analysis on the indian banking sector
TRANSCRIPT
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8/8/2019 Analysis on the Indian Banking Sector
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Present Scenario of the Indian
Banking Sectory Banking scenario in India has already gained all the
momentum, with the domestic and international
banks gathering pace.
y The focus of all banks in India has shifted theirapproach to 'cost', determined by revenue minus
profit. This means that all the resources should beused efficiently to better the productivity and ensure a
win-win situation.
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S m umb rsy Credit growth of banks stood at 19 per cent during the
one-year period ending June 4 2010, up from 15.10 per
cent a year agoyAs on June 4, bank credit stood at Rs 33.82 lakh crore.
In absolute terms, credit expansion was Rs 5.4 lakhcrore
yThe total assets of all scheduled commercial banks byend-March 2010 is estimated at Rs 40,90,000 crores
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Strengths
Extensive service
Largest user of IT as a toolsResistant from Global Financial Crisis
Improvement in the Cost-Income Ration
Profitability
Weakness
Efficiency levels
Payment SystemsCheck clearance
Structural Weakness
Refusal to dilute stake in the PSU bank
Opportunities
Accelerate the creation of world class
supporting infrastructure (e.g.,payments, asset reconstructioncompanies (ARCs), credit bureaus, back-office utilities)
Hybrid Capital
Threats
Efficiency: Banks need to access low costfunds and simultaneously improve the
efficiency
Deregulation and competition in thebanking sector:
New rules
Diffused Customer loyalty
Competency Gap
SWOT Analysis
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Gover ment olicies
Shape a superiorindustry structure
In a phased mannerthrough managedconsolidation
Enabling capitalavailability
Create a unifiedregulator
Distinct from thecentral bank
Overcomesupervisorydifficulties ,reduce
compliance costs
Improve corporategovernance
Increasing boardindependence,accountability
Accelerate thecreation of world
class supportinginfrastructure
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Future outlook of the Indian
Banking Sector(1/2)y The Indian banking industry has major issues to address
for it to grow. They are:
y 1) Competition from Global banks. 2) Rural Banking &Microfinance
y
Assets Under Management (AUM) are expected to grow by15% till 2010; Retail finance is expected to grow at an annualrate of 18%, from US$27.6 billion in 2003-04 to over US$75billion by 2010. Demand for credit likely to grow at 25% p.a.with rapid GDP growth
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Futureoutlook of t e Indian
anking Sector( / )y Indian Retail banking is totally isolated from the rural parts
and only SBI has presence in rural India. This leaves a lot ofroom for expansion.
y Currently microfinance is able to cater the needs of therural poor and the few who arent able to get micro creditresort to local money lenders who charge very high
interest. In order to get more money to expand theiroperations, Indian banks need to expand to rural India andtap in the potential forgetting the fear of increase in grossand net NPAs.
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Features of India t at prompt a ig
growt for banking sector Capital expenditure by the government and private industry
expected to grow at a high rate
Improved asset management practices
Demographic profile favours higher retail
Regulatory and technological enablers leading to high growth
Investment opportunity across all segments in the banking andfinancial services sector
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