2. OBJECTIVES
Main history of Indian Banking Industry.
Past performance and trends.
Major changes in recent past.
Current scenario.
The road ahead and challenges.
3. History and introduction to banking
industry
Originated in the last decade of the 18th century.
The General Bank Of India(started-1786),Hindustan
Bank(started -1790).
Formation of RBI in1934, got nationalized in January 1949
under RBI act.
Nationalization:
Except SBI every other bank was functioning
independently.
In 1969 ,14 banks got nationalized.
6 more banks got nationalized in 1980.
4. Post liberalization era:
Initially 10% FDI allowed, at present 74% with some
restriction.
Conversion from 4-6-4 model to 8 to 8
banking(present).
Adaptation of technology:
Internet banking
Electronic fund transfer
Automatic teller machines.
Core banking solutions.
5. Past performances and trends
80.00 1) Non performing asset
70.00 Priority sector worst
performer in recent past.
60.00
50.00 Non priority good
40.00
priority performance till 2008.
non priority
30.00 public Public sector has been
20.00 good and consistent
performer throughout.
10.00
0.00
2 4 6 8 10
6. Profitability
Despite high interest rates and high NPA and high
provisioning requirement the banking sector
witnessed growth
Growth of investments decelerated
Operating expenses grew at a higher rate
Growth of ‘other income’ decelerated
1. ROA moved from 1.05% to 1.10 %
2. ROE also witnessed improvements.
7.
8. Soundness indicators
Asset quality
Private sector saw a growth, whereas public sector asset
quality declined due to higher NPA
Agriculture contributed 44% in Higher NPA
Leverage Ratio
Remained constant at 6%
Credit boom
No chances of credit boom despite higher credit growth
9. CRAR
Declined owing to decline in tier2 CRAR ratio.
migrating to Basel II framework, the parallel run of Basel I is
also continuing as a backstop measure. The CRAR of all
bank groups under Basel I remained well above the stipulated
regulatory norm of 9 per cent in 2010-1.
Under Basel II also, the CRAR of SCBs remained well above
the required minimum in 2010-11.
This implies that, in the short to medium term, SCBs are not
constrained by capital in extending credit
10. Current scenario
Indian banking industry maintaining resilience while
providing for growth opportunities.
Survey by Ficci shows:
Regulatory framework, economic growth and insulation
from external market is major reason for the better
performance.
Regulatory systems of Indian banks were rated better
than China, Brazil, Russia, UK and at par with
Japan, Singapore and Hong Kong.
India’s Risk management systems more advanced
than China, Brazil and Russia
11. Overview
A rigorous evaluation of the health of commercial
banks, recently undertaken by the Committee on
Financial Sector Assessment (CFSA) also shows
that the commercial banks are robust and versatile.
The single-factor stress tests undertaken by the
CFSA divulge that the banking system can endure
considerable shocks arising from large possible
changes in credit quality, interest rate and liquidity
conditions
13. Human resource challanges
Thus, on the whole, we see
that Public Sector
Banks, Private Sector
Banks as well as Foreign
Banks view difficulty in
hiring highly qualified
youngsters as their biggest
HR threat ahead of
high staff cost
overheads, poaching of
skilled quality staff and high
attrition rates
19. The road ahead.
Is our banking industry ready for Basel 3 norms
Are we ready for IFRS norms.
Current and emerging environment offers sound
business opportunities to the banks.
Opportunities to the new entrants.
Improving efficiency.
Need to review laws governing the Indian banking
sector
Banking activities.
Credit flow industry.
