SlideShare a Scribd company logo
Doing Business in India The Big Picture A Banker’s Perspective US – India Business Summit November 29, 2006 Dr. Anil K Khandelwal Chairman & Managing Director Bank of Baroda
Indian Economy – A Snapshot One of the fastest growing in the world Consumption growth fuelling economic growth – consumption expenditure forming 78% of GDP Services sector contributing over 60% to GDP Emerging as a  hub of manufacturing excellence. new growth engines of Indian economy include IT, ITes, pharmaceuticals, bio-technology,  nano technology, agri. businesses Where forces of competition are at work Innovation driving enterprises Economic reforms well on course – entering second phase           
“ Inclusive growth” occupying central place High untapped potential in rural / agri - economy  Indian companies on acquiring spree and going global Indian companies pursuing global best practices and producing world-class managers Indian Economy – A Snapshot
Improved Ranking on Business Front World Bank – IFC Report on Doing Business in India for 2007 has given a higher rank to India compared to last year because : - India has cut the time to start a business from 71 to 25 days Reduced the Corporate Income Tax rate from 36.59% to 33.66% Supreme Court’s decision has made enforcing collateral simpler – easing access to credit Reforms to Stock Exchange Regulations have toughened investor protection
The Indian Financial  Sector Robust financial system Well established institutions Strong supervisory system Progressive integration of financial markets  - banking, insurance, mutual  funds, securities, commodities High competition  marked  by innovation  High technology absorption Rediscovery of the Indian customer 21 st  century customer driving innovations in banking Banking plus financial services becoming the new offerings
The Indian Financial  Sector Alternate e-delivery channels becoming popular with Indian customers Financial sector bracing to meet life cycle and life style needs of the great Indian middle class “ Cradle to Grave” becoming the new spectrum of life cycle needs Banking graduating beyond traditional boundaries of vanilla banking Indian customer demanding   TOTAL FINANCIAL SOLUTIONS Banking sector bracing itself to offer customized and structured products
The Indian Financial  Sector Banking sector entering newer areas like wealth management, private banking, doorstep banking, electronic banking, credit cards, investment advisory services, etc. Indian banks in a war game to acquire and retain customers Indian middle class being reached out and  wooed by banks  Indian middle class and financial sector beginning to dream together and weave a new bond of relationship Financial products like mutual funds, life policies, non-life policies competing with traditional banking products Banking sector fully geared for helping Indian middle class realize its dream Banking sector in good health – with low non-performing assets and prudential accounting standards in place Indian banking entering the phase of consolidation  (2 nd  Phase of Reform)  – on  way to acquire global size
Robust & Resilient Banking Sector A free & open banking sector where most businesses are now covered at the market-determined rates Full banking license system Highly Stable Sector despite a series of Exogenous Shocks like the Asian Crisis, Sanctions due to Nuclear Explosions, Record High Oil Prices and Large Corrections in Stock Markets Significant improvement in the Asset Quality: Net NPAs (%) have decreased from 8.1% at end-March 1997 to 2.0% at end-March 2006 despite tightening of prudential norms Capital Adequacy Ratio (%) of the banking sector has increased from 10.4% at end-March 1997 to 12.8% at end-March 2006 Operating Expenses of SCBs have declined from 2.1% of Total Assets in 1992 to 1.8% in 2005 indicative of improved efficiency Intermediation costs of SCBs have declined from 2.9% in 1995-96 to 2.1% in 2005-06
Strong Regulatory & Supervisory system RBI has strengthened prudential norms with respect to income recognition, disclosures and capital adequacy India complies with BIS 26 norms of best practices of supervisory criteria, country risk & convertibility Indian banks are well on road towards BASEL II compliance Credit Deposit Ratio is increasing – PSB : 66.2%, Pvt. Banks : 76.3% Bank credit is growing by about 30% Indian banks compare favourably with its Asian peers in asset quality Indian banking sector grew  by 6 times in the last decade – from Rs. 5,984 bn in 1995 to Rs. 36,105 bn.  KYC norms and Anti Money Laundering regulations in force Indian banks are serving the “Two Faces” of India – the Underprivileged, the Progressive & the Opulent – with equal aplomb Indian Banks – in good health…
Indian Banks – in good health… About 70000 strong branch network – More than 60% presence in Rural areas Consistent growth in profitability – Spread is getting healthier – from 3.1% in 2004-05 to 3.2% in 2005-06 NPL Ratios compare favourably with global trends  Consistently out-performing stock indices – Total Return to Shareholders continues to be attractive PSU Banks  : 61.2% India Banking : 51.3% Old Private  : 40.0% New Private  : 33.9%  TRS Apr 01 – Apr 05 PSBs  :  72% Pr.Bks  :  19% Fgn. Bks.:  7% Others include UCBs, RRBs, LABs & NBFCs Spread  :  3.2% CAR  : 12.0% ROA  :  1.0%+ Gross NPA : 3.34% Net NPA  : 2.00%
Banks – Major Financiers of Growth India has one of the strongest financial sector with low systemic risk Upturn in economic activity is mirrored in the sustained growth in “Demand for Bank Credit” Bank credit has increased sharply from 30% of GDP at end-March 2000 to 48% at end-March 2006 Non-food credit by SCBs increased by an average of 26.1% between 2002-2006 versus its long-term average of 17.8% from 1970 to 2006 Deployment of credit is quite broad-based with increasing flows going to infrastructure , SMEs, agriculture and retail sector (especially residential mortgages) during the past three years
