This presentation have the detailed analysis of the Indian banking sector, how it has evolved and reformes that have come gradually.It also has a classic case of merger of ICICI bank with BOM.
2. HISTORY OF BANKING SECTOR
Developed during the British era.
British East India Company established three
banks.
Bank of Bengal- 1809
Bank of Bombay- 1840
Bank of Madras – 1843
These three banks were later amalgamated and
called Imperial Bank
Taken over by State Bank of India in 1955
3. The Reserve Bank Of India was established in
1935
Followed by Punjab National Bank, Bank Of
India, Canara Bank and Indian Bank.
In 1969, 14 major banks were nationalized and
in 1980, 6 major private sector banks were
taken over by the government.
4. TYPES OF BANKS
Central Bank
The Reserve Bank of India
Public Sector Banks
State Bank of India and its associate banks called
the State Bank Group.
20 nationalized banks.
Regional rural banks mainly sponsored by public
sector banks.
5. Private Sector Banks
Private Banks
Foreign banks operating in India.
Scheduled co-operative banks.
Non-scheduled banks
Co-operative Sector
The co-operative sector is very much useful for rural
people.
State co-operative Banks
Central co-operative banks
Primary Agriculture Credit Societies
6. Development Banks/Financial Institutions
IFCI
IDBI
ICICI
IIBI
NABARD
Export Import Bank of India
National Housing Bank
7.
8. LIST OF PRIVATE SECTOR BANKS
Bank of Punjab
Bank of Rajasthan
Catholic Syrian Bank
Centurion Bank
City Union Bank
Dhanalakshmi Bank
Development Credit Bank
Federal Bank
HDFC Bank
ICICI Bank
9. IndusInd Bank
ING Vysya Bank
Jammu & Kashmir Bank
Karnataka Bank
Karur Vysya Bank
Laxmi Vilas Bank
South Indian Bank
United Western Bank
UTI Bank
10. LIST OF PUBLIC SECTOR BANKS
Allahabad Bank
Andhra Bank
Bank of Baroda
Bank of India
Bank of Maharastra
Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
IDBI Bank
Indian Bank
Indian Overseas Bank
Oriental Bank of Commerce
Punjab & Sind Bank
Punjab National Bank
Syndicate Bank
UCO Bank
Union Bank of India
United Bank of India
Vijaya Bank
11. CO-OPERATIVE BANKS IN INDIA
Cooperative banks in India finance rural areas
under:
Farming
Cattle
Milk
Hatchery
Personal Finance
12. COOPERATIVE BANKS IN INDIA FINANCE URBAN
AREAS UNDER:
Self-employment
Industries
Small scale units
Home Finance
Consumer finance
Personal finance
13. FOREIGN BANKS IN INDIA
ABN-AMRO Bank
Abu Dhabi Commercial Bank
Bank of Ceylon
BNP Paribas Bank
Citi Bank
China Trust Commercial Bank
Deutsche Bank
HSBC
JPMorgan Chase Bank
Standard Chartered Bank
Scotia Bank
Taib Bank
14. UPCOMING FOREIGN BANKS IN INDIA
Royal Bank of Scotland
Switzerland's UBS
US-based GE Capital
Credit Suisse Group
Industrial and Commercial Bank of China
15. REGIONAL RURAL BANKS
Haryana State Cooperative Apex Bank Limited
NABARD
National Bank for Agriculture and Rural
Development.
