INDIAN BANKING INDUSTRY

A P R I L 2 0 1 2
The Indian banking sector has emerged as one of the strongest drivers of Indias economic
growth. The Indian banking industry (US$ 1.22 triion! has made outstanding advancement in
ast few years" even during the times when the rest of the word was strugging with #nancia
metdown. India$s economic deveo%ment and #nancia sector iberai&ation have ed to a
transformation of the Indian banking sector over the %ast two decades.
Today Indian 'anking is at the crossroads of an invisibe revoution. The sector has undergone
significant deveo%ments and investments in the recent %ast. (ost of banks %rovide various
services such as (obie banking" S(S 'anking" )et banking and *T(s to their cients.
Indian banks" the dominant #nancia intermediaries in India" have made high+,uaity %rogress
over the ast #ve years" as is evident from severa factors" incuding annua credit growth"
%ro#tabiity" and trend in gross non+%erforming assets ()-*s!. .hie annua rate of credit growth
cocked 2/0 during the ast #ve years" %ro#tabiity (average 1eturn on )et .orth! was
maintained at around 120 during the same %eriod" whie gross )-*s fe from /./0 as on (arch
/1" 2334 to
2./0 as on (arch /1"
2311.
The Indian banking sector is a mi5ture of %ubic" %rivate and foreign ownershi%s. The beow
tabe highights to% 13 banks which contributed 260 share of the tota credit as on (arch /1"
2311. The State bank of India has recorded highest market share. The )et Interest (argin of
789: 'anks is ;.20 which is highest among others.
Name of Bank Cred
it
Portfol
io
R!"Bn#
$arket
S%are
&#
NI$
&#
$ar'11
Tier I
Ca(ital &#
' $ar
2011
R)N*
&#
$ar ' 11
Gro!
!
NPA&
# ' $ar
11
State 'ank of India <24< 16 2.= <.6 1/ /./
-un>ab )ationa
'ank
2;21 4 /.2 6.; 2; 1.6
'ank of 'aroda 226< 2 2.6 13.
3
2; 1.;
I:I:I 'ank 214; 2 2./ 1/.
2
13 ;.2
'ank of India 21/1 2 2.2 6./ 1< 2.2
:anara 'ank 2122 2 2.4 13.
=
24 1.2
789: 'ank 1433 ; ;.2 12.
2
1< 1.1
I8'I 'ank 12<1 ; 1.6 6.1 14 1.6
*5is 'ank 1;2; / /.1 =.; 1= 1.1
:entra bank of
India
12=< / 2.< 4.; 16 2.2
Source ? *nnua 1e%ort"
I:1*
1.1
2
1.1
3
1.3
2
1.3
3
3.=
2
3.=
3
1.3
2
NPA (%)
1.33
1.3
2
1.1
2
3.=
<
Source? 1'I" *ranca 1esearch
The :redit off+take has increased at a :*@1 of 1=.=
0 over 9A 34+
11. The 8e%osits have grown at a :*@1 of 16.20
over 9A 34+11 on account of strong growth in saving
account. The net )-* has increased from 10 in 9A
2336 to 1.120 in 9A 13. The 7igh interest rates
and ower economic growth has im%acted the
re%ayment ca%acities of borrowers and hence
%ushing u% the )-*s of banks. The net )-*
deceerated from 1.120 in 9A 13 to
3.=<0 in 9A
11.
233< 2336 233= 2313 2311
Indian banks en>oyed higher eves of money su%%y" credit and de%osits as a %ercentage of @8-
in 9A11 as com%ared to that in 9A13 showing im%roved maturity in the #nancia sector. :redit
growth remained high in the #rst haf of 9A11 on account of increased demand from industry
and the service sector. -ersona oans grew significanty by 1<0 during
2313+11 as com%ared with ;.10 during the
%revious year.
+IST)RY
Source?1'I
*though some form of banking" mainy of the money+ending ty%e" has been in e5istence in
India since ancient times" it was ony over a century ago that %ro%er banking began. The #rst
bank in India" though conservative" was estabished in
1<64. 9rom 1<64 ti today" the >ourney of Indian 'anking System can be segregated into three
distinct %hases. They are
as mentioned beow?
B Cary %hase from 1<64 to 1=4= of
Indian 'anks
B )ationai&ation of Indian 'anks and u% to 1==1 %rior to Indian
banking sector 1eforms
B )ew %hase of Indian 'anking System with the advent of Indian 9inancia D 'anking
Sector 1eforms after 1==1
The banking industry has moved graduay from a reguated environment to a dereguated
market economy. The market deveo%ments kinded by iberai&ation and gobai&ation have
resuted in changes in the intermediation roe of banks. The %ace of transformation has been
more significant in recent times with technoogy acting as a catayst. .hie the banking system
has done fairy we in ad>usting to the new market dynamics" greater chaenges ie ahead.
