Research And Analysis On The Indian Banking Industry Finance Essay - Free Essay Example

The Indian banking industry currently termed as strong, having weathered the global economic slowdown and showing good numbers with strong support flowing in from the Reserve Bank of India (RBI) measures. A report Opportunities in Indian Banking Sector, by market research company, RNCOS, forecasts that the Indian banking sector will grow at a healthy compound annual growth rate (CAGR) of around 23.3 per cent till 2011. Banking, financial services and insurance (BFSI), together account for 38 per cent of Indias outsourcing industry (worth US$ 47.8 billion in 2007). According to a report by McKinsey and NASSCOM, India has the potential to process 30 per cent of the banking transactions in the US by the year 2010. Outsourcing by the BFSI to India is expected to grow at an annual rate of 30-35 per cent. According to a study by Dun Bradstreet (an international research body)-Indias Top Banks 2008-there has been a significant growth in the banking infrastructure. Taking into account all banks in India, there are overall 56,640 branches or offices, 893,356 employees and 27,088 ATMs. Public sector banks made up a large chunk of the infrastructure, with 87.7 per cent of all offices, 82 per cent of staff and 60.3 per cent of all ATMs. According to the RBI, Indian financial markets have generally remained orderly during 2008-09. In view of the tight liquidity conditions in the domestic money markets in September 2008, the Reserve Bank announced a series of measures beginning September 16, 2008. Thus, the average call rate which was at 10.52 per ce nt declined to 7.57 per cent in November 2008 under the impact of these measures. 2. INDUSTRY PROFILE 2.1 Definition Bank may be defined as a financial institution which is engaged in the business of keeping money for savings and checking accounts or for exchange or for issuing loans and credit etc. A set of services intended for private customers and characterized by a higher quality than the services offered to retail customers. Based on the notion of tailor-made services, it aims to offer advice on investment, inheritance plans and provide active support for general transactions and the resolution of asset-related problems. The essential function of a bank is to provide services related to the storing of deposits and the extending of credit. Basic function may include Credit collection, Issuer of banking notes, Depositor of money and lending loans. 2.2 Segments Banks in India can be categorized into non-scheduled banks and scheduled banks. Scheduled banks constitute of commercial banks and co-operative banks. There are about 67,000 branches of Scheduled banks spread across India. During the first phase of financial reforms, there was a nationalization of 14 major banks in 1969. This crucial step led to a shift from Class banking to Mass banking. Since then the growth of the banking industry in India has been a continuous process As far as the present scenario is concerned the banking industry is in a transition phase. The Public Sector Banks (PSBs), which are the foundation of the Indian Banking system account for more than 78 per cent of total banking industry assets. Unfortunately they are burdened with excessive Non Performing assets (NPAs), massive manpower and lack of modern technology. On the other hand the Private Sector Banks in India are witnessing immense progress. They are leaders in Internet banking, mobile banking, phone banking, ATMs. On the other hand the Public Sector Banks are still facing the problem of unhappy employees. There has been a decrease of 20 percent in the employee strength of the private sector in the wake o f the Voluntary Retirement Schemes (VRS). As far as foreign banks are concerned they are likely to succeed in India. Indusland Bank was the first private bank to be set up in India. IDBI, ING Vyasa Bank, SBI Commercial and International Bank Ltd, Dhanalakshmi Bank Ltd, Karur Vysya Bank Ltd, Bank of Rajasthan Ltd etc are some Private Sector Banks. Banks from the Public Sector include Punjab National bank, Vijaya Bank, UCO Bank, Oriental Bank, Allahabad Bank, Andhra Bank etc. ANZ Grindlays Bank, ABN-AMRO Bank, American Express Bank Ltd, Citibank etc are some foreign banks operating in India. 3. MARKET DYNAMICS 3.1 Market Overview The banking sector is a very important sector of the Indian economy. The sector has made a marked improvement in the liberalization period. There has been extraordinary progress in the financial health of the commercial banks with respect to capital adequacy, profitability, asset quality and risk management. Deregulation has opened new doors for banks to increase revenues by entering into investment banking, insurance, credit cards, depository services, mortgage, securitization, etc. The major participants of  the Indian financial system are the commercial banks, the financial institutions (FIs), encompassing term-lending institutions, investment institutions, specialized financial institutions and the state-level development banks, Non-Bank Financial Companies (NBFCs) and other market intermediaries such as the stock brokers and money-lenders. The commercial banks and certain variants of NBFCs are among the oldest of the market participants. The FI s, on the other hand, are relatively new entities in the financial market place. The challenges faced by the sector would be gaining profitability, reinforcing technology, maintaining global standards, corporate governance, sharpening skills, risk management and, the most important of all, to establish Customer Intimacy. The insurance business is one of the most rapidly growing areas in the financial sector. Growth in Banking sectors HDFC Bank and Axis Bank continue to remain as leaders of the private sector banks. Both the banks have maintained the advances growth and NIM. SBI, Punjab National Bank, Bank of India and Union Bank are expected to lead among PSU Banks. Public sector banks (PSBs) on January 12, 2009 also decided to lower interest rates on bulk deposits and to offer a maximum rate of 7.5 per cent for one-year maturity. According to the latest RBI data, growth in broad money (M3), year-on-year (y-o-y), was 19.6 per cent (US$ 151.04 billion) on January 2, 20 09 lower than 22.6 per cent (US$ 141.82 billion) a year ago. Aggregate deposits of banks, year-on-year, expanded 20.2 per cent (US$ 133.08 billion) on January 2, 2009 as compared with 24.0 per cent (US$ 127.49 billion) a year ago. The growth in bank credit continued to remain high. Non-food credit by scheduled commercial banks (SCBs) was 23.9 per cent (US$ 102.78 billion), year-on-year, as on January 2, 2009 from 22.0 per cent (US$ 77.79 billion) a year ago. Scheduled commercial banks credit to the commercial sector expanded by 27.0 per cent (year-on-year) as on November 21, 2008, as compared with 23.1 per cent a year ago. Non-food credit of scheduled commercial banks expanded by 26.9 per cent, year-on-year, as on November 21, 2008, higher than 23.7 per cent a year ago. Net banking capital amounted to US$ 4.8 billion in April-September 2008 as compared with US$ 5.7 billion in April-September 2007. Lending by banks also rose more than 76 per cent to Rs 2,80,000 crore ( US$ 57.26 billion) during April-November 2008-09 from the same period a year ago. ( Source- RBI Website ) 3.3 Trend Analysis ( Source- CMI Data Base- Prowess ) 3.3.1 Declining NPA Ratio: The net NPA ratio of Indian banks stood at 1 % in March 2008 as compared to 7 % in March 2000. Indeed, the recent global financial crisis is expected to have only a limited impact on Indian banks. Indian banking system is robust given the high Capital Adequacy Ratio, low NPAs, about 30% of the balance sheet in the form of government securities and cash, and low level of leveraging. 