Old Age Problems And Issues

                                     Old Age Problems And Issues                                                                                                                   Dr.P.K.Khanna

                                         Southern Economist Volume 47,Number19,1st Feb.2009
Aging is a biological process. Men / women pass through many phases during the entire life period. From womb to tomb people pass through infancy, childhood, adolescence, adulthood and lastly through the old age. Aging is not a disease but a natural phenomenon. It is a series of processes that begin with life and as individuals move through the processes, they become more and more different from everyone else.

“Old Age” is really a social category that is defined differently in different countries and in different context. In India we term old people as “ Senior Citizens”. Even the age criteria are different for different purpose. To get senior citizen concession for travel by railways, the age criterion is 60 years. Same is the criteria for getting higher rate of interest on time deposits from banks. However for claiming concessions from the income tax the age criterion is 65 years. In some government undertakings people are retired at the age of 60 and in all Central Universities at the age of 65.Even the retirement age is different in defense services. Old age in India is defined as the age of retirement, which is 60 years, and above.

There is no uniformity across the world in treating a person of old age. For example in the United States age 65 has been the “traditional” age for full retirement. However, because of longer life expectancies, the full retirement age is increasing for people born after 1938. Full retirement now goes from 65 to 67 depending upon the year of birth (The Social Security Act). Age 70 has been used as a mandatory retirement for the members of some professions. 

Different people have viewed aging differently. Some of the views expressed are as under:

• “Age is a question of mind over matter. If you don’t mind, it doesn’t matter.”(Satchel Paige).
• “Nobody grows old merely by living a number of years. We grow old by deserting our ideals. Years may wrinkle the skin, but to give up enthusiasm wrinkles the soul.” (Samuel Ullman)
• “For age is opportunity no less

      Than youth itself, though in another dress,

      And as the evening twilight fades away

      The sky is filled with stars invisible by day.”

      (Henry Wadsworth Longfellow, “Morituri Salutamus,” 1875)

The Number of elderly people is increasing throughout the world without any exception to India. As per 2001 census the population structure of India was as under:

0-14 years		15-64 years		65 years and older		Total
Male	Female	Male	Female	Male	Female
175,228,164	165,190,951	324,699,562	301,821,383	23,925,371	23,138,386	1,014,003,817
Percentage:       31.5		63.3		5.2

(Source: Census of India 2001)

            Number and Proportion of Elderly people in Indian Population

                                 by Age Groups, 1961-2001

Age group	Year	1961	1971	1981	1991	2001
60 + (Number in Millions)		25	33	43	57	77
Percentage to the total population		5.6	6	6.49	6.76	7.5
70 + (Number in Millions)		9	11	15	21	29
Percentage to the total population		2	2.1	2.33	2.51	2.9
80 + (Number in Millions)		2	3	4	6	8
Percentage to the total population		0.6	0.6	0.62	0.76	0.8
90 +(Number in Millions)		0.5	0.7	0.7	1	NA
Percentage to the total population		0.1	0.1	0.1	0.2	NA
100+(Number in Millions)		0.01	0.01	0.01	0.01	NA
Percentage to the total population		0.02	0.02	0.02	0.02	NA

(Source: Population Aging And Health In India, S IRUDAYA RAJAN, Ph.D.The Centre for Enquiry into Health and Allied Themes (CEHAT), Mumbai)

Of the total population of 1014 million (as per 2001 census), there were 77million   elderly people in India. Thus the population of elderly people works out to 7.5% of the total population. As per 1961 census the population of elderly people were 25 million i.e. 5.6% of the total population. The population of elderly people rose by 308% during the last four decades. The number of elderly people is on rise and country is gradually becoming older. It is expected that by the end of the next four decades elderly people would constitute 14.5% of the total population.

                                 Population Projections

Age group	Year	2001	2011	2021	2031	2041
60 and above (Number in Millions)		77	96	133	179	236
Percentage to the total population		7.5	8.2	9.9	11.9	14.5
70 and above (Number in Millions)		29	36	51	73	98
Percentage to the total population		2.9	3.1	3.8	4.8	6
80 and above (Number in Millions)		8	9	11	16	23
Percentage to the total population		0.5	0.7	0.8	1	1.4

(Source: Population Aging And Health In India, S IRUDAYA RAJAN, Ph.D.The Centre for Enquiry into Health and Allied Themes (CEHAT), Mumbai)

Problem before our Nation:

India is facing a major problem of illiteracy and poverty amongst the aged people.

