BANKING INDUSTRIES

4.  Modern banking in India originated in the last decade of
the 18th century. Among the first banks were the Bank of
Hindustan, which was established in 1770 and liquidated in
1829–32; and the General Bank of India, established in
1786 but failed in 1791
 The largest and the oldest bank which is still in existence
is the State Bank of India (SBI). It originated and started
working as the Bank of Calcutta in mid-June 1806. In 1809,
it was renamed as the Bank of Bengal. This was one of the
three banks founded by a presidency government, the
other two were the Bank of Bombay in 1840 and the Bank
of Madras in 1843. The three banks were merged in 1921 to
form the Imperial Bank of India, which upon India's
independence, became the State Bank of India in 1955. For
many years, the presidency banks had acted as quasi-
central banks, as did their successors, until the Reserve
Bank of India[5] was established in 1935, under the Reserve
Bank of India Act, 1934.

5.  In 1960, the State Banks of India was given control of eight state-
associated banks under the State Bank of India (Subsidiary Banks)
Act, 1959. These are now called its associate banks.[6] In 1969,
the Government of India nationalised 14 major private banks;
one of the big banks was Bank of India. In 1980, 6 more private
banks were nationalised.[8] These nationalised banks are the
majority of lenders in the Indian economy. They dominate the
banking sector because of their large size and widespread
networks.[9]
 Despite the provisions, control and regulations of the Reserve
Bank of India, banks in India except the State Bank of India (SBI),
remain owned and operated by private persons. By the 1960s, the
Indian banking industry had become an important tool to
facilitate the development of the Indian economy. At the same
time, it had emerged as a large employer, and a debate had
ensued about the nationalization of the banking
industry.[21] Indira Gandhi, the then Prime Minister of India,
expressed the intention of the Government of India in the annual
conference of the All India Congress Meeting in a paper
entitled Stray thoughts on Bank Nationalization.[22][23]

6.  In the early 1990s, the then government embarked on a
policy of liberalisation, licensing a small number of private
banks. These came to be known as New Generation tech-
savvy banks, and included Global Trust Bank (the first of
such new generation banks to be set up), which later
amalgamated with Oriental Bank of Commerce, IndusInd
Bank, UTI Bank (since renamed Axis Bank), ICICI
Bank and HDFC Bank. This move, along with the rapid
growth in the economy of India, revitalised the banking
sector in India, which has seen rapid growth with strong
contribution from all the three sectors of banks, namely,
government banks, private banks and foreign banks.
 The next stage for the Indian banking has been set up,
with proposed relaxation of norms for foreign direct
investment. All foreign investors in banks may be given
voting rights that could exceed the present cap of 10% at
present.[26] In 2019, Bandhan bank specifically, increased
the foreign investment percentage limit to 49%.[27] It has
gone up to 74% with some restrictions.

7.  Nationalized BANK Marge

9. Banks
Commercial
Banks
Scheduled
Banks
Indian
Banks
Public
Sector
State Bank
of India
Nationalized
bank
Private
Sector
Foreign
Banks
Non
Scheduled
Banks
Regional
Rural Banks
Cooperative
Banks

10. INDIAN BANKS
 Registered or incorporated in
India.
 They have their headquarter
in India and can have
branches all over India.
 They can also operate in
foreign countries.
FOREIGN BANKS
 Registered or incorporated in
their home country, not in
India.
 They have their office and/or
branches in India.
 They play an important role in
shaping the attitude and
policies of foreign govt.,
companies and their clients
towards India.

11.  In 1969, 14 banks with depositbase
of Rs. 50 Crores or more were
nationalized. In 1980,, 6 more
banks were nationalized.
 This step brought more than 90% of
commercial banking in the public
sector.
 The main function of nationalised
bank is provide finance for the
housing projects, health facilities
and increase the chance to
providinig the products and
services to the people of ruralareas.

12.  They were set up on the
recommendation of Narasimham
Committee in 1975.
 The objective was to provide credit
and other facilities to small and
marginal farmers, agricultural
labours and artisans.
 RRBs are working in all states
except GOA and Sikkim.
 They are governed by Regional
Rural Bank act, 1976
 50% capital is provided by central
govt., 15% by state govt., 35% by
sponsoring public sector bank.
 Features of RRB:
  The area of RRB is limited to
only a region, comprising of some
district of a state
  These banks grant loan only
to the rural agriculture sector and
small artisans.
  The lending rates would be
some what lower than the
commercial banks.
  These are intended to
eliminate money lenders.
  These banks are to supplement
the
 effort of cooperative banks.

