1. Banking sector performanceafter 1991 economicliberalization in India1/27/2013SUBMITED TO: Dr. Nilanjan SenguptaSUBMITED BY:SECTION (A)GROUP NO.- ONE (1)ABHISHEK MEHROTRA(003)AMRITESH (005)ANSHUL PANDEY(010)APOORV SRIVASTAVA(008)BHARAT SHARMA (011)BISWAJITA MOHANTY (013)LAKSHMI UNNIKRISHNAN W(038)

2. 2Banking sector performance after 1991 economic liberalization in India ACKNOWLEDGEMENT The satisfaction that the successful completion of the task would be incomplete withoutmentioning all those guidance and encouragements which crown the efforts with success. First and foremost we would thank the lord Almighty for His grace, mercy without whichnothing would have been possible. We sincerely bow with reverence to the sanctum of KIAMS for giving us an opportunityto pursue our PGDM course.We are indebted to the Director, Dr. Gopal Iyengar, for facilitating a congenialacademic environment in the college.We will be obliged toDr. Nilanjan Sengupta who has given us the opportunity to make a reporton Banking sector performance after 1991 economic liberalization in India. We would like to say thanks to each other for being patient while doing the group activityand avoiding any type of plagiarism. Last but not the least we would like to thank our parents and friends. GROUP NO.- ONE (1)ABHISHEK MEHROTRA(003)AMRITESH (005)ANSHUL PANDEY(007)APOORV SRIVASTAVA(008)BHARAT SHARMA(011) BISWAJITA MOHANTY (013) LAKSHMI UNNIKRISHNAN W(038) January 27, 2013 3. 3Banking sector performance after 1991 economic liberalization in IndiaINTRODUCTIONTherecannotbeadiscussiononfinancialsectorinIndiawithoutthementionofthebankingindustry.Banking industryis consideredas thebackbone of Indianeconomy.Afterliberalizationofthepoliciesbythegovernment,thebankshavetobemorecompetitiveandperformance-oriented inthenewenvironment.Ithasbecomequitedifficultforthemtosurvive,performandsucceedin themarket.Underthesecircumstances,thereisaneedtohavealookattheemergenceoftheIndianbanking systemrightfromitearly daystillnow.LITERATURE REVIEWConsiderable work of research takes place on efficiency and profitability of banks of Indianbanks as well as other related fields like banking sector reforms etc. Hawast and John (1977) intheir study stated that bank profitability by cost control methods. Varde and Singh (1979) said intheir research that the reason of declining profitability of Indian banks during 1964-77 was lowspread, high manpower and other operational expenses. Shah (1979) linked profitability withbank management, customer service and financial performance.Joshi (1986) stated the discussionand trends in profits and profitability of banks since nationalization. Minakshi and Kaur (1990)attempted to measure quantitatively the impact of the various instruments of monetary policy onthe profitability of banks. They found that banks rate and reserve requirements ratios have playeda significant role in having a negative impact on the banks profitability. Ojha (1992) in his studyattempted to measure the productivity of public sector commercial banks in India like total assetsper employee, total credit and deposits per employee, pre tax and post tax profits per employee,ratio of establishment expenses to working funds and net interest per employee. The study ofPrajapati (1994) was a good attempt of post-liberalization researches made in the area foranalyzing the comparison between the performance and strategies of two banks, although both ofthem operate in the similar microenvironment like common regulated borrowing and lendingrates, statutory reserve requirement, priority sector lending obligations etc. These are someresearches which is done and there are many other who have been contributing till now.HISTORY OF INDIAN BANKINGCommercial banking has been one of the oldest business in India and theearliestreferenceof commercialbanking inIndia canbe tracedin thewritings of Manu. Theestablishment of the General Bank of India in the year 1786 marked thedevelopmentofastructuredbankingsysteminIndia.LatertheBankofHindustanandBengalBankcameintoexistence.TheEastIndia Companyestablishedthreebanks.Thesethreebankswereamalgamatedintheyear1920toformthenewImperialBankofIndia.TheImperialBankwasnationalizedandrenamedastheStateBankofIndiawiththepassingoftheActin1955.TheSwadeshiMovementwitnessedthebirthofseveralindigenousbanks,suchasPunjabNationalBank,BankofBarodaandCanara Bank. In order toincrease itscontroloverthebankingsector, theGovernmentofIndiahadnationalized14majorprivatesectorbankswithdeposits January 27, 2013 4. 