• 73% of the 60+ age group in India are illiterate with a little access to any basic educational means.
• 75% of the old are from the rural areas.
• 40% of the old live below poverty line.
• 90% of the older people are from unorganized sector with no social security.
• 55% of the women 60+ in age [a staggering 19 million] are widows.

On the one hand life expectancy of Indian masses is increasing, on the other problems of old people are on rise. In most parts of the world, women live longer than men. In India Life expectancy is around 66.28 years for male and 71.17 years for female.

In India about 85 per cent of the total workforce is in the unorganized sector with little or no formal old-age income security. Hence efforts need to be made by the government to provide older people with the means to lead decent and dignified full life particularly to those old people who are illiterates, poor and live below the poverty line.

Problems of old age people in India:

Rapid industrialization and urbanization has changed the social thread and structure of our society. On the one hand family structures are undergoing rapid changes due to nuclear families, on the other centuries old joint family system is disintegrating.

In old age physical strength deteriorates, mental stability diminishes. Collapse of joint family system has created major problem for elderly people, as there is no one to take care, give them mental and psychological support.

By and large the common problems faced by old people across the world include financial, dependency, health, loneliness, hostility, abuse of one kind or another both by family members and outsiders.

Health problem:

The health of old people is often poor, not because of old age, but also because diet, housing, occupation and lifestyle. Older people are prone to disease, infections, Injuries, chronic, terminal and degenerative diseases and suffer from psychological problems and have high risk of disability and risk of death. They suffer from arthritis, joint problems, cardio vascular diseases, impairment of special senses, amnesia, hypothermia, diabetes, prostrate enlargement, cancer, senility, blood pressure, loss of elasticity of blood vessels and accidental fall.

Psychological problems:

Due to generation gap old people do not fit in with the young generation. Even they do not like them. Those old people who do not adjust according to the new generation find themselves isolated and those who adjust find it difficult to compromise with their old value system. This leads to emotional problems and suicidal tendency, tendency to harm self for gaining attention of near and dears.  Other reasons for psychological problems are due to bereavement when spouse die, isolation, as friends and families die or move away. When children desert parents or live separately and do not care for them.

Social problems:

The exodus of Indians to other countries has left many parents ‘orphaned’. Large-scale migration to other parts of India is also leaving the elderly feeling vulnerable and lonely. The problem is who would take care, when children, the only hope for old age leave them either by design or compulsion. Life partners of old people, who are themselves aging look after each other. The problem becomes alarming when one of the spouses passes away. 

Problem of elder abuse:

According to an estimate nearly 40% of senior citizens living with their families are reportedly facing abuse of one kind or another but only 1 in 6 case actually comes to light. (Source: Azad India Foundation)

Incidences of elderly couples living alone being murdered either for the money what ever they have, or having jewelry are on rise. Even they are forced by their own children and relatives to sell their houses, and proceeds taken away. Some elderly people have also complained that in case of a property dispute they feel more helpless when their wives side with their children. Many of them suffer in silence as they fear humiliation or are too scared to speak up. In crisis even the nearest and dearest depart. Due to our social bondage and relationship our mind refuses to accept unpalatable reality about our kith and kins. Children are becoming increasingly intolerant of their parents' health problems and try to distance with them in variety of ways. A few of the incidences of elder abuse are as under.