Sindhanur Urban Souharda Co-operative Bank
United Bank of India
16. RBI
Central Bank of the Country
Established on April 1, 1934
Dr Duvuri Subbarao
(The current governor)
17. PREAMBLE
“To regulate issue of Bank notes, to keep the
reserves with a view to securing monetary
stability in India and generally to operate the
currency and credit system of the country to its
advantage”
18. ROLE OF RESERVE BANK
1. Issue of Notes
2. Banker, Agent and advisor to the government
3. Banker’s Bank & Lender of Last Resort
4. Custodian of Foreign Exchange Reserves
5. Regulation of Banking System
6. Clearing House Functions
7. Credit control
19. RE RECENT ACTIONS
Re- introduction of interest rates futures in Sep-
2009
License to S.A. “First Rand Bank”
Bank Rate, Repo Rate, Reverse Repo Rate, Cash
Reserve Ratio kept unchanged. Statutory Liquidity
Ratio restored to 25%
RBI to launch plastic Rs 10 currency shortly
20. IMPORTANCE OF RBI GUIDELINES
As per law, the RBI Guidelines are statutory
and mandatory.
The violations of same by banks constitute an
important defense for the borrowers and
guarantors.
22. PLATINUM JUBILEE
CELEBRATIONS
Outreach program in the country :
“to create awareness among villagers about banking and
its benefits.”
Khopi Village nr Pune
Hunder Village (18,380 fts) nr Siachen base camp
23. RBI’S ROLE INCREASINGLY ACQUIRING AN
INTERNATIONAL DIMENSION
Important international institutions promoting
effective regulatory structures and financial
stability consult RBI
Member of International Committees
- Bank for International Settlements (BIS)
- Committee on Global Financial System, the Markets
Committee, and the International Liaison Group under the
aegis of the Basel Committee on Banking Supervision
(BCBS)
- Financial Stability Forum and the BCBS
24. Global crisis insulation:
Dr Reddy did not succumb to pressures for
full convertibility and opening up banking
sector
Limited vulnerability to sub prime and
complex debt obligations
Confidence level high for inter-banking
lending market
“THE GLOBAL BACKDROP HAS NOT AFFECTED INDIA MUCH, REGULATORS WERE QUICK IN
RESPONDING TO THE CRISIS.”- CHIEF EXECUTIVE OF INDIAN BANKS ASSOCIATION
26. HISTORY OF BANKING IN INDIA
The first bank in India was established in 1786.
From 1786 till today it has gone through three
distinct phases
Phase1: Early phase from 1786 to 1969
Phase2: Nationalization of Indian Banks and up
to 1991prior to Indian banking reforms
Phase3: New phase of Indian Banking system
with the advent of the Indian Financial Banking
sector reforms after 1991
27. PHASE 1
The General Bank of India was established in
1786. Then came the Bank of Hindustan and
Bengal Bank. The East India company established
Bank of Bengal (1809), Bank of Bombay (1840),
Bank of Madras (1843) and these banks called as
Presidency Bank. These three banks were
amalgamated in 1920 and named as the Imperial
Bank of India, which was started as the as the
private shareholder bank mostly European
shareholder .
28. PHASE1 (CONT……)
In 1865 Allahabad Bank was established and first time
exclusively by Indians, Punjab National Bank Ltd was
setup in 1894 with headquarter in Lahore. Between
1906 to 1913 many banks were established namely
Canara bank, Central bank, Bank of India, Bank of
Baroda, Indian Bank, Bank of Mysore were established.
There were approximately 1100 banks mostly small was
established.
To streamline the banks and to gain control over the
banks Govt. of India came up with The Banking
Companies Act in 1949 which was later changed to
Banking Regulation Act 1949.
29. PHASE2
Govt. took some major steps to bring reforms in
the Indian banking sector after independence.
In 1955, it nationalized The Imperial Bank of
India with extensive banking facilities on a large
scale especially in rural and Semi-urban areas.
It form SBI to act as the principal agent of RBI.
In 1969 late Prime Minister Mrs. Indira Gandhi
nationalized 14 commercial banks.
