Report on Trend and Progress of Banking in India for the year ended June 30, 2011 submitted to the Central

Government in terms of Section 36(2) of the Banking Regulation Act, 1949

REPORT ON TREND AND PROGRESS OF BANKING IN INDIA 2010-11

RESERVE BANK OF INDIA

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© Reserve Bank of India 2011 All rights reserved. Reproduction is permitted provided an acknowledgement of the source is made.

Published by Mohua Roy for the Reserve Bank of India, Mumbai 400 001 and designed and printed by her at Jayant Printery, 352/54, Murlidhar Compound, Girgaum Road, Mumbai - 400 002.

.................. 7.. 3................................................................. 5.. 1 2 3 5 8 Chapter II : Global Banking Developments ............................. 6... An Analysis of the Performance of Top 100 Global Banks ..................................................................... Financial Markets ................................................. Strategic and Operational Responses ................ 11.................................. Introduction ... Non-Banking Financial Companies ..... Global Banking Trends ......................................................................... Financial Inclusion ............................................................................................ Banking Sector Legislation ........... Credit Delivery .................. 2..................... 1......................................... Forces Shaping the Environment ............................................................................................................................................. 3.................................................. Challenges ....... Introduction ........................................ 15............................................No............................................ Global Policy Reforms ......................................... Supervisory Policy ................................... 8................................................................................ 2.............................. 2.............................................................................................................................................................................. 13.... 2........................................................ 10....... Prudential Regulatory Policy ......................................... 10 11 19 22 25 29 Chapter III : Policy Environment ...................................... Cooperative Banks ........ Banking Trends in Select Regions and Countries ............................ Financial Performance of Scheduled Commercial Banks .. 4...................... 1....................................... Payment and Settlement System .......................................................................................... 31 32 33 36 38 42 45 46 49 51 52 54 55 56 57 Chapter IV: Operations and Performance of Commercial Banks ............................................ The Way Forward ....... Balance Sheet Operations of Scheduled Commercial Banks ................ 4............... Particulars Page No...................... 59 60 69 73 v ...... Introduction ................................................................................... 3.........Contents Sr............. Soundness Indicators .......... Monetary Policy ................................. Conclusions ................... 3...................................................................................................................................... 5.......... 4...................................................................................... Conclusions .......................................................................................................................................... Customer Service in Banks .................. 14......... 12.......................... Technological Developments ............................... 4. 9..... 1.................................. 5...................................................... 1.......... Introduction ................................................................................. 6................................................ Chapter I : Perspectives on the Indian Banking Sector ........... Regional Rural Banks ...........................................................................................................

............................... Foreign Banks’ Operations in India and Overseas Operations of Indian Banks ............................. Non-Banking Financial Companies ................. Particulars Sectoral Deployment of Bank Credit ......................................................................... 105 107 116 125 130 Chapter VI: Non-Banking Financial Institutions 1. Financial Inclusion ........................ 3....................... Introduction .. 6......................................................................................................... 2.............. Conclusions ................ Role of NABARD in Reviving the Rural Cooperatives ........................................................... Regional Rural Banks ......... 11.................. 3................... 2............................................................................... 5.................... 8........................ 14...................................................... Technological Developments in Scheduled Commercial Banks ................... Conclusions .................. 13......................................... Conclusions .............................. Primary Dealers ...............................Developments in Cooperative Banking 1. Introduction ............................... Customer Service ............................................ 131 132 136 150 153 vi ......................................................... Financial Institutions ........................ Operations of Scheduled Commercial Banks in Capital Market .................................................. 7............................................................... Urban Cooperative Banks ... 5.............................................................. Page No................................................ 9......... 12.................... Local Area Banks ............................ 10..............................................No. 4........ 4...................... Shareholding Pattern in Scheduled Commercial Banks .............................. 83 87 88 90 90 92 93 100 100 101 Chapter V ........... Rural Cooperatives ......................................................................................... 5................................Sr........................................................

............................................................................ Robust Credit Growth and Credit Booms – An Analysis of the Indian Banking Sector ... Impact of Restructuring of Advances on the Asset Quality of the Banking Sector .........................................2 VI.......4 79 IV....................2 II.... Profitability versus Risks: An Analysis of Off-Balance Sheet Exposures in the Indian Banking Sector ............................................................................ Inter-connectedness of NBFCs and Banks in India ............. Key Objectives and Features of the Basel III Framework ......................1 II.....................1 68 IV..................................List of Boxes Box No............................................3 151 vii ...................... Credit Rating of NBFCs – Practices and Prospects ................... Recommandations of the Working Group on the Issues and Concerns in the NBFC Sector ....................................................1 III........................................3 Particulars European Banks’ Exposure to Euro Area Sovereign Debt . Report of the Committee on Customer Service in Banks .................................................................................................. Recommendations of the Working Group on Securing Card Present Transactions ................. Role of Rural Cooperatives in Financial Inclusion – Some Emerging Issues ...................................... Soundness of StCBs .............5 82 108 121 126 138 140 V.........1 VI.............1 V... Counter-Cyclical Capital Buffer: Concept and Working ................................................... Page No......... 22 27 28 46 52 55 IV..............3 III..................................... Merger and Amalgamation of Urban Cooperative Banks ......3 VI...................................................................2 III............. II..................................................... Net Interest Margin of the Indian Banking Sector: Efficiency versus Profitability .....2 70 IV.... Asset Liability Mismatches (ALM) in the Indian Banking Sector: The Extent and Persistence .................... Monitoring Interest Rate Sensitivity based on Duration Gap Analysis ....................2 V..................3 73 IV..

....................21 IV..11 IV...4 III..26 IV...............28 Particulars Return on Assets of Banks for Select Economies ....... Resource Mobilisation through Euro Issues by the Banking Sector ............................................................. International Assets of Banks – By Type .... II................................ Capital to Risk-Weighted Assets Ratio of Banks in Select Economies ...........15 IV... Asset Liability Mismatches in the Indian Banking Sector .................. Resources Raised by Banks through Private Placements ............................... Consolidated Balance Sheet of Scheduled Commercial Banks ................................................................................................1 IV.......................................3 II............2 IV.............. Bank Group-wise Maturity Profile of Select Liabilities/Assets ............................ Details of Financial Assets Securitised by SCs/RCs .......................................24 IV.... Return on Assets and Return on Equity of SCBs – Bank Group-wise ...... Retail Portfolio of Banks .......14 IV.................2 II....27 IV...................................................................... Consolidated International Claims of Banks on Countries other than India .............. Growth in International Assets and Liabilities of Banks .... Page No......19 IV.20 IV..... International Liabilities of Banks – By Type ..... Public Issues from the Banking Sector ..................... Growth in Balance Sheet of Scheduled Commercial Banks ............................................................ Priority Sector Lending by Public and Private Sector Banks ............ Sector-wise NPAs of Domestic Banks .... Compensation under Agriculture Debt Waiver and Debt Relief Scheme ......... Capital to Risk-Weighted Assets Ratio under Basel I and II – Bank Group-wise Component-wise Capital Adequacy of SCBs ......................................23 IV...... NPAs of SCBs Recovered through Various Channels ........ Classification of Consolidated International Claims of Banks on Countries Other than India – By Maturity and Sector ..............16 IV........................3 IV..............13 IV.........10 IV............5 IV.......7 IV.............18 IV.............. Trends in Income and Expenditure of Scheduled Commercial Banks ....9 IV.... Trends in Provisions for Non-Performing Assets – Bank Group-wise ....... Rank Correlation Coefficients for Top Global Banks between 2009 and 2010 ....17 IV..... Non-SLR Investments of Scheduled Commercial Banks .............6 IV...1 II....................................................1 IV. Turnover and Capitalisation of Bank Stocks ..................... Cost of Funds and Return on Funds – Bank Group-wise . Trends in Non-Performing Assets – Bank Group-wise ......8 IV....25 IV........................................12 IV.......... Sectoral Deployment of Gross Bank Credit .... Priority Sector Lending by Foreign Banks .......................List of Tables Table No.. 12 14 15 23 36 61 62 64 65 65 66 66 67 69 71 71 72 74 74 76 78 78 80 81 81 84 85 87 87 87 88 88 89 viii .. Classification of Loan Assets – Bank Group-wise ...................... Risk-Return Performance........22 IV..........................4 IV...............................

....................................14 Particulars Number of Public Sector Banks Classified by Percentage of Private Shareholding . end-March 2010 .... Grade-wise Distribution of Deposits and Advances of Urban Cooperative Banks Distribution of Urban Cooperative Banks by Size of Deposits and Advances .....................41 IV..................11 V........................... Financial Performance of Scheduled and Non-Scheduled Urban Cooperative Banks ....... Bank-Group-wise Complaints received at Banking Ombudsman Offices ............. Number of ATMs of SCBs Located at Various Locations ....................38 IV........................31 IV.................... Tier wise Distribution of Urban Cooperative Banks ...........35 IV......................................................... Progress of Micro-Finance Programmes ..... Financial Performance of Local Area Banks ..........46 V.......................................................... Liabilities and Assets of Urban Cooperative Banks ..29 IV........................................ Soundness Indicators of State Cooperative Banks ..............2 V..................13 V....................................................................40 IV.............................. Elected Boards under Supersession ................................. Liabilities and Assets of State Cooperative Banks........ Financial Performance of Regional Rural Banks ............................7 V........5 V.....................4 V..............................................................................42 IV..................................................................................................... IV...37 IV................................. Debit Cards Issued by Scheduled Commercial Banks .................................... Select Financial Indicators of UCBs ...43 IV......................9 V..................45 IV.1 V................10 V.... A Profile of Rural Cooperative Banks .............................................................. Progress of Financial Inclusion ...................... Region-wise Complaints received at Banking Ombudsman Offices ...............8 V........ ATMs of Scheduled Commercial Banks .. Financial Performance of State Cooperative Banks ................................................................. 89 91 91 92 92 93 93 94 94 95 96 98 99 100 101 101 102 102 107 110 110 111 112 113 113 114 115 117 117 118 119 119 ix ..............................Table No................36 IV............... Credit Cards Issued by Scheduled Commercial Banks ...............30 IV..................33 IV............... Advances to Weaker Sections by Urban Cooperative Banks ... Volume and Value of Electronic Transactions by Scheduled Commercial Banks ....34 IV....................... Progress Made Under Financial Inclusion Plans ...............................32 IV.................................. Non-Performing Assets of UCBs .............................12 V... Distribution of New Bank Branches Across Regions and Population Groups .... Page No.........................................39 IV................................................................................... Purpose-wise Distribution of Credit from Regional Rural Banks ................44 IV...... Overseas Operations of Indian Banks .......6 V..... Investments by Urban Cooperative Banks .... Consolidated Balance Sheet of Regional Rural Banks ............................. Profile of Local Area Banks .............................3 V....................................

...25 V.....15 V.....6 VI.....................................................16 VI.... Pattern of Sources and Deployment of Funds of Financial Institutions .......... Liabilities and Assets of Primary Cooperative Agriculture and Rural Development Banks ................17 V................... Capital to Risk (weighted) Assets Ratio of Select Financial Institutions ...............................................................11 VI.......................................................22 V........... x Page No...............................................................24 V.................... Financial Performance of Select All-India Financial Institutions ......... 120 120 122 122 123 124 124 124 125 125 127 128 128 132 133 134 134 134 135 135 135 136 136 136 137 137 139 139 141 142 . Soundness Indicators of District Central Cooperative Banks .......... Ownership Pattern of NBFCs .......15 VI.................20 V...................12 VI..................... Profile of NBFCs ....................................... Financial Assistance Sanctioned and Disbursed by Financial Institutions ....3 VI.................. Resources Mobilised by Financial Institutions ............................ Liabilities and Assets of State Cooperative Agriculture and Rural Development Banks ................26 V..................2 VI...... Resources Raised by Financial Institutions from Money Market .... Asset Classification of Financial Institutions ...........17 Particulars Liabilities and Assets of District Central Cooperative Banks ....... Soundness Indicators of State Cooperative Agriculture and Rural Development Banks ...14 VI...................................23 V............................ Net Non-Performing Assets of Financial Institutions ............................. Consolidated Balance Sheet of NBFCs-D .......................................................5 VI..........................................16 V.. NABARD’s Credit to StCBs....... Major Components of Liabilities of NBFCs-D by Classification of NBFCs ....................4 VI.....8 VI....1 VI... Ownership Pattern of Financial Institutions ......... Financial Performance of District Central Cooperative Banks ...............21 V.......... Select Financial Parameters of Financial Institutions ......................................................... Progress under Kisan Credit Card Scheme .......................................7 VI.........19 V............10 VI.................................................................................................................................... V............................. State Governments and RRBs ................... Financial Performance of State Cooperative Agriculture and Rural Development Banks ................................. Asset Quality of Primary Cooperative Agriculture and Rural Development Banks . Liabilities and Assets of Financial Institutions .................................................................................. Primary Agricultural Credit Societies – Select Balance Sheet Indicators ...........Table No..................18 V......... Tranche-wise Details of RIDF (As at end-March 2011) ...... Financial Performance of Primary Cooperative Agriculture and Rural Development Banks ....................................................27 VI........ Long-term PLR Structure of Select Financial Institutions ..........................................9 VI.. Weighted Average Cost and Maturity of Rupee Resources Raised by Select Financial Institutions ......................13 VI..................................

........ Dependence on Public Funds .........................Table No...................... NPA Ratios of NBFCs-D ........................26 VI.... Profile of RNBCs ........................... Capital Adequacy Ratio of NBFCs-ND-SI ........... Performance of the PDs in the Primary Market ..............38 VI........... Bank Exposure of NBFCs-ND-SI ................. Public Deposits held by RNBCs .......................... Public Deposits held by NBFCs-D ... Select Indicators of Primary Dealers ..........Deposit Interest Rate Range-wise .................... 142 143 143 144 144 145 145 145 146 146 146 147 147 147 148 148 149 149 149 150 150 150 152 152 152 153 153 154 154 154 155 155 xi ..... Investment Pattern of RNBCs ....................... NPA Ratios of NBFCs-ND-SI ............... Range of Net Owned Fund vis-à-vis Public Deposits of NBFCs-D ................42 VI................................................... Borrowings of NBFCs-ND-SI-By Region . Capital Adequacy Ratio of NBFCs-D .................................................27 VI.............35 VI..30 VI..................................................... Sources of Borrowings by NBFCs-D by Classification of NBFCs ................... Financial Performance of Standalone Primary Dealers .24 VI...........34 VI......................................47 VI..................... Consolidated Balance Sheet of NBFCs-ND-SI ..........................22 VI....46 VI.................................... Maturity Pattern of Public Deposits held by NBFCs-D ............ Financial Performance of NBFCs-ND-SI .......33 VI...........23 VI....................................... Financial Indicators of Primary Dealers ..................37 VI....................45 VI...............Region-wise .......... Financial Performance of NBFCs-D .......................... CRAR of the Standalone PDs .............................39 VI............. Major Components of Assets of NBFCs-D by Classification of NBFCs ...................................................................................................... Sources and Applications of Funds of Standalone Primary Dealers .43 VI.............. VI...............36 VI................................................................ Distribution of Assets of NBFCs-D by Activity ... Net Owned Fund vis-à-vis Public Deposits of NBFCs-D by Category ......... Classification of Assets of NBFCs-D by Category of NBFCs ..........19 VI...........................25 VI....................................................31 VI................................................ Public Deposits held by NBFCs-D Region-wise .....................................................................44 VI................................................................................................ Performance of Standalone PDs in the Secondary Market ......................................................... NPAs of NBFCs-D by Category of NBFCs ................................48 VI..20 VI....................................................................49 Particulars Public Deposits held by NBFCs-D by Deposit Ranges .........28 VI..............32 VI.......18 VI.............. Page No.............29 VI...........41 VI.....21 VI........................................................... Assets of NBFCs-D by Asset-Size Ranges ................40 VI.

..................................... CDS Spread of Global Banks .............. Percentage Distribution of Top 100 Global Banks by Capital Adequacy (Leverage) Ratio ..........................................4 IV............List of Charts Chart No...................5 II............ Asset Quality of Banks in Select Economies ....................................26 II.................5 IV...... Balance Sheet Indicators of Banks in the Euro zone ..................8 II... Expectations about Bank Credit Availability to SMEs in the UK ..................................17 II........22 II..............................23 II..........................2 II...................25 II...........11 II............................ in per cent ........28 IV............ International Assets/Liabilities of Advanced and Emerging Economies ......................27 II..... Interest Rates on Bank Deposits from Non-financial Corporations (with Less than One Year Maturity)...................... Percentage Distribution of Top Global Banks by NPLs Ratio ......6 Particulars Global Macro-economic Trends ........18 II........3 IV........ Select Euro zone Economies ......................... Net Profits of SCBs ............................................... Sovereign and Bank CDS Spreads in Select Economies .......................................15 II.......................................... Expectations about Credit Conditions for SME Sector in the Euro zone ...................................................................................... Incremental Credit. Leverage in the Banking Systems of Select Economies ...........................16 II........................................ Percentage Distribution of Top 100 Global Banks by Return on Assets ................................21 II................... Sectoral Rates of Growth of Credit of US Banks ............... Bank Stock Indices in Select Economies/Economy Groups .................12 II......... Three-year Moving Average of Bank Credit Growth....... Composition of Off-Balance Sheet Exposures of the Banking Sector 2010-11 .................................. Write-off Rates of UK Banks ............7 II. Demographic Access to Banking Services across Select Economies ...............6 II....................... Growth in Balance Sheets of Chinese Banks .................... Deposits and Borrowings 2010-11 .................................................... Composition of Deposits 2010-11 ............. Sectoral Delinquency Rates of US Banks ............10 II......... xii Page No............20 II............................... Share of Countries in Total Assets of Top 100 Global Banks . Usage of Banking Services across Select Economies – Credit .........................................................14 II.............. 11 13 14 15 16 16 17 17 18 18 19 19 20 20 20 20 21 21 22 23 23 24 24 24 25 25 25 26 62 63 66 67 69 72 ...24 II..... Usage of Banking Services across Select Economies – Deposits ..........................................1 IV.......19 II.......................3 II..1 II... II. Credit as per cent of Deposits plus Borrowings 2010-11 ...... Changes in Soundness Indicators of Top 20 Global Banks ... Percentage Distribution of Top 100 Global Banks by CRAR ..............................................................13 II.......... Location of Global Banking Business .. Movements in Euro Inter-Bank Offered Rate ..............................................2 IV...................9 II.............................. Asset Growth in the US Banking Sector ..................................4 II.......................and Investment-Deposit Ratios of SCBs .......

.... Slippage Ratio .....................6 V....3 V............................................22 IV...............26 IV............................. Foreign Shareholding in Domestic Banks ...................24 IV.................. Population Group-wise Distribution of ATMs (end-March 2011) .......... Shares of Bank Groups in Outstanding Debit Cards ................. Region-wise Population per Bank Branch (end-March 2011) ................16B IV........... Major Complaints against Bank Groups 2010-11 ............... xiii Page No............................... IV............. Slippage Ratio ...........5 V.......................................................11A IV..................... Priority Sector Advances ..........19 IV......... Distribution of UCBs according to CRAR ......... Written Off Ratio – Bank Group-wise 2010-11 ........... Recovery Ratio ......................... NPAs Recovered as per cent of Previous Year’s Gross NPAs ........... NPAs Written Off as per cent of Previous Year’s Gross NPAs ............ Population Group-wise Share in Credit – March 2011 .....17B IV.......... Asset Size-wise Distribution of UCBs ......15 IV......................... Grade-wise Distribution of Number of UCBs and Share in Total Advances and Deposits ............................... Share of Regions in Total Net Increase in ATMs 2010-11 ...............10A IV.....................29B V............................................................. Trends in Gross Non-Performing Assets ....................................................18 IV.................. Shares of Bank Groups in Outstanding Credit Cards ...................................28 IV.............. Relative Performance of BSE Bankex and BSE Sensex ...12A IV............................................20 IV...27 IV.......................Chart No................................9 IV........................................2 V...... Tier I Ratio of Public Sector Banks ............................ Priority Sector Lending: Target and Achievement 2010-11 .................11B IV..................... Changing Profile of UCBs ...................17A IV...............12B IV...................................................1 V..........................Target and Achievement 2010-11 ............................................................10B IV.23 IV.........................................................13 IV....... CRAR and RoA of UCBs .....4 V.................8 IV............................ 74 75 75 76 76 77 77 77 77 78 80 84 86 86 86 86 88 89 89 91 92 94 95 96 96 97 97 98 98 106 108 109 109 112 113 114 ................. Structure of Cooperative Credit Institutions in India ........ Composition of Investments of UCBs ...........................Bank Group-wise 2010-11 ............ Export Credit – Target and Achievement 2010-11 ............................16A IV.....14 IV...................... Government Shareholding in PSBs .................. Bank Branches Opened in Hitherto Unbanked Centres (April-March) ... Distribution of Deposit and Credit According to Banking Centres – March 2011 ......................... Shares of Population Groups in Agricultural and Industrial Credit ..........................29A IV........................................25 IV......Bank Group-wise 2010-11 ....7 IV........................................................................................ Region-wise Share in Credit – March 2011 ........................ Agricultural Advances: Target and Achievement 2010-11 ..................7 Particulars Cost of Funds and Return on Funds – Bank Group-wise 2010-11 ..............21 IV............... Composition of Incremental NPAs of Domestic Banks 2010-11 ............... Ratio of NPAs to Advances ..............................................................2010-11 ..........................

.............. Region-wise and State-wise Profile of UCBs .... Number of NBFCs Registered with Reserve Bank of India .................... Net Non-Performing Assets/Net Loans ...............................4 VI......9 V..........13 VI.. Share of Public Deposits held by NBFCs-D-by Deposits Ranges ....................................................... Percentage Share of Different Categories of NPAs of StCBs ......12 V.................5 VI.2 VI...................................................11 V...............................................................6 VI.......7 VI.......................................................................8 V.....................Chart No......10 V................... Ratio of Public Deposits of NBFCs to Broad Liquidity (L3) andAggregate Deposits of SCBs .........1 VI.... Page No...............3 VI. Maturity Pattern of Public Deposits held by NBFCs-D ...................... Public Deposits held by NBFCs-D-Deposit Interest Rate Range-wise .......................... Percentage Share of Top and Bottom Five States in Total Number of UCBs......... 114 115 116 118 119 127 137 139 141 142 143 143 144 146 xiv ............. V.........8 Particulars Composition of Advances to Priority Sectors by UCBs ......................... Purpose-wise Details of Projects and Loans Sanctioned under RIDF ...... Select Balance Sheet Indicators of Scheduled StCBs ................. Financial Performance of NBFCs-D ................ Share of Public Deposits held by NBFCs-D Region-wise ......

. Select Financial Parameters of Scheduled UCBs ................. Working Results of State Cooperative Banks ........3 Particulars Off-Balance Sheet Exposures of Scheduled Commercial Banks in India ..1 V...Public Sector Banks Non-Performing Assets in Advances to Weaker Sections ....................1 IV..9 IV..........................7 IV......3(B) IV.....................9 V........2(B) IV........................11 V.Sector-wise .......................... Advances of Foreign Banks to Micro and Small Enterprises (MSE) and Export sectors .................. Statement of Complaints Received at Banking Ombudsman Office ..........................3 V.. Advances of Private Sector Banks to Agriculture and Weaker Sections ............. State-wise Distribution of UCBs .............. Non-Performing Assets in Advances to Weaker Sections ..............................................4(C) IV.....1 VI...Region and State wise Select Indicators of Primary Agricultural Credit Societies-State wise ....................................................8 IV..2 VI.10 VI............... Non-Performing Assets of Public Sector Banks ....List of Appendix Tables Table No......................................................... Share Prices and Price/Earning Ratios of Bank Stocks at BSE . Non-Performing Assets of Foreign Banks .7 V..... Working Results of Primary Cooperative Agriculture and Rural Development Banks -State-wise ........4(B) IV.... Financial Performance of Primary Dealers ..............State-wise ............................Region/State-wise ...................................8 V............ Major Indicators of Financial Performance of Scheduled UCBs ....4 V...... Targets Achieved by Private Sector Banks under the Priority Sector ...2(A) IV. Shareholding Pattern of Domestic Scheduled Commercial Banks ................................ 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 172 175 178 179 180 182 183 184 185 187 188 189 192 193 194 195 . Targets Achieved by Public Sector Banks under the Priority Sector ......2 V................10 IV....Region and State-wise .....6 V..5(A) IV. Select Financial Indicators of Primary Dealers .. Non-Performing Assets of Private Sector Banks .5(B) IV.................................5 V... Working Results of District Central Cooperative Banks ........................................................................................................ Credit-Deposit Ratio and Investment plus Credit-Deposit Ratio of Scheduled Commercial Banks ...Sector-wise . Financial Assistance Sanctioned and Disbursed by Financial Institutions ..................3(A) IV.......... Working Results of State Cooperative Agriculture and Rural Development Banks ....4(A) IV..2(C) IV....... Branches and ATMs of Scheduled Commercial Banks ...................... Bank Group-wise Lending to the Sensitive Sectors .............State-wise .. xv Page No.....Sector-wise ....... Sanctions and Disbursements Under RIDF ...........Private Sector Banks Advances of Public Sector Banks to Agriculture and Weaker Sections ..............5(C) IV.......6 IV........................................ Kisan Credit Card Scheme: State-wise Progress ...................... IV....... Targets Achieved by Foreign Banks under the Priority Sector ....................................

Capacity Adequacy Ratio Common Accounting System Current Account and Savings Account Central Board of Investigation Collateralised Borrowing and Lending Obligation Core Banking Solutions Comprehensive Capital Assessment Review xvi CRE CRR DCCB DGA DICGC CFSA CFT CGFS CGS CGTMSE CIC CCF CCP CDs CDS CE CEO CEOBSE Credit Conversion Factors Central Counter Party Certificates of Deposit Credit Default Swaps Common Equity Chief Executive Officer Credit Equivalent Amount Off-Balance Sheet Exposure Committee on Financial Sector Assessment Combating Financing of Terrorism Committee on Global Financial Stability Credit Guarantee Scheme Credit Guarantee Fund Trust for Micro and Small Enterprises Credit Information Company CICs-ND-SI Systemically Important Non-deposit taking Core Investment Companies CMB CME CNP CoR CPs CP CPSS CRAR CRAs CRCS Cash Management Bills Capital Market Exposure Card Not Present Certificate of Registration Commercial Papers Card Present Committee on Payment and Settlement System Capital to Risk-Weighted Assets Ratio Credit Rating Agencies Central Registrar of Cooperative Societies Commercial Real Estate Cash Reserve Ratio District Central Cooperative Banks Duration Gap Analysis Deposit Insurance and Credit Guarantee Corporation .List of Select Abbreviations AD ADR ADWDR AFC AFI AIFIs ALM AMA AML ANBC ASA ATM BC BCBS BCP-DR BCSBI BFS BIS BO BoD BoM BPR BSE CAR CAS CASA CBI CBLO CBS CCAR Authorised Dealer American Depository Receipt Agricultural Debt Waiver and Debt Relief Scheme Asset Finance Companies Annual Financial Inspection All India Financial Institutions Asset-Liability Mismatch Advanced Measurement Approach Anti-Money Laundering Adjusted Net Bank Credit Alternate Standardised Approach Automated Teller Machine Business Correspondent Basel Committee on Banking Supervision Business Continuity Management and Disaster Recovery Banking Codes and Standards Boards of India Board for Financial Supervision Bank for International Settlements Banking Ombudsman Board of Directors Board of Management Business Process Re-engineering Bombay Stock Exchange Ltd.

DIN DLIC DR DRT DSA EaR EBA ECCS ECS EFSF EFSM EIOPA EL EME EMV ESA ESFS ESM ESMA ESRB EU EURIBOR FASB FATF FB FCA FCCB FCMD FCNR (B) FEMA FHC Director Identification Number District Level Implementation Committee Disaster Recovery Debt Recovery Tribunal Direct Selling Agents Earnings at Risk European Banking Authority Express Cheque Clearing System Electronic Clearing Service European Financial Stability Facility European Financial Stabilisation Mechanism European Insurance and Occupational Pensions Authority Expected Loss Emerging Market Economy Euro pay MasterCard Visa European Supervisory Authorities European System of Financial Supervisions European Stability Mechanism European Securities and Markets Authority European Systemic Risk Board European Union Euro Inter-Bank Offered Rate Financial Accounting Standards Board Financial Action Task Force Foreign Banks Financial Conduct Authority Foreign Currency Convertible Bonds Financial Conglomerate Monitoring Division Foreign Currency Non-Resident (Banks) Foreign Exchange Management Act Financial Holding Company xvii FI FII FIP FLCC FMI FMU FPC FSA FSAP FSB FSDC FSLRC FSOC FSR G Sec GCC GDP GDR GFSR GHOS GIC GNPA GoI GSIB HRM HSBC HTM IAS IASB IBA ICs ICB Financial Institution Foreign Institutional Investments Financial Inclusion Plan Financial Literacy and Credit Counselling Centres Financial Market Infrastructure Financial Market Utilities Financial Policy Committee Financial Services Authority Financial Sector Assessment Programme Financial Stability Board Financial Stability and Development Council Financial Sector Legislative Reforms Commission Financial Stability Oversight Council Financial Stability Report Government Securities General Credit Card Gross Domestic Product Global Depository Receipt Global Financial Stability Report Governors and Heads of Supervision General Insurance Corporation of India Gross Non-Performing Assets Government of India Global Systemically Important Bank Human Resource Management Hong Kong and Shanghai Banking Corporation Held to Maturity International Accounting Standard International Accounting Standards Board Indian Banks’ Association Investment Companies Independent Commission on Banking EXIM Bank Export Import Bank of India .

Small and Medium Enterprises Market Value of Equity National Bank for Agriculture and Rural Development National Federation of State Cooperative Banks Non-Banking Financial Company Non-Banking Financial CompanyDeposit taking Non-Deposit taking Non-Banking Financial Company NBFC-ND-SI Systemically Important Non-Deposit taking Non-Banking Financial Company NBFIs NDS NDTL NECS NEFT NGO NHB NII NIM NIMC NOC NOF NOHC NPA NRE xviii Non-Banking Financial Institutions Negotiated Dealing System Net Demand and Time Liability National Electronic Clearing Service National Electronic Fund Transfer Non-Government Organisation National Housing Bank Net Interest Income Net Interest Margin National Implementing and Monitoring Committee No Objection Certificate Net Owned Fund Non-Operative Holding Company Non-Performing Asset Non-Resident External .ICDs ICICI ICT IDBI IDRBT IFC IFRS IIBI IL IMA IMF Ind ASs INFINET IOSCO IRB IRC IRDA IRSD IT IVR JLGs KCC KYC LAB LAF LCBG LCR LCs LEI LGD LIBOR LIC LTCCS Inter Corporate Deposits Industrial Credit and Investment Corporation of India Information and Communications Technology Industrial Development Bank of India Institute for Development and Research in Banking Technology Infrastructure Finance Company International Financial Reporting Standards Industrial Investment Bank of India Incurred Loss Internal Models Approach International Monetary Fund Indian Accounting Standards Indian Financial NETwork International Organisation of Securities Commission Internal Rating Based Incremental Risk Charge Insurance Regulatory and Development Authority Interest Rate Sensitivity under Duration Gap Analysis Information Technology Interactive Voice Response Joint Liability Groups Kisan Credit Card Know Your Customer Local Area Bank Liquidity Adjustment Facility Large and Complex Banking Group Liquidity Coverage Ratio Loan Companies Long-term Economic Impact Loss Given Default London Inter-Bank Offered Rate Life Insurance Corporation of India Long-Term Cooperative Credit Structure MAG MCA MDG MENA MFI MICR MIS MoU MSE MSF MSME MVE NABARD NAFSCOB NBFC NBFC-D NBFC-ND Macro-economic Assessment Group Ministry of Corporate Affairs Modified Duration Gap Middle East and North African Micro Finance Institution Magnetic Ink Character Recognition Management Information System Memorandum of Understanding Micro and Small Enterprise Marginal Standing Facility Micro.

NREGA NRRDA NRO NSFR OBS OECD OSMOS OTC PACS PAT PBT PCARDB PD

National Rural Employment Guarantee Act National Rural Roads Development Agency Non-Resident Ordinary Net Stable Funding Ratio Off-balance Sheet Organisation for Economic Corporation and Development Off-Site Monitoring and Surveillance System Over the Counter Primary Agricultural Credit Society Profit After Tax Profit Before Tax Primary Cooperative Agriculture and Rural Development Bank Primary Dealer

SAO SARFAESI

Seasonal Agricultural Operations Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest SHG-Bank Linkage Programme Scheduled Caste Supervisory Capital Assessment Programme State Cooperative Agriculture and Rural Development Bank Scheduled Commercial Bank Securitisation Companies/ Reconstruction Companies Securities and Exchange Board of India Self-Help Group Small Industries' Development Bank of India Systemically Important Financial Institution State Level Implementing and Monitoring Committee Statutory Liquidity Ratio Small and Medium Enterprises Special Purpose Vehicle Small Scale Industry Scheduled Tribe State Cooperative Bank Short-Term Cooperative Credit Structure Treasury Bills Task Force for Urban Cooperative Bank Traditional Gap Analysis Terminal Line Encryption Urban Banks Department Urban Cooperative Bank Unique Key Per Terminal Umbrella Organisations Vulnerability Analysis and Penetration Test Value at Risk

SBLP SC SCAP SCARDB SCB SCs/RCs SEBI SHG SIDBI SIFI SLIMC SLR SME SPV SSI ST StCB STCCS T/B TAFCUB TGA TLE UBD UCB UKPT UO VAPT VaR

PDO – NDS Public Debt Office – Negotiated Dealing System PE PFRDA PIN POS PRA PRBs PSB RCS RIDF RNBC RoA ROE RORWA RRB RSA RSL RTGS Price Earning Pension Fund Regulatory and Development Authority Personal Identification Number Point of Sale Prudential Regulation Authority Private Sector Banks Public Sector Bank Registrar of Cooperative Societies Rural Infrastructural Development Fund Residuary Non-Banking Company Return on Assets Return on Equity Return on Risk Weighted Assets Regional Rural Bank Rate-Sensitive Assets Rate-Sensitive Liabilities Real Time Gross Settlement System

xix

Chapter I

Perspectives on the Indian Banking Sector

Domestic banks continued to manage growth with resilience during 2010-11 with ample reserves of capital and liquidity, improved performance in profitability and asset quality. With high growth potential of the Indian economy and favourable demographics, banks have immense opportunities to further expand their business both with traditional and innovative products and through financial inclusion using technology enabled sustainable business models. However, the prevailing interest rate environment and slowing growth in the near-term amidst somewhat skewed exposures to interest sensitive sectors will require adept management of such exposures going forward. Further, it will be challenging for banks to raise additional capital and liquidity to support higher growth and to comply with Basel III stipulations. This would require banks to use innovative and attractive market based funding channels, especially when capital continues to remain expensive and the Government support may be constrained by fiscal considerations. The challenge to converge with the International Financial Reporting System would require banks to upgrade infrastructure including information technology and human resources. Given the focus on inclusive growth, banks are also expected to renew efforts to broaden the scope of financial inclusion and use viable business models to achieve their targets. Finally, sustained pursuit of forward looking strategies aimed at mitigating risks, diversifying revenue sources, containing asset-liability mismatches, providing effective response to changing global market environment and improving customer relationships should strengthen the overall growth of the banking sector in the medium term. 1. Introduction
1.1 The banking sector in India emerged largely unscathed from the global financial crisis of 2007-08, but faced a slowdown in the momentum of growth due to the weakening of trade, finance and confidence channels. However, post crisis, the economic growth in most emerging market economies (EMEs) including India recovered, while growth remains anemic in advanced economies. Instability of sovereign debt markets in the Euro zone, political turmoil in the Middle East and North African (MENA) region, calamities in Japan, sovereign debt downgrade of the United States in August this year and the persistently elevated levels of commodity prices have together led to an accentuation of downside risks to global growth. While these risks are expected to recede gradually over time, the long-term sustainability

of higher growth in India will depend crucially on the ability of the banking sector to mobilise the savings and meet the credit needs of the growing economy through innovative financial instruments and services that foster financial inclusion and provide efficient and transparent delivery of credit. 1.2 Despite the challenging headwinds from domestic and international developments, the performance of Indian banks remained robust during 2010-11. The resilience of the banking sector was marked by improvement in the capital base, asset quality and profitability. The profitability of scheduled commercial banks (SCBs) improved both in terms of return on assets (RoA) and return on equity (RoE). Simultaneously, both gross and net NPA ratios declined in comparison with the previous year. Since the Indian financial system is bank

Report on Trend and Progress of Banking in India 2010-11

dominated, banks’ ability to withstand stress is critical to overall financial stability. A series of stress tests conducted by the Reserve Bank in respect of credit, liquidity and interest rate risks showed that banks remained reasonably resilient. However, under extreme shocks, some banks could face moderate liquidity problems and their profitability could be affected. 1.3 A detailed description of perspectives on global developments is covered in Chapter II on Global Banking Developments. Against this background, some relevant perspectives about the Indian banking sector are outlined.

1.5 One point to note though is that the comparative position is at the aggregate level; a few individual banks may fall short of the Basel III norms and will have to augment their capital. There will be challenges of upgrading risk management systems and meeting the credit needs of a rapidly growing economy even while adjusting to a more demanding regulatory regime. In addition to countercyclical capital buffers, Basel III also envisages countercyclical provisions. 1.6 In India, banks have a stock of floating provisions which the Reserve Bank has not permitted to be used, except under a situation of systemic stress. While the floating provisions may serve the purpose of countercyclical provision, a framework is necessary for allowing its use. As an interim measure, the Reserve Bank has been trying to develop a methodology based on the Spanish dynamic provisioning system. This, however, has not been easy given the lack of required data and analytics with the banks. Migration to Basel III requires a high level of liquidity to be maintained through a pool of liquid assets. The definition of liquid assets is very stringent including the requirement that they should be freely available. Are the Indian banks geared up for transition to the International Financial Reporting System (IFRS)? 1.7 Converging to global accounting standards, i.e., IFRS facilitates comparability between enterprises operating in different jurisdictions. Convergence would help to reduce both the cost of capital and cost of compliance for industry. Training, education and skill development are cornerstones of a successful IFRS implementation. All the stakeholders including investors, accountants, auditors, customers, software and hardware vendors, rating agencies, analysts, audit committees, actuaries, valuation experts and other specialists will need to develop an understanding
2

2. Forces Shaping the Environment
Are Indian banks adequately prepared for migration to Basel III regime? 1.4 Commercial banks in India have already adopted standardised approaches under Basel II. It is time for larger banks to seriously consider upgrading their systems and migrating to advanced approaches. Adoption of advanced approaches requires simultaneous use of the underlying processes in the day-to-day risk management of banks. In the background of the recent global regulatory developments, a question often discussed is whether the Indian banks are prepared for Basel III. The building blocks of Basel III are by now quite well known: higher and better quality capital; an internationally harmonised leverage ratio to constrain excessive risk taking; capital buffers which would be built up in good times so that they can be drawn down in times of stress; minimum global liquidity standards; and stronger standards for supervision, public disclosure and risk management. Quick assessments show that at the aggregate level Indian banks will not have any problem in adjusting to the new capital rules both in terms of quantum and quality. Indian banks are comfortably placed in terms of compliance with the new capital rules.

Financial interconnectedness as a part of macro-financial surveillance is the key issue in discussions on prudential regulation policies as it can magnify idiosyncratic shocks across the financial system. macro-prudential policy has emerged as an important tool for addressing systemic risk. the Reserve Bank has started using network analysis techniques to model inter-bank exposures. banks will need to upgrade their infrastructure. However.10 At present. Additionally. Strategic and Operational Responses Migration of financial conglomerates in India to holding company structure 1. Current and emerging environment offers sound business opportunities to the banks 1. most of the financial groups in India are led by banks and organised under the Bank Subsidiary model. the 3 impact may be more significant if other entities like other banks. To put in place an effective system of macro-prudential surveillance of the financial system. emphasis on expansion of physical infrastructure and the extent of financial exclusion to be bridged will ensure growth of the banking sector in medium term. Factors like expected positive economic performance. competitiveness can be achieved by balancing factors such as scale. including IT and human resources to face the complexities and challenges of IFRS. The main challenges in implementing the recommendations include. NBFCs.8 Post-crisis. While the time dimension refers to pro-cyclical elements that give rise to the evolution of aggregate risk over time. scope.Perspectives on the Indian Banking Sector of IFRS provisions to varying degrees and what they need to do. Besides. To exploit emerging opportunities and to benefit from their strengths. prudence and knowledge. It is not only the accounting issues but how to address the non-accounting issues that will determine how successfully banks make a transition to IFRS. strong savings growth spurred by the favourable demographic dividend. the contagion analysis made on the basis of network analysis underlined that interconnectedness in the banking sector gives rise to vulnerability of financial system in the event of failure of one or more banks depending on the degree of interaction. The analysis revealed that the banking sector in India is deeply connected. Indian banks need to be globally competitive. Some major technical issues arising for Indian banks during the convergence process are the differences between the IFRS and current regulatory guidelines. The contagion impact is relatively contained due to regulatory limits on interbank exposures.9 The emerging economic environment provides a number of opportunities for the Indian banking sector. The Working Group on ‘Introduction of Holding Company structure in India for banks’ has recommended migration of major financial conglomerates to the holding company structure to address these limitations to some extent. performance and capital requirement of subsidiaries. the cross section dimension is concerned with distribution of risks which can be exacerbated owing to the interconnectedness in the financial system. . Further. formulating a new law governing functioning of financial holding companies. This model puts the onus on the parent bank for corporate governance. in particular. those within the ambit of International Accounting Standard (IAS) 39 replacement project relating to classification and measurement of financial assets and liabilities. 3. highlighting its time and the cross sectional dimensions. providing right incentives to the existing financial conglomerates through appropriate tax treatment and resolution of strategic and public policy issues by the Government in the case of public sector banks. the parent carries very substantial reputational risk. From a strategic perspective. Interconnectedness in the banking sector and vulnerability of financial system 1. and mutual funds are included for analysis.

However.25 per cent at end March 2011. which would have features such as advanced liquidity management facility.01 per cent in 2011. asset quality of banks needs to be closely watched in the changing interest rate environment as the sticky loan portfolio of small and medium enterprises might rise. The next generation RTGS with advanced technology and new functionalities is also in the pipeline. the decision to introduce credit default swaps (CDS) with effect from October 24. CDS shall be permitted on listed corporate bonds. Therefore. and real time information and transaction monitoring and control system. Periodic drills were conducted to get feedback and assurance on the effectiveness of the . The guidelines also require market participants to build robust and appropriate risk management systems. Further. have declined steadily from 15. From this point of view.70 per cent at end March 1997 to 2. a further challenge for the banks would be to ring-fence their operations by establishing a sound risk management system that is not only protective but also inclusive and acts as a business enabler. if not done with due care. The implementation of innovative financial products requires diligent assessment of counterparty and related risks. this does not fully reveal the underlying realities and some trends are a matter of concern. the communication backbone for the financial sector managed by the Institute for Development and Research in Banking Technology (IDRBT). which could put pressure on asset quality of banks in future. Rising interest rates and substantial amount of restructuring done during the crisis period.Report on Trend and Progress of Banking in India 2010-11 Introducing innovative financial products as an efficient way to manage risks 1.81 per cent at end 4 March 2008 to 2. and the reference entities shall be single legal resident entities. are likely to put further pressure on asset quality of banks.13 The extensive use of technology systems in transaction processing and settlement in retail as well as inter-institution and interbank markets requires adequate availability and capacity to handle the increasing load on these systems for smooth functioning of financial markets and banking industry in India. given their complex nature. unlisted but rated bonds of infrastructure companies and unlisted/ unrated bonds issued by the Special Purpose Vehicles (SPVs) set up by infrastructure companies as reference obligations. Management of asset quality 1. 2011 is a welcome development.21 per cent at end March 2010. there is a need for banks to step up efforts to resolve their existing NPAs and tighten their credit risk management systems. Newer skill sets for managing newer areas and unfamiliar elements of risks would continue to pose questions even to the most advanced banks. in percentage terms. and Indian Financial Network (INFINET).12 While gross NPAs. followed by a slight moderation to 2.11 Introducing innovative financial products is an efficient way to manage risks involved in the banking business. The concern is that the recoveries have not kept pace with slippages since 2007-08. Aggressive lending during the high credit growth phase followed by the crisis resulted in slippage with gross NPA ratio steadily rising from 1. Data centres managed by the Reserve Bank. structural integrity and operational control. extensible markup language based messaging system conforming to ISO 2002. Software changes were made in Real Time Gross Settlement (RTGS) and Public Debt OfficeNegotiated Dealing System (PDO-NDS) applications to enhance performance and introduce new functionalities. continued to provide robust support during the year. Banks will have to adopt an approach to re-evaluate their risk management acumen in a manner that calls for higher levels of transparency. While expanding market is a matter of survival. Robust business continuity management and disaster recovery 1.

To gainfully pursue financial inclusion. This will enable banks to lower lending rates while preserving their profitability. i. banks must bear in mind that apart from the supply side factors. 1. financial . The latter should be possible since the Reserve Bank has deregulated the interest rate that can be charged on small value loans. The NIM of the Indian banking system is higher than that in some of the other emerging market economies even after accounting for mandated social sector obligations such as priority sector lending and credit support for the Government’s anti-poverty initiatives. many of the productivity/ efficiency indicators have moved closer to the global levels. access to financial products is constrained by several factors. Today. inclusion will provide banks access to sizeable low cost funds as also opportunities for lending in the small volume segment. Challenges to further strengthening inclusive growth 1.in other words. demand side factors.16 The banking sector is a key driver of inclusive growth.14 The Indian banking sector has recorded an impressive improvement in productivity over the last 15 years. to sustain high and inclusive growth. reduce the net interest margin (NIM). transaction costs and provisioning expenses. banks were required to make efforts to increase the number of transactions in no-frill accounts. Banks were advised to ensure close and continuous monitoring of Business Correspondents (BCs). in future. Further. A quarterly report on the BCP-DR and Vulnerability Analysis and Penetration Testing (VAPT) exercise conducted by commercial banks at their end was also obtained and significant points emerging out of the same are included in the inputs for analysis and suitable incorporation in the periodical Financial Stability Report. there should be a clear demarcation of the technology related activities and BC related activities of their service providers. on opening of some form of low cost brick and mortar branches between the base branch and BC locations. There should be seamless integration of the financial inclusion server with their internal core banking solution (CBS) systems and in the case of end-to-end solution. This implies that banks need to offer attractive interest rates to depositors and reduce the lending rates charged on borrowers . They were also advised to focus.17 Banks also need to take into account various behavioural and motivational attributes of potential consumers for a financial inclusion strategy to succeed. Banks and other financial services players largely are expected to mitigate the supply side processes that prevent poor and disadvantaged social groups from gaining access to the financial system. Challenges Need for further improving the efficiency parameters of the Indian Banks 1. non-interest expenses including wages and salaries. However. there is a need to raise the level of domestic savings and channel those savings into investment. such as lower income and /or asset holdings also have a significant bearing on inclusive growth.15 By far the most important task is to further improve operating efficiency on top of what has already been achieved by optimising operating costs. banks will need to constantly reinvent their business models and design products and services demanded by a growing economy with rapid structural transformation. There are supply side and demand side factors driving inclusive growth. There has been a particularly discernible improvement in banks’ operating efficiency in recent years owing to technology up-gradation and staff restructuring.e. However.Perspectives on the Indian Banking Sector Business Continuity management and Disaster Recovery (BCP-DR) arrangements for shared infrastructure and Payment and Settlement Systems. If pursued effectively. 1. which 5 4..

Notwithstanding this wide array of legislations of varying vintage. 1956 and the Banking Regulation Act. compensation. complex and opaque ways underscoring their ‘contagion’ potential. 6 Need to review laws governing the Indian banking sector 1. transparency. self-employed in the micro and small business sector. If a corporate fails. the fallout can be restricted to the stakeholders. The nationalised banks are governed by the Banking Companies (Acquisition and Transfer of Undertaking) Acts of 1970 and 1980.19 The extant statutory arrangement is complex with different laws governing different segments of the banking industry. splitting the posts of chairman and CEO of banks and corporate governance under financial holding company structure. the small and marginal farmers as also rural share-croppers in the agricultural sector. Certain provisions of the Banking Regulation Act have been made applicable to public sector banks. Almost all the statutes have had to be amended from time to time to reflect changes in circumstances and context. they should be debated and decided upon as a . By the very nature of their business. Needless to say. It is important. not customised and of low quality. They accept large amounts of uncollateralised public funds as deposits in a fiduciary capacity and further leverage those funds through credit creation. 1949. private sector banks and foreign banks. While regulation has a role to play in ensuring robust corporate standards in banks. Banks facilitate economic growth. but not a sufficient condition for good corporate governance. some provisions of the RBI Act too are applicable to nationalised banks. are the conduits of monetary policy transmission and constitute the economy’s payment and settlement system. A major challenge of the next decade is financing the millions in the unorganised sector. Banks are interconnected in diverse. the relevant issues pertaining to corporate governance of banks in India are bank ownership. SBI and its subsidiaries. In this context. The decision of the Government to set up a Financial Sector Legislative Reforms Commission “to rewrite and clean up the financial sector laws to bring them in line with the requirements of the sector” is very timely and very vital. There is also a need to iron out inconsistencies between the primary laws governing the banking sector and other laws applicable to the banking sector. banks are highly leveraged. the point to recognise is that effective regulation is a necessary. high transaction costs. Other challenges include financing affordable housing and education needs of low income households. the statutory arrangement has served the system well by helping maintain an orderly banking system. If a bank fails. the impact can spread rapidly through to other banks with potentially serious consequences for the entire financial system and the macro economy. Similarly. There is a strong case for reviewing all the various legislations and recasting them for a number of reasons. inflexible. ethics. unaffordable products. each of the statutes was crafted in a setting reflecting the needs and concerns of the time. Need for effective corporate governance in banks 1. which should engage adequate attention. to recognise that changes in policy or in the regulatory architecture cannot be the remit of a Legislative Reforms Commission. State Bank of India and its subsidiaries are governed by their respective statutes. however. Private sector banks come under the purview of the Companies Act.18 Banks are different from other corporates in important respects and that makes corporate governance of banks not only different but also more critical.Report on Trend and Progress of Banking in India 2010-11 include: lack of awareness about the financial products. Foreign banks which have registered their documents with the registrar under Section 592 of the Companies Act are also banking companies under the Banking Regulation Act. and products which are not convenient. Rather. accountability.