• A person became widower at the young age of 24. He did not marry, as he never wanted a stepmother for his two sons aged 4 and 2 years. Both the children were reared, nurtured and brought up by their grandmother and father. The elder son migrated to States and had four children. On son’s and daughter in-law’s persuasion father shifted to the States on retirement. He used to visit India once in two years to stay with his younger son. The old man during his sojourn to India confided to one of his old colleagues that people think that he is enjoying a peaceful and relaxed life in the states where as it is not so. Helpers and baby-sitting is very costly in the states. He takes care of the kids, teach them and also helps in house hold work, he sighed that he is a cost free labour.
• One aged person refused the offer of his sons to live with them by turn .He confided that his wife was suffering from Parkinson’s disease for over 15 years and the sons and their family never bothered to take care. He said he was drawing a meager pension and maintaining him and his wife by doing odd jobs, taking, tuitions etc. There was no financial support from two of his sons; it was the third son who despite having four children and living in a metro was sending money order regularly. Family of both the sons used to spend summer vacations with the grand parents, which was a financial burden. On the death of his wife the aged person refused to move out to the houses of his sons and stayed alone till his death, as he never wanted to be treated as a burden on children.

Some young people ill-treat their aged parents, without realizing that one-day they too would become aged. They have to realize that the way you want to be treated in your old age, treat your aged family members in the same way. Therefore the young generation has to practice selfishness to selflessness.  

There are many such or similar incidences of emotional and psychological exploitation of aged people.  Approach of money minded families could be judged from the fact that on the death of a widow, the children and other family members started enquiring about the assets left behind by her and amount bequeathed by her. They were searching for the will and were paying least priority to the funeral of the deceased. There are thousands of such cases in the world. Obviously indicating that people want their aged people to die as early as possible for getting their property.

Dignity to death:

Old people want to have dignified death. Those who suffer from non-curable disease suffer from pain and sufferings, are bed ridden want voluntary euthanasia. Those living alone want to have proper last rites. They want to be confident that their last rites would be taken care of.

Option for old people:

For older people who have nowhere to go and no one to support them, old age homes provide a safe haven. These homes also create a family like atmosphere among the residents. Senior citizens experience a sense of security and friendship when they share their joys and sorrows with each other.

Rights of the Elderly:

Neglect of parents has become a big issue, so much so that the Indian government has passed “Maintenance and Welfare of Parents and Senior Citizens Act, 2007”. The act makes it imperative for adult children to look after their parents and provides effective provisions for the maintenance and welfare of parents and senior citizens. The act punishes children who abandon parents with a prison term of three months or a fine.

Parents cannot be evicted from a house without due process of law if they have been staying there from before. The act also provides Medical support for senior citizen by state governments by making it obligatory on the part of state governments to provide facilities for geriatric patients in every district hospital duly headed by a medical officer with experience in geriatric care.

The Hindu Adoptions and Maintenance Act say that an aged parent can demand maintenance from children in the same way that a wife can demand it from her husband. The Domestic Violence Act too provides parents with the right to seek relief.  Under section 125 of the Cr.PC, a magistrate can order a child to maintain his old parents under the Maintenance of Parents Act.

Coping with Old Age:

Most of the problems encountered by elderly people are due to their attitude. They have to change their attitude towards life and have to be pessimistic. Understand, that  “A strong positive mental attitude will create more miracles than any wonder drug.”(Patricia Neal)

Those who have retired after active and hectic service life, find it difficult to adjust in the changed situation. Even the partners of aged people find it difficult to cope up with their husbands, as they start interfering in day-to-day household affairs. One of the aged lady informed that her husband after retirement started interfering even in the affairs of kitchen, which he had never done before. Unnecessary and uncalled for interference spoils tranquility in the house. She informed that through out the whole life he had never bothered what was being cooked in the kitchen and enjoyed the food, which was cooked. After retirement he has become choosy. She said that she has to take care of the taste of all the members in the family (both kids, sons, daughter in-laws) and husband has to understand this. The person referred to by the lady advised that at this age his digestive system does not support spicy, heavy food, and food cooked in saturated fat. Since he is diabetic, suffers from high blood pressure, though he used to relish such food cannot take such food which is harmful to his health. People have to understand his problem.

Generally in Indian joint families, aged ladies compromise with their family members for maintaining tranquility and in the process become a target of their ire. In the process of pleasing every one in the family and keeping them happy aged ladies suffers in silence.