Indian Banks in the Best of the League of Asian Peers According to Moody’s Investor Services Analysis :  Indian lenders have highest Return on Equity (ROE) in Asia (20.38%), followed by Indonesia (20.19%), New Zealand (18.83%), Japan (-6.42%) Average gross bad loans as share of total loans – India (8.18%), Philippines (15.05%), Thailand (13.08%), China (11.80%) and Malaysia (9.73%) Cost to Income Ratio in India at 44.56% is in line with the best regulated Asian countries like Singapore (44.15%), Taiwan (42.61%) and Hong Kong (40.05%)
Banking Regulations Credit & Recovery Payment Systems Communications & Infrastructure Deregulated Interest rate Greater freedom to banks  Significant steps towards Full capital Account Convertibility SARFAESI Act 2002 Debt Recovery Tribunal (DRT) Real Time Gross Settlements(RTGS) Electronic Clearing System (ECS) Electronic Fund Transfer (EFT) Cheque Truncation - in the pipeline Internet Banking, E-Banking, On-line Tax Payment / Utility Payments, ATM, Mobile Banking Requirements Fulfillments Financial Sector Reforms – Going Ahead
Capital Norms Credit Information Financial Track record Other Regulatory Initiatives -  Min. Capital @ 9% as against 8% by BIS Indian Banks are ahead in Basel II readiness – implementation road-map targets March 2009 Min. Capital requirement for entry set @ Rs. 3 bn. for all banks in private sector Credit Information Bureau of India Ltd List of defaulters on RBI website -  No financial crisis – escaped contagion effect of South East Asian meltdown -  Strong Regulatory Practice & Prudence in place for “Managing Affluence” Regulatory provisions to bring NBFCs & UCBs under uniform prudential norms Area Status Significant Steps for Improvement…
Overall banking sector is growing by – 18% Retail Sector (CAGR – 5 years) - Housing  Loan  : 50.% - Consumer Durables  : 16% - Credit Card    : 45% -  Two Wheeler Loan  : 31% - Car Loans  : 26% - Other Personal Loans : 38% Indian Banks are on a high growth track…   More than 25% of the Bank Loan Assets are in Retail sector ensuring high returns - likely to cross Rs. 5700 bn by 2010
Online Banking  in India . . . Growth of e-Commerce Transactions Estimated 4.6* million Indian Internet users are Banking Online today  Indians paying bills online is expected to increase from the current 0.3 million in 2005-06 to 1.8 million by 2007-2008.  E-commerce transactions will cross the Rs 2000 crore mark (2006-2007) which translates into an increase of over 300% from financial year 2004-05.  Indian Banks are on a high growth track…
Is there any Untapped Potential in Indian Financial Market ? What is the ‘Big Picture’ ? Doing Business in India …
Consumer Loans / GDP(%) Mortgages / GDP(%) Credit Cards / GDP (%) Other Retail Loans / GDP (%) Consumption boom in India In each of the area, huge untapped potential left The Big Picture…
Mutual Funds – Global Perspective Mutual Funds as a % of GDP Global Investment Fund Asset Pool Low Penetration – Indian industry still in early stages Source : CLSA Asia Pacific Markets The Big Picture…
Life premium/ GDP (%) Source : Swiss Re Report 2005 Insurance Penetration – Global Landscape Non Life premium/ GDP (%) Insurance density (US$ premiums per capita) Low Penetration – A large potential still untapped  The Big Picture…   10 10 Indonesia 16 13 China 4.5 18 India 95 188 Malasiya 495 1211 South Korea 1203 1366 Australia 2122 1753 US 1093 2474 France 790 2954 Japan 1311 3287 UK Non Life Life  Country
Growth of Card Spending in India . . . Growth of ATMs in India Increasing trend of Plastic Spend High Technology Banking Products Need for value added services on card products Larger Number of Access Points for Customers Convenience to customer is the key Shared network is the future Growth of Credit and Debit Cards in India The Big Picture…
India - one of  10 fastest-growing  population of HNWIs globally There are at least  23  Indian citizens amongst the richest people on the planet Non Resident Indians can invest in all Indian Asset Classes No. of HNWIs in India – 100,000  (19.3% growth in 2005) Salary increases in India –  13.9%  is the highest in the world Increasing Investment avenues – Art, Realty Funds, Commodities Penetration level of  wealth management services in India - 10%  in comparison to European markets (60-90%) The number of companies listed on the Bombay Stock Exchange, at more than  6,000, is second only to NYSE .  Each year  2,500 tonnes of gold  is mined ( fifth of the world's gold output. )  and  3,500 tonnes  is consumed, of which  1,000 tonnes is consumed in India  alone. Wealth Management  & Private Banking – New Growth Opportunities…
India is fast emerging as the “Back Office” of the World & the “Global Knowledge Hub” The Big Picture…  100 Global Companies outsource from India Top Global Banks are present in India Largest talent pool  World class educational / professional institutions Increasing Trade activities  Cost of operations – low
Savings Rate @ 29% is low – Offers high potential from an increasingly affluent community  Less than 40% of Indian household has a bank account Bulging Middle Class – likely to exceed 300 mn Only 2% of the Indian population have insurance cover Less than 1% of the population is actively participating in the Stock market Number of high net worth households (> Rs. 500,000) is likely to grow from 200,000 to 400,000 by 2010  Consumer Finance stands at about 2% to 3% of GDP as compared to 25% in European market Real Estate Market is projected to touch USD 50 bn by 2008 SME Sector is catching up fast creating huge prospect of growth The Story Continues…
Capital Requirements –  to compete with Foreign banks in the post 2009 phase Financial Inclusion  – to remove imbalances in economic growth Banking Sector Consolidation  – for improving competitiveness – need for a clear road-map for “Managed Consolidation” HR Challenges  – Changing working conditions, re-skilling, compensation etc. Coping with the massive  technology adoption programme  – change management – from employees’ as well as customers’ perspectives Challenges Ahead….
High intermediation costs   Low Productivity Better  Corporate Governance  – higher level of accountability Improvement in  productivity and efficiency  in line with advanced markets Transformation from Plain Vanilla banking’ to  “multi-specialist”  banking Challenges Ahead….
Thank You