The second aspect relating to IT risks is a very critical issue. speed and convenience. Empowering customers with technology-driven benefits is a big challenge. In the rapidly changing global financial landscape. Basel II and III implementation brings in huge challenges. data theft. In the wake of the global financial crisis.Perspectives on the Indian Banking Sector prelude to the work of the Commission so that the Commission has a clear mandate on the policy directions. and for the smooth functioning of financial markets. it will be opportune for some of the larger banks to be looking out for opportunities for consolidation. number of such compliance requirements is increasing. On the next question. in terms of increasing expenditure on IT deployment and risks that are resulting from reliance on IT systems without necessary safeguards. With the growth and globalisation of markets in general and in the aftermath of recent crisis in particular.20 Of late. Wide spread technology deployment in the banking business has also brought to the fore some new issues and challenges. Emerging trends in payment systems and related challenges 1. there is a debate on whether the Indian banks should aim to become global? In this context. The evolving . 7 Costs and risks in using technology to change the face of banking 1.22 The smooth functioning of the market infrastructure for enabling payment and settlement systems is essential for market and financial stability. therefore. there is a need to view the related costs and benefits analytically and also view this as an aspiration consistent with India’s growing international profile. Can the Indian banks aim to become global in stature? 1. The main argument is that the increasing global size and influence of Indian corporates warrant a corresponding increase in the global footprint of Indian banks. but the benefit of technology has not fully percolated in terms of cost. as also for economic efficiency. Banks have adopted technology. it should be possible to aim for both. there has definitely been a pause to the rapid expansion overseas of our banks. is that Indian banks should increase their global presence. It is possible to take a middle path and argue that looking outwards towards increased global presence and looking inwards towards deeper financial penetration are not mutually exclusive. These can be broadly divided into two categories . Another significant aspect of banking business is regulatory and supervisory compliance. Notwithstanding the risks involved.21 Technology adoption has changed the face of banking in India. The opposing view is that Indian banks should look inwards rather than outwards. The surmise. With the increased use of IT.costs and risks. there are attendant risks posed to the banks as well as their customers in terms of monetary loss. those who argue that banks must go global contend that the issue is not so much the size of our banks in global rankings but of Indian banks having a strong enough global presence. it is imperative for the Indian banks to think global but act local. Cost aspects can be addressed by synergising IT deployment objectives with the broader. The financial sector and the payment and settlement system infrastructure have to be subservient to the real sector. Costs. it is unlikely that any of the Indian banks will come in the top ten of the global league even after reasonable consolidation. breach of privacy and banks need to be extremely cognizant of such risks. Two specific questions that need clarity in this context are: (i) can Indian banks aspire to achieve global size? and (ii) should Indian banks aspire to attain global size? On the first question. strategic business objectives to ensure adequate operational and management controls over purchase as well as maintenance of appropriate technology solutions. focus their efforts on financial deepening at home rather than aspiring to global size.

infrastructure. (iii) rollover risks of maturity of Foreign Currency Convertible Bonds (FCCBs) requiring refinancing at higher interest rates. Issues like complex risk management. and (iv) disproportionate growth in bank credit to four specific sectors. To leverage on the opportunities provided by new products. Stress tests suggest that the banking sector remains fairly well capitalised and resilient to asset quality shocks and other plausible adverse changes in macroeconomic scenario. deregulation and diversification of the financial system. the financial markets remained stress-free and the forecast of the values of the Financial Stress Indicator pointed out that they were likely to remain stable in the near term. The interface between banks and financial markets has undergone a fundamental shift in the recent times. safe. 5. (i) the possibility of spillovers from increasing financialisation of commodities to financial markets.24 While the opportunities to grow further are on increase. NBFCs and retail credit coupled with persistent asset-liability mismatches. The recent deregulation of savings bank deposit interest rates announced on October 25. raising the apprehensions of increasing delinquencies in the future. the macroeconomic fundamentals for India have remained robust. . The provisioning in lieu of pension liabilities and slippages in incrementally high growth loan portfolios in sensitive sectors such as retail and real estate sectors may impact profitability. The Way Forward 1. reliance on borrowed funds and enhanced requirement of provisioning for NPAs. It also has to be ensured that the products cover all segments of the population and provide an incentive to adopt these products. Issues pertaining to regulatory gaps 8 remaining in the NBFC sector that impinge on financial stability are being addressed by enhancing the scope of the regulatory perimeter while vulnerabilities in the liquidity risk management systems of domestic central counterparties are being weighed in terms of new mechanisms for bail-outs. appropriate liquidity management and enhancing skill development are some challenges already visible in the Indian context. As mentioned earlier. as banks with low share of savings deposits may like to garner a larger share of such deposits. The important issues in this context are how banks can provide costeffective. viz. since December 2010.25 It is important to recognise that with further globalisation. within the legal mandate.Report on Trend and Progress of Banking in India 2010-11 payment systems scenario offers new challenges and opportunities to all segments of this industry. The regulatory process will support all orderly development of new systems and processes. banks do have to contend with new challenges as they move forward. consolidation. (ii) interest rate differentials vis-à-vis advanced economies.. real estate. The banks have become intricately linked to financial markets and hence more vulnerable to financial markets stress. the banking business is set to become more complex and riskier.23 Despite the fragility of the global macrofinancial environment. and speedier and hassle free payment and settlement products and solutions. Some emerging trends that may be of immediate concern in respect of financial stability are. 1. A specific area of concern that has come to the fore is the concentrated and high pace of lending to the infrastructure sector by the public sector banks (PSBs). Further. the system providers/banks need to ensure that the challenges are adequately addressed. Some concerns related to financial stability 1. banks also face challenges in respect of demanding needs of supporting growth through financial inclusion and efficient credit intermediation through technology and product innovation. 2011 may initially lead to some competition. However. this process may not be disruptive. which could propel foreign funding by Indian corporates leading to currency mismatches.

Medium term outlook 1. viz.27 In the long term. efficiency. 9 . however. Banks need to build on four principles. As articulated earlier.Perspectives on the Indian Banking Sector While technological advancements in IT have led to discernible improvement in the efficiency of banking services. robust savings. the banking sector in India can look forward to enormous opportunities in their quest for long term growth. efficiency and risk management objectives. filling the void called ‘financial exclusion’ is the critical responsibility of banks. transparency and inclusion. The banking sector needs to focus on growth through inclusion. policy thrust to expand infrastructure and further strengthening of financial inclusion are expected to ensure robust growth of the banking sector in medium term. Going forward. the process of institutional strengthening assumes critical importance.26 To take full advantage of the opportunities while addressing the new challenges. Despite all the challenges and issues to be addressed. innovation and diversification while complying with domestic regulations and internalising international best practices. stability. expected economic performance. and between the advantages of scale and the compulsions of diversity. 1. between the benefits and risks of greater global integration. the most significant task of the Indian banking sector is to ensure that banking products and services are made available to every individual in the country efficiently to achieve total financial inclusion. The challenge is to leverage technology optimally to balance growth. banks have not gained in terms of efficiency partly because of lack of business process re-engineering. The three balancing acts that the banking sector development strategy needs to perform are: between the drivers of banking sector growth and the requirements of the larger growth and development agenda..

and the US economy in particular. The US banking system. with challenges arising from the global financial system as well as the emerging fiscal and economic growth scenarios across countries. concerns are also being expressed about the credit growth laying foundations for a weak asset quality in the years to come. threaten the stability of the global banking system from without. after a major slump in economic growth in 2009 following the financial crisis. The Global Financial Stability Report in September 2011 has cautioned that for the first time since October 2008. market and funding risks as a result of severe deterioration in public finances in certain European countries. the performance of the global banking system too has been characterised by a mixed bag of a few positive . banking system continues to be beleaguered by high leverage and weak asset quality. The banking system in the Euro zone. and 2011 so far.1 For the global economy. the risks to global financial stability have increased. as a whole. Banking systems in advanced economies have continued to be on uncertain grounds on account of a lacklustre economic revival and increasing sovereign credit strains. now faces a serious question about whether this revival in the banking system would continue in the near future. In the UK too. All such solutions need to be designed keeping in mind the larger interests of the global economy. In major emerging economies. and multi-laterally. has been a difficult period for the global banking system. in advanced and emerging economies. sovereign risks have strengthened even in the US with an increase in sovereign debt ceiling along with a downgrading of the rating of the US sovereign by the credit rating agency of Standard and Poor’s. Introduction 2. On the positive side. stands vulnerable to mounting credit. however. Further.Chapter II Global Banking Developments The year 2010. 2. have moved forward towards strengthening macro-prudential oversight of their banking systems. which showed signs of improvement in credit growth and profitability in 2010. Further.2 In this milieu. were on account of escalating sovereign risks in the Euro zone and heightened inflationary pressures marked by uncertainty in the Middle East and North Africa (MENA) region. has witnessed its economic recovery losing steam and has experienced a downgrading of its sovereign. The beginning of 2011 has seen the optimism giving way to greater concerns on account of a projected slowdown of the global economy in general. both advanced and emerging economies. individually. Further. The concerns. for 2011. While it is important to keep up efforts towards strengthening the banking system from within. The US. credit growth has been at relatively high levels and is being regarded as a cause of concern given the growing inflationary pressures and increasing capital inflows. The optimism was attributed to a somewhat encouraging ‘two speed’ recovery. many of these banks require recapitalisation to cushion them from the risk of sovereign defaults. 1. it is also equally important to develop effective solutions for containing fiscal and economic risks. signaling a partial reversal in the progress made over the past three years. which at the present juncture. the year 2010 was replete with a mixed sense of optimism and concerns. despite riding on the QE2 wave.

this chapter analyses the performance of the global banking system using major indicators of banking activity and soundness for select advanced and emerging economies. which could be characterised by improved credit growth.Global Banking Developments developments and a number of shortfalls.3 Against this setting. The major shortfalls.0 7.0 5. Global Banking Trends 2. with emerging and developing economies growing at 6. 2.5 In its September 2011 World Economic Outlook. The positive developments have been in terms of the efforts by countries towards revamping their regulatory and supervisory architecture learning from the crisis.6 per cent. It also looks into the detailed individual performance of the banking systems in few advanced and emerging economies/ economy-groups. it analyses the performance of the top-100 banks having major global presence. have been the lack of a widespread revival of the global banking activity. Source: Calculated from World Economic Outlook database 11 . The estimate for advanced economies of 1.0 per cent for the world economy as a whole during 2011. Finally.0 6. profitability and asset quality.6 per cent provided in September Chart II.5 7. however. the International Monetary Fund (IMF) has estimated a growth of 4. It then highlights the major regulatory and supervisory policy initiatives with regard to the global banking system during the year. 2.0 4.1: Global Macro-economic Trends Global Growth Trends 10 8 6 Per cent Rate of Investment (as per cent of GDP) 35 30 25 Per cent 4 2 0 -2 -4 -6 2006 2007 2008 2009 2010 2011 Est World Advanced economies Emerging and developing economies Rate of Unemployment and Inflation Unemployment rate (per cent) 20 15 10 5 0 2006 2007 Advanced economies 2008 2009 2010 2011 Est Emerging and developing economies Gross Government Debt (as per cent of GDP) 8.5 6.5 5. Macro-economic risks have increased substantially 2.5 4.5 8.4 per cent and advanced economies growing only at 1. moderation in economic prospects in 2011. along with an effort to step up capital adequacy of banks. high levels of unemployment and inflationary pressures. and lower leverage.4 The current global macro-economic situation is characterised by an unbalanced economic recovery across advanced and emerging economies.0 9 8 7 6 5 4 3 2 1 0 120 100 Per cent Inflation rate (per cent) 80 60 40 20 2006 2007 Advanced economies 0 2008 2009 2010 2011 Est Emerging and developing economies 2006 2007 2008 2009 2010 2011 Est Advanced economies (Rate of inflation) Emerging and developing economies (Rate of inflation) Advanced economies (Rate of unemployment) Note: The rate of unemployment is not reported separately for emerging and developing economies. and elevated levels of government debt (Chart II.1). at the institutional level.

The RoA of US banks turned positive by 2010 after staying in the negative zone in 2008 and 2009.7 1.5 . were globally on a path of slow recovery since the beginning of 2009.0 0. In Russia and Malaysia. banking business in some advanced economies showed signs of revival in 2010.4 1. In Germany..3 . 12 .1 -0.1 Malaysia 1. Return on Assets showed a moderate increase 2.. more so for emerging economies as a fallout of rising oil. Germany and France in the first quarter of 2011 after entering into the negative growth zone after the crisis. Return on Assets (RoA). recovered between 2009 and 2010. Spain and Italy. GDP growth was 1. there is an uncertainty about whether this credit revival would continue or not.9 Emerging and developing economies Russia 3.1 per cent in the second quarter of the year. 1.0 0.. In fact.5 1... showed a steep fall in the growth in bank credit with no signs of revival by 2011 (Chart II.2 0. which are generally associated with changes in balance sheet and profitability growth of banks.. which had dipped between 2008 and 2009. .3 1.4 0.3 1.2 … Greece 1.4 0.2 Mexico 2.5 United Kingdom 0. there was an upward movement in the prices of bank stocks but this was within a narrow range. Inflationary pressures. food and commodity prices.1 0.4 0.0 0.9 1. also showed a moderate increase in the US and 1 Table II. Disappointing performance of bank stocks 2. .7 Apart from the pickup in credit growth. In Russia.2)..4 per cent and recovered. it showed a further increase in 2011 (March).4 1.3 0.4 Portugal 1. particularly countries with fiscal strains.2 -0.4 -0.4 0.9 China 0.6 Against the macro-economic backdrop discussed in the foregoing section.. namely Portugal. there was a striking downtrend in bank stocks in the US since the The US GDP growth in the first quarter of 2011 slowed down to 0.5 2.8 0.3 .0 1.6 Advanced economies France 0. ..3 0.6 0.0 1. Other advanced economies from Europe. but has remained in the negative zone.3 per cent in the second quarter.2 1..Report on Trend and Progress of Banking in India 2010-11 2011 was lower than the estimate of 2.0 India 0.2 2.4 0.2 per cent provided in June 2011 in light of the lower quarterly GDP growth of leading advanced economies. The RoA of Indian banks too showed a modest rise between 2008 and 2010.1: Return on Assets of Banks for Select Economies Country 2007 2008 2009 2010 2011* .3 per cent in the first quarter of 2011 but declined to 0. RoA of the banking system.5 1.8 0. which had become stubborn in 2010.. .1). albeit moderately. The rate of unemployment in advanced economies has been little over 8 per cent in 2010 albeit with some moderation expected in 2011 as per the IMF estimates.1 0. In the US.5 Brazil 3.9 1.. to 1.2 … Japan 0.1 0. bank credit growth. 0. an indicator of banking system’s profitability and soundness. Moreover. has shown a recovery in 2011. -0.5 1. 1. China and Malaysia.6 Italy 0.8 Source: Compiled from Financial Soundness Indicators.1 1. the trend of increase in RoA continued even in 2011 (March).. However.3 -0.3).8 3.2 United States 1.8 Changes in bank stock indices.2 0. reflecting weak confidence of investors in these stocks (Chart II.2 -0. An increase in the growth of bank credit was evident in the US. even in Germany1...5 Spain 1.1 -0.4 3. IMF … Not available * Up to the period ending March France in 2010 (Table II. given the picture of economic revival looking bleak in the US and now. which had entered a downtrend since the beginning of 2009. Uncertainty about credit revival continues 2.7 0..6 Germany 0.3 -0. credit growth has again witnessed a slump in the second quarter of 2011 in the US.1 0. In the UK and Japan. are expected to aggravate further in 2011.9 1.

In all other countries. UK. Hence.4 0 3 2 -2 1 -1 6 10 4 12 0 8 2 10 20 30 40 50 60 70 04-2008 06-2008 08-2008 10-2008 12-2008 02-2009 04-2009 06-2009 08-2009 10-2009 12-2009 02-2010 04-2010 06-2010 08-2010 10-2010 12-2010 02-2011 04-2011 06-2011 -10 6 10 12 -6 4 -4 0 8 2 -2 10 15 20 25 30 35 0 5 0 US China Germany Portugal Russia 10 20 30 40 15 25 35 16 14 10 12 -2 10 20 15 25 -5 -3 -2 -1 0 5 6 4 0 8 2 0 5 0 1 2 3 12-2007 02-2008 04-2008 06-2008 08-2008 10-2008 12-2008 02-2009 04-2009 06-2009 08-2009 10-2009 12-2009 02-2010 04-2010 06-2010 08-2010 10-2010 12-2010 02-2011 12-2007 02-2008 04-2008 06-2008 08-2008 10-2008 12-2008 02-2009 04-2009 06-2009 08-2009 10-2009 12-2009 02-2010 04-2010 06-2010 08-2010 10-2010 12-2010 02-2011 04-2011 06-2011 12-2007 02-2008 04-2008 06-2008 08-2008 10-2008 12-2008 02-2009 04-2009 06-2009 08-2009 10-2009 12-2009 02-2010 04-2010 06-2010 08-2010 10-2010 12-2010 02-2011 04-2011 06-2011 08-2011 12-2007 02-2008 04-2008 06-2008 08-2008 10-2008 12-2008 02-2009 04-2009 06-2009 08-2009 10-2009 12-2009 02-2010 04-2010 06-2010 08-2010 10-2010 12-2010 02-2011 04-2011 06-2011 4 5 Note: Italy Japan France Brazil Chart II.0 12-2007 02-2008 04-2008 06-2008 08-2008 10-2008 12-2008 02-2009 04-2009 06-2009 08-2009 10-2009 12-2009 02-2010 04-2010 06-2010 08-2010 10-2010 12-2010 02-2011 04-2011 06-2011 08-2011 0 2 4 6 8 0 UK Spain India 05-2008 08-2008 11-2008 02-2009 Global Banking Developments Malaysia 05-2009 08-2009 11-2009 02-2010 05-2010 08-2010 11-2010 02-2011 05-2011 12-2007 02-2008 04-2008 06-2008 08-2008 10-2008 12-2008 02-2009 04-2009 06-2009 08-2009 10-2009 12-2009 02-2010 04-2010 06-2010 08-2010 10-2010 12-2010 02-2011 04-2011 06-2011 08-2011 12-2007 02-2008 04-2008 06-2008 08-2008 10-2008 12-2008 02-2009 04-2009 06-2009 08-2009 10-2009 12-2009 02-2010 04-2010 06-2010 08-2010 10-2010 12-2010 02-2011 04-2011 06-2011 08-2011 .2: Three-year Moving Average of Bank Credit Growth. Source: Calculated from Thomson Reuters. Credit data used for the growth calculations are as reported in the respective currency of each country. 3. 2. DataStream 13 10 15 20 25 30 0 5 10 12 14 16 11-2006 02-2007 05-2007 08-2007 11-2007 02-2008 12-2007 02-2008 04-2008 06-2008 08-2008 10-2008 12-2008 02-2009 04-2009 06-2009 08-2009 10-2009 12-2009 02-2010 04-2010 06-2010 08-2010 10-2010 12-2010 02-2011 04-2011 06-2011 08-2011 12-2007 02-2008 04-2008 06-2008 08-2008 10-2008 12-2008 02-2009 04-2009 06-2009 08-2009 10-2009 12-2009 02-2010 04-2010 06-2010 08-2010 10-2010 12-2010 02-2011 04-2011 06-2011 08-2011 12-2007 02-2008 04-2008 06-2008 08-2008 10-2008 12-2008 02-2009 04-2009 06-2009 08-2009 10-2009 12-2009 02-2010 04-2010 06-2010 08-2010 10-2010 12-2010 02-2011 04-2011 12-2007 02-2008 04-2008 06-2008 08-2008 10-2008 12-2008 02-2009 04-2009 06-2009 08-2009 10-2009 12-2009 02-2010 04-2010 06-2010 08-2010 10-2010 12-2010 02-2011 04-2011 06-2011 10 -10 15 0 5 -5 10 20 30 40 50 60 70 -10. Bank credit refers to private credit for Germany. Data for Spain are available with quarterly frequency. Russia. in per cent 1. Spain. France and Portugal. its growth rates are reported as quarterover-quarter. it refers to total bank credit. Growth rates for all other countries are month-over-month growth rates smoothened out using three-year moving average method.

6 -21.6 6.7 20. Table II. the level of capital adequacy showed a moderate decline between 2009 and 2010.2: Growth in International Assets and Liabilities of Banks Item Total assets 1.0 3. Both Mexican and 14 Source: Calculated from BIS. Ireland.1 22.5 10.5 -18.10 In most advanced countries. India and Mexico.5 2. however.4 5. Among EMEs.2 -2. in the UK. the upward movement in bank stocks since the beginning of 2009 was significant for India.9 In 2010-11 (March).5 -19.4 -6.5 -17. Greece.7 0.2 -1.9 5. US.0 9.0 -13.2).1 -1. international assets and liabilities of banks had contracted significantly in the aftermath of the financial crisis (Table II.Report on Trend and Progress of Banking in India 2010-11 Chart II. Italy.4 0.2 22.3).3 6.8 -17. with the exceptions of China. there was considerable revival in international banking business (by location of reporting banks) continuing with the trend in 2009-10.2 -17. Latin American banks increasingly resorted to the issuance of securities. resulting in the index overshooting its precrisis mark by the end of 2010. Revival in international banking business 2.1 26. During 2008-09.5 27. Capital to Risk-weighted Assets Ratio (CRAR) was placed above 15 per cent. Italy. By 2010.2 0. Greece and Spain US Note: EMU refers to European Monetary Union. Even in the emerging economies.0 -14. DataStream China EMEs India beginning of 2011. bank stock indices moved upwards very slowly since the beginning of 2009. and in China. Japan and Germany.1 6. the quantum of international assets and liabilities (in all currencies vis-à-vis all sectors) also showed a similar trend of increase between end-March 2010 and end-March 2011 (Chart II. Ireland and Spain) Portugal.3 7. the increase in international banking business gained considerable momentum by the first quarter of 2011. Increase in levels of capital adequacy 2. Local liabilities in foreign currency 2007-08 2008-09 2009-10 2010-11 26. Among the major emerging economies. External assets Loans and deposits Holdings of securities and other assets 2. Locational Banking Statistics.7 -0.6 28.0 -18. Among advanced countries. A similar downtrend could also be seen in bank stocks of the fiscally strained economies.7 1. External liabilities Loans and deposits Own issues of securities and other liabilities 2. leading to a sharp growth in the international liabilities of these banks. Source: Compiled from Thomson Reuters.1 5.4).4 26. In EMEs as a whole. . The ratio showed a further increase for US and German banks in the first quarter of 2011.5 33.0 0.3: Bank Stock Indices in Select Economies/Economy Groups 2500 US dollars (for China and EMEs) 400 350 300 250 200 150 100 50 0 25000 20000 15000 10000 5000 0 1-2-2011 1-4-2011 1-6-2011 1-8-2011 1-10-2009 1-10-2008 1-12-2008 1-12-2009 1-10-2010 1-12-2010 1-10-2011 1-2-2009 1-4-2009 1-6-2009 1-4-2008 1-6-2008 1-8-2008 1-8-2009 1-2-2010 1-4-2010 1-6-2010 1-8-2010 Indian rupees (for India) 2000 US dollars 1500 1000 500 0 1-2-2011 1-4-2011 1-6-2011 1-8-2011 1-10-2009 1-10-2008 1-12-2008 1-12-2009 1-10-2010 1-12-2010 1-10-2011 1-2-2009 1-4-2009 1-6-2009 1-4-2008 1-6-2008 1-8-2008 1-8-2009 1-2-2010 1-4-2010 1-6-2010 1-8-2010 Asia (excl Japan) EMU (excl Portugal. Local assets in foreign currency Total liabilities 1.4 26. the increase in international business was most striking for banks located in the US and UK.11 The level of capital adequacy across banks in most advanced economies was on a steady rise between 2008 and 2010 (Table II.7 7. Financial soundness of banks 1.

. Source: Compiled from BIS Locational Banking Statistics Table II.3 16.8 12.2 11. It is noteworthy.3 15. the extent of leverage for UK banks continued to be at relatively high levels. refers to it as a “leverage ratio”.3 Japan 12.8 20. the measure of leverage used for the present analysis has been referred to as preliminary.9 13..4 15.5 17.3 12.4 11.9 United States 12.8 15.6 14.6 12.7 11. the percentage of total capital (and reserves) to total assets has been taken as an indicator of leverage in the banking system2. Uneven decline in leverage 2.9 17.4 15.4 12..8 .7 Portugal 10.5 10.3: Capital to Risk-Weighted Assets Ratio of Banks in Select Economies Country 2007 2008 2009 2010 2011* Chinese banks showed a moderate decline in their capital positions by March 2011. Hence. In the US.4 12.2 11.9 Russia 15.1 Greece 11.5 12. 16. see “Concepts and Definitions” of FSI. (i) the capital measure should include Tier 1 capital and the predominant form of Tier 1 capital.6 Malaysia 14. 16.9 15.4 12.2 17.8 16.5 16.2 13.7 18.8 United Kingdom 12.4 9.1 ..6 China 8.4 Italy 10.4: International Assets/Liabilities of Advanced and Emerging Economies 8000 7000 6000 US $ billion International asset position of banks in all currencies .imf. <www. 15 .5 18.12 There was unevenness in the decline in banking sector leverage across countries after the crisis.4 10.5 16.8 14.3 13.4 16.2 18. 2. Advanced economies France 10.1 12. .org>. Notwithstanding this moderation. A moderation in leverage could also be seen for UK banks between 2008 and 2010. here. while (ii) total exposure should include exposure net of provisions and other valuation adjustments.Global Banking Developments Chart II.Advanced economies 9000 8000 7000 US $ billion International liability position of banks in all currencies .2 Spain 11.. however.9 18. 10. that the IMF while discussing this measure.3 .2 9.9 14..0 11.. IMF … Not available * Up to the period ending March/May 2 As per the baseline proposal for leverage ratio put forward by the BCBS under its Basel III rules text.3 Emerging and developing economies Brazil 18..0 13. 15.5 . leverage in the banking system showed some moderation between 2008 and 2010 (Chart II.Advanced economies 5000 4000 3000 2000 1000 0 France Germany Greece Italy Japan Spain United Kingdom United States 6000 5000 4000 3000 2000 1000 0 France Germany Greece Italy Japan Spain United Kingdom United States End-March 2007 End-March 2010 End-March 2008 End-March 2011 End-March 2009 End-March 2007 End-March 2010 End-March 2008 End-March 2011 End-March 2009 100 International asset position of banks in all currencies Emerging and developing economies 140 120 100 US $ billion International liability position of banks in all currenciesEmerging and developing economies 90 80 70 US $ billion 60 50 40 30 20 10 0 Brazil India Malaysia Mexico 80 60 40 20 0 Brazil India Malaysia Mexico End-March 2007 End-March 2010 End-March 2008 End-March 2011 End-March 2009 End-March 2007 End-March 2010 End-March 2008 End-March 2011 End-March 2009 Note: Data for 2007 for Malaysia are not available.2 Source: Compiled from Financial Soundness Indicators.3 Germany 12. It directly follows the measure provided by the IMF in its Financial Soundness Indicators (FSI) database..5 Mexico 15. This trend for US banks continued further in the first quarter of 2011.5 18.8 12.6 12.2 India 12.5).4 10. ..4 11.3 12.8 16...2 10.

2. there was an increase in the leverage of their banking systems in the post-crisis period. In the US. in many emerging economies.Advanced economies 12 11 10 9 8 7 6 5 4 3 2 1 0 12 11 10 9 8 7 6 5 4 3 2 1 0 Russia Ratio of NPLs to total loans. Greece and Spain. credit risks have risen and continue to be the key potential risk to global financial stability.6: Asset Quality of Banks in Select Economies Ratio of NPLs to total loans . there was a moderate improvement in asset quality between 2009 and 2010.14 Globally. IMF * Up to the period ending March Deleveraging had not gained any significant momentum in the banking systems of other advanced European economies. IMF 2007 Greece United Kingdom Per cent 2007 China 2008 India 2009 Malaysia 2010 Brazil 2011* Mexico * Up to the period ending March 16 .Report on Trend and Progress of Banking in India 2010-11 Chart II.Advanced economies 13 16 11 14 Leverage in the banking system-Emerging and developing economies Per cent 9 7 5 3 Per cent 2008 2009 2010 2011* Germany Portugal Greece Italy United Kingdom United States Green : Consistent decline in leverage since 2008 Red : Lack of consistency in the decline in leverage since 2008 2007 12 10 8 6 4 2007 Brazil 2008 Mexico 2009 Malaysia 2010 India 2011* China France Japan Spain Russia Green : Consistent decline in leverage since 2008 Red : Lack of consistency in the decline in leverage since 2008 Source: Compiled from Financial Soundness Indicators. Germany. Portugal. banking systems were generally less leveraged than most advanced economies. treating 2008 as the reference point. According to the GFSR (September 2011). The Report went on to add that improvements in credit risks had lagged behind improvements in the real economy. However. The Global Financial Stability Report (GFSR) (September 2011) has in fact highlighted releveraging as a major concern for banking systems in emerging economies.5: Leverage in the Banking Systems of Select Economies Leverage in the banking system . Moreover. many of the major emerging economies showed considerable Chart II. France. There was a trend of increasing Non-Performing Loans (NPLs) ratio across most advanced economies between 2008 and 2010 with the exception of the US. treating 2008 as the reference point. Weakening asset quality 2.13 In major emerging economies. the banking systems in these economies did not show signs of any perceptible increase in leverage during the crisis period. Source: Compiled from Financial Soundness Indicators.. there was little improvement in the asset quality of banks since the onset of the financial crisis. 3.Emerging and developing economies Per cent 2008 2009 2010 2011* Japan Spain Italy Portugal Germany France United States Note: Ratio of NPLs is not available for 2010 for Germany and hence has not been reported.6). viz. which continued in the first quarter of 2011 (Chart II. In complete contrast to advanced economies.

The spreads softened in the following months and continued to be low in 2010 and first half of 2011 across most advanced and emerging economies. With solvency of sovereigns coming into serious question in the recent months. Source: Bloomberg for Sovereign spreads and Thomson Reuters. in general. Rising CDS spreads indicating hardening risk perceptions 2. bank CDS spreads had hardened significantly during September Basis points Chart II. not just in the Euro zone Chart II. DataStream for Banks' spreads 17 6-Jun-2011 6-Dec-2008 6-Dec-2009 6-Sep-2008 6-Sep-2009 6-Dec-2010 6-Sep-2010 6-Sep-2011 .8: Sovereign and Bank CDS Spreads in Select Economies 6000 5000 4000 3000 2000 1000 0 Jan2010 Feb2010 Mar2010 Apr2010 May2010 Jun2010 Jul2010 Aug2010 Sep2010 Oct2010 Nov2010 Dec2010 Jan2011 Feb2011 Mar2011 Apr2011 May2011 Jun2011 Jul2011 Aug2011 Sep2011 Oct2011 Sovereign CDS spreads for select economies Basis points Greece 700 600 Ireland Portugal Spain Italy Belgium Germany 1600 1400 1200 1000 800 600 400 200 0 Japan United Kingdom United States France Bank CDS spreads in select advanced economies/economy groups Basis points Bank CDS spreads for select Indian and Chinese banks Basis points 500 400 300 200 100 0 1-Jan-2009 1-Jan-2010 1-Jan-2011 1-Apr-2009 1-Oct-2008 1-Oct-2009 1-Apr-2010 1-Oct-2010 1-Apr-2011 1-Oct-2011 1-Jul-2008 1-Jul-2009 1-Jul-2010 1-Jul-2011 6-Mar-2011 6-Mar-2009 6-Mar-2008 6-Jun-2008 6-Jun-2009 6-Mar-2010 US EU UK ICICI Bank Bank of India 6-Jun-2010 Bank of China Note: The sovereign spreads are for 5-year senior CDS. 2.7). while banks' spreads are for 5-year CDS. CDS spreads fell till mid-April and rose subsequently. particularly for some Euro zone countries. on the rise with intermittent periods of fall (Chart II. However. except in the Euro zone. During 2011.15 CDS spreads of global banks during 201011 have been. Asset quality remained particularly robust in China.Global Banking Developments improvement in asset quality in the years following the crisis.16 Across countries.8). reflecting the severe elevation in sovereign risks (Chart II. the sovereign CDS spreads had shot up to very high levels up to September 15. In the case of Greece.8). 2011.7: CDS Spread of Global Banks 450 400 350 300 250 200 150 100 1-5-2009 1-6-2009 1-7-2009 1-8-2009 1-9-2009 1-10-2009 1-11-2009 1-12-2009 1-1-2010 1-2-2010 1-3-2010 1-4-2010 1-5-2010 1-6-2010 1-7-2010 1-8-2010 1-9-2010 1-10-2010 1-11-2010 1-12-2010 1-1-2011 1-2-2011 1-3-2011 1-4-2011 1-5-2011 1-6-2011 1-7-2011 1-8-2011 1-9-2011 1-10-2011 Source: Bloomberg 2008 (Chart II. CDS spreads of global banks have been on a rise with the increase in risks associated with sovereign debt.

11). There was a contraction in the access to banking services in many of the advanced economies affected by the crisis. IMF but also in other parts of the world. The decline in the usage of banking services was more striking in the advanced economies. CGAP. particularly in the advanced economies.10 and II.000 adultsEmerging and developing economies Number of bank branches 45 40 35 30 25 20 15 10 5 0 France Spain 2007 United Japan United States Kingdom 2008 2009 2010 Germany Brazil 2007 2008 India 2009 2010 Malaysia Note: Data are not available for UK and Spain for 2010 and hence. CDS spreads for banks have been on a rise in the third quarter of 2011.10: Usage of Banking Services across Select Economies – Deposits 450 400 350 300 Per cent Per cent Bank deposits as per cent of GDPAdvanced economies 160 140 120 100 80 60 40 20 Bank deposits as per cent of GDPEmerging and developing economies 250 200 150 100 50 0 United Kingdom Japan Portugal Italy United States France Germany Spain 0 Malaysia 2007 China 2008 2009 India 2010 Brazil 2007 2008 2009 2010 Note: Data are not available for UK. it has attained centre stage particularly after the financial crisis.9).17 Financial inclusion has become an important part of the banking policy in both advanced and emerging economies in the recent years. Source: Compiled from Financial Access Survey. are not reported in the chart. India and China for 2010 and hence.9: Demographic Access to Banking Services across Select Economies 50 Number of branches per 100. The decline was more pronounced and widespread with regard to usage of credit services as compared to deposit services (Charts II. IMF 3 Financial Access 2010 – The State of Financial Inclusion through the Crisis. As noted in the report on “Financial Access” by the World Bank. There was also a decline in usage of banking services. Moreover. Spain.000 adultsAdvanced economies Number of bank branches 15 13 11 9 7 5 3 1 -1 Number of branches per 100. Source: Compiled from Financial Access Survey. Recent data from the World Bank on the access and usage of banking services suggest that these concerns have not been misplaced. Chart II. 18 .Report on Trend and Progress of Banking in India 2010-11 Chart II. Trends in access and usage of banking services Possibility of an increase in financial exclusion following the crisis 2. are not reported in the chart. World Bank. This is because there have been concerns about the possibility of an increase in financial exclusion following the crisis. resulting from a closure of bank branches (Chart II. slowing down of economic growth made an impact on the retail infrastructure in many advanced economies and bank branches were one of the causalities of this impact3.

remained the weakest spot in the US banking system. Banking Trends in Select Regions and Countries US banking system – Signs of a weak recovery 2. as personal credit. Hence.18 In 2010.2 earlier).11: Usage of Banking Services across Select Economies – Credit 500 450 400 350 Bank credit as per cent of GDPAdvanced economies 110 90 Bank credit as per cent of GDPEmerging and developing economies Per cent 250 200 150 100 50 0 United Portugal Kingdom Japan Italy Spain France United States Germany Per cent 300 70 50 30 10 -10 China 2007 Malaysia 2008 2009 India 2010 Brazil 2007 2008 2009 2010 Note: Data are not available for UK. 19 . are not reported in the chart.6 earlier. as noted in the Annual Report of the Federal Reserve (2010). Source: Compiled from Financial Access Survey. growth in credit of US banks turned negative since September 2009. They are seasonally adjusted. India and China for 2010 and hence.14)4. particularly in the real estate sector.12: Asset Growth in the US Banking Sector 14 12 10 8 6 Per cent constituted about 90 per cent of the total assets of the US banking sector (Chart II. In the 4 2 0 -2 -4 -6 2006-07 All US banks 2007-08 2008-09 2009-10 Banks with assets of more than 1 billion USD Banks with assets between 100 million and 1 billion USD Source: Calculated using data from FDIC database 4 Delinquency rates are defined as loans past due for thirty days or more and still accruing interest as well as those in non-accrual status. High levels of non-performing loans 2. it was credit which was hit the hardest on account of the crisis. As already noted in earlier section. this recovery continued to be weak. particularly credit cards. Spain. and entered the positive zone only after a year in August 2010 but showed signs of slowing down again in 2011 (see Chart II. For both commercial/industrial and real estate sectors. the performance of the US banking system showed signs of recovery since the time of the financial crisis but by historical standards.12). This recovery was largely driven by the US banks with an asset size of more than US$ 1 billion. Credit continued to remain restricted to industrial sector 2.9 per cent in 2008-09.Global Banking Developments Chart II. The delinquency rate for real estate loans hit a high of 10 per cent in the second quarter of 2010 (Chart II. showed a significant revival on the back of low base and with some improvement in the confidence of US consumers about a better economic outlook (Chart II. IMF 3.13).20 High levels of non-performing loans. bank credit continued to remain restricted even in 2009-10.1 per cent in 2009-10 from a negative growth of 3.19 Among the major components of balance sheets of US banks. The sector that received the largest setback with the slowing down of both credit and economic growth as fallout of the crisis was the commercial and industrial sector in the US. these rates do not compare with the NPL ratios given in Chart II. The assets of the US banking sector showed an overall growth of 2. which Chart II.

16).13: Sectoral Rates of Growth of Credit of US Banks 60 55 50 45 40 35 Chart II. concerns remained about revival in credit to small and medium enterprises (SMEs) in the Euro zone.16: Expectations about Credit Conditions for SME Sector in the Euro zone 20 Credit conditions have improved and will improve 10 18 15 16 8 Per cent 6 Credit conditions have deteriorated and will deteriorate 17 19 22 22 4 2 Credit conditions have remained unchanged and will remain unchanged 59 60 57 55 0 10 20 30 40 50 60 70 0 2007 Q4 2008 Q1 2006 Q1 2007 Q1 2009 Q1 2010 Q1 2011 Q1 2006 Q2 2007 Q2 2008 Q2 2009 Q2 2010 Q2 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2006 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q2 Real estate loans Commercial and Industrial loans Credit cards Agricultural loans Individual loans Per cent 2009H1 2009H2 2010H1 2010H2 Note: The figures refer to weighted percentage of responses. Source: Calculated from ECB database Source: Calculated using data from FDIC database subsequent quarters.Report on Trend and Progress of Banking in India 2010-11 Chart II. Chart II. this rate tapered off moderately but still remained at a stubbornly elevated level.15: Balance Sheet Indicators of Banks in the Euro zone Per cent per annum 25 Per cent 30 20 15 10 5 0 -5 Sep-2007 Sep-2008 Jun-2007 Jun-2008 Sep-2009 Sep-2010 Jun-2009 Jun-2010 Mar-2007 Mar-2008 Mar-2009 Mar-2010 Mar-2011 Jun-2011 Dec-2007 Dec-2008 Dec-2009 Dec-2010 -10 -15 -25 2006-07 2007-08 2008-09 2009-10 Real estate loans Commercial and Industrial loans Credit cards Agricultural loans Individual loans Loans to non-financial private sector Securities of non-financial private sector Total assets Note: The rates of growth are three yearly moving averages. banking conditions in the Euro zone showed signs of improvement in terms of revival in growth in private credit Chart II.14: Sectoral Delinquency Rates of US Banks 12 and banks’ investment in securities of the private sector in 2010 (Chart II.21 At the aggregate level. Euro zone banking system .Concerns remain with regard to revival in credit 2. Also. at the disaggregated level. concerns about credit revival continued to plague banks in the fiscally strained economies (Chart II.2 earlier).15). However. Source: Compiled from ECB's Survey on Access to Finance of SMEs in the Euro area Source: Calculated using data from Federal Reserve database 20 . a sector largely dependent on bank finance (Chart II.

With downgrading of sovereigns and the resulting losses. At the sectoral level. the UK banking system continued to be besieged by some concerns: First. rising sovereign risks have also increased funding risks for Euro zone banks. as per the Bank of England Credit Conditions Survey (Chart II. viz. the UK banking system showed moderate de-leveraging and reduced its reliance on wholesale funding. banks’ balance sheets in the Euro zone countries..17).6.20). despite de-leveraging.19). UK banking system – Leverage and credit risks at elevated levels 2. the level of leverage still remained high for UK banks. as already shown in Chart II. Secondly. particularly for medium term enterprises. Source: Compiled from ECB database 1/1/2008 1/3/2008 1/5/2008 1/7/2008 1/9/2008 1/11/2008 1/1/2009 1/3/2009 1/5/2009 1/7/2009 1/9/2009 1/11/2009 1/1/2010 1/3/2010 1/5/2010 1/7/2010 1/9/2010 1/11/2010 1/1/2011 1/3/2011 1/5/2011 1/7/2011 1/9/2011 0 Euribor 1-month Euribor 1-year 5-2011 .Global Banking Developments Impact of sovereign debt crisis on Euro zone banking system 2. credit card loans (Chart II. credit risks grew for the unsecured component of bank loans. the near to medium-term expectations about an improvement in credit availability have been on wane.1). Further. It is noteworthy that deposit rates in Spain. especially home sovereigns. Moreover. However. again reflecting funding strains for banks in these economies (Chart II. unlike its counterparts in the Euro zone. This is evident from a rising trend in Euribor (Euro Inter-bank Offered Rate) since mid-2010 (Chart II. as illustrated earlier in Chart II.24 In 2010-11.2. credit risks continued to be at elevated levels. particularly in the countries which are fiscally challenged. particularly on account of cross-border exposure of sovereign debt (Box II. 21 5 4 Per cent 3 2 1 Note: The rates are monthly averages. are generally an important part of banks’ balance sheets. private credit growth remained considerably weak. Select Euro zone Economies 6 5 4 Per cent 3 2 1 0 1-2011 1-2009 5-2009 1-2008 5-2008 9-2008 9-2009 1-2010 5-2010 9-2010 Greece Italy Spain France Germany Source: Compiled from Eurostat database emerged over stability of banks having exposure to sovereign debt of Euro area countries.22 Sovereigns. Italy and Greece – economies severely afflicted by the sovereign debt crisis – are at higher levels than the rates prevailing in other Euro zone countries. France and Germany. namely. have weakened significantly.18: Interest Rates on Bank Deposits from Non-financial Corporations (with Less than One Year Maturity).23 With sovereign debt concerns coming to the fore in the Euro area. concerns have Chart II.17: Movements in Euro Inter-Bank Offered Rate 6 Chart II. Risks related to cross-border exposure of sovereign debt 2.18). Thirdly.

624 18. Chinese banking system . its exposure to sovereign debt of other Euro area nations.272 Italy 1.25 Among the emerging economies.856 6.016 11. A. With the high growth in credit. The growth in bank assets and credit. any haircut/restructuring could adversely affect the banks of countries with otherwise sound fiscal positions.571 2. is relatively high.717 10.160 Banking Exposure of Ireland 5.Report on Trend and Progress of Banking in India 2010-11 Box II.26 The rank correlation coefficient of the top20 global banks between 2009 and 2010 worked Chart II.864 10. and P. Yet.383 2. however.476 12.685 Note: The listing of select countries in the Euro area covers the major sources and destination of sovereign debt and is not exhaustive.580 559 Portugal 257 13.807 4.592 31.19: Expectations about Bank Credit Availability to SMEs in the UK Bank credit availability for small enterprises in the UK 30 Increase in credit availability Increase in credit availability Bank credit availability for medium enterprises in the UK 30 20 10 0 2010 Q1 2010 Q2 2011 Q1 2009 Q4 20 10 0 2010 Q1 2010 Q2 2011 Q1 2011 Q2 Decrease in credit availability Decrease in credit availability 2010 Q3 2009 Q4 2010 Q4 2010 Q3 -20 -30 -20 -30 Observations during previous three months Expectations during the next three months Observations during previous three months Expectations during the next three months Note: The figures are net percentage balances calculated by weighing the responses of those lenders who answered the question by their market shares.322 839 239 2. 4. credit growth in China remained at a high level in 2010. Due to the high cross-border exposure to sovereign debt of banks. China exhibited a rapid expansion in the asset size of its banking system in 2009.888 2.707 304 6.017 48.313 Spain 345 1. some of which have debt sustainability issues.778 1. 4. cross-border exposure to sovereign debt is also high for banks in some of the Euro area nations (Table below). An Analysis of the Performance of Top 100 Global Banks Considerable repositioning of banks at the top end of the asset spectrum 2. at a time when banking sector assets in most advanced economies were in a phase of contraction following the financial crisis.916 1.718 4. despite Germany’s sound fiscal position.148 1. Illustratively. Slovik (2010). there are concerns being raised about a weakening of asset quality of Chinese banks in the near future. Source: Bank of England. Insurance and Private Pensions.21).310 6.922 5. “The EU Stress Test and Sovereign Debt Exposures”. OECD Working Papers on Finance. German and French banks are more exposed to the sovereign debt of Italy than other nations.03.029 10. (in Euro Million) Table : Exposure to Sovereign Debt of Banks Exposure to Sovereign Debt of Greece Greece Ireland Portugal Italy Spain France Germany UK Netherlands 56.44.854 5.131 3. Source: Blundell-Wignall.739 1.concerns about weakening of asset quality 2.179 1. peaked by the end of 2009 and posted a decline thereafter (Chart II. No.185 72.1: European Banks’ Exposure to Euro Area Sovereign Debt Apart from their exposure to sovereign debt of their own country. Credit Conditions Survey 22 2010 Q4 2011 Q2 -10 -10 .

4 Per cent for Private non-financial corporations Table II. Improvement in the profitability of global banks 2.15 Note: The coefficients were worked out assuming that the sample of top banks remained the same between the two years.27 An analysis of the location of incorporation of top 100 global banks (ranked by the strength of their Tier 1 capital) suggested a moderate shift of the global banking business from advanced economies to emerging economies in the aftermath of the crisis. In other words.4: Rank Correlation Coefficients for Top Global Banks between 2009 and 2010 Item Rank correlation coefficient Top-20 banks 0. This shift was attributable to bank failures as well as a weak growth in asset base of banks from the advanced economies. The rise in the rank correlation coefficients with the increase in the sample size suggested that there was considerable repositioning of banks at the top end of the asset spectrum (Table II. Source: Calculated from Banker Database 1 0.96 Top-100 banks 0. Strengthening of capital adequacy of global banks 2.2 1.05 0 Moderate shift of the global banking business to emerging economies 2.1 0. and more prominently.5 Per cent for consumer credit and credit cards 0.21: Growth in Balance Sheets of Chinese Banks 40 35 Per cent 30 25 20 15 Note: Series have been smoothened using three-year moving average method. The correlation coefficient increased steadily.5 0.83. Further. in the Euro zone economies (Chart II.22). The decline in the asset share of advanced economies between 2009 and 2010 was concentrated in the US. Source: Calculated from Peoples' Bank of China database Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 2006 Q4 2007 Q1 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 Consumer credit Credit cards Private non-financial corporations Assets Deposits Credit . about 89 per cent of the global banks had a positive RoA of less than 2 per cent in 2010 as against a share of 70 per cent in 2009 (Chart II.23).24).29 Apart from a turnaround in profitability of global banks. UK.28 There was a distinct improvement in the profitability of global banks between 2009 and 2010 as evident from an increase in RoA.3 0. there was also strengthening of capital adequacy positions of these institutions 23 0 Source: Calculated from Bank of England database out to 0.25 2 0.Global Banking Developments Chart II.5 0. In terms of both number and total assets of the top 100 global banks. The percentage of loss making global banks (reporting negative RoA) was down from 25 per cent in 2009 to only 5 per cent in 2010.83 Top-50 banks 0. as the sample of banks was expanded to top-50 and then to top-100 banks.4).20: Write-off Rates of UK Banks 3.98 3 2. Chart II.35 0. there was a fall in the share of advanced economies between 2009 and 2010 (Chart II. the ranking was re-worked by removing the new additions/deletions of banks during this period.5 0.

Slow process of deleveraging of global banks 2. the percentages may not add up to 100.0 15.24: Percentage Distribution of Top 100 Global Banks by Return on Assets 56 48 25 Per cent 20 15 33 22 10 5 17 6 0 5 0 -3<=RoA<-1 0<=RoA<1 1<=RoA<2 -1<=RoA<0 2 Singapore Eurozone Switzerland Sweden Japan US Denmark Brazil UK China South Africa Australia Canada South Korea Norway Turkey Russia India 3 5 1 1 2<=RoA<3 3<=RoA<4 0 RoA<-3 Advanced economies Emerging and developing economies 2009 2010 Source: Calculated using Banker Database 2009 2010 Note: On account of non-availability of data on certain banks from the top-100 sample.9 Advanced economies Emerging and developing economies Advanced economies Emerging and developing economies Source: Calculated using Banker Database between 2009 and 2010.25). Weakening asset quality of global banks 2.9 11.30 Notwithstanding the improvement in CRAR. the percentage of global banks with CAR ranging between 4 and 6 per cent had increased exactly by the same magnitude from 41 per cent to 46 per cent. the percentage had come down moderately by 5 percentage points to 19 per cent at the end of 2010 (Chart II. At end-December 2010. far above the BCBS norm of 8 per cent under the Basel II framework (Chart II.Report on Trend and Progress of Banking in India 2010-11 Chart II. Chart II. there was a decline in the proportion of banks reporting very Chart II. As against this.23: Share of Countries in Total Assets of Top 100 Global Banks 35 30 about 24 per cent of the top-100 global banks were highly leveraged with a Capital Adequacy Ratio (CAR) – a measure of financial leverage – of less than four per cent.0 88.22: Location of Global Banking Business Composition of number of top 100 global banks 2010 18.0 82.0 14. soundness of global banks remained a concern on account of a slow process of deleveraging and increasing levels of NPAs.2 84. There was an increasing concentration of banks between 2009 and 2010 in higher size classes based on CRAR.8 Composition of assets of top 100 global banks 2010 2009 2009 85. Source: Calculated using Banker Database 24 . 47 per cent of the top 100 global banks had a CRAR ranging between 13 per cent and 17 per cent. At the end of 2009.31 Between 2009 and 2010.26).

have attributed the eruption of a financial crisis of such vast magnitude and impact.28).25: Percentage Distribution of Top 100 Global Banks by CRAR 45 47 Chart II. suggesting some temperance of the acute credit strain on banks5. see Turner Review (2009) and Larosiere Report (2009). Source: Calculated using Banker Database 5 6 On account of non-reporting of data by many banks. including that of the latest Financial Crisis Inquiry Commission of the US (2011). revealed that while banks were in the process of stepping up their CRAR between 2009 and 2010. these reports have also underscored the need to increase interregulatory coordination both at the national and international level.33 Various authoritative reports on the crisis so far. the percentages may not add up to 100. Further. Chart II.Global Banking Developments Chart II. A number of banking policy reforms are since then being contemplated. Global Policy Reforms Significant increase in regulatory reforms 2. there was a general weakening of the asset quality of top global banks (Chart II. owing to the globalisation of finance.27). 5. there seemed to be little improvement in the leverage and NPLs ratios of banks during this period (Chart II. the percentages may not add up to 100. some of these. except this change at the extreme end of the spectrum. Source: Calculated using Banker Database 2009 2010 Source: Calculated using Banker Database high levels of NPLs ratio. the present analysis of NPLs is based on a sample of only 59 banks instead of 100 banks. However. to serious lacunae in the financial regulatory and supervisory framework6. 24 19 19 19 10 9 6 7 4<CAR<=6 6<CAR<=8 8<CAR<=10 2<CAR<=4 2009 2010 Note: On account of non-availability of data on certain banks from the top-100 sample. 10<CAR 25 5<NPL .26: Percentage Distribution of Top 100 Global Banks by Capital Adequacy (Leverage) Ratio 46 41 2.27: Percentage Distribution of Top Global Banks by NPLs Ratio 18 17 16 15 16 10 19 13 14 11 12 14 14 7 6 5 8 3 0<CRAR<=10 1 10<CRAR<=11 2 11<CRAR<=12 12<CRAR<=13 13<CRAR<=17 17<CRAR 0<NPL<=1 1<NPL<=2 2<NPL<=3 3<NPL<=5 2009 2010 Note: On account of non-availability of data on certain banks from the top-100 sample. For instance.32 The scatter plots of top 20 global banks taking three indicators of CRAR. leverage and NPLs ratio. have even reached the stage of implementation.

the BCBS also recommended the loss absorption by capital instruments at the point 7 of non-viability in January 2011 as a measure to enhance the quality of regulatory capital.28: Changes in Soundness Indicators of Top 20 Global Banks Top 20 global banks positioned by their CAR and CRAR 10 CAR in per cent 7 Top 20 global banks positioned by their NPLs ratio and CRAR NPLs ratio in per cent 12 10 8 6 4 2 0 0 10 20 Direction of improving soundness Direction of improving soundness 4 1 0 -2 15 30 30 CRAR in per cent 2009 2010 CRAR in per cent 2009 2010 Note: The top 20 banks are as per the list of 2010. the MAG observed a decline in annual GDP growth rate of about 3 basis points from its baseline level for 35 quarters from the start of implementation of the standards. 2. and is expected to be implemented in totality and not in parts8. It provides a set of collective minimum requirements. BIS. Source: Compiled from Banker database Reforms in Capital and Liquidity Standards 2. It is much more comprehensive and counter-cyclical in approach as compared to Basel II7. The same banks have been chosen for 2009 for these scatter plots.35 In addition to the December 2010 capital rules.2.Report on Trend and Progress of Banking in India 2010-11 Chart II. July 2011. 2. Taking a median of national estimates. 8 9 See Report on Trend and Progress of Banking in India – 2008-09 for a comparison of Basel III and Basel II norms of capital requirement and schedule for phase-in arrangements of Basel III. According to this recommendation. The framework provides details of the regulatory standards agreed to by the Governors and Heads of Supervision (GHOS) in September 2010. The Long-term Economic Impact (LEI) Group studied the costs and benefits of the new standards over the long run. The LEI noted that. BIS. “An Assessment of the Long-term Economic Impact of Stronger Capital and Liquidity Requirements”. See “Regulatory Reform: Remaining Challenges”. the Final Report of the Macro-economic Assessment Group (MAG) formed by Financial Stability Board (FSB) and BCBS concluded that the impact of higher capital standards on economic growth would be modest and would be much less in magnitude and spread over a longer time horizon than what was estimated by the MAG Interim Report in August 2010. and endorsed by the G-20 Leaders in November 2010. the benefits of reducing crisis-related risks would be substantial9. This framework incorporates both micro-prudential and macroprudential approaches to regulation and supervision.34 The most significant development during the year was the announcement by the Basel Committee on Banking Supervision (BCBS) in December 2010 (followed by minor modifications with regard to capital treatment for counterparty credit risk in bilateral trades in June 2011) of the reform framework to strengthen the capital and liquidity standards. The key objectives and features of the reform measures suggested in the Basel III framework are summarised in Box II. August 2010. while the costs in terms of permanent GDP foregone were expected to be small. 26 . Speech by Jaime Caruana.36 In December 2010. including situations where recapitalisation by public sector is necessary to save the bank. all regulatory capital instruments should be able to absorb losses in the event when a bank is unable to support itself in private market.

calling on international bodies to develop such a framework 10.Dampening pro-cyclical movements within the banking system by making it a “shock absorber” rather than a transmitter of risk to the real economy.2: Key Objectives and Features of the Basel III Framework Capital Standards I Raising capital base Objective . Introduction of stressed Value-at-Risk (VAR) capital requirement based on a continuous 12-month period of significant financial stress. there has been an explicit focus on developing a macro-prudential framework for dealing with system-wide risks.Introducing internationally harmonised and robust liquidity standards since stronger capital requirements may be necessary but not a sufficient condition for banking sector stability.38 The G-20 regulatory reform agenda has turned its attention to macro-prudential 10 regulation. Reforms related to Macro-Prudential Regulatory Framework 2. Liquidity Standards I.I. which include among others. Banks with large illiquid derivative position to a counterparty would have to apply longer margining periods for determining regulatory capital requirements. Measures . which has a longer time horizon of one year to provide sustainable maturity structure of assets and liabilities.2. available unencumbered assets and liquidity coverage ratio by currency. consistency in definition across jurisdictions and transparency in disclosure of capital base. contractual maturity mismatch. Movement to a relatively less pro-cyclical Expected Loss (EL) approach as against existing Incurred Loss (IL) and updation of supervisory guidance consistent with the EL approach. Introduction of capital charge for potential mark-to-market losses related to credit valuation adjustment risks associated with deterioration in creditworthiness of counterparty. Bank for International Settlements. Reference: “Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems”. II.1.Containing leverage in the banking sector thereby mitigating risk related to deleveraging. transparent and independent measure of leverage.I. II. Introduction of liquidity coverage ratio to ensure sufficient high quality liquid resources to cope with an acute stress scenario lasting one month.2 Remainder of Tier 1 capital comprising of subordinated instruments with fully discretionary non-cumulative dividends and with no maturity date or incentive to redeem. Since the crisis. Strengthening standards for collateral management.1 Tier 1 capital predominantly held as common shares and retained earnings. IV. Measures . concentration of funding. Creation of capital conservation buffers above the minimum capital and adjust the buffer range during periods of excess credit growth. Measures . comparable across jurisdictions by adjusting for differences in accounting standards. II Enhancing risk coverage Objective . II. Introduction of net stable funding ratio. The most important macro-prudential measure under Basel III framework is the counter-cyclical capital buffer.II. October 2010.II.4. which can address the time dimension of systemic risks. Supplement risk-based capital requirements with leverage measure Objective . IV.Strengthening risk coverage of capital framework especially for on.37 The crisis showed that while most financial entities can be regulated at an individual level. 27 .Ensuring quality.1. Reforms for Systemic Risk Management 1. III. which can also address time dimension of See “The Basel Committee’s Response to the Financial Crisis: Report to the G-20". II.and off-balance sheet items and derivative exposures. 2. I.3.3.Imparting consistency in quantitative metrics used by supervisors to capture liquidity risks. June 2011. I.2. Measures .2. BIS. the lack of an arrangement to supervise the system as a whole can create financial instability.1. 2. I. Innovative hybrid instruments with an incentive to redeem would be phased out.39 There are other provisions of Basel III. Reduce pro-cyclicality through counter-cyclical buffers Objective .III. Higher capital requirements for re-securitisation in banking and trading book.1.IV. the details of the concept and working of this buffer are illustrated in Box II. Introduction of a simple.3. The Basel III framework designed by the BCBS includes a number of provisions to dampen pro-cyclicality and increase the resilience of financial system. Measures . Quantitative liquidity metrics Objective . Introduction of metrics.1. Minimum liquidity standards Objective . Measures .Global Banking Developments Box II.