30. PHASE2 (CONT……)
In 1980 seven more banks were nationalized which brings
around 80% banks under the control of Govt. Govt. took the
following steps:-
1949: Enactment of Banking Regulation Act
1955: Nationalization of SBI
1959: Nationalization of SBI Subsidiaries
1961: Insurance cover extended to deposits
1969:Nationalization of 14 commercial banks
1971:Creation of credit guarantee corporation
1975:Creation of Regional Rural Banks (RRB)
1980:Nationalization of banks with deposits over 200 crore
31. PHASE3
This phase brought many more facilities in the
banking sector. In 1991, under the
chairmanship of Mr. M Narasimham, a
committee was set up which work for the
liberalization of banks in India
During this country is flooded with the Foreign
banks and ATMs. Phone Baking and Net
banking was introduced
32. BEGINNING OF MODERN BANKING IN INDIA
In 1786, English Agency House had established
The General Bank of India. This was the
beginning of the modern banking in India.
33. PRE- INDEPENDENCE
On the eve of independence in 1947 there
were 648 commercial banks comprising of 97
scheduled and 551 non-scheduled banks.
The number of banks office stood at 2,987,
total deposit at Rs 100,800 million and
advances Rs 4750 million.
34. RBI
RBI (Reserve Bank of India) came into
existence in 1935 as the central banking
authority of India with a share capital of Rs 5
crores on the basis of recommendation of
Hilton Young Commission. RBI was nationalized
in 1949.
35. BANKING DEVELOPMENT: PRE-NATIONALIZATION
Credit was excessively skewed in favor of large
borrowers
Agriculture Sector got only 2% of total bank
credit
Features with the goal of achieving the
equitable allocation of credit and relative
priorities set out in the five years plan
36. NATIONALIZATION OF BANKS
In July 1969 Govt. of India nationalized 14
major scheduled commercial banks, each
having the minimum deposit of Rs 500 million.
37. RATIONAL FOR NATIONALIZATION
Removal of control of few large Industrial and
Business houses
Provision for adequate credit for Agriculture,
Small Industries, exports etc
Giving Professional bent to management
Encouraging a new class of entrepreneurs
Change over from class banking to mass
banking
38. IMPACT OF NATIONALIZATION
Unprecedented growth in the branch network of
the commercial banks
Rapid growth in deposit mobilization and
expansion of credit
However commercial banks faces decline in
profitability
Directed lending and less flexibility
Increase cost of operations
39. FORMATION OF REGIONAL RURAL BANKS
Formation of Regional Rural Banks under the
act of RRB 1976
These are state sponsored, Region based,
Rural based, Rural oriented, commercial banks
Under this approach 196 RRBs were setup
42. ICICI Bank has launched `Global Indian Credit Card' for NRIs.
Bank of Rajasthan (BoR) has launched international credit card
operations in December 2005.
Investment Advisory Service
SGL accounts
Cash management services
44. NEED OF REFORMS
Greater inclusion
To protect the public sector banking system
To meet the international standards
To enhance efficiency and productivity through
competition
Lack of technological levels in operation
To maintain high transparency
High NPA’s
45. PROCESSES OF REFORMS
On all important issues, workings group are
constituted or technical reports are prepared
Resource Management Discussions meetings
are held by the RBI with select commercial
banks, prior to the policy announcements
To form a Technical Advisory Committee on
Money, Foreign Exchange and Government
Securities Markets (TAC)
46. CONT…
High Level Co-ordination Committee on
Financial and Capital Markets
Placing draft versions of important guidelines
for comments of the public at large before
finalisation of the guidelines
To align the regulatory framework with
international best practices
47. BASEL REFORMS
Basel I reforms:
- Focus on credit risk
Basel II reforms:
- Minimum capital requirements
- Supervisory review process
- Market discipline
48. NARSIMHAM COMMITTEE I (1991)
Reduction of SLR and CRR
Minimum Capital Adequacy Ratio
Prudential norms
Disclosure norms
Rationalization of foreign operations in India
Special tribunals and Asset Reconstruction
fund
50. NARSIMHAM COMMITTEE II
Focus on technological upgradation in Banking
sector
Mergers of banks need to be encouraged
Reorganizing of banks into global, national and
regional banks
Autonomy of banks
Capital Adequacy requirement
51. HOW HAS THE REFORMS HELPED??
Lendable efficiency of banks have increased
Have met international standards
Return on Assets of the banks rose from 0.4
per cent in the year 1991-92 to 1.2 per cent in
2003-04
The business per employee for public sector
banks more than doubled
52.
