banking challenges india
TRANSCRIPT
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Asset liability management, loan procedure
current issues and challenges in banking
industry
Group 7:
Pankhil Shikha (39)
Ravil Patel (44)
Rishabh Diwakar (45)
Rohan Bhardwaj (46)
Samarth Mewada (48)
S c h o o l o f P e t r o l e u m M a n a g e m e n t
Submitted to
Prof. Ashish Shah
26th Aug 2013
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Interest
Rate Risk
Credit
Risk
LiquidityRisk
Risks managed under
ALM
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Tools used by banks for ALM
ALM information systems
ALM Organization
ALM Process
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New Developments in Micro financing
Alifinance, or Alibaba Financial
SME financing arm of Chinese e-commerce firmAlibaba Group
A credit payment service to its 80 million users (up to 5,000 yuan)
To use the service - pay a 1 percent service fee on credit payments
More than 130,000 small and micro-sized enterprises have borrowed atotal of 28.2 billion yuan from Aliloan since April 2010, with only 0.71
percent of the total amount not paid back.
http://www.ebridges-china.com/en/e-commerce-in-china/alibabahttp://www.ebridges-china.com/en/e-commerce-in-china/alibaba -
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Government initiatives
Consolidation of some large banks to create two-three global ones.
Setting up of smaller banks, separate licenses for specific banking
operations instead of a single universal one.
Continuous licensing for new banks and conversion of some urbancooperative banks into full-fledged commercial banks
Relaxed the norm that stipulates non-banking finance companies(NBFCs) to have a minimum gap of six months between two non-convertible debentures (NCDs) issues
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Challenges in Banking Sector
1. Compliances with Basel III norms
CAR
Tier I capital 9% from 8%
Tier II capital 2.5%
2. Asset Quality Deterioration
Economic Slowdown
Elevated Interest rates
Mass restructuring of electricity boards and
infrastructure sector.
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Asset Quality
Source: RBI annual Report
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Kingfisher NPAs SBI consortium of 17 banks total loan exposure 7500 crore
SBI alone 1600 crore.
Slow Manufacturing growth
Poor performance of Infrastructure sector
3. Falling Net Interest Margins Decreased from 3.14% to 3.07 %
Reasons for NPAs
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As per census 2001 As per census 2011
Total
number of
households
Number of
households
availing
banking
services
Percent
Total
number of
households
Number of
households
availing
banking
services
Percent
Rural 138,271,559 41,639,949 30.1 167,826,730 91,369,805 54.4
Urban 53,692,376 26,590,693 49.5 78,865,937 53,444,983 67.8
Total 191,963,935 68,230,642 35.5 246,692,667 144,814,788 58.7
Source: Financial Inclusion ,Dept. of Financial services, Ministry of Finance
4. Financial Inclusion
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Steps to ensure Financial Inclusion
Aadhar Card
Opening of no-frills accounts
Relaxation on KYC norms
New banking licensing (after 1992)
Mandatory % of branches in rural areas
GCC General purpose credit card facility
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