2. global (crossjurisdictional) activity and complexity11.5 per cent of risk-weighted assets and also be ready to remove this requirement in a timely manner if the systemic risk crystallises. Shadow banking is described as “credit intermediation involving entities and activities outside the regular banking system”12. See "Shadow Banking: Scoping the Issues". among others. 28 . The regulation of G-SIBs is instrumental in dealing with the crosssectional dimension of systemic risk by mitigating inter-connection and contagion risk. FSB. and the additional required capital and their phase-in arrangements. As the decision about setting the buffer needs to be taken by national jurisdictions.40 A major development during the year with regard to containing systemic risks was the agreement reached by the GHOS on a consultative document setting out regulatory measures for Global Systemically Important Banks (G-SIBs) in June 2011. In December 2010. sectoral credit requirements tend to vary substantially making it difficult to assess the build-up of risk based on the credit/GDP guide alone. In the Indian context. However. Credit Default Swap (CDS) spreads. As a result. a Working Group has been set up within the Reserve Bank. “Guidance to National Authorities for Operating the Counter-Cyclical Capital Buffer”. minimum leverage ratio. The common reference guide for calibrating the buffer. though they are not exclusively designed to address the same. thereby facilitating an improved macro-prudential surveillance of the banking system. Reforms for regulating Shadow Banking and extending the Regulatory Perimeter 2.41 As the framework for regulation. their size. Moreover. As per this guidance. Reference: Bank for International Settlements (2010). as given in the BCBS principles. BIS. supervision and resolution of SIFIs is strengthened. interconnectedness. any increase in the buffer should be pre-announced by up to 12 months to give banks time to meet the additional capital requirements before they take effect. December. 3. These include permanent capital conservation buffer.3: Counter-Cyclical Capital Buffer: Concept and Working The introduction of a counter-cyclical capital buffer in Basel III framework is an important step towards improving the quality of regulatory capital as well as addressing its pro-cyclicality. systemic risks. such as asset prices. would take effect immediately to reduce the risk of credit supply being constrained by regulatory capital requirements. April 2011. This segment is of concern because credit intermediation in this segment 12 See “Global Systemically Important Banks: Assessment Methodology and Additional Loss Absorbency Requirement”. there is a potential for increase in incentive for businesses to migrate to the shadow banking system. it is necessary for authorities to review the information at their disposal and accordingly. The Group is currently examining this and various issues involved in the operationalisation of the counter-cyclical capital buffer. Consultative Document. national jurisdictions would determine how the buffer should vary within the range of 0-2.Report on Trend and Progress of Banking in India 2010-11 Box II. July 2011. however. As regards dealing with crosssectional dimension of systemic risks. the BCBS notes that as this guide may not always work well in all jurisdictions at all times. As per the BCBS guidance. in India. The assessment methodology for G-SIBs is indicator-based and comprises five broad categories viz . The Indian economy has undergone structural changes and growth has not been even across all sectors. The BCBS has also suggested using other variables and qualitative information. one of the major issues for calibrating the buffer relates to the choice of the reference guide. the BCBS issued the guidance for national authorities for operating the counter-cyclical capital buffer. the Basel III standards with increased bank capital and liquidity are expected to enhance the resilience of each individual institution to adverse shocks. judgment coupled with proper communications is an integral part of calibrating the buffer instead of relying mechanically on the guide. funding spreads. The reductions. These indicators can be useful in assessing the sustainability of credit growth and the level of system-wide risk. lack of substitutability in terms of the services they provide.. 11 These measures included the methodology for assessing systemic importance. is private sector creditto-GDP gap (deviations of credit-to-GDP ratio from its longterm trend). review the counter-cyclical capital buffer decisions on a quarterly or more frequent basis. Reforms related to Systemically Important Financial Institutions (SIFIs) 2. and new liquidity standards. credit condition surveys and real GDP growth.

47 Thirdly. Many of the Euro zone banks may require substantial pumping of capital given the capital shortfall in the event of a high Greek haircut. whose banks are either directly or indirectly exposed to these sovereigns. France and the UK. continue to be highly leveraged with dependence on wholesale funding markets. There have been attempts to institutionalise collegial arrangements in the US. 2.43 Global banking system today stands at a juncture. There are concerns about the revival in credit growth in many advanced economies to sectors that rely heavily on bank financing and are crucial for revival in employment and growth. credit risks also continue to be at high levels. the onset of sovereign debt pressures since the early 2010 have given rise to renewed credit. monitor and address threats of systemic risk. especially the fiscally strained economies in the Euro zone. The risks arising from other segments impact the banking segment through an “adverse feedback” effect. In an attempt to close regulatory gaps. First. in its October 2011 meeting. fiscal conditions and state of the global economy. 2. Second. .46 Secondly. stands marginally improved on two major counts since 2008. the system as a whole and most advanced economies. central banks and other regulators with the primary responsibility to identify. as well as the peripheral economies of Germany. there are indications of modest improvements in profitability of banks in the US and UK in 2010. global banks in most advanced economies. where downside risks and challenges outweigh the positive efforts made by the banking system towards regaining growth and health since the outbreak of the financial crisis. which has drafted a scoping paper entitled “Shadow Banking: Scoping the Issues”. namely. UK and EU. The downside risks are manifold and arise not just from within the banking system but also from the financial system in general. 2. small and medium enterprises. The FSB has suggested surveillance of shadow banking system through (i) improved two-step monitoring from micro and macroperspectives and (ii) direct regulation of shadow banking entities and indirect regulation by regulating banks’ interactions with these entities.Global Banking Developments takes place in an environment where prudential regulatory/supervisory oversight is either not applied or applied in lesser degree than for banks engaged in similar activities. Recapitalisation of banks in the Euro zone is also a major concern at the present juncture. despite attempts at de-leveraging.42 Apart from these global reforms. the FSB has formed a Task Force. market and funding risks in the Euro zone economies with troubled sovereigns.45 The global banking system. to borrow the term used by the European Central Bank (ECB). stands weak on many counts after the crisis. First. still show very weak credit growth. however.44 The growth and soundness of the global banking system. The G-20. which can prepare them to absorb future losses more effectively. on the basis of which it made recommendations for the consideration of G-20 in autumn 2011. not just attributable to sovereign credit risks but also risks emanating from the unsecured 29 6. Vulnerabilities persist 2. Fourthly. Conclusions Global banks are confronting multiple risks 2. there has been a steady effort by global banks to strengthen their capital base. Marginal improvement in capital adequacy and profitability of the global banking system 2. agreed on the initial recommendations on oversight of shadow banking. there have been significant policy reforms across various advanced countries in the post-crisis period. as discussed. involving the Governments. especially in the Euro zone and UK.

49 Given that global risks outweigh improvements. thus. there are concerns about high credit growth leading to burgeoning of bad assets for banks. need to brace for some such difficult exercises before they eventually stabilise. All in all. the near-term outlook for the global banking system is fraught with many uncertainties. especially for improving the fiscal situation. 2. Further. there is an urgent need for advanced economies to step up macro-economic action. European banks. the crisis has dampened the extent of financial inclusion in most advanced economies pushing people out of the ambit of financial system on account of both supply and demand side factors. The more recent intense formal consultations among European nations to finalise a Euro deal will have significant implications for European banks in terms of stiff haircuts to be accepted and to strengthen the capital bases of banks through recapitalisation. There has to be greater commitment from countries towards consistently implementing the banking regulatory reforms that have been already agreed upon while strengthening their macroprudential oversight. Demand for banking services too has been affected with a dent on employment and income generation in these economies. In the present situation. to rightly calibrate the transition to this system in order to avoid any adverse impact on the global economy. Near-term outlook for the global banking system is fraught with many uncertainties 2. particularly since the global economic recovery remains weak. however. The high levels of inflation coupled with increasing short-term capital flows into these economies have further raised concerns about financial stability. central banks and banking institutions should collectively tread the risky path to enduring recovery and stability. both advanced economies and emerging economies need to work individually and collectively towards strengthening and reviving the global banking system. Government agencies.48 Finally.Report on Trend and Progress of Banking in India 2010-11 component of bank credit in many advanced economies. Fifthly. there has been a growing divergence between the performance of banking systems in advanced and emerging economies. There is a need. In China. the credit growth in major emerging economies has been high leading to concerns about overheating of these economies. 30 . Supply of banking facilities has been eroded with bank failures and decline in banking activity in advanced economies. some of which are beyond its direct control. While growth and soundness of banks in advanced economies are at low.

banking sector policy across the world has received a newer meaning and relevance. The perimeter of regulation also needs to be expanded to cover the unregulated segments in order to minimise regulatory arbitrage. Apart from the commercial banking sector. payment and settlement system.Chapter III Policy Environment Macroeconomic policy in India during 2010-11 was aimed at achieving the twin objectives of sustaining economic growth and controlling inflation. Financial Inclusion continued to remain high on the agenda of the Reserve Bank with the rolling out of Board-Approved Financial Inclusion Plans by banks. in order to ensure that economic growth. Introduction 3. 1. with special thrust on regulatory and supervisory policies adopted during 2010-111. technological developments.1 With the onslaught of the global financial crisis. while migrating to advanced approaches under the Basel II framework and facilitating the movement towards the Basel III framework. As the developed world was still battling low economic growth and deterioration in public finances. Non-Banking Financial Companies (NBFCs) and Financial Markets are also discussed in the chapter. designing the road ahead for the presence of foreign banks. was not sacrificed in the long-run. The fact that the Indian banking system was not adversely affected during the recent crisis is a proof of the success of this policy. The other major aspects of the banking policy covered. remained above the comfort zone in 2010-11. which emerged partly on account of high global commodity prices and partly due to internal structural imbalances in demand and supply. . Banking sector policy needs to be consistent with the broader objectives of macroeconomic policy through the provision of productive credit to bolster economic growth within the broad contours of monetary management. This chapter presents major developments in various realms of banking sector policy. The period covered in this chapter stretches from April 2010 to October 2011. Treading on the same path. credit delivery. financial inclusion. India successfully reverted back to its pre-crisis growth path in 2010-11. India has been lauded as one of the few countries that has followed a vigilant and counter-cyclical policy approach to banking sector developments. holding company structure for banks. cautious and yet. customer service and legal provisions for banking. Indian banking sector policy with regard to financial liberalisation and innovation has always been calibrated. and introduced credit default swaps for corporate bonds. which was in the process of consolidation. major policy measures relating to Regional Rural Banks (RRBs). There is a growing realisation that regulatory and supervisory policy needs to be strengthened to adopt a system-wide approach to counteract pro-cyclical movements in the banking sector. These pressures called for repeated monetary policy responses. consistent. It has also widened the regulatory perimeter steadily to bring non1 banking entities into the ambit of regulation. the inflationary pressures. and repairing its financial regulatory architecture in the aftermath of the financial crisis. Cooperative Banks. the Reserve Bank initiated important policy discussions with regard to providing new bank licenses. include monetary policy. However.

the only rupee interest rate that continued to remain regulated was the savings deposit interest rate. Therefore. This was warranted to ensure that the long-term growth prospects were not harmed. the policy rate was raised eight times by 200 bps. the thrust of monetary policy was on avoiding policy impediments to the recovery amidst global uncertainties. Non-food manufacturing inflation remained much above the trend growth of 4 per cent during the second half of 2010-11. it was further raised five times by 175 bps. while growth continued to consolidate. 3.3 In the second half of 2010-11.2 Monetary policy stance in 2010-11 was attuned to the growth-inflation dynamics prevailing in the economy in the broader context of global uncertainties. the weighted average overnight call money rate was made the operating target of monetary policy. 3. policy rates were raised to contain inflation and anchor inflationary expectations. decided to deregulate the savings bank deposit rate in its Second Quarter Review of Monetary Policy 2011-12 released on October 25. A new Marginal Standing Facility (MSF) was also instituted under which Scheduled Commercial Banks (SCBs) could borrow overnight up to one per cent of their respective Net Demand and Time Liabilities (NDTL). banks can freely determine their savings bank deposit interest rates subject to the following two conditions: • Each bank will have to offer a uniform interest rate on savings bank deposits up to This section deals with monetary policy developments in brief. even if it meant sacrificing some growth in the short-term. the moderating path of inflation reversed beginning December 2010 due to a series of supply side shocks. 32 . These changes were deemed necessary for improved liquidity management and effective monetary transmission. In the first half of 201011.4 As the inflation remained above the comfort level of the Reserve Bank even in 201112. the repo rate was made the single policy rate to more accurately signal the monetary policy stance with the reverse repo rate pegged at a fixed 100 basis points below the repo rate. Changes in the Operating Procedure of Monetary Policy 3. In order to delineate the advantages and disadvantages of deregulating the savings deposit rate. both domestic and global. The Discussion Paper evoked wide ranging responses from a cross-section of stakeholders.Report on Trend and Progress of Banking in India 2010-11 2. the Reserve 2 Bank made a number of changes in the operating procedure of monetary policy with effect from May 2011. carved out of the required Statutory Liquidity Ratio (SLR) portfolio. Since the exit from its crisisdriven expansionary monetary policy stance.5 Based on the Report of the Working Group on Operating Procedure of Monetary Policy (Chairman: Shri Deepak Mohanty). The effective tightening since October 2009 has been of 525 bps as liquidity in the system transited from surplus to deficit. The CRR was also raised by 100 bps. the Reserve Bank has raised the policy rate (the repo rate) 13 times by 375 basis points. The Reserve Bank after weighing both pros and cons. as they have been covered in the RBI Annual Report 2010-11 in detail. Monetary Policy2 Monetary Policy Stance and Measures 3. the anti-inflationary stance was continued during this period. Accordingly. In 2011-12 so far (up to October 25. The MSF rate is 100 basis points above the repo rate and provides an upper bound to the policy rate corridor with reverse repo rate as the lower bound. while also containing inflationary pressures.6 With the steady process of deregulation since the early 1990s. 2011. As per these changes. the Reserve Bank prepared a discussion paper which was placed on the RBI website for suggestions from general public in April 2011. Till March 2011. Further. 2011). Deregulation of Savings Bank Deposit Rate 3.

which would ensure that credit was made available to farmers at the ground level at 7 per cent per annum.5 per cent and the additional interest subvention for . A suitable format has also been devised by the Reserve Bank to capture and closely monitor the achievement of these targets by banks on a half-yearly basis (March and September). The Reserve Bank has also taken up the matter with banks that have failed to achieve the targets prescribed by the Task Force. in the Union Budget for 201112. 50 per cent in 2010-11. the monitoring is being done on a quarterly basis. Further. In 2010-11. where the underlying assets are loans against gold jewellery and purchase/assignment of gold loan portfolio from NBFCs are also not eligible for classification under the agricultural sector. Credit Guarantee for Credit to Micro and Small Enterprises 3. Credit Delivery Priority Sector Lending Policy . 2010 to allocate 60 per cent of the MSE advances to micro-enterprises. Loans to Micro. SCBs have been advised on June 29. However. SCBs are advised to follow the guidelines on collateral free lending.10 Based on the recommendations of the Working Group (Chairman: Shri V. Similarly. In 2009-10. Small and Medium Enterprises (MSME) . there should not be any discrimination from customer to customer on interest rates for similar amount of deposit. an interest subvention of 2 per cent was provided on shortterm production credit of up to `3 lakh.Loans to Agriculture 3. if it so chooses. the Finance Minister has proposed an enhancement of the additional interest subvention for prompt-paying farmers to 3 per cent making the effective rate for such farmers to be 4 per cent per annum. the limit for collateral free loans to the MSE sector has been increased to ` 10 lakh and has been made mandatory for banks.9 Pursuant to the recommendations of the High Level Task Force constituted by the Government of India (Chairman: Shri T K A Nair).Policy Environment `1 lakh. a bank may provide differential rates of interest. reducing the effective rate for such farmers further to 6 per cent per annum.7 The Reserve Bank advised all SCBs in February 2011 that loans sanctioned to NBFCs for on-lending to individuals or other entities against gold jewellery will not be eligible for classification under priority sector as agricultural credit. irrespective of the amount in the account within this limit.8 The scheme of interest subvention has been in existence since 2006-07 with regard to provision of short-term agricultural credit to farmers by public sector banks. Further.. 33 3. From the quarter ending June 2011. This target is to be achieved in three stages viz.Loans to NBFCs 3. prompt-paying farmers has been increased to 2 per cent. investments made by banks in securitised assets originated by NBFCs.K. 55 per cent in 2011-12 and 60 per cent in 2012-13 with an annual growth of 10 per cent in the number of micro-enterprises accounts and an annual growth of 20 per cent in lending to micro and small enterprises. Priority Sector Lending Policy . Sharma) constituted by the Reserve Bank in March 2010 to review the Credit Guarantee Scheme (CGS) of the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). • For savings bank deposits over `1 lakh.Credit Target for MicroEnterprises 3. RRBs and cooperative banks. an additional interest subvention of 1 per cent was also provided to public sector banks in respect of those farmers who were prompt in repaying their loans within one year of disbursement of such loans. the interest subvention was reduced to 1.

provided that (a) Not less than 75 per cent of the aggregate loans given by MFIs are extended for income generating activities. Accordingly. micro and small enterprises. 2009 to September 30.000 crore was announced for this purpose. 2011 that: 1. The Committee has submitted its report in January 2011. balances with banks and financial . (vi) establishment of a proper system of grievance redressal procedure by MFIs.12 Following concerns about the micro finance sector in Andhra Pradesh. Malegam) was constituted to study issues and concerns in the MFI sector. An initial allocation of `1. and in light of the feedback received. Bank credit to MFIs extended on. agriculture. As per the Union Budget for 2011-12. After sanctioning and disbursing the eligible loans. and (viii) continuation of categorisation of bank loans to MFIs complying with the regulation laid down for NBFC-MFIs. a sub-Committee of the Central Board of the Reserve Bank (Chairman: Shri Y. (ii) a margin cap and an interest rate cap on individual loans. all SCBs have been advised on May 3.11 With the objective of improving affordability of housing for middle and lower income groups. H. 2010. which has been placed in public domain. the existing scheme has been further liberalised to housing loans of up to `15 lakh. The recommendations have been forwarded to CGTMSE for implementation. The Reserve Bank acts as the nodal agency in respect of SCBs. (iv) lending by not more than two MFIs to individual borrowers. (vii) creation of one or more “social capital funds”. absorption of guarantee fees for the collateral free loans up to ` 10 lakh by CGTMSE. inter alia.13 The recommendations of the Committee were discussed with all stakeholders. The Committee. it has been decided to accept the broad framework of regulations recommended by the Committee. where the cost of the house does not exceed `25 lakh as against the earlier limits of `10 lakh and `20 lakh. 3. and micro credit (for other purposes). (v) creation of one or more credit information bureaus. the Union Budget of 2009-10 had announced a scheme of 1 per cent interest subvention in respect of individual housing loans of up to `10 lakh provided that the cost of unit did not exceed `20 lakh. The Union Budget for 2010-11 had announced an extension of the scheme and also made a provision of `700 crore under the scheme for 2010-11. Loans to MFIs 3. a need was 34 felt for a more rigorous regulation of NBFCs functioning as Micro-Finance Institutions (MFIs). (b) Not less than 85 per cent of the total assets of MFI (other than cash. 2011 for on-lending to individuals and also to members of Self-Help Groups (SHGs)/ Joint Liability Groups (JLGs) will be eligible for categorisation as priority sector advances under respective categories viz.Report on Trend and Progress of Banking in India 2010-11 encourage branch level functionaries to avail the credit guarantee cover and making performance in this regard a criterion in their appraisal. respectively. 2011. Housing Loans 3. The necessary instructions with regard to the liberalisation of the scheme have been issued to all SCBs by the Reserve Bank on April 21. The Working Group has also made recommendations regarding an increase in the extent of guarantee cover. under the priority sector. or after. simplification of procedure for filing claims with CGTMSE and increasing awareness about the scheme. as indirect finance. has recommended: (i) creation of a separate category of NBFC-MFIs. The scheme is being implemented through SCBs and housing finance companies. The scheme was applicable initially for a period of one year effective from October 1. subject to certain conditions. April 1.. (iii) transparency in interest charges. SCBs claim reimbursement of subsidy from the Reserve Bank on a monthly basis. Accordingly.

(vii) There should not be any penalty for delayed payment. 2008 3.000 crore has been earmarked for reimbursing SCBs. a processing fee not exceeding 1 per cent of the gross loan amount. (d) The banks should obtain. which do not comply with above conditions and bank loans to other NBFCs. at the end of each quarter. health and livestock 35 for borrower and spouse can be recovered and administrative charges must be recovered as per IRDA guidelines. the lending institutions were compensated in a staggered manner as given in Table III. Out of this.20. fortnightly or monthly installments at the choice of the borrower. while for non-rural areas. actual cost of group insurance for life.240. (iv) Tenure of loan is not less than 24 months when loan amount exceeds ` 15. it should not exceed `1. 2011 classified under priority sector will continue to be reckoned as priority sector till the maturity of such loans. Bank loans extended prior to April 1. Bank loans to MFIs.000 in the first cycle and `50. The third instalment of ` 11.e. (iii) Interest cap on individual loans at 26 per cent per annum to be calculated on a reducing balance basis.12 crore has been transferred to NABARD for reimbursement of RRBs and cooperatives and the remaining amount of ` 10. (ii) Loan does not exceed `35. a Chartered Accountant’s Certificate from the MFI stating. Local Area Banks and Urban Cooperative Banks.47 crore was released by the Government of India in January 2011 of which ` 1. (c) Banks have to ensure that MFIs comply with the following caps on margin and interest rate as also other ‘pricing guidelines’: (i) Margin cap at 12 per cent for all MFIs. .1.100. (vi) Only the actual cost of insurance i. inter alia. Government securities and money market instruments) are in the nature of “qualifying assets”. will not be reckoned as priority sector loans with effect from April 1.000 crore was transferred to National Bank for Agriculture and Rural Development (NABARD) for reimbursement to RRBs and cooperatives.. (iv) Only three components are to be included in pricing of loans viz . The remaining amount of `12. and insurance premium. `28. 2008. The Government of India has sanctioned `40.000. (ii) The interest cost is to be calculated on average fortnightly balances of outstanding borrowings and interest income is to be calculated on average fortnightly balances of outstanding loan portfolio of qualifying assets.000 crore as the first and second instalments. Progress under the Agriculture Debt Waiver and Debt Relief Scheme. (iii) Total indebtedness of the borrower does not exceed `50.340.000. 2011.35 crore has been utilised for reimbursing SCBs. (v) The processing fee is not to be included in the margin cap or the interest cap of 26 per cent. that all three conditions given above have been followed. (viii) No Security Deposit/Margin is to be collected from borrowers.000. (v) The loan is without collateral.000 with right to borrower of prepayment without penalty.Policy Environment institutions. 2. interest charge. (vi) Loan is repayable by weekly.14 As per the schedule of reimbursement provided by the Government of India in respect of the Agriculture Debt Waiver and Debt Relief Scheme. A “qualifying asset” has to satisfy the following criteria: (i) The loan is to be extended to a borrower whose household annual income in rural areas does not exceed `60.000 in the subsequent cycles. Local Area Banks and Urban Cooperative Banks.

500 4. the Reserve Bank continued with policy initiatives aimed at expanding the outreach of banking services to remote parts of the country. besides the use of Business Correspondents (BCs). subject to reporting. While issuing such authorisation.000 and above as per Census 2001) will continue to require prior permission of the Reserve Bank.18 Since 2006. Widening the Definition of Business Correspondent 3. Mandating Opening of Branches in Rural Unbanked Centres 3.16 To further step up penetration of banking services in the rural areas. It was further relaxed vide circular dated September 28. to provide enhanced banking services in Tier 2 centres (with population of 50. The opening of branches in Tier 1 centres (centres with population of 1. banks have been mandated to allocate at least 25 per cent of their total number of branches to be opened during a year to unbanked rural centres. among others.00. address and Aadhaar number can also be taken as the basis for opening small bank accounts. there is a need for opening of more brick and mortar branches.000 Fourth instalment July 2011 Balance amount. KYC norms have been further relaxed vide circular dated January 27. simplifying procedure by stipulating that introduction by an account holder who has been subjected to full KYC drill and any evidence of the identity and address of the customer to the satisfaction of the bank.15 Financial inclusion has been made an integral part of the banking sector policy in India. The list of eligible individuals/entities who can Table III. Relaxation of KYC norms 3. 2011. making it applicable to all accounts.000 Third instalment July 2010 2.500 15.200 12. In 2010-11.000 to 99. encouraging use of technology and other supportive measures for achieving sustainable and scalable financial inclusion. would suffice for opening such accounts. if any Balance amount. it has been proposed to permit domestic SCBs (other than RRBs) to open branches in these centres without the need to take permission from the Reserve Bank in each case. 2011 to include job cards issued by/under National Rural Employment Guarantee Act (NREGA) (duly signed by an officer of the State Government) or the letters issued by the Unique Identification Authority of India containing details of name. UCBs and LABs Total ** Based on the current provisional estimates 17. provision of innovative products. During 2010-11 too. Further. the Reserve Bank will continue to factor in. if any 36 . the Reserve Bank has permitted banks to engage Business Facilitators and Business Correspondents (BFs/BCs) as intermediaries for providing banking services. if any Balance amount.500 7.17 Know Your Customer (KYC) requirements for opening bank accounts were relaxed for small accounts in August 2005.999 as per Census 2001).500 25.1: Compensation under Agriculture Debt Waiver and Debt Relief Scheme (Amount in `crore) Lending Institutions First instalment Sept 2008 RRBs and Cooperatives SCBs.800 9.Report on Trend and Progress of Banking in India 2010-11 4. Reserve Bank is furthering financial inclusion in a mission mode through a combination of strategies ranging from relaxation of regulatory guidelines.000 Proposed reimbursement** Second instalment July 2009 10. Financial Inclusion 3. whether at least 25 per cent of the total number of branches to be opened during a year are proposed to be opened in unbanked rural centres. Accordingly. in October 2011.

the Reserve Bank has been conducting one-to-one meetings with Chairman and Managing Director (CMD)/Chief Executive Officer (CEO) of banks.800 such unbanked villages have been identified and allotted to various banks through State-level Bankers’ Committee (SLBC). This will lead to efficiency in cash management. Progress on Financial Inclusion Plans 3. they will also focus on providing banking services in peripheral villages with population of less than 2. • • . BCs to be employed. in order to harness the large and widespread retail network of corporate for providing financial and banking services.19 Timely and hassle-free credit being the most important requirement of poor people. Banks were advised to integrate Board-approved FIPs with their business plans and to include the criterion on financial inclusion as a parameter in the performance evaluation of their staff. no-frill accounts opened including through BC-ICT. In alignment with the budget announcements. It may be a low cost and simple intermediary structure comprising of minimum infrastructure for operating small customer transactions and supporting upto 10 BCs at a reasonable distance of 2-3 km.21 In January 2010. banks were advised to draw up a roadmap for opening banking outlets in every unbanked village having a population of more than 2. banks have been advised to provide in-built overdraft of small amount in no-frill accounts so that customers can avail of credit of small amount without any further documentation.000 through branches/BCs/other modes. through a brick and mortar branch or any of the various forms of ICT-based models.Policy Environment be engaged as BCs has been widened from time to time. Kisan Credit Cards (KCC) and General Credit Cards (GCC) and other specific products designed by them to cater to the financially excluded segments. These plans broadly include self-determined targets in respect of rural brick and mortar branches to be opened. help in developing a better BC-monitoring mechanism. Such an approach will help banks in having a better customer redressal mechanism and at the same time. 2010. Roadmap for Banking Services 3.22 In order to review the progress of banks in the implementation of FIPs during the year 2010-11 and making way for accelerated progress in future. During 2010-11. These banks prepared and submitted their FIPs containing targets for March 2011. Introduction of Innovative and Simple Products 3. In future. ‘forprofit’ companies were also allowed to be engaged as intermediaries to work as BCs for banks in addition to entities permitted earlier.000 population. including through BCs.000.000. 2012 and 2013. 3. Few of the important action points which emanated out of the discussions held during May-June 2011 are as follows: • Banks shall review their delivery models so that Financial Inclusion results in a profitable business for them. coverage of 37 unbanked villages with population above 2. In addition to providing banking services in villages with more than 2. About 72.20 With an objective to ensure uniform progress in provision of banking services in all parts of the country. the timelines for completing the roadmap was extended to March 2012 vide circular dated September 16. for meeting emergency requirements. banks need to focus more on opening of brick and mortar branches in unbanked villages.000 as also other unbanked villages with population below 2. The implementation of these plans is being closely monitored by the Reserve Bank. all public and private sector banks were advised to put in place a Board-approved three-year Financial Inclusion Plan (FIP) and submit the same to the Reserve Bank by March 2010.

Thus. The utility of credit risk models based on market data have only limited scope for application in India as most of the corporate borrowers are unlisted and do not have listed corporate bonds. Further. • 5. 3. Banks shall formulate financial inclusion plans for RRBs sponsored by them and develop an effective monitoring mechanism so that targets assigned to the RRBs are also achieved meticulously. Thirdly. modelling operational risk under the Advanced Measurement Approach (AMA) is challenging due to the absence of external loss data and quality internal loss data. banks need availability of quality data. migration to advanced approaches would also help in pricing of financial products and performance measurement. unlike in the advanced economies.Report on Trend and Progress of Banking in India 2010-11 documentation and redressal of customer grievances. understanding of economic cycles. internal control factors and use of scenario analysis in computing the operational risk capital charge.26 Secondly. Further. the . As banking products and business models become increasingly complex. while Internal Models Approach (IMA) for market risk is relatively less demanding in terms of data requirements and modelling. Hence. as regards modelling credit risk under the Internal Rating Based (IRB) Approach. the relevant data is often kept in disparate systems and units. the risks inherent in these products can be measured and managed better under the advanced approaches. While the implementation of the standardised approaches and Pillar 2 would continue to be improved. it requires considerable subjective judgement in incorporation of the effect of business environment.25 Further. Prudential Regulatory Policy Migration to Advanced Approaches under Basel II 3. • Banks shall expand financial inclusion initiatives in urban and semi-urban areas by targeting pockets of migrant workers and small vendors and leveraging Aadhaar enrolment for opening bank accounts. These advanced approaches would help in aligning individual banks’ regulatory capital with their risk profiles and also improve their risk management practices. First. 3.24 Adoption of advanced approaches is more challenging than the standardised approaches. it is advisable that relatively large banks having adequate risk management systems migrate to advanced approaches first with other banks focusing on improving the risk management systems and MIS in a way that is consistent with their present operations and simultaneously build up the requisite organisational skills for the advanced approaches.27 Thirdly.23 In March 2009. and the traditional asset classes used by banks are different from those required under IRB approach. First. there is a need for modelling Probability of Default and Loss Given Default (LGD) based on bank’s own historical credit data. banks in India are not quite familiar with the use of the advanced quantitative techniques in risk management which are essential for computing risk measures under Basel II. banks have to build institutional capabilities for 38 implementation of advanced risk management framework particularly in the form of adequate incentive and compensation schemes for staff. Lack of adequate historical data poses a problem in such an exercise. Secondly. the focus has recently shifted to the implementation of the advanced approaches for computation of capital adequacy requirement under the Basel II framework. 3. 3. capability to use quantitative techniques and skilled staff for validation of risk models. all commercial banks in India completed migration to the basic approaches of Basel II. there are specific challenges in relation to implementation of individual approaches.

(vii) Other conditions: • The exposure of the bank to any entity in the promoter group shall not exceed 10 per cent and the aggregate exposure to all the entities in the group shall not exceed 20 per cent of the paid-up capital and reserves of the bank.Policy Environment methodologies for computation of Incremental Risk Charge (IRC) are still in the early stage of development. (vi) Business model: The model should be realistic and viable and should address how the bank proposes to achieve financial inclusion. Suggestions and comments on the draft guidelines were to be sent by October 31. 2011. Draft guidelines on Foundation IRB as well as Advanced IRB Approach for calculating credit risk capital charge have been placed on the RBI website on August 10.29 Pursuant to the announcement made by the Union Finance Minister in his budget speech and the Reserve Bank's Annual Policy Statement for the year 2010-11. Based on the responses received from various stakeholders and extensive internal discussions and consultations with the Government of India. Key features of the draft guidelines are as follows: (i) Eligible promoters: Entities/groups in the private sector. sound credentials and integrity and having successful track record of at least 10 years will be eligible to 39 promote banks. 2010. which will hold the bank as well as all the other financial companies in the promoter group. (iv) Foreign shareholding: The aggregate non-resident shareholding in the new bank shall not exceed 49 per cent for the first 5 years after which it will be as per the extant policy. Subject to this. again seeking comments from various stakeholders. Shareholding by NOHC in excess of 40 per cent shall be brought down to 20 per cent within 10 years and to 15 per cent within 12 years from the date of licensing of the bank. 2011 inviting comments from banks and other stakeholders. 3. The corporate structure should be such that it does not impede effective supervision of the bank and the NOHC on a consolidated basis by the Reserve Bank. a Discussion Paper on "Entry of New Banks in the Private Sector" was placed on RBI website on August 11.28 The Reserve Bank has laid down the time line for banks to migrate to advanced approaches. Licensing of New Banks in Private Sector 3. it is proposed to issue the final guidelines on IRB approach by end-December 2011. The NOHC shall hold minimum 40 per cent of the paid-up capital of the bank for a period of five years from the date of licensing of the bank. with diversified ownership. (v) Corporate governance: At least 50 per cent of the directors of the NOHC should be independent directors. 2011 on the RBI website. Entities/groups having significant (10 per cent or more) income or assets or both from real estate construction and/ or broking activities individually or taken together in the last three years will not be eligible. Guidelines on AMA for operational risk have also been issued in April 2011. actual capital to be brought in will depend on the business plan of the promoters. the Draft Guidelines were prepared and released on August 29. Guidelines have been issued for Standardised Approach (TSA)/Alternate Standardised Approach (ASA) for operational risk in March 2010 and IMA for market risk in April 2010. . owned and controlled by residents. (ii) Corporate structure: New banks will be set up only through a wholly owned Non-Operative Holding Company (NOHC) to be registered with the Reserve Bank as NBFC. As indicated in the Second Quarter Review of Monetary Policy of 2011-12. (iii) Minimum capital requirement: Minimum capital requirement will be `500 crore.

Holding Companies Structure for Indian Banks 3. a working group was constituted in June 2010 (Chairperson: Smt. 1949 are in place.34 To address the systemic concerns. depending upon whether the promoters intend to maintain majority control in the subsidiaries. After receiving feedback on the Discussion Paper. It is pertinent to mention that certain amendments to the Banking Regulation Act. The FHC would be well diversified and subject to strict ownership and governance norms.32 The Working Group has recommended Financial Holding Company (FHC) model as a preferred model for banks and all large financial groups irrespective of whether they contain a bank or not.31 Pursuant to the announcement made in the Monetary Policy Statement for the year 2010-11. 3. certain additional requirements have been stipulated. Presence of Foreign Banks in India 3. may be permitted to either promote a new bank or convert themselves into banks. Insurance Regulatory and Development Authority (IRDA). empowering the Reserve Bank to supersede the Board of Directors of a bank so as to protect depositors' interest. The bank shall open at least 25 per cent of its branches in unbanked rural centres. Shyamala Gopinath) to examine the introduction of a holding company structure for banks and other financial entities and the required changes in legislative and regulatory framework. These vital amendments are the removal of restriction of voting rights and concurrently empowering the Reserve Bank to approve acquisition of shares and /or voting rights of 5 per cent or more in a bank to persons who are 'fit and proper'. if considered eligible. 1949 are under consideration of the Government of India.33 The Working Group observed that the FHC model would enable better oversight of financial groups from a systemic perspective and allow better resolution of different entities as compared to Bank Subsidiary Model where liquidation of the parent bank may make the liquidation of subsidiaries inevitable. comprehensive guidelines on the mode of presence of foreign banks in India would be issued. 3. the Working Group has envisaged consolidated supervision at FHC level that would be 40 • • (viii) In respect of promoter groups having 40 per cent or more assets / income from nonfinancial business. Existing NBFCs. and facilitating consolidated supervision. Securities and Exchange Board of India (SEBI). The Report of the Working Group was placed on the RBI website in May 2011 for public comments. The Group had representatives from the Government of India. and after the amendments to Banking Regulation Act.Report on Trend and Progress of Banking in India 2010-11 • The bank shall get its shares listed on the stock exchanges within two years of licensing. wherever it is permissible as per law. . the Reserve Bank. The ownership restrictions would be applied either at the level of the FHCs or at the entity level. Indian Banks’ Association (IBA) and a few banks. The FHC would primarily be a nonoperating entity and would carry out all financial activities through subsidiaries. The Report has been forwarded to the Government of India for consideration. Final guidelines will be issued and the process of inviting applications for setting up of new banks in the private sector will be initiated after receiving feedback/comments on the Draft Guidelines. 3. are vital for finalisation and implementation of the policy for licensing of new banks in the private sector. a few which.30 The Reserve Bank also released a Discussion Paper on the presence of foreign banks in India in January 2011 seeking feedback and suggestions from stakeholders and general public.

differential ownership and governance standards prescribed by various regulators and differential ceilings for foreign ownership prescribed for various sectors. banking companies in India obtain approval from the Reserve Bank for conferring any benefit. including that of the Chief Executive Officer (CEO) of banks in private sector and foreign banks has always been under RBI regulation in terms of the provisions of Banking Regulation Act. 1949. This is because the recommendations need to be accepted by all stakeholders including Government of India and also a simultaneous amendment to various other acts is made. it may take a while before this can be achieved. it has been recommended that a separate legislation for regulation of FHC be enacted and amendments be simultaneously made to other statutes governing public sector banks. amenity or perquisite in whatever form to their directors/CEOs whether during or after termination of their term of office. there are numerous challenges in implementing the FHC model in India due to legacy issues and multiplicity of regulatory and legal provisions that govern various sectors. 3. unlike the situation in many other jurisdictions. a Certificate of Registration (CoR) was issued by the Reserve Bank to • • . Compensation Policy 3. 3. Some of the major challenges can be identified as follows: • Though enactment of a separate law for regulating FHCs has been recommended.37 Based on the Financial Stability Board (FSB) Principles for Sound Compensation Practices. administrative and management issues. To fully operationalise the FHC model.36 Compensation of Board of Directors. suitable amendments to various taxation provisions will have to be made to make the transition from bank subsidiary model to FHC model. the Reserve Bank is in the process of finalising its guidelines on compensation. 3. tax and stamp duty neutral.39 In 2010-11. the impact analysis carried out with the help of external consultants and methodologies prescribed by BCBS on risk alignment.Policy Environment formalised through Memorandum of Understanding between financial sector regulators. There exist various policy issues in the financial sector including the differential Government ownership in financial entities. In terms of provisions of the Act. the Reserve Bank placed draft guidelines on compensation in July 2010 on its website inviting public comments. Companies Act and Banking Regulation Act. The most challenging task would be reorganising public sector banks from bank 41 subsidiary model to FHC model as this involves both strategic and public policy issues for the Government. In addition. Irrespective of whether the Government chooses to maintain its control at the FHC level or at the bank level it would have to sort out implementation. Bringing all financial activities of a group within a single FHC would presuppose harmonisation among different sector policies. the Basel Committee on Banking Supervision (BCBS) brought out a consultative paper titled “Range of Methodologies for Risk and Performance Alignment of Remuneration” and issued the final paper in May 2011. wherever necessary. 1949.38 Pursuant to the announcement made in the Monetary Policy Statement of May 2011 and taking into account the feedback received on draft guidelines. In October 2010. The function of FHC regulation would be undertaken by a separate unit within the Reserve Bank with staff drawn from both the Reserve Bank as well as other regulators.35 However. Credit Information Companies 3.

signed in April 2010. Supervisory Policy Close and Continuous Supervision of Large and Systemically Important Banking Groups 3. 6. seeking approval to amortise the additional liability. under the 9 th bipartite settlement. Provision for Pension Liabilities 3. Banks are expected to ensure 3 that the commitments arising out of the wage settlement can be absorbed by them keeping in view their financial position. persons whose names appear to be similar to the names of directors appearing in the list of Wilful Defaulters of `25 lakh and above or Defaulting borrowers of `1 crore and above are wrongfully denied credit facilities on such grounds.2010-11. This also has systemic stability issues arising from under-provisioning and non-compliance with extant accounting standards. Provisioning Coverage Ratio (PCR) for Advances 3. The laxity in building up adequate provisions for such liabilities is a matter of regulatory concern. gratuity in accordance with the extant accounting standard AS 15. it was For details. The surplus of the provision over and above the prescribed prudential norms should be segregated into a separate account styled as “counter-cyclical provisioning buffer” which will be allowed to be used during periods of system-wide downturn with the prior approval of the Reserve Bank. which are systemically important. This will ensure that names of directors of these credit information companies are correctly identified and in no case. which is based on the International Accounting Standard IAS 19.Report on Trend and Progress of Banking in India 2010-11 Highmark Credit Information Services Private Limited to commence business of credit information after issuing CoR to Experian Credit Information Company of India Private Limited and Equifax Credit Information Services Private Limited earlier in 2009-10. were apparently not able to absorb the impact of the additional burden arising on account of above. the assessment shows that Indian Banks are well positioned to adjust to the Basel III norms well within the phase-in period. 2019. there exist many challenges. public sector banks and 10 old private sector banks. necessary that banks make proper assessment of their superannuation liabilities and provide for the same from the year in which the wage settlements fall due and not from the year in which such settlements are made. As witnessed during the last wage revision. 2013 and January 1. banks were required to maintain PCR of 70 per cent of gross NPAs with reference to the position as on end-September 2010. However. This was intended to be an interim measure till such time the Reserve Bank introduces a more comprehensive methodology of counter-cyclical provisioning taking into account the evolving international standards. see RBI Annual Report .42 The Basel Committee has prescribed a detailed roadmap for smooth transition to Basel III standards between January 1. Road Map for Basel III 3.40 As a macro-prudential measure.41 Banks provide various types of employee benefits such as pension. therefore. 42 . such as upgrading risk management systems and meeting the credit needs of a rapidly growing economy even while adjusting to a more demanding regulatory regime. The Reserve Bank issued a circular in September 2010 to banks/ financial institutions advising them to include the Director Identification Number (DIN) as one of the fields in the data submitted by them to credit information companies and Reserve Bank.43 For optimising the supervisory resources and also to have a more focused attention on banks. Special regulatory dispensation of amortisation was granted to these banks by the Reserve Bank for a period of five years subject to certain conditions3. The IBA approached the Reserve Bank on behalf of the member banks. In this regard. It is.

CMD. 2011. Initiatives taken by Board for Financial Supervision 3. Jaganmohan Rao.45 Keeping in view the changes in the banking system. R.. State Bank of India. Executive Director. Smt. Shri. Shri Diwakar Gupta. and a more meaningful consolidated/conglomerate supervision of banking groups with a focus on group wide capital adequacy assessment. The guidelines have been put in place in the current AFI cycle 2011-12. Review of the Format for Annual Financial Inspection of Banks 3. constituted in November 1994. among others. The supervisory rating framework is currently under review. Chanda Kochhar. the BFS had observed that in order to take advantage of favourable market conditions and book profits. 31 of foreign banks. 30 of private sector banks. a circular was issued in August 2010 advising • . MD and CEO. MD and CFO. Some of the important issues deliberated upon by the BFS during the period are as follows: • Continuing to exercise keen interest in fine tuning of supervisory rating. procedures and processes and suggest enhancements for making the supervisory policies comparable with global standards. In response. Dr. B. Chakrabarty) has been constituted to assess the adequacy of Reserve Bank’s supervisory policies.7 per cent of the total assets of the banking system. Basant Seth. which account for 52. the BFS sought a complete review of the rating methodology. N.46 The Board for Financial Supervision (BFS). Under the reorganised set up.44 A High Level Steering Committee (Chairman: Dr. (ii) the adjustment in composite rating to reflect the deterioration or improvement in the bank’s performance in various parameters. Professor. The Committee is mandated to submit its report by July 31. Varma. as directed by BFS. many banks were resorting to sale of securities held under Held to Maturity (HTM) category on more than one occasion during the year. and Shri M. During the period. During the period under review. Mahapatra. Steering Committee to Review Supervisory Processes for Commercial Banks 3. the supervisory responsibility of FCMD would include exercising on-site and off-site supervision. Shri B. C. 2012. Syndicate Bank.Policy Environment decided to reorganise the supervisory processes and the organisational structure of the Department of Banking Supervision (DBS). IIM. 4 of local area banks. Canara Bank are the members and Shri G. The revised guidelines pertaining to AFI coverage and method of drafting AFI reports are designed to sharpen the focus and bring out precision in analysis and arrive at clear conclusions for enabling the Reserve Bank to take definitive supervisory actions based on the findings. Chief General Manager-in-Charge of the Department of Banking Supervision is the Member Secretary of the Committee. J. Ahmedabad. the BFS held 13 meetings. Retired CMD. Rao. RBI. During July 2010 to July 2011. and 8 of financial institutions). the way banks do business and the need for supervisors to keep pace with the fast changing business practices. the BFS also reviewed 15 summaries of inspection reports and 43 summaries of financial highlights pertaining to scheduled UCBs classified in Grade I/II. It reviewed 98 inspection reports (25 reports of public sector banks. the process of the Annual Financial Inspection (AFI) of banks has 43 been redefined. ICICI Bank Ltd. whereby a new division named Financial Conglomerate Monitoring Division (FCMD) was created to have a system of “close and continuous supervision” of 12 large and systemically important banking groups. K. The suggestions included: (i) review of weightages given to sub-parameters. The reorganisation of the Department was made effective from April 1. remains the chief guiding force behind Reserve Bank’s supervisory and regulatory initiatives.