STRUCT
UR,
The 1eserve 'ank of India" the nations centra bank" began o%erations on *%ri 31" 1=/2. It
was estabished with the ob>ective of ensuring monetary stabiity and o%erating the currency
and credit system of the country to its advantage.
1'I
Schedued Unschedued
:ommercia :oo%erative
-ubic -rivate 9oreign
11'
1ura Urban
In India" the banks are being segregated in different grou%s. Cach grou% has their own benefits"
own dedicated target markets" imitations in o%erating in India. The commercia banking
structure in India consists of Schedued :ommercia 'anks and Unschedued 'anks.
Schedued commercia 'anks constitute those banks which have been incuded in the Second
Schedue of 1eserve 'ank of India (1'I! *ct" 1=/;. 9or the %ur%ose of assessment of
%erformance of banks" the 1eserve 'ank of India categorise them as %ubic sector banks" od
%rivate sector banks" new %rivate sector banks and foreign banks.
BUSIN,SS DI-ISI)N
Retai
l
.anki
n/
Retail .ankin/ ' Eoans to Individuas
(*uto oan" 7ousing Eoan" Cducation
Eoan and other %ersona
oan! or sma businesses.
*%ole!
ale
.ankin
/
B0!ine
!!
Di1i!i
on
Trea!0
r2
)(eratio
n!
)t%er
Bankin/
B0!ine!
!e!
*%ole!ale .ankin/ 3 Eoans to (id
and Earge cor%orate (.orking :a%ita
oans" -ro>ect #nance" Term oans" Eease
9inance!
Trea!0r2 )(eration! 3 Investment in
C,uity" 8erivates" :ommodities" (utua
9unds" 'onds" Trading and 9ore5
o%erations
)t%er Bankin/ B0!ine!!e! 3
(erchant 'anking" Eeasing business" 7ire
%urchase" Syndication services
etc
.
S*)T ANALYSIS
ST R,N GT
+S
Fauabe contributor to
@8- 1eguatory
environment
@overnment Su%%ort
*,A KN ,S
S,S
Increasing
)-* Eow
%enetration
Eack of %roduct
differentiation
)PP)RTUNI TI ,S
(odern
Technoogy
Unta%%ed 1ura
(arket
@obai&ation
T +R,A
T S
Unorgani&ed money
ending market
:ustomer
dissatisfaction
P)RT,R4S 5I-,
5)RC,S $)D,L
'anking is mainy a cient oriented business. * high+,uaity of services to the cient is crucia for
the growth and stabiity of any bank. * wider distribution and access of #nancia services he%s
both consumers and %roducers to raise their wefare and %roductivity. Such access is es%eciay
%owerfu for the %oor as it %rovides them o%%ortunities to buid savings" make investments" avai
credit" and more im%ortant" insure themseves against income shocks and emergencies. To
survive in an increasingy com%etitive environment" bank need to come u% with various
faciities ike Internet banking" mobie banking etc. .ith the onset of mobie banking" the
industry #nds itsef at the threshod of the ne5t ma>or technoogica ea%.
T%reat of
Ne6
,ntrant!
(Eow!
Buyer Power ' +i/% bargaining %ower of
customers on account of banks renders
uniform services to the cients. )ow a
days amost a banks woud ike to %rovide
re,uisite information very easiy by way
to
Internet" (obie banking to
the cients
B02
er
Po6
er
(7ig
h!
Com(etit
i1e
Ri1al
r2
(7igh
!
S0((li
er
Po6
er
(Eow
!
Supplier Power' Lo6 bargaining %ower of
su%%iers on account of 1'I reguatory
benchmarks. 'anks have to meet
numerous reguatory standards created by
1'I
Competitive Rivalry' +i/% com%etition of
account of number of %rominent %ubic"
%rivate" foreign aong
with coo%erative
banks
A1aila.ilit
2 of
S0.!tit0
te!
(7igh!
Availability of Substitutes ' +i/%
menace from substitutes ike )'9:s"
(utua funds" @overnment securities and T+
bis
Threat of new entrants + Lo6 threat of
new entrants on account of banking
reguations. 'efore setting u% of
a new bank" it is essentia to take the
consent of 1'I.
P,R5)R$
ANC,
The em%irica studies have found a strong reationshi% between economic growth and #nancia
deveo%ment. 9inance %ays an im%ortant roe in the economic growth. The charts de%ict
the %erformance of 'anke5 in ast 13 year and 1eative %erformance of 'SC 'anke5 D 'SC
Sense5 in 2313+11. The %erformance of 'anke5 acceerated during the %eriod (arch 2332 to
(arch 2336. The %erformance of banke5 deceerated during (arch 2336 G (arch 233= but
thereafter it has shown increasing trend ti (arch 2311.
