Banking and Finance

Historical Background
The first bank of limited liability managed by Indians was Oudh Commercial Bank founded in 1881. Subsequently ,Punjab National Bank was established in 1894. In 1906 Swadeshi Movement encouraged the formation of a number of commercial banks .

Banking Crisis
Banking crisis during 1913-17 and the failure of 588 banks in various states during the decade ending 1949 underlined the need for regulating and controlling commercial banks. The Banking Companies Act was passed in February 1949 which was subsequently amended to read as Banking Regulation Act in 1949. The Act provided the legal framework for regulation of the banking system by the Reserve Bank of India(RBI).

Journey of Indian Banking system

From 1786 till today, the journey of Indian Banking System can be segregated into three distinct phases. They are as mentioned below: (I) Early phase from 1786 to 1969 of Indian Banks (II) Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms. (III) New phase of Indian Banking System with the advent of Indian Financial & Banking Sector Reforms after 1991.

Nationalisation of Banks
The Government of India nationalized 14 banks on July 19,1969 and six more on April 15,1980.

First 14 nationalized banks

1) 2) 3) 4) 5) 6) 7) Bank of India Union Bank of India Bank of Baroda Bank of Maharashtra Punjab National Bank Indian Bank Indian Overseas Bank 8) Central Bank of India 9) Canara Bank 10) Syndicate Bank 11) United Commercial Bank 12) Allahabad Bank 13) United bank of India 14) Dena Bank

Second Phase of Nationalization

1) Andhra Bank 2) Corporation Bank 3) New Bank of India 4) Oriental Bank of Commerce 5) Punjab and Sind Bank 6) Vijaya Bank

Reserve bank of India

RBI is the central bank of India which came into existence on April 1,1935 as a privatelyowned bank with only 5 percent shares of the government of India , and a total share capital of Rs. 5 crore .On January 1,1949, RBI became a state-owned bank on account of private share holding by the government.

Functions of RBI
RBI regulates issue of bank notes above one rupee denomination Undertakes distribution of all currency notes and coins on behalf of the government Acts as the banker to the government of India and the state governments, commercial and cooperative banks Formulates and administers the monetary policy Maintains exchange value of rupee Represents India at the International Monetary Fund (IMF)

The following are best banks which are currently operating in India under the guidelines of

Reserve Bank of India (RBI)

Abn Amro Bank In India Allahabad Bank In India American Express Bank In India Andhra Bank In India Bank Of India Canara Bank Central Bank Of India CITI Bank Corporation Bank HDFC Bank

HSBC Bank ICICI Bank IDBI Indian Overseas Bank Oriental Bank Of Commerce Punjab National Bank State Bank Of India (SBI) Standard Chartered Bank United Bank Of India Axis bank

State Bank of India

State Bank of India is the largest public sector bank of India, and was created after nationalization of Imperial Bank of India in 1955.In terms of branches(10,836 branches), it is the largest in the world. The SBI and its associates as a group accounts for around 32.7% of aggregate banking business conducted by the public sector banks (excluding RRBs) and around 23.3% of the aggregate business of all scheduled commercial banks.

Composition of Indian Banking System

As of March 31,2006, there are 218 scheduled commercial banks in the Commercial Banking System of India (including foreign banks). Of the scheduled commercial banks,161 are in the public sector (i.e.nationalised banks and SBI Group) of which 133 are regional Rural Banks(RRBs). The remaining 28 banks in public sector are commercial banking business.

List of Private Banks in India

1) Bank of Punjab 2) Bank of Rajasthan 3) Catholic Syrian Bank 4) Centurion Bank 5) City Union Bank 6) Dhanalakshmi Bank 7) Development Credit Bank 8) Federal Bank 9) HDFC Bank 10) ICICI Bank 11) IDBI Bank 12) IndusInd Bank 13) ING Vysya Bank 14) Jammu & Kashmir Bank 15) Karnataka Bank 16) Karur Vysya Bank 17) Laxmi Vilas Bank 18) South Indian Bank 19) United Western Bank 20) UTI Bank

Foreign Banks in India

Foreign Banks in India always brought an explanation about the prompt services to customers. After the set up foreign banks in India, the banking sector in India also become competitive and accurative. New rules announced by the Reserve Bank of India for the foreign banks in India in this budget has put up great hopes among foreign banks which allows them to grow unfettered. Now foreign banks in India are permitted to set up local subsidiaries. The policy conveys that foreign banks in India may not acquire Indian ones (except for weak banks identified by the RBI, on its terms) and their Indian subsidiaries will not be able to open branches freely.