The Whole Firm Liquidity Modification regime which encompasses Indian banks operating through branches/subsidiaries in the UK would enable the UK branch of an Indian bank to place reliance on unlimited liquidity resources from anywhere within the whole firm (bank). In November 2010. the Inspecting Officers (IOs) should have access to all the reports/review notes prepared by the Inspection/Audit teams of the bank.1 per cent and with rating of ‘C’ and less will be inspected annually. • The BFS approved a proposal to subject only those foreign banks to Annual Financial Inspection. a specialised cell of the Economic Offences Wing for major bank fraud cases. Six Indian banks having presence in the UK have applied for “Whole Firm Modification” after obtaining prior approval of the Reserve Bank. if the value of sales and transfers of securities to/from HTM category exceeds 5 per cent of the book value of investment in HTM. Those foreign banks which have a market share of less than 0.5 crore and accordingly.5 crore would have to be reported to respective centres of Banking Security and Fraud Cell. Based on the suggestions of the BFS. Further.5 crore.1 per cent of the market share (assets plus off-balance sheet business). Those foreign banks with a market share of less than 0. Subsequently. As per the agreement. where staff involvement is prima facie evident must be reported to Anti Corruption Branch of CBI.48 The Reserve Bank issued a circular in October 2010 advising public sector banks about the increase in the upper limit for reporting of frauds to Central Bureau of Investigation (CBI) from `5 crore to `7. However. Internal Vigilance in Private Sector/Foreign Banks 3.47 A new liquidity regime through increased international cooperation in financial supervision arrangements was proposed by Financial Services Authority (FSA). it was clarified that one-time transfer of securities to/from HTM category with the approval of Board of Directors permitted at the beginning of the accounting year and sales to the Reserve Bank under preannounced OMO auctions would be excluded from the 5 per cent cap prescribed in August 2010. it would be advised to CBI’s Economic Offences Wing. shocks. some of which may be from overseas and may not be available locally. Reporting of Frauds by Public Sector Banks 3.49 In order to align the vigilance function in private and foreign banks to that of the public sector banks. This disclosure is required to be made in “Notes to Accounts” in banks’ audited Annual Financial Statements.Report on Trend and Progress of Banking in India 2010-11 banks to disclose market value of investments held in HTM category and indicate the excess of book value over market value for which provision is not made. agreements were entered into by the Reserve Bank with FSA in October 2010 to monitor the liquidity of the parent bank on an ongoing basis in respect of the six banks. UK to make the banking system more robust to withstand . the specifications and monitoring of triggers for liquidity insufficiency in respect of UK branches of Indian banks would rest with the parent bank. in case where the staff involvement is prima facie not evident. all fraud cases involving an amount of `1 crore and above going up to `7. it was decided that as supervisors.1 per cent will be inspected once in two years provided their rating is ‘B’ and above. all cases involving more than `7. the existing vigilance functions of a few private sector and foreign banks were mapped with the existing guidelines in the matter and it was observed that the practices 44 • Whole Firm Liquidity Modification Regime in the UK: Implications for Indian Banks 3. which have a business share of more than 0.

The penalties have been imposed for contravention of various directions and instructions issued by the Reserve Bank in respect of derivative transactions. Regional Rural Banks 3.52 The Reserve Bank has introduced a new return to monitor interest rate sensitivity based on duration gap and has issued a circular in November 2010 for details on computing the duration gap.53 Regional Rural Banks (RRBs) are regionbased and rural-oriented banks. Amalgamation of RRBs 3. the operating framework for tracking frauds and dealing with them was advised to be structured along the lines of “Detection and Reporting of Frauds. 7. As on date. The banks were advised to evolve suitable controls and disincentives in their HR process and internal inspection/audit process. . inter alia: (i) to appoint Chief of Internal Vigilance (CIV) whose role has also been defined in the guidelines. if any. Paschim-Banga Gramin Bank. Accordingly. 1934. Return to Monitor Interest Rate Sensitivity 3. business facilitators as well as new technologies are being experimented with. which should focus on ‘fit and proper criteria’ for posting of staff in specialised branches and build a database at offices about staff having aptitude for investigation/data analysis and provide them training in investigation and forensic audit.1. The contraventions relate to failure to carry out proper due diligence on user appropriateness and suitability of products. Based on the findings of the scrutinies. two RRBs viz . 80 RRBs have been included in the 2nd Schedule of the RBI Act. and adequacy of controls. so as to reach the unreached customers. In this regard.Policy Environment vary widely among the banks. the number of RRBs has come down to 82. which have been set up to correct the regional imbalances and functional deficiencies in the institutional credit structure vis-à-vis the weaker sections of the populace. Guidelines for Forensic Scrutiny 3. RRBs are well placed to carry forward the movement of financial inclusion due to their local character and familiarity with the local clientele.51 Penalties have been imposed on 19 commercial banks by the Reserve Bank in exercise of the powers vested with it under the provisions of Section 47A(1)(b) read with Section 45 46(4)(i) of the Banking Regulation Act.54 On account of the consolidation and amalgamation process which had started in September 2005. West Bengal and Kalinga Gramin Bank. malpractices and frauds for timely and appropriate action. At present. 1949. detailed guidelines aimed at bringing about uniformity and rationalisation in the function of internal vigilance were issued for private sector and foreign banks in May 2011 to address all issues arising out of lapses with regard to corruption. Orissa are ineligible for scheduling. out of 82 RRBs. New credit delivery models like business correspondents.50 Forensic scrutinies at certain identified banks were conducted by the Reserve Bank due to occurrence of large value frauds and sharp increase in number of frauds at such banks to primarily identify the policy gaps. (ii) to identify sensitive positions and have board-approved guidelines regarding rotation of staff and mandatory leave by staff handling sensitive desks. Private sector banks and foreign banks operating in India were advised. among others. and selling derivative products to users not having proper risk management policies. Penal Actions for Violations of RBI’s Guidelines on Derivative Transactions 3. Corrective Action and Preventive and Punitive Action” circular. issued earlier in this regard. The details about the return and procedure for calculation are illustrated in Box III..

‘earnings perspective’ and ‘economic value perspective’.57 Owing to enhancement of maximum limit for payment of gratuity from `3. The framework prescribed is aimed at determining the impact on the MVE arising from changes in the value of interest rate sensitive positions across the whole bank i. CBS Implementation 3. During 2010-11.BC. where either the assets/liabilities are 5 per cent or more of the bank’s total global assets/liabilities. Banks shall submit the report on interest rate sensitivity as per DGA in the stipulated format with effect from June 30. and on a monthly basis with effect from April 30. ‘over 5 years and up to 7 years’.Report on Trend and Progress of Banking in India 2010-11 Box III. Banks have been allowed to raise funds through long-term bonds with a minimum maturity of five years to the extent of their exposure of residual maturity of more than five years to the infrastructural sector. The RSA and RSL include the rate-sensitive off-balance sheet assets and liabilities as well.No. viz. Banks will be required to compute their interest rate risk position. It involves bucketing of all Rate-Sensitive Assets (RSA) and Rate-Sensitive Liabilities (RSL) and offbalance sheet items as per residual maturity/re-pricing date in various time bands and computing Earnings at Risk (EaR) or the loss of income under different interest rate scenarios over one year. 2012. RRBs' liability towards payment of additional premium to LIC has increased considerably. MDG can be used to evaluate the impact on the MVE of the bank under different interest rate scenarios.00 lakh. Cooperative Banks Urban Cooperative Banks (UCBs) 3. The interest rate risk can thus be viewed from two perspectives. Changes in interest rates impact a bank’s earnings through changes in its Net Interest Income (NII). Presently. the time buckets viz. September 2011.50 lakh to `10.04. have been incorporated in the new return. 2011 on a quarterly basis till March 31. 8. in each currency (including Rupees) by applying DGA to RSA and RSL items in that currency.56 As on September 30. 2012. Hence. the former is measured using the Traditional Gap Analysis (TGA) and the latter is measured using more sophisticated Duration Gap Analysis (DGA). details of which are as follows: .999 as per 2001 Census) without prior authorisation from the Reserve Bank... ‘above 7 years and up to 10 years’ and ‘over 10 years and up to 15 years’ and ‘over 15 years’. The interest rate risk position in all other residual currencies has to be computed separately on an aggregate basis.BP. both in the banking and trading books. In addition to the existing return on Interest Rate Sensitivity under Traditional Gap Analysis. the Reserve Bank monitors the interest rate risk of banks through a monthly return on interest rate sensitivity using the TGA. Changes in interest rates also impact a bank’s Market Value of Equity (MVE) or Net Worth through changes in the economic value of its rate-sensitive assets. 2010. All sponsor banks have committed to implement CBS in RRBs by the prescribed time line i. The DGA involves bucketing of all RSA and RSL as per residual maturity/re-pricing dates in various time bands and computing the Modified Duration Gap (MDG). 2011. called Interest Rate Sensitivity under Duration Gap Analysis (IRSD). 46 Amortisation of Gratuity 3.e. subject to reporting to respective Regional Offices of the Reserve Bank.e.. Generally. which has laid emphasis on financial inclusion. a new return is being introduced to monitor the interest rate risk using DGA.1: Monitoring Interest Rate Sensitivity based on Duration Gap Analysis Interest rate risk is the risk where changes in market interest rates affect a bank’s financial position.098/2010-11) dated November 4. Hence. The focus of the TGA is to measure the level of a bank’s exposure to interest rate risk in terms of sensitivity of its NII to interest rate movements over usually a one-year time horizon. they have been permitted to amortise the enhanced expenditure over a period of five years beginning with the financial year ending March 31. The step-by-step approach for computing modified duration gap has been detailed in the Reserve Bank circular (DBOD.58 Cooperative banks assume importance in the Indian financial system under the inclusive growth agenda. 2011 subject to a minimum of 1/5th of the total amount involved every year. a number of policy initiatives have been taken to strengthen cooperative banking in India. The past few years have seen banks’ foray into financing longterm assets. 65 out of 82 RRBs have migrated fully to core banking solutions (CBS).59/21. such as home loans and infrastructure projects. Branch Licensing Policy for RRBs 3. provided they fulfill certain conditions as specified in the relevant circular.55 The Reserve Bank has recently liberalised branch authorisation policy considerably for RRBs and allowed them to open branches in Tier 3 to Tier 6 centres (with population of up to 49. and implementation of CBS is in progress in the remaining RRBs. liabilities and off-balance sheet positions.

59 According to the liberalised policy. The Committee is of the view that. In this regard. The UCBs which want to operate in other States but keeping majority of branches in ‘C’ and ‘D’ category population centres would need minimum capital of `100 lakh. There should be segregation of the ownership of the UCB as a cooperative society from its functioning as a bank. (iii) no default in the maintenance of CRR/SLR during the preceding financial year. Financially Sound and Well-Managed (FSWM) UCBs can open off-site ATMs over and above their annual business plan provided they meet the following criteria: (i) maintenance of a minimum CRAR of 10 per cent. 2011. The existing well-managed cooperative credit societies with sound track record should be given priority for granting licenses as UCBs particularly in unbanked or inadequately banked centres. Malegam) comprising all stakeholders for studying the advisability of granting licenses to set up new UCBs.H. The expert committee submitted its report on August 18. consisting of persons with professional skills. RBI Act. 47 . Some of the recommendations by the Expert Committee are as follows: • UCBs which want to operate in the Northeast or only in one State would need a minimum capital of `50 lakh. the Reserve Bank set up an expert committee (Chairman: Shri Y. 1934 and instructions/directions issued by the Reserve Bank from time to time. subject to RBI (Foreign Exchange Department) guidelines only for the purpose of hedging underlying forex exposure arising from customer transactions. 1949 (AACS). there is need for a greater presence of UCBs.Policy Environment Opening of off-site ATMs by UCBs Liberalisation 3. the minimum owned funds of the FSWM UCBs should be commensurate with entry point capital norms for the centre where the offsite ATM is proposed/where the UCB is registered. (v) sound internal control system with at least two professional directors on the Board. which shall be entrusted with the responsibility for the control and direction of the affairs of the bank assisted by a CEO who shall have the responsibility of the management of the Bank.60 As announced in the Annual Policy Statement 2010-11. (ii) net NPAs being less than 5 per cent. • • Guidelines on Trading of Currency Options by UCBs 3. The appointment of the CEO shall be subject to the prior approval of the Reserve Bank. For UCBs which want to operate in other States without any requirement in ‘C’ and ‘D’ categories should have a minimum capital of `300 lakh. The BoD will establish a BoM. especially in unbanked districts and in centres having population of less than 5 lakh. (iv) continuous net profit for the last 3 years. and (vi) regulatory comfort based on track record of compliance with the provisions of BR Act. The UCBs which want to operate in more than one State after five years of successful operations would need a minimum capital of `500 lakh. New Bank Licenses 3. The new organisation structure shall consist of a Board of Management (BoM) in addition to the Board of Directors (BoD). In addition.61 UCBs licensed as Authorised Dealers (Category I) were allowed to participate in the exchange traded currency option market of a designated exchange. it is necessary to encourage new entrants to open banks and branches in States and districts which are unbanked or inadequately banked. recognised by SEBI as clients only.

instead of 15 per cent of deposits. Real Estate and Commercial Real Estate Sectors 3. commercial real estate and housing loans to the extent of refinance availed from higher financing agencies and National Housing Bank (NHB).62 As announced in the Second Quarter Review of Monetary Policy 2010-11.66 Consequent to the increase in the gratuity payment on account of the Amendment to 48 Payment of Gratuity Act. Limit for Housing Loans under Priority Sector Advances 3. UCBs were allowed to lend to SHGs/JLGs. Consequent to the issuance of revised guidelines on licensing of StCBs and DCCBs. Financing of Self-Help Groups (SHGs) and Joint Liability Groups (JLGs) 3.Prudential Regulatory Treatment 3. which qualify as loans to priority sector. Enhancement of Gratuity Limits . Loans to SHGs/ JLGs for agricultural and allied activities would be considered as priority sector advances. Accounting Procedure for Investment: Settlement Date Accounting 3. it was also decided that UCBs would not be allowed to exceed the aggregate ceiling for real estate.68 Scheduled UCBs having a minimum net worth of `100 crore. would also be treated as part of lending to weaker sections. 2011. 1972.65 UCBs were advised that to bring in uniformity in the practice adopted by banks while accounting for investing in Government securities. 2011. As on June 30.Report on Trend and Progress of Banking in India 2010-11 Exposure to Housing. if not fully charged to the Profit and Loss Account during the financial year 2010-11. Prudential Norms on Investment in Zero Coupon Bonds (ZCBs) 3.63 UCBs were advised not to invest in ZCBs unless the issuer builds up a sinking fund for all accrued interest and keeps it invested in liquid investments/securities (Government Bonds).000 would be considered as Micro Credit and hence treated as priority sector advances. UCBs were allowed to defer the expenditure related to enhancement of gratuity.67 With a view to further expanding the outreach of UCBs and opening an additional channel for promoting financial inclusion. over a period of five years beginning with the financial year ended March 31. Lending to SHGs. ten StCBs and 160 DCCBs were licensed. CRAR of at least 10 per cent. Further. it was decided that UCBs’ exposures to housing. other loans to SHGs/JLGs up to `50. Rural Cooperative Banks Status of Licensing of Cooperative Banks 3. which can be exceeded by an additional limit of 5 per cent of assets in case of dwelling units costing upto `10 lakh. real estate and commercial real estate loans would be limited to 10 per cent of their total assets.69 There are 31 State Cooperative Banks (StCBs) and 371 District Central Cooperative Banks (DCCBs) in the country.64 The limit for housing loans considered as a priority sector was increased from `20 lakh to `25 lakh for housing loans sanctioned by UCBs on or after April 1. net NPAs less than 5 per cent and have earned net profit continuously in the last three years were allowed to provide internet banking facility to their customers subject to obtaining prior approval of the Reserve Bank. which would also help them in achieving the sub-target of lending to weaker sections. 2011 subject to charging to the Profit and Loss Account a minimum of 1/5th of the total amount involved every year. Further. they should follow "Settlement Date" accounting for recording both outright and ready forward purchase and sale transactions in Government securities. Internet Banking for Customers of UCBs 3. UCBs have to disclose the expenditure so deferred in their Annual Financial Statements. . subsequently increased to `15 lakh for housing loans granted to individuals.

NBFCs have been advised to include “Telecom Towers” under infrastructure.72 Under the extant regulatory framework. Further NBFCs have been advised that only Credit Rating Agencies (CRAs) approved by the Reserve Bank can give the rating to Infrastructure Finance Companies (IFCs). CICs with an asset size of `100 crore or more and accessing public funds would be considered as Systemically Important Core Investment Companies (CICs-ND-SI) and would be required to obtain Certificate of Registration (CoR) from the Reserve Bank under Section 45IA of the Reserve Bank of India Act. were amended.71 The term “Infrastructure Loan” which had been defined in Para 2(viii) of Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions. Consequently. Core Investment Companies (CICs) with an asset size of less than `100 crore are exempt from the requirements of registration with the Reserve Bank.76 NBFCs are advised to prepare their balance sheet and profit and loss account as on March 31 every year. They are required to provide the credit information to the credit information companies in the prescribed format. 49 3. 1934 even if they have been advised in the past that registration would not be required. Regulatory Framework for Core Investment Companies (CICs) 3. respectively. Any extension of date of balance sheet would require prior approval of the Reserve Bank. only for the purpose of hedging their underlying forex exposures with an appropriate disclosure in their balance sheets. . Participation in Currency Options 9. NBFCs are also required to provide historical data in order to enable the new credit information companies to develop a robust database.Policy Environment seven StCBs and 136 DCCBs were still unlicensed. subject to RBI (Foreign Exchange Department) guidelines.70 State and Central Cooperative Banks were advised to limit the exposure to housing finance to 5 per cent of their total assets as against 10 per cent of their total loans and advances.74 NBFCs (excluding RNBCs) have been permitted to participate in the designated currency options exchanges recognised by SEBI. Balance Sheet and Profit and Loss Account Information 3. 2007. provisioning of 0.25 per cent of the outstanding standard assets has been introduced.75 NBFCs are required to become a member of at least one credit information company. Introduction of Provision of 0. 2007 and Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions. Limit imposed on Housing Finance for State and Central Cooperative Banks 3. Submission of Data to Credit Information Companies 3. Further.25 per cent for Standard Assets of NBFCs 3. NBFCs are required to submit a certificate from Statutory Auditor with respect to the position of the company as on March 31 every year within one month from the date of finalisation of the balance sheet and in any case not later than December 30 of that year. Non-Banking Financial Companies Amendment to Definition of Infrastructure Loan 3.73 In the interest of counter-cyclicality and also to ensure that NBFCs create a financial buffer to protect themselves from the adverse effects of economic downturns. However.

NBFCs have been advised that they may seek early retirement from the partnership firms. (ii) subsidiary or company in the same group of an NBFC or of another NBFC engaged in the business of a non-banking financial institution or banking business shall not be allowed to join the insurance company on risk participation basis. 2011 issued by the Reserve Bank before making such investment. 2012. All Systemically Important Non-Deposit taking NonBanking Financial Companies (NBFCs-ND-SI) are eligible to participate in the repo transactions.78 NBFCs registered with the Reserve Bank (other than Government companies as defined in Section 617 of the Companies Act.79 NBFCs have been advised that there shall be no discrimination in extending products and facilities including loan facilities to the physically /visually challenged applicants on grounds of disability. Entry of NBFCs into Insurance Business 3. Accordingly. which shall not be less than 15 per cent of its aggregate risk weighted assets on balance sheet and risk adjusted value of off-balance sheet items with effect from March 31.77 On account of the risks involved in NBFCs associating themselves with partnership firms.80 It was decided to align the minimum capital ratio of all deposit-taking NBFCs with that of NBFCs-ND-SI at 15 per cent. the contribution by all companies in the same group shall be .83 NBFCs registered with the Reserve Bank would be permitted to set up a joint venture (JV) company for undertaking insurance business with risk participation. from the Regional Office of the Reserve Bank in whose jurisdiction the head office of the company is registered.82 NBFCs desirous of making any overseas investment must obtain ‘No Objection’ (NoC) under the terms of Regulation of the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) (Amendment) Regulations. NBFCs are prohibited from contributing capital to any partnership firm or to be partners in partnership firms. 50 Setting up of Central Electronic Registry under the SARFAESI Act. a central electronic registry has been established under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act. subject to certain safeguards: (i) the maximum equity contribution such an NBFC can hold in a JV company is 50 per cent of the paid-up capital of the insurance company.Report on Trend and Progress of Banking in India 2010-11 NBFCs not to be Partners in Partnership Firms 3. if more than one company in the same group of the NBFC wishes to take a stake in the insurance company. all deposit taking NBFCs have been advised to maintain a minimum capital ratio consisting of Tier I and Tier II capital. Opening of Branch/Subsidiary/Joint Venture/Representative Office or Undertaking Investment Abroad by NBFCs 3. 2004 and the Non-Banking Financial Companies (opening of Branch/Subsidiary/ Joint Venture/Representative Office or Undertaking Investment Abroad by NBFCs) Directions. 1956) are eligible to participate in repo transactions in corporate debt securities. Ready Forward Contracts in Corporate Debt Securities 3.81 To prevent frauds in loan cases involving multiple lending from different banks on the same immovable property. In cases of existing partnerships. Loan Facilities by NBFCs to the Physically/ Visually Challenged 3. NBFCs participating in such repo transactions have been advised to comply with the Directions and accounting guidelines issued by the Reserve Bank. Enhancing CRAR to 15 Per cent 3. 2002 3. In this regard. it was clarified that in case.

viz.91 The Reserve Bank has constituted a 51 10. Returns to be Submitted by NBFCs – Revised Formats 3. all NBFCs (excluding RNBCs) are required to file various returns related to deposit acceptance. banks have been also advised to . Credit Card Services 3. provide complaint templates at all ATM sites for lodging ATM-related complaints. NBFCs shall submit all the returns online in the revised formats.87 The Reserve Bank has advised banks to put in place a system of online alerts latest by June 30. including levy of monetary penalties under the relevant statutory provisions. prudential norms and capital market exposure. Real Time Gross Settlement (RTGS) and National Electronic Fund Transfer System (NEFT) Services 3. <https://cosmos. a number of initiatives were taken in 2010-11.90 With a view to bring fairness and transparency. Further. To facilitate easy reconciliation of RTGS/NEFT return transactions. among others. Towards providing more efficient and transparent services to customers. banks have been advised to ensure stricter compliance with the extant instructions regarding cheque dropbox facility. Committee on Customer Service in Banks 3. inclusive of all charges involved in the processing and sanction of loans to enable the customer to compare the charges with other sources of finance.Policy Environment counted for the limit of 50 per cent prescribed for the NBFC in such an insurance JV.org. Further. 2011.86 As there have been numerous complaints about credit card operations of banks. Online Alerts for ATM Services 3. irrespective of the amount involved through various channels due to the increased instances of fraudulent withdrawals at ATMs.84 In terms of extant instructions. the Reserve Bank advised banks to strictly adhere to the guidelines issued in the Master Circular on Credit Card Operations of July 1.89 In view of complaints about refusal by banks to give acknowledgements to customers for cheques tendered at the counter.rbi. A failure to observe these guidelines could lead to suitable penal action. banks have been advised to provide necessary information to customers on return transactions in the account statement. Loan Services 3. compelling them to drop them in the drop-box.88 To ensure prompt redressal of customer complaints regarding RTGS transactions. both in letter and spirit . for all types of transactions.in>. The Reserve Bank has since hosted the format of the revised returns on the Bank’s website. It has been decided to rationalise the returns to streamline the reporting system and to improve the present method of collecting data. banks have been advised to use existing Customer Facilitation Centres set up for NEFT and RTGS customer complaints. banks have been advised to disclose ' all in cost '. Banks need to ensure that these charges are nondiscriminatory. banks have also been advised to furnish remitter details to customers in their pass book or account statement for credits received through NEFT/National Electronic Clearing Service (NECS) / Electronic Clearing System (ECS). Customer Service in Banks 3. Cheque Drop-Box Services 3..85 The Reserve Bank focuses on customer empowerment through enhanced dissemination of information. Banks have been further advised that no branch should refuse to accept cheques over the counter and give proper acknowledgement. 2011 to cardholders.

Silver Jubilee Year of Consumer Protection Act 3.92 The Reserve Bank commissioned a survey to assess customer satisfaction in the usage of ATMs across the country. (ii) providing plain vanilla savings account without prescription of minimum balance. To commemorate the occasion. The theme for celebration. transparency in operations. 52 . The major observations made by the Committee are given in Box III.Report on Trend and Progress of Banking in India 2010-11 Committee to study various aspects of customer service in banks. improvement in services to pensioners. education and information on new products. (vi) enhancement of Deposit Insurance and Credit Guarantee Corporation (DICGC) cover to `5. (iii) the use of debit cards for shopping was the highest in Maharashtra and Andhra Pradesh. SEBI to examine banking services rendered to retail and small customers. All banks would submit a detailed memorandum regarding customer service to the Board of Directors. According to the Committee. Financial Markets Adherence to Foreign Exchange Management Act (FEMA) Guidelines for Online Payment Transactions 3. The major findings of the Survey inter alia were as follows: (i) cards were mainly used for withdrawing cash or shopping purposes.000. promptness in service.2.2: Report of the Committee on Customer Service in Banks The Reserve Bank constituted a Committee (through a Board Memorandum dated May 26. The recommendations of the Committee are based on the above customers expectations. urban. (iv) provide a simple deposit account instead of suo moto offering bouquet services without customer demand and charging for the same. They include inter alia: (i) creation of a toll free Common Bank Call Number. which can be relied upon for KYC purposes. (ii) the use of debit cards for bills payment/ticket purchase was still low. among others. constituting 1 per cent of the total number of 60. The Committee submitted its report to the Bank in July 2011. grievance redressal. and customer rights and expectations. The Survey covered 600 ATMs distributed proportionately over metro. The Committee also called for public suggestions. 11. the Annual Monetary Policy . Damodaran. service charges and fees. and suggest measures for expeditious resolution of complaints. (ii) render fair and non-exploitative treatment and adhere to full disclosure of information. The interim report was presented to the Board for Payment and Settlement Systems in June 2011. (iv) providing small remittances at reasonable price.93 The year 2010-11 was the Silver Jubilee Year of the Consumer Protection Act. the major expectations of consumers are that banks should: (i) have a customer-centric approach. Customer Satisfaction Transactions Survey: ATM 3. former Chairman. (iv) the use of cards for shopping was more among the youth.000 ATMs in the country.95 The Online Payment Gateways have emerged as popular modes of e-commerce and Box III. (v) females used cards with less frequency.2010-11 had announced that banks should devote exclusive time in a Board meeting once every six months to deliberate on these issues. attitude of the bank staff towards the small and rural customers. (iii) setting up of a trusted third party KYC data bank. was “Consumers Discharge Your Responsibilities: Assert Your Rights”. 1986. semi-urban and rural regions. its structure and efficacy. the Department of Consumer Affairs proposes to bring out a book titled “Consumer Protection in India” containing papers written by experts. Exclusive Board Meetings on Customer Service 3. once every six months and initiate prompt corrective action. which would be released in December 2011. wherever quality and skill gaps were observed. including pensioners. The Committee had interactions with various stakeholders on all aspects of customer service fair treatment. 2010) under the chairmanship of Shri M. (iii) put in place an expeditious grievance redressal.00. proposed by the Ministry of Consumer Affairs. The Committee also had a mandate to look into the grievance redressal mechanism prevalent in banks.94 To increase Board oversight on customer service-related issues in banks. (v) zero liability against loss in ATM and online transactions.

such as commercial banks. The reference entities shall be single legal resident entities. Reporting requirements: It is mandatory for market makers to report their CDS trades v. particularly in smallvalue goods and services. Introduction of Credit Default Swaps (CDS) for Corporate Bonds 3. 2010. provided the CDS documentation includes such settlement method.96 The comprehensive guidelines on OTC foreign exchange derivatives and overseas hedging of commodity price and freight risks were issued on December 28. who can hedge only their underlying exposures. For users. final guidelines have been issued in May 2011. Over-the-Counter (OTC) Foreign Exchange Derivatives 3. both under the contracted exposures and past performance routes. Insurance companies and mutual funds can act as marketmakers subject to the approval of their respective regulators. The CDS shall be permitted on listed corporate bonds.97 The Reserve Bank had issued draft guidelines on introduction of CDS in 2003 and 2007. NBFCs and standalone PDs are permitted to undertake both protection buying and protection selling subject to satisfying certain eligibility norms. unlisted but rated bonds of infrastructure companies and unlisted/ unrated bonds issued by the Special Purpose Vehicles (SPVs) set up by infrastructure companies as reference obligations. which became effective in February 2011. NBFCs.Policy Environment have facilitated exports. (iii) permitting the use of cost reduction structures. among others. are inter alia: (i) AD category banks can only offer plain vanilla European Cross Currency Options. Market makers can opt for any of the three settlement methods (physical. . Users cannot purchase CDS without having the underlying exposure and the protection can be bought only to the extent (both in terms of quantum and tenor) of such underlying risk. ii. Following the proposal of introducing plain vanilla over-the-counter (OTC) single-name CDS for corporate bonds made in the Second Quarter Review of Monetary Policy of 2009-10. subject to certain safeguards. are as follows: i. include commercial banks. However. PDs. subject to certain safeguards. (iv) undertaking swaps to move from Rupee liability to forex liability is allowed. taking into account the adverse developments in the international financial markets. Based on the feedback received from 53 stakeholders on the draft guidelines prepared by the Group. The important elements of the revised guidelines. Users: Participants. (ii) allowing embedded cross currency option in the case of foreign currency-rupee swaps. iii. cash or auction settlement). Enhancing the existing limit per transaction of US$ 500 is under consideration. The salient features of the guidelines. among others. an internal Working Group (Convener: Shri R. The permitted participants have been categorised into: a) Market Makers: Participants. Kar) was constituted to finalise the operational framework. N. insurance companies and listed corporates. mutual funds. physical settlement is mandatory. The Reserve Bank has issued guidelines in November 2010 to Authorised Dealer (AD) banks allowing them to offer the facility of repatriation of exportrelated remittances (up to US$ 500 per transaction) by entering into standing arrangements with Online Payment Gateway Service Providers subject to certain conditions. b) iv. the issuance of final guidelines was deferred.

The National Payments Corporation of India (NPCI) has been entrusted with the task of operationalising this package. which is unique globally. The guidelines prescribe counterparty credit exposure limits. is the mandate given to banks to provide additional authentication for all CNP transactions based on information not available on the card. The Bank has also authorised the NPCI to provide a seamless. the maximum value of prepaid instruments that can be used in the form of mobile-wallets (m-wallets) has been increased from `5. which has now been extended to over 79. and Card Not Present (CNP) transactions. safe and secure. The Reserve Bank has so far approved proposals of 50 banks to commence mobile banking services. as also to cater to the stock market timings. Prepaid Payment Instruments 3. instant.000 to `50. the bank-led model of mobile banking has been adopted. through the mobile channel. 24X7. called Inter-Bank Mobile Payment Service. Major policy initiatives taken during the year to further strengthen the payment and settlement system were as follows: Paper Clearing: Express Cheque Clearing System 3. there is a definite need to make both Card Present (CP). 11-hourly settlements on week days and five-hourly settlements on Saturdays in National Electronic Fund Transfer (NEFT) was introduced in March 2010.100 To provide near-to-real-time funds transfer facility to retail customers. Mobile Banking Transactions 3.000. which would extend all banking facilities. Further.98 The Reserve Bank has set up a robust technology-based payment and settlement systems infrastructure with enhanced assurance of uninterrupted and efficient provision of services. on CDS trade reporting platform. where card is swiped at ATMs and Points of Sale (PoS). The ECCS would accept multiuser inputs in a networked environment. customers’ preference for electronic modes of payment. The banks introduced additional authentication for CNP 54 12. market participants are required to take these risks into account and build appropriate risk management systems. the guidelines issued in April 2009 were revisited in November 2010 and the following amendments inter alia were effected: (a) Extension of the use of semiclosed prepaid payment instruments used for payment of utility bills for the purchase of travel tickets. an advanced clearing house automation package Express Cheque Clearing System (ECCS) has been introduced. mobile-based inter-bank fund transfer system through mobile phones.99 To impart more efficiency to clearing process in non-MICR clearing houses. An important step taken by the Reserve Bank. (b) Permission to banks to issue semiclosed prepaid payment instruments through agents and BCs. Card-based Transactions 3. corebanking integration and graphic interface compatibility.Report on Trend and Progress of Banking in India 2010-11 within 30 minutes from the deal time. This is expected to enhance .000 branches. Payment and Settlement System 3. Electronic Payment Systems 3. vi.101 Keeping in view the increasing popularity of prepaid payment instruments. including money transfer facility. As CDS markets are exposed to various risks.102 Recognising the true potential of using mobile phones as a banking tool towards furthering financial inclusion.103 Given the increasing usage of cards (credit/debit/prepaid) issued by banks. PV01 limit (Change in price of `100 nominal bond for one basis point change in yield) and an independent risk management framework for monitoring and controlling of all aspects of risks.

105 To ensure that the payment systems operate in a safe and efficient manner and in line with extant policy prescriptions. (b) The customer is entitled to receive compensation for delay at the rate of `100 per day. 13. The Group. respectively.Policy Environment transactions except the Interactive Voice Response (IVR) transactions in April 2009. As part of the off-site surveillance. it may be considered to use the biometric finger-print capture in lieu of PIN at the ATM and PoS for 18 months. An assessment template has been devised to aid authorised entities to carry out a self-assessment of their operations. (c) After monitoring the progress made in the roll-out of Aadhaar UID.3. This measure would bring down the instances of disputes in payment of compensation between the issuing and acquiring banks. The mandate presently applies to all transactions using cards issued in India for payments on merchant sites where no outflow of foreign exchange is contemplated. The modern-day banking services are critically dependent on technological innovation and improvement. (d) Based on the above recommendations. During 2010-11. made inter alia the following recommendations: (a) The technology and payment infrastructure like implementation of Unique Key Per Terminal (UKPT) and Terminal Line Encryption (TLE) should be strengthened within 18-24 months. Efficiency in the ATM Delivery Channel 3.104 To improve the operational efficiency of ATMs for customers. (b) An additional factor (Personal Identification Number (PIN) or Biometric) for all domestic debit card transactions should be introduced within 24 months. This initiative has increased the confidence of customers in this channel leading to a steep fall in the frauds in e-commerce transactions. (c) All disputes regarding ATM-failed transactions should to be settled by the issuing bank and acquiring bank only through the ATM system provider leaving no scope of bilateral settlement arrangement outside the dispute resolution mechanism of the system provider. a decision should be taken to introduce Euro pay Master Card Visa (EMV) Chip and PIN for credit cards and debit cards for all domestic transactions within five and seven years. their volume and value has been created and placed on the RBI website. Technological Developments 3. 2011. which submitted its report on May 31.107 During the year. and extended the same to all IVR transactions in February 2011. the Reserve Bank in May 2011 has inter alia advised banks: (a) To reduce the time limit for resolution of customer complaints from 12 working days to seven working days from the date of receipt of the customer complaint. a database on the various payment instruments. Oversight of Payment Systems 3. the Reserve Bank has initiated a process of assessment. (e) EMV Chip Card and PIN should be issued in lieu of Magstripe cards when at least one purchase is evidenced at an overseas location. several new initiatives were taken by the Reserve Bank towards improving the banking sector technology. 55 . periodical drills were conducted in order to ensure effectiveness of the Business Continuity Management and Disaster Recovery (DR) arrangements for shared Box III.106 Technology is central to the design and delivery of banking services. risk management and business continuity arrangement. The Report was placed on the RBI website for public comments. The Reserve Bank has recently constituted a Working Group to look into the issue of security of all CP transactions.3: Recommendations of the Working Group on Securing Card Present Transactions A Working Group was constituted by the Reserve Bank on March 31. the major recommendations of the Group are discussed in Box III. 2011 for recommending measures to secure all Card Present (CP) transactions. comprising both off-site surveillance and on-site inspections complimented by market intelligence. The recommendations of the Group have been accepted by the Bank and appropriate directions have been issued in September 2011. Business Continuity Management and Disaster Recovery 3. provided the complaint is lodged with the issuing bank within 30 days from the date of the transaction.

IDRBT. Automated Data Flow (ADF) and New Generation RTGS (NG-RTGS) 3.112 The FSLRC has been constituted under the Chairmanship of Justice B. a new chapter on “Joint Mechanism” has been inserted in the Reserve Bank of India Act.N. The project is expected to be completed by December 2012. a Working Group comprising representatives from the Reserve Bank and select commercial banks was constituted for preparing an approach for implementation of next generation RTGS.109 In order to improve the quality and efficiency of regulatory reporting. Banking Sector Legislation 3. which pave way for reexamination of banking laws. 1934. Governor. rules and regulations with the requirements of India’s growing financial sector. consisting of Union Finance Minister as its ex-officio Chairperson. . 3. Chakrabarty) and members from IIT. The Terms of Reference of the Commission inter alia include the following: (i) examining the architecture of the legislative and regulatory system governing the Indian financial sector. Banks. Constitution of the Financial Sector Legislative Reforms Commission (FSLRC) 3. Srikrishna by the Central Government in March 2011. (iii) examining the most appropriate means of oversight over regulators and their autonomy from the Government. IIM.2011-17 3. The major points emerging from these exercises have been included as inputs for analysis in the Financial Stability Report brought out by the Reserve Bank.108 A High Level Committee (Chairman: Dr. and payment and settlement systems. (ii) examining if public feedback for draft subordinate legislation should be made mandatory. The Securities and Insurance Laws (Amendment and Validation) Act. with a view to rewriting. 1992.111 A number of important legislative changes have either been initiated or effected during the year.113 The Act. The Chapter provides for a Joint Mechanism. which provides an indicative road map for enhanced usage of IT in the banking sector. Banks have been advised to submit a roadmap indicating returns which can be sourced directly from their systems to a centralised repository for submission to the Reserve Bank. has amended the Reserve Bank of India Act. creation of the inter-regulatory mechanism in the form of Financial Stability and Development Council (FSDC) and strengthening of Reserve Bank’s powers with respect to commercial banks. for the Reserve Bank and banks. 2010.110 As indicated in the Annual Monetary Policy Statement for 2010-11. 1938. IT Vision Document . the Insurance Act. effective from June 18. A quarterly report on the Business Continuity Planning (BCP)-DR and Vulnerability Assessment and Penetration Testing (VAPT) exercise conducted by commercial banks at their end was obtained. 1956 and the Securities and Exchange Board of India Act. and the Reserve Bank prepared the “IT Vision Document – 2011-17”. The implementation of the Group’s recommendations has been initiated and the 56 NG-RTGS project is expected to be implemented by December 2012. 14. As noted in the RBI Annual Report 201011. 2010 3. 1934. The Group submitted its report in August 2010. C. extensible markup language-based messaging system and real time information and transaction monitoring. K. The Group has suggested several new features in the new generation RTGS (NG-RTGS). such as advanced liquidity management facility. the Securities Contracts (Regulation) Act.Report on Trend and Progress of Banking in India 2010-11 infrastructure. which has since been accepted. a project on straight through flow of data (ADF) from banks to the Reserve Bank has been taken up. streamlining and harmonising financial sector laws. with exception for emergency measures and.

The Banking Laws (Amendment) Bill.was the introduction of CDS for corporate bonds. (iii) allow nationalised banks to issue two additional instruments (bonus shares and rights issue) for accessing the capital market to raise capital required for expansion of banking business.Policy Environment Reserve Bank. which kept re-surfacing partly as a fallout of external developments and partly on account of domestic structural imbalances. while keeping in view the concern of financial stability. 2011 3. 1949. as its members to resolve any difference of opinion among the regulators.116 During the year. 1980 to make the regulatory powers of the Reserve Bank more effective and to increase the access of the nationalised banks to capital market to raise capital required for expansion of banking business. and (v) confer power upon the Reserve Bank to levy penal interest in case of non-maintenance of required cash reserve ratio. for both RRBs and UCBs.114 The Bill. 3. introduced in Lok Sabha in March 2011. so far. Finance Secretary and Chairpersons of SEBI. (iv) substantially increase the penalties and fine for some violations of the Banking Regulation Act.as market makers and users . IRDA and PFRDA. These . the inflationary pressures. while supporting economic recovery. which would pave way towards further reforms in the banking sector. a number of regulatory and developmental measures towards strengthening the health and physical outreach of these institutions were taken during the year. 1949 and constitution of the Financial Sector Legislative Reforms Commission. included changes in major banking sector statutes including the Banking Regulation Act. financial stability. the Banking Companies (Acquisition and Transfer of Undertakings) Act. Each of these initiatives was aimed at financial sector development. Another salient policy development that would impact financial sector development in a major way in the years to come. The other salient policy developments. 3. 3. 1949.000 crore. as its ex-officio Vice-Chairman. The Bill seeks to inter alia: (i) enable the nationalised banks to increase or decrease the authorised capital with approval from the Central Government and the Reserve Bank without being limited by the ceiling of `3. seeks to amend the Banking Regulation Act. the Reserve Bank undertook a variety of measures during the year. with specific relevance for banks . policy developments have been broadly in-sync with the major policy objectives of maintaining price stability.117 With a view to improving the use of technology and customer services in the banking sector. 1970 and the Banking Companies (Acquisition and Transfer of Undertakings) Act. (ii) make provisions to ensure that control of banking companies is in the hands of 'fit and proper' persons. the most noteworthy development was the formation of Board-approved Financial Inclusion Plans by banks for a time horizon of next three years. the Reserve Bank took important policy decisions with regard to forming draft guidelines about granting new licenses to private sector banks and release of two major discussion papers regarding the presence of foreign banks and promoting holding company structure for banks. financial inclusion and financial sector development. including the initiation of new generation RTGS and constitution of a committee to analyse expectations of customers from banks. The Act provides for a reference being made to the Joint Committee only by the regulators and not by the Central Government.115 This chapter discussed the major developments in the area of banking sector policy in 2010-11 and 2011-12. Finally.118 During the year. SEBI. In the field of financial inclusion. The decision of the Joint Committee would be binding on the Reserve Bank. IRDA and Pension Fund Regulatory and Development Authority (PFRDA). 57 15. Conclusions 3.

The Reserve Bank dealt with the inflationary pressures with a view of not to sacrifice the longterm growth prospects. would ensure a healthier and more inclusive banking sector. 3. which had been delicate in the aftermath of the crisis. it was necessary that economic recovery.119 Going forward. However.Report on Trend and Progress of Banking in India 2010-11 necessitated continuous monetary policy responses. while containing inflation. which can contribute towards sustained and inclusive growth of the Indian economy. was also not thwarted. 58 . with focused attention on financial stability and financial inclusion. a continued and consistent momentum of the banking sector policy.

improving economic growth while keeping inflation at tolerable levels was a policy challenge faced by many of the emerging market economies including India during the post crisis period. respectively in 2010-11 remained well above the required minimum of 9 per cent. the extent of financial exclusion continued to be staggering. the outstanding credit-deposit ratio of SCBs increased to 76. Introduction Performance of banks was conditioned by the dynamics of growth-inflation trade-off 4. the banking sectors in the emerging market economies displayed better performance in 2010-11 as compared with their western counterparts.25 per cent in 2010-11 from 2. the operations and performance of commercial banks during 2010-11 was conditioned to a great extent by the dynamics of growth-inflation trade-off experienced by the Indian economy. However.2 per cent. the return on assets (RoA) of SCBs improved to 1. and sluggish growth recovery in the Euro zone as also in the US.9 per cent and deposits grew at 18.3 per cent in 2010-11 over the previous year. higher interest rate environment not only caused concerns about slowdown in credit growth. Followed by the financial turmoil. the Reserve Bank has also undertaken monetary tightening during 2010-11. the large credit intake by some of the crucial sectors such as NBFCs and infrastructure.05 per cent in 2009-10. During the year. The gross NPAs to gross advances ratio declined to 2. Despite the growing pressures on margins owing to higher interest rate environment.10 per cent in 201011 from 1. 1. To keep inflation at tolerable levels. which is the edifice of the Indian financial sector. but also increased the possibility of deterioration in asset quality on the back of the possible weakening of the repayment capacities of borrowers in general. In contrast. Large borrowings by .0 per cent and 14.5 per cent in 2010-11 as compared with 73. Accordingly.1 The Indian banking sector. though weathered the worst consequences of the global financial turmoil to a large extent.6 per cent in the previous year. Accordingly. The tight interest rate environment also affected the profit prospects of commercial banks due to the possibility of lower margins in 2010-11. Credit grew at 22. Banks operated in a challenging operational environment 4. had to traverse through a challenging macroeconomic environment during the post crisis period.2 During 2010-11. the global financial sector was generally turbulent mainly because of the European sovereign debt crisis.39 per cent in 2009-10.Chapter IV Operations and Performance of Commercial Banks The Indian banking sector performed better in 2010-11 over the previous year despite the challenging operational environment. also raised concerns about financial soundness through the potential build up of sectoral credit booms. The banking business of Scheduled Commercial Banks (SCBs) recorded higher growth in 2010-11 as compared with their performance during the last few years. Though there was improvement in the penetration of banking services in 2010-11 over the previous year. The capital to risk weighted assets ratio under both Basel I and II frameworks at 13. displaying improvement in asset quality of the banking sector. The number of complaints received at the Banking Ombudsman offices witnessed decline in 2010-11 over the previous year.

almost three fourths of the total assets of the banking sector belonged to PSBs followed by NPRBs (15 per cent). Old private sector banks had the lowest share (around four per cent) followed by foreign banks (FBs) (around seven per cent). among others.). soundness indicators and regional penetration. 4. the need to migrate towards advanced approaches of capital calibration under Basel II was also a challenge that loomed large in the Indian banking sector. 60 . Balance Sheet Operations of Scheduled Commercial Banks Consolidated balance sheet of SCBs registered higher growth 4. The highest growth was recorded by new private sector banks (NPRBs) followed by public sector banks (PSBs). This is in contrast to the trend observed during the last two years and signals a revival from the peripheral effects of global financial turmoil. making term deposits more attractive as compared with demand and savings deposits. The number of SCBs increased to 83 in 2010-11 from 81 in 2009-10. reduction in Government spending as also the large currency holdings by the public due to high inflation made the liquidity conditions more stringent in 201011. 19 nationalised banks and IDBI Bank Ltd. The higher growth in the consolidated balance sheet of SCBs was contributed by all the bank groups except old private sector banks (OPRBs).5 On the liability side of the balance sheet. Liability side of the balance sheet was driven by capital. 82 Regional Rural Banks (RRBs) and four local area banks (LABs) for the financial year 2010-11 to highlight the emerging issues in the Indian banking sector. profitability.Report on Trend and Progress of Banking in India 2010-11 the telecommunication companies to participate in the auction of 3G spectrum.4 The consolidated balance sheet of SCBs recorded higher growth in 2010-11 as compared with the previous year. Yet. borrowings and. The chapter analyses the audited annual accounts of 83 SCBs1. 14 old private sector banks and 36 foreign banks. 7 new private sector banks. the growth was primarily driven by loans and advances.3 Against this backdrop. the growth was driven mainly by borrowings. Credit growth in 2010-11 of new private sector banks and foreign banks was particularly noteworthy when compared with their performance during the last year. which recorded 1 These include 26 public sector banks (State Bank of India and its five associates. 2. and other liabilities and provisions. Notably. Asset side of the balance sheet was driven by loans and advances 4. to keep up with the latest technological developments and to improve the quality of customer service. other liabilities 4. Alongside. as at end-March 2011. Further.6 On the asset side of the balance sheet. there was also a pressing need to become more innovative to transform unbanked villages into profitable business locations thereby strengthening the financial inclusion process. An interesting development about the consolidated balance sheet of SCBs in 2010-11 was the deceleration in the growth of savings bank deposits and demand deposits with a corresponding acceleration in the growth of term deposits. marginal deceleration in growth. capital. and the mobilisation of funds from the stock market through public issues by PSBs were the main factors behind the growth of capital of SCBs in 2010-11. This could be due to the prevailing higher interest rate environment. The recapitalisation of public sector banks by the Central Government. There was a revival in credit growth across all the bank groups except old private sector banks in 2010-11 as compared with the previous year despite the tight interest rate environment. the present chapter analyses the operations and performance of commercial banks in India during the year 2010-11 in terms of deployment of credit.

011 18.379 1.73.83.25.787 6.967 10.185 4. Overdrafts. Other Assets -: Negligible/Nil Source: Balance sheets of respective banks. Other Liabilities and Provisions Total Liabilities/Assets 1.176 86.138 1.22.172 79.65. The higher growth in deposits emanated mainly from term deposits.38.1 Government Securities (a+b) a) In India b) Outside India 3.16.534 33.41.470 40.668 2.29.3.7 Deposits. Deposits 3.05.173 3.222 49.62. etc.181 2.60.03.1 Bills purchased and Discounted 4.16.984 70.109 10.90.033 3.138 92.915 As at end-March 2011 Old private sector banks 4 1.063 54.017 60.055 2.182 91. Cash and Balances with RBI 2.97.603 51 27.64.156 New private sector banks 5 3.578 1. 4.939 13. Balances with Banks and Money at Call and Short Notice 3.425 2.206 19.886 23.712 6.28.91.765 12.55.243 4.144 2.750 7.3 Term Loans 5. Demand Deposits 3.32. 2010.647 9.38.74.632 1.760 Foreign banks 6 35.616 4.273 71.938 27.64.411 8.925 3.92.463 4.892 Private sector banks 3 4.992 4.2).874 All scheduled commercial banks 7 59.066 3.65.34. Term Deposits 4.189 4.667 1.24.042 23.875 84. recorded deceleration in 2010-11.8 In contrast.19. this could be due to the higher interest rate environment leading 61 to an increase in term deposit rates.84. This was mainly because of the accelerated deposit mobilisation of new private sector banks in 2010-11 over the previous year. While accelerated growth rate of term deposits is a welcome development from the point of view of stability of balance sheet as it strengthens the retail deposit base and reduces asset liability mismatches.35.97.617 64.920 33.83.432 1.14.708 3.83.759 1.699 1.962 1.130 6.2 Cash Credits.396 22.293 27.40.650 1.499 1.784 10. current account and savings account (CASA) deposits.405 13.515 10.929 2.1.778 10.624 9.438 52. The only exception to this general trend was the new private sector banks. Major Liabilities of SCBs Deposits Deposits registered higher growth 4.365 1.797 76.75.51.733 2. Borrowings 5.528 20.908 92.980 47.225 13.2 Other Approved Securities 3.689 72. adversely impacting profitability.63.509 7.Operations and Performance of Commercial Banks Table IV.28. Investments 3.156 1.95.113 36.91. thus.600 16.89. Loans and Advances 4.603 64.58.11.522 4.33.71.95. Reserves and Surplus 3.681 the growth of investments of the banking sector witnessed deceleration in 2010-11 in comparison with the previous year.98.032 10.58.649 929 38 1.98.3 Non-Approved Securities 4.707 1.114 17.432 6.717 4. which recorded higher growth in investments in 2010-11 as compared with the previous year (Tables IV.52.82.383 45.960 2 53.58.874 3.252 929 89 1.817 3.657 14.79. it may increase the interest expenses of the banking sector.02.020 2.12.207 42.1: Consolidated Balance Sheet of Scheduled Commercial Banks (in ` crore) Item Public sector banks 1 1.11.09.42.268 10.1 and IV.103 3.70.409 1.783 1.704 2.805 1.039 90.41.359 7.093 2.157 24.166 67.97.83.844 13.960 1. Share of CASA deposits in total incremental deposits declined 4.2.001 28.053 14.29. Shift of funds to term deposits due to higher interest rates is one of the reasons for this trend.782 36.013 2.958 77.602 1. Fixed Assets 6.985 4.10.098 2.98.48.111 31.72.196 43.534 10.900 39.79.539 25.648 56. which are least cost sources.22.50.403 1. which constitute 78 per cent of total liabilities of the banking sector registered higher growth in 2010-11 in contrast to the trend observed in the recent years.756 5.57. the savings deposit mobilisation decelerated in 2010-11 across all the bank groups as compared with the previous year. Savings Bank Deposits 3. 2 19. .11.93.537 1.85.30. As alluded to earlier. Capital 2. It is pertinent to note that despite the increased remuneration on savings deposits based on a daily product basis with effect from April 1.

