Today, the banking industry in our country is stronger and capable of withstanding the pressures of competition. It withstood Global Financial Crisis (2008). In the era of Globalization Banking Sector in India is rapidly changing since 1990s due to technological innovation, financial liberalization with entry of new private and foreign banks, and regulatory changes in the corporate sector. Indian banking industry is gradually moving towards adopting the best practices in accounting, internationally accepted prudential norms, with higher disclosures and transparency, corporate governance and risk management, interest rates have been deregulated, while the rigour of directed lending is being progressively reduced. In our country, currently we are having a fairly well developed banking system with different classes of banks – public sector banks, foreign banks, private sector banks – both old and new generation, regional rural banks and co-operative banks with the Reserve Bank of India as the leader of the system. In the banking field, there has been an unprecedented growth and diversification of banking industry and our banks are now utilizing the latest technologies like internet and mobile devices to carry out transactions and communicate with the masses.
INDUSTRY OVERVIEW
Evolution of Banking Sector in India
Structure of Banking in India
Parameters/ Indicator – banking Sector
Growth of the Industry with Examples
Prominent Companies in the Banking Sector
New entrants in the Banking Sector
Exit of Banks
Major Decisions take by the Government for Banking Sector
Today, the banking industry in our country is stronger and capable of withstanding the pressures of competition. It withstood Global Financial Crisis (2008). In the era of Globalization Banking Sector in India is rapidly changing since 1990s due to technological innovation, financial liberalization with entry of new private and foreign banks, and regulatory changes in the corporate sector. Indian banking industry is gradually moving towards adopting the best practices in accounting, internationally accepted prudential norms, with higher disclosures and transparency, corporate governance and risk management, interest rates have been deregulated, while the rigour of directed lending is being progressively reduced. In our country, currently we are having a fairly well developed banking system with different classes of banks – public sector banks, foreign banks, private sector banks – both old and new generation, regional rural banks and co-operative banks with the Reserve Bank of India as the leader of the system. In the banking field, there has been an unprecedented growth and diversification of banking industry and our banks are now utilizing the latest technologies like internet and mobile devices to carry out transactions and communicate with the masses.
INDUSTRY OVERVIEW
Evolution of Banking Sector in India
Structure of Banking in India
Parameters/ Indicator – banking Sector
Growth of the Industry with Examples
Prominent Companies in the Banking Sector
New entrants in the Banking Sector
Exit of Banks
Major Decisions take by the Government for Banking Sector
Financial Performance Analysis of Selected Private Sector Banks in IndiaDr. Amarjeet Singh
The performance of the banking system has been
widely recognized as an important element for economic
growth and for enhancing the economic and financial system
buoyancy in facing financial crisis. In fact, such a vital role in
the economy has made banks to be considered as one of the
most strained kinds of businesses in the globe as they are
subject to close scrutiny since banks will otherwise be
counterproductive and severely damage the economy of a
country. Efficient and profitable banks maximize
shareholders’ value and encourage the shareholders to make
additional investments. As a result of which, more
employment opportunities will be created and more goods
and service will be produced and ultimately bring about
economic growth in which private and public sector banking
institutions play equal role. The present study analyses the
financial performance of selected private banks in India with
the help of correlation analysis by considering return on total
assets as the independent variable.
Indian Banking Industry: Challenges and OpportunitiesWaqas Tariq
Abstract: The banking industry in India has a huge canvas of history, which covers the traditional banking practices from the time of Britishers to the reforms period, nationalization to privatization of banks and now increasing numbers of foreign banks in India. Therefore, Banking in India has been through a long journey. Banking industry in India has also achieved a new height with the changing times. The use of technology has brought a revolution in the working style of the banks. Nevertheless, the fundamental aspects of banking i.e. trust and the confidence of the people on the institution remain the same. The majority of the banks are still successful in keeping with the confidence of the shareholders as well as other stakeholders. However, with the changing dynamics of banking business brings new kind of risk exposure. In this paper an attempt has been made to identify the general sentiments, challenges and opportunities for the Indian Banking Industry. This article is divided in three parts. First part includes the introduction and general scenario of Indian banking industry. The second part discusses the various challenges and opportunities faced by Indian banking industry. Third part concludes that urgent emphasis is required on the Indian banking product and marketing strategies in order to get sustainable competitive edge over the intense competition from national and global banks. This article is a small seed to existing branch of knowledge in banking industry and is useful for bankers, strategist, policy makers and researchers. Key words: Rural Market, Risk Management, Global Banking, Employee and Customer Retention.
