped impressions in their ranges of enthusiasm." It's anything but difficult to concentrate on the first part, how to leave foot shaped impressions. In any case, the genuine force originates from the second, living up to expectations in your general vicinity of enthusiasm.

** To what extent and how is money an effective motivation.

In spite of the way that the vast majority of the world works for the purpose of monetary prize, the requirement for cash just obliges us to attempt certain kind of work, however doesn't spur in real certainty.

For instance, one of the speculations of  human inspiration -
'Cash as a helper hypothesis' is grounded on the conviction that the requirement for cash essentially inspires all specialists ("Speculations of Human," 2004). In any case, such an announcement is genuine just to a constrained extent, no doubt. Despite the fact that the very word "cash" (which in last result means to guarantee more noteworthy joy) would be the most widely recognized answer to the subject of whatever reasons us to work, in its own particular right it lingers behind the mixture of other human qualities. "A basic increase in salary, actually not distinguished as a major aspect of the corporate society, would be characterized as an outer help.

Pay is normal, required, and needed -
It is most certainly not essentially an identifier of either corporate or individual personality" (Grossman, n.d. )

 A brief interruption segment, para.

1). "Therapists have been finding that remunerates can lower execution levels, particularly when the  execution includes imagination" (Kohn, n.d., Presentation segment, para.

2). Besides, "if a prize -
cash, recompenses, praise, or winning a challenge -
comes to be seen as the reason one is participating in an action, that movement will be seen as less pleasant in its own privilege" (Kohn, n.d. ).

Herzberg said in regards to 'pay': "when pay happened as an element in the lows (causes of disappointment) it rotated around the wage's shamefulness framework inside of the organization. It was the arrangement of pay organization that was being depicted... as something that accompanied a man's accomplishment at work. It was a type of recognition; it implied more than cash; it implied an occupation well done; it implied that the individual was advancing in his work.

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How to get Car /Auto/Vehicle Loan easily?

 Car /Auto/Vehicle Loan

A few consumers will invest days ensuring they get the most reduced cost on a vehicle, yet they won't try to look for the best automobile advance. In the event that you don't have financing set up when you visit the dealership to purchase, you're abandoning yourself powerless against whatever terms the merchant offers, which may have a much higher loan fee than you could get somewhere else. What's more, merchants frequently check up the financing cost of an advance over what you really meet all requirements for, which can cost you several extra dollars.

At last, you need to adjust an advance's aggregate expense against a regularly scheduled installment you can bear. However, in the event that you focus just on the regularly scheduled installment, you'll build the odds that you'll unconsciously wind up with an awful arrangement. It's likewise shrewd to face reality before setting your sights on a fantasy machine.

Keep sight on total cost of a loans

At the point when contrasting loans, the figure to concentrate on is the annual price rate (APR), which differs from everyday. A lower rate can create noteworthy long haul reserve funds. For instance, a three-year, $15,000 loan at 5% APR would spare you almost $500 generally speaking, contrasted and the same advance at 7%.

Another key thought is the term of a credit, which can essentially influence both your regularly scheduled installment and the aggregate expense of your financing. A shorter term implies higher regularly scheduled installments yet less cash paid by and large. Attempt to keep the length of the credit as short as you can manage.

A three-year credit costs far less generally speaking than a five-year advance. For instance, in the event that you get $15,000 at a 6.5 percent APR for 36 months, your regularly scheduled installment will be $460, and the aggregate interest will be $1,550. The same credit extended to 60 months would bring down the regularly scheduled installment to $293—over $150 less—yet expands the enthusiasm by $1,060 to a sum of $2,610. What's more, that doesn't check that more extended advances regularly have higher loan costs means interest rate.

Another worry with long haul credits is that they protract the time before your installments start building value in the vehicle. For instance, with a 60-month credit, it may take year and a half of installments or more before the auto is worth more than you owe on it. This implies on the off chance that you need to exchange or offer the auto early, the value you'll get won't cover the sum regardless you owe, always called being "upside down." The same is valid if the auto were stolen or decimated. Your protection installment won't be sufficiently high to pay off whatever remains of your loan.