Suggestions to the aged people:

• “Parents were invented to make children happy by giving them something to ignore.” Ogden Nash (US humorist & poet (1902 - 1971))
• Change your attitude. You are creator of your own problems.
• Adopt philosophical attitude towards life.
• Don’t pity yourself; respect yourself as “ He that respects himself is safe from others. He wears a coat of mail that none can pierce”. Henery Wadsworth Longfellow, US poet (1807 - 1882)
• Nothing is good or bad, only thinking makes it so.
• Don’t think you have health problems. Diseases are in mind and not in body, control your mind and thoughts to wander, as mind seduces consciousness.      “Ya Matih Sa Gatih” meaning - as we think so we become.
• “Live neither in the past nor in future, but let each day’s work absorb your entire energies, and satisfy your widest ambition.” Sir William Oslar, British (Canadian-born) physician (1849 - 1919)
• Curtail unnecessary desires, live within means, plan your resources in such a manner that you have not to look at others for support.
• All bank accounts, shares to be in joint names with your spouse. Use nomination facility. A nominee cannot claim the asset till both of you is surviving.
• Enjoy life; do not compromise with your diet and comforts, for the sake of leaving assets behind for children. Once you are dead, you become a history, no one would bother for you, do not think what people will say after your death.  
• Do not interfere in the affairs of children. Never give uncalled for views and suggestions, and if asked for, doge the reply.
• Adopt the principle of detachment. Attachment is the cause of all miseries. Understand you would leave every thing behind, then why to have attachment.” According to Swami Vivekananda  “Attachment degenerates us individually and in the second place makes us extremely selfish.
• Do not expect any thing even form your nearest and dearest as  ”Asa Hi Param Duhkham, Nairasyam Parmam Sukham”(Bhagavat (II-8-44)) meaning- expectations are the cause of all miseries, and non-expectations are the cause of happiness.
• “Sama-Dukha-Sukhan Purna Asa Nairasyaya Samah: (Astavakra Gita-V-4) meaning- pain and pleasure, hope and disappointments life and death are all intellectual evaluations and its habitual concept.
• In one’s greatest hour on need, one stands alone.
• Do what you wanted to do, do what you were craving to do. The time has come to satisfy your self-actualization needs.
• Enroll for further studies. You will feel young and healthy in the company of young people and would also command love and respect. There are many persons who have joined universities /colleges at the age of 60+.
• Never while away your time, make proper use of every moment you live.
• Attend spiritual discourses, read religious books, do yogic exercise and do meditation to keep mind and body fit and healthy.

Conclusion:

Elderly people (senior citizens) are a treasure of our society. They have worked hard all these years for the development of the nation as well as for the community. They possess a vast experience in different walks of life. The youth of today can gain from the experience of the senior citizens in taking the nation to greater heights. At this age of their life, they need to be taken care of and made to feel special.

References:

1. Astavakra Gita- Swami Chimayananda
2. Azad India Foundation - www.azadindia.org
3. Census of India 2001
4. Maintenance and welfare parents and senior citizens Act, 2007
5. Rajan. S. Irudaya,”Population Aging and Health In India” Centre for Enquiry into Health and Allied Themes, Mumbai
6. www.cehat.org
7. www.gits4u.com

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Credit Policy and Credit Planning

Credit Policy and Credit Planning:

 

The word "policy” covers matters ranging from high order strategy to administrative detail. It provides guidance for managerial thinking as well as action.

A policy is a deliberate plan of action, usually based on certain principles indicating the priorities of decision makers about allocations of resources for achieving rational outcome. It is a written statement that communicates management’s intent, objectives, requirements, responsibilities, and or standards.

Lending is one of the core activities of banks. Banks earnings, profitability, reputation, net asset value etc., depend on its credit portfolio. A sound and healthy lending portfolio is must for bank’s survival.

Reserve Bank of India issues guidelines from time to time relating to flow of credit and directives about credit discipline by the borrowers and banks.

Keeping in view the economic conditions, fiscal deficit position of the country Government of India/ Ministry of Finance too issue directives to banks about credit. RBI announces monetary and credit policy in April and October each year keeping in view the significant changes in the regulatory framework for financial markets. The policy has direct impact on the lending policy of banks. 

 Why Credit Policy?