Chapter 4 schemes of banking developmentNayan Vaghela
schemes of banking development, Lead banking scheme, Mutual funds, deposit insurance scheme, modernization of banking industry, non banking financial companies
A Study on Emerging Challenges & Opportunities for Indian Banking Sectorinventionjournals
Banking sector is treated as a backbone of a nation as it plays multifarious role for the all total growth of a developing country like India. The banking industry in India has a huge canvas of history, which covers the traditional banking Practices from the time of Britishers to the reforms period, nationalization to privatization of banks and now increasing numbers of foreign banks in India. Therefore, Banking in India has been through a long journey. Banking industry in India has also achieved a new height with the changing times. The use of technology has brought a revolution in the working style of the banks. Nevertheless, the fundamental aspects of banking i.e. trust and the confidence of the people on the institution remain the same. Here commercial banks cater to short and medium term financing requirements, while national level and state level financial institutions meet longer-term requirements. Banking industry in India has also achieved anew height with the changing times. Most of banks provide various services such as Mobile banking, SMS & Net banking and ATMs to their customers for their convenience. The use of technology has brought a revolution in the working style of the banks. Banking today has transformed into a technology intensive and customer friendly model with a focus inconvenience. However, changing dynamics of banking business also brings new kind of risk exposure.
A bank is a financial intermediary that creates credit by lending money to a borrower.
Banking in India in the modern sense originated in the last decades of the 18th century.
Among the first banks were the Bank of Hindustan, which was established in 1770
The largest bank, and the oldest still in existence, is the State Bank of India. It originated as the Bank of Calcutta in June 1806.
The Reserve Bank Of India was established in 1935
Indian banking consists of 26 public sector banks, 20 private sector banks, 43 foreign banks, 56 regional rural banks, 1,589 urban cooperative banks and 93,550 rural cooperative banks
Financial Performance Analysis of Selected Private Sector Banks in IndiaDr. Amarjeet Singh
The performance of the banking system has been
widely recognized as an important element for economic
growth and for enhancing the economic and financial system
buoyancy in facing financial crisis. In fact, such a vital role in
the economy has made banks to be considered as one of the
most strained kinds of businesses in the globe as they are
subject to close scrutiny since banks will otherwise be
counterproductive and severely damage the economy of a
country. Efficient and profitable banks maximize
shareholders’ value and encourage the shareholders to make
additional investments. As a result of which, more
employment opportunities will be created and more goods
and service will be produced and ultimately bring about
economic growth in which private and public sector banking
institutions play equal role. The present study analyses the
financial performance of selected private banks in India with
the help of correlation analysis by considering return on total
assets as the independent variable.
Indian Banking Industry: Challenges and OpportunitiesWaqas Tariq
Abstract: The banking industry in India has a huge canvas of history, which covers the traditional banking practices from the time of Britishers to the reforms period, nationalization to privatization of banks and now increasing numbers of foreign banks in India. Therefore, Banking in India has been through a long journey. Banking industry in India has also achieved a new height with the changing times. The use of technology has brought a revolution in the working style of the banks. Nevertheless, the fundamental aspects of banking i.e. trust and the confidence of the people on the institution remain the same. The majority of the banks are still successful in keeping with the confidence of the shareholders as well as other stakeholders. However, with the changing dynamics of banking business brings new kind of risk exposure. In this paper an attempt has been made to identify the general sentiments, challenges and opportunities for the Indian Banking Industry. This article is divided in three parts. First part includes the introduction and general scenario of Indian banking industry. The second part discusses the various challenges and opportunities faced by Indian banking industry. Third part concludes that urgent emphasis is required on the Indian banking product and marketing strategies in order to get sustainable competitive edge over the intense competition from national and global banks. This article is a small seed to existing branch of knowledge in banking industry and is useful for bankers, strategist, policy makers and researchers. Key words: Rural Market, Risk Management, Global Banking, Employee and Customer Retention.