The four+month %eriod ()ovember 2313+9ebruary 2311! was marked by a consistent decine in
a the indices caused by a number of goba and domestic deveo%ments. The Sense5
decined by 12.;0" whie the 'anke5 Inde5 decined by
16./
0.
Some of the goba factors" such as increase in crude oi %rices and high commodity %rices
contributed to inHation in the domestic economy. 7igh inHation cou%ed with ow growth rate in
the Inde5 of Industria -roduction (II-! and tightening interest rates has caused some concerns
over the short+term economic growth" hitting the stocks in a the sectors" %articuary those in
the #nancia services sector.
Source? 1'I
In recent years" 8e%osit" which constitutes <6 %er cent of tota iabiities of the banking sector
has registered higher growth. The higher growth in de%osits emanated mainy from term
de%osits. The acceerated growth in term de%osit coud be as a resut of higher interest rate
environment. The 8e%osit and 'orrowings chart de%icts that the de%endence
of foreign banks and new %rivate sector banks on borrowings was reativey high as com%ared
with other bank grou%s.
Con!olidated Balan7e S%eet of SCB at t%e end of $ar 2011 R!"
Crore#
Parti70lar! P0.li7
Se7tor
Pri1ate
Se7tor
5orei/n
8e%osits ;/"<2"=62 13"32"<2= 2";3"46=
:ash and 'a. with 1'I /"22"/<= 64"111 23"2=/
Investments 1/"26"2/; ;"22"323 1"42";==
Eoans and *dvances //"32"4/2 <"=<"2/; 1"=2"2/=
Source? 'IS of 1es%ective 'anks (Incude 24 -ubic Sector" 21 -rivate Sector D /4 9oreign 'anks!
12
3
Composition of Deposits (2010-11)
12
3
Deposits and Borrowings (2010-11)
133
63
43
;3
23
89"1
2:"0
92";
9<":
<;"=
>2"0
;>";
;8"2
13
3
63
43
;3
23
>";
8";
:2"<
:;";
1<"
1
<>"
:
1:"=
9="0
3
-S's J-1's )-1's
9's
:*S* Term 8e%osits
3
-S's J-1's )-1's
9's
8e%osits 'orrowings
Source? 1'I K-ubic Sector 'anks (-S's!" Jd -rivate Sector 'anks (J-1's!" )ew -rivate Sector 'anks ()-1's!" 9oreign
'anks (9's!L
&
*
s

0

o
f

t
o
t
a

i
a
b
i

i
t
i
e
s
The other vita factors which determine the %ro#tabiity of banking sectors are net interest
margin ()I(!" o%erating e5%enses and other income. )et Interest (argin ()I(! is used to assess
eMciency of the banking sector. In India" during the ast one decade" )I( was in the range 2.2
%er cent to /.1 %er cent. The )I( of the Indian banking sector continues to be higher than some
of the emerging market economies of the word.
$o1ement! in )(eratin/ ,?(en!e! @
)t%er In7ome
$o1ement in
NI$
Source? 1'I
The asset ,uaity of Indian banks has im%roved dramaticay over the %ast 12 years. The gross
)-* has reduced from
12.<0 in (arch 1==< to 2.22 0 in (arch 2311. The im%rovement in asset ,uaity was visibe in
%rivate sector banks and foreign banks. The asset ,uaity of -ubic sector banks witnessed
deterioration in 2313+11 owing to deterioration in asset ,uaity of the S'I grou%. *gricutura
sector contributed ;; %er cent of the tota incrementa )-*s of domestic
banks in
2313+11.
Trend! in Gro!! Non'Performin/ A!!et!
NPAs recovered as % of previous ear!s gross NPAs
<3
Source? 1'I
42
43
22.4
22
23
44.
1
24.2
24.6
2336 233= 2313
2311
Source? 1'I
&
Capital to Risk Weighted Assets Ratio (CRAR)
The Ca(ital to Ri!k *ei/%ted A!!et! Ratio
:1*1! of a bank grou%s under 'ase I remained
we above the sti%uated reguatory norm of =
%er cent in 2313+11. *mong the bank grou%s"
foreign banks registered the highest :1*1 in
2313+11. To im%rove the ca%ita ade,uacy of the
%ubic sector banks" government infuse cor%us so
that -SU banks can be in a %osition to com%ete
with the other key %ayers. The 1eturn on *ssets
(1J*! of foreign bank is high com%ared to %rivate
and %ubic banks during the %eriod 2334+3< to
2313+2311.