3.3.2 Increasing Number of Mergers There has been an increase in numbers of mergers as mergers and acquisition route is providing a quick step to acquire competitive size and offering banks an opportunity to share markets and reduce cost of product development and delivery. Consolidation in the banking sector is inevitable Mergers of smaller, newer banks would be much easier than the PSU banks, due to legal and social constraints. India is now moving in the direction of fewer but larger mega banks. While merging banks should keep in mind the inherent strengths and weaknesses of a taken over bank. Fundamental features like Portfolio, NPA levels, capital adequacy, technology levels, staff issues should be closely considered when planning for a merger. 3.3.3 Declines in Non Performing Assets (NPA) The gross NPAs of the scheduled commercial banks, which were as high as 15.7 per cent at end-March 1997, declined significantly to 2.4 per cent as at end-March 2008. The net NPAs of these banks during the same period declined from 8.1 per cent to 1.08 per cent. These figures too compare favorably with the international trends and have been driven by the improvements in loan loss provisioning by the banks as also by the improved recovery climate enabled by the legislative environment. 3.4 Key Drivers 3.4.1 Innovations The banking sector in India saw greater emphasis being pl aced on technology and innovation. Banks began to use technology to provide better quality of services at greater speed. Internet banking and mobile banking made it convenient for customers to do their banking from geographically diverse places. Banks also sharpened their focus on rural markets and introduced a variety of services geared to the special needs of their rural customers. Banking activities also transcended their traditional scope and new concepts like personal banking, retailing and banc assurance were introduced. The sector was also moving rapidly towards universal banking and electronic transactions, which were expected to change the way banking would be perceived in the future. 3.4.2 Improvements in the Regulatory Environment The regulatory environment in India is liberal in regard to the functioning of the foreign banks and whether the regulatory approach towards foreign participation in the Indian banking system is consistent with liberalized environment. Und oubtedly, the facts indicate that regulatory regime followed by the Reserve Bank in respect of foreign banks is non-discriminatory, and is, in fact, very liberal by global standards. Here are a few facts which bear out the contention. No restrictions have been placed on establishment of non-banking financial subsidiaries in India by the foreign banks or of their group companies. 4. PEST ANALYSIS 4.1 Political Factors 4.1.1 Regulations: Banking institution is flattering from compiling with the sets of regulations such as AMI( Anti- money laundering ), SOX (Sarbannes Oxley act ),etc. These regulations can pose challenges because of technological constraints and can impact on the profit banks are making. But from different prospective, one must comply with these regulations not only because they are mandatory but also because it will help in reputation building and customer and culture orientation. It is essential for global institution to comply with both the national as w ell as international regulations as it helps them establish ties with foreign countries as they view as reliable organizations. Technology makes it easier to comply with regulations. In case of the national banks, they are bound to have branches across India. Especially in case of bank with global presence, technology plays an important role as multiple regressions specific to the countries or region have to be complied with. A judiciously integrated solution system enables even a mammoth size financial institution to comply with regulation at ease. Banks need to adopt a holistic approach in order to comply with national, international, and regional regulations. Especially the bank has international presence then this become more necessary as they would have to fall in line for all three regulatory bodies. 4.1.2 High Capital Adequacy Ratio (CAR) for Implementation of Basel II: The Basel Capital Accord (Basel II) guidelines promulgated by the BIS to establish capital adequac y requirements and supervisory standards for banks to be implemented by 2007 and are structured by three pillars. The Basel II is designed to facilitate a more comprehensive, sophisticated and risk sensitive approach for banks to calculate regulatory capital. The proposals will enable banks to align regulatory requirements more closely with their internal risk measurement and to improve operational process. The Committee today consists of central bankers and supervisory regulators from 13 countries. Basel II attempts to accomplish protect the international financial system by setting up rigorous risk and capital management requirements designed to ensure that a bank holds capital reserves appropriate to the risk the bank exposes itself to through its lending and investment practices. In simple terms, the greater risk to which the bank is exposed, the greater the amount of capital the bank needs to hold to safeguard its solvency and overall economic stability. The basic purpose of this recommendation is to ensure that capital allocation is more risk sensitive, separating operational risk from credit risk and quantifying both, and attempting to align economic and regulatory capital more closely to reduce the scope for regulatory arbitrage. The 3-Pillar Approach of Basel II ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Minimum Capital Requirement (Addressing Credit Risk, Operatinal Risk Market Risk) ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Supervisory Review (Provides Framework for Systematic Risk, Liquidity Risk Legal Risk) ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Market Discipline Disclosure (To promote greater stability in the financial system) 4.2 Economic Factors The Indian banking system is relatively insulated from the factors leading to the turmoil in the global banking industry. According to rating agency CRISIL, the recent tight liquidity in the Indian market is qualitatively different from the global liquidity crunch, which has been caused by a crisis of confidence in banks lending to each other. RBIs recent initiatives, including the reduction in CRR by 150 basis points from 11 October 2008, cancellation of two auctions of government securities, and confidence-building communication, have already begun easing liquidity pressures. The strong capitalization of Indian banks, with an average Tier I capital adequacy ratio of above 8 per cent, is a positive feature in their credit risk profile. Indian banks do face challenges in the current Indian economic environment, marked by a slower gross domestic product growth, depressed capital market conditions, and relatively high interest rate regime. The profitability of Indian banks is expected to remain under pressure due to increased cost of borrowing, declining interest spreads, and lower fee income due to slowdown in retail lending. 4.3 Social Factors Banking industry has played a major role socially. It has led to increased savings from the society in various ways like Savings Bank account, Fixed Deposit Account etc. It has led to habit of saving among the mass plus offering the society an interest for its savings. Over the years the banks in this industry have been the key players in building the economy by the way of lending people and taking their savings for the countrys well being. 