More Related Content

Viewers also liked

Dov Winer at Info2010 Conference
Dov Winer at Info2010 ConferenceDov Winer at Info2010 Conference
Dov Winer at Info2010 Conference
Dov Winer
 
Understanding cities using ViziCities and 3D data visualisation
Understanding cities using ViziCities and 3D data visualisationUnderstanding cities using ViziCities and 3D data visualisation
Understanding cities using ViziCities and 3D data visualisation
Robin Hawkes
 
E write writing for the web - top 10 principles dhs 28 mar2013
E write writing for the web - top 10 principles dhs 28 mar2013E write writing for the web - top 10 principles dhs 28 mar2013
E write writing for the web - top 10 principles dhs 28 mar2013
LeslieOflahavan
 
Community Participation (041115)
Community Participation (041115)Community Participation (041115)
Community Participation (041115)
Centre for Adult Learning and Literacy
 
2013 04 cbi informational residency incubator final slideshare
2013 04 cbi informational   residency incubator final slideshare2013 04 cbi informational   residency incubator final slideshare
2013 04 cbi informational residency incubator final slideshare
jvielman
 
Q1-AD von Samsung
Q1-AD von SamsungQ1-AD von Samsung
Q1-AD von Samsung
julia135
 
Prueba 1
Prueba 1Prueba 1
Prueba 1
guest8dc44b
 
PHP Underground Session 1: The Basics
PHP Underground Session 1: The BasicsPHP Underground Session 1: The Basics
PHP Underground Session 1: The Basics
Robin Hawkes
 
E-WRITE - Repurpose web content for social media - 17 mar2013
E-WRITE - Repurpose web content for social media - 17 mar2013E-WRITE - Repurpose web content for social media - 17 mar2013
E-WRITE - Repurpose web content for social media - 17 mar2013
LeslieOflahavan
 
020615 Jewish Networking Congress
020615 Jewish Networking Congress020615 Jewish Networking Congress
020615 Jewish Networking Congress
Dov Winer
 
Keluarga Galaksi, Sebuah Tinjauan Genotip
Keluarga Galaksi, Sebuah Tinjauan GenotipKeluarga Galaksi, Sebuah Tinjauan Genotip
Keluarga Galaksi, Sebuah Tinjauan Genotip
Nur Agustinus
 
070501 Info 2007 Archives
070501 Info 2007 Archives070501 Info 2007 Archives
070501 Info 2007 Archives
Dov Winer
 
Majalah INFO-UFO no 04
Majalah INFO-UFO no 04Majalah INFO-UFO no 04
Majalah INFO-UFO no 04
Nur Agustinus
 
AQA English - Unit 1 Understanding non-fiction texts
AQA English - Unit 1 Understanding non-fiction textsAQA English - Unit 1 Understanding non-fiction texts
AQA English - Unit 1 Understanding non-fiction texts
missbec
 
Expanding Learning Time and Space
Expanding Learning Time and SpaceExpanding Learning Time and Space
Expanding Learning Time and Space
Centre for Adult Learning and Literacy
 
Jurnal gandrung vol2 no1 (e jurnal)
Jurnal gandrung vol2 no1 (e jurnal)Jurnal gandrung vol2 no1 (e jurnal)
Jurnal gandrung vol2 no1 (e jurnal)
Nur Agustinus
 
Dr Anil Khandelwal ss infotour
Dr Anil Khandelwal ss infotourDr Anil Khandelwal ss infotour
Dr Anil Khandelwal ss infotour
guestfc8a87
 
Usp dh 2013
Usp dh 2013Usp dh 2013
Usp dh 2013
Dov Winer
 
Penilaian Hasil dan Dampak Program - shared version (180914)
Penilaian Hasil dan Dampak Program - shared version (180914)Penilaian Hasil dan Dampak Program - shared version (180914)
Penilaian Hasil dan Dampak Program - shared version (180914)
Centre for Adult Learning and Literacy
 

Viewers also liked (20)

Dov Winer at Info2010 Conference
Dov Winer at Info2010 ConferenceDov Winer at Info2010 Conference
Dov Winer at Info2010 Conference
 
Understanding cities using ViziCities and 3D data visualisation
Understanding cities using ViziCities and 3D data visualisationUnderstanding cities using ViziCities and 3D data visualisation
Understanding cities using ViziCities and 3D data visualisation
 
E write writing for the web - top 10 principles dhs 28 mar2013
E write writing for the web - top 10 principles dhs 28 mar2013E write writing for the web - top 10 principles dhs 28 mar2013
E write writing for the web - top 10 principles dhs 28 mar2013
 
Community Participation (041115)
Community Participation (041115)Community Participation (041115)
Community Participation (041115)
 
2013 04 cbi informational residency incubator final slideshare
2013 04 cbi informational   residency incubator final slideshare2013 04 cbi informational   residency incubator final slideshare
2013 04 cbi informational residency incubator final slideshare
 
Q1-AD von Samsung
Q1-AD von SamsungQ1-AD von Samsung
Q1-AD von Samsung
 
Prueba 1
Prueba 1Prueba 1
Prueba 1
 
PHP Underground Session 1: The Basics
PHP Underground Session 1: The BasicsPHP Underground Session 1: The Basics
PHP Underground Session 1: The Basics
 
E-WRITE - Repurpose web content for social media - 17 mar2013
E-WRITE - Repurpose web content for social media - 17 mar2013E-WRITE - Repurpose web content for social media - 17 mar2013
E-WRITE - Repurpose web content for social media - 17 mar2013
 
020615 Jewish Networking Congress
020615 Jewish Networking Congress020615 Jewish Networking Congress
020615 Jewish Networking Congress
 
Keluarga Galaksi, Sebuah Tinjauan Genotip
Keluarga Galaksi, Sebuah Tinjauan GenotipKeluarga Galaksi, Sebuah Tinjauan Genotip
Keluarga Galaksi, Sebuah Tinjauan Genotip
 
070501 Info 2007 Archives
070501 Info 2007 Archives070501 Info 2007 Archives
070501 Info 2007 Archives
 
Eesti Rahatähed
Eesti RahatähedEesti Rahatähed
Eesti Rahatähed
 
Majalah INFO-UFO no 04
Majalah INFO-UFO no 04Majalah INFO-UFO no 04
Majalah INFO-UFO no 04
 
