International Journal of Business and Management Tomorrow

Vol. 2 No. 7

Growth of Commercial Banks in India

Dr. Sandeep Kaur, Department of Economics, Punjabi University, Patiala

Abstract
In the light of liberalization, privatization and globalization a lot of challenges were faced by the commercial banks. After the nationalization and till the early 1990s, the main thrust of banking operations was on social banking and accordingly the emphasis was placed on enhancing the branch network in rural and semi-urban areas. The present paper seeks to analyse the growth, development and challenges of commercial banks in India, which have been occurring in the wake of banking sector reforms in India. The analysis brings into light that in the post-nationalisation period, the proportions of rural areas in total number of bank branches as well as in credit deployment and deposit mobilisation have been declined. On the other hand, the metropolitan areas registered a high increase in their percentage share in total expansion, credit deployment and deposit mobilization. Therefore in the post-nationalisation era, the performance of the banking system with respect to branch expansion in the rural and hitherto unbanked areas, mobilisation of deposits, deployment of credit, population coverage and so on has indeed been creditable and perhaps has no parallel in the annals of banking elsewhere. In order to analyse the growth of banking activities i.e. branch expansion, deposit mobilisation and credit deployment, annual compound growth rate have been calculated. Keywords: Branch Expansion, Commercial Banks, Credit Deployment, Deposit Mobilisation, PostNationalisation Period.

1. Review of Literature
Bhatia (1978) attempted to analyse the economic performance of Indian banking system as reflected in its output, price and profitability over the period 1950-68. The main findings of this study are: (i) the profit performance of Indian banking system during the period 1950-68 has been satisfactory; (ii) the structure of banking system (represented by the number of bank offices and the deposit concentration ratio) during the period has an insignificant effect on its performance. ISSN: 2249-9962 July|2012 www.ijbmt.com Page | 1

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Vashist (1987), in his doctoral work, evaluated the performance of PSBs with regard to six indicators, i.e., branch expansion, deposits, credit, priority sector advances, differential rate of interest, advances and net profits, over the period 1971-83. The study has ranked Indian Overseas Bank at the top and Dena Bank at the bottom. To improve the performance of commercial banks, the study has suggested development of marketing strategy for deposit mobilisation, profit planning and strengths, weaknesses, opportunities and threats analysis in banks. Marugesan and Rao (1991) analysed the performance of Public Sector banks in the context of (i) productivity and growth, (ii) social objectives, and (iii) profitability ratios over the period 1973-86. The major conclusions of the study are (i) the performance in terms of deposit mobilization, opening of branches and deployment of advances during the study period has been impressive, (ii) both operating expenditure and establishment expenditure have declined during this period indicating an efficient management of banking activities, (iii) deposit-credit ratio in rural areas has increased, (iv) public sector banks have not performed better in terms of profitability, and (v) gross and net profits have also declined. Kulkarni (2000) and Kohli (2001) have discussed the various aspects such as manual banking to computerised banking, stage of automation in nationalised banks, new private sector Indian banks and foreign banks. Kohli has found out that the advancement in computing and telecommunications has revolutionised the financial industry, and banking on the net is fast catching on. As e-commerce gets transformed into m-commerce with the increasing use of technologies, banking business is in for a major overhaul. Das and Ghosh (2006) investigated the performance of Indian commercial banking sector during the postreform period. They have evaluated several efficiency estimates of individual banks using non-parametric data envelopment analysis. They have employed three different approaches, viz. intermediation approach, valueadded approach and operating approach in defining inputs and outputs of banks. Mahesh and Rajeev (2006) have attempted to measure the deposit efficiency of Indian commercial banks by using stochastic frontier technique for the period 1985-2004. The results show that, on an average, Indian commercial banks are around 75 per cent efficient in producing deposits compared to the best performing banks within the sample. Public sector banks as a group rank first in the deposit efficiency measures. Deregulation and resulting competition amongst the banks have significant impact on the deposit efficiency of Indian commercial banks.

2. Scope of the Study

Keeping in view the scope of the study, it has been decided to include all scheduled commercial banks in India including the foreign banks operating in India. Therefore, the present study is confined to public sector banks comprising the State Bank of India (SBI) and its seven associates collectively termed as the SBI Group and the nationalised banks. The study would cover a period from 1969 to 2006. It is an appropriate time to assess the impact of financial sector reforms, during which there has been substantial transformation of the whole financial system, on various banking operations in different population groups viz. rural, semi-urban, urban and metropolitan areas.

3. Objectives of the Study

After the initiation of the financial sector reforms, changes in the functioning of the banking sector has become more defined and substantial. This is obviously getting reflected in the pattern of branch expansion, deposit mobilization and credit allocations across various sectors and regions. It will be an interesting study to check the predictability, rationality and the compatibility of these changes with the changing dynamics of the economy. Therefore, in the present paper these aspects will be tested empirically.

4. Research Methodology
The present research work is based on the secondary data only. The secondary data has been collected chiefly from the various RBI Bulletins, Statistical Tables relating to Banks in India, Trend and Progress Reports of Banking in India, Annual Reports of Commercial Banks, Banking Reports on Currency and Finance, Banking Statistics Basic Statistical Returns (all brought out by the Reserve Bank of India, Mumbai). In order to analyse the growth of banking activities i.e. branch expansion, deposit mobilisation and credit deployment, in various population groups, annual compound growth rate have been calculated as follows: CGR = (Present figure Past figure) 1/n - 1 n = number of time periods.

Where,

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5. Introduction
Banking industry is the blood vascular system of our economy. It has a positive role to play in the economic development of the country as repositories of peoples savings and purveyors of credit, especially as the success of economic development depends on the mobilisation of resources and their investment in an appropriate manner. Till 1991, the banking industry as a whole had given emphasis on deposit mobilisation, credit deployment and branch expansion. The rapid growth of banks, especially since nationalisation of major commercial banks in 1969, brought in both quantitative and qualitative changes in their functioning and also approach towards socio-economic development of the country. The banking industry has become a catalyst for growth and development. In the present study, an attempt has been made to study the growth of commercial banks in India since nationalisation in terms of certain major indicators.

