Indian Banking Industry Analysis

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BANKING

Transcript of Indian Banking Industry Analysis

Page 1: Indian Banking Industry Analysis

BANKING

Page 2: Indian Banking Industry Analysis

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

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STRUCTURE

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• 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

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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%

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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

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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)

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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 %)

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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

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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

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Payment Banks

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

Small banks

• Banking Products• Limited Area of Operations

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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

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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

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