Chapter 4 schemes of banking developmentNayan Vaghela
schemes of banking development, Lead banking scheme, Mutual funds, deposit insurance scheme, modernization of banking industry, non banking financial companies
A Study on Emerging Challenges & Opportunities for Indian Banking Sectorinventionjournals
Banking sector is treated as a backbone of a nation as it plays multifarious role for the all total growth of a developing country like India. The banking industry in India has a huge canvas of history, which covers the traditional banking Practices from the time of Britishers to the reforms period, nationalization to privatization of banks and now increasing numbers of foreign banks in India. Therefore, Banking in India has been through a long journey. Banking industry in India has also achieved a new height with the changing times. The use of technology has brought a revolution in the working style of the banks. Nevertheless, the fundamental aspects of banking i.e. trust and the confidence of the people on the institution remain the same. Here commercial banks cater to short and medium term financing requirements, while national level and state level financial institutions meet longer-term requirements. Banking industry in India has also achieved anew height with the changing times. Most of banks provide various services such as Mobile banking, SMS & Net banking and ATMs to their customers for their convenience. The use of technology has brought a revolution in the working style of the banks. Banking today has transformed into a technology intensive and customer friendly model with a focus inconvenience. However, changing dynamics of banking business also brings new kind of risk exposure.
A bank is a financial intermediary that creates credit by lending money to a borrower.
Banking in India in the modern sense originated in the last decades of the 18th century.
Among the first banks were the Bank of Hindustan, which was established in 1770
The largest bank, and the oldest still in existence, is the State Bank of India. It originated as the Bank of Calcutta in June 1806.
The Reserve Bank Of India was established in 1935
Indian banking consists of 26 public sector banks, 20 private sector banks, 43 foreign banks, 56 regional rural banks, 1,589 urban cooperative banks and 93,550 rural cooperative banks
Banking Structure in India:
This presentation helps us to understand the basics of banking in India, its initiation, role and growth over the period of time.
MTBiz is for you if you are looking for contemporary information on business, economy and especially on banking industry of Bangladesh. You would also find periodical information on Global Economy and Commodity Markets.
Signature content of MTBiz is its Article of the Month (AoM), as depicted on Cover Page of each issue, with featured focus on different issues that fall into the wide definition of Market, Business, Organization and Leadership. The AoM also covers areas on Innovation, Central Banking, Monetary Policy, National Budget, Economic Depression or Growth and Capital Market. Scale of coverage of the AoM both, global and local subject to each issue.
MTBiz is a monthly Market Review produced and distributed by Group R&D, MTB since 2009.
The Indian economy, which is the third largest in the world in terms of purchasing power, is going to touch new heights in the coming years. As predicted by Goldman Sachs, the Global Investment Bank, by 2035 India would be the third largest economy in the world just after U.S. and China. It will grow to 60% of size of the U.S. economy. This booming economy of today has passed through many phases before it achieved the current milestone.
This report gives the different aspects relating the GDP growth of India. GDP rate since independence, reasons for fluctuation in GDP, role of Indian government in growth of GDP, role of public, privet and government in growth of GDP and finally reasons of devaluation of devaluation of rupee in comparison to dollar are outlined in a nutshell.
Anticipating and Gearing up Real Estate Sector in Indiainventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
where can I find a legit pi merchant onlineDOT TECH
Yes. This is very easy what you need is a recommendation from someone who has successfully traded pi coins before with a merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi network coins and resell them to Investors looking forward to hold thousands of pi coins before the open mainnet.
I will leave the telegram contact of my personal pi merchant to trade with
@Pi_vendor_247
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
The Evolution of Non-Banking Financial Companies (NBFCs) in India: Challenges...beulahfernandes8
Role in Financial System
NBFCs are critical in bridging the financial inclusion gap.
They provide specialized financial services that cater to segments often neglected by traditional banks.
Economic Impact
NBFCs contribute significantly to India's GDP.
They support sectors like micro, small, and medium enterprises (MSMEs), housing finance, and personal loans.
Exploring Abhay Bhutada’s Views After Poonawalla Fincorp’s Collaboration With...beulahfernandes8
The financial landscape in India has witnessed a significant development with the recent collaboration between Poonawalla Fincorp and IndusInd Bank.
The launch of the co-branded credit card, the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card, marks a major milestone for both entities.
This strategic move aims to redefine and elevate the banking experience for customers.
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new product—it signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
1. KAL AAJ AUR KAL
An Overview of the Indian Banking sector
against the backdrop of Politico, social,
economic and cultural environment.
