bankingindustryppt

7/29/2019 bankingindustryppt

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Banking IndustryRecent trends and the road ahead


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OBJECTIVES

Main history of Indian Banking Industry.

Past performance and trends.

Major changes in recent past.

Current scenario.

The road ahead and challenges.


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History and introduction to banking

industry

Originated in the last decade of the 18th

century. The General Bank Of India(started-1786),Hindustan

Bank(started -1790).

Formation of RBI in1934, got nationalized in January 1949

under RBI act. Nationalization:

Except SBI every other bank was functioning

independently.

In 1969 ,14 banks got nationalized.

6 more banks got nationalized in 1980.


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Post liberalization era: Initially 10% FDI allowed, at present 74% with some

restriction.

Conversion from 4-6-4 model to 8 to 8

banking(present).

Adaptation of technology: Internet banking

Electronic fund transfer

Automatic teller machines.

Core banking solutions.


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Past performances and trends

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

2 4 6 8 10

priority

non priority

public

1) Non performing asset

Priority sector worst

performer in recent past.

Non priority goodperformance till 2008.

Public sector has been

good and consistent

performer throughout.


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Profitability

Despite high interest rates and high NPA and highprovisioning requirement the banking sector

witnessed growth

Growth of investments decelerated

Operating expenses grew at a higher rate Growth of other income decelerated

1. ROA moved from 1.05% to 1.10 %

2. ROE also witnessed improvements.


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Soundness indicators

Asset qualityPrivate sector saw a growth, whereas public sector assetquality declined due to higher NPA

Agriculture contributed 44% in Higher NPA

Leverage Ratio

Remained constant at 6%

Credit boom

No chances of credit boom despite higher credit growth


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CRAR

Declined owing to decline in tier2 CRAR ratio.

migrating to Basel II framework, the parallel run of Basel I is

also continuing as a backstop measure. The CRAR of all

bank groups under Basel I remained well above the stipulated

regulatory norm of 9 per cent in 2010-1.

Under Basel II also, the CRAR of SCBs remained well above

the required minimum in 2010-11.

This implies that, in the short to medium term, SCBs are not

constrained by capital in extending credit


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Current scenario

Indian banking industry maintaining resilience whileproviding for growth opportunities.

Survey by Ficci shows: Regulatory framework, economic growth and insulation

from external market is major reason for the betterperformance.

Regulatory systems of Indian banks were rated better

than China, Brazil, Russia, UK and at par with Japan,

Singapore and Hong Kong.

Indias Risk management systems more advanced

than China, Brazil and Russia


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Overview

A rigorous evaluation of the health of commercialbanks, recently undertaken by the Committee on

Financial Sector Assessment (CFSA) also shows

that the commercial banks are robust and versatile.

The single-factor stress tests undertaken by the

CFSA divulge that the banking system can endure

considerable shocks arising from large possiblechanges in credit quality, interest rate and liquidity

conditions


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Current challenges


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Human resource challanges

Thus, on the whole, we see

that Public Sector Banks,

Private Sector Banks as

well as Foreign

Banks view difficulty in

hiring highly qualified

youngsters as their biggest

HR threat ahead of

high staff cost overheads,

poaching of skilled quality

staff and high attrition rates


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Strong pillars


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Continued


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Continued


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Continued..


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Globalexpansion


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The road ahead.

Is our banking industry ready for Basel 3 norms

Are we ready for IFRS norms.

Current and emerging environment offers sound

business opportunities to the banks.

Opportunities to the new entrants.

Improving efficiency.

Need to review laws governing the Indian banking

sector

Banking activities.

Credit flow industry.

bankingindustryppt

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