4 Banking sector performance after 1991 economic liberalization in IndiaexceedingRs.500millionin1969.Thishadraisedthe numberofscheduledbankbranchesundergovernmentcontrolto84percentfrom31percent. The presentbanking systemcan be classifiedinto thefollowing categories:(i) Public SectorBanks(ii)PrivateSector Banks(iii) Foreign Banks(iv)RegionalRuralBanks(v) Co-operativeSectorBanks(vi)DevelopmentBanks.WhileseveralcommitteeshavegoneintotheproblemofcommercialbanksinIndia,therecommendationsmadebythehighlevelcommitteesonthefinancialsectorreforms,chairedbyMr. M. Narasimham,laidthefoundationforthebankingsector reforms.These were:a) NarasimhamCommittee-I (1991).b) NarasimhamCommittee-II (1998).PHASES OF INDIANBANKINGTheIndianbankingsystemanditsregulationscanbebetterunderstoodwhen dividedintothefollowingtwo phases:Post-NationalizationPost-Liberalization.Theeraofnationalizationcommencedin1969whenthecountrys14majorcommercialbankswerenationalized.Incontinuationofthisprocess,6morebanks werenationalizedin1980. Asaresultofnationalization,theaggregatedepositsofscheduledcommercialbanks(SCBs)whichstoodatRs.4,669croreduringJuly1969touchedRs.2,33,753crorebytheendofMarch1992 (StatisticalTablesrelatingto Banks in India-Various Issues, RBI).Thepoorperformanceofthepublicsectorbankswasincreasinglybecominganareaofconcern.ThecontinuousdeclineofprofitabilityandriseofNon-PerformingAssets(NPAs)ofbanksposedasignificantthreattothestabilityofthefinancial system. Till the early 1990s, the financialsector could be described as a classic exampleoffinancialrepression.WHYLIBERALIZATIONTheGovernmentofIndiaframeditspoliciesintheyear1991-92,keepinginviewthebenefitsofliberalization.Itwasexpectedthatintheprocessofopeningupits economy to theoutside world, increased competition could turn the banks more efficient, bring aboutimprovement and ultimately benefits the customers. Someoftherootcausesthatwerebehindthedullperformanceofthebankspromptedtheinitiationof the bankingsector reforms.Someof these causes were:Greateremphasison directedcreditprograms;Regulatedinterestratestructure;Excessiveregulationson organizationsstructureand managerialresources;January 27, 2013 5. 5Banking sector performance after 1991 economic liberalization in IndiaLackof focus on profitability;Lackof competition;Lackof proper Accountingand Risk ManagementSystem;Lackof operationaltransparency andExcessivesupportfromgovernment.Thereformswereinitiatedwithanaimtobringaboutaparadigmshiftinthe banking industry. Hence,banking reforms were made an integral part of the liberalizationprocess.Thefinancialsectorreformsstartedin1991hadprovidedthe necessary platform for the banking sector tooperate on the basis of operational flexibility and functional autonomy; enhancing productivity,efficiency and profitability.IMPACTOFLIBERALIZATIONONTHEPERFORMANCE OF INDIANBANKINGBanking sector plays animportant role in the economic development of acountry.ThebankingsectorreformsinIndiawerestartedasafollowupmeasureofeconomicliberalizationandfinancialsectorreformsinthecountry.Thebankingsectorbeingthelifelineoftheeconomywastreatedwithutmostimportanceinthefinancialsectorreforms.ThereformswereaimedattomaketheIndianbankingindustrymorecompetitive,versatile, efficient, and productive, to follow international accounting standardsandtofreefromthegovernments control. Thereformsinthebanking industry startedin theearly1990s havebeen