1 9.8 45.5 12.0 53. However.0 10.0 40.7 10.7 22.0 per cent in April 2011 and deregulation of interest rate on savings deposits in October 2011.0 16.8 6.2 14.7 9.4 -31.7 464.4 22.1 Government Securities (a+b) a) In India b) Outside India 3.9 14.1 6.6 16. Loans and Advances 4.6 9.8 464.3 8.5 10.9 6.1 27.2 -0.1 20.1 8. Cash and Balances with RBI 2.1 -11.0 13.5 26.3 15.9 -29.8 18.0 21.1 28.9 2.0 14.1 25.7 -57.8 9.4 2.1 22.9 -4.3 12.1 Bills purchased and Discounted 4.9 18.0 19. savings deposits will no longer be as less expensive as they were in the past. 0.9 18.3 33.1 3.6 6.6 19.4 30.8 18.5 23.2 24.2 -36.6 -11. Savings Bank Deposits 3.3 26.7 6.2 21.8 6. the share of CASA deposits in total incremental deposits declined to 36 per cent in 2010-11 as compared with 48 per cent in the previous year.2 25.9 18.3 13.9 12.9 12.7 9.9 32.3 19.9 21.2 -11.5 10.3 17.5 -13.8 19. Capital 2.5 -18.1 -40.0 15.2 Other Approved Securities 3.8 25.9 20.1 10.5 CASA Term deposits . In tune with the growth deceleration.6 -34.9 20.5 24.2 16.2 24.9 27.4 15.5 7.9 8.2 48.2 20.8 35.4 22.6 9.7 However.5 4.5 15.4 25.3 23.9 21.2 -4.8 1.9 The Reserve Bank raised concerns with regard to the growing unclaimed deposits with the banking sector and advised SCBs in August 62 2008 to become pro-active in finding out the whereabouts of these customers. Growth of unclaimed deposits decelerated 4.4 12.6 -31.0 46.3.7 14.0 -38.1 2. 4.7 15.5 19.7 26. Investments 3.2 28.1 23.8 21.3 8.2 22.7 12.0 7.6 22.9 72.1 20.1 21.9 18.3 Non-Approved Securities 4.5 -14.5 13.4 17.9 26.2 2. may improve the savings deposit mobilisation going forward. Fixed Assets 6.9 7.5 7.1: Composition of Deposits 2010-11 100 90 80 70 57.4 41.6 15.6 10. since 2008 the growth rate of unclaimed Chart IV.2 19.2 26.7 -1.0 23.0 14.6 19.9 30.2 9.6 15.7 18. Resultantly.1.2: Growth in Balance Sheet of Scheduled Commercial Banks (Per cent) Item Public sector banks 2 3 Private sector banks 4 5 Old private sector banks 6 7 New private sector banks 8 9 Foreign banks 10 11 All scheduled commercial banks 12 13 1 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 1.3 Term Loans 5.0 19.3 22.2 22.0 12.8 16.4 24.9 -3.6 18.8 8.6 72.9 12.9 19.6 6.5 -41.2 27.0 15.6 9.2 25. Balances with Banks and Money at Call and Short Notice 3.6 9.4 25.0 18.1 24.4 21.4 19.6 43.1 16. Other Assets -: Negligible/Nil Source: Balance sheets of respective banks. Overdrafts.2 Cash Credits.4 -1.8 28.9 15.0 3.0 26.5 65.2 25.2 3.1 -34.8 24.8 74. An analysis at the bank group level indicated that foreign banks had the highest share of CASA deposits followed by NPRBs and PSBs (Chart IV.6 36.5 16.2 6.5 12.1 15.6 8.4 11.8 27.2 64.6 8. with the deregulation of interest rates.0 2. Other Liabilities and Provisions Total Liabilities/Assets 1.6 -30.9 34.3 7.4 13.0 32.5 per cent to 4.0 11.7 33.5 26.2 18.1 15.9 19.Report on Trend and Progress of Banking in India 2010-11 Table IV.8 -71.1 37. etc.7 -43.4 2.4 10.7 37.9 18.4 35.9 21. in a competitive environment. Deposits 3.5 8.2 20. Borrowings 5.4 27.1 18.6 6.0 32.9 12.1 28.3 21.5 Percentage share 60 50 40 30 20 10 0 PSBs OPRBs NPRBs FBs SCBs 42.2 12. Reserves and Surplus 3.5 34.3 17.3 38.2 17.1 15.8 18.3 19.2 8.1 18.5 17.8 23.6 5.7 29.8 -12.7 19.3 32. Demand Deposits 3.5 2.1 19.8 20.3 10.3 17.4 25.3 46. Term Deposits 4.4 7.4 19.8 10.2 30.7 -2.8 20.8 0.7 26.7 72.7 -4.5 27.0 22. the upward revision in the savings deposit rate from 3.4 -3.9 15.4 56.9 7.1).9 6.2 -16.5 32.8 14.6 29.4 19.2 17.9 33.2.2 4.8 48.0 28.2 40.2 -82.5 20.4 4.4 -14.4 9.9 2.6 10.

the loans and advances of the banking sector recorded higher growth in 2010-11 as compared with the previous year. however. on a y-o-y basis.2). The growth rate of unclaimed deposits came down to 5 per cent in December 2010 as compared with the growth rates of 15 per cent in December 2009 and 18 per cent in December 2008.2 Investments Growth of investments decelerated 4.9 16. Importantly. 63 .2: Deposits and Borrowings 2010-11 90 82.1 9. investments of the banking sector in Government securities held in India recorded lower growth in 2010-11 as compared with the previous year in tune with the reduction in SLR requirements from 25 per cent to 24 per cent with effect from December 18.5 78. While the economic recovery from the recent financial turmoil increased the demand for credit. The dependence of foreign banks and new private sector banks on borrowings was relatively high as compared with other bank groups (Chart IV. In 2010-11. on the back of corresponding high growth in term deposits mobilisation. However. In contrast to the previous year’s trend.Operations and Performance of Commercial Banks deposits witnessed deceleration. term loans grew at a higher rate in 2010-11 as compared with the previous year. mainly to meet the SLR requirements prescribed by the Reserve Bank and to raise funds from the shortterm money market.5 18. Major Assets of Scheduled Commercial Banks Bank Credit Growth of loans and advances witnessed acceleration 4.10 Borrowings. higher growth in deposits as well as growth in capital facilitated higher credit growth.02 per cent in 2010-11 as in the previous year 2. At the bank group level. new private sector banks recorded significantly higher growth in term loans as compared with the previous year. which constitute nine per cent of the total liabilities of the banking sector recorded accelerated growth in 2010-11 as compared with the previous year. remained more or less same at 0.8 As per cent of total liabilities 60 50 40 30 20 10 0 PSBs OPRBs NPRBs FBs SCBs 7. 2010. 80 70 67.6 85. there was an overall deceleration in the growth of investments in securities in 2010-11 as compared with the previous year.11 It is interesting to note that despite the widespread concerns with regard to slowdown in credit off-take in the context of tight monetary policy. from the supply side.12 Due to the accommodation of higher credit growth. almost three fourths of the total investments of the banking sector were in Government securities held in India. unclaimed deposits in the current accounts and fixed deposit accounts declined as at end-December 2010 over the previous year.0 Deposits Borrowings 2 Data on deposits were taken from Quarterly Statistics on Deposits and Credit of SCBs. The share of unclaimed deposits in total deposits. Chart IV. the share of borrowings in total liabilities exhibited wide variation. In 2010-11.5 3.4 49. Borrowings Borrowings recorded higher growth 4.

4 9.8) Per cent to total 5 8. Public sector undertakings Of which. Private corporate sector As on March 25.089 (47. Alongside. banks’ investments in shares witnessed increase in 2010-11 over the previous year. This was primarily due to a decline in the investments in commercial paper in 2010-11 over those during the previous year.15 The growth in international assets was mainly led by foreign currency loans to residents.3) 2. Source: Section 42(2) returns submitted by SCBs.2) 38. the international liabilities of the banking sector continued to be almost double of the international assets of the banking sector in 2010-11 as in the recent past.351 93. Units of MFs 5.941 (15.316 (37.296 (-4.564 1.5 12. The decline in such investments reflected tight liquidity conditions during 2010-11.244 (-50.0) 8. The growth in international liabilities was mainly led by growth in equities of banks held by non-residents.377 30.975 (49.965 32.500 (11. Private corporate sector 4.3 41.0 As on October 07.3: Non-SLR Investments of Scheduled Commercial Banks (Amount in ` crore) Instrument 1 1.13 The non-SLR investments of SCBs witnessed a decline in March 2011 as compared with those during the corresponding period of the previous year.603 (-10. 64 . International assets recorded higher growth 4.5). 3 4 Refers to international liabilities and assets of branches of all commercial banks geographically located in India.0 3.0 13.4).Report on Trend and Progress of Banking in India 2010-11 Non-SLR investments declined 4. Public sector undertakings Of which.8 100.806 (2. Yet. international liabilities of the banking sector grew at a lower rate as compared Table IV. with the growth in international assets.14 In 2010-11.3) Per cent to total 3 5. The sector-wise composition of international claims showed that it was mainly claims on International Liabilities and Assets of Scheduled Commercial Banks3 International liabilities moderated growth registered 4.310 (-51.946 66.0) 2.16 The consolidated international claims of the banking sector registered higher growth in 2010-11 as compared with the previous year. On the other hand. 2011 4 21.2 21.8 3.5 12. Commercial Paper 2. Consolidated International Claims4 Consolidated international claims recorded higher growth 4.326 (12. Refers to international assets of all branches (both located in India and abroad) of domestic commercial banks.406 (9. Non-Resident Ordinary (NRO) deposits and foreign currency borrowings (Table IV.26.63.09.2) 8. Instruments issued by FIs Total Investments (1 to 5) Note: Figures in parentheses indicate percentage variation over the corresponding period in the previous year.2 28.1 23.4 18.0 14. Investments in commercial paper are short-term investments of the banking sector to reap economic gain out of short-term surplus funds.7) 27.1) 41.2 4.029 47. Shares a) b) Of which.3 29. banks’ investments in bonds/ debentures also witnessed a marginal increase during 2010-11 as compared with the previous year (Table IV.3) 32.2 11. outstanding export bills drawn on non-residents by residents and Nostro balances (Table IV.077 61.0) 35. Bonds/Debentures a) b) Of which.6 41.013 74.1 14. 2011 2 12.0) 31.3).3 100.

2) 1.9) 4.343 (21.354 (16.7 7.476 (50.139 (3.0 22.0) 1. which led the growth in total international claims of banks (Table IV. @@ : Include capital supplied to and receivable profits from foreign branches/subsidiaries of Indian banks and other unclassified international assets.5 41.419 (18.3 -21.181 (96.391 (6.2) 39 (0. Table IV. Deposits and Borrowings of which: Foreign Currency Non Resident Deposits (Bank) [FCNR (B)] scheme Foreign Currency Borrowings * Non-resident External Rupee (NRE) Deposits Non-Resident Ordinary (NRO) Rupee Deposits 2.3) 62.3 * : Include inter-bank borrowings in India and from abroad.083 (48.229 (23.321 (21.88. Own Issues of Securities/Bonds 3.0) 74.38.2 15.2 45.824 (6.166 (23.067 (100.1) 50.21.22.4 19.5 13. Source: Locational Banking Statistics.6) 61.Operations and Performance of Commercial Banks Table IV.496 (20.7) 50.9) 30.699 (6.9) 77. Note : Figures in parentheses are percentages to total international assets.7 -6.6).0) 30.3 -0.462 (6.234 (16.7) 73.380 (27. banks.1) 4.17 The growth in the consolidated international claims of banks on countries other than India was mainly led by claims of banks on Germany.9 2.1) 27.2 14.9) 72.8 17.21.2 28. claims of banks on UK and Hong Kong registered a decline in 2010-11 as compared with the previous year (Table IV.0 0.78.By Type (As at end-March) (Amount in ` crore) Percentage Variation Item 1 1.0 2011 5 11.179 2011 3 3. Other Liabilities of which: ADRs/GDRs Equities of banks held by non-residents Capital/remittable Profits of Foreign Banks in India and other unclassified International Liabilities Total International Liabilities 2010 2 3.0) 9.3) 1.1) 9.1) 30. FC lending to and FC deposits with banks in India.741 (96.359 (100.6 -48. Loans and Investments of which : a) Loans to Non-Residents* b) c) d) Foreign Currency Loans to Residents** Outstanding Export Bills drawn on Non-Residents by Residents Nostro Balances @ 2010 2 2.4) 1.9 33.159 (14.8) 5.799 (5.135 (21.7) 2.5) 52.7).454 2010 4 4.9) 5.40.9) 1. Holdings of Debt Securities 3.575 (0.7 49. Note: Figures in parentheses are percentages to total International liabilities.0) 2011 3 2.6 359.6) 179 (0. @ : Include placements made abroad and balances in term deposits with non-resident banks.313 (11.8 91.4 12.8 -1.52. In contrast.2) 2.2 -15.2) 41.9 28.78.574 (74.3) 10. 4.072 (7.4 -1.8 -0.1 7.1 16.0) 2010 4 8.37.439 (1. Source: Locational Banking Statistics. UAE and USA.3 193.8) 95. Packing Credit in Foreign Currency (PCFC).0 -20. 65 . and external commercial borrowings of banks. ** : Include loans out of FCNR (B) deposits.414 (5.196 (4.5: International Assets of Banks .4 165.4 13.4 2011 5 17.658 (26.4: International Liabilities of Banks – By Type (As at end-March) (Amount in ` crore) Percentage Variation Item 1 1.221 (74. Other Assets @@ Total International Assets * : Include rupee loans and Foreign Currency (FC) loans out of non-residents (NR) deposits.147 (3.38.46.23.8 0.2 23.8) 14.413 (14.6) 34.08.1) 1.4 21.

7: Consolidated International Claims of Banks on Countries other than India (As at end-March) (Amount in ` crore) Item 1 Total Consolidated International Claims of which: a) United States of America b) c) d) e) f) United Kingdom Singapore Germany Hong Kong United Arab Emirates 2010 2 2.4) 1.6) 1.By Maturity and Sector (As at end-March) (Amount in ` crore) Residual Maturity/Sector 1 Total Consolidated International Claims a) Maturity-wise 1) Short-term (residual maturity less than one year) 2) Long-term (residual maturity of one year and above) 3) Unallocated b) Sector-wise 1) Bank 2) 3) Non-Bank Public Non-Bank Private 2010 2 2.1) 1.498 (6.413 1. for equities) and maturity information not available from reporting bank branches.2) 18. The outstanding credit-deposit ratio was higher at 77 per cent in 2010-11 as compared with 74 per cent in the previous year.4) Table IV.164 (5.376 (7.247 (35.3: Credit as per cent of Deposits plus Borrowings 2010-11 80 69. 2) Unallocated residual maturity comprises maturity not applicable (e.370 (13.6 50 PSBs OPRBs NPRBs FBs SCBs .33.1) 1.9) 12.5) 15.401 (55.. In contrast.Immediate Country Risk Basis. Source: Consolidated Banking Statistics . 3) Bank sector includes official monetary institutions (IFC.9) 18. Chart IV.893 (62.437 (7.7) 18.638 (62.Immediate Country Risk Basis.2) and hence.44.442 (0. ‘Non-bank public sector’ comprises only State/Central Governments and its departments.4) 5.46.5) 87.142 (44. Public sector banks ranked first in terms of this ratio followed by private sector banks and foreign banks (Chart IV.071 (100.394 (22. Source: Consolidated Banking Statistics .5) 18.09.0) 53. the outstanding investment-deposit ratio was lower at 34 per cent in 2010-11 as compared with 36 per cent in the previous year.46. etc.3 Per cent 60 58. Credit-Deposit and Investment-Deposit Ratios of Scheduled Commercial Banks Banks reported higher outstanding creditdeposit ratio 4.3).2) 6. ‘Non-bank public sector’ comprised of companies/institutions other than banks in which shareholding of State/Central Governments was at least 51 per cent. However.36.0) 54.18 Trends in credit-deposit ratio as well as investment-deposit ratio manifested banks’ preference for credit over investments in 201011. Among the bank groups.141 (15. a more meaningful ratio for a bank group comparison would be credit as a percentage of deposits plus borrowings.1 67.1) 13.438 (57.3) 870 (0.6: Classification of Consolidated International Claims of Banks on Countries other than India .33.) and central banks.Report on Trend and Progress of Banking in India 2010-11 Table IV.191 (42.3 70 67. including State/Central Governments and its departments.2) 34.5) 14.33.8) 98. the higher credit-deposit ratio reported by new private sector banks as well as foreign banks needs to be interpreted with a caveat as the 66 dependence of these bank groups on deposits for funds is relatively lower as compared with other bank groups.818 (22.1) 81. 4) Prior to the quarter ended March 2005.g.8) 2011 3 2.3) 2011 3 2.494 (2. From March 2005 quarter.536 (5.978 (8. These bank groups raise a substantial amount of funds through borrowings (see Chart IV.939 (35.3) Note: 1) Figures in parentheses are percentages to total International claims.1 68.413 (100.9) 36. ECB.071 1. Note: Figures in parentheses are percentage shares in total international claims.273 (2. new private sector banks recorded the highest credit-deposit ratio followed by foreign banks in 2010-11.179 (5.546 (7.53.

Loans and Advances a) Up to 1 year b) Over 1 year and up to 3 years c) Over 3 years IV.0 3 2011 48.9 9.4 11 2011 64.0 Maturity Profile of Assets and Liabilities of Banks No significant shift in the maturity profilewise composition of assets and liabilities 4.2 Private sector banks 4 2010 47. subsequently incremental C-D ratio witnessed moderation.4: Incremental Credit.3 40.6 14.Operations and Performance of Commercial Banks 4.6 49.5 68.0 Per cent 60.0 15.4).7 28.7 39.2 15.2 28.and InvestmentDeposit Ratios of SCBs 120.2 69.3 40.9 38.0 79.1 New private sector banks 8 2010 47. Investments a) Up to 1 year b) Over 1 year and up to 3 years c) Over 3 years 48.4 30.3 40.7 24.6 35.7 10.6 15.5 23.1 14.2 5 2011 46.8: Bank Group-wise Maturity Profile of Select Liabilities/Assets (As at end -March) (Per cent to total under each item) Liabilities/assets 1 Public sector banks 2 2010 I.9 34.5 33.0 78.8 9.9 38.8 66.6 15.4 26.1 38.7 38.4 16.1 46.9 24.8 28.4 37.3 35.6 40.6 36. However.8 28. and more than half of the total investments were long-term during the same period.8 27.2 26.7 61.0 11. Owing to the robust credit growth in 2010-11. Chart IV.8 22.7 18.2 42.5 12.7 26.6 42. the incremental C-D ratio went above 100 per cent during the third quarter of 201011.0 37.1 17.4 13.9 27.0 Foreign banks 10 2010 63.2 28.0 33.1 34.4 19.7 36.0 13.7 16.4 37.3 21.0 80. 67 .3 Source: Balance Sheets of respective banks.2 44.4 40.2 40.0 15. There was no significant shift in the maturity profile-wise composition of assets and liabilities of the banking sector in 2010-11 over the previous year indicating the persistence of Table IV.4 41. Borrowings a) Up to 1 year b) Over 1 year and up to 3 years c) Over 3 years III.5 13 2011 48.0 46.5 74.3 22.4 26.0 9 2011 46.7 12.1 54. However.9 41.1 20.19 The incremental C-D ratio above 100 per cent is a rough indicator of overheating in the economy.9 40. 2011* 11 February Incremental C-D ratio *: Provisional data.4 41.4 25.9 33.4 57.8 6.7 23.0 41.4 8.2 27.1 12.7 25. Incremental I-D Ratio 100 per cent advances.6 6.1 21.4 29.0 36.6 41.3 35.2010 24 Sep 2010 3 Dec.5 36.7 14.0 22 April 11 16 July 2010 26 Feb.6 23.8 12. 2010 1 July 2011 9 Oct 09 13-Mar-09 22-May-09 28 Mar 08 15 Aug 08 18 Jan 08 6 June 08 18 Dec 09 31-Jul-09 24 Oct 08 2 Jan 09 13 Apr-07 22 June 07 31 Aug 07 7-May-10 9 Nov 07 9 Sep.7 69.8 27.8 35.0 14.7 38.0 100.0 0.5 47.2 18.2 41.0 33.1 12.2 13.4 36.8 76. the incremental I-D ratio improved during the later part of the year (Chart IV.4 All SCBs 12 2010 49.5 30.6 32. Accordingly. The maturity profile-wise composition of assets and liabilities indicated that almost half of the total deposits and borrowings of the banking sector were short-term as at end-March 2011.4 21.3 33.8 39.2 Old private sector banks 6 2010 47. Deposits a) Up to 1 year b) Over 1 year and up to 3 years c) Over 3 years II.0 37.2 59.9 15.4 15.8 15.5 38.1 18.9 36.6 42.3 27.2 8.0 57.6 14.0 40.8 7 2011 45.4 37. almost one fourth of the total loans and 20.20 The mismatches in the maturity profile of assets and liabilities of the banking sector are a cause for concern as it leads to the financing of long-term assets by short-term liabilities.6 36.

witnessed a growth of 31 per cent in 2010-11. the persistence of ALM positive gap is estimated on the basis of absence of mean reversion. The ALM calculated as long-term assets minus long-term liabilities never turned out to be negative during the recent years implying that the higher growth observed in the long-term loan segment is leading to asset liability mismatches in the banking sector. An analysis of the extent and persistence of asset liability mismatches in the Indian banking sector is provided in Box IV.5. March 2006 to September 2010 for all SCBs is 0.24 The off-balance sheet exposures of the banking sector. it means that there is no significant persistence. This indicates that there is no significant persistence in the ALM positive gap during the period under study at the aggregate level. in the ‘one to three years’ bucket it is significant and calls for careful monitoring (Table).8).5 ⎥ ⎥ ⎢ T ⎦ ⎣ The value of γ for the ALM positive gap during the entire sample period. 68 Off-Balance Sheet Operations of Scheduled Commercial Banks Off-balance sheet operations of banks continued to increase 4. Under the assumption of a symmetric white noise process (zero persistence). Carlos Robalo (2004). followed by 3-5 years bucket (31 per cent) and 1-3 years bucket (27 per cent).1 (Table IV.5. Recognising the risky and uncertain nature of OBS. June. Reference: Marques. i. that is is used for testing the statistical significance of the measure of persistence γ.5. the ALM positive gap is not significant.5 ⎥ ⎥ ∩ N (0.405b (0. The bucket-wise analysis of persistence shows that in none of the time buckets.9). It is theoretically proved that for a symmetric zero mean white noise process E (γ) = 0. it is persistent in the ‘one to three years’ time bucket. Thus. The forward exchange contracts constituted more than three fourths of total offbalance sheet exposures in 2010-11. Table: Measure of Persistence of ALM Positive Gap – Bucket-wise Time Buckets One to Three Years Three to Five Years More than Five Years Total Persistence (γ) 0. 4. asset-liability mismatches.23 The recent global financial turmoil demonstrated the risk involved in accumulating large amount of off-balance sheet exposures (OBS). ALM positive gap in the more than five years bucket constituted 42 per cent of the total ALM positive gap. Working Paper No. in sum. Note: Number of Observations used for the analysis is 55. though at the aggregate level. On the other hand.3264) b Acceptance of the null hypothesis of zero persistence at 5 per cent level. The percentage of long-term assets financed by short-term liabilities witnessed a marginal decline over the previous year (Table IV.1: Asset Liability Mismatches (ALM) in the Indian Banking Sector: The Extent and Persistence The analysis of the maturity profile of long-term assets and liabilities indicates that at the aggregate level. An analysis of persistence of the positive ALM gap is carried out following the methodology developed by Marques (2004).22 On the financing side. at ten per cent level..Report on Trend and Progress of Banking in India 2010-11 Box IV.5)/(0.47 0.5 it signals the existence of significant persistence. The off- . Accordingly. 4.5/√T) 1. which is slightly lower than 0. the statistic ⎤ ⎡ ⎢ γ − 0.404b (0.60 0. Thus. the persistence is significant at five per cent level. European Central Bank. ⎛n⎞ γ = 1− ⎜ ⎟ ⎝T ⎠ Where n stands for the number of times the series crosses the mean during a time interval with T+1 observations. if the value of γ is close to 0.47 Significance (γ – 0.0606) -0. The percentage share of shortterm liabilities used to finance long-term assets also witnessed a marginal decline in 2010-11 over the previous year (Table IV.e. which declined in the previous two years. However.47 0. As at end-September 2010. the long-term assets are financed by short-term liabilities.483b (0. 371.404b (0.3264) 0.9). 4. if the value of γ is significantly above 0. the Reserve Bank tightened the prudential norms on OBS in August 2008. almost 23 per cent of short-term liabilities were used to finance almost 20 per cent of long-term assets in the banking sector. Bucket-wise break-up of ALM positive gap shows that the banking sector has the highest ALM positive gap in the bucket more than five years followed by 3-5 years and 1-3 years.21 Almost 20 per cent of the long-term assets of the Indian banking sector were financed by short-term liabilities in 2010-11.47.1) ⎢ ⎢ 0.3264) -0. ‘Inflation Persistence: Facts or Artefacts?’.

1 -16..9 24.0 SBI Group. 6. in contrast to the deceleration experienced in 2009-10.25 Despite widespread concerns with regard to profitability on account of higher interest expenses on the one hand and. 9. 2010.7 13. 12.0 22.2 New private sector banks 3 Foreign banks All SCBs 22.2 -6. viz. 1. Bank group/year no. Operating expenses grew at a higher rate 4.6 23.3 21.9 13. Growth of ‘other income’ decelerated 4. the net interest margin (NIM) of SCBs improved in 2010-11 over the previous year. However.2 21.4 16.6 FBs.3 NPRBs. it was considerably lower than the growth in interest income. which 69 prohibited sub-prime lending to the corporate sector might have contributed to the higher interest income in 2010-11 apart from robust credit growth.2 NBs.8 18. interest expenses also witnessed accelerated growth in 2010-11 owing to the higher interest rate environment. and lower interest income on the other.8 Acceptance. 67. the financial performance of SCBs improved in 2010-11 as compared with the previous year.4 18.0 19.4 27. The decline in trading income of the banking sector in 2010-11 over the previous year was one of the reasons for this trend.0 23.8 19. despite the overall deceleration in ‘other income’. 4. 0.1 19.7 22. commission and brokerage recorded higher growth in 201011 over the previous year. Financial Performance of Scheduled Commercial Banks Profitability Consolidated net profits recorded higher growth 4.5: Composition of Off-Balance Sheet Exposures of the Banking Sector 2010-11 OPRBs.Operations and Performance of Commercial Banks Table IV.5 Guarantees.1 -9. one of the major components of ‘other income’.1 Nationalised banks # 1. The implementation of the Base rate system with effect from July 1.2 SBI Group 2 Private sector banks 2. A detailed analysis of OBS of the Indian banking sector is provided in Box IV.7 *: Calculated as (long-term assets minus long-term liabilities)/longterm assets*100 **: Calculated as (long-term assets minus long-term liabilities)/shortterm liabilities*100 #: Include IDBI Bank Ltd. 16. higher nonperforming assets and the consequent higher provisioning requirements. the operating expenses of the banking sector grew at a higher rate in 2010-11 as compared with the previous year mainly on account of pay hikes implemented in the . Although.7 14.2 Forward Exchange Contracts.3 -25.6 38.4 15. balance sheet exposures of foreign banks constituted more than two thirds of the total offbalance sheet exposures of the banking sector in 2010-11.2 (Appendix Table IV. Accordingly. 86.9: Asset Liability Mismatches in the Indian Banking Sector (Per cent) Sr.5 27. 3.5).0 17.28 In contrast. Long-term Assets Percentage of Financed by short-term Short-term liabilities used to Liabilities* finance longterm assets** 2 3 4 5 Chart IV.3 31.0 22.26 The consolidated net profits of the banking sector recorded higher growth in 2010-11.5 28.6 24.0 1 2009-10 2010-11 2009-10 2010-11 1 Public sector banks 1. primarily because of higher growth in interest income.2 19.27 ‘Other income’ recorded a lower growth in 2010-11 over the previous year.4 23.1 and Chart IV.1 Old private sector banks 2.

these exposures can seriously damage the financial soundness of the banking sector. with i = 1. the OBS of the banking sector witnessed substantial growth. Table: Impact of OBS on ‘Other Income’ Sample Period : 2002 to 2010 across five bank groups Number of pooled observations .750* 3. c is a constant term.N. Coefficients -1. Hence. The panel data regression was done at the bank group level. However. The Hausman test statistic was not significant. The log of ‘other income’ was taken as the dependant variable. especially those of foreign banks and new private sector banks (Chart B). the risk associated with these off-balance sheet exposures is difficult to quantify. Thus.365 0. Results indicated that one per cent increase in off-balance sheet exposures increases ‘other income’ of the banking sector by 0. which is the biggest component of the off-balance sheet exposure of the banking sector.480 t-value -1. Xits are k explanatory variables and ε it is the disturbance with vi the unobserved bank-specific effect and u it the idiosyncratic error.Report on Trend and Progress of Banking in India 2010-11 Box IV. on-balance sheet assets and first lag of ‘other income’. banks have an incentive to accumulate off-balance sheet exposures in the interest of garnering better ‘other income’ and profits.188 0. t = 1.2010-11 10000000 9000000 8000000 7000000 6000000 5000000 4000000 3000000 2000000 2011 1000 500 0 2002 2003 2005 2008 2009 2004 2006 2007 2010 1000000 0 SBI Group New private sector banks Nationalised banks Foreign banks Old private sector banks SBI Group NBs NPRBs OPRBs FBs OBS BA 70 .44 *: Significant at ten per cent level. increase the gross income although at a higher level of risk. symbolically.2: Profitability versus Risks: An Analysis of Off-Balance Sheet Exposures in the Indian Banking Sector Off-balance sheet exposures (OBS) raise concern as its exact impact on the soundness of the banking sector is uncertain. On the other hand. Thus. the size of the total offbalance sheet exposures of the Indian banking sector was larger than the total balance sheet assets of the banking sector. As the economy grows. Thus.189** 4. with the onset of recovery.89 Adjusted R-Squared: 0. **: Significant at five per cent level.172*** Where ε it = vi + uit Chart A: Movements in OBS Amount of OBS rebased to 100 3000 2500 2000 1500 ` crore Chart B: Off-Balance Sheet Exposures (OBS) and Balance Sheet Assets (BA) . With the onset of the global financial turmoil. This was mainly due to foreign banks and new private sector banks. OBS of the banking sector again witnessed a positive growth in 2010-11 (Chart A). the model used in the study can be written as: k π it = c + ∑ β k X it + ε it k =1 K πit is the ‘other income’ of bank group i at time t.085 0. The independent variables were off-balance sheet exposures. The regression results are presented below (Table). results of the random effects model are reported. off-balance sheet exposures.715*** 2. Resultantly. ***: Significant at one per cent level. it may be noted that as at end-March 2011.88 DW Statistic: 1. from the point of view of banks. the policy on OBS was tightened in August 2008. which are basically fee-based services.08 per cent. Thus. Ipso facto. The role of OBS in generating ‘other income’ was examined using panel data regression analysis. T. In the event of a default. the demand for such risk management services from the banking sector also increases. it has an incentive to accumulate off-balance sheet exposures to reap more fee income. Public sector banks and old private sector banks had relatively low level of off-balance sheet exposures as compared with other bank groups.…. However. During the last ten years. fluctuations in the exchange rate and also the higher interest rate environment increase the demand for forward contracts from the customers of banks. On the other side.…. the off-balance sheet exposures can seriously damage the soundness of the banking sector as demonstrated by the recent global financial turmoil.50 Dependent Variable: ‘Other Income’ Explanatory Variables Intercept Balance Sheet Assets Off-Balance Sheet Exposures First Lag of ‘Other Income’ R-Squared : 0. in the event of a default. especially that of new private sector banks and foreign banks. if the risk appetite of a particular bank is high. The bank groupwise data used have been taken from the previous issues of the Report on Trend and Progress of Banking in India. there was a decline in OBS of the banking sector in 2008-09 and 2009-10. ceteris paribus.

38 1.15.26 14. Further.10).446 4.899 2.66 15.1 Nationalised banks* 1.00. 5 Efficiency 4.20 14.98. The depreciation in the value of investments owing to the higher interest rate environment also increased the provisioning requirements of the banking sector.43.12 1.87 5.29 A factor.776 5 15.53 9.00 0.70 14.11 13. The Reserve Bank had increased provisioning requirements for such loans (classified as standard assets) in December 2010 due to the risk of delinquencies upon repricing of such loans going forward (Table IV.34 14.37 14. banking sector during the last one year.93 21.42 0. The marginal decline in both RoA and RoE recorded by the SBI group was partly on account of the provisioning requirements for housing loans extended at teaser interest rates.09 30.96 1 Public sector banks 1. 4.331 1.49.97 1.05 per cent in 2009-10.94 12. mainly on account of increase in gross non-performing assets (GNPAs) (in absolute terms).63 6.28 0.71. In view of the exceptional nature of the event.891 1.26 1.10 per cent in 2010-11 from 1.42 3.37 11.11 and Chart IV.31 2010-11 6 16.31 8.29 11.74 1.23. 71 .667 79.879 1.Operations and Performance of Commercial Banks Table IV.210 70.53 18.335 57. while a higher NIM contributes to profitability.03 0.230 4. it is expected to increase further in future (Table IV.47 18.950 78. Income a) Interest Income b) Other Income 2.72 Marginal improvement in return on assets 4.2 SBI Group 2 Private sector banks 2.92.91 1. Net Profits for the year 5. The return on assets of SCBs also marginally increased to 1. Net Interest Income (1a-2a) Memo Item: 1.24 2010-11 Amount Percentage variation 4 5.17 2.30 15.129 71.337 2.85 23.62 10. The return on equity also witnessed an improvement over the same period.028 55. the consolidated net profits of the banking sector registered higher growth in 2010-11 as compared with the decelerating trend observed during the recent past.38 6.1 Old private sector banks 2. no. As the provisioning requirements for various categories of NPAs were increased in May 2011.179 79. Net Interest Margin 2.15 34. mainly owing to higher NIM. Source: Profit and loss accounts of respective banks.31 On the one hand.05 2010-11 4 0. provisions and contingencies also witnessed higher growth in 2010-11 as compared with the previous year.23 20.51 1.226 1.17 10.564 5. Expenditure a) Interest Expended b) Operating Expenses of which : Wage Bill c) Provisions and Contingencies 3. the unamortised expenditure would not be reduced from Tier I capital. on the other it also Table IV.096 3 6.43 1.10: Trends in Income and Expenditure of Scheduled Commercial Banks (Amount in ` crore) Item 2009-10 Amount Percentage variation 1 1.267 4.92 2 4.37.96 1.97 23.79 1. The opening balance of reserves of banks will be reduced to the extent of the unamortised carry forward expenditure.109 1.72.00.91.248 65.87 7.10 13.2 New private sector banks 3 Foreign banks All SCBs *: Nationalised banks include IDBI Bank Ltd. Operating Profits 4.16 12. which helped the banking sector to maintain profitability in 2010-11 was the regulatory treatment extended to liabilities arising out of re-opening of pension option to employees of PSBs and the enhancement in gratuity limits in February 2011. Note: 1) Return on Assets = Net profits/Average total assets 2) Return on Equity = Net profits/Average total equity Source: Calculated from balance sheets of respective banks. the SBI group was an exception to this general trend.083 1. The Reserve Bank allowed banks to amortise the total liabilities arising out of this development over a period of five years and as such only one fifth of the total liabilities was charged to the profit and loss account of the current year 5. However.92 11.94. Bank group/year Return on assets 2009-10 1 2 3 0.90 18.6).28 14.95 1.22.10 Return on equity 2009-10 5 17.30 Resultantly.11: Return on Assets and Return on Equity of SCBs – Bank Group-wise (Per cent) Sr.

09 5. 2) Cost of Borrowings = Interest Paid on Borrowings/Average of current and previous year’s borrowings.0 60000 NIM to improve the efficiency of financial intermediation along with increasing the noninterest income to maintain profitability.73 Return on Advances 6 9.00 3.65 6.34 8.67 6.78 3.3 5.39 8.09 3.65 2.10 3.70 2.0 8.64 5.01 2.87 2. 4) Return on Advances = Interest Earned on Advances /Average of current and previous year’s advances.20 8.40 8.17 5. 1 2 1 Public sector banks 2009-10 2010-11 1. mainly due to an increase in return on investments.95 10. Thus.0 40000 15.99 8. One (Per cent) 25.10 20000 10000 0.20 6.93 5. However.11 8.75 5.2 50000 20.1 Nationalised banks* 2009-10 2010-11 1.32 4.46 8. return on advances declined in 2010-11 over the previous year.00 3. cost of funds of SCBs witnessed a decline in 2010-11 as compared with the previous year.10 9.50 4.28 5.96 2.56 9.00 1.42 4.Bank Group-wise Sr.22 1.36 4.09 9.95 2.31 2.28 6. 3) Cost of Funds = (Interest Paid on Deposits + Interest Paid on Borrowings)/(Average of current and previous year’s deposits plus borrowings).56 9. which is considered as a sign of inefficiency.56 6.42 Spread 9 = (8-5) 2.0 0 2008 2009 2010 2011 Absolute Net Profits Return on Assets Growth in Net Profits implies higher cost of financial intermediation in the economy.50 8.1 Old private sector banks 2009-10 2010-11 2.85 6. No.10 3.35 4.0 70000 80000 Return on Assets. A detailed analysis of efficiency of the banking sector during the last one decade is provided in Box IV.41 3.53 6.34 Cost of Funds 5 5.09 6.37 4.54 6.33 6.31 1.30 8.2 SBI Group 2009-10 2010-11 2 Private sector banks 2009-10 2010-11 2.21 8.75 9.10 8.80 6.99 4.0 36.52 3.81 6. there is a need to bring down Table IV. 5) Return on Investments = Interest Earned on Investments /Average of current and previous year’s investments.24 1.13 5.27 2. primarily owing to a decline in the cost of deposits (Table IV. Absolute Net Profits (` crore) 72 . Cost of funds declined 4.31 1. Note: 1) Cost of Deposits = Interest Paid on Deposits/Average of current and previous year’s deposits.83 3.42 9.12).60 8.43 9.5 23.62 6.77 4. the return on funds increased in 2010-11 as compared with the previous year.Report on Trend and Progress of Banking in India 2010-11 Chart IV.11 5.18 Return on Investments 7 6.33 In contrast.47 5.57 2.89 9.99 3.89 5.9 35. 6) Return on Funds = (Interest Earned on Advances + Interest Earned on Investments) / (Average of current and previous year’s advances plus investments).93 8.84 9.83 4.48 3.10 4.05 1.80 4.73 3.36 1. Source: Calculated from balance sheets of respective banks.0 23.2 New private sector banks 2009-10 2010-11 3 Foreign banks 2009-10 2010-11 All SCBs 2009-10 2010-11 Bank group/year Cost of Deposits 3 5.97 6.68 5.98 8.41 8.30 5.23 6.44 8.39 6.56 1.49 5.13 1.0 30000 10. Return on funds improved 4.3. Growth in Net Profits 30.12: Cost of Funds and Return on Funds .63 5.01 4.28 2.13 5.50 2.01 Cost of Borrowings 4 1.22 8.67 10.6: Net Profits of SCBs 40.29 3.79 Return on Funds 8 8.69 *: Include IDBI Bank Ltd.29 9.0 1.39 7.18 9.32 In contrast to the general expectation.12 5.

At the bank group level.7). Thus. which is used to assess efficiency of the banking sector is NIM. and NIM from Chart A: Movements in NIM 5. In sum. leverage.0 -1. NIM indicates the margin taken by the banking sector while doing banking business. The NIM..1 per cent. which witnessed a declining trend during the period 2004 to 2010. Chart B: Movements in Operating Expenses and Other Income 2.0 1. The decomposition of NIM into NIM from core banking business.3: Net Interest Margin of the Indian Banking Sector: Efficiency versus Profitability While maintaining profitability is a sine qua non for the financial soundness of the banking sector. operating expenses and ‘other income’ are crucial in determining profitability of the banking sector. NIM was in the range 2. In contrast. efficient financial intermediation is important from the point of view of economic growth.0 0. NIM from others witnessed a decline. viz. Accordingly. In this context. Thus. Soundness Indicators Soundness indicators point to a comfortable position 4. As alluded to earlier. Mumbai. ‘other income’ to total average assets also witnessed a declining trend during the last one decade. A balanced approach would be to bring down NIM. asset quality. along with an increase in income from other sources and reduction in operating expenses to maintain profitability (Subbarao.5 per cent to 3. mainly the difference between all other interest income and interest expenses) showed that NIM from core banking business witnessed substantial increase during the last one decade. December. 2010). capital adequacy. there is a need to increase it. one of the indicators.0 -2. nevertheless. ‘Five Frontier Issues in Indian Banking’.0 Operating expenses. credit booms and liquidity are analysed in this section. lower cost of funds during the recent years (see Chart IV. the increase in return on funds along with the decline in cost of funds lead to an increase in spread.0 0. .0 4.0 Per cent 2. which will improve efficiency of financial intermediation. other income as per cent of assets others (i. during the last one decade.5 2. In India. On the other side. while the return on funds was largely comparable.e. Reference: D Subbarao (2010). it is important to increase ‘other income’ and reduce operating expenses as ratio of assets in the interest of profitability. there is a need to bring down NIM from an efficiency point of view. calculated as the difference between interest income from loans and advances minus interest expenses on deposits as a per cent of average total assets). it may be important for the Indian banking sector to improve ‘other income’ along with a reduction in NIM from core banking business to maintain profitability and to improve efficiency of financial intermediation (Chart B). The operating expenses to total average assets witnessed a declining trend during the last one decade mainly owing to the cost effective technological advancements. from a profitability point of view.1) (Chart IV.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 NIM from Core Banking Business NIM from others NIM Operating Expenses to Total Assets Other Income to Total Assets reason for this trend could be the increase in gross non-performing loans in absolute terms. 73 4. The increase in the NIM from core banking business indicates that the cost of financial intermediation increased in the economy during the last one decade.5 1. However. Speech delivered at ‘BANCON 2010’. (i. The high share of less expensive CASA deposits enabled foreign banks to register lower cost of deposits and. there is a need to bring down NIM from core banking business to bring the overall NIM down (Chart A). improved during 201011. leaving the total NIM more or less stable during the same period.34 Financial soundness of the banking sector is a sine qua non for the financial system’s stability in a bank dominated country like India. The net interest margin (NIM)..Operations and Performance of Commercial Banks Box IV. there was substantial variation in cost of funds. in turn. The NIM of the Indian banking sector continues to be higher than some of the emerging market economies of the world.e.0 3.5 0.. different aspects of financial soundness of the banking sector.0 1. The lowest cost of funds recorded by foreign banks helped them to register the highest spread in 2010-11.

5 14. the parallel run of Basel I is also continuing as a backstop measure.7 13.72.1 10. This implies that.8 12.5 5 4 3 2 1 0 4. In 2010-11.0 Tier II 4.662 5.5 8.14: Component-wise Capital Adequacy of SCBs (As at end-March) (Amount in ` crore) Item 2010 1 2 Basel I 2011 3 Basel II 2010 4 2011 5 Cost of Funds FBs NPRBs Return on Funds SBI Group NBs Spread OPRBs Capital to Risk Weighted Assets Ratio (CRAR) CRAR under both Basel I and II remained well above the stipulated norm 4. Among the bank groups.2 11. Source: Based on off-site returns submitted by banks.2 10.615 3.13).5 2011 5 13. 90 per cent in the second year and 80 per cent in the third year of the minimum capital under Basel I to limit any risk arising from the quality of compliance with the Basel II framework.6 Basel I 2011 3 11.76. Notably.583 39.6 3.8 4.5 12.37 While implementing Basel II.9 17.1 12.1 16. in 2009-10.2 8 7 6 Per cent 5.5 17.8 17.74. 4.2 of which: Tier I 9. foreign banks registered the highest CRAR. Risk-weighted assets 42.35 Though all SCBs excluding RRBs and LABs migrated to Basel II framework.7: Cost of Funds and Return on Funds .3 15.395 47.582 6.0 4. 74 . Under this dispensation. A.1 Source: Based on off-site returns submitted by banks. Capital funds (i+ii) 5.933 C. it further increased to 99.95.14). the Reserve Bank had specified the per cent of minimum capital under Basel II as per cent of minimum capital under Basel I as a prudential floor.389 i) Tier I capital 3.1 3. well above the target prescribed by the Reserve Bank.8 4.1 13.70.0 17.5 14.16.9 18. declined in 2010-11 over the previous year mainly owing to a decline in Tier II CRAR ratio.1 13.3 18. followed by private sector banks and PSBs in 2010-11.13: Capital to Risk Weighted Assets Ratio under Basel I and II – Bank Group-wise (As at end-March) (Per cent) Bank group 2010 1 Public sector banks Nationalised banks* SBI group Private sector banks Old private sector banks New private sector banks Foreign banks Scheduled commercial banks 2 12.6 13.047 1.7 13. banks were advised to continue with the parallel run till March 31.3 14.72. SCBs are not constrained by capital in extending credit (Table IV.1 13.74. 2013 and the prudential floor was fixed at 80 per cent.4 3.100 4. the CRAR of SCBs remained well above the required minimum in 2010-11.95.1 per cent.4 14.808 B.666 4.0 Basel II 2010 4 13. Government plans to increase the Tier I ratio above 8 per cent to ensure the Table IV.81.97.4 per cent.565 51.0 14.74.1 12. in case of PSBs.581 ii) Tier II capital 1.98.1 3.381 6.67.2 3.3 4. in the short to medium term.4 9. the ratio was 99. The CRAR of all bank groups under Basel I remained well above the stipulated regulatory norm of 9 per cent in 2010-11 (Table IV.0 15.2 * : Include IDBI Bank Ltd.3 16.5 17.01.916 1.Report on Trend and Progress of Banking in India 2010-11 Chart IV.2 13. Further. In December 2010.4 4. CRAR (A as % of B) 13.Bank Group-wise 2010-11 10 9 8.281 1.6 16. the third year of Basel II implementation (for all foreign banks and domestic banks with international presence).9 5.24.4 8. however. the minimum capital under Basel II should be 100 per cent in the first year. Under Basel II also.0 14.36 The CRAR.1 9.5 4.3 13.0 8. Table IV.

9 and Table IV. Foreign banks. the banking sector has written off almost ten per cent of the outstanding gross non-performing loans (as at end-March 2010). which will become operational from January 1. however. the ratio was on the higher side.8 60000 10 40000 5 2.7 per cent (as on June 30.9: Trends in Gross Non-Performing Assets 25 22. 2010) as compared with the required CRAR under proposed Basel III at 10. SBI group reported the highest GNPA ratio followed by foreign banks in 2010-11. Banking sector has written off ten per cent of the previous year’s outstanding GNPAs per cent 7 6 Public Sector Banks Target 8 per cent 2009-10 2010-11 financial soundness of these banks. In 2010-11. The percentage of outstanding GNPAs written off to total outstanding GNPAs (as at end-March 2010) Chart IV. in comparison with 2008 and 2009. 2013 in a phased manner.8 120000 20 100000 GNPA Ratio.25 20000 0 2008 Absolute GNPAs 2009 2010 GNPA Ratio 2011 0 Growth in GNPAs Absolute GNPAs (` crore) . Growth in GNPAs 80000 15 15.6 Non-Performing Assets GNPAs to gross advances ratio improved 4. 4.2 22. The 75 11. however.8: Tier I Ratio of Public Sector Banks 12 11 10 9 8 improvement in asset quality was visible in both private sector banks and foreign banks.Operations and Performance of Commercial Banks Chart IV.8). Public sector banks.39 per cent in the previous year. Indian banks will not have any problem in adjusting to the new capital rules both in terms of quantum and quality. The extent of write off was lower in 2010-11 as compared with the previous year. This was mainly due to deterioration in asset quality of the SBI group.38 Even with the proposed Basel III framework. registered a decline in gross non-performing loans in 2010-11 over the previous year (Chart IV. The gross NPAs to gross advances ratio declined to 2.5 per cent.39 The asset quality of the banking sector improved in 2010-11 over the previous year. showed that the CRAR of Indian banks under Basel III will be 11. writting off of NPAs was an important factor in maintaining the asset quality of the banking sector at tolerable levels. which helped in limiting the growth of gross non-performing loans. increased in absolute terms in 2010-11 over the previous year. though at a lower rate.15). only three banks had a Tier I ratio of below 8 per cent (Chart IV.25 2. witnessed deterioration in asset quality in 2010-11 over the previous year. Quick estimates based on the data furnished by banks in their off-site returns. This indicated that during the last two years. Among the bank groups. Indian banks can comfortably cope with the proposed Basel III framework 4. however.25 2.25 per cent in 2010-11 from 2. The GNPAs.40 During the year 2010-11.39 2. however.

657 11.95 2. the difference is due to two reasons: first.9 4. Debt Recovery Tribunals (DRT) and Lok Adalats are different channels available for the banking sector to recover their Chart IV.54 2.234 3.32 1.Bank Group-wise 2010-11 20 18 16 17. Note: Difference between closing balance of gross NPAs in 2009-10 and opening balance of gross NPAs in 2010-11 in the State Bank group is due to the merger of State Bank of Indore with the State Bank of India.091 8.068 4.133 3.323 2.19 2. was particularly high for SBI group and new private sector banks (Charts IV.Bank Group-wise (Amount in ` crore) Item Public Nationalised sector banks* banks 2 59.107 14.11 0.11B).410 48.12A and IV.804 231 3.240 Gross NPAs as per cent of Gross Advances 1. In case of old private sector banks.25 1. 4.017 14. 4.7 6.186 5.698 83.87 2. the merger of Bank of Rajasthan and second.33 5.699 New private sector banks 7 14.906 70. witnessed an improvement in 201011.394 36.222 SBI Group 4 Private sector banks 5 Old private sector banks 6 3.338 30.97 1 Closing balance for 2009-10 Opening balance for 2010-11 Addition during 2010-11 Recovered during 2010-11 Written off during 2010-11 Closing balance for 2010-11 2009-10 2010-11 Closing balance for 2009-10 Closing balance for 2010-11 2009-10 2010-11 Gross NPAs 23.41 Slippage ratio calculated as addition of gross NPAs during the year as a per cent of outstanding standard assets of the previous year is another important indicator of asset quality.8 14 12 10 8 6 4 2 0 1.26 2.412 1.91 1. The slippage ratio.7 Per cent 10 9.071 1.562 14.813 1.172 2.790 6.1 4. the banking sector recovered 57 per cent of the outstanding GNPAs (as at end-March 2010) through various recovery channels.7 15.56 * : Include IDBI Bank Ltd.884 74.15: Trends in Non-Performing Assets . Foreign banks reported the highest recovery percentage followed by nationalised banks (Charts IV.12B). Source: Balance Sheets of respective banks.49 0.4 0 2008 2009 2010 2011 NBs SBI Group OPRBs NPRBs FBs 76 . At the bank group level.09 1.92 1.527 5. which increased consistently since 2008.4 2.160 5.39 2.448 1.926 59.613 2.430 1.712 8.312 1.133 7.922 2.89 3.723 41.433 58.514 77 5.137 982 0.392 18.417 4.10B).622 3.82 0.10A and IV.813 21.25 38.56 Foreign banks 8 7.53 Net NPAs as per cent of Net Advances 0.97 16.46 1.67 Scheduled commercial banks 9 84.78 0.299 97.11A and IV. Chart IV.614 2. broadly reflecting the recovery of growth.23 29.00 2.712 44.42 Recovery of GNPAs is another important component of asset quality management in the banking sector. due to the inclusion of interest reserve of `5.281 Net NPAs 12.340 22.974 1.639 23.541 2.017 6. new private sector banks recorded the lowest slippage ratio in 2010-11 (Charts IV.375 36.70 2.74 2.27 crore in the closing balance of gross NPAs in 200910 and exclusion of the same from the opening balance of gross NPAs in 2010-11 by the City Union Bank.10A: NPAs Written off as per cent of Previous Year's Gross NPAs 16 14 12 Per cent 14.0 8 6 4 2 0.09 3 36.977 1.01 0.245 3.08 0. During the year 2010-11.394 35.514 25.532 17.226 37.371 4.43 SARFAESI Act.10B: Written Off Ratio .Report on Trend and Progress of Banking in India 2010-11 Table IV.039 17.

5 0.11A: Slippage Ratio 2.0 Chart IV.12A: NPAs Recovered as per cent of Previous Year's Gross NPAs 90 68 66. 2011.2 Per cent Per cent 1.5 2.3 1. Of these.11B: Slippage Ratio .00 2008 2009 2010 2011 0 NBs SBI Group OPRBs NPRBs FBs NPAs. Further. Due to the speedy recovery in Lok Adalats. In 2010-11. registered with the Reserve Bank.8 77 . Restructuring of standard advances helped in limiting the growth of gross nonperforming loans 4.6 56. though there was an improvement over the previous year (Table IV.9 1.0 0. in 2010-11.Bank Group-wise 2010-11 80 71.17).00 2.1 Chart IV.50 2.12B: Recovery Ratio .5 1.5 49.00 1.0 1. However. 4. out of the total amount involved. had commenced operations. there was 51 per cent increase in the number of cases referred to under the SARFAESI Act.1 2.16).4 77.3 66 64 62 Per cent Per cent 70 60 50 40 30 20 10 0 2008 2009 2010 2011 NBs SBI Group OPRBs NPRBs FBs 25. In 2010-11. Out of the total security receipts issued by SCs/RCs in 2010-11. the number of cases referred to Lok Adalats witnessed a decline over the previous year.7 2. the book value of assets acquired by SCs/RCs grew at 19 per cent over the previous year. the number of cases referred to DRT registered a whopping growth of 114 per cent over the previous year.50 0. In 2010-11.8 2.6 2.00 1.50 1.Operations and Performance of Commercial Banks Chart IV.8 60 58 56 54 52 50 55. the number of cases referred to Lok Adalats is much more as compared with other channels of recovery.8 47.2 2.5 56. the percentage of amount recovered to amount involved was comparatively lower in Lok Adalats as compared with DRT in 2010-11.45 The restructuring of advances undertaken by the banking sector during the recent years also helped in reducing the GNPA ratio of the Chart IV. thirteen SC/RCs.44 The Reserve Bank issued Certificate of Registration (CoR) to fourteen securitisation companies/reconstruction companies (SCs/RCs) as at end June. 71 per cent were subscribed by the banking sector (Table IV.Bank Group-wise 2010-11 3. Moreover. more than one third was recovered in 2010-11.