By Sanjeev Kumar
2. Preview
This is a report on the health of the Indian banking sector
of the past, present and the future under relevant
circumstances and various views be it social, political
economic or culture attached to it. If I shall start with an
incident related to my native place Raxaul – a sleepy town
in the east of Bihar. Few years back a report was published
in one of the leading newspaper of India that the district of
East champaran is among the poorest of the districts in
whole country and it ranks at last position in the listing of
the total 543 districts of India. It gave me a shock, not only
because i am a native but also because we have seen the
best of times during late seventies and eighties.
3. To understand this circle of developments First we should
review the backdrop of the events that happened during the
post independence era of sixties, seventies eighties and
nineties.
4. 1951-54: In a survey of Bhartiya grammen saakh sarvekhan (Indian
villages credit report) it was said that commercial banks contributed to
only 0.9% of the farmers total income. While lenders have contributed
24.9% and commercial lenders has 44.8%.
1955: Nationalisation of State Bank Of India.
Between 1969 and 1980: More banks had been nationalised.
Establishment Of National Agricultural and Rural Bank Of India
(NABARD), ICICI, IDBI and SIDBI etc.
FIRST THE ECONOMIC AND POLITICAL VIEWPOINT:
5. 1984: Operation Blue Star- Late Mrs. Indira Gandhi gave the green signal
to operation blue star which launches the state in the swift and bloody
war against Sikhs and terrorists.
October’ 1984: The charismatic leader was assassinated.
December’ 1984: Rajiv Gandhi lead congress to form Government at the
centre after landslide victory at the general elections, garnering an
unparallel 400 plus seats in the parliament.
6. 1985: A new messiah called Dhirubhai Ambani emerged in
the India stock market. His penchant unabashedly
rewarding his shareholders made him the darling of Dalal
Street.
1985-1986: From 265 in Dec 84 the BSE index scaled to 322
points by march 1885. In February 1986 it doubled to 638.
In 18 months the rise had been a good 131%, meaning an
equated annual jump of 75%
7. 1987: Rajiv Gandhi lost his midas touch. A series of breath taking
scandals lead to a direct confrontation with the media.
1989-91: 3 different governments were formed and dissolved during a
short period of three years.
1991: Gulf war erupted between Jan and May between the oil
producing nations and few superpowers of the world. Berlin wall fell ,
Germany was unified.
May 1991: India went to polls again three years ahead of schedule. Rajiv
Gandhi assassinated on May 21’1991. P.V. Narasimha was nominated as
new PM of India and he made Dr. Manmohan Singh Finance Minister.
8. June 1991: India was drifting into economic collapse. We
almost defaulted on the installment obligation which we
owned to the World Bank. Inflation has touched a high of
18%. Export was coming to a grinding halt, stagflation was
imminent. Rupee was fast becoming an international joke,
leading to the flight of Indian capital. Foreign reserve was 1
Bn. Dollars, an amount that could foot just a fortnight’s
import bill. It meant that the country was on the threshold of
Bankruptcy and whole system on brink of collapse.
9. Late 1991: Sensex reached 1000 mark for the first time.
1992: Raja J Chellaiah’s Fiscal reform papers with wide ranging
suggestions for a mind boggling clean-up in the direct and indirect tax
front came in handy.
Two sharp doses of devaluation were followed up by a series of savage
import restrictions and a belt tightening credit squeeze that had most
industries choking.
MRTP: Monopoly restrictions trade practices &
FERA: Foreign Exchange Regulations Act were edited beyond
recognition.
10. Industrial licensing was done away with and capital goods and raw
materials were allowed to be freely imported.
1992-93: Private sector was allowed to enter the mutual funds
market and foreign institutional investors were given free
access to Stock Market.
Jan 1992: Sensex crossed 2000.
Feb 29’ 1992: It crossed 3000.
April 22’1992: Sensex zoomed to 4500 before closing at 4467.
11. The same day great bond scam broke out and the market
began its inexorable slide downwards.- The Rs. 4000 crore
scam was perhaps to be written off as development
expenditure for capitalism.
1991-94: Emergence of Asian Tigers economies- Singapore,
Malaysia, Indonesia, Taiwan and Korea.
1991-92: USSR under the leadership of Mikhail Gorvachev
embraced Capitalism but with disastrous consequences. It
lead to disintegration of USSR.
12. 1993: World Trade Organisation- as a member of WTO India signed the
General Agreement on Tariff and Trade, a multilateral treaty subscribed
to by 107 governments, which together accounts for more than 90% of
the world trade.