4.3.1 Increased Usage of Online Banking Advantages previously held by large financial institutions have shrunk considerably. The Internet has leveled the playing field and afforded open access to customers in the global marketplace. Internet banking is a cost-effective delivery channel for financial institutions. Consumers are embracing the many benefits of Internet banking. Access to ones accounts at anytime and from any location via the World Wide Web is a convenience unknown a short time ago. Thus, a banks Internet presence transforms from brouchreware status to Internet banking status once the bank goes through a technology integration effort to enable the customer to access information about his or her specific account relationship. The six primary drivers of Internet banking includes, in order of primacy are: Improve customer access Facilitate the offering of more services Increase customer loyalty Attract new customers Provide services offered by competitors Reduce customer attrition 4.4 Technological Factors 4.4.1 IT Services Indian banking industry, today is in the midst of an IT revolution. A combination of regulatory and competitive reasons has led to increasing importance of total banking automation in the Indian Banking Industry. Information Technology has basically been used under two different avenues in Banking. One is Communication and Connectivity and other is Business Process Reengineering. Information technology enables sophisticated product development, better market infrastructure, implementation of reliable techniques for control of risks and helps the financial intermediaries to reach geographically distant and diversified markets. In view of this, technology has changed the contours of three major functions performed by banks, i.e., access to liquidity, transformation of assets and monitoring of risks. Further, Information technology and the communication networking systems have a crucial bearing on the efficiency of money, capital and foreign exchange markets. Banks as well as other financial entities entered the world of information technology and with Indian Financial Net (INFINET). INFINET, a wide area satellite based network (WAN) using VSAT (Very Small Aperture Terminals) technology, was jointly set up by the Reserve Bank and Institute for Development and Research in Banking Technology (IDRBT) in June 1999. The Indian Financial Network (INFINET) which initially comprised only the public sector banks was opened up for participation by other categories of members. The first set of applications that could benefit greatly from the use of technologi cal advances in the computer and communications area relate to the Payment systems which form the lifeline of any banking activity. The process of reforms in payment and settlement systems has gained momentum with the implementation of projects such as NDS ((Negotiated Dealing System), CFMS (Centralized Funds Management System) for better funds management by banks and SFMS (Structured Financial Messaging Solution) for secure message transfer. This would result in funds transfers and funds-related message transfer to be routed electronically across banks using the medium of the INFINET. Negotiated dealing system (NDS), which has become operational since February 2002 and RTGS (Real Time Gross Settlement system) scheduled towards the end of 2003 are other major developments in the area. Internet has significantly influenced delivery channels of the banks. Internet has emerged as an important medium for delivery of banking products services. Detailed guidelines of RBI for Internet Banking has prepared the necessary ground for growth of Internet Banking in India. 4.4.2 Mobile Banking M-Commerce The Commerce of Convenience The leaders of telecom in India, Reliance and Airtel have taken the lead in offering m-commerce services. From bill payments to airline and railway ticketing to booking movie tickets and other random services, the services providers offer it all-Commerce in India is on a huge growth path and hybrid m-commerce service providers such as Pay mate now offering innovative services never heard of before. Mobile pays the bills PayMate allows mobile subscribers to make payments for merchant services using their cell phones. It is connected to merchants and banks to enable transactions. PayMate allows a transaction to be completed with a single SMS (one click) technology. ATM banking costs 80% while Internet and telebanking costs only 15% compared to normal banking transactions. Private sector Banks have pioneered internet banking, phone banking, anywhere banking, mobile banking, debit cards, Automatic Teller Machines (ATMs) and combined various other services and integrated them into the mainstream banking arena. Apart from the Mobile Banking, including of SMS Banking, Net Banking and ATMs are the major steps taken by the banks in India towards modernisation. With all these devices and systems, there is a complete freedom to experience. 5. MICHAEL PORTERS FIVE FORCE ANALYSIS 5.1 Buyers Power 5.1.1 Specialized Products for Women and Students Single women are increasingly making up the second-largest group of home-buyers, though their size is still small compared with the number of mortgage loans availed by men. ABN Amro Bank and Citibank have designed special womens accounts that cater to the investment requirements of the female investor, offering benefits such as free consultancy and advice, reduced minimum balance, breaks in process fees and even lower interest rates on loans. There are students special accounts called youth power in ICICI, and the also help students with educational loans. 5.2 Supplier Power 5.2.1 Fragmented Mobile Payment Solutions Market The telecom story in India has been a huge success. A 100 million plus mobile users is a dream come true for marketers. If thats not all the number of users is growing by as much as 3 million a month. The numbers are hugely in favor of m-commerce. Mobile phone users in India outnumber credit and debit cards and internet users 2.5 to one. 5.3 Intensity of Competition 5.3.1 New Entrants Intensifying the Competition Foreign Banks in India always brought an explanation about the prompt services to customers. After the set up foreign banks in India, the banking sector in India also become competitive and accurative.Foreign banks are likely to succeed in their niche markets and be the innovators in terms of technology introduction in the domestic scenario which will increase the competition in the domestic b anking industry. The outlook for the private sector banks indeed looks to be more promising vis-à  -vis other banks. While their focused operations lower but more productive employee force etc will stand them good, possible acquisitions of PSU banks will definitely give them the much needed scale of operations and access to lower cost of funds. 5.4 Threat of New Entrants 5.4.1 Focus on Niche Segments Foreign banks are likely to succeed in their niche markets and be the innovators in terms of technology introduction in the domestic scenario. The outlook for the private sector banks indeed looks to be more promising vis-à  -vis other banks. While their focused operations, lower but more productive employee force etc will stand them good, possible acquisitions of PSU banks will definitely give them the much needed scale of operations and access to lower cost of funds. These banks will continue to be the early technology adopters in the industry, thus increasing their efficie ncies. Also, they have been amongst the first movers in the lucrative insurance segment. Already, banks such as ICICI Bank and HDFC Bank have forged alliances with Prudential Life and Standard Life respectively. This is one segment that is likely to witness a greater deal of action in the future. In the near term, the low interest rate scenario is likely to affect the spreads of majors. This is likely to result in a greater focus on better asset-liability management procedures. Consequently, only banks that strive hard to increase their share of fee-based revenues are likely to do better in the future. 5.4.2 Regulatory Reforms Limiting Foreign Presence Expansions through acquisitions offer limited prospects, however, as foreign investors still encounter restrictions when purchasing stakes in Indian banks. Investment by foreign institutional investors (FIIs) in PSBs are subject to an overall statutory limit of 20%. Foreign banks are permitted to acquire controlling stakes on ly in those banks that have been earmarked by the RBI for restructuring. There are also limits on portfolio investment in shares issued by private banks. FIIs are permitted to acquire up to 10% of the capital of a private sector bank, with an aggregate limit of 24% for all FIIs in any individual bank (which can be raised to 49% if a resolution is passed by the banks board of directors followed by a special resolution of its general body). The aggregate foreign investment in existing private banks from all foreign sources (FDI, FIIs and nonresident Indians) cannot exceed 74% of the private banks paid-up capital. 