GL)BAL BANKING
TR,NDS
The @oba #nancia crisis makes significant changes in the o%erating framework of banks. The
%erformance of banks im%roves owing to strong ending growth and ow credit osses. The
%resent goba macro+economic situation is differentiated by an unbaanced economic recovery
across advanced and emerging economies" high eves of unem%oyment" inHationary %ressures"
and eevated eves of government debt. The 1eturn on *ssets (1o*!" an indicator of
banking systems %ro#tabiity and soundness showed a moderate increase in the US and 9rance
in 2313. The 1o* of US banks turned %ositive by 2313 after staying in the negative &one in
2336 and 233=N it showed a further
increase in 2311. The 1o* of Indian banks showed a modest rise
between 2336 and 2313.
Ret0rn on A!!et! R)A# of Bank! Bank
Sto7k Indi7e! in Sele7t ,7onomie!
Capital to Risk Weighted Assets Ratio (CRAR)
SourceGI(9"OU%to the %eriod ending (ar 11" P
)ot *vaiabe
Source? 1euters"
8ataStream
K,Y PLAY,RS
PUBLIC
S,CT)R
State Bank of India SBI#
State 'ank of India is the argest banking and #nancia services com%any in India. In addition to
the banking services" the 'ank through their subsidiaries" %rovides a range of #nancia services"
which incude ife insurance" merchant banking" mutua funds" credit card" factoring" security
trading" %ension fund management and %rimary deaershi% in the money market. The State 'ank
@rou%" with over 14"333 branches" has the argest banking branch network in India. The bank
has 1/1 overseas oQices s%read over /2 countries. The bank offers convenience of over 21333
*T(s in India.
The bank has recorded tremendous growth in )et Interest Income. The )et Interest Income has
registered a growth of
/<.;10 from 1s.2/"4<1.;; crores in 233=+13 to 1s. /2"224.;1 crores in 2313+11on account of
growth in interest income on advances and investments. The tota assets of the bank increased
by 14.1<0 from 1s.13"2/";1/.</ crores at the end of (arch 2313 to 1s. 12"2/"</4.23 crores as
at end (arch 2311.
5inan7ial +i/%li/%t!
R!" Crore#
Parti70lar! $ar'11 $ar'10 $ar'0= $ar'0: $ar'0>
8e%osits =//=/2.6
1
63;114.2
/
<;23</.1
/
2/<;3/.=
;
;/2221.3
=
Investments 2=2433.2
<
2=2<62.2
3
2<2=2/.=
4
16=231.2
<
1;=1;6.6
6
*dvances <24<1=.;
2
4/1=1;.1
2
2;223/.2
3
;14<46.2
3
//<//4.;
=
Interest Income 61/=;./4 <3==/.=2 4/<66.;
/
;6=23./
1
/<2;2./
/
Interest C5%enses ;664<.=4 ;</22.;6 ;2=12.2
=
/1=2=.3
6
2216;.1
/
)et -ro#t 624;.22 =144.32 =121.2/ 4<2=.12 ;2;1./1
Ke2 Ratio &#
Parti70lar! $ar'11 $ar'
10
$ar'
0=
$ar'
0:
$ar'
0>
:redit+8e%osit <=.= <2.=4 <;.=< <<.21 </.;
4
Investment I 8e%osit /;.3/ /4.=6 /4./6 /;.61 /6.2
2
Interest C5%ended I Interest
Carned
43.3; 44.44 4<.26 42.2/ 2=.2
<
Interest Income I Tota 9unds <.1; <.3/ <.24 <.4 <.32
Interest C5%ended I Tota 9unds ;.2= ;.4= 2.3= ;.=2 ;.16
)et Interest Income I Tota 9unds 2.62 2./; 2.;< 2.4; 2.6;
J%erating C5%enses I Tota
9unds
2.32 2.31 1.64 2.3< 2./2
)et -ro#t I Tota funds 3.</ 3.=1 1.36 1.3; 3.64
1J). 12.42 1;.6 1<.32 14.<2 12.;
1
Source? :ine
Source? *nnua 1e%ort
Peer Com(ari!on $ar7% 2011#
Parti70lar! State Bank
of
India
P0nAa.
National
Bank
Canara
Bank
Bank of
Baroda
)et -rofit :B2<9";2 ;";//.23 ;"322.6= ;"2;1.46
)II :1B8=9"8< 24"=64.;6 2/"34;.32 21"662.=2
Tota *ssets 1B228B>8<"2
0
/<6"/22.22 //4"3<6.<4 /26"/=<.16
C-S 12<"2> 1/4./< 6=.3< 132./3
:C-S 191":> 1;;.;2 =2.;= 111.;=
-C 21"=2 6.=2 <.3/ =.12
'F 1B028"90 4/2.;= ;32.33 2/;.;/
1J). (0! 12"<2 2;.;2 24.;2 2/.23
Source? :ine
P0nAa. National Bank PNB#
-un>ab )ationa 'ank is one of the big four banks of India. -)' is ranked as the 2
nd
argest bank
in the country after S'I in terms of branch network" business and many other %arameters.