5.1 Branch Network

The social control over banking and the policies associated with bank nationalisation had infused a centrifugal tendency to the spread of banking so as to prevent its concentration in urban and well-developed regions. With the financial sector reforms initiated in the mid-1990s and with the freedom given to scheduled commercial banks to operate in a liberalised environment, a centripetal tendency has been in vogue whereby banks operations have been increasingly attracted by those sectors and regions which are relatively well-endowed and rich. As is widely known, the bulk of the territorial spread of branch network, particularly in rural areas and underdeveloped regions, took place prior to the 1990s. Though the reform process of the 1990s did not prevent the banks from expanding rural branch network and in fact, the Narasimham Committee did specifically emphasise the importance of rural institutions and branch banking, in reality quite the contrary has happened. The spread of bank branches has tended to concentrate in urban and metropolitan centres during liberalization period. Until banking reforms the RBI, as a policy, enforced slow down in branch expansion in metropolitan areas. On the other hand, steady increases particularly in the number of rural branches were encouraged on the consideration that the scheduled commercial banks had a role to play in branch banking in the process of institutionalisation of rural savings. The comparative position of the expansion of the bank branches in different population groups is shown in Table 1. The rural branches of scheduled commercial banks have increased from 17.6 per cent in June 1969 to 56.9 per cent in March 1991. After this, the percentage of rural branches has continuously decreased and it has become 43.2 per cent in March 2006. The fall in the rural branches has been due to the policy changes introduced during nineties. In the decade that followed 1990 (reform period), it was felt that haphazard growth should be contained and there should be qualitative network in branch banking. The Narasimham Committee-I recommended that branch licensing be abolished, and the matter of opening and closing branches may be left to commercial judgment of individual banks. However, this recommendation was partly implemented. Although branch licensing has not been abolished, greater operational freedom has been given to individual banks to open certain specialized branches as well as expending branches in a more systematic way in its geographical spread. Of late, the banking system has been increasingly looking towards technology-based delivery channels and progressive reduction of physical branches to the extent possible. However, banks were allowed to convert their non-viable rural branches into satellite offices on certain conditions. Moreover, in November 1998, RBI had allowed banks to close down or merge loss making branches in certain specific areas. Five years old branches could be considered for closure if these were incurring losses for 3 consecutive years. The closing down of branch would be considered only when it is found to be posing a threat to the banks property or the lives of its employees. Although it had been stated that if the branch was located in an area where no other bank is available, even the loss making branch would not be closed, but the scheduled commercial banks had chosen the easy option of stopping any such rural expansion. Due to all these reasons, the percentage of rural branches has declined and the percentages of semi-urban, urban and metropolitan branches have increased. While the percentage of urban branches has increased from 14.3 per cent in March 1991 to 17.9 per cent in March 2006, this figure has increased from 10.0 per cent to 17.0 per cent for metropolitan areas during the same period. Before March 1991, the number of urban and metropolitan branches has decreased as shown in Table 4.1. There has also been slight rise in the number of semi-urban branches. The number of semi-urban branches rose from 18.7 per cent in March 1991 to 21.9 per cent in March 2006. The analysis of the annual trend growth rates depicts that growth of the share of rural branches in total branches has increased by an impressive figure of 6.67 per cent from 1969 to 1980 but this figure is as low as -1.99 per cent for the period 1991-06. On the other hand, during the period 1969-80, growth rate share of the urban and ISSN: 2249-9962 July|2012 www.ijbmt.com Page | 3

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metropolitan area in total commercial branches has declined by -2.26 per cent and -2.80 per cent respectively, but these figures have risen by 1.36 and 4.01 per cent respectively during the period 1991-00. The growth rate of the share of semi-urban branches has been negative for the two periods, i.e., 1969-1980 and 1981-90. However, the annual trend growth rate has been positive for the next two decades. Thus, the overall analysis of the table provides that relative share of rural branches in the total branch network has gone up significantly (25.6 per cent) during the period 1969-2006, while the relative share of other categories, viz. semi-urban, urban and metropolitan branches has declined during the same period. However, it is important to note that the share of rural branches has declined, and the share of urban and metropolitan branches has increased during the post-liberalization period. The percentage distribution of number of branches of scheduled commercial banks according to bank group is shown in Table 2. The share of nationalised commercial banks in the total branches of commercial banks have increased from 50.6 per cent on the eve of nationalisation to 55.8 per cent at the end of June 1980 and declined to 49.8 per cent at the end of March 2006. In the case of SBI group, the percentage share of branches has declined from 30.9 per cent on the eve of nationalisation to 19.8 per cent at the end of March 2006. A glance at the growth of the percentage share of Regional Rural Banks provides that the figure has fallen after 1991, i.e., after the introduction of new economic policy. The percentage share of other scheduled commercial banks has increased from 18.5 per cent in June 1969 to per cent in June 1979, and then declined to 9.4 per cent at the end of March 2006. Annual trend growth rate of the share of the regional rural banks in total is 1.64 per cent which is higher as compared to growth rates of other banks during the period under study. Hence, it is apparent from Table 2 that the share of number of branches of SBI group and its associates, and nationalised banks has been slow since 1991. There has been a positive growth in these figures in the decade of nineties but it has fallen during the six years of next decade. The share of other scheduled commercial banks has risen continuously after the introduction of financial sector reforms. Also looking at the aggregate position, for nationalised banks the percentage of branches has decreased only by 0.8 per cent, while for state bank groups and other scheduled commercial banks the proportion of branches has decreased by 11.1 per cent and 9.1 per cent respectively over the period 1969-2006. Whereas for regional rural banks the proportion of the branches has increased by 12.4 per cent during the period 1980-2006 and for foreign banks this share has increased slightly by 0.1 per cent during the period 1990-2006.