5.5 Threat of Substitute Products 5.5.1 Informal Financing in the Rural Sector Proxy Banking is an innovation in banking system that will simplify agricultural lending and also add to the increasing base of kisan credit cards. Proxy banking has become a subject of curiosity among the people living in rural areas include; more than sixty percent of rural households have no bank accounts as yet, whereas just twenty percent of the rural households can obtain credit from a formal source. Also, branch banking is not a feasible option in rural areas 6. COMPETITIVE LANDSCAPE HDFC Bank and Axis Bank continue to remain as leaders of the private sector banks. Both the banks have maintained the advances growth and NIM. SBI, Punjab National Bank, Bank of India and Union Bank are expected to lead among PSU Banks. The competitive analysis of five banks i.e. SBI, ICICI Bank, HDFC Bank, Punjab National Bank (PNB) and ING Vysya Bank has been done. 6.1 Competitive Strategy ICICI Bank- It strategy of using a client-centric business model by instituting relationship groups to actively cross-sell the full range of the ICICI Groups products and services to its clients has yielded the desired results, as demonstrated by the robust growth in business volumes. ICICI also aggressively expanded its client base by leveraging its structuring skills, based on a customized approach HDFC Bank- Its objective is to build sound customer franchises across distinct businesses so as to be a preferred provider of banking services for target retail and wholesale customer s egments, and to achieve a healthy growth in profitability, consistent with the Banks risk appetite. The bank is committed to do this while ensuring the highest levels of ethical standards, professional integrity, corporate governance and regulatory compliance. Punjab National Bank- In order to achieve growth , PNB follows the strategy either to increase the existing fund size or launch new products. ING-VYSYA Bank- ING Vysya has adopted a two-fold strategy for growth expansion of branch network and deepening its relationship with customers by offering new products to increase its market share 6.2 Economic Activity: SBI- Incorporated in 1955, State Bank of India is a public sector bank providing banking, financial and leasing services. It is also involved in mutual fund and capital market activities through its subsidiaries. ICICI Bank- Engaged in banking services. It engages in a range of banking products and financial services to corporate and retail customers, inv estment banking, life and non-life insurance, venture capital, asset management and information technology. HDFC Bank- It offers a range of services such as corporate banking, treasury and capital market services, housing finance, advisory services and custodial services to FIIs, mutual funds and others. ING-VYSYA Bank- Incorporated in 1930. It offers various banking related services. It engages in corporate banking, retail banking, rural banking, commercial banking, treasury management and provides financial products. 6.3 Financial Analysis 6.3.1 Income Statement Analysis  PAT in Rs Cr. OPERATING INCOME in Rs Cr State Bank Of India 2478.42 18030.34 ICICI Bank Ltd. 1272.15 7836.08 HDFC Bank Ltd. 621.74 5407.89 ING Vysya Bank Ltd. 52.05 620.21 SBI had the highest net income of Rs 2478 Cr and has resulted in a drastic increase by 32.8% Operating Margin and Expenses by 29.2% in FY2008 as compared to the FY2007- SBI has registered significant improvements in its operating margins since 2003. Technology up gradation has enabled the bank to reduce inconsistencies. ICICI Bank, HDFC Bank and ING-VYSYA Bank has earned net profit of Rs 1272 Cr, Rs 621.74 Cr and Rs 52.05 Cr with a decrease of.957% and increase of 63.86% and 47.41% in their Operating margins respectively. 6.3.2 Balance Sheet Analysis  HDFC Bank SBI ICICI Bank ING Vysya Bank PAT/Total income 12.15 10.25 7.41 11.52 Networth 8770.7 46820.2 1535.65 49032.66 Quick ratio 3.96 2.27 2.48 1.56 Current ratio 3.97 2.58 2.51 1.6 Debt equity ratio 1.03 1.85 1.22 1.49 Interest cover 1.37 1.21 1.21 1.33 No. of employees 14739 0 5852 179205 No. of branches 651 1262 446 10270 EPS on accounting year end 29.94 37.37 13.33 106.56 PAT/Total Income- There has been a constant increase in PAT/Total income in SBI Bank from 9.64 to 11.52 in last 5 years but HDFC and ICICI Banks show increase in 2005 and there a constant decrease in this ratio. ING-VYSYA Bank has a negative PAT/Total Income ratio of -3.17 in 2005 but it has recovered to 7.41 in 2008. Quick Ratio- There has been a constant increase in quick ratio in HDFC Bank, ICICI Bank, ING-VYSYA Bank in last 5 years but increase in SBI Ban k as more inventories and even liabilities has increased. Current Ratio- There has been a constant increase in quick ratio in HDFC Bank and a fluctuation of increase-decrease in ICICI and ING-VYSYA Banks but has shown an increase in last 2 years. But this ratio has declined in SBI Bank from 1.73 to 1.60 last year. Debt Equity Ratio ICICI Bank plans to finance its expansion plans over the next few years by raising capital through equity, and not debt and there is a constant decrease in this ratio from 4.86 to 1.85 where there has been a constant increase in SBI Bank from .85 to 1.49 since last 5 years. No. of Employees- There has been a cut in no. of employees in SBI banks from 207039 in 2004 to 179205 in 2008 but still it has the highest employees and a constant increase in no. of employees in rest banks but HDFC has a drastic increase in their numbers from 5673 to 37836 employees in last 5 years. No. of Branches- The no. of branches has increased in all the banks and t he SBI has the highest of about 10270 branches Return on Equity Despite the decline in returns on equity in 2004-05, SBI generated healthy returns on equity in 2008. 6.4 Stock Market Performance The five key players stock price performance is as follows: ( Source- CMI Data Base- Prowess ) Till February 2009, SBI has highest stock price of Rs 1194 which is a public sector bank and HDFCs stock price is Rs 945.5 which is a private sector bank. ICICI Bank and PNB Bank has similar stock price performance as Rs 434 and Rs 409 respectively. ICICI Bank has slight higher stock price as compared to PNB Bank. ING-VYSYA Bank has least stock price as compared to all these banks of Rs 134.55. STOCK RATIOS  P/E P/B Yield EPS H D F C Bank Ltd. 19.29 3.05 0.9 49.02 I C I C I Bank Ltd. 11.61 0.98 2.53 37.41 I N G Vysya Bank Ltd. 7.56 0.88 1.11 17.79 State Bank Of India 9.46 1.37 1.8 126.24 HDFC Bank has highest price per earning (P/E) ratio and price per book value (P/B) ratio of 19.29 and 3.05 as compared to other banks. ICICI Bank has highest yield ratio of 2.53 and SBI has highest earning per share (EPS) of 126.24 which is quite higher as compared to other banks. INDUSTRY OUTLOOK The banking industry in India seems to be unaffected from the global financial crises which started from U.S in the last quarter of 2008. Despite the fallout and nationalization of banks across developed economies, banks in India seems to be on the strong fundamental base and seems to be well insulated from the financial turbulence emerging from the western economies. The Indian banking industry is well placed as compare to their banking industries western counterparts which are depending upon government bailout and stimulus packages. The strong economic growth in the past, low defaulter ratio, absence of complex financial products, regular intervention by central bank, proactive adjustment of monetary policy and so called close banking culture has favoured the banking industry in India in recent global financial turmoil. The report Indian Banking Sector Forecast to 2012 contains comprehensive research and rational analysis on various segments, like assets size, income level and number of cardholders, in the Indian banking industry. It also analyzes the current performance and key market trends, and helps clients to understand various products available in the market and their future scope. 7. APPENDIX 7.1 International Conferences and Annual Meetings Global banking conference Retail bankers academy Conference on payment system in banks Emerging issues and opportunity conference for Indian banks First global conference on legal and accounting process outsourcing

