analysis on the indian banking sector

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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THANK YOU !!

analysis on the indian banking sector

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