With that the world became “Borderless” in the words of Kenniche
ohamas.
Till 1996: P.V. Narsimha Rao’s governance with prudence worked
towards development at all fronts. Major achievements were
devaluation of rupee, FDI started in Indian corporate for the first time.
Disinvestments in the Public sector Units to make them more
competitive and to align them with the market.
13. 1999-2004: A.B. Bajpayee’s 1st BJP’s government named
National Democratic Alliance (NDA) was formed at the centre.
Major achievements were Continuation of liberalisation
activities in terms of FDI and FII’s investments, opening the
Indian Market space further.
Flexibility in Exchange rates and full convertibility of Current
and Capital account.
14. 2004-09: First term of Dr. Manmohan Singh’s Congress government
named United Progressive Alliance (UPA) was formed. They took major
steps towards reforms in Money market, SEBI, PFRDA, Stock markets,
RBI, Consolidation of nationalised banks, Mutual Funds etc.
15. 2009-2014: In May 2009, 2nd Congress’s UPA government
under the leadership of Dr. Manmohan Singh was formed at
the centre. Although it will be remembered for many financial
Scandals which broke out during the 2nd stint. These include
the infamous telecom Scam, Commonwealth Games Scam,
Coal Mines allotment Scam, Adarsh Housing Scam and many
others. Various scams lead to its defeat in next general
elections of May 2014.
16. CRISIS Of 2008-09:
After growing at around 9% per annum between 2002-2007, the Indian economy started
began to slow down in the early to late 2007, much before the global crisis happened.
The main problem in August 2008 seemed to be inflation which has reached 17.8% due
to sharp rise in crude in July 2008 at $ 149/barrel. Food inflation was at 11.4%.
As per the economic survey of 2008 from September 2007 to January 2008 FII inflows
were at $22.5 Bn. as against $11.8 Bn. from April till July 2007. The outflows of FII’s
started in 2008; they fled due to the unwinding of stock positions and to replenish cash
imbalances abroad. There was net outflow of portfolio investments amounting to $16
Bn. between Feb and June 2008. With the outflows of FII’s there was depreciation in
the rupee’s value and the stock market also witnessed a collapse. The rupee value fell
from Rs. 39-40 to dollar in Jan-April to Rs. 50/dollar.
17. The stock market crashed twice in the year 2008, first in Jan it fell 1430
points and then in the month of Nov it fell 1982 points.
The overall impact of the crisis on the Indian economy was first evident
in the shrinkage of GDP growth falling from 7.8% in the first half of
2008-09 to 5.8% during 2nd half of the year. Growth improved to 6.1% in
the first quarter of 2009-10 & to 7.9 in 2nd quarter of the financial year
09-10.
18. ROLE OF RBI AND GDP GROWTH:
The other aspect of the sector was that during these times of turbulence of nineties and
early 2000 the RBI has constantly been performing the required role of a regulator with
continued prudence in deciding the essential bank rates, viz. CRR, SLR, repo rates, and
other lending rates.
To get an overview of this if we will see the plot of graph between GDP quarterly
growth rate against time over a period of 10 years from 2005 till 20114-15, the same
shows a flat near 8% growth between 1st quarter 2005 till quarter 4th of 2010-11 with a
dip to 3.8% during Q3-Q4 of 2008-09, which again improved in Q3 2009-10. And a
second dip during Q1-Q4 of 2012-13 to just above 4.5% which is now improving to
7.5%.
19. Figure 1: QUATERLY GDP GROWTH 2005-06Q1 TO 2014-15Q4 (Per cent)
0
2
4
6
8
10
12
14
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Q1 Q2 Q3 Q4
Sources: Office of Economic Adviser, Department of Industrial Policy and Promotion, Central Statistics Office, Reserve
Bank of India and National Stock Exchange
20. THE SOCIALAND CULTURAL VIEWPOINT:
The social and cultural impact of this growth is self-explained in terms of the growth of
the Indian Economy and the impact of the same on the banking sector. To understand
these first we need to understand the following limitations of the Indian Banking sector.
Household Savings:
Household savings continue to be the largest contributor to gross capital formation.
Household savings has two components- financial and physical, where the latter
typically does not lend itself easily to financial intermediation in the economy. If we see
a plot of the household savings in the banks in past few years we can observe that
contribution of physical assets to the household savings has stood stubbornly above
60% throughout the last decade. However the recent reports says that the proportion
of the two has improved with a skew towards financial assets at 56.53% and
towards physical assets at 43.47% in the year 2016.