AQA English - Unit 1 Understanding non-fiction texts
AQA English - Unit 1 Understanding non-fiction textsAQA English - Unit 1 Understanding non-fiction texts
AQA English - Unit 1 Understanding non-fiction texts
 
Expanding Learning Time and Space
Expanding Learning Time and SpaceExpanding Learning Time and Space
Expanding Learning Time and Space
 
Jurnal gandrung vol2 no1 (e jurnal)
Jurnal gandrung vol2 no1 (e jurnal)Jurnal gandrung vol2 no1 (e jurnal)
Jurnal gandrung vol2 no1 (e jurnal)
 
Dr Anil Khandelwal ss infotour
Dr Anil Khandelwal ss infotourDr Anil Khandelwal ss infotour
Dr Anil Khandelwal ss infotour
 
Usp dh 2013
Usp dh 2013Usp dh 2013
Usp dh 2013
 
Penilaian Hasil dan Dampak Program - shared version (180914)
Penilaian Hasil dan Dampak Program - shared version (180914)Penilaian Hasil dan Dampak Program - shared version (180914)
Penilaian Hasil dan Dampak Program - shared version (180914)
 

Similar to Dr Anil Khandelwal

Naguabo 2
Naguabo 2Naguabo 2
Naguabo 2
guest1262e4
 
Dr anilkhandelwal
Dr anilkhandelwalDr anilkhandelwal
Dr anilkhandelwal
kcmani15
 
Current trends in banking sector (2015) Edition
Current trends in banking sector (2015) EditionCurrent trends in banking sector (2015) Edition
Current trends in banking sector (2015) Edition
Isha Desai
 
Indian Banking Industry - Challenges, Opportunities and Growth Driver of Bank...
Indian Banking Industry - Challenges, Opportunities and Growth Driver of Bank...Indian Banking Industry - Challenges, Opportunities and Growth Driver of Bank...
Indian Banking Industry - Challenges, Opportunities and Growth Driver of Bank...
Resurgent India
 
Banking sector and opportunities in indiar
Banking sector and opportunities in indiarBanking sector and opportunities in indiar
Banking sector and opportunities in indiar
simply_salman
 
Vibrant Gujarat Summit Profile on Financial services Opportunity in Gujarat
Vibrant Gujarat Summit Profile on Financial services Opportunity in GujaratVibrant Gujarat Summit Profile on Financial services Opportunity in Gujarat
Vibrant Gujarat Summit Profile on Financial services Opportunity in Gujarat
Vibrant Gujarat
 
Banking industry analysis report
Banking industry analysis reportBanking industry analysis report
Banking industry analysis report
Deepak Kasturi
 
Financial services banking
Financial services bankingFinancial services banking
Financial services banking
Sourav Mishra
 
annual030502.ppt
annual030502.pptannual030502.ppt
annual030502.ppt
ArchitaSingh61
 
Indian Banking Industry Sustaining Growth with Equity - Industry Overview and...
Indian Banking Industry Sustaining Growth with Equity - Industry Overview and...Indian Banking Industry Sustaining Growth with Equity - Industry Overview and...
Indian Banking Industry Sustaining Growth with Equity - Industry Overview and...
Resurgent India
 
CP world
CP worldCP world
CP world
Vandana Rai
 
India : Banking Sector Report_August 2013
India : Banking Sector Report_August 2013India : Banking Sector Report_August 2013
India : Banking Sector Report_August 2013
India Brand Equity Foundation
 
Indiabankingsectorreportaugust2013 140201021707-phpapp01
Indiabankingsectorreportaugust2013 140201021707-phpapp01Indiabankingsectorreportaugust2013 140201021707-phpapp01
Indiabankingsectorreportaugust2013 140201021707-phpapp01
Supa Buoy
 
“Role of Technology in Bank.”
“Role of Technology in Bank.”“Role of Technology in Bank.”
“Role of Technology in Bank.”
Vatsal Patel
 
Changing dynamics
Changing dynamicsChanging dynamics
Changing dynamics
Midhu Mohanan
 
Ebay News 2004 7 21 Earnings
Ebay News 2004 7 21 EarningsEbay News 2004 7 21 Earnings
Ebay News 2004 7 21 Earnings
QuarterlyEarningsReports
 

Similar to Dr Anil Khandelwal (16)

Naguabo 2
Naguabo 2Naguabo 2
Naguabo 2
 
Dr anilkhandelwal
Dr anilkhandelwalDr anilkhandelwal
Dr anilkhandelwal
 
Current trends in banking sector (2015) Edition
Current trends in banking sector (2015) EditionCurrent trends in banking sector (2015) Edition
Current trends in banking sector (2015) Edition
 
Indian Banking Industry - Challenges, Opportunities and Growth Driver of Bank...
Indian Banking Industry - Challenges, Opportunities and Growth Driver of Bank...Indian Banking Industry - Challenges, Opportunities and Growth Driver of Bank...
Indian Banking Industry - Challenges, Opportunities and Growth Driver of Bank...
 
Banking sector and opportunities in indiar
Banking sector and opportunities in indiarBanking sector and opportunities in indiar
Banking sector and opportunities in indiar
 
Vibrant Gujarat Summit Profile on Financial services Opportunity in Gujarat
Vibrant Gujarat Summit Profile on Financial services Opportunity in GujaratVibrant Gujarat Summit Profile on Financial services Opportunity in Gujarat
Vibrant Gujarat Summit Profile on Financial services Opportunity in Gujarat
 
Banking industry analysis report
Banking industry analysis reportBanking industry analysis report
Banking industry analysis report
 
Financial services banking
Financial services bankingFinancial services banking
Financial services banking
 
annual030502.ppt
annual030502.pptannual030502.ppt
annual030502.ppt
 
Indian Banking Industry Sustaining Growth with Equity - Industry Overview and...
Indian Banking Industry Sustaining Growth with Equity - Industry Overview and...Indian Banking Industry Sustaining Growth with Equity - Industry Overview and...
Indian Banking Industry Sustaining Growth with Equity - Industry Overview and...
 