Personal Statement On Emotional Intelligence - 885 Words

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Argument Analysis - Declaration of Independence Essay

Argument Analysis - Declaration of Independence In May of 1776 a resolution was passed at the Virginia Convention in Williamsburg that asked the thirteen American colonies to declare the United Colonies free and independent from the British crown. At the second continental congress the resolution passed and on June 11, 1776 a five-man committee led by Thomas Jefferson was established to write the Declaration of Independence. On July 4, 1776 the members of the second continental congress signed into existence one of the most influential documents in history. The way that Jefferson structured The Declaration of Independence made the article extremely influential. Jefferson first starts by sharing his belief†¦show more content†¦One reason that The Declaration of Independence was so influential was that Thomas Jefferson’s claims against the King of England were easy to understand and logical. Typical complaints include â€Å"For quartering large Bodies of Armed Troops among us;† and â€Å"For imposing Taxes on us without our Consent.† Jefferson uses plain language that everyone can understand to point out large injustices done by the king. His statements about the King are short and to the point. He does not waste any words or bore the reader with abstract writing or excess words and thoughts. He goes from one point to the next to the next in such a fashion that the reader’s concentration is never broken. His points are logical and everyone living in the colonies at that time and many people around the world probably had some idea of the incidents behind all his grievances against the king. Jefferson raps up the injustices done by the king by declaring the United Colonies to be free and independent states. 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Separation of power in Malaysia free essay sample

That â€Å"cases before the courts were not intervened by any quarters† and that â€Å"there were cases where the judgments were not in favour of the executive† do not equate to the doctrine in practice. (Phrases within quotation marks taken from a Bernama news report attributed to Nazri who was speaking during the question-and-answer session in the Dewan Rakyat recently. ) Separation of Power has been dead for TWO decade Furthermore, the doctrine is a means and the end is the protection of the rakyat secured through the upholding of the sanctity and independence of the judiciary. Either way, as things stand, the credibility of the Barisan Nasional (BN) government and the judiciary has hung in the balance over the past two decades. The doctrine, which calls for checks and balances between the three estates of government, has been dead in the country’s system of political governance since 1998. Two-thirds majority is NOT good for any country That was when former prime minister Tun Dr Mahathir Mohamad, backed by a solid two-thirds majority in parliament, made the judiciary a subordinate estate. It stemmed from one of the most crucial amendments of the Federal Constitution that has caused much angst and deliberations among jurists. Many saw the amendment as having taken away the judiciary’s inherent common law jurisdiction and the check against abuse of executive power, be it arising from administrative measures or via substantive laws. Judicial power of the federation was taken away In essence, the amended provision Article 121 (1) took away â€Å"judicial power of the federation† from the judiciary, which shall only â€Å"have such jurisdiction and powers as may be conferred by or under federal law†. In practice, judges have more often than not become subservient to parliament, which is under the control of the executive, and their ability to deliver justice according to common law and even basic principles of rule of law is shackled. Judges still could not deliver justice in ISA detention For instance, there have been many cases whereby judges had been unable to deliver justice in ISA detention cases but for procedural irregularities. The interpretation and context of national security is solely the domain and judgment of the minister. That is what the doctrine of separation of powers promises to curb the concentration, arbitrary use and abuse of executive power. At least two chief justices during their respective tenure have alluded to the fact that the doctrine is amiss in the country. Amendment made in anger to injustice lasting a generation Under former prime minister Tun Abdullah Ahmad Badawi’s administration, the then chief justice, Tun Abdul Hamid Mohamad, said in June last year that the move by the government to amend Article 121(1) â€Å"shows that an amendment made in anger as a reaction to a decision of the court could last for one generation†. That was when Datuk Zaid Ibrahim was the de facto law minister, who claimed that his efforts to initiate legal reforms largely failed due to strong resistance from within Umno. Referring to the government’s purported intention to revert to the original provision, Abdul Hamid had said: â€Å"Water finds its own level. We believe in separation of powers. â€Å"The principle must apply equally to the three branches the executive, the legislature and the judiciary of the government. † He was also reported as saying that there should not be any double standards in favour of either of the three branches at any one’s convenience. Another former chief justice, Tun Ahmad Fairuz Sheikh Abdul Halim, in a public speech in Singapore three years ago, laid out the conflicting thoughts and struggle of jurists with Article 121(1) but did not provide any definitive answers. Malaysian judiciary is subservient to the wishes of the legislature However, he did acknowledge that pursuant to a literal interpretation of the provision, â€Å"the judiciary is subservient to the wishes of the legislature in which the executive under the system of responsible government has to a large extent control of what legislation to enact†. International Bar Council Effort He even cited the concerns expressed by the International Bar Association on the effect of the amendment. The association had at that time said: â€Å"It seems to us that this amendment has had the effect of eliminating the inherent powers and jurisdiction of the courts. It therefore fundamentally disturbs the concept of the separation of powers and affects the ability of the judiciary to enforce fundamental rights. It tends to make the judiciary an arm of the legislature, an instrument of the executive. † Citation from International Commission of Jurists The International Commission of Jurists was also cited: ‘‘The formulation of 121 of the Constitution makes the High Courts’ jurisdiction and powers dependent upon federal law, ie the court has no constitutionally entrenched original jurisdiction. â€Å"This undermines the separation of powers and presents a subtle form of influence over the exercise of judicial power. This makes the operation of the High Court dependent upon the legislature and is a threat to the structural independence of the judiciary. † We cannot leave the rule of law to chance As argued in this column previously, the country cannot afford to leave the rule of law and democracy to chance. The Malaysian executive branch and the judiciary would never garner credibility and earn trust from the people until and unless transformation is made. Make no mistake, the powers bestowed on the state under the Sedition Act and Internal Security Act as well as other draconian legislation are wide ranging and are susceptible to arbitrary use. Right the wrong now please The Home Ministry, which is in the midst of reviewing a few such legislation, must take the opportunity to do the right things towards unshackling the judiciary from the executive’s grip. Only then can his colleague and fellow minister, Nazri, declare with a certain pride that a democratic country like Malaysia upholds a doctrine as sacrosanct as the separation of powers. 