21. 0
5
10
15
20
25
2004-05 2009-10 2010-11 2011-12 2012-13 2013-14
Household (Financial) Household (physical)
Figure 2: Household savings in the banks in past few years.
Source : Central Statistics Office. Caveat: New method employed in
2013-14.
22. Double Financial repression on the balance sheet of Indian Banks:
INTRODUCTION
The policy discourse around banking in India has thrown up many specific ideas and
challenges recently, prominent amongst them being the problem of stressed and
restructured assets, the difficulty in acquiring the resources to meet the looming
Basel III requirements on capital adequacy, and the need for governance reform
(see for example the Nayak Committee Report). These pertain to mostly PSB’s.
Stepping back from these proximate issues allows a deeper analytical diagnosis of the
problems of Indian banking which in turn provide the basis for more calibrated
solutions. These pertains to both public sector as well as private sector banks.
The challenges in the Indian banking system lie elsewhere and fall into two
categories: policy and structure. The policy challenge relates to financial
repression. The Indian banking system is afflicted by what might be called “double
financial repression” (Figure 3).
24. 1. Financial repression on the liability side:
Figure 4 plots the average rate of return on deposits in all scheduled commercial banks
in India over the last 14 years. These are calculated as the difference between the
weighted average return on term deposits as reported by the Reserve Bank of
India minus the CPI-IW Inflation rate for that year as reported by the Central
Statistics Office. High inflation and limited return on banks’ assets has ensured that the
rates maintained by banks fetched households a negative real rate of return on deposits.
Financial repression on the liability side has arisen from high inflation since2007,
leading to negative real interest rates, and a sharp reduction in households’ financial
savings.
25. Figure 4: Average rate of return on deposits
-6
-4
-2
0
2
4
6
8
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Average Real Rate Of Return On Deposits
Source: RBI and Central Statistical Units
26. As India exits from liability-side repression with declining inflation,
ranging in between 5-6% in past 5 years (2011-2016), the time may
be appropriate for addressing its asset-side counterparts.
The structural problems relate to competition and ownership. First,
there appears to be a lack of competition, reflected in the private sector
banks’ inability to increase their presence. Indeed, one of the paradoxes
of recent banking history is that the share of the private sector in overall
banking aggregates barely increased at a time when the country
witnessed its most rapid growth and one that was fuelled by the private
sector. It was an anomalous case of private sector growth without
private sector bank financing. Even allowing for the irrational
exuberance of the Public Sector Banks (PSBs) that financed this growth
phase, the reticence of the private sector was striking.
27. 2. Financial repression on the Assets side:
Financial repression on the asset side of the balance sheet is created by
the statutory liquidity ratio (SLR) requirement that forces banks to
hold government securities, and priority sector lending (PSL) that
forces resource deployment in less than- fully efficient ways
The Statutory Liquidity Ratio is a requirement on banks to hold a certain
share of their resources in liquid assets such as cash, government bonds
and gold. In principle, the SLR can perform a prudential role because
any unexpected demand from depositors can be quickly met by
liquidating these assets.
28. Statutory Lending Ratio (SLR):
SLR requirements have traditionally been high. From 38 per cent in the
period before 1991, there was a dramatic decline to about 25 per cent at
the end of the 1990s. Since then however, the number has hovered
around the quarter century mark, only recently falling to 22 per cent. As
of Feb 4, 2015 the minimum requirement is 21.5 per cent of total assets.
Banks typically keep more than the required SLR, the current realised
SLR is in fact over 25 per cent. In practice, the SLR has become a
means of financing (at less than market rates presumably) a bulk of
the government’s Fiscal Deficit, suggesting that SLR cuts are related
to the government’s fiscal position. It makes a case for gradually
reducing this requirement- both to free up capital for the banks and to
make the market for government bonds more liquid
29. Priority Sector Lending (PSL)
A key component of equality of credit in India has been the so called “priority sector
lending”. All Indian banks are required to meet a 40 per cent target on priority sector
lending. The law states that all domestic commercial banks, public or private, have to
lend 40 per cent of their adjusted net bank credit (ANBC) or credit equivalent
amount of their off balance sheet exposure— whichever is higher—to the priority
sectors, and number for foreign banks (with more than 20 branches) is 32 per cent.
