Banking industry of india analysis - PDF

1. Banking Industry of India Analysis

2. Table Of Content Indian Banking Industry Segmentation Classification of Banks Non Banking financial Company Online and Mobile Banking Role of RBI

3. Indian Banking Segmentation

4. Indian Banking Segmentation

5. Classification of Banks Central Bank (Reserve Bank of India) Commercial banks Co-operative banks Banks can be classified as: Scheduled (Second Schedule of RBI Act, 1934) Non-Scheduled Scheduled banks can be classified as: Public Sector Banks Private Sector Banks (Old and New) Foreign Banks Regional Rural Banks

6. Cooperative Banks: Registered under co-operative society Act,1912 Operated by elected managing committee Work on no profit and no loss basis Serves entrepreneurs, industries and self employment in urban area. Mainly Finance agriculture based activity like farming, livestock and hatchery. small businesses,

7. Schedule Banks : Covered under 2nd schedule of RBI Act, 1934 A bank with paid –up capital of 5 lakh or above ,qualifies for schedule bank category Eligible for taking loan from RBI t banking rate.

8. Private Sector Banks Major equity or share hold by private shareholder Follow all banking rules and regulations laid by RBI. Some big private banks of India are; HDFC,ICICI, Axis Bank etc…

9. Public Sector Banks Nationalised Banks Account for more than 75% of total banking business in India Majority of stakes are held by govt For Example -SBI, Bank of India, PNB, Canara Bank, and IDBI

10. Foreign Bank Has it’s headquarters in foreign country Operates from India as private entity Follows regulations of their home country as well of operating country For Example–City Bank, HSBC and Standard Chartered .

11. Non Banking Financial Company (NBFC) Registered under Companies Act, 1956. Regulated y RBI Engaged in the business of Loans and advances, acquisition of shares,stocks,bonds Different types of NBFC in India are- Asset Finance Company, Investment Company ,Loan Company, Infrastructure Finance Company Other Financial Intermediaries  are Venture Capital Funds ,Hire and Leasing Companies etc.

12. Online and Mobile Banking Services provided by banks to their customers for financial transaction remotely through computer and mobile Services like account information, Transaction, Investments, Customer service Examples – NEFT, RTGS, EMPS, MOBILE WALLLETS, UPI

13. Progress of banking in India (1) Nationalisation of banks in 1969: 14 banks were nationalised Branch expansion: Increased from 8260 in 1969 to 68500 in 2005 Population served per branch has come down from 64000 to 15000 A rural branch office serves 15 to 25 villages within a radius of 16 kms Still only 32,180 villages out of 5 lakh have been covered

14. Progress of banking in India (2) Deposit mobilisation: 1951-1971 (20 years)- 700% or 7 times 1971-1991 (20 years)- 3260% or 32.6 times 1991- 2006 (11 years)- 1100% or 11 times Expansion of bank credit: Growing at 20-30% thanks to rapid growth in industrial and agricultural output Development oriented banking: priority sector lending

15. Progress of banking in India (3) Diversification in banking: Banking has moved from deposit and lending to Merchant banking and underwriting Mutual funds Retail banking ATMs Anywhere banking Internet banking Venture capital funds Factoring

16. Role Of RBI Monetary Authority RBI Controls the supply of money in the economy by its control over interest rate in order to maintain price stability and achieve high economic growth using Monetary Policy Issuer of Currency Sole authority of India to issue of Currency, issues and exchange currency note and destroy when they are not fit in circulation

17. Role Of RBI (Continued) Issuer of Bank License •Under section 22 of Banking regulation, every bank to obtain license from RBI. •Entities /Groups in the private sector, entities in public sector and NBFc shall be eligible to set up a bank through wholly – owned Non – Operative Financial Holding company( NOFHC).They will also need to have sound and successful track record of 10 years.

18. Role Of RBI (Continued) Banker’s Bank Provide Loan to banks Accepts Deposits from bank Regulates opening of new ATM’s and Branches of commercial Banks Other main role RBI play are such as- Lender’s Last Resort, Banker and Debt Manager of Government, Controller of Credit, Acts as cleaning house, Manager of foreign exchange

19. Bank profitability: Suggestions Some suggestions made by Narasimham Committee are: Set up an Asset Reconstruction Fund to take over doubtful debts SLR to be reduced to 25% of total deposits CRR to be reduced to 3 to 5% of total deposits Banks to get more freedom to set minimum lending rates Share of priority sector credit be reduced to 10% from 40%

20. Suggestions (cont’d) All concessional rates of interest should be removed Banks should go for new sources of funds such as Certificates of Deposits Branch expansion should be carried out strictly on commercial principles Diversification of banking activities Almost all suggestions of the Narasimham Committee have been accepted and implemented in a phased manner since the onset of Reforms

21. Conclusion nIndia’s financial system is quite huge and caters to every kind of demand for funds nBanks are at the core of our financial system and therefore, there is greater expectation from them in terms of reaching out to the vast populace as well as being competitive.

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