2) Understanding the separation of power HE Bar Council’s Constitutional Law Committee (ConstiLC) is back with the second phase of its public education campaign MyConstitution or PerlembagaanKu. It will be launched tomorrow, 15 Jan 2010, and will discuss the separation of powers. Part one of the campaign was on knowing the Federal Constitution. ConstiLC deputy co-chair Mahaletchumi Balakrishnan and committee member Daniel Albert, who drafted the second Rakyat Guides booklet explaining the separation of powers, tell The Nut Graph why it is such an important concept. They also discuss where it has failed in Malaysia and the consequences, in an 8 Jan 2010 interview in Kuala Lumpur. TNG: How does the campaign break down the concept of separation of powers for people? Daniel Albert: The Rakyat Guide booklet is titled Constitutional Institutions and the Separation of Power. It will discuss the three institutions which govern a country — the legislative, the executive, and the judiciary. Separation of powers is needed so that no one institution becomes too powerful. And each institution is able to function as a check or watchdog on other institutions. How is this concept supposed to work? If Parliament were to enact a law that was not in line with the constitution, the courts would have the power to declare the law ineffective. Or if the government had a policy that breached fundamental liberties, the court could declare the policy ineffective and remedy the situation. As for Parliament, it is supposed to ensure that the government functions in accordance with the constitution through debates, where cabinet ministers are answerable to Parliament. If Parliament is not happy, there is the option of a vote of no-confidence. So the separation of powers provides for this system of checks and balances to ensure there is accountability and transparency in the way the country is governed. AlbertThere are also other constitutional institutions such as the Attorney-General’s Chambers, the Elections Commission, the Auditor-General, the Pardons Board, and the Land Tribunal. The booklet briefly describes all these. What about the judiciary’s role in this check-and-balance system? Albert: It’s significant because there is rarely a meaningful system of check and balance between Parliament and government. The prime minister is the leader of the majority in Parliament. He [or she] can control Parliament to some extent through the party whip. The prime minister chooses the cabinet, and in the Malaysian context all cabinet members must also be members of Parliament. But the judiciary is seen as more independent in terms of appointment. The question is whether the judiciary is playing a meaningful role in the system right now. Where do you think public understanding of the separation of powers is at? Mahaletchumi: Our gauge has been public commentary in the media, media articles, and current issues which give us a general feel of public awareness. When we engaged university students in our campaign’s first phase, they were excited. Many students are aware of current issues, but because they’ve never been taught about the constitution, they can’t connect the dots. I think the lack of public debate when Article 121(1) of the Federal Constitution was amended in 1988 indicates the level of awareness about the separation of powers. Prior to the amendment, courts had the power to adjudicate on any matter that arose. But the amendment gave the courts confined powers as provided to them by federal law. This has a huge impact on the separation of powers. But the amendment was passed regardless, and with very little public debate. It is the same with more recent bills like the Malaysian Anti-Corruption Commission Act and the Judicial Appointments Commission Act, or amendments [to existing legislation]. There was little public debate from a constitutional point of view. Separation of powers is not mentioned or defined in the Federal Constitution. Rather, it is something one understands from the way power and functions are divided between the legislative, executive and judiciary. The separation of powers is an age-old concept that precedes the constitution, and is present in any system of government where power is divided between different institutions. Instead of being defined in the constitution, it is incorporated through various provisions. So you cannot say that separation of powers doesn’t exist just because it is not mentioned in the constitution. Albert: The Federal Court did try to suggest that in 2007. Justice [Tun] Abdul Hamid Mohamad [a former chief justice], delivering the majority ruling, stated that there is no provision for separation of powers in the Malaysian constitution. He held that the framers were influenced by the idea of the concept, but it only applied in so far as it was consistent with the constitution and its amendments. But on the same bench, another judge, Justice Tan Sri Richard Malanjum [currently Chief Judge of the High Court of Sabah and Sarawak] said the exact opposite. Malanjum’s view was that Parliament could not limit the court’s judicial powers as it would be contrary to our democratic system. He further stated that the separation of powers is a basic feature of our Federal Constitution. So there are two views. One is that the amendment is ineffective because the separation of powers is so fundamental, so basic to the constitution’s structure, that not even Parliament can amend it. The other view which supports the amendment is that if Parliament were to enact a law that says â€Å"the court cannot review this law†, then that would be the stand. The court only has as much power as federal law gives it. Some examples are the home minister‘s power to ban books, or to issue detention orders under the Internal Security Act. Because there are two views, it remains to be seen how the courts will interpret their own power. What are some examples how separation of powers has failed here? Albert: One is the 1988 judicial amendment. It was perceived to take away the court’s inherent jurisdiction and entrenched right to examine all laws, and to review any act, or exercise of power by Parliament and the executive. If the judiciary is unable to play this role, who else can? Another example is the Perak speaker’s declaration of seat vacancies in the state legislative assembly. The Federal Court decided that it was unlawful of him to do so, and gave that right to the Election Commission. The Federal Court also ruled that the Perak speaker could not suspend the menteri besar from attending the state assembly. This is clearly contrary to the Federal Constitution, where Article 72 prohibits the validity of proceedings in the assembly being questioned by the courts. 3) Definition of Separation of power The separation of powers, often imprecisely used interchangeably with the trias politica principle,[1] is a model for the governance of a state (or who controls the state). The model was first developed in Ancient Greece and Rome. Under this model, the state is divided into branches, each with separate and independent powers and areas of responsibility so that no branch has more power than the other branches. The normal division of branches is into a legislature, an executive, and a judiciary. Malaysia is a country which practices a parliamentary democracy system which is based on British Westminster system. The concept of â€Å"people rule’ applies whereby the leaders are chosen by people through election process who then form the government. Since independence, the governing and administration of our country has been strengthened further by means of separation of power based on our constitution. To discuss further whether the separation of power is applicable in Malaysian context, it’s wise to understand first, the meaning of separation of power itself. The three main powers or bodies which forms our constitution are knows as The Executive, The Legislative and the Judiciary. Separation of power basically means there’s no overlapping or conflict of interest in carrying out their duties to run the government, among these bodies. The specific duties of each body should be looked upon to: The Executive – Is