CP world
CP worldCP world
CP world
 
India : Banking Sector Report_August 2013
India : Banking Sector Report_August 2013India : Banking Sector Report_August 2013
India : Banking Sector Report_August 2013
 
Indiabankingsectorreportaugust2013 140201021707-phpapp01
Indiabankingsectorreportaugust2013 140201021707-phpapp01Indiabankingsectorreportaugust2013 140201021707-phpapp01
Indiabankingsectorreportaugust2013 140201021707-phpapp01
 
“Role of Technology in Bank.”
“Role of Technology in Bank.”“Role of Technology in Bank.”
“Role of Technology in Bank.”
 
Changing dynamics
Changing dynamicsChanging dynamics
Changing dynamics
 
Ebay News 2004 7 21 Earnings
Ebay News 2004 7 21 EarningsEbay News 2004 7 21 Earnings
Ebay News 2004 7 21 Earnings
 

Recently uploaded

Case study on Indian Ecommerce logistics
Case study on Indian Ecommerce logisticsCase study on Indian Ecommerce logistics
Case study on Indian Ecommerce logistics
UnheardShayari
 
Family/Indoor Entertainment Centers Market: Regulation and Compliance Updates
Family/Indoor Entertainment Centers Market: Regulation and Compliance UpdatesFamily/Indoor Entertainment Centers Market: Regulation and Compliance Updates
Family/Indoor Entertainment Centers Market: Regulation and Compliance Updates
AishwaryaDoiphode3
 
1234567891011121314151617181920212223242
12345678910111213141516171819202122232421234567891011121314151617181920212223242
1234567891011121314151617181920212223242
fauzanal343
 
DEKISH ELEVATOR INDIA PVT LTD Brochure.pdf
DEKISH ELEVATOR INDIA PVT LTD Brochure.pdfDEKISH ELEVATOR INDIA PVT LTD Brochure.pdf
DEKISH ELEVATOR INDIA PVT LTD Brochure.pdf
unosafeads
 
THE IMPORTANCE OF CODING IN DEVOPS EXPLANATION
THE IMPORTANCE OF CODING IN DEVOPS EXPLANATIONTHE IMPORTANCE OF CODING IN DEVOPS EXPLANATION
THE IMPORTANCE OF CODING IN DEVOPS EXPLANATION
hrajkumar444
 
Top Digital Marketing Strategy in 2024.pdf
Top Digital Marketing Strategy in 2024.pdfTop Digital Marketing Strategy in 2024.pdf
Top Digital Marketing Strategy in 2024.pdf
Top IT Marketing
 
PETAVIT MICHAEL TAY.pdfAAAAAAAAAAAAAAAAAAAA
PETAVIT MICHAEL TAY.pdfAAAAAAAAAAAAAAAAAAAAPETAVIT MICHAEL TAY.pdfAAAAAAAAAAAAAAAAAAAA
PETAVIT MICHAEL TAY.pdfAAAAAAAAAAAAAAAAAAAA
lawrenceads01
 
Importance of Quality Transformations in VUCA World
Importance of Quality Transformations in VUCA WorldImportance of Quality Transformations in VUCA World
Importance of Quality Transformations in VUCA World
Ankur860831
 
The-Three-Pillars-of-Doctoral-Research-What-Why-and-How (1).pptx
The-Three-Pillars-of-Doctoral-Research-What-Why-and-How (1).pptxThe-Three-Pillars-of-Doctoral-Research-What-Why-and-How (1).pptx
The-Three-Pillars-of-Doctoral-Research-What-Why-and-How (1).pptx
Jindal Global University, Sonipat Haryana 131001
 
PAWFESSIONAL ELVA MAX.pdfAAAAAAAAAAAAAAAAAAA
PAWFESSIONAL ELVA MAX.pdfAAAAAAAAAAAAAAAAAAAPAWFESSIONAL ELVA MAX.pdfAAAAAAAAAAAAAAAAAAA
PAWFESSIONAL ELVA MAX.pdfAAAAAAAAAAAAAAAAAAA
lawrenceads01
 
MEA Union Budget 2024-25 Final Presentation
MEA Union Budget 2024-25 Final PresentationMEA Union Budget 2024-25 Final Presentation
MEA Union Budget 2024-25 Final Presentation
PhysicsUtu
 
brojjeddah Home Services Company in Saudi Arabia
brojjeddah Home Services Company in Saudi Arabiabrojjeddah Home Services Company in Saudi Arabia
brojjeddah Home Services Company in Saudi Arabia
brojjeddah
 
Discover who your target audience is and reach them
Discover who your target audience is and reach themDiscover who your target audience is and reach them
Discover who your target audience is and reach them
Quibble
 
Managing Customer & User Experience of Customers
Managing Customer & User Experience of CustomersManaging Customer & User Experience of Customers
Managing Customer & User Experience of Customers
SalmanTahir60
 
Satta matka guessing Kalyan result sattamatka
Satta matka guessing Kalyan result sattamatkaSatta matka guessing Kalyan result sattamatka
Satta matka guessing Kalyan result sattamatka
➑➌➋➑➒➎➑➑➊➍
 
Pricing sophistication - auto insurance telematics
Pricing sophistication - auto insurance telematicsPricing sophistication - auto insurance telematics
Pricing sophistication - auto insurance telematics
Matteo Carbone
 
A STUDY OF MUTUAL FUND OF BANK OF INDIA .pdf
A STUDY OF MUTUAL FUND  OF BANK OF INDIA .pdfA STUDY OF MUTUAL FUND  OF BANK OF INDIA .pdf
A STUDY OF MUTUAL FUND OF BANK OF INDIA .pdf
rsonics22
 
Growth Buyouts - The Dawn of the GBO (Slow Ventures)
Growth Buyouts - The  Dawn of the GBO (Slow Ventures)Growth Buyouts - The  Dawn of the GBO (Slow Ventures)
Growth Buyouts - The Dawn of the GBO (Slow Ventures)
Razin Mustafiz
 