5.2 Bank Credit

5.2.1 Population Group-wise Share of Bank Credit Bank credit has a dynamic role to play in the regions and sectors, such as self-employed production units, small farmers and small-scale enterprises, as their growth and survival, depend on external finance. It is not only that the rural branch network has stagnated but the relative sizes of rural deposits and credit have also receded, and above all, the extent of credit deployed from out of deposits mobilised in rural areas has rapidly fallen. Because of the changes in the classification of centres as per the population census data from time to time, the comparability of banking data by population groups has been affected. However, the data presented in Table 3 shows that the share of rural as well as semi-urban and urban branches in aggregate credit has declined in nineties. The table indicates that during June 1969, the share of rural centres in total credit has been 1.5 per cent which rose to 15.4 per cent during June 1990. It might be due to the introduction of Jawahar Rozgar Yojana (JRY), Jawahar Gram Samridhi Yojana (JGSY), and alike employment schemes; and implementation of various rural centric development projects. But from March 1990 onwards, there has been a continuous decline in the share of rural centres. The same trend has been found in the case of semi-urban and urban sector commercial banks. The growth rate analysis of the share of different sectors shows that the share of rural sector commercial banks has been as high as 14.95 per cent during the period 1969-1980. However, it slipped to 3.81 during the next decade. It is important to note that growth rate has fallen to negative during nineties and early twenties. Same trend has been found in the case of semi-urban and urban sector but with a little difference. The metropolitan branches of commercial banks have shown a different trend. Their share in total credit has been increasing after liberalization period. Therefore, it is important to note that during nineties and early twenties their trend growth rate has been positive and the highest as compared to branches in rural, semi-urban and urban areas. The analysis of the table brings out that rural, semi-urban and urban areas remained neglected during the liberalization period at the cost of metropolitan areas so far the deployment of total credit by scheduled commercial banks is concerned. This is a matter of great concern as the rural, semi-urban and urban areas are highly important for an equitable and balanced regional development. ISSN: 2249-9962 July|2012 www.ijbmt.com Page | 4

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5.2.2 Bank Group-wise Share of Bank Credit Bank group-wise distribution of credit of scheduled commercial banks is shown in Table 4. The table indicates that although the share of nationalised banks in total credit of scheduled commercial banks has been the highest from 1969 to 2006, but a falling trend is seen particularly during the liberalization period. While the share of other scheduled commercial banks in total credit of scheduled commercial banks has increased after liberalization period from its minimum figure of 3.7 per cent during 1990 to 20.0 per cent in 2006. The growth rate of the share of the credit of other scheduled commercial banks is the highest in nineties and early twenties. During the entire period, i.e., from 1981 to 2006, the share of Regional Rural Banks (RRBs) has grown at the rate of 2.54 per cent which is the highest as compared to other bank groups for the same period. This may be due to the fact that the Regional Rural Banks have been established with the aim to take the banking services to the doorsteps of rural masses especially in remote rural areas where they have no access to such services. The commercial banks could not meet the entire credit needs of the rural mass due to the lack of sufficient funds, cooperatives, and interest in rural credit field. This has created a wide gap in the rural credit scenario of the country. The Narasimham Committee in its report suggested for setting up new banking institutions which must be regionally-based, rural-oriented and owned by the Government. Accepting the recommendations of the Narasimham Committee the President of India promulgated the Regional Rural Banks Ordinance on September 26, 1975. This was later replaced by the RRBs Act, 1976 and was deemed to have come into force on 26th September, 1975. 5.2.3 Credit Allocation Occupation-wise The sectoral pattern of bank credit distribution underwent a significant transformation after the nationalization of banks. In this respect, broadly three distinct phases are discernible: (i) till the end of the nineties, there has been steady improvement in the share of agriculture in total bank credit which happened at the cost of industry share; (ii) the decade of the nineties has seen a reversal of the trend. The agriculture share has seen a steep decline in it with the industry share remaining generally static and with the services sector including trade gaining in importance; and (iii) the latest phase after 2000 in which the banks have aggressively moved in favour of retail loans in the form of personal loans for housing, consumer durables and other personal requirements; in this phase the share of agriculture has made a fractional recovery even as the industry share has continued to fall. The sector-wise distribution of bank credit has been shown in Table 5. Agricultural sector is of great importance both from the economic and social perspective but only 9.02 per cent of total credit outstanding has gone to this sector in 1972. With the adoption of 20-point Programme in July 1975 and priority sector lending in the eighties, the credit flow to this sector reported a continuous increase. By June 1989 as much as 17.34 per cent of total credit allocation has gone to agriculture credit allocation has gone to agriculture sector. From this year onwards, particularly in nineties, there has been continuous decline in credit flow to agriculture sector. By March 2001, agriculture sector is appropriating only 9.61 per cent of total credit outstanding. This small percentage showing a decline might be due to the fact that 60 per cent of the agriculture credit needs are catered by the unorganised financial sector. Not only this, the recommendation made by Narasimham Committee to reduce the target of priority sector lending might have affected the decision of banks to lend more to agriculture sector. This is a matter of grave concern. However, the credit flow to agriculture sector started improving after 2001 and it was 11.41 per cent of the total credit allocation in 2006. The trend growth rate has been quite higher during the period 1972-80 as compared to other periods. In June 1972, as much as 61.15 per cent of total credit outstanding has been accounted by the industrial sector. However, from this year onwards, credit flow to this sector started declining and it reached at the lowest figure of 37.40 per cent in 2006. The reasons might be that since financial sector reforms, capital adequacy norm and risk weighted portfolio management compelled banks to stay away from small borrowers, and go in favour of medium and large size industries to increase the profitability. Transport sector suffered the most as far as credit allocation is concerned. It can be observed from the table that its share in the total credit outstanding has increased from 1.58 per cent in 1972 and reached at the highest figure of 5.45 per cent in 1983. Since onwards, there has been a continuous decline in credit flow to transport sector and it touched the figure of 1.57 per cent in 2006. If we look at the growth of the percentage share of transport sector, it is clear that during the period 1972-80 it has achieved the highest growth rate of 14.46 per cent and there has been a continuous fall in the growth percentage after this period. The role played by trade and transport component has been vital for the improvement of economy particularly after liberalization. India, being an underdeveloped economy, there is need to do more for the development of this sector. For this, institutional credit allocation to this sector becomes all the more important. But it has been observed that the share of trade and transport in total credit outstanding has fallen alarmingly not only during the nineties but even onwards. This fall might compel this sector to go for comparatively expensive credit from unorganised sector. Personal loans, and professional and other services in total credit outstanding saw a continuous rise during the last decade. Their share in the total credit outstanding has increased drastically from 3.43 per cent and 1.52 per cent to the highest level of 23.33 per cent and 5.41 per cent respectively during the ISSN: 2249-9962 July|2012 www.ijbmt.com Page | 5