They are recogni&ed as the bank offering highest eves of customer satisfaction in 8ehi and
:hennai. The bank has a wide network of 216= branches which com%rise of
23;< 1ura" 112; Semi Urban" 1111 Urban and 6<< (etro%oitan branches at the
end of (arch 2311.
8uring 9A 2313+11" with /=.140 share of :*S* to domestic de%osits" the 'ank achieved a net
%ro#t of 1s ;;// crore. 'ank has a strong ca%ita base with ca%ita ade,uacy ratio of 12.;20 as
on (ar11 as %er 'ase II with Tier I and Tier II ca%ita ratio at 6.;;0 and /.=60 res%ectivey. *s
on (arch11" the 'ank has the @ross and )et )-* ratio of 1.<=0 and
3.620
res%ectivey.
The 'ank$s tota de%osits amounted to 1s /" 12"6== crore at the end of (arch$ 2311" showing
an absoute accretion of 1s. 4/"24= crore and a growth of 22.20 over %revious year. 1atio of
@ross )-*s to @ross *dvances stood at 1.<=0 at the end of (arch$ 2311" whie the ratio of )et
)-*s to )et *dvances was 3.620.
Canara Bank
:anara 'ank with head,uarter in 'angaore o%erates in four segments"
namey treasury o%erations" retai banking o%erations" whoesae banking
o%erations and other banking o%erations. The bank has a branch network
of /22< incuding ; overseas branches as on
(arch /1"
2311.
The )et %ro#t recorded a //.220 growth of 1s. ;324 crore in 9A 11 com%ared with 1s./321 crore
in 9A 13. The Tota 8e%osits registered a growth of 22./0 to reach 1s.2=/=</ crore as at (arch
2311 com%ared to 1s.2/;421 crore a year ago. The :ost of 8e%osits has decreased from 4.12 in
9A 13 to 2.63 in 9A 11. The :*S* de%osits grew by 21.60 to reach
1s. 6/11< crore as at (arch 2311. The net interest margin has im%roved by /2 b%s from 2.63
in 9A 13 to /.12 in 9A 11.
1.2
3 1.3
4
"#A (%)
1./
3
1.;
2
;33"33
3
/33"33
3
Deposits and Advances
2=/"=</
2/;"42
1
1.33
3.2
3
233"33
3
133"33
3
3
164"6=/
1/6"21
=
212";4<
14="//2
3.3
3
233= 2313
2311
233= 2313
2311
8e%osits *dvances
"
s
$

C
r
o
r
e
1.1
2
1.1
1
1.1
3
1.3
=
1.3
6
1.3
<
1.3
4
Net NPA as % Net Advances
1.3=
1.3
4
1.1
1
14.3
3
12.2
3
12.3
3
1;.2
3
1;.3
3
1/.2
3
1/.3
3
12.2
3
12.3
3
1;.1
3
CA" (%)
1/.;
/
12./6
1.3
2
233= 2313
2311
233= 2313
2311
'ase
II
Source? *nnua 1e%ort
PRI-AT, S,CT)R
ICICI
Bank
I:I:I 'ank Etd is the second argest %rivate sector bank in India by market
ca%itai&ation. They are a %ubicy hed banking com%any engaged in %roviding a
wide range of banking and #nancia services incuding commercia banking and
treasury o%erations. The 'ank has a network of 2"<22 branches
and 6"33/ *T(s in India" and has a %resence in 1= countries"
incuding India.
The net %ro#t for #sca 2311 was 1s. 2121./6 crore" re%resenting a 260
increase over the %revious year because of decrease in %rovisions and contingencies. The net
interest income has increased by 110 from 1s. 611; crore in #sca 2313 to 1s. =31< crore in
#sca 2311. The tota advances grew by 1=.;0 in #sca 2311 on account of strong growth in
domestic cor%orate advances. The return on assets im%roved substantiay to 1./;0 in #sca
2311 from 1.1/0 in the %revious year.
The tota de%osits have increased by 11.<0 from 1s. 232314.43 crore at (arch /1" 2313 to 1s.
222432.11 crore at (arch
/1" 2311. The %ro%ortion of current and savings account de%osits in tota de%osits had increased
from 26.<0 at (arch
/1" 233= to ;2.10 at (arch /1" 2311. The net non+%erforming asset ratio has reduced from
1.6<0 at (arch /1" 2313 to
3.=;0 at (arch /1" 2311. The ca%ita ade,uacy %osition continued to be very strong" with
tota ca%ita ade,uacy of
1=.20 and Tier+1 ca%ita ade,uacy of 1/.20.