Further, public sector banks have clearly defined rules they have to follow in the
subcategories- agriculture, micro and small enterprises, education, housing,
export credit and others. The most important amongst them is that 45 per cent of
all priority sector lending must be made to agriculture.
From previous many decades the most challenging factors of the Indian
banking sector has been the funding of Government’s Capital account
deficit and Fiscal deficit through the SLR which resulted in the squeeze
on the balance sheets of the public sector banks. And the other aspect is
the Priority sector lending PSL.
30. 3. Comparative analysis of banking and credit:
We start with the size of credit in India. In terms of a number of
indicators, the Indian financial sector does not appear to be an outlier.
The overall credit- GDP ratio as well as the proportion of total credit
accounted for by the banking sector is not out of line taking account of
India’s level of development. Moreover, its size hasn’t increased
dramatically over time compared to other countries. While the boom
years of the last decade both spawned and were fed by a credit boom,
originating in the public sector banks, irrationally exuberant behaviour
was not out of line with similar experiences in other countries.
31. 0
50
100
150
200
250
1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
CHN IND JPN KOR
Figure 5: Domestic Credit to GDP% Ratio. India below low middle income
countries
32. 4. Comparative analysis of Public sector banks and Private sector banks:
In the context of the Structural Problems related to Competition and
Ownership.
A primary concern of the health of the banking sector
in India has been lack of sufficient internal
competition. Private banks have slowly been brought
into the arena since 1990. It is important to note that
India’s approach was not privatisation of public sector
banks, rather it was based on allowing entry of new
private banks. This strategy worked reasonably well in
the telecommunication and civil aviation sectors but
did it work in banking? The results have been mixed.
33. Figure 5 A and B show that India saw a steady rise in the
size of private sector banks till 2007 both in relation to
deposit and lending indicators. Thereafter, the process
slowed considerably (and of course in the aftermath of the
Lehman crisis, there was a flight to safety toward the PSBs).
So, one of the paradoxes of recent banking history is that
the share of the private sector in overall banking aggregates
barely increased at a time when the country witnessed its
most rapid growth and one that was fuelled by the private
sector. It was a case of private sector led growth
without private sector bank financing. Even allowing
for the irrational exuberance of the PSBs that financed this
growth phase, the reticence of the private sector was
striking.
36. INCLUSIVE GROWTH OF BANKING SECTOR:
RBI has taken several steps during 2005 to set up a full
network of financial services all across India. These
steps were regulatory as well as others. In the starting
the banks were asked to open up no-frills account or
zero balance accounts in all the unbanked areas
viz. Small villages, blocks and talukas all across the
country in 2012 this was called Adharbhut bachat
bank savings account and later the same was termed
and are now known as JAN DHAN Accounts.
37. Rangrajan Committee:
The financial inclusiveness was the primary goal for which a Committee was
formed under in 2008. In the advices of this committee among several steps
the important ones were savings, credit, micro insurance and refund and
safety of funds to the poor.
As a result to implement the recommendations of this committee, the banks
were asked to take up any one district to achieve the target of 100% financial
inclusiveness.
Banks were given a target to provide facilities in all the distant villages at low
cost based on ICT (Internet Communication and Technology) banking
correspondent model.
The board has started in 2010 a three years financial inclusiveness plan FIP.
Prepared a roadmap to reach all the villages of population up to 2000 till
2012, and in villages of population between 1000 and 2000 till 2013.
Availability of at least 4 banking products.
Opening of at least 25% new branches in the unbanked villages of the
country.
Kisan Credit card started to be issued in this direction was another
important step.
38. THE NPA Resolution:
In the meantime the following other challenges in the
form of NPA’s Non performing Assets came to bother
the banks across all levels. If we see the plot of level of
NPA’s in all the banks during 2011 to 2016-06-30, the
same shows a steep climb.
40. When we see the level of NPA’s across various
Industries based on size then we see that it is majorly
provided to the Big and medium sized units rather to
the medium and small enterprises.
In recent developments starting of Small and medium
enterprise/unit development and reconstruction
agency MUDRA. Banks started to provide loans to
small enterprises whose financial requirements were
below 10 lacks
42. REFERENCES
My Personal Diary
Newspaper reports and Magazines
Indian Economic Survey 2014-2015
Yojana – A Government. Publication.
RBI Reports
Central Statistical Organisation.
World Bank databank.