NewBase 05 July 2024 Energy News issue - 1736 by Khaled Al Awadi_compresse...
NewBase   05 July 2024  Energy News issue - 1736 by Khaled Al Awadi_compresse...NewBase   05 July 2024  Energy News issue - 1736 by Khaled Al Awadi_compresse...
NewBase 05 July 2024 Energy News issue - 1736 by Khaled Al Awadi_compresse...
Khaled Al Awadi
 
United Kingdom's Real Estate Mogul: Newman George Leech's Impact on the Swiss...
United Kingdom's Real Estate Mogul: Newman George Leech's Impact on the Swiss...United Kingdom's Real Estate Mogul: Newman George Leech's Impact on the Swiss...
United Kingdom's Real Estate Mogul: Newman George Leech's Impact on the Swiss...
Newman George Leech
 

Recently uploaded (20)

Case study on Indian Ecommerce logistics
Case study on Indian Ecommerce logisticsCase study on Indian Ecommerce logistics
Case study on Indian Ecommerce logistics
 
Family/Indoor Entertainment Centers Market: Regulation and Compliance Updates
Family/Indoor Entertainment Centers Market: Regulation and Compliance UpdatesFamily/Indoor Entertainment Centers Market: Regulation and Compliance Updates
Family/Indoor Entertainment Centers Market: Regulation and Compliance Updates
 
1234567891011121314151617181920212223242
12345678910111213141516171819202122232421234567891011121314151617181920212223242
1234567891011121314151617181920212223242
 
DEKISH ELEVATOR INDIA PVT LTD Brochure.pdf
DEKISH ELEVATOR INDIA PVT LTD Brochure.pdfDEKISH ELEVATOR INDIA PVT LTD Brochure.pdf
DEKISH ELEVATOR INDIA PVT LTD Brochure.pdf
 
THE IMPORTANCE OF CODING IN DEVOPS EXPLANATION
THE IMPORTANCE OF CODING IN DEVOPS EXPLANATIONTHE IMPORTANCE OF CODING IN DEVOPS EXPLANATION
THE IMPORTANCE OF CODING IN DEVOPS EXPLANATION
 
Top Digital Marketing Strategy in 2024.pdf
Top Digital Marketing Strategy in 2024.pdfTop Digital Marketing Strategy in 2024.pdf
Top Digital Marketing Strategy in 2024.pdf
 
PETAVIT MICHAEL TAY.pdfAAAAAAAAAAAAAAAAAAAA
PETAVIT MICHAEL TAY.pdfAAAAAAAAAAAAAAAAAAAAPETAVIT MICHAEL TAY.pdfAAAAAAAAAAAAAAAAAAAA
PETAVIT MICHAEL TAY.pdfAAAAAAAAAAAAAAAAAAAA
 
Importance of Quality Transformations in VUCA World
Importance of Quality Transformations in VUCA WorldImportance of Quality Transformations in VUCA World
Importance of Quality Transformations in VUCA World
 
The-Three-Pillars-of-Doctoral-Research-What-Why-and-How (1).pptx
The-Three-Pillars-of-Doctoral-Research-What-Why-and-How (1).pptxThe-Three-Pillars-of-Doctoral-Research-What-Why-and-How (1).pptx
The-Three-Pillars-of-Doctoral-Research-What-Why-and-How (1).pptx
 
PAWFESSIONAL ELVA MAX.pdfAAAAAAAAAAAAAAAAAAA
PAWFESSIONAL ELVA MAX.pdfAAAAAAAAAAAAAAAAAAAPAWFESSIONAL ELVA MAX.pdfAAAAAAAAAAAAAAAAAAA
PAWFESSIONAL ELVA MAX.pdfAAAAAAAAAAAAAAAAAAA
 
MEA Union Budget 2024-25 Final Presentation
MEA Union Budget 2024-25 Final PresentationMEA Union Budget 2024-25 Final Presentation
MEA Union Budget 2024-25 Final Presentation
 
brojjeddah Home Services Company in Saudi Arabia
brojjeddah Home Services Company in Saudi Arabiabrojjeddah Home Services Company in Saudi Arabia
brojjeddah Home Services Company in Saudi Arabia
 
Discover who your target audience is and reach them
Discover who your target audience is and reach themDiscover who your target audience is and reach them
Discover who your target audience is and reach them
 
Managing Customer & User Experience of Customers
Managing Customer & User Experience of CustomersManaging Customer & User Experience of Customers
Managing Customer & User Experience of Customers
 
Satta matka guessing Kalyan result sattamatka
Satta matka guessing Kalyan result sattamatkaSatta matka guessing Kalyan result sattamatka
Satta matka guessing Kalyan result sattamatka
 
Pricing sophistication - auto insurance telematics
Pricing sophistication - auto insurance telematicsPricing sophistication - auto insurance telematics
Pricing sophistication - auto insurance telematics
 
A STUDY OF MUTUAL FUND OF BANK OF INDIA .pdf
A STUDY OF MUTUAL FUND  OF BANK OF INDIA .pdfA STUDY OF MUTUAL FUND  OF BANK OF INDIA .pdf
A STUDY OF MUTUAL FUND OF BANK OF INDIA .pdf
 
Growth Buyouts - The Dawn of the GBO (Slow Ventures)
Growth Buyouts - The  Dawn of the GBO (Slow Ventures)Growth Buyouts - The  Dawn of the GBO (Slow Ventures)
Growth Buyouts - The Dawn of the GBO (Slow Ventures)
 
NewBase 05 July 2024 Energy News issue - 1736 by Khaled Al Awadi_compresse...
NewBase   05 July 2024  Energy News issue - 1736 by Khaled Al Awadi_compresse...NewBase   05 July 2024  Energy News issue - 1736 by Khaled Al Awadi_compresse...
NewBase 05 July 2024 Energy News issue - 1736 by Khaled Al Awadi_compresse...
 