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period under study. However, the highest growth rate in shares of respective sectors in total credit outstanding has been achieved by personal loans, i.e., 6.19 per cent during the period under study. As the economy grows, personal and professional services in particular find an expansion in their share in the total national income. It is obvious that it should get reflected in the credit allocation pattern and it has been observed in the predicted line. Thus, credit allocation in this sector is progressive over the period. Trade is also another significant component of the services sector vis--vis economy. This component of the services sector affects exponentially the national income, but credit allocation pattern in this sector is showing a similar trend as in the case of transport sector. The annual growth rate is 6.79 per cent for the period 1972-80 and decreased to -10.03 per cent during 2001-06, which is the lowest figure as compared to other sectors in this decade. Thus, on the whole, the position that emerges from Table 5 is that the sector-wise credit allocations by commercial banks have shown a mixed trend. Some of the sectors like personal loans, professional and other services, and agriculture have captured a major portion of scheduled commercial banks credit allocation, whereas the sectors like industry, trade and transport have shown a decline in their share. It has also been observed that the long-term government policies are the guiding principle rather than short-term economic requirements in the scheduled commercial banks credit outstanding.

5.3 Deposit Mobilisation

The commercial banks have emerged as one of the major financial intermediaries in the country to mobilise the communitys financial savings. Sustained efforts have been made by commercial banks to induce people to keep a part of their savings as bank deposits. Deposits mobilised by the banks are utilised for: (i) loans and advances, (ii) investments in government and other approved securities in fulfilment of the liquidity stipulations, and (iii) investment in commercial papers, shares, debentures, etc. up to a stipulated ceiling. There has been a substantial increase in the deposits of scheduled commercial banks during the post-nationalization period. 5.3.1 Population Group-wise Share of Bank Deposits Table 6 shows the distribution of deposits of scheduled commercial banks according to population group since 1969. The share of metropolitan population in total deposits has been the highest followed by urban and semiurban for all the years under study. The share of rural population has been the lowest. It is important to note that the share of metropolitan and rural population in total deposits has increased during the years 1969 to 2006 at the cost of urban and semi-urban population. A close look at the trend growth rates of the shares indicates that the share of metropolitan population in the total deposits of commercial banks has increased tremendously during the liberalization period, while the share of rural population increased positively during the preliberalization period. It might be due to the fact that the branches of commercial banks have grown at the rate of 30 per cent per annum during the period 1970-90. The branch expansion in the rural areas has witnessed a slow down during the reform period. 5.3.2 Bank Group-wise Share of Bank Deposits Table 7 carries the data showing the bank group-wise distribution of deposits of the scheduled commercial banks. The analysis of bank group-wise share in deposits of scheduled commercial banks depicts that nationalised bank group has contributed more than 50 per cent in the total deposits mobilised by all scheduled commercial banks till the year 2003, after which it has fallen though marginally. However, after reaching at the highest figure of 61.9 per cent during June 1990, there has been a sharp fall of 13.4 per cent from June 1990 to March 2006. The share of deposits of State Bank group remained more or less constant during the 36-year period constituting a little more than one-fourth of the total deposits by all scheduled commercial banks. State Bank group is successful in holding on to its percentage share deposits in total deposits of all scheduled commercial banks. However, nationalised bank group is seen to be losing its share in total deposits. The share of foreign bank group in total deposits has shown an increasing trend till March 1997 after which it started falling. In the case of other scheduled commercial banks, their share has gone up from 4.4 per cent in 1990 to 19.4 per cent in 2006. This shows that other scheduled commercial banks have taken a head start in the deposit mobilisation after the liberalization measures adopted with regard to entry of new private sector banks in 1993. That is why, the annual compound growth rate of the share of other scheduled commercial banks in total deposits has been higher during 1991-00 and 2001-06 with the respective percentage of 12.85 and 7.92 as compared to other bank groups.

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6. Suggestions
Based on the findings of the study several suggestions are made for improving commercial banks overall performance. The commercial banks need to focus on the following suggestions: Banks must continue to pay adequate attention to deposits and credit as they constitute the core of banking activity and a substantial portion of income and expenditure is associated with them. So far as deposits are concerned, it is safe area of business expect for few stray instances of operational risks like human errors, frauds and forgeries. Credit is the real activity that should be managed to generate profits by keeping three cardinal principles of investment in mind Liquidity, Solvency and Profitability. Without adversely affecting the quality of services, the banks should device the strategies to cut down and control the costs. The cost should be kept at a minimum possible level. A cautious approach to the branch expansion policy, reducing the level of establishment expenses, optimum use technology that minimizes the costs, etc. Another area, which requires urgent attention, is improving staff productivity particularly in public sector banks. There is need to downsize staff to cut high cost of staff expenses. It is also necessary to redistribute staff to strengthen the neglected areas of marketing

7. Conclusion
It is clear from the above discussion that the banking industry in India has made a remarkable and creditable progress particularly with respect to branch network, deposit mobilisation and credit deployment. The public sector banks have a large network of branches as compared to other bank groups. On an aggregate basis, commercial banks credit allocation to rural, semi-urban and urban region witnessed a consistent fall, whereas metropolitan region witnessed an increase in their share of the total credit allocation in the nineties. The public sector banks continued to play a very prominent role in both deposit mobilisation and credit disbursal even after the implementation of reforms since 1991. They contributed about 75 per cent of their total deposits mobilised and total credit advanced by all scheduled commercial banks. However, the entry of domestic private sector banks has been altering this trend to some extent since the late nineties. In fact, it is important to keep in mind that excessive competition may create an unstable banking environment, while insufficient competition may breed inefficiency or reduce credit access for the needy borrowers.