233 3.9 2.Debt Recovery Tribunals.235 9. weaker sections NPAs to weaker sections advances also witnessed an increase in PSBs and private sector banks.Report on Trend and Progress of Banking in India 2010-11 Table IV.89 37.604 Amount recovered* 8 151 3.833 6.940 797 4.133 4. While the ratio of priority sector gross NPAs to priority sector advances increased in public sector banks in 2010-11 over the previous year.55 32.2 (A).87 27.203 6. of cases referred 1 i) Lok Adalats ii) DRTs iii) SARFAESI Act 2 778.48 Similarly. (4) as % of Col.642# 2010-11 Amount involved 7 5.092 30.254 14. of cases referred 6 616.384 39 1.019 78.5 2 1. PSBs registered higher increase in agricultural NPA ratio as compared with private sector banks (Charts IV. and Appendix Tables IV.4. which could be with reference to cases referred during the given year as well as during the earlier years. DRTs. The impact of restructuring of advances on the asset quality of the banking sector is provided in Box IV. witnessed an increasing trend thereafter. Agricultural sector contributed 44 per cent of total incremental NPAs of domestic banks 4.4 1.556 End-June 2011 3 74. it declined in private sector banks during the same period (Table IV.17: Details of Financial Assets Securitised by SCs/RCs (` crore) Item 1 1 Book Value of assets acquired 2 Security Receipts issued by SCs/RCs 3 Security Receipts subscribed by (a) Banks (b) SCs/RCs (c) FIIs (d) Others (Qualified Institutional Buyers) 4 Amount of Security Receipts completely redeemed End-June 2010 2 62.(7) 9 2.2 (B) and IV.18 and Chart IV.2 1.5 3.5 0 Public Sector Banks Private Sector Banks Public Sector Banks Private Sector Banks Public Sector Banks Private Sector Banks -: Nil/negligible. Despite the increase in the limit of collateral free loans Chart IV.930 11.46 The share of priority sector NPAs in gross NPAs of domestic banks witnessed an increase in 2010-11 over the previous year.797 14. #: Number of notices issued.5 0. IV.2 (C)). 4.14.47 Agricultural sector contributed 44 per cent of the total incremental NPAs of domestic banks in 2010-11.13).314 2. In 2010-11. 4.2 2.5 3.366# Amount involved 3 7.00 30.561 Col.5 4. Source: Quarterly Statement submitted by Securitisation Companies/ Reconstruction Companies (SCs/RCs).249 2009-10 Amout recovered* 4 112 3.6 3. The agricultural NPAs to agricultural advances of domestic banks.00 No.217 14.0 1 0.704 2009-10) might have contributed to the growth in agricultural NPAs in 2010-11 owing to the deterioration in credit quality.859 11.088 15. which declined in 2008-09 due to the implementation of the Agriculture Debt Waiver and Relief Scheme.872 118.5 2.16: NPAs of SCBs Recovered through Various Channels (Amount in ` crore) Recovery channel No. Priority sector NPAs to Priority Sector Advances Agriculture NPAs to Agriculture Advances Weaker Sections NPAs to Weaker Section Advances 2010 2011 78 .78 *: Refers to amount recovered during the given year.0 3.051 10. (3) 5 1. banking sector. Higher growth registered in the credit to agricultural sector (more than 20 per cent) during the last four years (2006-07 to Table IV.13: Ratio of NPAs to Advances 4.13 and IV.(8) as % of Col.4 3 Per cent 2.018 12.0 4 3.2 2.269 Col. 2008.

there was always a concern how many of these restructured standard accounts will fall back into the NPA category over a period of time as these borrowers were facing temporary cash flow problems in the wake of the global financial turmoil.28.93.3 (B)).50 extended to the SME sector from `5 lakhs to `10 lakhs in May 2010.088 Total Gross NPAs to Total Gross Advances 2.01 Scenario-III – 100 per cent of Restructured Standard Advances turning NPAs Scenario-III NPAs 1.66 per cent as at end-March 2011. Under the extreme assumption that the entire restructured standard advances would have become NPAs if these were not restructured.83 12. Though it was prescribed in August 2008 that accounts classified as standard assets should be immediately reclassified as sub-standard assets upon restructuring.53 14.82 10. the NPA ratio of the SME sector witnessed a decline in 2010-11 over the previous year. Results are provided in the Table below.79 19.860 Scenario-III NPA Ratio 4. in January 2009.93 2011 over 2010 7 22. and Appendix Tables IV. At the system level. which were standard as on September 1.116 Scenario-I NPA Ratio 2. if any.19 19.379 97. The special regulatory treatment allowed to the standard accounts helped the banking sector to limit the growth of gross nonperforming advances.05. different scenarios have been developed assuming different values for the percentage of restructured standard advances falling back into the NPA category.Operations and Performance of Commercial Banks Box IV. In sum. Thus.94 2. provided certain conditions are met.20.01 per cent as at end-March 2011 as against the reported GNPA ratio of 2. Data on restructuring of advances by bank groups since September 2008 indicate that public sector banks account for major portion of the restructuring of standard advances.99 2.22 13.77 2.78.24 3. one important measure was allowing banks to restructure their advances.35 Restructured standard advances as % of gross advances 2.66 Scenario-I – 15 per cent of Restructured Standard Advances turning NPAs Scenario-I NPAs 77.317 1.44 2.73 192.16 per cent as at end-March 2009 to 2.491 1.06.84 Total Gross Advances 27.816 94.18.60 5.05 60.86 68.98 3.19 36.12 17. sub-standard and doubtful.21 38.222 81. the Reserve Bank had proactively taken many steps to arrest the downward spiral. the priority sector NPAs to 79 priority sector advances was generally high in PSBs as compared with private sector banks (Table IV.834 1. The exceptional/special regulatory treatment permits treating standard accounts as standard after restructuring. the restructured standard advances as a percentage of gross advances increased from 2.46 5.35 per cent (Table).859 Total Gross NPAs 68.62 22.601 1.13 24.991 Of which Restructured 60. in the economy and the banking sector.4: Impact of Restructuring of Advances on the Asset Quality of the Banking Sector In the aftermath of the global financial turmoil in 2007. To assess the impact of restructuring of standard advances on the asset quality of the banking sector. However.10. . the gross NPA ratio would have been as high as 5.74 Scenario-II – 25 per cent of Restructured Standard Advances turning NPAs Scenario-II NPAs 83.01 31.996 1.537 2.71.17.13. Accordingly. an exceptional/special regulatory treatment was granted to all accounts.17 2010 over 2009 6 17.350 31.080 39.50 2. as a one-time measure. Chart IV. Amongst those steps. the Reserve Bank issued guidelines on restructuring of advances by banks in August 2008 by which banks were allowed to restructure accounts of viable entities classified as standard.079 Standard Advances 27.16 2.572 32.64 14.896 40. 2008.59 27.279 96.98 22. Table: Impact of Restructuring on Asset Quality of SCBs (Amount in ` crore) Item March 2009 1 2 All SCBs March 2010 3 March 2011 4 Y-on-Y Growth rate 2009 over 2008 5 19. the impact of restructuring of advances on the asset quality of the banking sector will be shaped by the per cent of restructured standard accounts falling back into the NPA category.00.90.12.25.3 (A) and IV.684 Scenario-II NPA Ratio 2.

9 SBI group 5.353 7.220 2.034 14.830 28.0 100.3 13.: Nil/negligible. **.3 27.2 per cent in 2010-11 as compared with the previous year’s growth of 22 per cent.068 3 53.1 22. Per cent – Per cent of total NPAs.6 All SCBs 12.482 6.594 11.908 25.229 10.630 9.0 100.8 44. there was an increase in the (Amount in ` crore) Provisioning for GNPAs witnessed higher growth 4.612 3.0 100.755 10.694 13. net NPAs to net advances ratio declined in 2010-11 over 2009-10.045 42.2 41.384 17.0 100.940 15. not strictly comparable with 2010.9 18.6 12.2 Of which Public Sector Amt.0 100.370 16.567 4. Per cent 1 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2 30.1 14.4 16.950 11 46. Per cent 14 57.613 1.8 58.981 19.9 40.5 24.include IDBI Bank Ltd.470 42.4 0.51 In accordance with the decline in the gross NPA ratio in 2010-11 over the previous year.3 23.754 1.685 89.1 0.0 8.2 12.4 11.0 100.5 Old private sector banks 13.599 3.353 16.023 2. Per cent 4 8.053 39. the ratio of outstanding provisions to gross NPAs improved in 2010-11 over the previous year (Table IV.172 269 417 1. – Amount. However.2 49. Reflecting the increase in provisions.0 100.7 Private sector banks 6.7 51. for the year 2011 data pertain to ‘micro and small enterprises’ and for the year 2010 data pertain to ‘small scale industries’. Amt. the standard assets to gross advances ratio witnessed an improvement during the same period. Source: Based on off-site returns (domestic) submitted by banks.383 25.179 3.139 1.869 3.298 475 551 664 746 12.3 6.50 Net NPAs registered a lower growth of 8 per cent in 2010-11 as compared with the previous year’s growth of 23 per cent. Resultantly.890 12.9 631 17.3 48.4 73.5 20.Report on Trend and Progress of Banking in India 2010-11 Chart IV.537 14.4 5.7 76.5 Nationalised banks** 24.7 11.660 5 14.676 15.9 15.773 14.1 10.589 5. .7 12.0 17.453 29.1 20.848 41.2 1.1 New private sector banks 4.802 15.5 5.562 17.678 10.1 13. hence. Per cent 8 9 Non-Priority sector Amt Per cent 10 26.611 13.638 7 Others Amt.1 22.916 1.499 15.1 17.330 14.245 19.224 35. reflecting increase in provisioning for NPAs.6 1.0 100.5 Amt.9 0.9 44.999 2. Per cent 6 11.9 77.0 100.7 43.971 3.9 4.1 13.668 10.14: Composition of Incremental NPAs of Domestic Banks 2010-11 27.8 0.6 47.2 55.3 12.017 15 100.49 In sync with the growth in GNPAs.1 59.417 17.592 13.9 18. the provisioning for NPAs registered a growth of 25 Table IV.823 1.3 56.047 35.1 55.0 100.0 100.573 12.5 #: Data for 2011 pertains to ‘micro and small enterprises’ and.8 50.1 56.268 2.9 43.4 7. * : Excluding foreign banks. Net NPAs registered lower growth 4. 80 . Per cent 12 524 278 280 273 244 6 153 153 524 431 13 0.277 74.8 760 5.301 71.8 Amt.7 Of which Small scale industries# Amt.1 7.6 26.140 17.7 0.424 2.2 869 24.487 5. Standard assets to gross advances ratio improved 4.7 72.0 100.741 9. 44.095 10.640 46.2 20.02 0.0 Total NPAs Public sector banks 20.2 21.340 8.2 722 5.1 0.5 11.792 4.18: Sector-wise NPAs of Domestic Banks* Year Priority sector Agriculture Amt.7 Agriculture Other Priority Sector Small Scale Industries Non-Priority Sectors Note: Under the item ‘small scale industries’.0 100.6 1.19).4 52.147 1.907 21.

447 3.061 22.758 10.4 74.37 0.24 * : As per cent to gross advances. in 2010-11 owing to the corresponding growth in the capital base of the banking sector.190 44.19: Trends in Provisions for Non-Performing Assets – Bank Group-wise (Amount in ` crore) Item Public sector banks 2 28.3 66.61 97.440 2. **: Include IDBI Bank Ltd.133 20.73.727 6.2 SBI Group 2 Private sector banks 2.841 3.73.91.99 0.463 2.89 0.922 51.37 0.05 0.60.815 4.590 1.989 1.46 97.0 Memo: Gross NPAs 74.31 1.30 97. Bank group No.81 0.699 61.86 1.187 29.238 758 1.20: Classification of Loan Assets .93 0.293 15.256 34.33 0.26.3 Old private sector banks 6 2.37 1.383 33.1 Nationalised banks** 1.Operations and Performance of Commercial Banks Table IV.46.368 Per cent* 7 1.75 Sub-standard assets Amount 6 28.150 13.034 19. the leverage ratio.83.back of excess during the year As at end-March 2011 4 10. there is no evidence of credit boom 4.32 0.7 75.94 0.808 5.81 97.369 13.1 9 43.53 0.086 14.93 1.19 1. as in the previous year.33 0.973 18.1 Old private sector banks 2.782 5.93.980 1.5 indicated that the robust credit growth during 2010-11 did not Leverage Ratio Leverage ratio remained unchanged 4.126 3.97 1.392 45.02 1.552 18.18 1.183 2.Bank Group-wise (As at end-March) (Amount in ` crore) Sr.77 98.864 580 626 1.27 97.81.76 97.601 4.413 46.20).56 0.349 13.7 76. remained constant at 6.149 749 2. Note: Constituent items may not add up to the total due to rounding off.348 21.213 38.99 0.914 18. 81 .60.680 Nationalised banks* 3 17.55 0.530 1.277 4.818 15. The analysis provided in Box IV. Source: DSB Returns (BSA) submitted by respective banks.395 1.166 2.95 Doubtful assets Amount 8 25.745 1.180 15.271 13.03 97.68 95.520 21. ratio of doubtful assets to gross advances ratio in 2010-11 over the previous year.562 41.94 1.52 2.760 Per cent* 5 97.67 1.20 0.473 9.06 Loss assets Amount 10 5.085 Per cent* 9 0.35 0.110 33.69 98.415 Per cent* 11 0.44 0.401 11.33 0.9 SBI group Private sector banks 5 10.720 12.9 47.94 1. The substandard assets as a ratio of gross advances declined in 2010-11 over the previous year (Table IV.14 0. Credit Boom Despite higher credit growth.6 per cent Table IV.282 10.21 0.641 36.898 6. 1 2 1 Public sector banks 1.52 Despite the higher growth in balance sheet during 2010-11.60.614 Ratio of outstanding provisions to gross NPAs (per cent) End-March 2010 47.317 42.240 62.705 3. it is important to monitor the development of credit bubbles in the economy.83 1.11 97.280 2.94.04 0.040 97.909 3.472 7.865 42.742 27.413 8.541 62.222 48.111 8.24 0.750 6.09.178 2.803 6.36 0.466 3. Source: Balance sheets of respective banks.586 2.13 97.490 30.05 98.2 * : Include IDBI Bank Ltd.842 4.4 End-March 2011 49.00 97.953 8.311 1.52.2 1 Provisions for NPAs As at end-March 2010 Add : Provisions made during the year Less : Write-off.795 1.5 55.45 0.2 New private sector banks 3 Foreign banks Scheduled commercial banks 3 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 Year Standard assets Amount 4 26.590 10.854 4.2 Foreign Scheduled banks commercial banks 8 4.534 32.15 0.253 7.066 1.72.674 10.068 58.33 1.848 6.06 0.791 34.087 8.929 1.02 1.19 0.05 1. write.7 New private sector banks 7 8.637 1.0 51.74 97.215 8.755 3.53 From the point of view of banking sector stability.34 0.27.917 54.

C and D).5 times of standard deviation of cyclical credit in the early 2010-11. which deserves careful monitoring going forward (Charts A. ‘Household Credit in the New Europe: Lending Boom or Sustainable Growth?’. the credit to NBFCs was in an upturn during 2010-11. The Liquidity Adjustment Facility (LAF) window of the Reserve Bank. banks were operating under tight liquidity conditions.5 0 1 0 -1 -2 -3 2007Q1 2008Q1 -0.877) Cyclical Infrastructure Credit Chart C: Credit Boom in Housing Credit 4 3 2 Per cent Per cent Chart D: Credit Boom in Credit to NBFCs 1 0. To analyse credit booms. the analysis was also undertaken at the sub-sectoral level. However. switched into deficit mode at end-May 2010 and largely remained in deficit for rest of the financial year 2010-11. Credit booms can seriously undermine the financial soundness of the banking sector owing to deterioration in credit quality. UK.664) Cyclical Credit Ceiling (1.901) 2011Q4 Cyclical Housing Credit Ceiling (0. (2006) is used here. Further. Discussion Paper No. Autonomous factors like the centre’s surplus balance with the Reserve Bank and currency in circulation were key drivers of liquidity conditions in 2010-11. al. B. despite the higher credit growth. As per the said methodology.Report on Trend and Progress of Banking in India 2010-11 lead to development of any credit boom in the economy both at the aggregate and sub-sectoral level (Box IV. the methodology developed by Coricelli et. the cyclical component of credit to the infrastructure sector crossed the ceiling of 1. Centre for Economic Policy Research. B. Reference: Coricelli.5 times the standard deviation of the cyclical credit. Liquidity Due to autonomous factors banks operated under tight liquidity conditions 4. Reflecting the tight liquidity conditions and regular hikes in the policy rates by the Reserve Box IV.5 2007Q1 2008Q1 2009Q1 2009Q1 2010Q1 2010Q1 2006Q2 2011Q1 2007Q2 2006Q2 2008Q2 2007Q2 2008Q2 2009Q2 2009Q2 2010Q2 2010Q2 2011Q1 2006Q3 2011Q2 2007Q3 2006Q3 2008Q3 2007Q3 2008Q3 2009Q3 2009Q3 2010Q3 2006Q4 2011Q3 2007Q4 2006Q4 2007Q4 2008Q4 2008Q4 2009Q4 2009Q4 2010Q3 2010Q4 2010Q4 2011Q2 Ceiling (1.728) Cyclical Component of Credit to NBFCs 82 2011Q4 -4 2011Q4 -20 -3 . As along with the robust growth of aggregate non-food credit.5: Robust Credit Growth and Credit Booms – An Analysis of the Indian Banking Sector The robust credit growth experienced by the Indian economy during 2010-11 raised concerns with regard to the development of credit booms in the economy.54 During 2010-11. Fabrizio. The results are provided in Charts A. a credit bubble or boom is present when the cyclical component of credit exceeds 1. C and D.5 -1 -1. Chart B: Credit Boom in Infrastructure Credit 4 3 2 1 0 -1 -2 5 0 -5 -10 -15 2007Q1 2008Q1 2009Q1 2010Q1 2006Q2 2011Q1 2007Q2 2008Q2 2009Q2 2010Q2 2006Q3 2011Q2 2007Q3 2008Q3 2009Q3 2010Q3 2006Q4 2011Q3 2007Q4 2008Q4 2009Q4 2010Q4 2011Q4 2007Q1 2008Q1 2009Q1 2010Q1 2006Q2 2007Q2 2008Q2 2009Q2 2010Q2 2011Q1 2006Q3 2007Q3 2008Q3 2009Q3 2010Q3 2011Q2 2006Q4 2007Q4 2008Q4 2009Q4 2010Q4 2011Q3 2011Q3 Ceiling (12. Fabio Mucci. though moderated thereafter. Chart A: Credit Boom in Aggregate Non-Food Credit 20 15 10 Per cent Per cent The results indicated that at the aggregate level there was no credit boom in the economy during 2010-11. and Debora Revoltella (2006). The liquidity conditions have continued to remain in deficit mode during 2011-12 so far. some of the sectors such as credit to NBFCs and credit to infrastructure sector also witnessed high growth in 2010-11. 5520. The cyclical component of credit was obtained from Hodrick-Presscott filter.5). London. which had remained in surplus mode for nearly 18 months.

57 In sync with the higher growth rates.value 0. the highest credit growth was observed in advances against shares followed by advances against FCNR(B)/NRNR deposits and vehicle loans. In tune with the overall moderation in the growth of industrial credit. there was an improvement in the growth of aggregate nonfood credit in 2010-11 as compared with that in the previous year. However.524*** 4. It is pertinent to note that despite the enhancement of limit (from ` 50. CBLO and Market Repo) moved in tandem with the call rate. Credit growth to agriculture and industry moderated 4.000 crore during 200910.096** p. but generally remained below it during this period. and professional services.e.000 to `1. the credit flow to the agricultural sector decelerated in 2010-11 over the previous year. This was in contrast to the trend observed during the last four years. the effective interest rate in respect of aggregate CD issuances increased to 9. after hovering around the lower bound of the informal LAF corridor for a long period. **: significant at five per cent level. The rates in the collateralised segments (i. 83 . As this was a one-time event. In contrast. the credit to infrastructure sector also reported lower growth in 2010-11 as compared with that in the previous year. The sharp decline in the growth of agricultural credit was partly on account of definitional changes effected during FebruaryMarch 2011. empirical estimation suggests that these long-term loans increase the asset liability mismatches in the banking sector (Table IV. credit to non-banking financial companies (NBFCs) reported the highest growth rate followed by tourism. In line with the rise in rates in other money market segments.000).. credit to infrastructure sector may moderate going forward. The telecommunications sector was the major contributor of this higher credit growth. the share of agricultural credit in the total outstanding nonF-Statistic 2. The average issuance of certificates of deposit (CDs) remained high during 2010-11.55 On a y-o-y basis. credit growth to infrastructure sector was substantially high. 6 Null Hypothesis Infrastructure Loans does not granger cause ALM Infrastructure Loans does not granger cause ALM gap in the ‘more than five years’ ***: significant at ten per cent level. The major drivers of this overall credit growth during 2010-11 were credit to services sectors and personal loans. which was mainly due to credit extended for participation in the 3G spectrum auctions. Within the services sector. the call rate. firmed up since end-May 2010 and mostly remained above the upper bound of the informal corridor in the second-half of 2010-11. Banks and primary dealers were the major groups of borrowers in the collateralised segments. Shares of services sector and personal loans in total non-food credit increased 4.09 0. hotels and restaurants.000 crore as compared to around `17. for the waiver of margin/security requirements for agricultural loans in June 2010. However.Operations and Performance of Commercial Banks Bank.21)6.00.02 5.07 per cent as at end-March 2010. Within personal loans. The average issuance during 2010-11 was higher at around `33.56 The growth of credit to agriculture sector and industrial sector witnessed moderation during 2010-11 in comparison with those in the previous year.96 per cent at end-March 2011 from 6. Sectoral Deployment of Bank Credit Growth of aggregate non-food credit improved 4. the shares of services sector credit and personal loans increased in the total outstanding nonfood credit as at end-March 2011 in comparison with the previous year. in comparison with the growth in total non-food credit and growth in industrial credit.

6 Note: 1) Data are provisional and relate to select banks. First.79.0 -10.26.7 4.85.60.577 42.9 30 20 10 42.8 6. It may require careful monitoring at the present juncture also owing to a number of reasons. However.5 -0.15)8. which offers employment to large sections of population received only 13 per cent of total non-food credit as at end-March 2011.8 17.2 18.1 38.20.0 15.1 29. housing credit witnessed higher growth 4.11.9 Agriculture Agriculture Industry Industry 16. Further.15)7.2 23.3 27.00. housing loans being sensitive to interest rate increases might increase the possible Based on data taken from Basic Statistical Returns.15: Shares of Population Groups in Agricultural and Industrial Credit 80 67.110 18.007 50 Per cent 22.929 Credit Card Outstanding 20. 4. It may be recalled that growth in personal loans was one of the major factors behind the high credit growth phase of the mid-2000s.13.6 17.849 10.7 -28.Report on Trend and Progress of Banking in India 2010-11 Table IV. the credit to telecommunications sector. Industry 13.6 40 40. 4.451 Of which: Infrastructure Loans 3. Agriculture and Allied Activities 4.633 Of which: Housing 3. food credit recorded a decline.6 23. Services 7.16.5 5.5 25.75. leaving a small share for other population groups (Chart IV.59 The share of industrial credit also witnessed a decline in the outstanding non-food credit in 2010-11 as compared with the previous year.61 Personal loans witnessed a growth of 17 per cent in 2010-11 over the previous year. The shares of rural.1 7.4 16. 84 Industry 0 .801 38.4 6.6 23. which recorded a growth of 69 per cent in 2010-11 over the previous year.46.58 Rural areas accounted for almost 39 per cent of total agricultural credit and another 28 per cent was disbursed in semi-urban areas as at end-March 2010.3 17.790 Of which: Tourism. Source: Sectoral and Industrial Deployment of Bank Credit Return (Monthly).0 12.888 3. more than 70 per cent of the total industrial credit was disbursed in metropolitan areas.8 27.9 21.355 20. even with the decline. various issues.21: Sectoral Deployment of Gross Bank Credit (Amount in ` crore) Sector 2009-10 Amount Percentage Variation 1 2 3 2010-11 Amount Percentage Variation 4 5 Chart IV.26.8 36.0 16.863 4.710 9.7 Agriculture Industry 70 60 1.333 24.133 2. almost half of the total non-food credit went to the industrial 7 8 sector in 2010-11. Personal Loans 5.098 43.11. 4.1 37.40.836 1.4 54.9 13. Agricultural sector.00.0 71. 2) The slowdown in credit to agriculture was largely on account of definitional changes effected during February-March 2011. hotels and restaurant 19. also witnessed an increase in its share in the total infrastructure credit.60 As at end-March 2010.85.128 Non-Banking Financial Companies 1.729 1.410 Commercial Real Estate Loans 92. Based on data taken from Basic Statistical Returns 2009-10. semiurban and urban areas in total agricultural credit witnessed an increase during the period 2005-06 to 2009-10.5 5.145 Education 36.441 Total Non-Food Gross Bank Credit (1 to 4) 30.3 14. Despite policy tightening.8 Rural Semi-Urban Urban Metropolitan 2005-06 2009-10 16. the share of infrastructure increased from 29 per cent in 2009-10 to 33 per cent in 201011. Out of the total industrial credit.4 Agriculture 9.9 4. while that of metropolitan areas witnessed a decline during the same period (Chart IV.67.655 6.372 3.

retail trade.4A.841** 4.8) 87. majority of personal loans are long-term loans and empirical analysis indicated that it causes asset liability mismatches in the long-term buckets9.8) 90.6) 92.48. in 2010-11 also. export credit is a part of priority sector lending of foreign banks. As in the previous year.5A and IV.625 (15.16A and IV. However.62 The priority sector lending10 witnessed a growth of 18 per cent in 2010-11 over the previous year. a few banks could not meet the priority sector lending F-Statistic 2.3) 3.7) 8. in December 2010.463 (17. In 2010-11.64 Foreign banks have a slightly different norm for priority sector lending as the target for them is set at 32 per cent of ANBC. banks have lent more than 40 per cent of their ANBC to priority sectors.14. whichever is higher. at the aggregate level.04 0. 10 As per the extant norms. whichever is higher as on March 31st of the previous year to priority sectors.136 (15. The sub-target prescribed for agriculture at 18 per cent of ANBC was also achieved by banks in 2010-11 (Table IV. However. however.340** p. at the bank-level. broad categories include small enterprise sector. public sector banks and private sector banks have to lend 40 per cent of their adjusted net bank credit (ANBC) or credit equivalent amount of off balance sheet exposures.22: Priority Sector Lending by Public and Private Sector Banks (As on the last reporting Friday of March) (Amount in ` crore) Item Public Sector Banks 2010 1 Priority Sector Advances# Of which.825 (13. Micro and Small Enterprises 2.319 (13.9) 2011P 3 (41.4B.669 2. and may have a significant impact on GNPAs of the banking sector. Further.991 (16. IV.02 Null Hypothesis Personal Loans does not granger cause ALM Personal Loans does not granger cause ALM gap in the ‘three to five years’ **: Significant at five per cent level.14.4) 2011P 5 (46. Third. education and housing. microcredit. a sizable portion of personal loans (except housing and vehicle loans) are unsecured loans. However. IV. it is a concern that 18 out of 26 public sector banks could not meet the target set for agricultural advances in 2010-11. the growth of agricultural advances decelerated to 9 per cent in 2010-11 as compared with the growth of 23 per cent in the previous year. Table IV. Note: Figures in parentheses represent percentages to Net Bank Credit/ Adjusted Net Bank Credit (ANBC)/Credit equivalent amount of OffBalance Sheet Exposures (CEOBSE).6) 3.63 The bank-wise data on priority sector advances as per cent of ANBC. Among the private sector banks.1) 64. at the aggregate level. only one bank could not meet the priority sector lending target in 201011.76.28.3) 4. the Reserve Bank had strengthened the prudential norms relating to housing loans to prevent excessive leverage.737 (19.615 2. In fact. Second. priority sector lending target was met by the banking sector 4.857 (16.5) Private Sector Banks 2010 4 (45.value 0. despite policy tightening. #: In terms of revised guidelines on lending to priority sector lending. ten private sector banks did not meet the target set for agricultural advances in 2010-11 (Charts IV. and Appendix Tables IV.828 Credit to Priority Sectors At the aggregate level. its impact may be felt subsequently. 9 P: Provisional. housing credit witnessed higher growth in 2010-11 over the previous year. However. Further. foreign banks achieved the target of priority sector lending.5B). 4.777 10. indicated that seven out of 26 public sector banks were not able to meet the priority sector lending target of 40 per cent of ANBC in 201011.Operations and Performance of Commercial Banks defaults by borrowers.4) 2 (41.16B. Some public sector banks could not meet the priority sector lending target 4.76. 85 .63.72. Since the tightening was towards the end of the financial year. Agriculture Of which.22).

viz. though foreign banks achieved the target of export credit at 12 per cent. exposure to capital market. and Appendix Tables IV. The highest growth was reported by consumer durables followed by auto loans in 2010-11 over the previous year.17A: Priority Sector AdvancesTarget and Achievement 2010-11 120 100 80 Per cent 60 40 Per cent 50 40 30 20 20 0 10 0 Banks Target (32 per cent) Foreign Banks Banks Target (12 per cent) Foreign Banks Note: Priority sector lending target will only be applicable from 2011-12 onwards to banks. some banks could not meet the target (Table IV. In 201011.23.17B.17A and IV. at the aggregate level. which are subject to fluctuations in prices. at the bank level.24). The only sub-segment. which decelerated during the recent past registered higher growth in 2010-11. Credit to Sensitive Sectors Credit to sensitive sectors registered higher growth 4.65 The retail loan segment of the banking sector. This is one of the reasons for zero values. total retail portfolio of the banking sector. The sensitive sector credit growth reported by the SBI group is particularly noteworthy at 41 per Chart IV. credit to sensitive sectors recorded higher growth as compared with the previous year.4C and IV..Target and Achievement 2010-11 80 70 60 Retail Credit Retail loan segment registered higher growth 4.5C). which reported negative growth rate in 2010-11 over the previous year was credit card receivables (Table IV.16A: Priority Sector Lending: Target and Achievement 2010-11 70 65 60 55 Chart IV. Importantly.17B: Export Credit . Charts IV. housing loans continued to constitute almost half of the Chart IV. The housing loans witnessed a moderate growth of 16 per cent in 2010-11 over the previous year.Report on Trend and Progress of Banking in India 2010-11 Chart IV. which have started their operations in 2010-11.66 Credit to sensitive sectors. 86 . and as such leads to booms in loans and advances. direct and indirect lending to real estate sector and credit to commodities sector presumes significance in the context of financial stability as these are the sectors.16B: Agricultural Advances: Target and Achievement 2010-11 30 25 20 Per cent 45 40 35 30 25 20 Banks Target (40 per cent) Public sector banks Private sector banks Per cent 50 15 10 5 0 Banks Target (18 per cent) Public sector banks Private sector banks target in 2010-11. Further.

67 Despite higher growth.8 24.3 50. 2 325 4.247 Grand Total 87 .501 12.243 7.43.346 2.1 4 42. 4. banks did not raise any resources from the global capital markets. through public issues witnessed substantial increase in 2010-11. broad categories include agriculture.752 (19.0 -44. The capital raised by banks was through rights issue.487 2011P Percentage to ANBC/ CEOBSE 5 40.155 2.2 19.69 Resources raised by banks through private placements declined by 40 per cent in 2010-11 over the previous year. retail trade. persistence of Euro zone sovereign debt problems and political tensions in the MENA region have negatively affected overall 6. Source: Based on Off-site returns (domestic). mainly on account of private sector banks.Operations and Performance of Commercial Banks Table IV.972 (18. resources raised by banks Table IV. 4.032 21.332 Debt 3 Private Sector Banks Equity 4 313 915 Debt 5 Equity 6 638 5.862 3. cent as compared with the industry average of 22 per cent in 2010-11.15.0 -6. Operations of Scheduled Commercial Banks in Capital Market Resources raised by banks through public issues increased 4. 5.555 18.147 12. which registered a decline of over 64 per cent (Table IV. particularly during March 2011 when 70 per cent of the total resources were raised.53. whichever is higher.70 During 2010-11.396 3 20. 3.364 4.25: Public Issues from the Banking Sector (` crore) Year Public Sector Banks Equity 1 2009-10 2010-11 -: Nil/Negligible. 2. 2006.5 36. 2 59.23: Priority Sector Lending by Foreign Banks (As on the last reporting Friday of March) (Amount in ` crore) Sector 2010 to ANBC/ CEOBSE 1 Priority Sector Advances # Of which: Export credit Of which: Micro and Small Enterprises* 21.22. This was mainly due to the growth in real estate credit. The share of sensitive sector credit as well as real estate sector credit to total loans and advances was the highest in foreign banks followed by new private sector banks in 2010-11 (Appendix Table IV.26).565 78.0 25.947 6.5 4.2 -13. education and housing.24: Retail Portfolio of Banks (Amount in ` crore) Item Outstanding as at end-March 2010 1 1. 4.2 -28. Resumption of FII inflows and a moderate recovery in the secondary market enabled banks to raise resources.00. the share of credit to sensitive sectors in total loans and advances witnessed a decline in 2010-11 as compared with the previous year due to the offsetting jump in the growth of total loans and advances.960 33. 4. Housing Loans Consumer Durables Credit Card Receivables Auto Loans Other Personal Loans Total Retail Loans (1 to 5) 2 3.0 66.9 P : Provisional.0) 2011 3 3.5 Amount Percentage Amount Table IV.25).247 Total Debt 7 8=(6+7) 638 5.5 27. Small and Medium Enterprises Development Act.5) Percentage variation 200910 4 20.7 21. Note: ANBC/CEOBSE – Adjusted Net Bank Credit/Credit equivalent amount of Off-Balance Sheet Exposures.655 1. The amount of total loans and advances are as provided in the off-site returns (domestic) of SCBs. *: The new guidelines on priority sector advances take into account the revised definition of small and micro enterprises as per the Micro.6 -3.68 In contrast to the trend observed during the last two years.9 201011 5 16. micro credit. #: In terms of revised guidelines on lending to priority sector.67.6).03. The environment of sluggish growth recovery in the advanced economies. with public sector banks accounting for the bulk of the increase (Table IV.527 Note: Figures in parentheses represent percentage share of retail loans in total loans and advances. small enterprises sector.

resource mobilisation through Euro issues (Table IV. of Amount Issues raised 1 Private Sector Banks Public Sector Banks Total 2 18 63 81 3 17. ADRs/GDRs. the price earning (P/E) ratio of nine out of the 38 banks was lower as compared with the previous year.A.19).American/Global Depository Receipts. -: Nil/Negligible. FCCBs – Foreign Currency Convertible Bonds.73 In 2010-11. Shareholding Pattern in Scheduled Commercial Banks Government shareholding in PSBs was well above the statutory requirement 4.27). which had recorded significant gains in 2009-10 continued to grow in 2010-11. of Issues 4 5 25 30 Amount raised 5 6.27).2010-11 140 7.A. reflecting positive market sentiments given the healthy growth in credit demand (Chart IV.Report on Trend and Progress of Banking in India 2010-11 Table IV. Government shareholding in public sector banks ranged roughly between 57 per cent and 85 per cent in 2010-11. This share further increased in 2011-12 (during April and June). four banks registered decline in their stock prices over the previous year.A. though the minimum statutory requirement is 51 per cent (Table IV.29 and Chart IV.762 40.863 2010-11 No.18: Relative Performance of BSE Bankex and BSE Sensex . Similarly. Chart IV. BSE Bankex outperformed BSE Sensex 4. 4. albeit at a slower pace.: Not available. Bank stocks witnessed an increase in their share in total turnover in 2010-11 over 2009-10. Table IV.979 Volatility of BSE Bankex was higher than that of BSE Sensex 4.74 In 2010-11. The volatility of BSE Bankex was higher than that of BSE Sensex in 2010-11 as in the previous year. share of bank stocks in total market capitalisation witnessed a decline at end June 2011 over end March 2011 (Table IV.101 23. Note: Data for 2010-11 are provisional. 2010-11 3 N.063 20.72 Out of 38 listed banks. Source: Merchant Bankers and Financial Institutions.27: Resource Mobilisation through Euro Issues by the Banking Sector (` crore) Item 2009-10 2 843 843 843 N. the share of bank stocks in total market capitalisation also increased in 2010-11 over the previous year. Performance of Banking Stocks in the Secondary Market Despite concerns.916 26. the BSE Bankex outperformed BSE Sensex during 2010-11 as in the previous year.71 The domestic stock market.28 and Appendix Table IV. Value of Index rebased to 100 130 120 110 1 Euro Issues (i) ADRs a) Private b) Public (ii) GDRs a) Private b) Public (iii) FCCBs 100 90 3-March-11 18-November-10 16-September-10 30-December-10 10-February-11 9-December-10 20-January-11 7-October-10 28-October-10 26-August-10 31-March-11 1-April-10 22-April-10 13-May-10 5-August-10 24-June-10 15-July-10 3-June-10 BSE Bankex BSE Sensex N.26: Resources Raised by Banks through Private Placements (Amount in ` crore) Category 2009-10 No.18). 88 .7). Despite concerns over the net interest margins and rising provisions. However. reflecting the risk in trading in these stocks (Table IV.

91 11.19: Government Shareholding in PSBs (end-March 2011) 90.3 3. Turnover and Capitalisation of Bank Stocks Item 1 1.5 11.8 -37..9 8.41 10. **: As at end-period.0 75. only four banks. @: Defined as coefficient of variation.28 201011 4 24. Twelve out of 21 public sector banks had only less than ten per cent foreign shareholding in 2010-11. foreign Chart IV. had foreign shareholding of more than 49 per cent in 201011. Source: BSE. the foreign shareholding was more than 20 per cent in 2010-11. Share of capitalisation of bank stocks in total market capitalisation** 200809 2 -41.75 The foreign shareholding in public sector banks continued to be at a lower level in 2010-11 as in the previous year. –: Nil/neglegible.20 and Appendix Table IV.61 200910 3 137.55 *: Percentage variations in indices on a point-to-point basis.3 4.9 10. SBI and IDBI Bank Ltd.96 Table IV. three new private sector banks and one old private sector bank. 2011. the ceiling put forward by the Reserve Bank for new banks for the first five years of their operations in the draft guidelines issued in August 2011 (Chart IV. Notably.3 6. Chart IV.48 201112# 5 -3.20: Foreign Shareholding in Domestic Banks (end-March 2011) 80 70 60 50 Per cent 85.5 16. while rest of the public sector banks had less than 20 per cent foreign shareholding.8).9 10.6 -2. viz.0 Per cent 70. In nine out of 14 old private sector banks.3 9. #: April-June 30.2 9.0 60. Return* BSE Bankex BSE Sensex 2.0 shareholding in all private sector banks was less than 74 per cent. *: Including 19 nationalised banks.28: Risk-Return Performance.0 0 50.0 Banks Banks Ceiling 51 per cent PSBs 49 per cent OPRBs NPRBs PSBs 74 per cent 89 .9 23.Operations and Performance of Commercial Banks Table IV.2 80.29: Number of Public Sector Banks* Classified by Percentage of Private Shareholding (end-March 2011) Class of shareholding Private Private Total resident non-resident private shareholding shareholding shareholding 2 1 upto 6 upto 9 upto 2 upto 3 10 6 1 9 4 3 12 4 - 1 Up to 10 per cent More than 10 and 20 per cent More than 20 and 30 per cent More than 30 and 40 per cent More than 40 and 43 per cent 8. All the new private sector banks had a foreign shareholding of more than 30 per cent. Volatility@ BSE Bankex BSE Sensex 3. the regulatory maximum prescribed by the Reserve Bank.0 80.0 45.0 40 30 20 65. Share of turnover of bank stocks in total turnover 4. 4.3 9.0 24.03 11. However.0 10 55.

77 Between September 2010 and August 2011.79 During the recent years. were the front runners in adopting technology. ICICI Bank Ltd. viz. 4. introduction of automated teller machines (ATMs) enabled customers to do banking without visiting the bank branch.81 During 2010-11. The largest branch network of foreign banks in India was that of Standard Chartered Bank followed by HSBC Ltd. In 2010-11 the number of ATMs witnessed a growth of 24 per cent over the previous year. State Bank of India undertook the largest expansion of foreign operations through opening five new offices abroad (Table IV. Among private sector banks.9). Technological Developments in Scheduled Commercial Banks Technological upgradation continued 4. Rabobank International and Woori Bank to open one branch each in India. In 2010-11.3 per cent in 2010-11 from 45. State Bank of India had the largest network of foreign offices as at end August 2011 followed by Bank of Baroda. Foreign operations of Indian banks expanded 4.30). More than 65 per cent of the total ATMs belonged to the public sector banks as at end March 2011 (Table IV. The share of PSBs in outstanding debit cards witnessed an increase during the recent . Sumitomo Mitsui Banking Corporation to open a representative office in India. In sync with the trend observed in case of ATMs. However. which started their operations in the mid nineties followed by liberalisation. Permission was also granted to one foreign bank viz. The new private sector banks and most of the foreign banks. In addition.78 Between September 2010 and August 2011. National Australia Bank.V. nearly three fourths of the total debit cards were issued by PSBs as at end March 2011.7 per cent in 2009-10.Report on Trend and Progress of Banking in India 2010-11 8.. Citibank and the Royal Bank of Scotland N. had the largest foreign 90 presence as at end-August 2011. viz.31 and Appendix Table IV. 38 foreign banks (from 24 countries) were operating in India as compared to 34 banks at end September 2010.... These two banks together accounted for 51 per cent of the total foreign offices of Indian banks as at end August 2011. 4. it is important to note that presently almost 98 per cent of the branches of public sector banks are fully computerised.80 Further. 47 foreign banks operated in India through representative offices as at end August 2011 as against 45 as at end September 2010. The largest Indian bank. the pace and quality of banking was changed by the technological advancements made in this area.76 At end-August 2011. However. Thus. For old private sector banks and public sector banks adoption of technology was an arduous job because of the historical records and practices. 4. Foreign Banks’ Operations in India and Overseas Operations of Indian Banks Operations of foreign banks in India witnessed an increase 4. Computerisation as well as the adoption of core banking solutions was one of the major steps in improving the efficiency of banking services. 9. the percentage of off-site ATMs to total ATMs witnessed a marginal decline to 45. Indian Banks opened nine more branches abroad apart from opening one subsidiary and one representative office. the number of debit cards grew at the rate of 25 per cent over the previous year. and within which almost 90 per cent of the branches are on core banking platform. Industrial and Commercial Bank of China. permission was granted to four new foreign banks. the foreign operations of Indian banks (16 public sector banks and six private sector banks) expanded in 2010-11 with a network of 244 offices as compared with 233 offices in the previous year. The total number of branches too increased to 321 in August 2011 from 315 in September 2010.

003 2.485 8.8 42. Punjab National Bank 4 11.0 79. Axis Bank 3 18. IndusInd Bank Ltd.31: ATMs of Scheduled Commercial Banks (As at end-March 2011) Outstanding number of credit cards declined 4.3 25 20 15 10 5 0 NBs SBI Group OPRBs NPRBs FBs 1 Public sector banks 1. in absolute terms.651 23.32 and Chart IV. ICICI Bank Ltd. Bank of India 24 5. 1 10. State Bank of India 42 12. 1 19.729 33. I 2 3 29.007 11.525 1. 7 20. 21.0 36.21). Bank of Baroda 46 4. UCO Bank 4 14. Canara Bank 4 6.367 74.692 15.1 Old private sector banks 2. Indian Bank 3 8.30: Overseas Operations of Indian Banks (Actually operational) Name of the Bank 1 Branch 2010 2 2011 3 144 1 47 24 4 4 6 1 4 47 1 4 1 13 3 2 8 157 Subsidiary 2010 4 20 9 3 1 2 5 3 3 23 2011 5 21 9 3 1 3 5 3 3 24 Representative Office 2010 6 39 1 2 3 5 1 2 4 4 8 2 5 1 1 16 2 2 8 2 1 1 55 2011 7 39 1 2 3 5 1 2 4 4 8 2 5 1 1 17 3 2 8 2 1 1 56 Joint Venture Bank 2010 8 7 1 1 1 4 7 2011 9 7 1 1 1 4 7 2010 10 203 2 2 59 33 5 2 3 11 1 11 59 1 6 6 1 1 30 5 3 18 2 1 1 233 Total 2011 11 211 2 2 60 33 5 2 4 11 1 12 64 1 6 6 1 1 33 6 4 19 2 1 1 244 I.795 19.145 14.651 4.2 New private sector banks III Foreign banks All SCBs (I+II+III) *: Include IDBI Bank Ltd.487 24. Bank group On-site Off-site ATMs ATMs Total Off-site number ATMs as of ATMs per cent of total ATMs 4 49. IDBI Bank Ltd. Oriental Bank of Commerce II.8 55. No.505 5 39.Operations and Performance of Commercial Banks Table IV.518 286 1. Federal Bank Ltd. the number of outstanding debit cards witnessed an increase for new private sector banks during the recent years (Table IV. Syndicate Bank 1 13.648 13. Table IV. Andhra Bank 3.126 19.547 10. years.1 Nationalised banks* 1.8 36.0 59.081 40. Public Sector Banks 137 1. Total 148 -: Nil Note: 1) Data for 2010 relate to end-September. Corporation Bank 7. Indian Overseas Bank 6 9.82 The issuance of credit cards facilitates transactions without having to carry paper Chart IV. HDFC Bank Ltd. New Private Sector Banks 11 17.776 2006-07 2007-08 2008-09 2009-10 2010-11 91 .2 SBI group II Private sector banks 2.1 45. 2) Data for 2011 relate to end-August. However.691 9.641 1. United Bank of India 16. Allahabad Bank 1 2. 22. Kotak Mahindra Bank Ltd.104 10. Union Bank 1 15.21: Shares of Bank Groups in Outstanding Debit Cards 45 40 35 30 Percentage Share Sr. while that of new private sector banks and foreign banks witnessed a decline over the same period.836 24.

39 10.2 New private sector banks III Foreign banks All SCBs (I+II+III) Bank group Outstanding Number of Debit Cards 200607 2 44.1 Old private sector banks 2. the Reserve Bank set up a separate Customer Service Department in 2006 and also Banking Ombudsman (BO) offices in 15 major banking centres.04 0 NBs SBI Group OPRBs NPRBs FBs 2006-07 2007-08 2008-09 2009-10 2010-11 for retail transactions and Real Time Gross Settlement (RTGS) for large value.28 5.03 10.87 41.72 2.33 and Chart IV. No 1 I Public sector banks 1.1 Old private sector banks 2.14 0.68 0. No.85 27.82 50.09 19.25 4.06 12.19 3.04 13.22).34 28. improved the speed of financial transactions.12 200708 3 3.2 SBI group II Private sector banks 2.84 Both retail and large value systems of electronic payment transactions registered a growth out of which NEFT registered a steep growth in 2010-11 over the previous year (Table IV.85 7.71 58.99 70. Volume of transactions through NEFT registered a steep growth 4. Electronic banking transactions have been on steady increase 4. 10.Report on Trend and Progress of Banking in India 2010-11 Table IV.33: Credit Cards Issued by Scheduled Commercial Banks (As at end-March 2011) (In Millions) Sr.30 9.44 41.72 3.31 23.76 4.43 181. across the country.78 2.83 The electronic payment systems such as Electronic Clearing Service (ECS) credit and debit.34 80.75 3.08 24.18 0.12 9.33 27.14 3.06 9.27 90.70 200708 3 64.29 0.55 200809 4 3. Despite the decline in the number of outstanding number of credit cards. BO has been an effective forum for redressing complaints received from customers.44 137. New private sector banks and foreign banks accounted for more than 80 per cent of the total outstanding credit cards as at end March 2011 (Table IV.39 9.1 Nationalised banks 1. Customer Service Number of complaints against banks declined 4.58 12.07 53.53 9.92 227.29 36.08 0.09 34.32: Debit Cards Issued by Scheduled Commercial Banks (As at end-March 2011) (In Millions) Sr.21 13. National Electronic Fund Transfer (NEFT) Table IV.93 0. respectively in 2010-11.44 0.1 Nationalised banks 1.26 0.34).1 5.02 200809 4 200910 5 201011 6 170.04 9.32 0.33 28. Understanding the importance of customer service in banking.98 102.65 8.85 Customer satisfaction is an integral element in inculcating trust among the common people on the banking sector.97 money.64 18.33 201011 6 3.04 4.34 47. the volume and value of transactions with credit card recorded a growth of 13 per cent and 22 per cent.5 0.24 24. which may also facilitate financial inclusion in the medium to long-term.22: Shares of Bank Groups in Outstanding Credit Cards 60 50 40 91.04 34.25 10.69 40.81 38.44 5. Since its inception.84 Chart IV.94 23.72 12.57 18.70 200910 5 3.2 New private sector banks III Foreign banks All SCBs (I+II+III) Bank group Outstanding Number of Credit Cards 200607 2 4.2 SBI group II Private sector banks 2.7 129. 92 . 1 I Public sector banks 1.43 Percentage Share 30 20 10 74.25 3.73 2.

3 49.5 48.326 10.727 528 5. whereas the number of complaints against private sector banks and Table IV. New Delhi.045 1.560 7.3 Percentage Variation 4 11. The decline was particularly visible in metropolitan regions.854 3.234 2009-10 2010-11 Volume 1 ECS Credit ECS Debit NEFT RTGS 2 98.. The second largest number of complaints were received against pension (8 per cent) followed by loans and advances (6 per cent).192 7. the Reserve Bank has been encouraging the banking sector to expand the 93 Source: Various Regional Offices of Banking Ombudsman. there was a decline in the number of complaints received by the BO offices across the country.6 3. Complaints against pension and direct selling agents (DSA) increased in 2010-11 over the previous year (Table IV.34: Volume and Value of Electronic Transactions* by Scheduled Commercial Banks (As at end-March 2011) (Volume in million.832 5.89 Financial inclusion has been one of the top priorities of the Reserve Bank during the recent years.613 69.7 106.Operations and Performance of Commercial Banks Table IV.234 12. Financial Inclusion Financial inclusion further progressed 4.524 4.274 foreign banks witnessed a decline over the same period.87.646 9. Chandigarh and Guwahati.5 5.3 33. more than 90 per cent of total complaints relating to DSA were received against foreign banks and new private sector banks.873 1. viz. Patna.94. Complaints against public sector banks increased 4. almost one fourth of the total complaints were received against credit/ debit/ATM cards.470 5. Further. . more than 50 per cent of the complaints relating to hidden charges were received against private sector banks and foreign banks.219 3.10).3 156.0 99.. Such complaints were relatively less in case of public sector banks.35: Region-wise Complaints Received at Banking Ombudsman Offices BO office Number of complaints 2009-10 1 Ahmedabad Bangalore Bhopal Bhubaneswar Chandigarh Chennai Guwahati Hyderabad Jaipur Kanpur Kolkata Mumbai New Delhi Patna Thiruvananthapuram Total 2 4.149 3.5 22. Mumbai and Chennai. In 2010-11. Bhopal.283 2. However.86 In 2010-11.8 62. Ahmedabad.559 7. Value in ` crore) Year 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 Value 6 1.532 79.2 Percentage Variation 8 20.7 132.507 3. 11. Number of complaints per branch was particularly high for foreign banks at 22.686 73.35).266 2010-11 3 5. in the midst of general declining trend.36 and Appendix Table IV.09.5 5.2 3 117.34 in 2010-11.9 129.210 1.88 A point to be noted at this juncture is the concentration of complaints with regard to DSA against new private sector banks and foreign banks.012 3.5 5 19.53. viz . an increase in complaints against public sector banks in 201011 over the previous year.3 148.9 *: Excluding transactions carried out through cards 4.1 149.87 There was.622 4.2 9 54. which reported an increase in the number of complaints (Table IV.058 12. there were some centres.81. 4.3 22.668 584 5.566 10.0 -6. In 2010-11. Accordingly.508 2.077 71.359 7 1.39.23). However.3 66. however.124 3.512 8.17.319 5.190 3.84.707 2. more than 95 per cent of the complaints regarding pension were received against public sector banks (Chart IV.149 4.

