BANKING

OVERVIEW

Important industry- Indian Economy

90%- total financial services sector

Service oriented- 24 Hrs. banking solution

10% Contribution to the GDP

By 2017- CAGR of 18.1%

Potential to become- 5th largest in the world

Consists of :26 public sector, 20 private sector, 43 foreign, 61 regional rural & 90,000 credit cooperatives

STRUCTURE

• Controlling money supply in the system• Monitoring different key indicators like GDP and inflation• Maintaining people’s confidence in the banking and financial

system

Regulator- Financial System

• Inflation control• Control on bank credit – CRR and SLR• Interest rate control• Issue currency notes• Control circulation of fake currency

Issuer -Monetary Policy & Currency

• Issue Of License• Prudential Norms• Corporate Governance• KYC Norms• Transparency Norms

Controller & Supervisor

ROLE OF RBI

• Risk Management• Audit and Inspection• Foreign Exchange Control• Development

COMPETITIVE LANDSCAPE

PUBLIC SECTOR BANKS

Number of banks: 26

Number of branches: 75,779

2000 2013 20250.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

7.50% 6.10% 4.70%

80%73%

63%

12.30%20.90%

32.10%

ESTIMATES OF MARKET SHARES ON LINEAR PRO-JECTION

foreign banks public sector banks private sector banks

17%

16%

23%

TOP FIVE COMPETITIVE BANKS

PUBLIC

• SBI• Bank of Baroda• PNB• Canara Bank• Bank of India

PRIVATE

• HDFC Bank• ICICI Bank• Axis Bank• Kotak Mahindra• IndusInd Bank

FOREIGN

• Citi Bank• Standard Chartered• HSBC• DBS Bank• Deutsche Bank

DEPOSITS

2007-08 2008-09 2009-10 2010-11 2011-12 2012-130

10000200003000040000500006000070000

30%31%32%33%34%35%36%37%

PUBLIC SECTOR BANKS

Term Deposits Saving DepositsCurrent Deposits Cost of Funds

(Rs. Billion)

2007-08 2008-09 2009-10 2010-11 2011-12 2012-130

2000400060008000

10000120001400016000

28%

30%

32%

34%

36%

38%

40%

PRIVATE SECTOR BANKS

Term Deposits Saving DepositsCurrent Deposits Cost of Funds

(Rs. Billion)

2007-08 2008-09 2009-10 2010-11 2011-12 2012-130

500100015002000250030003500

36%

38%

40%

42%

44%

46%

48%

FOREIGN SECTOR BANKS

Term Deposits Saving Deposits Current Deposits Cost of Funds

(Rs. Billion)

PERFORMANCE INDICATORS

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

-100.0 -50.0 0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 400.0

NON PERFORMING ASSETS

Old private sector banks New private sector banksForeign banks in India Series5

(Rs. Billion)

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

2.54 2.56 2.7

3.754

3.39

1.541.85

2.352.68 2.75 2.73

4.63

5.49

4.93 5.094.83

3.92

NET PROFITABILITY MARGIN

Public Sector Private Sector Foreign Sector

(In %)

PRIORITY SECTOR LENDING

• Specific Sectors Like Agriculture Or Small Scale Industries

2009 2010 2011 2012 20130

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

2000000

ForeignPrivate public sector

Small Banks & Payment Banks

• a need for transactions and savings accountsObjectives

• registered as a public limited company Registration, licensing and regulations

• successful track record of at least 5 years in running their businesses.Eligibility criteria

• should have a net worth of Rs 100 croreCapital requirement

• cannot undertake lending activities• Invest in Government securities/Treasury Bills with maturity

up to one year Deployment of funds

• majority of independent DirectorsCorporate governance

Payment Banks

• Increase Financial Inclusion• Savings/Deposits/Payments/Remittances• No Credit Lending

Small banks

• Banking Products• Limited Area of Operations

NEW LICENSES AND BASEL III

New License Criteria• Promotor Holding – 50% For First 5 Years• Listing To Be Done With 3 Years Of Commencement• 25% Of Branches In Unbanked Rural Centers• Compliance To Priority Sector Lening TargetIn Principle License Granted To IDFC And Bandhan Microfinance In April

2014

24 Pending Applicants

Basel III

• Improve Ability To Absorb Economic And Financial Stress• To Strengthen The Regulation, Supervision And Risk Management• Capital Adequacy And Liquidity Adequacy

REASONS TO INVEST IN INDIA

India’s Banking Sector Is Constantly Growing

Amended Banking Laws Bill

Robust Demand

Innovation In Services

Business Fundamentals

Policy Support