Dr. Sandeep Kaur, Department of Economics, Punjabi University, Patiala

References
Bhatia, R.C. (1978). Banking Structure and Performance: A Case Study, Unpublished Doctoral Dissertation. West Virginia Univer sity (USA). Das, A. & Ghosh, S. (2006). Financial Deregulation and Efficiency: An Empirical Analysis of Indian Banks during the Post-reform Period. Review of Financial Economics, Vol. XV, pp. 193-221. Kohli, S.S. (2001), Indian Banking Industry: Emerging Challenges. IBA Bulletin, Vol. XXIII, No. 3, March, pp. 437-448. Kulkarni, R.V. (2000). Changing Face of Banking from Brick and Mortar Banking to E-banking. IBA Bulletin, Vol. XXII, No. 1, January, p.8. Mahesh, H.P. & Rajeev, M. (2006). Banking on Deposit Mobilisation: Efficiency Pursuits of Indian Commercial Banks. The Indian Economic Journal, Vol.54, No. 3, October-December. Marugesan, B. & Rao, C. (1991). Production, Profitability and Social Objectives in Public Sector Commercial Banks in India. Journal of the Indian Institute of Bankers, Vol.67, No. 3, pp. 100-102. Vashist, A.K. (1987). Performance Appraisal of Commercial Banks in India. Ph.D. Thesis, Department of Commerce, H.P. Universi ty, Shimla.

Table 1: Percentage Distribution of Number of Branches of Scheduled Commercial Banks According to Population Group (in per cent) Year Rural Semi-urban Urban Metropolitan Total Jun-1969 17.6 40.8 23.3 18.3 100.00 Jun-1972 36.0 31.4 18.0 14.6 100.00 Jun-1973 36.0 31.0 18.1 14.9 100.00 Jun-1974 36.1 30.5 18.3 15.1 100.00 Jun-1975 35.6 30.4 18.8 15.2 100.00 Jun-1976 35.4 30.7 19.0 14.9 100.00 Jun-1977 37.2 30.0 18.7 14.1 100.00 Jun-1978 41.3 27.8 17.5 13.4 100.00 Jun-1979 43.3 26.8 16.8 13.1 100.00 Jun-1980 45.7 25.6 16.3 12.4 100.00 Jun-1981 48.0 24.5 15.7 11.8 100.00

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Source: Note:

Jun-1982 50.5 23.0 15.0 11.4 100.00 Jun-1983 50.9 23.0 15.1 11.0 100.00 Jun-1984 53.7 20.4 15.1 10.8 100.00 Jun-1985 54.3 20.3 15.0 10.4 100.00 Jun-1986 54.6 19.8 15.0 10.5 100.00 Jun-1987 54.7 19.7 15.1 10.5 100.00 Jun-1988 54.6 20.1 14.9 10.4 100.00 Jun-1989 55.7 19.3 14.7 10.3 100.00 Jun-1990 56.5 19.0 14.4 10.1 100.00 Mar-1991 56.9 18.7 14.3 10.0 100.00 Mar -1992 56.8 18.7 14.5 10.0 100.00 Mar -1993 56.3 18.6 14.9 10.1 100.00 Mar -1994 55.9 19.0 15.0 10.1 100.00 Mar -1995 51.7 21.2 15.0 12.1 100.00 Mar -1996 51.2 21.3 15.2 12.3 100.00 Mar -1997 50.5 21.4 15.5 12.6 100.00 Mar -1998 49.9 21.5 15.7 12.9 100.00 Mar -1999 49.2 21.5 16.1 13.2 100.00 Mar -2000 48.7 21.7 16.2 13.4 100.00 Mar 2001 48.3 21.8 16.3 13.6 100.00 Mar 2002 47.8 21.9 16.6 13.7 100.00 Mar 2003 47.4 22.1 19.8 13.7 100.00 Mar 2004 46.8 22.2 17.0 14.0 100.00 Mar 2005 45.7 22.3 17.6 14.4 100.00 Mar -2006 43.2 21.9 17.9 17.0 100.00 Annual Trend Growth Rate 1969-80 6.67 -3.34 -2.26 -2.80 1981-90 1.57 -2.58 -0.59 -1.48 1991-00 -1.99 2.08 1.36 4.01 2001-06 -1.99 0.23 1.41 3.74 Total 1.17 -1.25 -0.33 -0.20 Basic Statistical Returns of Scheduled Commercial Banks in India, Various issues, Published by RBI, Mumbai. Rural Centres: Places with population over 10,000 Semi-urban Centres Places with population over 10,000 and up to 1, 00,000 Urban Centres: Places with population over 1, 00,000 and up to 10, 00,000 Metropolitan Centres: Places with Population over 10, 00,000

2: Percentage Distribution of Number of Offices of Scheduled Commercial Banks According to Bank Group (in percent) Year NationalisedState Bank of India andRegional Rural Foreign Other Scheduled All Scheduled Banks its Associates Banks Banks Commercial Banks Commercial Banks Jun-1969 50.6 30.9 18.5 100.00 Jun-1972 53.2 29.2 17.6 100.00 Jun-1973 53.2 29.1 17.7 100.00 Jun-1974 53.6 28.1 18.3 100.00 Jun-1975 53.1 28.0 18.9 100.00 Jun-1976 52.3 27.4 20.3 100.00 Jun-1977 50.8 25.9 23.3 100.00 Jun-1978 49.2 25.1 25.7 100.00 Jun-1979 48.3 24.5 27.2 100.00 Jun-1980 55.8 23.9 8.4 11.9 100.00 Jun-1981 54.7 23.1 10.6 11.7 100.00 Jun-1982 53.2 22.1 13.6 11.1 100.00 Jun-1983 51.9 21.6 15.8 10.6 100.00 Jun-1984 49.5 21.4 19.0 10.1 100.00 Jun-1985 47.6 20.1 23.1 9.2 100.00 Jun-1986 48.0 20.0 23.6 8.4 100.00 Jun-1987 48.2 19.8 23.9 8.1 100.00 Jun-1988 48.3 19.7 24.1 7.9 100.00 Jun-1989 48.3 19.8 24.2 7.7 100.00 Jun-1990 49.2 20.0 24.0 0.2 6.5 100.00 Mar-1991 49.6 19.9 23.8 0.2 6.4 100.00 Mar -1992 49.6 20.0 23.7 0.2 6.4 100.00 Mar -1993 49.7 20.1 23.5 0.2 6.4 100.00 Mar -1994 49.7 20.2 23.2 0.2 6.6 100.00 Mar -1995 49.9 20.3 23.0 0.2 6.6 100.00 Mar -1996 49.9 20.2 22.8 0.3 6.8 100.00 Mar -1997 49.9 20.2 22.5 0.3 7.1 100.00 Mar -1998 50.0 20.1 22.2 0.3 7.4 100.00 Mar -1999 50.1 20.0 22.0 0.3 7.6 100.00 Mar -2000 50.1 20.1 21.8 0.3 7.7 100.00 Mar 2001 50.1 20.1 21.7 0.3 7.8 100.00 Mar 2002 49.8 20.1 21.6 0.3 8.2 100.00