United Kingdom's Real Estate Mogul: Newman George Leech's Impact on the Swiss...
United Kingdom's Real Estate Mogul: Newman George Leech's Impact on the Swiss...United Kingdom's Real Estate Mogul: Newman George Leech's Impact on the Swiss...
United Kingdom's Real Estate Mogul: Newman George Leech's Impact on the Swiss...
 

Dr Anil Khandelwal

  • 1. Doing Business in India The Big Picture A Banker’s Perspective US – India Business Summit November 29, 2006 Dr. Anil K Khandelwal Chairman & Managing Director Bank of Baroda
  • 2. Indian Economy – A Snapshot One of the fastest growing in the world Consumption growth fuelling economic growth – consumption expenditure forming 78% of GDP Services sector contributing over 60% to GDP Emerging as a hub of manufacturing excellence. new growth engines of Indian economy include IT, ITes, pharmaceuticals, bio-technology, nano technology, agri. businesses Where forces of competition are at work Innovation driving enterprises Economic reforms well on course – entering second phase           
  • 3. “ Inclusive growth” occupying central place High untapped potential in rural / agri - economy Indian companies on acquiring spree and going global Indian companies pursuing global best practices and producing world-class managers Indian Economy – A Snapshot
  • 4. Improved Ranking on Business Front World Bank – IFC Report on Doing Business in India for 2007 has given a higher rank to India compared to last year because : - India has cut the time to start a business from 71 to 25 days Reduced the Corporate Income Tax rate from 36.59% to 33.66% Supreme Court’s decision has made enforcing collateral simpler – easing access to credit Reforms to Stock Exchange Regulations have toughened investor protection
  • 5. The Indian Financial Sector Robust financial system Well established institutions Strong supervisory system Progressive integration of financial markets - banking, insurance, mutual funds, securities, commodities High competition marked by innovation High technology absorption Rediscovery of the Indian customer 21 st century customer driving innovations in banking Banking plus financial services becoming the new offerings
  • 6. The Indian Financial Sector Alternate e-delivery channels becoming popular with Indian customers Financial sector bracing to meet life cycle and life style needs of the great Indian middle class “ Cradle to Grave” becoming the new spectrum of life cycle needs Banking graduating beyond traditional boundaries of vanilla banking Indian customer demanding TOTAL FINANCIAL SOLUTIONS Banking sector bracing itself to offer customized and structured products
  • 7. The Indian Financial Sector Banking sector entering newer areas like wealth management, private banking, doorstep banking, electronic banking, credit cards, investment advisory services, etc. Indian banks in a war game to acquire and retain customers Indian middle class being reached out and wooed by banks Indian middle class and financial sector beginning to dream together and weave a new bond of relationship Financial products like mutual funds, life policies, non-life policies competing with traditional banking products Banking sector fully geared for helping Indian middle class realize its dream Banking sector in good health – with low non-performing assets and prudential accounting standards in place Indian banking entering the phase of consolidation (2 nd Phase of Reform) – on way to acquire global size
  • 8. Robust & Resilient Banking Sector A free & open banking sector where most businesses are now covered at the market-determined rates Full banking license system Highly Stable Sector despite a series of Exogenous Shocks like the Asian Crisis, Sanctions due to Nuclear Explosions, Record High Oil Prices and Large Corrections in Stock Markets Significant improvement in the Asset Quality: Net NPAs (%) have decreased from 8.1% at end-March 1997 to 2.0% at end-March 2006 despite tightening of prudential norms Capital Adequacy Ratio (%) of the banking sector has increased from 10.4% at end-March 1997 to 12.8% at end-March 2006 Operating Expenses of SCBs have declined from 2.1% of Total Assets in 1992 to 1.8% in 2005 indicative of improved efficiency Intermediation costs of SCBs have declined from 2.9% in 1995-96 to 2.1% in 2005-06
  • 9. Strong Regulatory & Supervisory system RBI has strengthened prudential norms with respect to income recognition, disclosures and capital adequacy India complies with BIS 26 norms of best practices of supervisory criteria, country risk & convertibility Indian banks are well on road towards BASEL II compliance Credit Deposit Ratio is increasing – PSB : 66.2%, Pvt. Banks : 76.3% Bank credit is growing by about 30% Indian banks compare favourably with its Asian peers in asset quality Indian banking sector grew by 6 times in the last decade – from Rs. 5,984 bn in 1995 to Rs. 36,105 bn. KYC norms and Anti Money Laundering regulations in force Indian banks are serving the “Two Faces” of India – the Underprivileged, the Progressive & the Opulent – with equal aplomb Indian Banks – in good health…
  • 10. Indian Banks – in good health… About 70000 strong branch network – More than 60% presence in Rural areas Consistent growth in profitability – Spread is getting healthier – from 3.1% in 2004-05 to 3.2% in 2005-06 NPL Ratios compare favourably with global trends Consistently out-performing stock indices – Total Return to Shareholders continues to be attractive PSU Banks : 61.2% India Banking : 51.3% Old Private : 40.0% New Private : 33.9% TRS Apr 01 – Apr 05 PSBs : 72% Pr.Bks : 19% Fgn. Bks.: 7% Others include UCBs, RRBs, LABs & NBFCs Spread : 3.2% CAR : 12.0% ROA : 1.0%+ Gross NPA : 3.34% Net NPA : 2.00%
  • 11. Banks – Major Financiers of Growth India has one of the strongest financial sector with low systemic risk Upturn in economic activity is mirrored in the sustained growth in “Demand for Bank Credit” Bank credit has increased sharply from 30% of GDP at end-March 2000 to 48% at end-March 2006 Non-food credit by SCBs increased by an average of 26.1% between 2002-2006 versus its long-term average of 17.8% from 1970 to 2006 Deployment of credit is quite broad-based with increasing flows going to infrastructure , SMEs, agriculture and retail sector (especially residential mortgages) during the past three years
