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Banking industry ppt

Banking industry ppt






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    Banking industry ppt Banking industry ppt Presentation Transcript

    • Banking IndustryRecent trends and the road ahead
    • OBJECTIVES Main history of Indian Banking Industry. Past performance and trends. Major changes in recent past. Current scenario. The road ahead and challenges.
    • History and introduction to banking industry Originated in the last decade of the 18th century. The General Bank Of India(started-1786),Hindustan Bank(started -1790). Formation of RBI in1934, got nationalized in January 1949 under RBI act. Nationalization:  Except SBI every other bank was functioning independently.  In 1969 ,14 banks got nationalized.  6 more banks got nationalized in 1980.
    •  Post liberalization era:  Initially 10% FDI allowed, at present 74% with some restriction.  Conversion from 4-6-4 model to 8 to 8 banking(present). Adaptation of technology:  Internet banking  Electronic fund transfer  Automatic teller machines.  Core banking solutions.
    • Past performances and trends80.00 1) Non performing asset70.00  Priority sector worst performer in recent past.60.0050.00  Non priority good40.00 priority performance till 2008. non priority30.00 public  Public sector has been20.00 good and consistent performer throughout.10.00 0.00 2 4 6 8 10
    • Profitability Despite high interest rates and high NPA and high provisioning requirement the banking sector witnessed growth  Growth of investments decelerated  Operating expenses grew at a higher rate  Growth of ‘other income’ decelerated 1. ROA moved from 1.05% to 1.10 % 2. ROE also witnessed improvements.
    • Soundness indicatorsAsset qualityPrivate sector saw a growth, whereas public sector asset quality declined due to higher NPAAgriculture contributed 44% in Higher NPALeverage RatioRemained constant at 6%Credit boomNo chances of credit boom despite higher credit growth
    • CRAR Declined owing to decline in tier2 CRAR ratio. migrating to Basel II framework, the parallel run of Basel I is also continuing as a backstop measure. The CRAR of all bank groups under Basel I remained well above the stipulated regulatory norm of 9 per cent in 2010-1. Under Basel II also, the CRAR of SCBs remained well above the required minimum in 2010-11. This implies that, in the short to medium term, SCBs are not constrained by capital in extending credit
    • Current scenario Indian banking industry maintaining resilience while providing for growth opportunities. Survey by Ficci shows:  Regulatory framework, economic growth and insulation from external market is major reason for the better performance.  Regulatory systems of Indian banks were rated better than China, Brazil, Russia, UK and at par with Japan, Singapore and Hong Kong.  India’s Risk management systems more advanced than China, Brazil and Russia
    • Overview A rigorous evaluation of the health of commercial banks, recently undertaken by the Committee on Financial Sector Assessment (CFSA) also shows that the commercial banks are robust and versatile. The single-factor stress tests undertaken by the CFSA divulge that the banking system can endure considerable shocks arising from large possible changes in credit quality, interest rate and liquidity conditions
    • Current challenges
    • Human resource challanges  Thus, on the whole, we see that Public Sector Banks, Private Sector Banks as well as Foreign  Banks view difficulty in hiring highly qualified youngsters as their biggest HR threat ahead of  high staff cost overheads, poaching of skilled quality staff and high attrition rates
    • Strong pillars
    • Continued
    • Continued
    • Continued..
    • Global expansion
    • The road ahead. Is our banking industry ready for Basel 3 norms Are we ready for IFRS norms. Current and emerging environment offers sound business opportunities to the banks. Opportunities to the new entrants. Improving efficiency. Need to review laws governing the Indian banking sector Banking activities. Credit flow industry.