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International Journal of Business and Management Tomorrow

Mar 2003 49.9 20.1 21.6 0.3 Mar 2004 49.9 20.0 21.4 0.3 Mar 2005 49.8 19.8 20.9 0.3 Mar -2006 49.8 19.8 20.6 0.3 Annual Trend Growth Rate 1969-1980 -0.13 -2.40 1981-1990 -1.24 -1.66 8.99 1991-2000 0.12 0.05 -1.02 6.33 2001-2006 -0.08 -0.36 -1.05 Total -0.16 -1.12 1.64 3.33* Source: Compiled from various issues of Basic Statistical Returns of Scheduled Commercial Banks in India, Published by RBI, Mumbai. Note:(i) Where the data was not available or found to period of this study has been highlighted respective columns. (ii) The figures with a * Indicate the growth in respect of foreign banks. 8.1 8.5 9.1 9.4 0.89 -5.92 2.35 3.77 -3.16

Vol. 2 No. 7
100.00 100.00 100.00 100.00

be negligible with a rate of the

for - period

a in

certain the

1990-2006

Table 3: Percentage Distribution of Credit of Scheduled Commercial Banks According to Population Group (in per cent) Year Rural Semi-urban Urban Metropolitan Total Jun-1969 1.5 11.3 20.0 67.2 100.00 Jun-1972 4.6 14.0 21.2 60.2 100.00 Jun-1973 4.8 14.3 22.4 58.4 100.00 Jun-1974 5.3 14.7 22.9 57.1 100.00 Jun-1975 5.9 15.1 24.0 55.0 100.00 Jun-1976 5.8 13.3 21.8 59.1 100.00 Jun-1977 6.5 13.8 22.4 57.4 100.00 Jun-1978 7.5 15.1 22.5 55.0 100.00 Jun-1979 8.4 15.6 22.7 53.3 100.00 Jun-1980 9.7 16.2 22.6 51.6 100.00 Jun-1981 11.4 17.4 22.8 48.4 100.00 Jun-1982 12.1 17.2 22.4 48.2 100.00 Jun-1983 12.3 17.7 21.7 48.2 100.00 Jun-1984 14.8 16.4 23.5 45.3 100.00 Jun-1985 13.8 17.5 22.4 46.4 100.00 Jun-1986 14.7 17.6 22.3 45.4 100.00 Jun-1987 15.1 17.7 22.8 44.4 100.00 Jun-1988 15.8 18.4 22.5 43.2 100.00 Jun-1989 16.3 17.3 23.0 43.5 100.00 Jun-1990 15.4 17.1 22.6 44.8 100.00 Mar-1991 15.0 16.3 22.4 46.3 100.00 Mar -1992 15.1 15.8 21.7 47.4 100.00 Mar -1993 14.1 14.5 20.3 51.1 100.00 Mar -1994 14.0 14.0 20.4 51.6 100.00 Mar -1995 11.9 13.5 18.6 56.0 100.00 Mar -1996 11.4 13.1 17.7 57.8 100.00 Mar -1997 11.4 13.1 17.6 57.9 100.00 Mar -1998 11.4 12.8 17.6 58.2 100.00 Mar -1999 11.0 12.7 17.8 58.5 100.00 Mar -2000 10.6 12.2 17.2 60.0 100.00 Mar 2001 10.2 11.5 17.4 61.0 100.00 Mar 2002 10.2 11.2 16.5 62.1 100.00 Mar 2003 10.2 11.3 16.4 62.1 100.00 Mar 2004 9.7 11.4 17.1 61.9 100.00 Mar 2005 9.5 11.3 16.4 62.7 100.00 Mar -2006 8.3 10.0 16.2 65.4 100.00 Annual Trend Growth Rate 1969-80 14.95 2.38 0.89 -1.94 1981-90 3.81 0.19 0.12 -1.23 1991-00 -4.19 -2.98 -2.97 2.97 2001-06 -3.63 -1.88 -0.95 1.07 Total 2.43 -0.19 -0.98 0.26 Source: Compiled from various issues of Basic Statistical Returns of Scheduled Commercial Banks in India, Published by RBI, Mumbai. Note: Rural Centres: Places with Population up to 10,000 Semi-Urban Centres: Places with Population over 10,000 and up to 1,00,000 Urban Centres: Places with Population over 1,00,000 and up to 10,00,000 Metropolitan Centres: Places with Population over 10,00,000.

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Year

Vol. 2 No. 7

Table 4: Distribution of Credit of Scheduled Commercial Banks According to Bank Group (in per cent) Nationalised State Bank of India and Regional Rural Foreign Other Scheduled All Scheduled Banks its Associates Banks Banks Commercial Banks Commercial Banks