continuedtillnow. TheIndianbankingregisteredtremendousgrowthinthepost-liberalizationera.Sincethebeginningof1991,therehasbeenaseachangeintherule,regulation, organization,andscopeandactivitylevelofIndianfinancialsector.TheIndianbanking industryhaswitnessedarapidgrowthaftereconomicreforms.Ithasshiftedfromregulatedtode-regulatedmarketeconomyanddefinedanewroleforthebanks.All these reforms have changed the Indian banking market from Sellersmarket toBuyersmarket. The Narasimham Committee, 1991 h a d r e c o m m e n d e d several reformsi nbanking sectorwith thechangewind of financialsectorreforms. Someof theimportantfinancialliberalizationmeasuresare:Reductionin pre-emptionof funds throughreductionof CRRand SLR.Introductionof prudentialprovisioning and CapitalAdequacy norms.Phasingout thedirectedcreditprograms.Deregulationof interestrates.I n f u s i o n of competition(Entry of PrivateSector Banks).Impartingtransparency.Introductionof universalbanking.Mergersand Acquisitions.Developmentof technology.Emphasison corporategovernance. The winds of change gained momentum in the last few years, such asglobalizationofIndianeconomyandopeningupoffinancialservicesunderWTO.Itis expected that thebanking sector will undergo mergers and acquisitions (M&A), consolidation, globalization of January 27, 2013 6. 6Banking sector performance after 1991 economic liberalization in Indiaoperations, developmentof new technology, bestcorporategovernancepracticesanduniversalization. ThemainobjectiveofoursistomakeasimpleassessmentoftheimpactofthereformsoftheIndianbankingsector.Ithasbeenmorethan18yearsofthestart oftheeconomicreformsin Indiaand financialsector reformswere one of theimportant partsoftheprocess.The present chapter captures the impact of economic liberalization on theperformanceofIndianbankingsectorinthelastdecadeandalsotheimpactofbankingsectorreformsontheIndianbankingsector. Acomparativeanalysisofvariousbank groups withrespect to different variableshasbeentaken. Important indicatorsof scheduledcommercialbanks(SCBs) areanalyzedfrom1969 to 2008. Scheduled CommercialBanks at a Glance(InRs. Crores)IndicatorsJune March March MarchMarchMarch1969 2001 2005 20062007 2008 Numberof Commercial89300289 222183174 Banks (a)Scheduled73296285 218179170 CommercialBanks (b)Non-scheduled16 44 444 CommercialBanks Numberof BankOffices8262 6793770373 716857434677773 inIndia PopulationperOffice(in6415 1616 15 15 thousand) AggregateDepositsof SCBs inIndia 4646 9891411700198 210904926119343196940 (a)DemandDeposits2104 159407 248028364640 429731 524310 (b)TimeDeposits2542 8297341452171 174440921822032672630 CreditofSCB inIndia3599 5292711100428 150707719311902361913 DepositsofSCBsas percentageto GNP 15.556.0 60.065.4 70.174.7 CreditDepositRatio (Percent)77.553.5 62.670.1 73.574.6 SCBsAdvancesto PrioritySector(Rs. 504182255 381476 510175632647 738686 crore) CashDepositRatio(Per Cent) 8.28.46.4 6.77.29.7 PerCapita Depositof SCBs(Rs) 88977016281 191302338228610 TheIndianbankingindustryhadmadesufficientprogressduringthereforms period.TheprogressoftheindustrycanbejudgedintermsofgrowthofCreditand Deposits,Branch January 27, 2013 7. 7Banking sector performance after 1991 economic liberalization in Indiaexpansion,Advancesto Priority Sector, etc.Aggregate Deposits and Credit of Scheduled CommercialBanksAboveshowsthatthedemanddeposits and timedepositsofscheduledcommercialbanks(SCBs)hadincreased.Thegrowthoftimedepositsinabsolutetermshasbeenmorethandemanddeposits.Thehighgrowthoftimedepositsoverdemanddepositsismainlyduetohigherinterestratesbeingofferedbythebanksonsuchdepositsaswell as availability oftaxbenefitstocertaindepositschemes.ThestudycarriedoutbyCRISILrevealedthatgrowthoftermdepositsisduetothesensitivitiesofinterestrate,whileother depositssuchasdemandandsavingsdepositsshownosensitivitiestointerestratemovement.Theinterestrateofferedby the scheduledcommercialbanks(SCBs) on termdeposits on anaveragewas 