53. MANAGEMENT
PERSPECTIVES
CORPORATE MERGERS & SERVICE
GOVERNANCE ACQUISTIONS INNOVATIONS
54. PERSONAL BANKING NRI BANKING BUSINESS BANKING
DEPOSITS MONEY TRANSFER CORPORATE NET BANKING
LOANS REMITTANCES CASH MANAGEMENT
CARDS INVESTMENTS TRADE SERVICES
CAR/HEALTH INSURANCE PROPERTY SOLUTIONS SME SERVICES
WEALTH MANAGEMENT INSURANCE ONLINE TAXES
DEMAT A/C CUSTODIAL SERVICES
55. LATEST TRENDS OF ICICI
MOBILE BANKING
INTERNET BANKING
ICICI I-ZONE
TV BANKING
56. MERGERS & ACQUISITIONS
JP MORGAN MERGER WITH CHASE
MANHATTAN
HDFC ACQUIRING CENTURION BANK OF
PUNJAB
PRIOR TO THIS MERGER CENTURION BANK
HAD MERGED WITH BANK OF PUNJAB
ICICI BANK ACQUIRING BANK OF MADURA
57. PREMIER BANKS PROVIDING CUSTOMISED
SOLUTIONS
HSBC PREMIER
AXIS PRIORITY
ICICI PERSONAL
HDFC PRIVATE
BANK OF BARODA PERSONAL
58. BT –KPMG BANK RANKINGS 2009
Based on 26 parameters consisting of three
broad categories
Growth
Size
Strength
59. INDIA’S BEST BANKS
1. Axis Bank
2. Bank of India
3. Punjab National Bank
4. Bank of Baroda
5. HDFC Bank
6. Indian Bank
7. Federal Bank
8. Corporation Bank
9. Union Bank of India
10. Citibank
60. INDIA’S BEST BANKS
The Mid-Size Chartbusters
(Balance Sheet size less than 24000 crore and more than 10 branches)
1. YES Bank
2. Karur Vysya Bank
3. Dhanalakshmi Bank
4. City Union Bank
5. The Nanital Bank
6. Karnataka Bank
7. Ratnakar Bank
8. South Indian Bank
9. Lakshmi Vilas Bank
10. Bank of Rajasthan
61. INDIA’S BEST BANKS
The Small Wonders
(Balance Sheet size 3000 crore or less and 10 or less branches)
1. DBS Bank
2. JPMorgan Chase Bank
3. Scotia Bank
4. Barclays Bank
5. Bank of America
6. Deutsche Bank
7. Calyon Bank
8. BNP Paribus
62. INITIATIVES TAKEN BY GOVERNMENT
National Electronic Clearing Service (NECS) :
the core banking solutions
Reduction in the Reserve Bank's policy rates
and easy liquidity conditions
Cutting down of repo and reverse repo rates
Tax free cash withdrawals from banks
Inter-ATM usage transaction
63. CHALLENGES
Globalisation
Enhancement of customer service: demand for new products,
particularly derivatives
Application of technology
Implementation of Basel II
Implementation of new accounting standards
Compliance with KYC aspects
Interest rate risk
Interest rates and non-performing assets
Competition in retail banking
The urge to merge
64. TRENDS
Banks funding innovation
Proxy banking: Tapping the rural market
New banking correspondents
Regional banks going national
Consolidation of banks and financial players
Outsourcing business to cut costs
Credit Card business growing in spite of downturn
Retail banks to change models from credit base to
deposit base
Financial deepening and financial inclusion
65. THE FUTURE
Linking of mobile, Uid and payments without
the need of a bank account