Parti70lar! ICICI Bank +D5C Bank A?i! Bank Kotak $a%"
Bank
)et -ro#t 2121./6 /"=24./= /"/66.;= 616.16
)II 22"=<;.32 1="=26.21 12"12;.61 ;"/3/.24
Tota *ssets ;34"2//.4< 2<<"/22.41 2;2"<1/./
<
23"623.44
C-S ;2.=< 61.<2 63.21 11.3;
:C-S ;<.62 =2.;1 6<.24 12./6
-C 22.= 26.4< 1<.2 ;1./6
'F ;<6.2= 2;2.;4 ;42.<< =2.2/
1J). (0! =.42 14.<; 1=./; 1;./=
Source? :ine
Net %nterest %ncome
Deposits and Advances
13"333.
33
6"333.3
3
4"333.3
3
;"333.3
3
2"333.3
3
+
2311 2313 233= 2336
233<
22333
3
23333
3
12333
3
13333
3
2333
3
3
2311 2313 233= 2336
233<
8e%osits *dvances
Capita& Ade'uac "atio (%)
1="1
1>"<
1="9
1=";
;"< ;":
;"9
<"8
18"; 11":
19"0
18"2
2313 2311 2313
2311
'ase I
'ase II Tier+I
Tier+II
2.2
2
1.2
1
3.2
3
Net NPA "atio (%)
233= 2313
2311
Source? *nnua 1e%ort
+D5C Bank
789: 'ank Etd is a ma>or Indian #nancia services com%any based in (umbai.
The 'ank has an enviabe network of 1=64 branches in ==4 Indian cities and 2;<1
*T(s during the year 2313+11. The com%any has recorded an increase of //0
in net %ro#t for 9A 2311 of 1s. /=24 crore over the %revious year. The :a%ita
*de,uacy 1atio (:*1! stood at 14.20 as against the reguatory minimum of
=.30. Jf this" Tier I :*1 was 12.20 as on
(arch /1" 2311.
The tota de%osits have increased by 2;.40 at 1s. 236264 crore and the tota advances were
increased by 2<0 to 1s.
12==6/ crore over (arch /1" 2313. The )et interest income grew by 22.<0 mainy on account
of acceeration in oan growth. The %ro%ortion of core current and savings de%osits (:*S*! to
tota de%osits continued to be heathy at 210 as
on (arch /1" 2311.
43
"
s
$

C
r
o
r
e
"
s
$

C
r
o
r
e
23
;;
;3
/3
23
13
3
CA(A "atio (%)
22
2/
1.6
3
1.4
3
1.;
3
1.2
3
1.3
3
"eturn on Assets (%)
1.2/
1.26
1./3
233= 2313
2311
233= 2313
2311
Net %nterest )argin (%)
2
;.22
;./2
;.22
;
/
Capita& Ade'uac "atio
Tier 1 Tier 2
1<"9;&
1;"82&
1>"99&
1<"22&
8"=;& 8"><& 9"1:&
8"==&
12";0& 11";<& 18"2<&
12"28&
2
1
233= 2313
2311
2313 2311 2313
2311
'ase I
'ase II
Source? *nnua 1e%ort
A?i!
Bank
*RIS 'ank is one of the fastest growing banks in %rivate sector. The bank
o%erates in four segments" namey treasury" retai banking" cor%orateI whoesae
banking and other banking business. The bank
has a very wide network of around 1/=3 branches and 4"2<3 *T(s.
The net %ro#ts have grown at a :*@1 of ;<.220 during ast 2 years. The bank
re%orted a net %ro#t of 1s. /"/66.;= crores for the year ended (arch /1" 2311 over the net
%rofit of 1s. 2"21;.2/ crores in the %revious year. The )et Interest Income increased by /1.1;0
to 1s. 4"242.== crores in 9A 11 from 1s. 2"33;.;= crores in 9A 13.
The bank maintain a heathy asset+,uaity with a ratio of @ross )-*s to gross customer assets
of 1.310 com%ared to
1.1/0 in %revious year and a )et )-* ratio of 3.240 com%ared to 3./40 in 9A 13. The
de%osit and advances has increased by //.=/0 and /4.;60 res%ectivey. The :a%ita
*de,uacy 1atio under 'ase II stood at 12.420 in 9A 11 against 12.630 in 9A 13.
"eturn on Assets (%)
N%) (%)
1.2;
1.;
;
1.4<
1.46
/.;
<
/./
/
/.<
2
/.42
2336 233= 2313
2311
2336 233= 2313 2311
Cost of *unds (%)
Deposits and Advances
4.32
4.23
2.23
;.=4
233"33
3
123"33
3
133"33
3
23"333
3
R
!