6to9percentwhichishavingamaturityperiodofthreetofiveyearslookingatthetrendofinterestrateoflastfourtofiveyears.Asaresultofthis,thereisagrowthinaggregatedepositsofscheduledcommercialbanks.AlongwiththeincreaseinaggregatedepositsofSCBs,thecreditofthebanks hasalso increased. Thegrowthofcredithasbeenlargelyduetotherobustgrowthofindustrialsectorsandthegovernmentdecisiontoincrease credittotheagriculturalsectorwhichledtorapid increaseinbankcredit.ThepercapitadepositsofSCBsincreasedfromsimplyRs.88crorein1969toRs.9,770crorein2001andtoRs.28,610croreinMarch2008.Moreover,depositsofSCBsaspercentageofGrossNationalProduct(GNP)atfactorcost(atcurrentprices) hasincreasedfrom15.5 per centin June 1969 to74.7 per centas on March 2008.PrioritySectorLendingTheflowofcredittoprioritysectorsincreasedtoRs.7,38,686croreinMarch2008ascomparedtoRs.1,82255croreinMarch2001andJustRs.504croreinJune1969.CreditflowtotheprioritysectorismainlytoAgriculture,Smallscaleindustries,Housingandservicesector.Theshareofprioritysectoradvancestototalcredithasincreasedto32.9percentasonMarch2008ascomparedto14.00percentinJune1969.Theincreaseshowsmorethandoubletheincreaseinprioritysectoradvancestototaladvancesover40years.Butitremainssameduringthebeginningofpost-reform period totilldate.Credit-DepositRatio Thecredit-depositratio(CDratio)ofallscheduledcommercialbanksoveraperiodoftimehasincreasedfrom53.5percentinMarch2001to74.6percentinMarch2008.Theincreaseindemandforcommercialcreditandalsofoodandnon-foodcredithasledtoanincreaseintotalcreditofscheduledcommercialbanks(SCBs)over the last fewdecades and as a result of this, the credit-deposit ratio continued to increase.Butitstarteddecliningafter2007.Thecash-depositratioduringtheperiodofnationalizationofbanksin1969was8.2percentandthesamehasdeclinedto7.2percentasonMarch2007.Thedeclining trendofcash- January 27, 2013 8. 8Banking sector performance after 1991 economic liberalization in IndiadepositratiorevealsefficientmanagementofcashflowofSCBsduringtheperiodconcerned.Butduring2007-08,thecash-depositratioincreasedto9.7percentascomparedto7.2 percentduringtheprevious year.Thesizeofthebankassetsofaneconomyisameasureoffinancialmaturity.ThesizeofthebankassetsinrelationtoGDPhasimportantimplicationsforfinancialdevelopmentofanyeconomy.InIndia,theratioofbankassetstoGDPofallscheduledcommercialbankswas53.4percentin1997-98anditincreasedto103.3percentin 2006-07.Outof this,publicsectorbanks(PSBs) accountedfornearly80per centassetsasapercentagetoGDP.Inthecaseofpublicsectorbanks(PSBs),theratioofbankassetstoGDPincreasedfrom44.1percentin1997-98to79.6percentin2006-07.TheshareofprivatesectorbanksintheratioofbankassetstoGDProseto17.6percentin 2007frommerely4.8 percent in1998.Theimpactofreforms(Financialliberalization)ontheperformanceofIndian banking sectorwas measured / analyzed on thebasis ofdifferentindicators ofperformance.Tomakeacomparativeanalysisofvariousindicatorsofperformanceofdifferentbanksfrom1997-98to2007-08,thebanksweredividedintofivegroups,i.e.,AllScheduledCommercialBanks,PublicSectorBanks,OldPrivateSectorBanks,NewGenerationPrivateSectorBanks, and Foreign Banks.Tomeasuretheimpactofliberalization,privatizationandglobalizationonthe performanceofIndianbankingsector,thefollowingindicatorswereused toanalyzethe impactof variousreforms:ProfitabilityIndicators.Productivity Indicators.Assets Quality Indicators.(DPrudentialnormslikeCRR,SLR,structureofInterestrates,priority,sectorlendingindicatory,competitionandinstitutionalfeaturesetc.Technology DevelopmentIndicators.PROFITABILITYINDICATORS Profit is the very reason for the continued existence of every commercial organization.Therateofprofitabilityandvolumeofprofits are,therefore, rightly consideredasindicatorsofefficiencyinthedeploymentofresourcesofthebanks. Profitabilityindicatesearningcapacityofthebanks. Ithighlightsthemanagerialcompetencyofthebanks.Italsoportraysworkculture,operatingefficiencyandoverall performanceofthebanks.Various structural factors include geographical spread of bank branches, decentralization inmanagementandstructuralchanges in deposits andadvances.Bankingstructureandprofitabilitystructureofbankingsystemsacrosscountrieshaveabearingontheprofitabilityofbanks.Theprofitabilityofbanksisaffectedbyonewayortheotherbythesefactors.Afterliberalization,profitabilityhasregaineditslostimportance.Nowbanksarebeingdirectedtoachievetheprofitabilitytargets.Sinceallthebanksinthecountryfunctionundersimilarenvironment,thelowperformanceofanybankcanbeattributedtoalarge extenttotheirmanagerialinefficienciesand structuraldeficiency. Theimpactofreformsontheprofitabilityofbankingsectorhasbeenstudiedon January 27, 2013 9. 