Jun-1969 50.8 33.3 15.9 100.00 Jun-1972 54.1 29.4 16.5 100.00 Jun-1973 55.1 30.0 14.9 100.00 Jun-1974 55.9 29.5 14.7 100.00 Jun-1975 55.6 29.7 14.7 100.00 Jun-1976 58.1 28.6 13.4 100.00 Jun-1977 56.2 30.0 13.8 100.00 Jun-1978 54.6 30.3 15.1 100.00 Jun-1979 53.0 31.4 15.6 100.00 Jun-1980 58.4 32.0 0.8 8.7 100.00 Jun-1981 59.1 31.0 1.2 8.7 100.00 Jun-1982 59.3 30.4 1.5 8.8 100.00 Jun-1983 58.5 31.2 1.7 8.6 100.00 Jun-1984 57.4 30.7 2.3 9.6 100.00 Jun-1985 57.9 31.2 2.3 8.6 100.00 Jun-1986 59.6 29.1 2.7 8.6 100.00 Jun-1987 60.3 27.3 3.1 9.3 100.00 Jun-1988 59.9 27.4 3.4 9.4 100.00 Jun-1989 60.1 27.0 3.3 9.6 100.00 Jun-1990 59.6 27.2 3.2 6.2 3.7 100.00 Mar-1991 57.5 28.0 3.0 7.5 4.0 100.00 Mar -1992 55.9 27.4 3.1 9.2 4.3 100.00 Mar -1993 54.3 30.8 2.8 7.4 4.6 100.00 Mar -1994 52.7 32.5 2.9 6.5 5.4 100.00 Mar -1995 53.4 29.2 2.9 7.6 6.9 100.00 Mar -1996 51.1 29.1 2.9 9.0 7.9 100.00 Mar -1997 48.9 29.2 3.1 9.3 9.5 100.00 Mar -1998 48.7 28.6 3.1 9.0 10.6 100.00 Mar -1999 49.2 28.1 3.0 8.2 11.5 100.00 Mar -2000 48.7 27.6 2.9 8.4 12.4 100.00 Mar 2001 48.6 26.8 3.0 8.4 13.2 100.00 Mar 2002 47.3 25.0 2.9 7.3 17.5 100.00 Mar 2003 46.8 24.1 3.0 7.1 19.0 100.00 Mar 2004 46.4 23.7 3.0 7.2 19.8 100.00 Mar 2005 47.8 23.1 2.8 6.6 19.7 100.00 Mar -2006 47.9 23.1 2.4 6.6 20.0 100.00 Annual Trend Growth Rate 1969-80 0.70 -0.9 -3.07 1981-90 0.28 -1.85 12.11 -4.00 1991-00 -1.92 -0.39 0.11 1.49 15.68 2001-06 -1.14 -2.81 -3.43 -4.18 7.32 Total -0.52 -0.63 2.54 0.38* -0.19 Source: Compiled from various issues of Basic Statistical Returns of Scheduled Commercial Banks in India, Published by RBI, Mumbai. Note:(i) Where the data was not available or found to be negligible for a certain period of this study has been highlighted with a - in the respective columns. (ii) The figures with a * Indicate the growth rate of the period 1990-2006 in respect of foreign banks.

Table 5: Outstanding Credit of Scheduled Commercial Banks According to Occupation (in per cent) Year Agricultural Industry Transport Operators Professional and Other Services Personal Loans Trade -1969 -1970 -1971 -1972 9.02 61.15 1.58 1.52 3.43 14.85 Jun-1973 9.02 57.38 1.78 1.65 3.22 18.57 Jun-1974 8.86 59.13 1.85 1.71 3.61 17.45 Jun-1975 10.75 58.39 2.29 1.83 3.54 16.64 Jun-1976 10.39 50.37 2.54 1.68 3.04 26.67 Jun-1977 10.39 47.94 2.69 1.90 2.98 28.44 Jun-1978 12.28 47.68 3.60 1.98 3.04 26.29 Jun-1979 13.15 46.77 4.27 2.04 3.15 25.38 Jun-1980 14.79 48.03 4.28 2.21 3.28 22.44 Jun-1981 16.72 49.13 4.89 2.29 3.45 17.93 Jun-1982 17.15 47.34 5.14 2.26 3.91 18.50 Jun-1983 16.52 47.50 5.45 2.41 3.52 18.61 Jun-1984 17.66 42.33 5.21 2.87 3.27 21.69 Jun-1985 17.64 41.32 4.79 3.07 3.34 23.37

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Jun-1986 17.39 42.66 4.63 Jun-1987 17.29 44.46 4.01 Jun-1988 17.55 46.63 3.87 Jun-1989 17.34 47.32 3.39 Jun-1990 15.93 48.74 3.15 Mar-1991 14.95 47.57 2.93 Mar -1992 14.80 47.70 2.61 Mar -1993 13.57 48.60 2.30 Mar -1994 13.00 48.14 2.57 Mar -1995 11.82 45.61 1.87 Mar -1996 11.31 48.00 1.79 Mar -1997 11.12 49.34 1.82 Mar -1998 10.68 48.82 1.96 Mar -1999 10.69 49.14 1.84 Mar -2000 09.92 46.47 1.75 Mar 2001 09.61 43.91 1.62 Mar 2002 09.76 41.41 1.42 Mar 2003 10.04 40.98 1.24 Mar 2004 10.93 38.03 1.27 Mar 2005 10.79 38.77 1.19 Mar -2006 11.41 37.40 1.57 Annual Trend Growth Rate 1972-80 6.41 -3.61 14.46 1981-90 -0.08 0.01 -5.54 1991-00 -4.54 0.09 -5.29 2001-06 3.61 -3.02 -1.88 Total -0.33 -0.77 -2.45 Source: Compiled from various issues of Banking in India, Published by RBI, Mumbai. Note: Where the data was not available or period of this study has been respective columns. 3.34 3.57 3.72 3.71 2.96 2.95 2.84 2.64 2.66 2.33 3.55 3.14 3.46 3.28 3.18 3.57 4.22 4.49 4.99 4.80 5.41 4.19 5.41 2.43 7.62 2.96 on 3.74 4.17 5.19 4.96 6.42 7.72 8.18 8.32 8.62 8.95 9.27 9.95 10.53 10.35 11.22 12.25 12.58 15.07 20.34 22.21 23.33 -1.26 6.27 4.12 16.10 6.19 Trend and for -

Vol. 2 No. 7
21.25 18.75 14.65 13.90 13.88 14.73 14.26 15.30 15.78 17.12 13.87 13.16 13.88 13.67 15.56 16.63 15.38 13.76 11.52 11.25 9.92 6.79 -3.59 -0.63 -10.03 -1.77 Progress a in