"

C
r
o
r
e
233< 2336 233= 2313
2311
2336 233= 2313
2311
8e%osits *dvances
C)NC,
RN
Indian economy is one of the fastest growing economies of the word. The economy with its
varied geogra%hy and demogra%hy has s%ecific re,uirements in order to traverse to the ne5t
orbit and attain its fu %otentia. 'anks enabe to co%e with #nance re,uirement for few
industries such as Infrastructure" 7ousing" 1ea Cstate etc. Indias infrastructura #nancing needs
are not ony huge but aso vita. Traditionay banks have been the ma>or source of infrastructure
#nancing and their e5%osure to infrastructure is aready high at 1< %er cent. There are severa
ma>or concerns which are noted beow.
Inten!if2in/ 7om(etition
Indian banking industry has undergone ,uaitative changes due to banking sector reforms.
Indian banking sector" which is dominated by state+controed banks" has been facing formidabe
chaenges. 8ue to this new emerging com%etition" Indian banks" es%eciay -S's" are trying
their best to im%rove their %erformance and %re%aring to com%ete in the emerging goba
market. )ew %rivate sector banks and foreign banks have more customer+centric %oicies" high
,uaity services" new attractive schemes and com%uteri&ed branches. * these services attracted
more and more customers to their banks.
In this conte5t" there is a need to e5amine the eMciency of %ubic sector banks o%erating in
India. (ainy" com%etition can intensify and banks wi become more eMcient. The transaction
cost of customers coud come down and a bank which is eMcient" nimbe and customer focused
woud aways be abe to do better than others. *s a resut of gobai&ation" many new banks have
entered the Indian banking industry" further intensifying the com%etition.
In7rea!in/ NPA
The asset ,uaity of banks is one of the most im%ortant indicators of their #nancia heath. It aso
reHects the eMcacy of banks credit risk management and the recovery environment. The Indian
banks have shown very good %erformance as far as the #nancia o%erations are concerned. 'ut
)on+%erforming *ssets ()-*! has caused some concerns. 8es%ite write+oQs" gross )-*s have
continued to rise significanty. The new accretion to )-*s has been much faster than the
reduction in e5isting )-*s due to ower eves of u%gradation and recoveries.
To im%rove the banks abiity to manage their non+%erforming assets ()-*s! and restructured
accounts in an eQective manner and considering that amost a branches of banks have been
fuy com%uteri&ed" the 1eserve bank of India in its (onetary -oicy Statement 2312+1/ %ro%osed
the foowing measures?
To mandate banks to %ut in %ace a robust mechanism for eary detection of signs of
distress" and measures" incuding %rom%t restructuring in the case of a viabe accounts
wherever re,uired" with a view to %reserving the economic vaue of such accountsN and
To mandate banks to have %ro%er system generated segmentGwise data on their )-*
accounts" write+oQs" com%romise settements" recovery and restructured accounts.
8es%ite these concerns" it is %ro>ected that the Indian banking industry wi grow through ea%s
and bounds ooking at the huge growth %otentia of Indian economy. 7igh %o%uation base of
India" rising dis%osabe income" etc. wi drive the growth of Indian banking industry in the ong+
term.
BUDG,T
2012'18
The #nancia market %erformance is often considered as a barometer of the economy. The
'anking system is the dominant ife+ine of the #nancia market. The budget 2312+1/ was argey
%ositive for the banking sector. Though no ma>or announcements were made" the 9inance
(inister target to reduce #sca de#cit wi indirecty bene#t the sector as it wi ead to reduced
inHation which in turn wi ead to a reduction in %oicy rates.
'udget 2312 G 1/ has %ro%osed that individua ta5 %ayers be aowed ta5 deductions of u% to 1s
13"333 on interests that they earn from their saving de%osits. This %ro%osa may give some
boost to current and savings accounts (:*S*! de%osits. *ny increase in these de%osits wi
%ositivey im%act the net interest margins of banks. The other ma>or announcement is to set
aside 1s 12"666 crore for reca%itai&ation of %ubic sector bank and the target for agricutura
credit raised by 1s. 1"33"333 crore to 1s. 2"<2"333 crore.
P,ST
ANALYSIS
-oitica
+
(onetary
-oicy
+
1eguator
y
framewor
k
Cconomic
Socia
Technoogi
ca
+
Interne
t
bankin
g
+(obie banking
+*T(
P)LITICAL
ANALYSIS
$)N,TARY P)LICY
(onetary %oicy becomes more restrictive over the %ast years. InHation has remained a
%oicy headache for the government and the centra bank for the %ast two years. InHation
was a %rimary concern among the %oicy makers during 2313+11. InHation" which remained at
eevated eves for a arge %art of 9A11" was argey driven by food and fue items and ater
on transmitted to manufacturing %roducts to become a genera %henomenon. The
average inHation rate in India was <.==0 between 1=4= and 2313.
The 1eserve 'ank of India (1'I! in its annua monetary %oicy for 2312+1/ on (arch 1<" 2312
sashed the %oicy rates by
23 basis %oints. The re%o rate at which banks borrow money from the 1'I now stands at
60 from 6.230 earier. Simiary" the reverse re%o rate at which 1'I borrows money from
banks is now at <0 from <.230 earier. The cash reserve ratio (:11! was eft unchanged at
;.<20.