9Banking sector performance after 1991 economic liberalization in Indiathebasisofvariousvariablesofprofitabilitylikeincome,interestincome,non-interest income, grossprofit,netprofit,spread, expenditure,interest expended, operatingexpenses,costtoincomeaspercentageoftotalassetoffivebankgroupsfrom1997-98 to 2007-08.YEARSIncomeInterestIn Non NetProfit/Loss Expenditure Costto come InterestIncomIncomee2000-01 11.779.272.470.93 10.8460.252001-02 11.448.562.881.32 10.1263.472002-03 10.357.682.641.568.7853.032003-049.556.742.841.657.9048.282004-058.495.942.521.297.1945.292005-068.866.172.651.547.3249.542006-079.906.532.571.67 7.43 51.09 These are as the % of total assets.PRODUCTIVITYINDICATORS Amongvariousproductivityindicators,employeeproductivityindicatorslikebusinessperemployeeandprofitperemployeearemostcommonlyused.Inaddition,businessperbranchand profitperbrancharealsousedtojudgethebranchlevel productivity. SelectedProductivityIndicatorsofScheduledCommercialBanks(Rs.in Lakh) YearBusiness Per Profit Per Business PerEmployeeEmployee Branch 1996-9766 0.41290 1997-9875 0.51449 1998-9984 0.31587 1999-0097 0.51794 2000-01 115 0.51962 2001-02 137 0.92149 2002-03 150 1.22348 2003-04 163 1.52545 2004-05 173 1.32670 2005-06 217 1.53337The business per employee of scheduled commercial banks increased over three-foldinrealtermsfromRs.66lakhin1996-97toRs.217lakhin2005-06,exhibitinganannualcompoundgrowthrateofnearly10percent.Atthesametime,theprofitperemployeeincreasedmorethanfour-fold,fromRs.40000toRs.150000over the sameperiodas shown in Table.BranchproductivityalsoshowedasimilartrendasisevidentfromTable4.14.Businessperbranchincreasedmorethan2.5timesduringtheperiodofstudy.Overall,thefiguressuggestdistinctiveproductivityimprovementsinthebankingsectoroverthe January 27, 2013 10. 10Banking sector performance after 1991 economic liberalization in India reformperiod.Such improvements could be driven by these factors: Technologicalimprovements,whichexpandtherangeofproductspossibilities,andacatchingup effect,aspeerpressureamongstbankscompelsthemtoraisetheproductivitylevel.In thecontextofgradualderegulationsoffinancialsector,severalfactorscouldhavebeen atwork:asignificantshiftofthebest practicefrontier,drivenbyacombinationof technologicaladvances,financialinnovationanddifferentstrategiespursuedbybanks suitedtotheirbusinessphilosophyandrisk-returnprofile,changingcompositionof banksinput- output,andreductionintotalcostduetoimprovementinoverallefficiency. Whileitisdifficulttopinpointtherelativemix ofthesefactorsinraisingproductivity, thebottomlineisclear.Indianbankswitnessedsignificantproductivity improvementsinpost- reformsperiod. ASSETSQUALITYINDICATORS ThemeasureofNon-PerformingAssets(NPAs)explainstheefficiencyin allocationofresourcesmadebythebankstoproductivesectors.TheproblemofNPAs ariseseitherduetobadmanagementbybanksorduetochangeinbusinesscycle.The sharpriseincreditgrowthcontinuedtobeaccompaniedbysignificantimprovementin assetquality.Amongtheseveralchannelsofrecoveryavailabletothebanksdealingwith Non- Performing Loans (NPLs), the Debt Recovery Tribunal (DRT) and the SARFAESIActhavebeen mosteffectivein termsof amountrecovered. YEARS Gross NPAsNet NPAs2000-01 4.90 2.502001-02 4.60 2.302002-03 4.00 1.902003-04 3.30 1.202004-05 2.52 0.922005-06 1.83 0.672006-07 1.46 0.58 These are as the % of total assets. PRUDENTIAL NORMS Sincethebeginningoffinancialsectorreforms,animportanttaskofthepolicy- makers