8/3/2019 Banking Ppt 2011
http://slidepdf.com/reader/full/banking-ppt-2011 1/16
PREPLACEMENT TRAINING - 2011
Dr. K. Sriharsha ReddyProfessor & Head
Department of Business Management,MIPGS
Saidabad, Hyderabad.
8/3/2019 Banking Ppt 2011
http://slidepdf.com/reader/full/banking-ppt-2011 2/16
Evolution and progress ofIndian banking
8/3/2019 Banking Ppt 2011
http://slidepdf.com/reader/full/banking-ppt-2011 3/16
As at the end of March 2007: 20 nationalized banks, 8 SBI banks, 17 old privatesector banks, 8 new private sector banks, 29 foreign banks, 96 regional ruralbanks.
STRUCTURE OF BANKING IN INDIA
8/3/2019 Banking Ppt 2011
http://slidepdf.com/reader/full/banking-ppt-2011 4/16
Back drop of reforms since 1991
• In the beginning of 1990, the social banking goals setfor the banking industry made most of the public sectorbanks unprofitable.
• Reasons for poor performance of banks
(1) high cash reserve ratios and statutory liquidityrequirements(2) low yields on government bonds (as compared withthose on commercial advances);(3) directed and concessional lending;
(4) administered interest rates; and(5) lack of competition.
8/3/2019 Banking Ppt 2011
http://slidepdf.com/reader/full/banking-ppt-2011 5/16
Summary of banking sectorreforms since 1991 …
• First, the CRR declined from 15% in 1991 to 5.0% in2006. The SLR also declined, from 38.5% in 1991 to25% in 1997, remaining at this level until today .
• Decline in the CRR and SLR increased banks flexibility
in allocating credit and improved their profitability.
• Second, interest rates became flexible as to almost allterm deposits rates and lending rates on advances inexcess of Rs200,000.
• Interest rate deregulations have encouraged banks toimprove their cost efficiency and diversify their businessinto non-traditional areas.
8/3/2019 Banking Ppt 2011
http://slidepdf.com/reader/full/banking-ppt-2011 6/16
• Third, reform in priority sector lendingmainly through the expansion of coverageand interest rate decontrols on advancesin excess of Rs200,000 helped banks tomitigate the negative impact arising fromsuch policy loans.
• Fourth, entry barriers were reduced forprivate sector and foreign banks. Theentry of new banks has increasedcompetition. Public sector banks wereallowed to rationalize some branches,while branch licensing was removed.
8/3/2019 Banking Ppt 2011
http://slidepdf.com/reader/full/banking-ppt-2011 7/16
• Fifth, various prudential norms and moreappropriate accounting standards wereintroduced.
• Better accounting standards haverevealed some of the true status of NPAproblems of public sector banks.
• This enabled the Government to imposeappropriate policies to deal with NPAproblems.
• Sixth, the Government recapitalizednationalized banks and public sectorbanks have been partially privatized.
8/3/2019 Banking Ppt 2011
http://slidepdf.com/reader/full/banking-ppt-2011 8/16
Return on Assets (ROA)
-4
-3
-2
-1
0
1
2
3
1 9 9 2
1 9 9 4
1 9 9 6
1 9 9 8
2 0 0 0
2 0 0 2
2 0 0 4
2 0 0 6
2 0 0 8
SBG
NB
PBFB
ASCB
8/3/2019 Banking Ppt 2011
http://slidepdf.com/reader/full/banking-ppt-2011 9/16
Net Interest Margin (NIM)
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
1 9 9 2
1 9 9 4
1 9 9 6
1 9 9 8
2 0 0 0
2 0 0 2
2 0 0 4
2 0 0 6
2 0 0 8
SBG
NB
PB
FB
ASCB
8/3/2019 Banking Ppt 2011
http://slidepdf.com/reader/full/banking-ppt-2011 10/16
Operating Cost Ratio (OCR)
0
2
4
6
8
10
12
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
SBIG
NB
PB
FB
SCB
8/3/2019 Banking Ppt 2011
http://slidepdf.com/reader/full/banking-ppt-2011 11/16
Growth of assets in Indian banking
58238 292770
1152604
2875520
5241331
0
1000000
2000000
3000000
4000000
5000000
6000000
1980 1990 2000 2006 2009
Assets in Rs Crs
8/3/2019 Banking Ppt 2011
http://slidepdf.com/reader/full/banking-ppt-2011 12/16
Asset Structure of IndianCommercial Banking System
31.2
59.1
4.9 3.8
33.2
55.7
3.3 5.4
29.1
48.1
6.7
5.1 7.1
24
46
5.2
14.6
6.9
0
10
20
30
40
50
60
1980 1990 2000 2006
SBI
NB
OPB
NPB
FB
8/3/2019 Banking Ppt 2011
http://slidepdf.com/reader/full/banking-ppt-2011 13/16
Bank group wise deposits of Scheduled CommercialBanks to Total Deposits in percentages
27.4
64.4
2.95.3
29.3
63.2
2.94.6
28.1
63.6
4.43.9
27.8
58.2
6.97.2
28.5
53.4
5.5
12.6
27.6
50.7
4.7
17
25.1
51.7
4.5
18.5
0
10
20
30
40
50
60
70
1980 1985 1990 1995 2000 2005 2006
SBI & itsAssociates
Nationalized
Foreign
Domestic
private
8/3/2019 Banking Ppt 2011
http://slidepdf.com/reader/full/banking-ppt-2011 14/16
Bank group wise share of advances of scheduledCommercial banks to Total advances in percentages
0
10
20
30
40
50
60
70
1980 1990 2000 2002 2004 2006
SBI & its AssociatesNationalized
Foreign
Domestic private
8/3/2019 Banking Ppt 2011
http://slidepdf.com/reader/full/banking-ppt-2011 15/16
NPA s of Scheduled Commercial Banks aspercent of Net Advances (Bank Group-wise)
0
1
2
3
4
5
6
7
8
9
1998 2001 2003 2005 2007 2009
PSBFB
DPB
ASCB
8/3/2019 Banking Ppt 2011
http://slidepdf.com/reader/full/banking-ppt-2011 16/16
7830715197>10
1---1-8-10
------4-8
------< 42008-
09
421681242>10
331217768-10
93-33-4-8
8--35-< 41995-
1996
SCBFBNPBOPBNBSBGBankGroup
Year
Distribution of Scheduled Commercial Banks by CRAR