In the process of financial intermediation banks are confronted with various kinds of financial and non-financial risks. These risks are highly inter-dependent.  One area of risk can have ramifications for a range of other risk categories. Banks are attaching considerable importance to improve the ability to identify, measure, monitor and control the overall level of risks undertaken. To mitigate the risk, banks prepare credit policy which contains guidelines for the entire credit process, from credit origination to problems in loan management and covers areas like mechanism for loan review, interbank exposure, country risk, credit rating framework, portfolio management and risk adjusted return on capital. Credit policy gives valuable guidance to the operational units in credit dispensation, building up a diversified portfolio of quality assets and credit monitoring. The policy also contains prudential limits to individual borrowers, non-corporate borrowers, entry-level exposure norms, substantial exposure limits, benchmark financial ratios, borrower standards, exposure limits, ceilings to industries, sensitive sectors, rating categories etc.  For effective implementation of credit policy banks have also put in place a multi-tier credit approving system wherein an “Approval Grid” clears the loan proposals before being placed to the respective sanctioning authorities.

 

Objectives of credit policy:

The main objectives of a credit policy are:

• To comply with national priorities in achieving planned growth in various productive sectors of the economy.
• To see that credit portfolio has a balanced mix from different viewpoints.
• To regulate and streamline the financial resources of the bank in an orderly manner for achieving objectives of the bank and to instill a sense of credit culture in the operating staff.
• To provide need based and timely availability of credit to borrowers.
• To strengthen the credit management skills, supervision and follow up measures for maintaining a healthy and quality credit portfolio in the bank for ensuring overall profitability.
• To minimize credit risk.
• To comply with various regulatory requirements, pertaining to exposure norms, priority sector norms, income recognition and asset classification guidelines, capital adequacy, credit risk management guidelines, etc., of Reserve Bank of India and other authorities.
• To decide discretionary lending powers of various authorities

 

Aspects kept in view while preparing Credit Policy:

(a) Regulatory Restrictions issued by RBI:

While preparing lending policy, banks keep into consideration Regulatory Restrictions issued by RBI on lending, the power derived from the Banking Regulation Act, 1949. The regulatory restrictions include:

• Statutory Restrictions
• Regulatory Restrictions
• Restrictions on other loans and advances   and contains
• Guidelines on Fair Practices Code for Lenders

(i) Statutory Restrictions: In terms of Section 20(1) of the Banking Regulation Act, 1949, a bank cannot grant any loans and advances on the security of its own shares Banking Regulation Act, 1949. Section 20(1) of the Banking Regulation Act, 1949 also lays down the restrictions on loans and advances to the directors and the firms in which they hold substantial interest.

(ii) Regulatory Restrictions:

RBI has put restrictions on granting of loans and advances to:

• Relatives of Directors
• Officers and Relatives of Senior Officers of Banks
• Industries Producing / Consuming Ozone Depleting Substances (ODS)

RBI has also put certain restrictions on advances against Sensitive Commodities under Selective Credit Control (SCC) and payment of commission to staff members including officers under Section 10(1)(b)(ii) of Banking Regulation Act, 1934,

(iii) Restrictions on other loans and advances:

     RBI has issued guidelines to banks in respect of:

• Loans and Advances against Shares, Debentures and Bonds
• Advances against Fixed Deposit Receipts (FDRs) Issued by Other Banks
• Advances to Agents/Intermediaries based on Consideration of Deposit Mobilisation
• Loans against Certificate of Deposits (CDs)

• Bank Finance to Non-Banking Financial Companies (NBFCs) in respect of certain activities undertaken by them
• Bank Finance to Equipment Leasing Companies
• Financing Infrastructure/ Housing Projects

(iv) Guidelines on Fair Practices Code for Lenders:

It is basically disclosure guidelines. Commercial banks and other lenders are required to state plainly the terms of the contract and provide a copy of the lending agreement to the borrower.  RBI has advised all banks and financial institutions to display on their web sites “Fair Practices Code for Lenders.”

