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Dr. K. Sriharsha Reddy Professor & Head Department of Business Management, MIPGS Saidabad, Hyderabad.
STRUCTURE OF BANKING IN INDIA As at the end of March 2007: 20 nationalized banks, 8 SBI banks, 17 old private sector banks, 8 new private sector banks, 29 foreign banks, 96 regional rural banks.
Reasons for poor performance of banks (1) high cash reserve ratios and statutory liquidity requirements (2) low yields on government bonds (as compared with those on commercial advances); (3) directed and concessional lending; (4) administered interest rates; and (5) lack of competition.
Third, reform in priority sector lending mainly through the expansion of coverage and interest rate decontrols on advances in excess of Rs200,000 helped banks to mitigate the negative impact arising from such policy loans. Fourth, entry barriers were reduced for private sector and foreign banks. The entry of new banks has increased competition. Public sector banks were allowed to rationalize some branches, while branch licensing was removed.
Fifth, various prudential norms and more appropriate accounting standards were introduced. Better accounting standards have revealed some of the true status of NPA problems of public sector banks. This enabled the Government to impose appropriate policies to deal with NPA problems. Sixth, the Government recapitalized nationalized banks and public sector banks have been partially privatized.
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SBG NB PB FB ASCB
SBG NB PB FB ASCB
SBIG NB 6 PB FB SCB 4
0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Bank group wise deposits of Scheduled Commercial Banks to Total Deposits in percentages
70 60 50 40 30 20 10 0 7.2 6.9 5.5 5.3 4.6 3.9 2.9 2.9 4.4 12.6 4.7 4.5 Domestic private 27.4 29.3 28.1 27.8 28.5 27.6 25.1 18.5 17 Foreign
Bank group wise share of advances of scheduled Commercial banks to Total advances in percentages
70 60 50 40 30 20 10 0 1980 1990 2000 2002 2004 2006 SBI & its Associates Nationalized Foreign Domestic private
Distribution of Scheduled Commercial Banks by CRAR Year 19951996 Bank Group <4 4-8 8-10 >10 <4 4-8 8-10 >10 SBG 6 2 7 NB 5 3 7 4 1 19 OPB 3 3 7 12 15 NPB 1 8 7 FB 3 12 16 30 SCB 8 9 33 42 1 78
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