was to bring in an appropriate regulatory framework. The design of an appropriate regulatory frameworkis to encourage competition andefficiencyin bankingservicesandatthesametimeensureasafeandsoundbankingsector.Itmay beverydifficultandcomplexcomponentofbankingsectorliberalizationprocess.TheNarasimham Committee - I report provided guidance on the actual design of the regulatory mechanism. The regulatory framework for banks known as Prudential Regulationintheliterature consistsbroadlyofcapitaladequacynorms,restrictionson the linesofactivitiesthatbankscanparticipatein,restrictiononentryanddeposit insurance.Theprudentialregulatoryframeworkfor banks hasbeendesignedtoaddress theJanuary 27, 2013 11. 11Banking sector performance after 1991 economic liberalization in India following issues: MarketStructure, CapitalAdequacy Norms, Accountingand Provision for NPAs, Supervision of theBanks, and Privatizationof Banks. TECHNOLOGICAL INDICATORS TechnologicalDevelopment in Banks Technologicaldevelopmentandtheuseofinformationtechnology(IT)have transformedthefunctioningofthebankingsectorinthecountry.BanksinIndiahave usedITnotonlytoimprovetheirowninternalprocessesbutalsotoincreasefacilities andservicestothecustomer.Furthermore, thelargescaleincreaseinthenumberof transactionshandledbythebankshasenhancedthedependenceofbankingsectoron moderntechnologiesincludingtheuseofcomputers.Apartfromreducingtransactions cost,theuseoftechnologyhasalsoprovidednewavenuestobankstoexpandtheir outreach,especiallyintheremoteandruralareas.Severalbankshavebeenpositioning themselvesasaonestopshopfinancialserviceproviderwithafairlyexhaustiverange of products. Following technological development is done after liberalization. Computerizationin Banks ComputerizationofBranches inPublicSectorBanks Branches and ATMs ofBanks RealTime Gross Settlement (RTGS) and Other ElectronicTransactions AlthoughcashcontinuetobeusedheavilyinretailtransactionsinIndia,theuse ofchequeandseveralotherpaymentinstrumentssuchaCreditcards,Debitcardsand Smartcards,onthewhole,hasbeenincreasingintherecentyears.Theuseofpayment cards,both involumeand valueterms,morethandoubledin2004- 05.AsaresultofsharpincreaseinRTGSandotherelectronictransactions,the proportionofelectronictransactionsbothinvolumeandvaluehasincreasedsharply. Electronicpaymentsarecheaperascomparedtopaper-basedinstruments.Theycan alsobecarriedoutfasterincomparisonwithpaper-basedtransactions.Theincreaseduseof electronicpaymentshas,thus,increasedtheefficiencyofthe paymentsystem.TheRTGSwasoperationalizedonMarch26,2004.Itsusagefortransferoffunds especially for largevalues andfor systematically importantpurposehas increased sincethen.ThelargevaluepaymentsystemsincludetheRealTimesGrossSettlement (RTGS), governmentsecuritiesclearingandFOREXclearing.TheRTGSsystemhas beeninoperationformorethanfouryearsinceitsoperationalization.RetailElectronicPayment Methods Theuseofelectronicpayments,bothretailandcard-based,increasedinrecent years,reflectingtheincreasedadoptionoftechnology.Theelectronicpaymentsystems suchaselectronic clearingservice(ECS)-bothdebitandcredit,nationalelectronicJanuary 27, 2013 12. 12Banking sector performance after 1991 economic liberalization in India fundstransfersystem(NEFT)andcardbasedpayment(creditanddebit)arebecoming increasinglypopularasindicatedbytheincreaseintransactionthroughretailelectronic paymentmethods.BoththevariantsofECS,i.e.,ECS(credit)andECSdebitfordirect creditsuchassalaryandpensionpayments;andtheotherfordirectdebits,suchas collectionofbills,insurancepremiumandequatedmonthlyinstallment(EMI)payments ofloansarebeingincreasinglypreferred. REFERENCES:RBI,StatisticalTablesrelatingtoBanks in India, Various issues (1997-98 to 2007-08).ReportonTrendandProgressofBankinginIndia,variousissues(1997-98to2007-08).ReserveBank ofIndia, IBA Bulletin(Variousissues)Reserve Bank ofIndia, RBIBulletin(Variousissues)ReserveBankofIndiaReportoftheCommitteeFinancialSystem(Narasimham Committee),1991.January 27, 2013