Preparing Credit Policy:

Credit policy differs from bank to bank.  Banks prepare their credit policy keeping in view RBI guidelines, directives of Government of India, Ministry of Finance, banking scenario, provisions
of Banking Regulations Act, position of assets and liabilities,
traditions, inherent expertise, strengths and weaknesses, emerging market, economic trends,
and banks’ priorities, thrust areas, innovative products and above all
most profitable deployment of resources by way of lending. The credit
policy also contains guidelines for risk identification, measurement,
risk grading, risk reporting and risk control. Credit policies are
periodically reviewed keeping in view the ever-changing economic and
socioeconomic conditions.  Credit policy
duly approved by board of directors is circulated to branches and
controlling offices along with detailed instructions and guidelines.

As
per RBI directives all commercial banks operating in India are required
to give 40 percent of their net adjusted credit to priority sector. RBI
regulates rate of interest on priority sector advances up to a limit of
Rs. 2 laks.  RBI announces credit policy twice a year. Credit policy
specifies bank’s exposure in different segments of economy.

(i) Assessment of Needs:

Assessing the credit needs of different sectors help in budgeting the quantum of funds to be lent in to that sector.

(ii) Assessing Resource position:

Deposits are the main resource for banks. Bank deposits are held in different maturity buckets as under

1 to 14 days

15 to 29 days

29 days and up to 3 months

Over 3 months and up to 6 months

Over 6 months and up to 1 year

Over 1 year and up to 3 years

Over 3 years and up to 5 years

Over 5 years

While deciding credit policy deposits in different maturity buckets are considered, as a bank cannot afford to lend for longer period if major portion of deposits is held in short period maturity bucket.

(iii) Sectoral Diversification:

Credit policy should not have leaning towards a particular sector, as deployment of resources towards one particular sector may be suicidal for the bank.  It is not advisable to keep all eggs in one basket. Therefore size of the loan portfolio for different sectors of economy needs to be determined.

iv) Retail lending or bulk (wholesale) lending:

While preparing credit policy bank also decides whether it wants to go for retail lending or bulk lending. While retail lending involves higher cost of supervision and control the element of credit risk is less. In case of bulk lending cost of supervision and control is less but risk of default is high.

(v) Loan Pricing:

Bank has to decide the benchmark Prime Lending Rate for different types of loans and advances. It also decides whether to have fixed rate of interest or floating rate of interest or both and its applicability on different asset products. The advantage in charging fixed rate of interest is that the revenue can be worked out well in advance. The disadvantage is that in the event of interest rate going up and in the event of declining rate regime (unless bank falls in line) borrowers desert bank and migrate to other banks having lower interest rate. In case of floating interest rate it automatically gets adjusted as per market forces, however it become bit difficult to project revenue. Banks also permit borrowers to switch over from fixed to floating rate and vice versa by levying migration fee.

(vi) Market intelligence:

With a view to enabling them to face competition, while preparing credit policy, banks take in to account the credit policy of other banks. They find out-processing fee, charges for non-utilization of sanctioned limit and other incidental charges and reducing risks arising from lending operations.

(vii) Risk assessment:

Banks also undertake portfolio review / industry studies in order to assess the risks lying in the portfolio / industries financed and impact of concentration of exposures to certain borrowers, sectors or industries for improving quality of the portfolio and reduce the potential adverse.

(vii) Exposure limit:

In terms of powers conferred by the Banking Regulation Act, 1949, RBI issues statutory guideline to Scheduled Commercial Banks relating to credit exposure limits for individual / group borrowers , credit exposure to specific industry or sectors, and the capital market exposure of banks.

 

Preparing Budget:

Once the bank decides its lending policy, budgeting for lending is done. Controlling offices are asked to prepare their lending budget keeping in view the potential in their area of operations and priorities mentioned in district credit plan.

 

References:

• Crosse. Howard D. and George H. Hempel “ Management Policies for Commercial Banks”, Prentice-Hall, Inc. Englewood Cliffs, New Jersey, 1973
• Banking Regulation Act, 1949
• Master Circular RBI/2008-09/78 DBOD No. Dir. BC. 17/13.03.00/2008-09 dated July 1, 2008 ‘Loans and Advances –Statutory and Other Restrictions’
• Master Circular RBI/2009-10/71 DBOD No. Dir. BC.15/13.03.00/ 2009-10 dated July 1, 2009 about Exposure Norms

 

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