indian banking industry analysis
TRANSCRIPT
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