List of Foreign Banks in India

1) Abu Dhabi Commercial Bank 2) ANZ Grindlays Bank 3) Bank of America 4) Bank of Ceylon 5) BNP 6) Citi Bank 7) China Trust Commercial Bank 8) HSBC 9) Standard Chartered Bank 10) Taib Bank 11) Bank of Nova Scotia 12) ABN-AMRO Bank 13) Deutsche Bank 14) JPMorgan Chase Bank

Banking and Finance - Overview

Financial Services

Commercial Bank
Private banking Investment Banks Bank cards

Investment Services
Asset Management Hedge Fund Managers Custody services

Insurance
Insurance Brokerage Insurance Underwriting

Advisory Services
Stock brokers (private client services) and discount brokers

Credit card machine services and networks

Reinsurance

Evolution of Industry
Flexible exchange rates Further trade liberalization in goods and services Increases in the level of FDI Trade liberalization in financial services Deregulation of financial markets both in developed and in a number of emerging countries Securitization Macroeconomic coordination and global financial stability Consolidation of financial institutions Increased mergers and acquisitions The gradual integration of stock markets around the world Internalization of the securities markets An increase in the role of corporate governance in national and international investment strategies Regional integration such as those experienced in Europe, Asia and America The Asian currency crisis and the call for a New International Financial Architecture Coordination amongst the central banks through the BIS and financial globalization are amongst some of the developments

Major Players
Global
JP Morgan Chase Bank of America HSBC Citigroup Deutsche Bank Goldman Sachs Morgan Stanley Merrill Lynch BNP Paribas

Indian
SBI ICICI PNB HDFC Bank of Baroda Corporation Bank IDBI UTI

Market Share
Top ten banking groups in the world ranked by tier 1 capital
Tier 1 Capital (US$ billions)
73 69 67 64 63 43 40 39 36 35

Rank 1 2 3 4 5 6 7 8 9 10

Company Citigroup JP Morgan Chase HSBC Bank of America Credit Agricole Group Royal Bank of Scotland Mitsubishi Tokyo Financial Group Mizuho Financial Group HBOS BNP Paribas

Country US US UK US France UK Japan Japan UK France

India - Strategic Map

Citibank

High

Stan C HSBC ICICI Bank Karur Vysya

ABN Amro

HDFC
IndusInd Bank

Service Quality

Vysya Bank State Bank of India Bank of Baroda

Bank of India
PNB Andhra Bank Canara Bank Co-operative Banks

Low

Rural Banks

Rural

Regional Geographical Spread

Urban

Global Finance Industry

Increased Fee Revenue is the Goal as One-Stop Shopping is Offered by Financial Services Firms, including Banks plus Traditional and Discount Brokerages - Meanwhile, Financial Planning and Private Banking are Targeted Branch Banking Booms Property and Casualty Underwriters Recover from a Disastrous 2001 Insurance Sells Well on the Internet

The India Scenario - A Comparison

Only one Indian Bank in the top 100 Banks in the world India's best and brightest, the SBI, is roughly one-tenth the size of the world's biggest bank - Citigroup Six Chinese banks feature among the top 25 Asian banks while India has only two representatives - SBI and ICICI Bank. Similarly, SBI's consolidated pre-tax profit is $1.9 billion against Citigroup's $29 billion, Bank of America's $25 billion and HSBC's $21 billion The one area where Indian banks are able to compete with their global peers is their return on assets (RoA). Among big Indian banks, ICICI Bank, PNB, Canara Bank and HDFC Bank have a return on assets of over 1 per cent return, while SBI's return on assets is 0.89 per cent. Among Indian banks, HDFC Bank has the highest return on assets -- 1.71 per cent. This is lower than that of Citigroup (1.97 per cent) but much better than the RoA of HSBC (1.40 per cent). Our banks are small but efficient. However, if the economy has to grow at over 8 per cent, they must build the scale. India Inc has already announced over Rs 650,000 crore (Rs 6,500 billion) of investment plans. Without the scale, local banks can't possibly support this growth story

Key Success Factors

Consolidation: Achieving Strategic Balance Retail Renaissance: Bonding with Customers The Offshoring Decision Transforming the Finance Function Monitoring Credit Quality Achieving Comprehensive Governance of Risk Management Corporate Governance