Introduction

According to the Reserve Bank of India (RBI), Indian banking sector is well capitalized and well-
controlled. The country's political and economic conditions are much greater than any other country
in the world. Credit, market and liquidity risk analysis propose that Indian banks are commonly
versatile and have withstood the worldwide downturn well.

Indian financial industry has seen the development of creative financial models like instalments and
small finance banks. RBI's new measures may go far in helping the rebuilding of the local financial
industry.

The advanced instalments framework in India has developed the most among 25 nations with India's
Immediate Payment Service (IMPS) being the main framework at level five in the Faster Payments
Innovation Index (FPII).

In addition to the co-operative credit institutions, the Indian banking system comprises 27
government banks, 21 banks, 49 foreign banks, 56 national rural banks, 1,562 urban co-operation
banks and 94,384 rural co-operative banks.

Indian banks are focusing more and more on an integrated risk management strategy. The
international Banking Compliance Agreement of Basel II is already signed by banks, and most
financial institutions have met Basel III's capital requirements, which is 31 March 2019 deadline.

A comprehensive credit information database that is open to all concerned parties has now been
decided by the Reserve Bank of India (RBI), which formed the Public Credit Registry (PCR). Insolvency
and bankruptcy code (amendment) Ordinance Bill 2017 has been introduced and is intended to
improve the banking sector.

Profit is said to be a reward for bearing risks, but this is not true for the banking industry. Banks are
exposed literally to different types of risk. A good banker can mitigate these risks and regularly
produce valuable returns for shareholders. Risk reduction starts with the proper definition of the
threats, why and what harm they can do.

Credit Risk
Credit risk is the risk that emerges from the chance of non-instalment of advances by the borrowers.
Even though credit risk is to a great extent characterized as risk of not accepting instalments, banks
likewise incorporate the risk of deferred instalments inside this class.

Market Risk
Besides loans, banks still hold a significant share of securities. These securities are held as a result of
the bank's treasury activities or as collateral based on which banks have lent their clients. In different
ways, banks face market risks. When they hold large stocks, banks may hold foreign exchange that
exposes them to Forex risks. They are subject to equity risk. Likewise, banks lend items such as gold,
silver and immovables, which expose them to commodity risk. Banks use hedging contracts to
minimize these risks. They are free to sell financial derivatives in any stock market

Operational Risk
To order to be competitive, banks must conduct huge business. In terms of larger banks, economies
of scale work. Therefore, it is exceedingly difficult to establish consistent internal processes on such
a broad scale. Business risks emerge due to fails in the day-to-day operations of the bank. Examples
of operational risk include payments to the wrong account or incorrect order execution when on the
market. It is primarily because of the deployment or possibly because of the failure of information
systems that organizational risks occur.

Liquidity Risk
Liquidity risk means that, if the payers come to withdraw their money, the bank would not be able to
fulfil its obligations. The fractional reservation banking structure is inherent in the risk. Just a
proportion of the deposits obtained in this scheme is held in stocks, with the rest being used as
loans. Thus, if all the institution's depositors went in to withdraw their money at once, the bank
would not have any capital. The possibility of liquidity is not troubling for modern day banks. This is
due to the central bank's support. If a bank fails, the central bank transfers all its money to the bank
in question.

SWOT Analysis of Indian Banking Sector

Strength
 One of the oldest industries which initially started with bartering and trading, but now much
more. Banks offer value for money, and access to credit to pursue our goals, savings and bond
services.
 Banks act as a leader in economic growth and this growth has been fostered because of
increased in financial trade and stability with supply and demand. The rise in jobs and
elimination of global poverty are also one factor behind the growth.
 Banks gives financial support to their customers to return to their feet after a crisis or a natural
disaster by lending loans.
 Online banking is now simpler than ever. Without entering the branch of your bank, you can
deposit your check and pay your bills and apply for your credit card.
 Foreign investment in finance was assisted by the strong and stable Indian rupee, as well as its
potential for growth.

