Sectoral

Presentation
on
Banking
Presented By
Jaideep Bakre
AGENDA
Agenda
 What is a Bank?

• Bank: Establishment authorized by a government to:

ü accept deposits
ü pay interest
ü clear checks
ü make loans
ü act as an intermediary in financial transactions
ü provide other financial services to its customers.
 Structure of Indian Banks

duled Commercial
Cooperative
Banks
Credit Institutions
All India FinancialState
Institutions
Financial Institutions
Other Institution

Sector Private
Banks (27)
Sector Banks
Foreign
(22) Banks (31)RRBs
Urban
(84)Cooperative
Rural Cooperative
Banks (1721)
Cred

Source: “Report on trend and progress of banking in India 2008–09”, RBI website, www.rbi.org.in, accessed on
January 12, 2010
Role of Reserve Bank of India

RBI
 Scheduled Banks

• Scheduled Banks in India constitute those banks which

have been included in the Second Schedule of Reserve
Bank of India(RBI) Act, 1934. RBI in turn includes only
those banks in this schedule which satisfy the criteria
laid down vide section 42 (6) (a) of the Act. 

• The banks included in this schedule list should fulfil two

conditions. 
ü The paid capital and collected funds of bank
should not be less than Rs. 5 lakhs. 
ü Any activity of the bank will not adversely affect
the interests of depositors. 

• Every Scheduled bank enjoys the following facilities.

ü Such bank becomes eligible for debts/loans on
bank rate from the RBI.
Market Overview
 Market Overview

Source: “Report on trend and progress of banking in India

2008–09”, RBI website, www.rbi.org.in, accessed on January
12, 2010
Revenues

Source: RBI Website

 Profit

Source: RBI Website

Business per employee (in Rs. Lakhs)

Source: RBI Website

Profit per employee (in Rs. Lakhs)

Source: RBI Website

 Gradual Shift

Source: “Report on trend and progress of banking in India

2008–09”, RBI website, www.rbi.org.in, accessed on January
12, 2010
Key Trends in Banking
Key Trends in Banking
 Mergers and Acquisitions
Date of Acquirer
Target Bank Assets of Number of
Merger Bank Target bank Branches of
as a % of Target Bank
Acquiring
Feb 2008 HDFC Bank Centurion Bank’s
20 394
Bank of Assets
August 2007 Centurion Lord Krishna 11
Punjab 110
Bank of Bank
April 2007 ICICI
PunjabBank Sangli Bank 0.5 190

March 2007 Indian Bharat 6 102

Overseas Overseas
October IDBI
Bank United
Bank 8 230
2006 Western
September Federal BankGanesh Bank Bank 1 32
2006 of
Kurundwad
Source: Statistical tables relating to banks of India —1979–2007, 6
May 2008,
 Opportunities

• Retail Banking
• Corporate Banking
– Growing MSME Sector
• Microfinance
– Fierce Competition in Urban Areas
– 46000 Branches in Rural and Semi
Urban Areas
• Growing Long Term Fund
Requirements
• Remittance
–S oUS$ 45 Billion in 2008
u rce : “ N R I m a rke t: th e p o te n tia l” , E Y C e n te r fo r B u sin e ss K n o w le d g e , A p ril
2009
 Monetary and Credit Policy Rates

Bank rate (or Discount rate): It is the rate of interest which a central bank
charges on the loans and advances that it extends to commercial banks
and other financial intermediaries.
Repo Rate: Whenever the banks have any shortage of funds they can borrow

it from RBI. Repo rate is the rate at which our banks borrow rupees from
RBI. A reduction in the repo rate will help banks to get money at a cheaper
rate. When the repo rate increases borrowing from RBI becomes more
expensive.
Reverse Repo Rate: The rate at which Reserve Bank of India (RBI) borrows

money from banks. Banks are always happy to lend money to RBI since
their money are in safe hands with a good interest. An increase in Reverse
repo rate can cause the banks to transfer more funds to RBI due to this
attractive interest rates. It can cause the money to be drawn out of the
banking system.
Cash reserve Ratio: It is the amount of funds that the banks have to keep

with RBI. If RBI decides to increase the percent of this, the available
amount with the banks comes down. RBI is using this method (increase of
CRR rate), to drain out the excessive money from the banks
Statutory Liquidity Ratio: It is the amount a commercial bank needs to

maintain in the form of cash, or gold or govt. approved securities (Bonds)

before providing credit to its customers. SLR rate is determined and
 Current Values

• Policy Rates
– Bank Rate: 6%
– Repo Rate: 5.75%
– Reverse Repo Rate: 4.5%
• Reserve Ratio
– Cash Reserve Ratio: 6%
– Statutory Liquidity Ratio: 25%

 Gross Domestic Product

• Gross Domestic Product (GDP)- is a

measure of a country's overall
official economic output. It is the
market value of all final goods and
services officially made within the
borders of a country in a year
GDP (Y) is a sum of Consumption

(C), Investment (I), Government
Spending (G) and Net Exports (X -
M).
 Y = C + I + G + (X − M)
GDP Growth Rate over a Decade