  • 12. Indian Banks in the Best of the League of Asian Peers According to Moody’s Investor Services Analysis : Indian lenders have highest Return on Equity (ROE) in Asia (20.38%), followed by Indonesia (20.19%), New Zealand (18.83%), Japan (-6.42%) Average gross bad loans as share of total loans – India (8.18%), Philippines (15.05%), Thailand (13.08%), China (11.80%) and Malaysia (9.73%) Cost to Income Ratio in India at 44.56% is in line with the best regulated Asian countries like Singapore (44.15%), Taiwan (42.61%) and Hong Kong (40.05%)
  • 13. Banking Regulations Credit & Recovery Payment Systems Communications & Infrastructure Deregulated Interest rate Greater freedom to banks Significant steps towards Full capital Account Convertibility SARFAESI Act 2002 Debt Recovery Tribunal (DRT) Real Time Gross Settlements(RTGS) Electronic Clearing System (ECS) Electronic Fund Transfer (EFT) Cheque Truncation - in the pipeline Internet Banking, E-Banking, On-line Tax Payment / Utility Payments, ATM, Mobile Banking Requirements Fulfillments Financial Sector Reforms – Going Ahead
  • 14. Capital Norms Credit Information Financial Track record Other Regulatory Initiatives - Min. Capital @ 9% as against 8% by BIS Indian Banks are ahead in Basel II readiness – implementation road-map targets March 2009 Min. Capital requirement for entry set @ Rs. 3 bn. for all banks in private sector Credit Information Bureau of India Ltd List of defaulters on RBI website - No financial crisis – escaped contagion effect of South East Asian meltdown - Strong Regulatory Practice & Prudence in place for “Managing Affluence” Regulatory provisions to bring NBFCs & UCBs under uniform prudential norms Area Status Significant Steps for Improvement…
  • 15. Overall banking sector is growing by – 18% Retail Sector (CAGR – 5 years) - Housing Loan : 50.% - Consumer Durables : 16% - Credit Card : 45% - Two Wheeler Loan : 31% - Car Loans : 26% - Other Personal Loans : 38% Indian Banks are on a high growth track… More than 25% of the Bank Loan Assets are in Retail sector ensuring high returns - likely to cross Rs. 5700 bn by 2010
  • 16. Online Banking in India . . . Growth of e-Commerce Transactions Estimated 4.6* million Indian Internet users are Banking Online today Indians paying bills online is expected to increase from the current 0.3 million in 2005-06 to 1.8 million by 2007-2008. E-commerce transactions will cross the Rs 2000 crore mark (2006-2007) which translates into an increase of over 300% from financial year 2004-05. Indian Banks are on a high growth track…
  • 17. Is there any Untapped Potential in Indian Financial Market ? What is the ‘Big Picture’ ? Doing Business in India …
  • 18. Consumer Loans / GDP(%) Mortgages / GDP(%) Credit Cards / GDP (%) Other Retail Loans / GDP (%) Consumption boom in India In each of the area, huge untapped potential left The Big Picture…
  • 19. Mutual Funds – Global Perspective Mutual Funds as a % of GDP Global Investment Fund Asset Pool Low Penetration – Indian industry still in early stages Source : CLSA Asia Pacific Markets The Big Picture…
  • 20. Life premium/ GDP (%) Source : Swiss Re Report 2005 Insurance Penetration – Global Landscape Non Life premium/ GDP (%) Insurance density (US$ premiums per capita) Low Penetration – A large potential still untapped The Big Picture… 10 10 Indonesia 16 13 China 4.5 18 India 95 188 Malasiya 495 1211 South Korea 1203 1366 Australia 2122 1753 US 1093 2474 France 790 2954 Japan 1311 3287 UK Non Life Life Country
  • 21. Growth of Card Spending in India . . . Growth of ATMs in India Increasing trend of Plastic Spend High Technology Banking Products Need for value added services on card products Larger Number of Access Points for Customers Convenience to customer is the key Shared network is the future Growth of Credit and Debit Cards in India The Big Picture…
  • 22. India - one of 10 fastest-growing population of HNWIs globally There are at least 23 Indian citizens amongst the richest people on the planet Non Resident Indians can invest in all Indian Asset Classes No. of HNWIs in India – 100,000 (19.3% growth in 2005) Salary increases in India – 13.9% is the highest in the world Increasing Investment avenues – Art, Realty Funds, Commodities Penetration level of wealth management services in India - 10% in comparison to European markets (60-90%) The number of companies listed on the Bombay Stock Exchange, at more than 6,000, is second only to NYSE . Each year 2,500 tonnes of gold is mined ( fifth of the world's gold output. ) and 3,500 tonnes is consumed, of which 1,000 tonnes is consumed in India alone. Wealth Management & Private Banking – New Growth Opportunities…
  • 23. India is fast emerging as the “Back Office” of the World & the “Global Knowledge Hub” The Big Picture… 100 Global Companies outsource from India Top Global Banks are present in India Largest talent pool World class educational / professional institutions Increasing Trade activities Cost of operations – low
  • 24. Savings Rate @ 29% is low – Offers high potential from an increasingly affluent community Less than 40% of Indian household has a bank account Bulging Middle Class – likely to exceed 300 mn Only 2% of the Indian population have insurance cover Less than 1% of the population is actively participating in the Stock market Number of high net worth households (> Rs. 500,000) is likely to grow from 200,000 to 400,000 by 2010 Consumer Finance stands at about 2% to 3% of GDP as compared to 25% in European market Real Estate Market is projected to touch USD 50 bn by 2008 SME Sector is catching up fast creating huge prospect of growth The Story Continues…
  • 25. Capital Requirements – to compete with Foreign banks in the post 2009 phase Financial Inclusion – to remove imbalances in economic growth Banking Sector Consolidation – for improving competitiveness – need for a clear road-map for “Managed Consolidation” HR Challenges – Changing working conditions, re-skilling, compensation etc. Coping with the massive technology adoption programme – change management – from employees’ as well as customers’ perspectives Challenges Ahead….
  • 26. High intermediation costs Low Productivity Better Corporate Governance – higher level of accountability Improvement in productivity and efficiency in line with advanced markets Transformation from Plain Vanilla banking’ to “multi-specialist” banking Challenges Ahead….