The 1eserve 'ank of India reduced the :ash 1eserve 1atio (:11! by <2 basis %oints from 2.20 to
;.<2 0 with eQect from (arch 13" 2312. This reduction wi in>ect around 1s.;6"333 crore of
%rimary i,uidity into the banking system to ensure smooth How of credit to %roductive sectors of
the economy. Carier" 1'I in its third ,uarter review in Sanuary 2312 reduced the :11 by 23 basis
%oints from 40 to 2.20 in>ecting a i,uidity of 1s./1"233 crore into the banking system to
mitigate the tight i,uidity conditions" which was the first move in the :11 since it was increased
to 40 in *%ri 2313.
R,GULATI)N
The e5%ected integration of various intermediaries in the #nancia system woud re,uire a strong
reguatory framework. It woud aso re,uire a number of egisative changes to enabe the
banking system to remain contem%orary and com%etitive.
,C)N)$IC
ANALYSIS
The Indian economy has recorded remarkabe
growth over the %ast decade. India$s economic
growth is e5%ected to robust in 2312 and 231/.
The Internationa (onetary 9und (I(9! has %ared
Indias economic growth %ro>ection to 4.=0 in
2312 from its Sanuary estimate of <0" the ony
emerging economy for which it has done so.
'anks %rovide ca%ita formation to various
sectors which directy he% in the growth of
Indian economy.
S)CIAL
ANALYSIS
Indian banking system has been %rogressing
ra%idy. There
are am%e o%%ortunities for the banks to cover unta%%ed rura market. Aet" banking faciities are
not avaiabe in many rura areas. (any farmers are taking oan from moneyender at a very high
rate of interest. Sma+scae industries woud remain im%ortant for banks. :hanges coud be
e5%ected in near future for unorganised sectors.
T,C+N)L)GICAL
ANALYSIS
In recent time" Indian banking industry has been consistenty working towards the
deveo%ment of technoogica changes and its usage in the banking o%erations for the
im%rovement of their eMciency. .ith the a%%ication of new and im%roved technoogies banks
e5%ected to reduce costs" time and give customer satisfaction. :ore banking has changed the
face of banking by oQering vaue added services. :ore banking a%%ications he%s to %rovide
com%ete front and backend automation of banks. Technoogica deveo%ments woud render
How of information and data faster eading to faster a%%raisa and decision+making. This woud
enabe banks to make credit management more eQective" besides eading to an a%%reciabe
reduction in transaction cost.
Internet .ankin/ or banking via the Internet can be considered a
remarkabe deveo%ment in the banking sector. The abiity to
carry out banking transactions through the Internet has em%owered
customers to e5ecute their #nancia transactions within the comfort of
their homes and oQices. In todays busy word" when %eo%e do not
have much time even for %ersona work" Internet banking a%%ears as a
boon.
Internet 'anking he%ed give the customer$s anytime access to their banks. 'ut for Internet
banking there is a re,uirement of a -: I Ea%to% with an Internet connection.
(obie usage has seen an e5%osive growth in economies ike India. India has
reached 6=/.6; miion mobie subscriber mark (Source? T1*I" 8ec 2311! for a
%o%uation of 1.21 biion. .ith $o.ile Bankin/" customer can check their
account baance" transfer funds 2; 5 <" bis %ayments" booking of bus I Hight
tickets" recharge %re%aid mobie and do a ot more effortessy and securey.
'anking through ce %hone bene#ts the banks too. It cuts down on the cost of
tee+banking and is more economica.
AT$ (*utomated Teer (achine! is eectronic machine" which is
o%erated by a customer himsef to de%osit or to withdraw cash
from bank. *T(s reduce the work %ressure on bank$s staQ and
avoid ,ueues in bank %remises. *T(s are of great he% to
traveers. They need not carry arge amount of cash with
them. They can withdraw cash from any city or state" across the
country and even from outside the country with the he% of *T(.
C)NCLUSI
)N
The #nancia sector reforms have brought about significant im%rovements in the #nancia
strength and the com%etitiveness of the Indian banking system. The %rudentia norms"
accounting and discosure standards" risk management %ractices" etc are kee%ing %ace with
goba standards" making the banking system resiient to goba shocks.
In the recent %ast" the Indian banking sector has undergone significant deveo%ments and
investments. In this sector" there are huge o%%ortunities and numerous chaenges. (oney
aundering is a growing menace and it not ony %oses serious threat to the stabiity and integrity
of the financia system but aso to the sovereignty and safety of nations wordwide. In the
coming days" chaenges before banks woud %rimariy ie in saving themseves from the
growing threat of money aundering.