1) Deposit accounts 726 Remittances 3.458 832 1.598 2.37: Progress of Financial Inclusion No.035 58 36 4.00 0.8) 0. 4) Data on population for the year 2010-11 are taken from Census of India 2011. Note:1) Data on credit and deposits are taken from the consolidated balance sheet of SCBs.126 2.927 (-11. 5) Data on population per bank branch and population per ATM for the year 2009-10 are repeated from the Report on Trend and Progress of Banking in India 2009-10.160 720 22.217 Loans/advances 3.378 812 2.700 Percentage of Population having deposit accounts* 55.347 (30.25 8 293 175 3.37).445 5. Percentage Share Cards/ ATM Loans/ Advances Hidden Charges Pension DSA 94 .943 (-24. branches opened in Tier 3 to Tier 6 centres.6 0.371 705 4.35 Foreign banks All SCBs UCBs/ RRBs/ others Total 1 4 347 1.163 204 440 70 7.Report on Trend and Progress of Banking in India 2010-11 Table IV.119 518 2. Indicator 1 1 2 3 4 5 2 2009-10 3 2010-11 4 54.962 1.4) 0.262 Charges without prior notice 1.3) 1.36: Bank Group-wise Complaints Received at Banking Ombudsman Offices –2010-11 Nature of Complaint Public sector banks 2 Nationalised banks* 3 379 1.810 2.10 0. As a result of all these efforts the status of financial inclusion improved in 2010-11 over the previous year (Table IV. 6) Data on population for the year 2009-10 for calculating Indicators 5-8 are derived from the population per bank branch as reported in the Report on Trend and Progress of Banking in India 2009-10. DSIM.727 4.018 5.417 (6.274 (-10.6 76.323 283 17.45 SBI group Private sector banks 5 641 816 4. new bank branches. Chart IV.6 Population per Bank Branch 14. 3) Data on branches include branches of Regional Rural Banks in 2010-11.2 8 Percentage of Population having credit cards 1.149 5.40 0.660 4.30 0.680 742 2.260 Others 4.983 Total complaints 42.3 7 Percentage of Population having debit cards 15.1) 1.216 17.124 761 2.20 0.345 8.94) 0.293 4.00 NBs SBI Group OPRBs NPRBs FBs *: Data relate to 2008-09 and 2009-10.019 Credit/Debit/ATM cards 9.000 Population per ATM 19.90 10 11= (9+10) 67 206 245 271 131 117 83 16 16 786 69 606 1.835 Out of subject 1.724 (1.716 42 653 916 24 3. Data relate to AprilMarch.799 Non-Observance of BCSBI Code 1.4 9.122 (-24.3 10 Branches opened in hitherto unbanked centres as a per cent of total new bank branches 5.927 2. and branches opened in unbanked centres are taken from Master Office File.4 Credit-Deposit 73.081 (-38. banking network both through setting up of new branches and also through BC model by leveraging upon the information and communication technology (ICT).25 New private sector banks 7 591 751 4.836 43 747 928 25 3.734 4.9) Complaints per Branch 0.891 995 1.874 1.179 (-15.564 4.7 Credit-GDP 53.722 146 14.070 71.196 199 482 21 161 658 19 1.69 *: Include IDBI Bank Ltd. Source: Various Regional Offices of Banking Ombudsman.8 6 Percentage of Population having credit accounts* 9.307 (2.336 66.243 61.971 Direct selling agents 120 Notes and coins 86 Non-Observance of Fair Practice of Lenders 8.50 0.746 Failure on commitments made 1.5 13.746 1.49 55.010 16.706 130 13.2 9.6) 2. 2) Data on bank branches.23: Major Complaints against Bank Groups 2010-11 1.90 0.700 Pension 5. debit cards and credit cards are sourced from the Department of Payment and Settlement System.000 936 62 50 4.47 Old private sector banks 6 50 65 149 185 120 1 94 12 1 254 51 167 30 1.8 1.309 647 1. 7) Data on number of deposits and credit accounts are taken from the Basic Statistical Returns 2009-10.34 9 1.116 4. Note: Figures in parentheses indicate percentage change over the previous year.2) 1. 8) Data on number of ATMs.466 16.340 2.879 1.60 0.343 1.871 4.675 1.204 4.276 7.156 253 15.263 20.80 0.1) 22.70 Table IV.574 3.53 9 Branches opened in Tier 3-6 centres as a per cent of total new bank branches 40.9 18.

Of new branches 2 874 (18.93 An important policy initiative to increase the number of bank branches in the Tier 3 to Tier 6 centres was the liberalisation of the branch authorisation policy in December 2009. The bank branches opened in the hitherto unbanked centres increased from 281 in 2009-10 to 470 in 2010-11 (April-March).011 (41.1) 650 (13.3 3.3) 2. However.0 6.6 10.0) 4. Of new branches 4 1.0) Population groups 3 Rural Semi Urban Urban Metropolitan Total No.24). had the highest share of new bank branches in 2010-11.38: Distribution of New Bank Branches across Regions and Population Groups (During the period 2010-11 April-March) Regions 1 Central Region Eastern Region North Eastern Region Northern Region Southern Region Western Region Total No.5) 97 (2.120 (23. Andhra Pradesh (9 per cent) and Tamil Nadu (7 per cent) during the period April-March 2010-11. banks were advised to allocate at least 25 per cent of the total new bank branches in unbanked rural centres. 95 WESTERN REGION 0 CENTRAL REGION . the extent of financial exclusion is staggering. the share of new bank branches opened in unbanked centres in 2010-11 was low (Chart IV.2 6.91 In 2010-11.94 In July 2011. 4.90 Yet. viz. 22 per cent were in rural areas and 42 per cent were in semi-urban areas.92 The State-wise distribution of new bank branches showed that Uttar Pradesh had the highest share of new bank branches at 11 per cent followed by Maharashtra (10 per cent). North-Eastern region had the lowest share of new bank branches in 2010-11 (Table IV. Bank branches opened in hitherto unbanked centres increased 4. 11 2009-10 2010-11 Target Data on deposit accounts and credit accounts are taken from the Basic Statistical Returns 2009-10.7 7.826(100. This underlined the need to strengthen the financial inclusion drive through well thought out policies. almost ten per cent were opened in hitherto unbanked centres as compared with 6 per cent in the previous year.1 10.6 3. The Southern region. Of the total new bank branches opened in 2010-11. SCBs opened more number of branches in Tier 3 to 6 centres as compared with the previous year.263 (26.9) 873 (18. Out of every 1000 persons.3 8. Source: Master Office File. Expansion of Banking Network through Bank Branches Number of bank branches increased by 4.37). Importantly.. in comparison with the latest policy prescription.0) 1.077 (22. In 2010-11 (April-March).6 11.7) 865 (17.826 (100.38). the number of branches of SCBs increased by 4.2) 822 (17.24: Bank Branches Opened in Hitherto Unbanked Centres (April-March) 30 As per cent of total new bank branches 25 20 16. Table IV.826 4.2 15 12. On the other hand.2) 1. the least banked region.1) 4. Chart IV. of the new branches opened by SCBs.9 4. More than half of the new branches were opened in Tier 3 to 6 centres during 2010-11 (April-March) (Table IV.826 over the previous year.Operations and Performance of Commercial Banks Extent of financial exclusion is staggering 4. which is already well banked.2 10 5 EASTERN REGION NORTHERN REGION SOUTHERN REGION NORTH EASTERN REGION Note: Figures in parentheses are percentages to total new bank branches.0) 4. only 99 had a credit account and 600 had a deposit account as at end-March 2010 11 .

8) Foreign Banks 21 (1. Sixty three per cent of the net addition of ATMs by new private sector banks and 98 per cent of net addition of ATMs by foreign banks were at off-site locations in 2010-11.9) 7.25: Region-wise Population per Bank Branch (end March 2011) 19.4) 1. 24.0) 24.328 18000 16000 14000 12000 Population Metropolitan centres.7) 8.598 (30.1 Rural centres.7] Total 6 49. Out of the total net increase in ATMs in 2010-11.6) 8.4) 5.9] Expansion of Banking Network through ATMs Nearly 50 per cent of the net increase in ATMs was at off-site locations 4.7) 7.6) 20 (1. respectively of the net addition of ATMs by nationalised banks and old private sector banks were also at off-site locations.651 (100. 2) Figures in square brackets are percentage variation over the previous year.206 (33. 32.39: Number of ATMs of SCBs Located at Various Locations Bank group Rural 1 Public sector banks 2 (At end-March 2011) Semi– urban 3 13. North-Eastern region had the lowest share in the incremental increase in the deployment of ATMs 4.7) 8.27). Chart IV.054 (25.9] Urban 4 16.062 (32.3) [24. Note: 1) Figures in parentheses indicate percentage share of total ATMs under each bank group.8) [21.043 10.975 (46.8 All India (13.2) 1. 9.496 Public Sector Banks.576 (32.0) 1. 17.98 The share of the North Eastern region was the lowest in the incremental deployment of ATMs in 2010-11 (Chart IV.029 (42.466) 10.260 18. Rural areas accounted for ten per cent of total outstanding ATMs 4. followed by nationalised banks (38 per cent) (Table IV.25).186 (32.26).97 In 2010-11.3 Semi–urban centres.0) 23. 82.8] Metro politan 5 14.6 FB.5) 3.95 Despite the efforts taken.054 (32.718 (10.0) 6.0) 1.445 (17.9) State Bank Group 3.7) 10.077 12.132 (32.6 10000 8000 6000 4000 2000 0 Urban centres.262 (5.872 (11.1) 25.3) [21. 44 per cent were off-site ATMs.255 5.154 (12. 33. 0.0) 74. off-site ATMs have more relevance than on-site ATMs.5) Total 7. Table IV.3 Southern Northern Western Central Eastern All-India North Eastern Population per Bank Branch 96 .0) 4.8) 4.9) 24. Almost 41 per cent and 49 per cent.26: Population Group-wise Distribution of ATMs (end-March 2011) 20000 17.082 (24.401 (34.3) Old Private Sector Banks 332 (8.8) 5.845 (23.175 (31. almost one tenth of the total ATMs were located in rural areas out of which the State Bank group accounted for 44 per cent Chart IV.8) Private sector banks 1.3 Private Sector Banks.339 (32.155 (9.0) [23.505 (100.836 (100.487 (100.151 (28.6) [37.5) 18.367 (100.680 (22.306 (33.0) 19.0) 24.39 and Chart IV.0) 1. Eastern and Central regions continued to be substantially higher than the national average in 2010-11 (Chart IV.278 (26.126 (100.96 From the point of view of banking penetration.651 (100. the population per bank branch (after including branches of RRBs) in North Eastern.6) 300 (21.Report on Trend and Progress of Banking in India 2010-11 4.7] *: Include IDBI Bank Ltd.0) New Private Sector Banks 930 (4.5) 8.784 (20.525 (100.026 (75.9) Nationalised Banks* 2.

The Reserve Bank is closely monitoring the Financial Inclusion Plans 4.3 18.6 56. (Charts IV. together accounted for 46 per cent of total deposits and 56 per cent of total credit in 2010-11. Chennai. Banks have already prepared such plans and the Reserve Bank is closely monitoring the implementation of these plans. The population group-wise distribution of credit indicated that 68 per cent of total credit belonged to the metropolitan region as at end-March 12 2011.4 50.March 2011 19.2 25. 97 . in 2010-11.9 Top one centre 0 20 40 60 80 100 Northern Central North Eastern Western Eastern Southern Percentage Share Credit Share Deposit Share Distribution of Bank Credit and Deposits12 Banking business is concentrated in the metropolitan region 4.40.0 21..3 Top two hundred centres 82. Delhi.2 64. Further.101 To strengthen the financial inclusion drive.Operations and Performance of Commercial Banks Chart IV.7 46.6 69. The share of North-Eastern region in the total credit was abysmally low as at end-March 2011.8 33. 47 per cent of the total villages covered Data are taken from Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks March 2011. Bangalore and Hyderabad.28).28: Distribution of Deposit and Credit According to Banking Centres . While the semi-urban areas accounted for nine per cent of credit as at end March 2011.0 74.11). Greater Mumbai centre alone accounted for 22 per cent of total deposits and 25 per cent of total credit in 2010-11. the Reserve Bank asked banks to cover all villages with more than 2. To facilitate the smooth progress of this plan.102 The total number of villages covered by at least one banking outlet grew at 82 per cent in 2010-11 over the previous year.000 population with at least one banking outlet by March 2012. banks were also encouraged to cover the peripheral villages with population less than 2.6 78.27: Share of Regions in Total Net Increase in ATMs 2010-11 Chart IV. Kolkata. viz . 4. Importantly. Greater Mumbai. the top six centres. the rural areas accounted for six per cent of credit. and Appendix Table IV.1 67. all banks were advised to put in place board approved financial inclusion plans (FIPs).1 Top hundred centres Top fifty centres Top twenty centres 11. The concentration of credit was higher in these centres as compared with the concentration of deposits (Chart IV. In addition.99 The spatial distribution of deposit and credit indicated high level of concentration in the metropolitan regions.6 Top ten centres Top six centres 14.29B.100 Geographical region-wise distribution of credit indicated that more than one third of the total credit belonged to the Western region.8 2.7 74. The progress made under FIPs is provided in Table IV.000.3 61. 4.6 55.29A and IV.

Further.with population >2000 Villages Covered .43.3 per cent in 2009-10 to six per cent in 2010-11.2 million new SHGs were creditlinked with banks.40). almost 77 per cent of the total villages covered were through BCs.499 33.308 .757 27.743 27. 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 2 Total Number of Customer Service Points deployed Total Villages Covered Villages Covered .319 45.158 100 423 50 4.07.8 Chart IV.185 43. respectively in 2010-11 over the previous year (Table IV.643 255 3.684 76.29A: Region-wise Share in Credit March 2011 26. It can be understood from the table that banks have been heavily relying on BCs to expand the banking network in the unbanked areas under FIPs.40: Progress Made Under Financial Inclusion Plans Sr. SHG-Bank Linkage Programme has completed two decades of existence since the early days of the pilot in 1992.014 21.Report on Trend and Progress of Banking in India 2010-11 Chart IV. In 2010-11.654 19. In 2010-11. However.000.6 23.230 25 1. at end-March 2011.8 34. 7.2 Semi-Urban Urban Metropolitan under FIPs were villages with population less than 2. The number of Kisan Credit Cards (KCCs) and General Credit Cards (GCCs) witnessed growth of 15 per cent and 49 per cent. the amount of savings per SHG was `9.519 1.5 6.8 9. The share of ‘no-frills’ accounts with overdrafts in the total ‘no-frills’ accounts improved from 0.6 Northern Central North Eastern Western Eastern Southern Rural 68.103. credit of `65.653 75 6.7 7. bankers and also the international community.with population <2000 Villages covered through Branches Villages covered through BCs Villages covered through other modes (Mobile van and ATM) Urban Locations covered through BCs Number of No-Frill Accounts (in millions) Amount in No-Frill Accounts (` crore) Number of No-Frill Accounts with OD (in millions) Amount in No Frill A/Cs with OD (` crore) Number of KCCs outstanding (in millions) Amount in KCCs outstanding (` crore) Number of GCCs outstanding (in millions) Amount in GCCs outstanding (` crore) end-March 2010 2011 3 33.862 .0 17.405 as compared to the amount of 98 1.361 99.4 494 Micro Finance 4.801 355 3. the approach has faced a few concerns of being fundamentally focused on credit without Table IV.083 25.840 53.547 crore (including repeat loan) was disbursed to these SHGs. civil society organisations.6 814 1 1.042 54.429 1. There is a strong belief that the SHG movement has the potential to satisfy the financial service needs of India’s unbanked people in a sustainable way. like the financially excluded poor households.652 4 190 3 36. The number of ‘no-frills’ accounts recorded a growth of 50 per cent in 2010-11 over the previous year.46 million SHGs maintained savings accounts with banks.397 46. On an average.895 . The approach has received wide acceptance amongst a multiplicity of stakeholders.0 0. and bank loans of `14.13 8 20 4 58. 1.343 . Particulars No.180 in 2010-11.29B: Population Group-wise Share in Credit March 2011 5.566 4 199 23 Progress: April 10March 11 5 25.443 22.

Source: NABARD.680(5.293) Amount (` crore) 2009-10 8. The growth under the MFI-linkage programme in terms of both number and amount of loans was much higher than the corresponding growth under the SHG-Bank Linkage Programme in 2010-11 (Table IV.29) 7. 1934. it will raise concerns not only about multiple regulations but also about client protection.009 2010-11 4 1.24) 4.015) 22.41).26) 4.20(0.95(1.453(2. as borrowers would then be subject to different regulations.46(2.98) 6.546(1.41: Progress of Micro-Finance Programmes (As at end-March) Item Number (in million) 2008-09 1 Loans disbursed by banks during the year Loans outstanding with banks Savings with banks 2 1.198) 28. Among others.547(2.732 5.02) 2008-09 5 12.199(1.106.829) 7. thus. If there are separate regulations governing NBFC-MFIs in individual states.27) 4.12(1.51) 2009-10 3 1. adequate room for intensifying the space for thrift and savings. Andhra Pradesh Microfinance Act 4. client friendly in tune with the changing needs (Table IV. NABARD’s attempt at present has been to better appreciate the concerns being expressed from different quarters which are aimed at addressing some of these critical concerns to make the approach more flexible.689 2010-11 7 14. 4.Operations and Performance of Commercial Banks Table IV.605 crore. It replaced the Ordinance on the same matter issued on October 15.85(1.105.59(0. (iv) all repayments have to be made at the office of the Gram Panchayat or at a designated public place.41).221(7.69) Number (in million) 2008-09 Loans disbursed by banks during the year Loans outstanding with banks 581 1.563) Self-Help Groups Amount (` crore) 2009-10 6 14. this Bill stipulates that (i) every MFI has to register before the Registering Authority of the district.176 2008-09 3. empowering it to regulate the NBFCMFIs.605 10.480) 31. If other States also come out with legislation similar to the AP Government. (v) MFIs cannot use agents for recovery or use coercive methods of recovery.817) Microfinance Institutions* *: The actual number of MFIs provided with bank loans would be lower on account of MFIs availing loans from more than one bank. the task of regulation by the Reserve Bank of MFIs operating in more than . If State Governments start enacting their own legislations to regulate MFIs including the ones regulated by the Reserve Bank.79(1.25) 6.513 2010-11 469 2.038(6. The Act applies to all entities engaged in the business of microfinance including NBFCs 99 regulated by the Reserve Bank under the provisions of the RBI Act. (iii) no MFI can give a further loan to any SHG/its members without the approval of the registering authority where there is an outstanding bank loan. The responsibility for regulating NBFCs has been given to the Reserve Bank. In 2010-11.016(1. 2010.22(0.251) 6.254(2. Similarly the approach has also shown the need and scope for allowing greater flexibility to accommodate multiplicity of credit borrowings at the SHG level.063 10. 461 MFIs were provided loans by banks to the tune of `7. 4.61(0. 2010.148 2010-11 7.104. (ii) no member of an SHG can be a member of more than one SHG.915 2009-10 691 1. A bill titled “A Bill to protect The Women Self Help Groups from Exploitation by the Micro Finance Institutions in the State of Andhra Pradesh and for the Matters Connected Therewith or Incidental Thereto” was passed by the Andhra Pradesh Legislative Assembly on December 14. and (vi) loan recoveries have to be made only by monthly installments.862) 5. there will be plurality of regulation leaving scope for regulatory arbitrage. Note: Figures in brackets indicate the details about SHGs covered under Swarnajayanti Gram Swarozgar Yojana (SGSY).

136 65.041 1.0 12.119 9.Report on Trend and Progress of Banking in India 2010-11 one State will become even more difficult.855 59.6 3 (Credit + Investment) -Deposit Ratio 87. though the share of agricultural credit in total credit witnessed a marginal decline in 2010-11 over the previous year.45.1 NABARD 5.3 Term Borrowings from 5.145 39.906 26.093 1. majority of the credit was for other purposes in 2010-11 (Table IV.102 47.064 18.9 20. No.797 2. The increase was particularly visible in case of saving deposits followed by deposits in the current account in 2010-11.48 115.232 9.42).6 7. Many of the RRBs were also recapitalised during the recent years to enable them to extend more credit to the rural areas.69 55. 100 5 6 7 8 9 10 11 12 13 Memo Item 1 Credit -Deposit Ratio 57.240 9. Source: NABARD.080 55.108 The overall deposit mobilisation of RRBs increased in 2010-11 over the previous year.853 44. Within the non-agricultural sector.491 15.9 55. . The per branch profitability as well as per employee profitability of RRBs witnessed an increase in 2010-11 over the previous year (Table IV. RRBs’ balances with the Reserve Bank witnessed an increase in 2010-11 over the previous year (Table IV.770 12. Regional Rural Banks Amalgamations reduced the number of RRBs during the recent years 4. Despite a decline in operating profits.8 21. 4.2 Sponsor Bank 5. NABARD and others.035 8. the return on assets recorded a decline in 2010-11 over the previous year.985 1. #: Include accumulated losses.15.17 Percentage variation 5 18.784 8.2 1. 4.109 The net profits of RRBs increased in 2010-11 over the previous year.8 1. which are operational in more than one State.906 61.237 2010-11P 4 197 9.3 Others Other Liabilities Total liabilities/Assets Cash in Hand Balances with RBI Other Bank Balances Investments Loans and Advances (net) Fixed Assets Other Assets # Item At end-March 2009-10 3 197 8.060 1.157 379 8.190 91.84.0 9. net profits registered an increase owing to the decline in provisions and contingencies. 1 1 2 3 4 2 Share Capital Reserves Share Capital Deposits Deposits 4.7 20.289 79.649 8. On the assets side.111 Local Area Banks (LABs) form a very small segment of the Indian banking sector.2 P: Provisional.1 21.66.186 84 8. 13. Local Area Banks Assets of local area banks registered lower growth 4. A little more than half of the credit was bagged by the agricultural sector in 2010-11.1 2 Investment -Deposit Ratio 32. Table IV.1 Current 4.500 6.0 7.: Nil/Nigligible. these institutions have a .4 17. reduced from 196 in early 2000s on account of restructuring and amalgamation of existing RRBs to improve their financial soundness. Presently.6 13. RRBs are sponsored by commercial banks along with the Central Government and the concerned State Governments.359 2.44). even with the increase in net profits in absolute terms. However.0 18.065 3.863.065 75. The borrowings of RRBs also increased in 2010-11 over the previous year owing to higher borrowings from Sponsor Banks.280 94. Though small in size.43).582 4. Within agriculture.42: Consolidated Balance Sheet of Regional Rural Banks (Amount in ` crore) Sr. there are 82 RRBs functioning in the country.9 41.110 It is important to note that more than 80 per cent of the total credit of RRBs belonged to the priority sector in 2010-11.107 The professionalism of commercial banks and the rural orientation of cooperatives were imbibed in Regional Rural Banks (RRBs) to improve credit flow to the rural economy without compromising the overall financial soundness of the banking sector.715 457 8. 4.9 14. This may also impact the business of MFIs. crop loans constituted almost 74 per cent of the volume of lending.2 Savings 4.7 16.9 19.5 12.602 1.

As provisions and contingencies 101 registered higher growth in 2010-11.2 5. yet concerns remain 4. despite the demanding operational environment.: Nil/Negligible.225 995 14.. Note: Figures in parentheses indicate percentage share in total credit. 1 2 Item 2009-10 (82) 3 2010-11P Percentage (82) variation 4 16.643 17. In contrast.46). Yet the Indian .7 ii Net profits 1. Source: NABARD. In tune with this overall deceleration. However.4 (b) Operating expenses 2.231 (45.282 (55.4 per cent in 2009-10 mainly due to an increase in net interest income. the increase in net profits was less than the growth in operating profits (Table IV.2 17.5 iv Expenditure (a+b+c) 7. better RoA.598 5.9) 40.3 1.655 82. viz.067 (54.113 Though there was deceleration in the asset growth of LABs.232 8.9 (-)30.3 (a) Interest income 7. of which one LAB. 4. Need to further improve efficiency 4. despite the positives. deposit growth.Operations and Performance of Commercial Banks Table IV.3 0.220 15.093 E Financial ratios i Operating profits 1.5 6.6 (c) Provisions and Contingencies 0. four LABs are functioning in India.112 The total assets of LABs registered a lower growth in 2010-11 over the previous year. 2) Figures in parentheses refer to the total number of RRBs.819 68. the deposit mobilisation recorded a marginally higher growth of 22 per cent in 201011 as compared with the growth of 20 per cent in the previous year (Table IV. 14.612 4.663 14.1 2011P 4 55.663 12.643 1.4 A Income (i + ii) 13.6 0. Source: NABARD P: Provisional Note: 1) Financial ratios are with respect to average total assets. This was evident in the higher credit growth.1) 881 2.3 42.703 1.547 of which Wage bill 2. Capital Local Area Bank Ltd.951 i Interest expended 7.6 Short-term credit (crop loans) Term credit (for agriculture and allied activities) iii Indirect Advances II Non-agriculture (i to iv) i ii iii iv Rural artisans Other industries Retail trade Other purposes Total (I+II) Memo item : (a) Priority sector (b) Non-Priority sector (c) Percentage share of priority sector in total credit P : Provisional.1) 810 1.625 5.988 2.9) 33.298 82.84.0 Table IV. sound CRAR and improvement in GNPA ratio.029 C Profit i Operating profits 2.7 (b) Other income 0.1 (a) Interest expended 4.0 2.8 per cent in 2010-11 from 1.1 iii Income (a + b) 8.913 ii Net profits 1. certain concerns continued to persist in the Indian banking sector. the Indian banking sector demonstrated continued revival from the peripheral spill over effects of the recent global financial turmoil in 2010-11. which enables them to cater better to the needs of local populace hailing from rural and semi-urban areas.15. local orientation.823 13.945 ii Other income 890 B Expenditure (i+ii+iii) 11.43: Financial Performance of Regional Rural Banks (Amount in ` crore) Sr.676 iii Provisions and contingencies 1. the RoA of LABs improved to 1.6 4.359 1.6 11.619 36.115 Maintaining profitability is a challenge especially in a highly competitive and high interest rate environment.5 17.5 (-)7. the gross advances of LABs marginally moderated to 21 per cent in 2010-11 as compared with the previous year’s growth rate of 22 per cent.537 (44.082 36. accounted for more than two third of the total assets of all LABs.114 In retrospect.3 5 17.5 7.905 3. 4.1 0. Presently.895 82.1 16. No.00.9 7. .8 19.884 D Total assets 1.44: Purpose-wise Distribution of Credit from Regional Rural Banks (Amount in ` crore) Purpose 1 2 I Agriculture (i to iii) i ii As at end-March 2010 3 46.375 ii Operating expenses 3.45).1 of which Wage Bill 1. Conclusions Banks’ performance improved.956 83.404 45.835 i Interest income 12.8 38.825 715 2. among others.234 28.

2) 29 (3.2 5. it is a concern that a substantial portion of the total incremental NPAs of domestic banks in 2010-11 was contributed by agricultural NPAs.9 2.9) 737 (100.4 52.1 4 19. Source: Based on Off-site returns (domestic).8 62..0 9.7) 36 (5.e .2 48.5 15.46: Financial Performance of Local Area Banks (Amount in ` crore) Particulars 1 A Income (i+ii) i) Interest income ii) Other income B Expenditure (i+ii+iii) i) Interest expended ii) Provisions and contingencies iii) Operating expenses of which : Wage bill C Profits i) Operating profits/loss ii) Net profits/loss D Net Interest Income E Total assets F Financial ratios i) Operating profits ii) Net profits iii) Income iv) Interest income v) Other income vi) Expenditure vii) Interest expended viii) Operating expenses ix) Wage bill x) Provisions and contingencies xi) Net Interest Income 2009-10 2 104 86 18 91 51 8 32 14 21 13 35 946 2. Need to closely monitor the quality of assets 4.1) 946 (100. However. Further. banking sector would need to make greater efforts to address this issue.4) 120 (12.9 12.4 1. increase ‘other income’. Need to persevere with the task of further strengthening financial inclusion 4. In the coming years. how many of them will again fall back into the NPA category.6 17. All LABs 2 651 (68.7) 78 (14.Report on Trend and Progress of Banking in India 2010-11 Table IV. Thus.4 -5.0) 84 (15.3) 138 (12.2 24. banking sector managed to improve the RoA marginally in 2010-11 over the previous year.7) 534 (100.4 3. which implies foregone profitability in an attempt to clean balance sheets.0) Deposits 2011 5 648 (72. i.5 12.4 1.6 1.0) 2011 7 420 (65.45: Profile of Local Area Banks (As at end-March) (Amount in ` crore) Bank 2010 1 Capital Local Area Bank Ltd.9 4. which needs to be addressed.8) 897 (100. Krishna Bhima Samruddhi Local Area Bank Ltd.1 1.5 5.6 21.0 operating expenses in the interest of efficiency and profitability. certain concerns with regard to asset quality of the banking sector continued to loom large.0 2010-11 Percentage Variation 3 124 107 17 105 55 13 37 17 32 19 52 1.8) 158 (14.5) 61 (5.0) Note: Figures in parentheses indicate percentage share in total. Further. . the writing off ratios were high in the Indian banking sector.0) Assets 2011 3 750 (67.6) 644 (100.1 10.2) 122 (13. Source: Based on Off-site returns (domestic).6 15.5) 1. there was always a concern with regard to the restructured standard accounts. there is a need to reduce NIM.7 1. Though the GNPA ratio witnessed improvement in 2010-11 over the previous year.0) Gross Advances 2010 6 347 (65.4) 34 (3. Coastal Local Area Bank Ltd.7 1.2) 101 (13. and reduce Table IV. the detailed analysis showed that NIM.4 7. it is also important to address certain flaws observed while expanding the banking 102 Note: All ratios under ‘F’ are with respect to average total assets.107 3.4 46. which is already high in India as compared with some of the emerging market economies.2) 100 (15.5) 88 (13.1 10. increased further.8) 127 (13.107 (100.3 5.0) 2010 4 532 (72. Alongside.6) 25 (4.117 Staggering financial exclusion despite the efforts taken by the banking sector is a critical issue.116 A challenging task in the midst of regular policy rate hikes was the management of the quality of assets.9 3.7) 48 (5. Subhadra Local Area Bank Ltd. During the last two years.6 0.6) 93 (10.7) 75 (10.7 10.

Need for greater use of technology to propagate financial inclusion 4. during 2010-11 non adherence to the priority sector lending targets and targets set for advances to the agriculture sector raises concern from the point of view of equitable distribution of credit to productive sectors of the economy. which is at a lower level in India as compared with some of the peer group countries. Though. which requires continuous improvement . which were not able to meet the target set for priority sector as a whole and also for agricultural credit. growth observed in infrastructure loans and 103 personal loans raises risk to the banking sector as these loans may increase the asset liability mismatches. inter alia.Operations and Performance of Commercial Banks services during the recent years. the number of outstanding credit cards witnessed a declining trend during the recent years. the NorthEastern. lower percentage of new bank branches opened in the hitherto unbanked areas. These include. As these technological advancements improve the pace and quality of banking services. it may moderate in the coming years. Eastern and Central regions continued to display backwardness in the availability as well as utilisation of banking services. at the bank level. there are a number of banks. efforts need to be taken to improve credit flow to the rural areas as also to the North-Eastern. and real estate demands continuous monitoring. Need for banks to conform to the priority sector lending target 4. For similar reasons. personal loans. growth pick up in the commercial real estate loans also deserves attention. Thus. Non adherence to the agricultural lending target by a large number of banks raises concern as still a large proportion of India’s population depends on the agricultural sector for livelihood. Credit to the NBFCs witnessed a growth of more than 50 per cent in 2010-11 over the previous year. larger expansion of banking services through BCs as compared with branches. High growth of credit to few sensitive sectors may impact credit quality 4. Though at the aggregate level. The status of credit card penetration was worse with only less than two per cent of the population having a credit card.120 On the other side.119 Though there was no evidence of a credit boom in the economy. rural areas accounted for only a small proportion of credit. which requires careful monitoring. Need to improve credit flow to rural areas 4. the debit card penetration continued to be low with only 30 per cent of deposit account holders having a debit card. the higher credit growth observed in some of the sectors such as NBFCs.122 Quality of banking services is another area. More alarmingly. As such. infrastructure. bank groups adhered to the targets prescribed by the Reserve Bank. Six top metropolitan centres accounted for almost half of the total banking business of the Indian banking sector. Nevertheless. Eastern and Central regions. lower percentage of branches opened in the North Eastern region and lower percentage of ‘no-frills’ accounts with overdraft. Need for improving the quality of banking services 4. Further.121 On the operational side. infrastructure loans also witnessed a higher growth in 2010-11 over the previous year. there is a need to make efforts to improve card penetration in the country. Further.118 One disquieting feature in the present business scenario of the Indian banking sector is the concentration of banking business in a few metropolitan centres. This will also help in increasing credit penetration in terms of credit-GDP ratio. despite the convenience offered by ATMs in providing banking services. this was mainly because of the loans extended to the telecommunications companies to participate in the 3G spectrum auctions.

It is a welcome development that at the aggregate level the number of complaints received at various banking ombudsman offices registered a decline in 2010-11 over the previous year. their share in the sensitive sector credit.Report on Trend and Progress of Banking in India 2010-11 to attract more customers to the formal banking channels. as almost one fourth of the total complaints were with regard to cards. focused attention on the issues that are being confronted by the banking sector may be imperative in the larger interest of securing economic growth with equity. Moreover. Further. many of them have not been meeting these targets. In general.124 To conclude. 104 . all bank groups should take more care while offering cards both debit and credit. the target set for export credit was also not met by many of these banks. majority of complaints with regard to hidden charges were also received against these two bank groups. Once these issues are addressed.123 A generic issue that may deserve attention at this juncture is the concerns raised by operations of foreign banks. these two bank groups need to promote transparency by way of informing customers about different charges levied by them. and as such their role in furthering financial inclusion especially by extending banking services to the unbanked regions is limited. especially share in the real estate credit was particularly high. Further. However. the Indian banking sector has the potential to become further deeper and stronger. The area in which the public sector banks have to pay attention is pension services. the off balance sheet exposures accumulated by foreign banks were also particularly high raising system-wide risks. Need for a review of foreign banks’ operations 4. it is also a fact that even after having a lower priority sector lending target. Further. On the other side. Greater attention to these issues would facilitate better financialisation of the economy and in the medium to long-term lead to broad-based economic growth. It is a fact that these banks are mostly present in the metropolitan regions. a detailed analysis revealed that both foreign banks and new private sector banks need to make continuous efforts to improve the quality of service offered by DSA as more than 90 per cent of the complaints with regard to DSA were received against these two bank groups. 4. This is because.

3 The cooperative structure in India can broadly be divided into two segments. State Cooperative Banks (StCBs) and District Central Cooperative Banks (DCCBs) reported profits but the ground level institutions. Within the rural cooperative sector. Further the annual policy statement of the Reserve Bank for 2010-11 envisages inclusion of financially sound UCBs in the Negotiated Dealing System (NDS) and opening up of internet banking channel for UCBs satisfying certain criteria. of which majority were non-scheduled UCBs.4 The rural cooperatives are divided into short term and long term structures. the poor financial health of cooperative banks in general. the integration of cooperative banks with the financial sector has increased following the inclusion of UCBs in Indian Financial Network (INFINET) and Real Time Gross Settlement System (RTGS) from November 2010. District Central Cooperative Banks (DCCBs) operating at district level and the Primary Agricultural Credit Societies (PACS) operating at . Introduction 5. the network of cooperatives was not broad based in the north-eastern region of the country.e. there were 1.2 In recent years. small scale industries and self employed workers.Chapter V Developments in Cooperative Banking The financial performances of Urban Cooperative Banks (UCBs) improved in 2010-11 though there are some concerns with regard to some of the UCBs reporting negative CRAR. which needs to be addressed in order to fully utilise the benefits of wide spread network of these institutions. there were 42 UCBs having operations in more than one State. The financial performance of long term cooperatives was found to be even weaker than their short term counterparts.. Also. i.645 UCBs operating in the country.1 Cooperative banking sector plays an important role by providing financial intermediation services to agricultural and allied activities. while majority of the UCBs were operating within a single State. Increased Interlinkages between UCBs and Commercial Banks 5. As at end-March 2011. rural cooperatives operate in the rural parts of the country. While the urban areas are served by Urban Cooperative Banks (UCBs). This suggests that efforts need to be taken to improve banking penetration in the north-eastern part of the country along with improving the financial health of the ground level cooperative institutions. continued to be concentrated in certain regions. 5. it was observed that the branch network of cooperatives. raises the risk of contagion that may affect the financial system as a whole due to the weak financial position of these institutions. The structure of short term cooperatives sector comprises of State Cooperative Banks (StCBs) operating as apex level institutions in each state. however. This growing interconnectedness of cooperative sector with the commercial banking sector. Moreover. these institutions are considered as a potential instrument to bring people from far-flung areas under the formal banking network. 5. 1. However. though widespread across the country. Moreover. Primary Agricultural Credit Societies (PACS) continued incurring huge losses. Since the network of cooperative banks is widespread across different parts of the country. and grass root level cooperatives in particular remains as an impediment.

This chapter provides analysis of operation and performance of cooperative banks based on the data collected from Urban Banks Department (UBD) of RBI (for UCBs) . However. whereas the registration and management related activities are governed by the Registrar of Cooperative Societies (RCS) in case of UCBs operating in single State and Central RCS (CRCS) in case of multi-State UCBs.647) StCBs: SCARDBs: PCARDBs: Note: State Cooperative Banks.Report on Trend and Progress of Banking in India 2010-11 grass root level. respectively1. the long term cooperatives are the State Cooperative Agriculture and Rural Development Banks (SCARDBs) at State level and Primary Cooperative Agriculture and Rural Development Banks (PCARDBs) operating at district/block level (Chart V. PACS: Primary Agricultural Credit Societies. Figures in parentheses indicate the number of institutions at end-March 2011 for UCBs and at end-March 2010 for rural cooperatives. 106 . DCCBs: District Central Cooperative Banks. In case of rural cooperatives. Similarly. Section 1 provides the introduction and a broad overview of the cooperative sector in India. numbers of cooperatives refer to reporting cooperatives. A detailed analysis of recent initiatives taken by NABARD for revival of rural cooperatives is presented in section 4.410) UCBs (1. 2. Primary Cooperative Agriculture and Rural Development Banks.575) Multi State (17) PCARDBs (697) DCCBs (370) PACS (94.765) Scheduled (53) Non-scheduled (1.1: Structure of Cooperative Credit Institutions in India (As at end-March 2011) Cooperative banks (97.5 The banking related activities of UCBs are governed by the Reserve Bank. the structure is even more complex with the Reserve Bank and the NABARD sharing the responsibility of regulating banking related activities and RCS regulating registration/ management related activities. Section 2 and 3 focus on the business operations and performances of UCBs for 2010-11 and rural cooperatives for 2009-10. For rural cooperatives. Section 5 delineates important observations emanating from the analysis presented in this chapter2. 5. efforts have been taken in recent years by the Reserve Bank to solve problems related to duality in control. and National Federation of State Cooperative Banks or NAFSCOB (for PACS). This involved signing of Memorandum of Understanding (MoUs) with the Central/State Government apart from putting in place a forum called State Level Task Force on Co-operative Urban Banks (TAFCUB). for resolving issues related to duality in control.592) Long term (717) Short term (95. Chart V. State Cooperative Agriculture and Rural Development Banks.1) 5. this chapter provides an analysis of operations and performances of cooperative banks in India.048) Multi State (25) Single State (28) SCARDBs (20) StCBs (31) Single State (1.6 Organised into five sections. 1 2 Since data for rural cooperatives is available with time lag of one year. 1.NABARD (for rural cooperatives except PACS).645) Rural cooperatives (95.

3 30.341 Percentage Share to Total 7 63.130 10.3 100. The shares of deposits and advances of UCBs in grade I and II together were 89.0 4. During the period 1991-2004 the UCB sector witnessed substantial growth possibly encouraged by the liberalised policy environment in post reform period.9 As an outcome of the ongoing consolidation process of the UCB sector in the form of merger/ acquisition among financially viable banks and exit of the non-viable ones. Keeping in view the heterogeneity of this sector. at end-March 2011.004 2.11 An analysis of performance of the UCB sector according to assets. The percentage Table V.8 UCBs are classified into four categories. There was. In the vision document the Reserve Bank proposed merger/amalgamation of viable entities within the sector and non-disruptive exit of the unviable ones.7 100. deposits and advances size wise further confirmed that there was a concentration of business in favour of UCBs with larger asset size. 2005. Grade-wise Distribution of UCBs 5.8 5.8 5. however a marginal decline in the percentage of UCBs of grade I category in 201011 as compared to the previous year. III and IV based on their financial performance in terms of certain parameters like CRAR.691 55.0 Amount of Deposits 4 1.487 7. Urban Cooperative Banks3 Profile of UCBs Consolidation of UCBs through mergers/ acquisitions is in progress 5. In the recent years there has been a decrease in total number of UCBs as an outcome of the ongoing consolidation process in this sector. UCBs categorised as grade I and II are considered as financially stronger than that of grade III and IV.12. 5. Share of banking business of UCBs of grade I and II witnessed an increase 5. there was a concentration of number of UCBs in grade I and II categories in recent years.645 Percentage Share to Total 3 51.237 1.0 Amount of Advances 6 86.9 per cent of total deposits and advances of UCBs. 107 .1: Grade-wise Distribution of Deposits and Advances of Urban Cooperative Banks (As at end-March 2011) Grades 1 I II III IV Total 3 Number of UCBs 2 845 497 172 131 1.7 UCBs play an important role by providing banking services to the wider sections of the society. Alongside.0 The data for 2011 presented in this section is provisional.2 4.34.5 8.7 26. grade I.0 100. This is evident from the fact that the UCBs of grade I and II witnessed an increase in their share in total deposits as well as advances in recent years.206 12..5 and 89. the Reserve Bank proposed a multi-layered regulatory and supervisory approach specifically aimed at revival and strengthening of UCBs in its vision document for UCB sector.5 26. respectively. The percentage of banks in grade I and II together constituted 82 per cent of total UCBs as at end-March 2011 compared to 80 per cent at end-March 2010.701 6.10 The share of banking business also witnessed concentration in favour of financially sound UCBs in the recent past. viz. especially in rural and semi urban areas.2 10.916 35. net NPAs and history of profit/loss.36. Profile of UCBs-According to Asset Size wise and Business wise Concentration of business was witnessed in favour of larger UCBs 5. eroding public confidence and posing systemic risk to the sector. a number of entities in the UCB sector became weak and unviable.031 Percentage Share to Total 5 63.Developments in Cooperative Banking 2. II.

1961.1). The Reserve Bank. According to the new guidelines. The RCS notified 95 mergers comprising 8 grade I. (ii) financial contribution by the transferee bank. Table 1. The year wise progress of merger/acquisition is presented in Table 1.9 89.6 10. and (iii) sacrifice by large depositors. confines its approval to the financial aspects of the merger taking into consideration the interests of depositors and post-merger financial stability of the acquirer bank.7 9.1 28.5 16. followed by Gujarat (16) and Andhra Pradesh (10).7 10.4 89.2.3 49. The financial parameters of the acquirer bank post merger must conform to the prescribed minimum prudential and regulatory requirements invariably for the merger cases.5 Grade-wise percentage share of advances 100% 90% 80% 70% Per cent 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 13.1 52.1 29.1.4 10.7 27.1: Merger and Amalgamation of Urban Cooperative Banks The consolidation of the UCBs through the process of merger of weak entities with stronger ones has been set in motion through transparent and objective guidelines issued in February 2005. The Reserve Bank examines the pros and cons of the merger scheme and places the same before an expert group for further screening and recommendations. Table1.4 2008 I 2009 2010 II III IV 2011 2009 I+II 2010 III+IV 2011 2009 I+II 2010 III+IV 2011 108 .8 30.2:State-wise Progress in Mergers/acquisition States 1 Maharashtra Gujarat Andhra Pradesh Karnataka Punjab Madhya Pradesh Uttarakhand Chhattisgarh Rajasthan Total 2005-06 2 2 2 4 2006-07 3 12 1 1 1 15 2007-08 4 14 7 3 2 1 27 2008-09 5 16 2 1 1 1 1 22 2009-10 6 6 2 3 2 13 2010-11 7 6 1 2 1 1 11 2011-12 8 2 1 3 Total 9 58 16 10 3 1 1 2 2 2 95 Chart V. Though mergers/amalgamations of UCBs come within the purview of concerned State Government. If the proposal is found to be suitable Reserve Bank issues no objection certificate (NOC) to the concerned cooperative/RCS/CRCS.1 12.7 8. 4 grade II. Pursuant to the issue of guidelines on merger of UCBs.2 Per cent 70% 60% 50% 40% 30% 20% 10% 0% 84. 59 comprised of UCBs having negative net worth.6 89.9 42.5 51.1 10.3 89.2: Grade-wise Distribution of Number of UCBs and Share in Total Advances and Deposits (As at end-March 2011) Distribution of UCBs according to grades 100% Number of cooperatives (in per cent) Grade-wise percentage share of deposits 100% 90% 80% 15.4 14.1:Year-wise Progress in Mergers/acquisitions Financial year 1 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12* Total *:Upto June 30.2011 Proposals received in RBI 2 24 32 42 16 26 17 1 158 NOCs issued by RBI 3 13 17 28 26 17 13 6 120 Merger effected (Notified by RCS) 4 4 15 27 22 13 11 3 95 Out of the 95 mergers reported so far. the Reserve Bank would also consider scheme of amalgamation that provides for (i) payment to the depositors under section 16(2) of the Deposit Insurance and Credit Guarantee Corporation Act. the Reserve Bank issued another set of guidelines in January 2009 for merger/acquisition of UCBs having negative net worth as on end-March 2007. The maximum number of mergers took place in the State of Maharashtra (58). The process of merger/amalgamation requires the acquirer bank to submit the proposal alongwith some specified information to RCS/ CRCS and the Reserve Bank. the Reserve Bank received 158 proposals for merger of which the Reserve Bank has issued NOC to 120 proposals as on end-June 2011(Table 1. Details about State wise progress in mergers/acquisitions are furnished in Table 1. 17 grade III and 66 grade IV UCBs. while considering proposals for merger/amalgamation.0 10.Report on Trend and Progress of Banking in India 2010-11 Box V.5 60% 50% 40% 30% 20% 10% 0% 83. In addition to the guidelines issued in February 2005.6 10. prior approval from the Reserve Bank is required for obtaining No Objection Certificate (NOC).0 10.

4). 5.3: Changing Profile of UCBs Distribution of UCBs-YoY variation 30 Number of UCBs (in per cent) Y-o-Y change in share of assets 35 25 20 15 10 5 0 Percentage share of assets 30 25 20 15 10 5 0 1000 < A < 2000 500 < A < 1000 250 < A < 500 1000 < A < 2000 500 < A < 1000 250 < A < 500 2010 Note: 'A' denotes asset size (in ` crore) 100 < A< 250 2011 2010 100 < A< 250 50 < A < 100 2011 share of banks with larger asset size (assets more than `25 crore) witnessed an increase in 2010-11 compared to previous year.4) 25 UCBs (12.12 As at end-March 2011. 109 A < 15 . Chart V. though accounted for only 4 per cent of total number of UCBs. tier I and tier II for regulatory purposes. Accordingly. percentage share of UCBs with asset size less than `25 crore declined during the same period.14 Apart from grade-wise classification.4: Asset Size-wise Distribution of UCBs (As at end-March 2010) 17 UCBs (32.0) 231 UCBs (1.1) 15 < A < 25 A > 2000 A > 2000 A < 15 244 UCBs (14.4 285 UCBs (7.8) 351 UCBs (1. viz.4) 50 < A < 100 25 < A < 50 15 < A < 25 25 < A < 50 104 UCBs (12.8) Chart V.13 An analysis of deposits and advances basewise distribution of UCBs revealed that banking business was predominantly concentrated in favour of larger UCBs. 5. contributed almost 53 per cent of total deposits. the remaining share of 14 per cent of total assets was attributable to UCBs with smaller asset size (`15 crore-`100 crore). Accordingly. which accounted for almost 73 per cent of total number of UCBs (Chart V. Similarly. only 3 per cent of total number of UCBs had advances base of more than 4 `500 crore.. but they accounted for almost 47 per cent of total advances disbursed in 2010-11 (Table V. UCBs with medium asset size (`100 crore-`500 crore) had a share of 21 per cent of total number of UCBs and 27 per cent of total assets size.4) 336 UCBs (4.Developments in Cooperative Banking Chart V.2). UCBs are classified into two categories. UCBs with assetsize more than `500 crore constituted almost 6 asset-size per cent of total number of UCBs while the same category of UCBs accounted for a share of 59 per cent of the total assets of the sector. Also UCBs with larger asset base witnessed an increase in their share in total assets (Chart V. All UCBs following the below stated criteria4 are classified as tier I banks where as all other banks are classified as tier II banks. UCBs with larger deposit base (more than or equal to `500 crore).6) 52 UCBs (13.3).5) A > 2000 100 < A< 250 1000 < A < 2000 50 < A < 100 500 < A < 1000 25 < A < 50 250 < A < 500 15 < A < 25 A < 15 Note: 'A' denotes asset size in ` crore and figures in parentheses indicate percentage share of assets Deposits and advances as referred in this definition may be reckoned as on 31-st March of the immediate preceding financial year. Tier-wise Profile of UCBs Number of tier I banks reduced as compared with the previous year 5.

8 100.642 12.645 6 Ad j 1000 500 i Ad < 1000 250 i Ad < 500 100 i Ad < 250 50 i Ad < 100 25 i Ad < 50 10 i Ad < 25 Ad < 10 Total 7 17 27 50 148 182 259 446 516 1.4 14.031 Percentage Share to Total 5 19.9 19.3).341 Percentage Share to Total 7 18.645 100.0 11.899 30.057 17. of banks Number Percentage Share to Total 3 77.487 19.297 2.0 Advances base Distribution of UCBs by Size of Advances Number of UCBs Number Percentage share in total 8 1.779 1.737 Percentage share in total 10 33.0 1.6 14.0 100. II. shares in total deposits as well as advances were less than 20 per cent.031 Deposits Percentage share in total 5 39.463 9.36.5 5.12.0 Amount 8 52. Similarly.1 5.341 Note: D: Deposits in rupees crore.323 7.219 11.7 27.0 Deposits Amount 4 40. accounted for majority share of advances and deposits.0 1.0 1 D j 1000 500 i D < 1000 250 i D < 500 100 i D < 250 50 i D < 100 25 i D < 50 10 i D < 25 D < 10 Total 2 28 41 91 206 245 318 418 298 1.4 0.4 Advances Amount 9 45.3 81.335 22. III.Report on Trend and Progress of Banking in India 2010-11 Table V.3: Tier-wise Distribution of Urban Cooperative Banks (As at end-March 2011) (Amount in `crore) Bank Tier Type No.301 Assets Percentage Share to Total 9 19. deposits and advances of branches in one district separately constitute at least 95 per cent of the total deposits and advances.4 18.11.6 13.7 2.442 7.12.252 2. Ad: Advances in rupees crore I.7 100.1 6.2: Distribution of Urban Cooperative Banks by Size of Deposits and Advances (As at end-March 2011) (Amount in `crore) Deposit base Distribution of UCBs by Size of Deposits Number of UCBs Number Percentage share in total 3 1.0 12.7 16.2 80.631 17.212 31.5 14.73.3 25.377 2.423 1.2 100.645 110 . the distribution of total assets was also heavily skewed in favour of tier II banks with these banks accounting for almost 81 per cent of total assets of the UCB sector (Table V.8 5.867 28.0 Amount 4 83.2 14. though constituted less than one fourth of total number of banks.4 2.115 1. Banks with deposits below `100 crore operating in more than one district provided the branches are in contiguous districts and.1 31.924 2.1 100.918 1.6 3. As at end-March 2011 tier I banks accounted for more than three fourths of total number of UCBs. Tier II banks. whose branches were originally in a single district but subsequently became multi-district due to reorganisation of the district.36.5 12. As against this their Balance Sheet Operations of UCBs Balance sheet of UCBs expanded mainly on account of growth in borrowings as well as loans and advances 5.8 22.279 366 1.9 8.0 1 I II Total 2 1.0 9.1 15.8 100.15 There was an increase in the number of tier II banks while number of tier I banks reduced as at end-March 2011 as compared to the previous year. Non-scheduled UCBs witnessed expansion of their balance Table V. Banks with deposits below `100 crore.8 100.2 80.16 Balance sheet of UCBs expanded at a rate of 15 per cent at end-March 2011 over the previous year.20.4 3. Banks having deposits below ` 100 crore operating in a single district. 5. This expansion in balance sheet was largely attributed to borrowings on the liabilities side and loans and advances on the assets side.646 2.71.6 9.0 Advances Amount 6 24. respectively of the bank.