a body which has the power to govern the country either in the federal or state level. This is a unique collaboration between the federal and state level to run the country efficiently. At the federal level they are known as the cabinet and headed by the Prime Minister and in the state level they are known as state executive council (Exco) which is headed by Chief Minister or Menteri Besar. Their primary function is to govern, administrate and to implement laws that are passed by the legislative body at their respective levels (federal or state). They can’t interfere in matters related to legislative or the Judiciary. The Legislative body As similar to the Executive, the legislative body exists both at federal and state level. At the federal level, they are known as Member of Parliament (MP) and headed by The Yang Di Pertuan Agung and State legislative Assemblymen (ADUN) headed by Yang Di Pertua or Sultan at the state level. Their main function is to draw up, amend and pass laws. 4) Separation of Power, Malaysian Context The doctrine of separation of powers is a political doctrine under which the legislative, executive and judicial branches of government are kept distinct, to prevent abuse of power. However, Malaysia has its own model. Whilst our Constitution does have the features of the separation of powers, it also contains features which do not strictly comply with the doctrine. To what extent the doctrine applies, therefore, depends on the provisions of the Constitution. † 5. In determining the constitutionality or otherwise of a statute under our Constitution, it is the provision of the Constitution that matters, not a political theory expounded by some thinkers. The doctrine of separation of powers is not a provision of the Malaysian Constitution. Thus, a provision of the Constitution cannot be struck out on the ground that it contravenes the doctrine. Similarly, no provision of the law may be struck out as unconstitutional if it is not inconsistent with the Constitution, even though it may be inconsistent with the doctrine. † In case readers of this article are not immediately familiar, the case of PP v KOK WAH KUAN [2007] 6 CLJ 341 dealt with a child who was convicted of killing his tuition teacher’s daughter. He was ordered to be detained at the pleasure of the Yang di-Pertuan Agong pursuant to section 97(2) of the Child Act 2001. The question that arose was whether his sentence was unconstitutional, because it gave to the executive branch of government the function of the judicial branch of government, namely the determining of the sentence. Hence the issue of the existence and applicability of the doctrine of separation of powers within the Malaysian Federal Constitution. The particular quotation referred to in the Malaysian Government’s document was actually culled from various paragraphs of the judgment of Abdul Hamid Mohamad PCA, writing for the majority decision in PP v KOK WAH KUAN on the issue of separation of powers. Now earlier in the same ‘Statement by Malaysia – Annexe’, the Government was at pains to explain that the amendment to Article 121(1) of the Malaysian Federal Constitution which replaced the words â€Å"judicial power of the Federation† with the words â€Å"shall have such jurisdiction and powers as may be conferred by or under federal law† did not alter the meaning and intent of Article 121(1). The Government had this to say: â€Å"Malaysia wishes to inform that according to the legislative history of Clause (1) of Article 121 of the Federal Constitution, regardless of the terminology used to refer the jurisdiction and powers of the courts, the position and effect of Clause (1) of Article 121 of the Federal Constitution prior and after the amendment to Article 121(1) via Act A704, remains the same as both subject the judicial power of the courts to Federal law. In fact, the post amendment position states the law in clearer terms. † The above is the official position of the Malaysian Government, announced to the whole world. But see here below a different view: â€Å"Prior to the amendment to Article 121(1) of the Federal Constitution, there existed a definitive declaration that the judicial power of the Federation shall be vested in the two High Courts. The provision also then provided for the two High Courts to have jurisdiction and powers conferred by or under federal law. After the amendment (vide Act A704), there no longer exists a declaration that the ‘judicial power of the Federation’ – as the term was understood prior to the amendment – vests in the two High Courts. The jurisdiction and powers of the two High Courts are now prescribed by federal law and not dependent on the interpretation of the term ‘judicial power’ as prior the amendment. To say that the amendment had no effect did not make sense. † Where, readers may ask, was this second view taken from? Well, none other than from the judgment of Abdul Hamid Mohamad PCA in the very same case of PP v. KOK WAH KUAN. Law not a buffet spread The Malaysian government ought not to think of the law as a buffet spread in a hotel restaurant, where we can pick and choose which parts of a judgment of a case that we like and will follow, and which we will not. After having relied so heavily upon the judgment of Abdul Hamid Mohamad PCA to support its position that there is no such thing as the doctrine of separation of powers in the Malaysian Federal Constitution, it is sheer folly to then go on to say, implicitly, that the same Abdul Hamid Mohamad PCA got it wrong when he concluded that, â€Å"To say that the amendment [to Article 121(1) of the Malaysian Federal Constitution] had no effect did not make sense. † It is submitted that it is the Malaysian Government’s position that does not make sense. This is an error that even a first year law student would have been able to spot and avoid. It is interesting to note that in the case of of PP v. KOK WAH KUAN, four out of the five judges who heard the case agreed that the doctrine of separation of powers did not apply to the Malaysian Federal Constitution. There was Abdul Hamid Mohamad PCA, who wrote the judgment, and Ahmad Fairuz CJ, Alauddin CJ (Malaya) and Zaki Azmi FCJ, all of whom concurred. In respect of the doctrine of separation of powers, Richard Malanjum CJ (Sabah and Sarawak) dissented. Perhaps the learned current Chief Justice should focus more on correcting this decision and restoring separation of powers as a constitutional doctrine rather than rushing justice through our courts. The former is of far more critical importance for the long-term development of a truly independent judiciary. Indeed, the words of Richard Malanjum CJ (Sabah and Sarawak) are instructive: â€Å"The courts, especially the superior courts, are a separate and independent pillar of the Federal Constitution and not mere agents of the Federal Legislature. In the performance of their function they perform a myriad of roles and interpret and enforce a myriad of laws. Article 121(1) is not, and cannot be, the whole and sole repository of the judicial role in this country for the following reasons: (i) the amendment to Article 121(1) seeks to limit the jurisdiction and powers of the High Courts and inferior courts to whatever ‘may be conferred by or under federal law’; (ii) the courts cannot be confined to ‘federal law’ as their role is to be servants of the law as a whole; (iii) it is not legally possible in a country with a supreme Constitution and with provision for judicial review to prevent the courts from examining constitutional questions; (iv) despite the amendment (to Article 121(1)), the common law powers of the courts are intact (see Ngan Tuck Seng v Ngan Yin Hoi [1995] 5 MLJ 509 referred). Further, the inherent powers of the courts are a separate and distinct source of jurisdiction; (v) the courts cannot be prevented from interpreting the law creatively; (vi) past or earlier statutes have to be applied to modern or current circumstances; (vii) in interpreting constitutional provisions, a judge cannot afford to be too literal. He is to be creative and not passive to enable the constitutional provisions to be the guardian of people’s rights and the source of their freedom; (viii) the