Weakness
 Banking is controlled by public sector banks, but the profitability of these banks is
threatened by high rates of unsustainable loans-part of which are triggered by the political
push to satisfy farmers with credit waivers-and a low level of non-providing loans.
 The average 2% of the expenditure on equity funds hampers small investment growth.
 There has been confusion among retail investors with the high number of mutual fund
structures, which discourage investments and constrain growth.
 Bank face lack of coordination with the rest of the world because they regulate finance and
heavily dependent on economic cooperation, but it is a global issue. About 50% of the world
economy is owned by Europe. When it faces a recession, proxies would be willing to sacrifice
for the rest of the world (and banks). The banks will also find it difficult to fluctuate
currencies and exchange rates.
 Old technology used by the bank act as a vulnerability. Many banks still host online services
with outdated IT infrastructure.

Opportunities
  There is continuing the liberalization of the banking and insurance industries, with a rising
position for private firms and the divestment of stakes in government firms.
 As an investment target for mutual funds and pension funds, equities are becoming
increasingly relevant and that drives growth in capital markets.
 Potential increase in the cap on foreign investment, up from 49%, would attract
foreign entities.

Threats
 In the agriculture sector, which is 60 percent rain-fed and heavily impacted by monsoons,
the economy is also highly impacted.
 Poor weather can cause inflation in food prices and undermine incomes of much of the
income-dependent 50 percent of the population.
 It is doubtful that drives to collect government taxes and black money would help invest.
 Indeed, during times of political turmoil abroad, India is vulnerable to inflation due to
electricity prices and oil prices.
 A recession is the biggest challenge to any money processing industry by this a company can
build or break. It will have a direct effect on the banking industry if SMEs and large
companies collapse.
 Infringements of records is raised as data supplied by the banks is through more online
options. People provide their banks with other websites such as invoicing firms (e.g. PayPal).
If the business splits, hackers have access to personal accounts of the bank. While banks
cannot do anything about breaches of other websites, they can ensure their own website is
heavily secured from hackers

SWOT Analysis of SBI Bank

Strength:
 In terms of overall industry, revenue, and resources, SBI is the largest bank in India.
 The bank has more than 13,000 outlets and 25,000 ATM centres according to ongoing
statistics.
 In 32 countries worldwide, the bank is of quality in connection with the exchange of
currency.
 The bank has come together with the state bank of Saurashtra, Indore and in the new
FY2012 it wants to go further.
 In corporate banking administration, SBI has the main motor advantage.
 SBI late modified its vision and statements of intent, suggesting the movement towards
banking new-age administrations.

Weakness
 In comparison to private banks, there is no valid innovation-driven governments.
 Staff show caution in addressing problems quickly, because professional reliability is higher,
and customers are longer than private banks.
 The banks invest a large amount on their leased facilities.
  SBI has the highest number of workers in the banking sector, which then spends half of its
income on the salaries of members.
 Any modernisation, the bank often transmits new-age customers to the old bank.
 The SBI refuses to draw up client payroll accounts, and several part-workers in the
administration are now moved to a private bank, not as before, for the ease of business.

Opportunities
 The merger of SBI with five more banks is being planned in support to be the Real
Hyderabad State Bank, Patiala State Bank, Bikaner State Bank and Jaipur, Travancore State
Bank and the Mysore State Bank.
 Merger must expand the industry to secure its principal role.
 Owing to strong cash inflow from the Asian sector, SBI aims to grow and put money into
global tasks.
 As the bank does not yet modernize many of its financial activities, trend-setting
technologies and programming are being employed in a superior way to enhance customer.
 A young and capable pool of graduates and B schools is rapidly opening new horizons for
the supposed 'old state bank.'

Threats
 From 9166.05 in 2010 to 7,370.35 in 2011, net profit of the year has decreased.
 It reflects the diminution of its close competitor ICICI in a portion of the entire industry.
Other private banking institutions such as HDFC, AXIS bank, etc.
 FDIs in the banking division allowed are increased to 49 percent, a major risk for SBI, as
people usually move to external banks to boost banking offices and advancements.
 There are many government banks such as PNB, Andhra, Allahabad Bank, and Indian banks.
 As SBI includes strict validation methodology and a significant amount of planning activities,
customers want to switch into private banks and money-linking specialist organizations for
credits and house loans.