15.  Commercial Banks
are like other financial
institutions ( e.g.:
money lenders,
indigenous bankers,
cooperative societies,
agricultural and
industrial credit
institutions) which are
in the business of
lending and borrowing
of money or credit
..

16. • Accepting deposits
• Advancing Loans
• Discounting Bills of exchange
• Agency services
• General services

17. • Accepting Deposits
Demand or Current Account Deposits:
- A depositor can withdraw it in part or
in full at any time he likes without notice It
carries no interest
-Only small savings of businessmen
Cheque facilities

18. – Fixed deposits for 15days to few years
– Withdrawn at expiry of term
– High rate of interest
– A source of investment

19. • small saving deposits
• salaried people
• less rate of interest
• money can be withdrawn
• through cheques

20. • Collection of bills, cheques
• Collection of dividends, interest, premium
• Purchase and sale of shares and
debentures
• Payment of insurance premiums
• Acts as trustee when nominated

22. • It measures the ability of a company to use its near cash or
quick assets to extinguish or retire its current
liabilities immediately
• Include those current assets that presumably can be quickly
converted to cash
• Quick Ratio = (Cash Equivalents + Short term investments +
Accounts receivable )/ current liabilities
18
16
14
12
10
8
6
4
2
0
Mar'08 Mar'09 Mar'10 Mar'11 Mar'12
HDFC
ICICI
Investors
22
Manager
Creditors

23. 23
• Analyzes how effectively the business is managing its
assets to produce sales.
• If too much has been invested, the operating capital is
high
• If invested too low, it may affect sales hurting the
profitability
• There are various efficiency ratios
– Inventory Turnover ratio
– Revenue per employee
– Receivables Turnover
– Assets Turnover

24. • The amount of sales generated for every
dollar's worth of assets
• It indicates the effectiveness of the firm’s use
of its total assets to create revenue
• Asset turnover = Sales/Assets
1
0
2
3
4
5
6
Mar'08 Mar'09 Mar'10 Mar'11 Mar'12
HDFC
ICICI
Investors
24
Creditors
Manager

25. Margins
• Gross profit margin
• Operating profit margin
• Net profit margin
Returns
• Return on assets
• Return on equity
25

26.  Net Profit margin
18
16
14
12
10
8
6
4
2
0
2008 2009 2010 2011 2012
Net Profit Margin
Net Profit Margin
15.93
16.09
14.76
11.35
12.82
Investors
Manager
11

27. • The amount of earnings per each outstanding
share of a company's stock
• Earning Per Share EPS=PAT/No. of outstanding
shares
20
10
0
30
40
50
60
2008 2009 2010 2011 2012
HDFC
ICICI
Investors
Manager
27

28. • It shows the relationship of the total assets
of the firm to the portion owned by
shareholders
• It indicates a company's leverage, the amount
of debt used to finance the firm
• Asset-to-Equity Ratio = Total Assets/Total
Shareholders' Equity Investors
Creditors
2
0
4
6
8
14
12
10
2007-08 2008-09 2009-10 2010-11 2011-12
HDFC
ICICI
28

29. • A financial ratio indicating the relative proportion of
shareholders' equity and debt used to finance a company's
assets
• The two components are often taken from the firm's balance
sheet or statement of financial position (book value)
• Debt-to-Equity Ratio = Long Term Debt/Equity
4
2
0
6
8
10
12
2008 2009 2010 2011 2012
HDFC
ICICI
Investors
Creditors
29

30. • A risk ratio that help determining the firm's ability to repay its
debt obligations
• Interest coverage ratio = Profit Before Interest and Taxes/
Interest Expenses
0.60
0.40
0.20
0.00
0.80
1.00
1.40
1.20
1.60
1.80
2011-12 2010-11 2009-10 2008-09 2007-08
HDFC
ICICI
Investors
Creditors
30

31. Ratio Investors Creditors Manager(Internal)
Liquidity ratio
Profitability ratio
Efficiency ratio
Capital ratio
Cash flow
31