You can lessen this period by taking a shorter credit. For instance, with a three-year advance, you as of now may have manufactured a huge number of dollars of value in the vehicle before the end of the main year.You can abstain from being upside down by making a noteworthy initial installment. At the point when financing the buy of another auto, we prescribe having an exchange or up front installment of no less than 15 percent of the aggregate expense.

Where to search for a car advance/ loan ?

Strolling into a dealership with an ensured vehicle advance in your grasp gives you haggling force and adaptability. It additionally helps you evade the regular deals strategy of stirring up the vehicle cost with financing costs. Then again, going into the dealership without doing research on how you are going to back your buy is setting yourself up to overpay.

One spot to begin your quest for an advance is at www.bankrate.com. The site demonstrates to you the present normal credit rates broadly. What's more, by entering your Postal division, you can see a few offers custom-made particularly for your zone. In any case, the site regularly does exclude a great deal of nearby loan specialists or, sometimes, national ones. So it merits checking with individual foundations, too.

A dealership might have the capacity to offer you the best financing terms. Be that as it may, you ought to in any case get your work done in advance via painstakingly looking for the best advance offers so you have an comparison point.

Also taking the automaker's low-or zero-percent financing regularly implies passing on a refund, subsequent to your decision by and large is either, not both. Be that as it may, you frequently can defeat both universes by taking the refund from the merchant and getting financing somewhere else, regardless of the possibility that the loan cost is higher than the special one from the maker.

To utilize the credit versus-refund instrument, you'll initially need to search for the best option rate. 

Here are a few spots to look:

Local Banks: 

Banks by and large have particular, traditionalist advance arrangements and may just take into account those with better credit references. Thus banks are in a position to offer some extremely competitive credit rates. Since you most likely have an association with no less than one bank as of now, that may be an incredible spot to begin your financing seek. Most banks have sites where you can check their present advance rates, yet in the event that you choose to apply for a credit, you ought to stop by a branch office and manage a genuine individual. It's a decent approach to control where your own data goes, and by staying away from oversights or mistaken assumptions, you may exit the entryway with a quite decent financing cost offer.

Local credit unions: 

Credit unions work somewhat like banks, however they loan cash just to their individuals, who are additionally proprietors of the credit union itself. Since credit unions are not-for-profit, their working expenses are genuinely low and their loaning rates can be entirely aggressive. Numerous individuals have a place with credit unions just to exploit the advantageous advance approaches.

Online banks: 

Online banks can be aggressive. Rather than going to a neighborhood office, you apply over the Web. To discover them, do a Web look for "online automobile credits." Internet financing has a downside, notwithstanding. It might be hard to control where the data you give about yourself goes, and you might be besieged with email and telephone calls from banks you never knew about or reached in any case. Make sure to check every site's protection arrangement before giving individual data. As a precaution, in case you're not acquainted with the loan specialist, look at its site with the Better Business Agency / Bureau.

Dealerships: 

Alongside organizing credits from automakers, merchants work with banks and other free sources. One advantage to organizing financing through a merchant is accommodation. Be that as it may, regularly the rates they cite incorporate a markup for the dealership itself, which can make these credits costly. Equipped with offers from a portion of alternate sources we've specified, you might have the capacity to bring the merchant's underlying quote down to something alluring. In any case, you should get your work done first. Likewise, a few merchants promote that they will work with purchasers who are credit dangers, however you ought to depend on paying a high APR.

Understanding credit

The best rates you will observe promoted on the web, in daily papers, or somewhere else regularly require that you have a top financial assessment. Your score will decide the financing cost a moneylender will charge you (or whether you'll have the capacity to get a car credit by any means).

Your credit standing is particularly vital with the late home loan emergency and related financial issues, which have made getting an auto advance more troublesome. Not just do borrowers need higher least FICO assessments, they're progressively being requested that produce pay stubs and records to substantiate their wage and other data they give on an advance application.

A FICO assessment is a three-digit number that is utilized by most banks to survey your credit-value; that is, that you are so liable to reimburse an advance and make installments on time. In spite of the fact that there are a few scoring strategies, the one most regularly utilized by moneylenders is known as a credit rating since it was developed by Reasonable Isaac, an autonomous organization. FICO scores range from 300 to 850, with the higher scores demonstrating better FICO assessments.

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