Report

of certain the

found to highlighted

be negligible with a

Table 6: Distribution of Deposits of Scheduled Commercial Banks According to Population Group (in per cent) Year Rural Semi-urban Urban Metropolitan Total Jun-1969 3.1 22.0 25.9 49.0 100.00 Jun-1972 6.5 22.4 25.0 46.2 100.00 Jun-1973 7.1 23.3 25.4 44.2 100.00 Jun-1974 7.8 22.7 24.8 44.8 100.00 Jun-1975 8.1 22.2 24.6 45.0 100.00 Jun-1976 8.7 22.6 24.9 43.9 100.00 Jun-1977 9.0 22.3 24.8 43.8 100.00 Jun-1978 9.9 22.4 25.1 42.6 100.00 Jun-1979 10.6 22.5 24.9 42.0 100.00 Jun-1980 11.9 23.0 25.3 39.8 100.00 Jun-1981 13.0 23.2 24.7 39.1 100.00 Jun-1982 13.8 22.9 25.0 38.3 100.00 Jun-1983 14.1 23.5 24.9 37.5 100.00 Jun-1984 14.4 20.7 26.0 38.9 100.00 Jun-1985 13.4 21.5 26.3 38.8 100.00 Jun-1986 13.9 21.2 25.7 39.3 100.00 Jun-1987 14.3 21.3 26.0 38.4 100.00 Jun-1988 15.1 21.7 25.6 37.7 100.00 Jun-1989 15.0 21.4 25.1 38.6 100.00 Jun-1990 15.3 21.2 24.7 38.9 100.00 Mar-1991 15.5 20.7 24.5 39.4 100.00 Mar -1992 15.1 19.6 23.3 42.0 100.00 Mar -1993 15.0 19.4 23.2 42.4 100.00 Mar -1994 15.2 19.5 22.9 42.4 100.00 Mar -1995 13.7 18.8 22.2 45.3 100.00 Mar -1996 14.4 19.5 22.4 43.7 100.00 Mar -1997 14.7 19.6 22.5 43.2 100.00 Mar -1998 14.5 19.4 22.6 43.5 100.00 Mar -1999 14.7 19.5 22.9 42.9 100.00 Mar -2000 14.7 19.7 23.0 42.6 100.00 Mar 2001 14.7 19.6 22.9 42.8 100.00 Mar 2002 14.2 19.1 22.8 43.9 100.00 Mar 2003 13.8 18.9 22.8 44.5 100.00 Mar 2004 12.9 17.7 21.9 47.5 100.00 Mar 2005 12.2 16.9 21.5 49.4 100.00 Mar -2006 10.8 14.5 20.6 54.1 100.00 Annual Trend Growth Rate 1969-80 10.83 0.14 -0.20 -1.54

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1981-90 1.47 -0.97 0.08 1991-00 -0.53 -0.26 -0.52 2001-06 -5.73 -5.39 -2.11 Total 2.13 -0.82 -0.48 Compiled from Basic Statistical Returns of Commercial Banks, Various issues, Published by RBI, Mumbai. Rural Centres: Places with population up to 10,000. Semi-Urban Centres: Places with population over 10,000 and up to 1,00,000. Urban Centres: Places with population over 1,00,000 and up to 10,00,000. Metropolit.an Centres: Places with population over 10,00,000. 0.01 0.61 4.65 0.17

Vol. 2 No. 7

Source: Note:

Table 7: Distribution of Deposits of Scheduled Commercial Banks According to Bank Group(in per cent) Nationalised State Bank of India Regional Rural Foreign Other Scheduled All Scheduled Banks and its Associates Banks Banks Commercial Banks Commercial Banks Jun-1969 56.5 27.0 16.5 100.00 Jun-1972 56.8 27.1 16.1 100.00 Jun-1973 56.1 27.9 16.0 100.00 Jun-1974 56.2 27.9 15.9 100.00 Jun-1975 55.7 28.4 15.9 100.00 Jun-1976 55.7 28.8 15.5 100.00 Jun-1977 55.4 29.3 15.3 100.00 Jun-1978 56.0 28.3 15.7 100.00 Jun-1979 55.3 28.8 16.0 100.00 Jun-1980 62.3 28.5 0.5 8.7 100.00 Jun-1981 62.9 27.9 0.6 8.5 100.00 Jun-1982 62.6 28.2 0.8 8.4 100.00 Jun-1983 61.9 28.8 1.0 8.3 100.00 Jun-1984 61.9 28.5 1.2 8.5 100.00 Jun-1985 61.4 28.8 1.4 8.4 100.00 Jun-1986 61.5 28.7 1.5 8.2 100.00 Jun-1987 62.2 28.0 1.8 8.1 100.00 Jun-1988 61.5 28.5 1.9 8.0 100.00 Jun-1989 61.4 27.6 2.1 9.0 100.00 Jun-1990 61.9 26.6 2.3 5.0 4.4 100.00 Mar-1991 61.0 26.6 2.4 5.7 4.4 100.00 Mar -1992 58.9 27.0 2.5 6.9 4.7 100.00 Mar -1993 58.3 26.8 2.5 7.5 4.9 100.00 Mar -1994 57.1 26.8 2.8 7.8 5.5 100.00 Mar -1995 57.3 25.3 3.0 7.5 6.9 100.00 Mar -1996 56.1 26.1 3.2 7.1 7.5 100.00 Mar -1997 55.3 25.0 3.5 7.1 9.1 100.00 Mar -1998 54.7 24.4 3.7 6.9 10.3 100.00 Mar -1999 54.7 24.6 3.8 6.2 10.7 100.00 Mar -2000 53.9 24.7 3.9 5.7 11.8 100.00 Mar 2001 53.5 24.9 4.0 5.3 12.3 100.00 Mar 2002 51.0 24.1 3.9 5.0 16.0 100.00 Mar 2003 50.7 24.0 3.9 4.5 16.9 100.00 Mar 2004 49.8 23.9 3.7 4.8 17.8 100.00 Mar 2005 49.9 24.3 3.5 4.4 17.9 100.00 Mar -2006 48.5 23.3 3.4 5.3 19.4 100.00 Annual Trend Growth Rate 1969-80 0.31 0.63 -3.04 1981-90 -0.18 0.42 15.20 -3.45 1991-00 -1.25 -1.18 6.24 -0.90 12.85 2001-06 -1.63 -0.88 -3.34 -0.91 7.92 Total -0.35 -0.54 7.18 -2.29* -0.47 Source: Compiled from various issues of Basic Statistical Return Commercial Banks, Published by RBI, Mumbai. Note: (i) Where the data was not available or found to be negligible for a certain period of this study has been highlighted with a - in the respective columns. (ii) The figures with a * Indicate the growth rate of the foreign banks in the period 1990-2006. with the respective percentages of 12.85 and 7.92 as compared to other bank groups. Year

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