Indian Banking Industry Analysis
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Transcript of Indian Banking Industry Analysis
![Page 1: Indian Banking Industry Analysis](https://reader035.fdocuments.in/reader035/viewer/2022081418/55c7f9dbbb61eb06648b47ad/html5/thumbnails/1.jpg)
BANKING
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OVERVIEW
Important industry- Indian Economy
90%- total financial services sector
Service oriented- 24 Hrs. banking solution
10% Contribution to the GDP
By 2017- CAGR of 18.1%
Potential to become- 5th largest in the world
Consists of :26 public sector, 20 private sector, 43 foreign, 61 regional rural & 90,000 credit cooperatives
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STRUCTURE
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• Controlling money supply in the system• Monitoring different key indicators like GDP and inflation• Maintaining people’s confidence in the banking and financial
system
Regulator- Financial System
• Inflation control• Control on bank credit – CRR and SLR• Interest rate control• Issue currency notes• Control circulation of fake currency
Issuer -Monetary Policy & Currency
• Issue Of License• Prudential Norms• Corporate Governance• KYC Norms• Transparency Norms
Controller & Supervisor
ROLE OF RBI
• Risk Management• Audit and Inspection• Foreign Exchange Control• Development
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COMPETITIVE LANDSCAPE
PUBLIC SECTOR BANKS
Number of banks: 26
Number of branches: 75,779
2000 2013 20250.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
7.50% 6.10% 4.70%
80%73%
63%
12.30%20.90%
32.10%
ESTIMATES OF MARKET SHARES ON LINEAR PRO-JECTION
foreign banks public sector banks private sector banks
17%
16%
23%
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TOP FIVE COMPETITIVE BANKS
PUBLIC
• SBI• Bank of Baroda• PNB• Canara Bank• Bank of India
PRIVATE
• HDFC Bank• ICICI Bank• Axis Bank• Kotak Mahindra• IndusInd Bank
FOREIGN
• Citi Bank• Standard Chartered• HSBC• DBS Bank• Deutsche Bank
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DEPOSITS
2007-08 2008-09 2009-10 2010-11 2011-12 2012-130
10000200003000040000500006000070000
30%31%32%33%34%35%36%37%
PUBLIC SECTOR BANKS
Term Deposits Saving DepositsCurrent Deposits Cost of Funds
(Rs. Billion)
2007-08 2008-09 2009-10 2010-11 2011-12 2012-130
2000400060008000
10000120001400016000
28%
30%
32%
34%
36%
38%
40%
PRIVATE SECTOR BANKS
Term Deposits Saving DepositsCurrent Deposits Cost of Funds
(Rs. Billion)
2007-08 2008-09 2009-10 2010-11 2011-12 2012-130
500100015002000250030003500
36%
38%
40%
42%
44%
46%
48%
FOREIGN SECTOR BANKS
Term Deposits Saving Deposits Current Deposits Cost of Funds
(Rs. Billion)
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PERFORMANCE INDICATORS
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
-100.0 -50.0 0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 400.0
NON PERFORMING ASSETS
Old private sector banks New private sector banksForeign banks in India Series5
(Rs. Billion)
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
2.54 2.56 2.7
3.754
3.39
1.541.85
2.352.68 2.75 2.73
4.63
5.49
4.93 5.094.83
3.92
NET PROFITABILITY MARGIN
Public Sector Private Sector Foreign Sector
(In %)
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PRIORITY SECTOR LENDING
• Specific Sectors Like Agriculture Or Small Scale Industries
2009 2010 2011 2012 20130
200000
400000
600000
800000
1000000
1200000
1400000
1600000
1800000
2000000
ForeignPrivate public sector
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Small Banks & Payment Banks
• a need for transactions and savings accountsObjectives
• registered as a public limited company Registration, licensing and regulations
• successful track record of at least 5 years in running their businesses.Eligibility criteria
• should have a net worth of Rs 100 croreCapital requirement
• cannot undertake lending activities• Invest in Government securities/Treasury Bills with maturity
up to one year Deployment of funds
• majority of independent DirectorsCorporate governance
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Payment Banks
• Increase Financial Inclusion• Savings/Deposits/Payments/Remittances• No Credit Lending
Small banks
• Banking Products• Limited Area of Operations
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NEW LICENSES AND BASEL III
New License Criteria• Promotor Holding – 50% For First 5 Years• Listing To Be Done With 3 Years Of Commencement• 25% Of Branches In Unbanked Rural Centers• Compliance To Priority Sector Lening TargetIn Principle License Granted To IDFC And Bandhan Microfinance In April
2014
24 Pending Applicants
Basel III
• Improve Ability To Absorb Economic And Financial Stress• To Strengthen The Regulation, Supervision And Risk Management• Capital Adequacy And Liquidity Adequacy
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REASONS TO INVEST IN INDIA
India’s Banking Sector Is Constantly Growing
Amended Banking Laws Bill
Robust Demand
Innovation In Services
Business Fundamentals
Policy Support
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