role of a judge is not just to deliver what is already there but it is also constitutive and creative and goes far beyond a mechanical interpretation of pre-existing law, extending to direct or indirect law-making in the several ways mentioned in the judgment. † Inadequate understanding The response of the Malaysian Government to the report of the WGAD has exposed our Government’s inadequate understanding of and appreciation for the rule of law. It comes as no surprise therefore to read that the Government has stoutly maintained that preventive detention legislation should continue to exist in Malaysia. It has attempted to suggest to the international community that our preventive detention legislation has adequate safeguards by way of habeas corpus applications, knowing full well that legislation has restricted the scope of such applications only to errors of procedure and not to issues of substance. Judges cannot delve into the actual reasons for detention, but only point out where the Government has failed to dot its â€Å"i’s and cross its t’s†. Such a limited and superficial jurisdiction is symptomatic of the respect shown to our courts in matters of justice. But again, is such a position surprising from a government that does not acknowledge that courts act as a check and balance on the executive and the legislature. I can but urge the Malaysian Government to stop defending the indefensible. A glance of Separation of Power in Malaysia The Doctrine of separation of power and the principle of check and balance and its application in Malaysia. Titek Sobah bt Suyub Law Department, UiTM Perak Introduction 1) This doctrine is a mechanism to prevent the abuse of powers by the governing bodies while exercising or performing their function. Since these bodies is the caretaker of the people therefore they are to ensure that the nation is being manage according to law so that the well being of the people will not be put aside. 2) Because of this, no governing body can be given more than one power because these may resulted in an unlimited of power making it impossible to be question and check upon by others. 3) To enable supervision and checking be done upon this power, it need to be separated according to its function and each government organ which have been allocated with certain function cannot later on encroach into the administration and function of other organ. Each organ is being confined to its function alone. Procedure /Method 1) This doctrine works by balancing the powers distributed amongst organs of government and giving each organ the ability to check the power exercise by other organ. 2) It is a kind of measured to remove the amount of power hold by one organ only whereby these power will be divided into different organ with different function making it difficult to abuse the power held by these organ since it will always be scrutinized by other organ. 3) Under this doctrine, the government is divided into three organ or branches which are assigns with different political and legal powers and they are to act independently of each other. a) The Executive This will be the government organ that will be responsible in administering the nation and ensuring that government policy will be carried out according to the law. The government departments which assist in administering the nation are part of the executive. In performing their duties, it must be done according to the power granted by the law so that it will not be void and be held ultra vires and of no effect. b) The Legislative This organ will be given the responsibility to enact law so that administration could run smoothly. However this organ cannot interfere as to the administration carried out by the executive. Law will be enacted in accordance with the interest of the people generally and not the interest of the government organ. Parliament will be the place where law will be enacted and the voice of the people was heard through their representative. c) Judiciary The law which was enacted by the legislative will not only govern the people but also the nation including the three government organ. All action done by all parties must be according to the law. If dispute arise as to whether certain action contradict the law, then it might be challenge in court. Therefore the judiciary whereby the system of court is under this organ plays an important role in determining as to whether action done is legal or illegal. The judiciary will interpret the law enacted by the legislative and at the same time applies the said law in arriving at their decision. All parties will be treated equally and the judiciary is free to make judgments without coercion, fear or favor. Check and Balance 1) With separate power and authority granted to different organ, it will actually limit the power possess by each organ and the prohibition to encroach the power exercise by the other organ not only act as a prohibition to the abuse of power however each organ have to be fully aware that their action will be scrutinize by other organ. 2) The executive itself cannot claim that they are more superior than the other organ since their action can still be challenge by the judiciary if it is not according to law. 3) In fact the legislator though given power to enact law, however if law is not enacted carefully it is still of no use and will be quash by the judiciary and will defeat its purpose. 4) The judiciary itself in exercising its function has to be in accordance with law and cannot use their discretion without limitation. 5) Therefore whatever is being done by any of this organ, it have to be in line with each other or else it will not be valid. These government organ not only will be checking upon the exercising of power of each other since it will be challenge if not done accordance to law however the government organ itself have to check as to whether they are acting according to the law or not to avoid being challenge later on. 6) This situation will ensure that the power possess by each organ will not be exercise arbitrarily and it will be balance by the said process of ability to check upon one another and the people is given the rights to criticize government action and remove officials from office. 7) The person who composes these three government organ must be kept separate and distinct, and no individual being allowed to be at the same time a member of more than one organ. In this way each of the organ/branches will be a check to the others and no single group of people will be able to control any of these organs in performing their function. Effect/Conclusion 1) Under this doctrine, the ability to question and challenge each other upon action which are not done according to law will only allowed the government to use force upon combination use of power possess by the three organs. Once there is no agreement upon the exercising of power by the three organs than the action by the government will not be valid. 2) The executive may exercise its power in administering the nation however if the exercising of power is not accordance to the law enacted by the legislator than the judiciary may held that what is being done by the executive is ultra vires and therefore not valid. As an example the Road Transport Department (JPJ) may prohibits traffic offender from renewing their license, however do the department posses the power to do this under the law? If there is no such power granted by any law enacted by the legislator then the judiciary may review this action once challenge in court. 3) In Malaysia, Separation of Power is not being practice strictly. This can be seen from the overlapping power of the executive and the legislative. Both of these government organs in Malaysia were represented by the same person. The cabinet of Malaysia (executive) is also the members of Parliament (legislative). Therefore the tendency of ratifying an ultra vires action done by the executive may exist. 4) Meanwhile the Judges were appointed by the Yang Dipertuan Agong who is acting upon the advice of the executive. Independency of each organ in Malaysia can still be question since the doctrine of separation of power is not being adhered to strictly.