195 (9.0) 80.075 (31.19 As at end-March 2011.2) 10.2) 557 (0.3) 2.9) 15.271 (100.4) 21.3) 24.718 (2.340 (1.736 (100.9) 74. previous year.2) 2.12.0) 12.9) 2. Cash in Hand 2.107 (29.19.7) 1.37. Investments in Central and State Governments securities constituted almost 77 per cent of total SLR investments.3) 53.374 (100.289 (1.6) 648 (0. Balances with Banks 3. investments in term deposits with StCBs and DCCBs constituted almost one fifth of total SLR investments of UCBs in 2010-11. there was a decline in investments made in non-SLR instruments in 2010-11.709 (1.916 (9. The share of deposits in total liabilities increased marginally in 2010-11 as compared to the previous year.1) 2.5) 10. Further.595 (34.73.1) 12.604 (1.498 (6.302 (100.9) 22.170 (33.0) 1. Capital and reserves together constituted almost 12 per cent of total liabilities in 2010-11.431 (0.2) 651 (0.0) 2011 3 1.8) 1.896 (100.53.9) 1.455 (8.766 (8. Borrowings 5.2) 1.483 (9.010 (9. share of deposits in total liabilities was 78 per cent implying that UCBs are heavily dependent on deposits for resources.789 (46.377 (10.9) 50.9) 407 (0. Other Assets Total Liabilities/Assets Scheduled UCBs 2010 2 1.0) 14.6) 10.4) 11.0) 2011 5 4.3) 11.1) 2.4).0) 2010 6 5.3) 10.33.5) 33.772 (51.Developments in Cooperative Banking sheet at a higher rate than their scheduled counterparts.7) 10.4: Liabilities and Assets of Urban Cooperative Banks (As at end-March 2011) (Amount in `Crore) Item 1 Liabilities 1.031 (77.0) Note: Figures in parentheses are percentages to total liabilities/assets.290 (9.890 (8.260 (9.8) 48. 111 .17 As at end-March 2011.066 (9.436 (47.973 (8. While total investments in SLR securities continued to increase.357 (0.18 The growth in total investments of UCBs moderated in 2010-11 as compared to the Table V.395 (2. 5. Deposits 4.531 (10.567 (2.0) 61. 5.955 (3.647 (48.880 (8.8) 1.516 (9.6) 10.6) 2.2) 2. Both Investment Activities of Urban Cooperative Banks SLR instruments continued to account for a major part of total investments 5.569 (48. There was also a change in the composition of SLR investments in 2010-11 with UCBs shifting their investments from term deposits with StCBs and DCCBs to Central and State Government securities and other approved securities (Table V.5) 11.859 (10.4) 485 (0.657 (8.503 (8.6) 4.150 (77.528 (8.36.005 (10.20 The non-scheduled UCBs witnessed a higher growth in SLR investments as compared to their scheduled counterparts. Reserves 3.83.4) 31. On the assets side. loans and advances constituted almost half of total assets followed by investments and balances with banks (Table V.023 (0.063 (36.238 (7.341 (49.7) 9.6) 1.5) 586 (0.943 (77.682 (9.3) 92. Investments 5.19.871 (1.3) 26.3) 1.4) 1.02.571 (1.7) 1. Money at Call and Short Notice 4. Other Liabilities Assets 1.9) 1.9) 20.0) All UCBs 2011 7 6.783 (1.6) 79.7) 1.190 (0.602 (77.9) 23.4) 1.566 (100.0) 61.7) 12.208 (77.0) 1.428 (77.0) Non-Scheduled UCBs 2010 4 3.153 (10.03.6) 24. almost 93 per cent of total investments of UCBs were in SLR instruments.480 (28.612 (1. Loans and Advances 6.267 (2.0) 21. 5.5) 1.5). Capital 2.12.6) 11.136 (0.4) 87.8) 1.

8 13.21 Net profits of the UCB sector improved substantially during 2010-11 as compared to Chart V. which witnessed their expenditure growing at a higher rate than income.7 and Chart V. In case of non scheduled UCBs.8 51. if any 1.5) 6.5) 1.127 (11.5 -23.1) 10.0) v) Term Deposits with DCCBs 13.326 (8.5) iv) Term Deposits with StCBs 6.4 5 10.5: Composition of Investments of UCBs (As at end-March 2011) Composition of Investments-Scheduled UCBs 9% 10% Composition of Investments-Non-scheduled UCBs 6% 2010 11% 2010 90% 91% 89% 2011 94% 2011 SLR Non-SLR SLR Non-SLR 112 . 5.496 (6.756 (92.839 (17. The scheduled UCBs.6) i) Central Government Securities 40.1 -19.6) ii) State Government Securities 7. Financial Soundness of UCBs Asset Quality Gross NPAs increased. However.075 (100.23 The gross non-performing assets (GNPAs) of UCB sector increased during the period 201011 over the previous year. Return on assets and net interest margin improved for the sector as a whole owing to a significant increase in net profits.2) B.169 (100.4 1. taxes and staff expenses (Table V. Bank wise data of RoA revealed that majority of banks were reporting RoA in the range of 0-1.6) 576 (0. continued to have a higher proportion of their total investments in non-SLR instruments as compared to non-scheduled UCBs (Chart V.5) vi) Others. however.324 (1.0) 80.6 29. Note: Figures in parentheses are percentages to total investments.319 (7.6).861 (12.5).22 All the major items of the profit and loss account of the UCB sector witnessed positive growth during 2010-11. Non-SLR Investments 8.5 per cent (Table V.791 (9.Report on Trend and Progress of Banking in India 2010-11 Table V.372 (60.0 38.3) 10.818 (51. the increase in profits was mainly attributable to a fall in provisions and contingencies.4) the previous year when this sector witnessed a slowdown in net profits possibly due to the spillover effects of global financial crisis. there was a Financial Performance of UCBs Net profits of the UCB sector improved due to growth in income 5.3 30.5: Investments by Urban Cooperative Banks (Amount in `Crore) Item As at end-March 2010 1 Total Investments (A+B) 2 Percentage Variation 2011 2009-10 2010-11 3 87.0 13.3 19. thus improving the overall financial position of this sector.4 79. these groups witnessed a decline in their nonSLR investments.244 (10.2 19.7 -23.3) 4 21.1 -21.8 -13.7) 5. This increase in profits was primarily attributable to a robust growth in income surpassing the growth in expenditure.9 28.736 (2.8) iii)Other Approved Securities 415 (0.7) 52.4 79.0) A. though there was a decline in both gross as well as net NPA ratios 5.7).925 (89. SLR Investments (i to vi) 70.

528 (94.0) 10. Interest Expenditure ii.667 1. 5.849 (92.257 2010-11 7 22. Non-Interest Expenditure of which: Staff Expenses C. Provisions.786 2.9) 2.439 (7.9) 1594 (7.233 Non-Scheduled 2009-10 4 11. taxes iii.1) 741 (5.4) 1.0) 8.273 (29. However.670 (70.7) 1. Chart V.203 Percentage variation (All UCBs) 2009-10 8 7. Financial indicators 2009-10 1 Return on Assets Net Interest Margin 2 0.871 1.57 2.0) 7.6) 9.12 2010-11 5 0.137 (70.5 -19.0) 7.751 (90.4 1.3 ii.8 10.7: Select Financial Indicators of UCBs Non-Scheduled 2009-10 4 0.214 666 548 2010-11 3 9.004 (71.657 948 709 2010-11 5 12.442 (29.500 (100.57 3.860 (94. Amount of operating profits ii.1 9. Amount of net profits Note: Figures in parentheses are percentages to their respective totals.830 (29. contingencies.2) 2. Non-Interest Income B.443 (100.601 (70.5) 7.7) 5. Total Income (i+ii) i.013 (27.3) 2.3) 4.6: Financial Performance of Scheduled and Non-Scheduled Urban Cooperative Banks (As at end-March 2011) (Amount in `Crore) Item Scheduled 2009-10 1 A. Profits i.3) 853 (8.10 3.4) 629 (5.865 1.1 12.157 (100.9 -19.832 862 970 All UCBs 2009-10 6 19.7) 2.02 113 . Total Expenditure (i+ii) i.0) 5.5) 810 (9.9) 10.0) 18.536 (70.3 13.7 75.8).54 Scheduled 2010-11 3 1.033 800 1.579 (100.776 1.0) 12.718 (100.662 2.86 2010-11 7 0.847 (100.9 -17.7 12.8 14.1 10.3) 16.334 (72.010 1.843 (28.0 -18.57 2. Interest Income 2 8.6 17.169 (29.8) 1. it was found that almost 20 per cent of the scheduled UCBs failed to comply with the prescribed minimum CRAR of 9 per cent whereas their nonscheduled counterparts performed better in terms of capital adequacy with only 8 per cent of them reporting CRAR below the prescribed limit (Chart V.0) 20.24 As at end-March 2011.6 12. decline in gross as well as net NPA ratios during 2010-11 implying improvement in asset quality for the UCB sector.279 (92. Along with the improvement in gross and net NPA ratios there was also an increase in the provisioning coverage ratio of the sector (Table V.0) 13.09 15% 58% 79% 78% 23% 2% 2% 13% 5% 5% 1% 2% 2% 2% 13% Non scheduled UCBs Scheduled UCBs 3 % ≤ CRAR < 6% 6 % ≤ CRAR < 9% CRAR<3% 9 % ≤ CRAR < 12% 12 % ≤ CRAR Table V.6).6) 2.4 12.3 9.6 2010-11 9 13.821 3.6: Distribution of UCBs according to CRAR (As at end-March 2011) All UCBs Capital Adequacy Majority of UCBs reported CRAR more than 9 per cent 5. almost 90 per cent of the UCBs were found to have a CRAR of more than 9 per cent.7) 7.0) 6.3 34.842 (100.6) 3.347 (100.154 2.601 (100.614 1.770 (100.0) 11.4) 1.1) 1.1) 18.Developments in Cooperative Banking Table V.809 (100.989 (91.97 All UCBs 2009-10 6 0.86 3.0) 5.25 An analysis of bank wise CRAR data revealed that most of the UCBs with CRAR less than 9 per cent actually reported negative CRAR.561 (100.68 2.

9 adjusted bank credit or credit equivalent amount of off-balance sheet exposure. The priority sector lending target for UCBs was set at 40 per cent of Chart V.399 72.130 8. Chart V.529 3. of total priority sector advances.0 40.5 Mar’2011 3 11.28 As at end-March 2011.821 10. Also inter-bank exposures will not be taken into account for setting priority sector targets/sub targets.27 As at end-March 2011.0 15.0 -5.0 -1.0 1.7). and 6 are in percentages. However. Agriculture Small enterprises State sponsored organizations for SC/ST Housing loans Note: Percentages mentioned in this chart are with respect to total loans and advances of UCBs 5 6 Existing investments. almost 14 per cent of total advances of UCBs were disbursed to weaker sections6 of which more than 60 per cent was absorbed by small enterprises. The share of agriculture under priority sector in total advances declined in 2011 as compared to the previous year (Chart V.7: CRAR and RoA of UCBs (As at end-March 2011) 4.0 -3.9 7.0 Regulatory minimum of 9 per cent -4. 114 .578 66. 5. whichever is higher. as on August 30. 2. 5.0 CRAR 54% Priority sector advances 46% 27% 3% 1% 0.0 Note: Four UCBs have been excluded from this chart owing to their very high negative values for the CRAR as at end-March 2011. Gross NPAs Net NPAs Gross NPA Ratio Net NPA Ratio Provisioning Coverage Ratio Mar’2010 2 11.0 -10. advances to priority sectors by the UCBs constituted almost 46 per cent of their total advances disbursed by them.0 Non-priority sector advances Micro credit Educational loans -6.0 20. The dismal financial performances of these banks were also visible with some of them reporting negative RoA (Chart V.0 -15. as on 31st March of the previous year5.8: Composition of Advances to Priority Sectors by UCBs (As at end-March 2011) Note: 1.0 3. 6.0 25.5 2. 2007 made by banks in non-SLR bonds held in HTM category are not taken into account for calculation of adjusted bank credit. 4.8: Non-Performing Assets of UCBs (Amount in `Crore) Items 1 1.0 -5. fresh investments by banks in non-SLR bonds are taken into account for this purpose. A further breakup of total priority sector advances revealed that small enterprises and housing loans constituted almost 59 per cent and 26 per cent.Report on Trend and Progress of Banking in India 2010-11 Table V. 5. The advances to weaker sections constituted almost 30 percent of total priority sector advances as at end-March 2011 (Table V.5 8.1 3. Advances to priority sectors are inclusive of advances to weaker sections.0 0.0 35. 2. 4. Coverage ratio is calculated as provisioning as percentage of gross NPAs.8).0 10.0 30.5 per cent RoA 2.26 UCBs play an important role in providing adequate and timely credit to small and weaker sections of the society.0 5. Priority Sector Advances UCBs’ advances to priority sectors constituted almost 46 per cent of total advances 5. Items 3. 3. respectively.399 3.9).0 45.0 1.2% 12% 3% -2.0 0.

5 2.7 7.3 2. Indirect Finance 952 Small Enterprises 11. Direct Finance 9.5 76.9 13.4 0. Geographical Spread of UCBs UCBs continued to be concentrated in the western region 5. The concentration was. Maharashtra alone accounted for more than 65 per cent of the banking business of UCBs followed by Gujarat and Karnataka.1 0. Southern states accounted for 14 and 16 per cent of total deposits and advances.7 70 60 50 40 30 20 10 2.2 15.951 more than three fourths of total deposits as well as advances attributed to western region.9 Agriculture and Allied Activities 1.1 8.7 0. Kerala and Tamil Nadu together in total deposits as well as advances of the UCBs was close to 90 per cent. the banking business of UCBs was very shallow in other parts of the country. (Chart V.4 0.29 An analysis of the State-wise data on number of UCBs as well as advances and deposits revealed that UCBs continued to remain concentrated in terms of number as well as banking business in the western part of the country.9 0 10. respectively. Gujarat.6 3. Accordingly.8 65.0 10.8 Gujarat Tamil Nadu Percentage share of deposits Number of UCBs (in per cent) Percentage share of advances Percentage share of deposits Karnataka Percentage share of advances 115 Maharashtra Andhra Pradesh Kerala Other States .3 2.166.10). 5. Karnataka.6 9.9) 5. more skewed when considered in terms of banking business with Chart V.0 2. Indirect Finance 1.8 7.928 of which 1.3 1. From the analysis it can be concluded that the level of concentration in terms of geographical presence was comparatively less in grade I UCBs followed by grade II/III and grade IV (Chart V.7 6.9: Region-wise and State-wise Profile of UCBs (As at end-March 2011) 80 70 60 50 Per cent Per cent 76. The share of Maharashtra.6 2.31 For a comparative analysis among different grades of UCBs according to level of geographical concentration. Direct Finance 555 2.9 3. Andhra Pradesh. however.3 1.7 3.3 2.Developments in Cooperative Banking Table V.7 8. a comparison has been done between the share of top five States and bottom five States according to the number of UCBs.937 Micro Credit 1.30 The State-wise data on deposits and advances further revealed that within the regions also there was a concentration of banking business in some of the States.2 40 30 20 10 0 Northern Western Southern Central Eastern & North Eastern 14. almost 48 per cent of the total UCBs were located in the western States followed by southern States accounting for 34 per cent of total UCBs.991 2. particularly in eastern and north-eastern regions. As at end-March 2011.9: Advances to Weaker Sections by Urban Cooperative Banks (As at end-March 2011) (Amount in `Crore) Sector 1 Amount 2 Percentage share in total advances 3 1.5 2.1 0.507 of which 1.021 Total 18.000 State Sponsored Organisations for SC/ST 96 Educational loans 399 Housing loans 4.9 2.

StCBs and DCCBs reported profits. decelerated for StCBs and DCCBs at end-March 2010 as compared to the previous year. Short-term Structure of Rural Cooperatives 5.34 As at end-March 2010.35 The short term structure of rural cooperatives comprises of StCBs operating as the apex institutions in each State. however.36 The balance sheet of StCBs expanded at a rate close to 12 per cent during 2009-10. however. the PACS. DCCBs operating at the district level and PACS operating at a more granular level. almost one third of total rural cooperative credit institutions (excluding PACS) had their boards under supersession. 116 . reported highest NPA ratio.10). PACS incurred huge losses. Out of the total loans and advances issued by the rural cooperatives. DCCBs accounted for almost 47 per cent followed by PACS and StCBs. Within the short term structure. indicating poor asset quality of these grass root level cooperatives (Table V.10: Percentage Share of Top and Bottom Five States in Total Numbers of UCBs (As at end-March 2011) 90% cooperatives in total loans and advances stood at less than 3 per cent. thus indicating the dominance of short term structure in rural credit disbursement. Within the short term structure. The NPA ratio.32 As at end-March 2010. short term cooperatives constituted a majority while only one per cent of the total cooperatives operating in the country were long term in nature. Among various types of rural cooperatives SCARDBs witnessed the highest percentage of boards under supersession (Table V. The NPA ratio was found to be higher in case of long term cooperatives. 5. whereas the ground level institutions.33 StCBs and the DCCBs were heavily dependent on deposits for resources whereas borrowings constituted a major part of total assets in case of PACS. SCARDBs and PCARDBs. Out of the total number of rural cooperatives. Management of Cooperatives Almost one third of total rural cooperatives’ boards under supersession 5.11). PACS continued to incur losses. which Share of top 5 Share of bottom 5 7 Data for 2009-10 presented in this section is provisional. While StCBs and DCCBs witnessed fall in their net profits. 82% 80% 81% 73% 70% 69% Number of banks (in per cent) 60% 50% 40% 30% 20% 10% State Cooperative Banks 2% 2% II 1% III 2% IV 0% I Growth of StCBs’ balance sheet decelerated in 2009-10 as compared to previous year 5. The short term cooperatives (except PACS) were found to be better placed as compared to their long term counterparts in terms of asset quality and recovery performance. The financial positions of long term cooperatives were found to be weaker than the short term cooperatives with both SCARDBs and PCARDBs reporting losses as at end-March 2010. there were a total 95. Rural Cooperatives7 Financial performance of long term cooperatives was relatively weak 5. The share of long term Chart V.765 rural cooperative institutions operating in the country.Report on Trend and Progress of Banking in India 2010-11 3.

of Cooperative Banks Balance Sheet Indicators i.037 C.479 35.136 4757 16.559 53.581 3.662 Short-Term DCCBs 3 370 31. 117 . Deposits iii. while investment accounted for the almost 45 per cent of total assets. Amount of Profits ii.0 Note: 1.215 39.588 49.466 2. Loans and Advances Outstanding vi. Total Liabilities/Assets Financial Performance i. Jharkhand and West Bengal are repeated for 2009-10 due to lack of information. 2 Data are repeated for DCCBs operating in the States Bihar.465 11. Institutions in Profit a.404 28. SCARDBs: State Cooperative Agriculture and Rural Development Banks.10: A Profile of Rural Cooperative Banks (As at 31st March.676 PACS 4 94.000 25.07. Manipur. On the liabilities side.46. SCARDB in Tripura is defunct. 29 462 2 209 253 575 4353 8. Also. Table V. ‘-‘ : Not available.0 276 123 416 538 -415 4154 4.Developments in Cooperative Banking Table V.8 322 1. Data related to StCBs in Bihar. PACS: Primary Agricultural Credit Societies. investments increased at a higher rate than loans and advances. DCCBs: District Central Cooperative Banks. Sikkim.629 1.482 25.936 1.524 ++ 41. Institutions in Loss a.510 759 15. West Bengal and Kerala.679 2.8 91. No. Overall Profit (+)/Loss (-) iv. StCBs: State Cooperative Banks.841 42. Accumulated Loss Non-performing Assets i.192 + Long-Term SCARDBs 5 20 4. Amount of Loss iii.764 74. No. b.832 2. and other assets on the assets side. 3 Manipur SCARDB is defunct.205 17.5 D. +: Working capital. Kerala and West Bengal are repeated for the year 2009-10 from previous year due to lack of information.118 369 33.938 76. As Percentage of Loans Outstanding iii. was lower than the growth observed during 2008-09.2 SCARDBs 4 20 9 45. *: Nayagarh DCCB in Orissa is in no profits no loss situation.20. Source: NABARD and NAFSCOB. 2.9 75. 2010) (Amount in `crore) Item 1 (i) Total number of institutions (ii) Number of institutions where Boards were under Supersession Percentage of reporting Boards under supersession [(ii) as per cent of (i)] StCBs 2 31 9 29.234 12.12).659 47* 523 1.735 1.480 1.18.647 12. Recovery of Loans to Demand (Per cent) 2 31 11.3 - 10 127 9 155 -27 1. Note: 1 StCBs in the states of Bihar. Source: NABARD. The growth in StCB’s balance sheet was mainly due to increase in borrowings and other liabilities on the liabilities side.871 79.2 41. No.0 41. Borrowings iv. 2010) (Amount in `crore) Item StCBs 1 A.0 Total 6 1. B. PCARDBs: Primary Cooperative Agriculture and Rural Development Banks.7 40. the percentage share of investments in total assets increased with a decline in the share of loans and advances as at endMarch 2010 as compared to the previous year (Table V.132 41.150 23. During 2009-10.562 PCARDBs 6 697 5.642 33.347 -1.370 1.0 PCARDBs 5 697 265 38.11: Elected Boards under Supersession (Position as on March 31.165 461 12.35.286 51.0 DCCBs 3 370 86 23.190 5. 4 Data for 5 SCARDB are not available for 2010. Amount ii. deposits continued to account for the largest share of the resources of StCBs.18. b. Pondicherry and West Bengal and DCCBs in Bihar. Loans and Advances Issued v.393 1. ++: Total overdues. Owned Funds (Capital + Reserves) ii. and cash and bank balances.

400 49.631 (1. Reserves 3. ‘Reserves’ include credit balance in P&L Account shown separately by some of the banks.0) 20.6 -3.4) 10.188 7.905 21.2 47.8) 46.179 10000 0 2008 Deposit 2009 Credit 2010 2011 Investments (SLR) Source: Form B under section 42(2) of RBI act. Analysis of various categories of NPAs further revealed that the decline in NPA was mainly on account of a decline in sub-standard and doubtful assets while there was a steep increase in loss assets in 2009-10 as compared to previous year (Table V.0) (100.662 (100.5) 70.11).913 (19.325 (9. it was observed that deposits declined significantly in 2010-11 as compared to the previous year.329 20000 15. 2.773 17. Figures in brackets are percentages to total liabilities/assets.20.Report on Trend and Progress of Banking in India 2010-11 ` Crore 5.4) (7.150 (65.11: Select Balance Sheet Indicators of Scheduled StCBs (As at end-March 2011) 70000 65.14).116 1.6) 2010 3 1.6 12. There was also a change discernable in the composition of total income of the StCBs for last two years with the share of their non-interest income in total income Table V. interest income accounted for almost 95 per cent of StCBs total income in 2010.40 The asset quality of StCBs improved as at end-March 2010 over the previous year with their NPAs declining both in absolute as well as percentage terms. there was substantial increase in total credit disbursed in 2010-11.8) (41.6) 23.997 (4.7 2. Deposits 4. Other Liabilities Assets 1.567 54.886 42.8 2009-10 5 4. Kerala and West Bengal repeated for the year 2009-10.39 On the expenditure side.4 7.175 59.7 16.396 40000 46.240 (8. Data for StCBs in the States of Bihar.3 11. Provisions and contingencies also declined in 2009-10 (Table V.1) 5.0 -0. Investments 3.5) 10. 118 7.8 17. Borrowings 5.350 60000 30000 23.372 43.083 (5. Capital 2.3) 4.312 (65. 5.3 1.08.0) Percentage variation 2008-09 4 2.8 12.13) NPA ratio declined for StCBs though there was a sharp increase in ‘loss’ NPAs 5.559 (19. Source: NABARD . This fall in profit was mainly attributed to a slower growth of income during 2009-10 as compared to the previous year.333 (4.385 58. 1934 increasing continuously. Total wage bill increased substantially though there was a fall in total operating expenses in 2009-10 as compared to the previous year.1) 1.0) 48.629 (44. Cash and Bank balance 2.1) (45.5) 79.8) (6.0) -4.7 21. Other Assets Total Liabilities/Assets As at end-March 2009# 2 1.6 #: Data for 2008-09 is updated Notes: 1. Loans and Advances 4.37 From the updated information on major balance sheet indicators of scheduled StCBs available in Section 42(2) returns.5) 6.698 52.569 (1.3 4.568 50000 42.2 24. The trend continued in 2009-10 with non-interest income growing at a significantly higher rate than interest income.334 (43.960 9. Investments in SLR instruments by StCBs declined in 2010-11 as compared to the previous year (Chart V.367 (7.5 41. interest expenditure continued to account for more than three fourths of total expenses. StCBs’ profits decreased mainly on account of slower growth in income 5. In contrast.8 -7. Manipur.8 13. Nonetheless.12: Liabilities and Assets of State Cooperative Banks.7 Chart V. end-March 2010 (Amount in `crore) Item 1 Liabilities 1. 3.38 Net profits of StCBs decreased in 2009-10 as compared to the previous year.

Interest Income 2 7.9 -12. which was attributable to growth in deposits and ‘other’ liabilities on the liabilities side and investments on the assets side.5 -41.1) 7.8 9.2) 1. Wage Bill C.0 18.729 (78.4 10.6 60. though growth in investments decelerated as compared to 2008-09.4 30. Doubtful 3.6 District Central Cooperative Banks Investments grew at a higher rate than loans and advances 5.0) 512 (7.332 2.0 -18. Manipur and Kerala are repeated for the year 2009-10. Profits i. Provision Made 3.1 21.44 On the assets side.1 -41.9 44.1) 7.9 190.9 24.7 29. Data for StCBs in Bihar.8 -20. Other Income B.0 50.3) 11.0 51.0 40.8 7. Interest Expended 309 (4. 5. Total NPAs (i+ii+iii) 5. However.6) 393 (4. During 2009-10.0 66.4 ii.0) 2010 3 8.0 21.0 28.0) 7.0 Note: 1. NPAs to Loans Ratio 11.627 ii.1 0.42 During 2009-10 the balance sheet of DCCBs witnessed expansion at a rate close to 12 per cent.0 4. 70.822 iii.092 (15. loans and advances increased as compared to a decline in 2008-09. 5.9 15.1 -62.41 The percentage share of ‘sub-standard’ and ‘loss’ categories of NPAs in total NPAs increased in 2009-10 as compared to the previous year though there was a decline in the percentage share of ‘doubtful’ NPAs during the same period (Chart V.0 A.8 8.6 43.272 (100.8) ii.7 34. Operating expenses of which.13: Financial Performance of State Cooperative Banks (Amount in `crore) Item As at end-March 2009 1 A.0) 5.8 44.43 Deposits accounted for almost two thirds of total liabilities of DCCBs in 2009-10.8 -15.9) 417 (5.8 ii. the higher growth in investments as compared with the growth of loans and advances during 2009-10 indicated DCCBs’ continued preference for investments rather than lending due to reduction in risk Chart V.219 802 8.5 2009-10 5 8. Expenditure (i+ii+iii) i.0 Sub standard 2009 Doubtful 2010 Loss 119 . Sub-standard 1. Loss 276 B. West Bengal. loans and advances constituted almost half of the total assets whereas investments accounted for almost one third of the same. 5. Source: NABARD.861 4.590 (100.Developments in Cooperative Banking Table V. 2.883 iii.7 -16.5 10.8 13.4 Percentage variation 2008-09 4 22.281 (95.3 -0.12).8 91.239 (100.310 Source: NABARD 20.8 2. Provisions Required 2.12: Percentage Share of Different Categories of NPAs of StCBs (End-March 2010) 80.353 1.3 -8.822 (94. there was a decline in the percentage share of capitals and reserves in total liabilities.14: Soundness Indicators of State Cooperative Banks (Amount in `crore) Item 1 As at end-March 2009 2 2010 3 4.0) 6.438 Percentage variation 2009 4 -7.5) 581 (7.9) 997 (12.725 i.8 Percentage share Table V.1 35.5 2010 5 -24. Provisions and Contingencies iii. Income (i+ii) i. indicating their heavy dependence on deposits for funds.595 (82. Alongside.9) ii. Figures in parentheses are percentages to the total income/ expenditure.8 i.985 (100.0) 7. Recovery to Demand (%) 91. Net Profits 451 (6.6 30. Operating Profits 768 318 647 253 0.

330 (62.4) (5.7 12.735 (14.8) 64.2 -16.623 1.136 52.0) 2.9 14.676 100.9 16.9 28.0) 16. Net profits of DCCBs’ declined mainly due to increase in operating expenses 5. appetite following increased downward risk to domestic growth emanating from global economic uncertainties (Table V.1 3. Wage Bill C.578 7.4) 4. Other Liabilities Assets 1.3) 23.417 (22.9) 1. Operating expenses of which.9 6.2) 2.1 -3. .95.363 1. Loans and Advances 4.913 (33.228 (13. Profits i. Total NPAs as well as the NPA ratio declined as at end-March 2010 as compared to the previous year. Interest Income ii. Capital 2. there was an increase in the percentage share of loss assets in total NPAs of DCCBs with a subsequent decline in percentage shares of doubtful and sub-standard assets.817 (90.8 3.0) 1.227 24.618 (15. 5.4 -13.1) 2010 3 17.0) 10.0) 1.6 14.429 1.797 (6.7 17.3 8. Source: NABARD.6 17.9) 2.500 (9.168 (5.576 (100.Report on Trend and Progress of Banking in India 2010-11 Table V.936 (90.7) 99.6 10.8 -1.713 (100.0 2 16. West Bengal and Kerala are repeated for the year 2009-10.7 7. West Bengal and Kerala are repeated for the year 2007-08. Figures in parentheses are percentages to total. 2.684 2.8) 13.1) (34. increased at a significantly slower rate in 2009-10 as compared to 2008-09 (Table V.1 19.6) 12.777 (10.302 (100.46 An analysis of different components of the profit and loss account of DCCBs suggested that the deceleration of profits was mainly on account of increase in operating expenses. Interest Expended ii.6) (6.353 3.4) (3.0) 9. Data for DCCBs of Bihar. which is the major component of income for DCCBs.0 9.709 75.949 (100. Deposits 4.9 21.473 1.1 2009-10 5 11.7 21.593 12.1) 10.413 (63.1) 14. Borrowings 5.0 100.0 11.1 10. Cash and Bank balance 2. Provisions and Contingencies iii.15: Liabilities and Assets of District Central Cooperative Banks (Amount in `crore) Item As at end-March 2009 1 Liabilities 1. Substandard assets continued to account for major Table V.629 20.0) 15.6 19.1) (13. Asset quality of DCCBs’ improved with fall in NPA ratio 5. ‘Reserves’ include credit balance in profits and loss account shown separately by some of the banks.917 14.485 (9. Operating Profits ii.0 expended continued to account for a majority share of total expenses of DCCBs with the same increasing at a higher rate than interest income of DCCBs during 2009-10.6 -12.6 Percentage variation 2008-09 4 24.404 (65.45 The overall financial performance of DCCBs deteriorated during 2009-10 with their net profits declining substantially.018 (24.9) (11. Reserves 3. Income (i+ii) i.466 (50.5) (9. Figures in parentheses are percentages to total.1 2009-10 5 8. Other Assets Total Liabilities/Assets 2 2010 3 Percentage variation 2008-09 4 10. Interest income. 2.1) 18. 3.07. Investments 3.47 The asset quality of DCCBs improved as at end-March 2010 continuing the trend of the previous year.0) 14.2 -1. Similar to StCBs.663 28.3) 2.061 (11.2) (67.6 9.1 14. Net Profits 3.8) (49. Expenditure(i+ii+iii) i. This is in contrast with the improved financial performance of these institutions in the previous year when DCCBs started reporting overall profits as compared to losses prior to that.4) 1.255 (15.4 16.8 34.4 14.46.7 3. as the latest data were not available.7 23.16: Financial Performance of District Central Cooperative Banks (Amount in `crore) Item As at end-March 2009 1 A. Data for DCCBs of Bihar.5 5.2) 3. Other Income B.15).18.7 Note: 1.27.16). Source: NABARD. Interest 120 Note: 1.119 (14.309 (3.0) 27.

The high leverage ratio of StCBs remains as a cause of concern for rural cooperative sector and also limits their ability to provide further assistance to ground level institutions.000. to analyse the resilience of StCBs with respect to increased credit risk a stress test has been conducted at system’s level.2 100% 25 per cent for substandard assets and 100 per cent for doubtful/loss assets CRAR (actual) 15. there was an increase in percentage share of ‘doubtful’ NPAs in total NPA. Another important trend observed in the composition of NPAs of StCBs during 2005-09 is that while share of ‘sub-standard’ NPAs in total NPA came down.0 10. the leverage ratio8 for StCBs was found to be very high in recent years. Calculated as ratio of assets to capital. 121 2010 0. The increased provisioning requirement was first adjusted from the operating profits of StCBs and then the residual provisioning requirements.000. there was a steep increase in the provision coverage ratio of StCBs in the year 2010 as compared to the previous year. given the fact that the ground level cooperatives or PACS incurred huge losses in recent years. Resilience of StCBs-a stress test for increase in credit risk Due to unavailability of data.000. The following table summarises the stress test results.0 18.00 6. However.0 6. More importantly. However.000.00 20 18 16 14 10 8 6 4 2 0 Per cent Per cent 40. but showed some amount of deceleration in last two years (Chart 2. it was not possible to measure the capital to risk weighted asset ratio (CRAR) for StCBs.0 8. Due to unavailability of risk weighted assets for StCBs.0 2.0 10.00 2.00 12 . The stress test assumes increase in gross NPAs of StCBs by 100. sec 42(2) of RBI act).0 30. Despite this. it was not possible to conduct a stress test at bank level for StCBs.00 3.00 Per cent ` crore 50. though ‘loss’ category increased in 2009-10.000. was further subtracted from the capital. with the CRAR level falling significantly under the three stress scenarios as mentioned above.00 1.0 70. There has been a continuous decline in the NPA of StCBs since 2006. A risk weight of zero per cent was assumed for investments in SLR instruments by StCBs (obtained from data collected from form B.00 2001 2002 2003 2000 2005 2008 2009 2004 2001 2002 1999 2003 2000 2005 2008 2009 2004 2006 2007 2010 2006 2007 Leverage ratio CRAR Sub standard Total NPA Doubtfull NPA ratio Loss part of total NPAs followed by doubtful assets.1: Result of Stress Test for Credit Risk-StCBs Items 1 Increase in NPA Provisioning requirements Scenario I 2 Secnario II 3 200% 25 per cent for substandard assets and 100 per cent for doubtful/loss assets 15. Since data on risk weighted asset is not available for rural cooperatives.000.0 0.0 12. The provision coverage ratio for StCBs exhibited an increasing trend from 2007 onwards.0 60. Particularly. StCBs’ ability to provide assistance to PACS depends on the financial soundness of their own. the NPA ratio for StCBs remained high when compared with the commercial banks.7 The result of the stress test revealed that an unexpected increase in the NPA level would affect the CRAR of StCBs at system level significantly. Table 2. Hence the financial health of StCBs has strong influence on the overall financial health of short term rural cooperatives. The recovery performance of DCCBs also 8 improved at end-March 2010 compared to previous year (Table V. This fall was due to reduction in NPAs under the three major categories. However. CRAR under the stress is calculated as ratio of capital (after adjusting for the provisioning requirements) and reserves to investments and advances. both at absolute as well as in percentage terms.1).0 5.8 3. a rough measure of capital adequacy for StCBs has been taken as ratio of capital and reserves to investments and advances.0 20.3 Scenario III 4 300% 25 per cent for substandard assets and 100 per cent for doubtful/loss assets 15.0 0. 200 and 300 per cent along with the increased provisioning requirement of 25 per cent in case of sub-standard assets and 100 per cent for doubtful as well as loss assets.2: Soundness of StCBs A trend analysis StCBs are the apex institutions in the short term structure of rural cooperatives.000.00 7.0 4.0 16. Chart 2. It was assumed that the ratio of different categories of NPAs remained the same under all the three scenarios.Developments in Cooperative Banking Box V.000.0 8. This ratio stood at the range of 12-15 per cent in recent years.1: Trend in Capital Adequacy. Leverage and NPAs of StCBs 80. though the same again decelerated in 2010.8 -1.0 14. The increase in percentage share of ‘doubtful’ NPAs in total NPA during 2005-09 indicated that NPA of StCBs has become stickier in recent years.0 4.8 CRAR under the stress 7.17). if any.

764 5.9 -11. Total advances disbursed by PACS increased at a rate of 28 per cent 5. 122 A. Borrowings constituted more than half of the total resources of PACS in the year 2009-10.standard 2 2010 3 Percentage variation 2008-09 4 -4. Assets 1.9) (16.938 51.479 a.359 21.6 -5.7 ii) Provisions Required 10.0 20. Government Contribution 603 656 b.148 of which.787 74. Source: NAFSCOB. Liabilities 1.5 29. Total Loans Issued (a+b)* 58.3 6.5 4.During the year. Total NPAs (i+ ii + iii) i) Sub.9 i) Recovery to Demand (%) 72. almost 70 per cent of total PACS were classified as viable and another 23 per cent of total numbers of PACS were classified as potentially viable as at end-March 2010.225 10.3 8. Percentage of NPAs to Loans 17.987 2.5) ii) Doubtful 7.463 12.51 The long term structure of rural cooperatives consists of SCARDBs operating at the State level and PCARDBs operating at district/block level.4 5.022 61. Deposits 26.984 iii) Provision Made 11. Moreover.1 7. PACS are an integral part of short term rural credit cooperatives.3 17.686 54.951 b) Medium-Term 10.1 2.3 5. Short term loans.9 12.4 8.611 (14.585 1.49 The balance sheet operations of PACS expanded significantly during 2009-10 over the previous year.0 34.18).989 16.35.970 b) Medium-Term 18.677 2.1) B.4 20.50 Analysis of financial performance of PACS showed that almost 43 per cent of total PACS operating all over the country were loss making entities whereas 5 per cent of total number of PACS were either dormant or defunct indicating weak financial performance of these institutions in general. Total Reserves 4.080 99.1 Long-Term Structure of Rural Cooperatives 5.3 4.8 -10.7 2009-10 5 -9.0 -2.510 Note: * . Working Capital 94. Total Loans Outstanding (a+b) 64.2 .Report on Trend and Progress of Banking in India 2010-11 Table V. which continued to constitute more than 80 per cent of total loans issued by PACS witnessed higher growth than medium term loans during the year 2009-10 (Table V. 17.4 3.192 B.3 0.110 7.3 7.8 42. Owned Funds (a+b) 11.1 2. Total loans disbursed by PACS increased by almost 28 per cent during the year 2009-10.4 27.0 8. Total working capital of PACS increased as at end-March 2010 mainly on account of increase in deposits.480 a) Short-Term 45.4) iii) Loss 2.245 35.529 2. Borrowings 48.7 75.765 12. 2.202 6.6 -16.2 -4. -1. these institutions witnessed increase in their gross NPAs in 2009-10 though the NPA ratio marginally declined for PCARDBs. However. which work at a grass root level and provide short term crop loans and other working capital loans to farmers and rural artisans.9 Primary Agricultural Credit Societies (PACS) 5.0) (39.17: Soundness Indicators of District Central Cooperative Banks (Amount in `crore) Item As at end-March 2009 1 A.2 -2.18: Primary Agricultural Credit Societies-Select Balance Sheet Indicators (Amount in `crore) Item 1 As at end-March 2009 2 2010 3 Percentage variation 2008-09 4 3.9 9.1) (44.007 7.1 11.9 2.229 (45.896 12. Paid-up Capital 7.889 5.394 (40. Table V.48 Primary Agricultural Credit Societies (PACS) continued to play an important role in providing institutional credit to agricultural and rural sectors.5 Almost 43 per cent of the PACS reported losses 5.4 2009-10 5 14.6 19. Total Resources (2+3+4) 87.286 4.938 a) Short-Term 48. Both SCARDBs and PCARDBs reported net losses in 2009-10.0 1. indicating their heavy reliance on external sources for funding.044 76.9 -12.234 8.393 Source: NABARD.330 3.

NPA ratio also increased for SCARDBs 5. Cash and Bank Balance 2.6) 711 (2. however.8) 3. Alongwith decline in profits.420 (64.55 With significant fall in profitability.7 -2. Deposits 4. The recovery performance of SCARDBs.8) 15.19).5 15.21).8 3. Figures in parentheses are percentages to their respective totals.0) Percentage variation 2008-09 4 -33.53 On the assets side. as at end-March 2010.849 (62. which is the major source of funds for SCARDBs registered a negative growth during 2009-10.836 (23.5 15. Loans and Advances 4.3 2. Other Assets Total Liabilities/Assets 2 812 (3.000 (66.52 Total assets/liabilities of SCARDBs registered a moderate growth of 0. This is evident from the fact that SCARDBs reported net losses during 2009-10 as compared to profits during 2008-09.7 -1. Source: NABARD. 3.2) 3.0) 15.4) 759 (3.7 per cent in 2009-10 as compared to 2. the same continued to grow at a higher rate than loans and advances in 2009-10 (Table V. Deterioration in their financial performances can be attributed to sharp fall in interest income on one side.7) 5.19: Liabilities and Assets of State Cooperative Agriculture and Rural Development Banks (Amount in `crore) Item As at end-March 2009 1 Liabilities 1.4) 4.823 (19.224 (20.0) 25. ‘other assets’ declined in 2010.3 -22.5 per cent in 200809.7 Note: 1..6 6.6) 16. Other Liabilities Assets 1.2) 3.6 -11. Data for SCARDBs in the States of Maharashtra repeated from the year 2007-08. 2.e..2 67.56 The growth of balance sheet of PCARDBs moderated in 2009-10 as compared to the previous year mainly on account of contraction in ‘other’ assets and liabilities and also slower growth in two major components of their balance .688 (14. and significant rise in operating expenses. at end-March 2010 as compared to the previous year (Table V. Another major component of total assets.4 8. i. The other important items on liabilities side. SCARDB in Manipur is defunct.3) 17. Borrowings 5. borrowing. improved. Primary Cooperative Agriculture and Rural Development Banks (PCARDBs) PCARDBs’ balance sheet grew at a lower rate in 2009-10 5.0 15. Though there was a steep decline in provisions and contingencies and also marginal decline in interest expended.0) 2010 3 821 (3.141 (12.5 -10. ‘Sub-standard’ NPAs continued to account for a majority share of total NPAs followed by ‘doubtful’ and ‘loss’ categories. including wage expenses on the other side. during 2009-10.0) 189 (0. this could not. Though the growth in investments slowed down in 2009-10 as compared to the previous year. SCARDBs also witnessed increase in their NPAs 123 Table V. i. loans and advances accounted for almost two thirds of total assets. Investments 3.3 6.2 2009-10 5 1. Capital 2.5) 5. Reserves 3.6 20.6 -1.54 SCARDBs witnessed a sharp deterioration in their financial performance during 2009-10. increased during the same period. SCARDBs reported net losses as compared to net profits in previous year 5.4) 25.386 (100.4) 197 (0.20). On the liabilities side.581 (61.941 (11.Developments in Cooperative Banking State Cooperative Agriculture and Rural Development Banks (SCARDBs) Borrowings reduced while capital and reserves together increased their share in total liabilities of SCARDBs 5. there was an increase in ‘sub-standard’ as well as ‘doubtful’ categories of NPAs while ‘loss’ NPAs declined. net owned funds (capital and reserves) and deposits. Within the various categories of NPAs. however.5 0.5 4. however compensate for the decline in income by almost one third of its amount in 2008-09 (Table V.0) 4.7) 2.713 (18.e.191 (12. 5.562 (100.

borrowings as well as loans and advances. Investments 3.0) 2.5) 1. It is.040 (100.22).6 13. sheet i. Capital 2.037 100.390 (47.6 69.303 (63.1 -31.9 -0. Reserves 3.1 -2.2 27. 3.3 43. Losses incurred by PCARDB’s increased followed by sharp increase in staff expenses 5.8 13.. Cash and Bank Balance 2.846 100. There was an overall fall in income of PCARDBs owing to fall in both interest as well as non-interest income. Loans and Advances 4.0 18.493 2010 2008-09 3 5. As at end-March 2010.4 17.365 (49.3 maximum followed by loans and advances.3) 268 (1.7) 30.4 15.2) 235 (7.2 - -70.8) 36 (0.9) 1.167 (4.515 (6.0 -67.0) 1.832 (51.22: Liabilities and Assets of Primary Cooperative Agriculture and Rural Development Banks (Amount in `crore) Item As at end-March Percentage Variation 2009 1 Liabilities 1.7) 2. Figures in parentheses are percentages to their respective totals.475 (61.1 -15.073 (28.0 1.e.641 (100. there was steep increase in staff expenses as well as provisions and contingencies.122 (4.219 (49. NPAs to Loans Ratio i) Recovery to Demand (%) ii) Provisions Required iii)Provision Made As at end-March Percentage Variation 2009 2 4. 2.1) 400 (1.0) 1.0) 2.737 (86. the share of ‘other’ assets was Table V. Source: NABARD 124 .8 16.7) 11.1 -28.8) 12.1) 194 (6.009 (100.4) 422 -27 4 65.0 2010 2008-09 3 1.970 (39. Note: Figures in parentheses are percentages to totals.4) 25.7 31.7 147.7 19.3) 6.268 (45. but due to high provisioning and contingencies reported net losses (Table V.638 (14.9 2.21: Soundness Indicators of State Cooperative Agriculture and Rural Development Banks (Amount in `crore) Item 1 A.6 4. Total NPAs (i+ii+iii) i) Sub-standard ii) Doubtful iii) Loss B.2 3.8 2009-10 5 0.9) 1.4) 33.0) 1.5) 1.0) 3.Report on Trend and Progress of Banking in India 2010-11 Table V.0 -16.330 (44. Deposits 4.0 1. Other Assets Total Liabilities/Assets 2 1.9 13.0 2010 2008-09 3 2. Source: NABARD. Wage Bill D Profits i Operating Profits ii Net Profits (+)/ Loss (-) 2 3.2 41.1) 1.8 4. Data for SCARDBs in the States of Maharashtra repeated.4) 12.7 352.5) 236 (0.3) 275 (13.6) 12.23).493 (14.1) 287 (14.1) 3.0 17.7 1. Other Liabilities Assets 1.7 86.8 2009-10 5 14.6 20.0 -43.4 40.0 64.1) 3.1 9.774 (92. and investments.0) 240 (8.7 -82.948 (100.2 15.1) 233 (11.5) 11.7 7.960 (100.8) 2.5) 461 (1.439 49 Variation 2009-10 5 -33.3 22.6) 2.20: Financial Performance of State Cooperative Agriculture and Rural Development Banks (Amount in `crore) Item As at end-March 2009 1 A Income (i+ii) i Interest Income ii Other Income B Expenditure (i+ii+iii) i Interest Expended ii Provisions and Contingencies iii Operating expenses Of which.7 19.9 Note: Figures in parentheses are percentages to total.8 -7.2 3. Borrowings 5.0 4 69.466 1. On the expenditure side.57 Financial performance of PCARDBs deteriorated with the amount of losses increasing in 2009-10 as compared to the previous year.527 (6. Table V.4 32.120 (48. SCARDB in Manipur is defunct Source: NABARD. however.9 16.8) 7.2) 24. worth mentioning that PCARDBs reported operating profits at end-March 2010.218 1.0) 20 (0.9) 450 (22.482 (45. On the assets side.9) 12.012 (100.1 -37.536 4 -23.8 0. borrowings constituted more than half of total resources of PCARDBs where as capital and reserves together constituted almost 21 per cent of the same.146 (38.579 (26.6 - Note: 1. Investments grew at a higher rate than loans and advances during 2009-10 (Table V.942 (59.

8) 591 (29.431 (70.742 (100.7) 43 (0.25).831 (100.2) 28 (0.8 -8.114 4 -7. Interest Income ii.8 15. Interest Expended ii.0 41. 4.2 1 Item Table V.8 21.0) 1.217 (54. 125 Progress under Rural Infrastructure Development Fund (RIDF) and Kisan credit Card (KCC) Scheme 5.3 46.7 1.0) 1.2 -6.5 9.4 2009-10 5 -9.2 4.58 Total NPAs of PCARDBs increased in absolute terms for PCARDBs as at end-March 2010 as compared to the previous year.6) 347 -199 2010 2008-09 3 1.23: Financial Performance of Primary Cooperative Agriculture and Rural Development Banks (Amount in `crore) Item 1 A. The short term credit provided by NABARD to cooperatives is mainly used for financing seasonal agricultural activities. Among various types of NPAs. There was.8) 545 (24.4) 1.4 -4.248 (100.3) 2. A majority of total loans disbursed by NABARD in 2010-11 was in the form of short term credit extended to StCBs and RRBs. The credit extended to StCBs and RRBs increased significantly during 2010-11 as compared to the previous year while there was a decrease in long term credit extended to the State Governments (Table V.040 1. Role of NABARD in Reviving the Rural Cooperatives 5.221 (100.7 2009-10 5 2.0 -9. Provisions and Contingencies iii.6) 42. 32.8 195. Source: NABARD NPA ratio of PCARDBs declined marginally 5.5 1.930 (40.4 Note: Figures in parentheses are percentages to total. Operating Profits ii.24: Asset Quality of Primary Cooperative Agriculture and Rural Development Banks (Amount in `crore) As at end-March Percentage Variation 2009 2 4.089 (43.2 -8.022 (100. Net Profits As at end-March Percentage Variation 2009 2 2.24). Expenditure (i+ii+iii) i.0) 2. The medium term credit is used for financing other approved agricultural purposes and the long-term credit involves loans given to State Governments.7) 180 -417 4 29.7 8.3 -7.723 (56. Source: NABARD. the total amount of credit disbursed by NABARD increased significantly as compared to the previous year.769 (58.6) 596 (26.60 During 2010-11.Developments in Cooperative Banking Table V.5) 513 (22.138 (50.3 22. however. Wage Bill C. The recovery performance of PCARDBs improved as at end-March 2010 as compared to the previous year (Table V.292 (70.0) 1. NPAs to Loans Ratio i) Recovery to Demand (%) ii) Provisions Required iii)Provision Made -5.5) 2.2 -34.840 (100. Out of the total credit disbursed by NABARD in 2010-11.0) 2.2 A. particularly in the backdrop of declining public investments in agriculture and rural sectors. The scheme of RIDF was first introduced in the annual budget of 1995-96.5) 540 (29.8) 285 (12. Other Income B.Operating expenses of which. a marginal decline in NPA ratio of PCARDBs during the same period.9) 42. marketing of crops.3 53. and pisciculture activities.0) 1. Note: Figures in parentheses are percentages to their respective totals.59 NABARD plays a pivotal role in disbursing credit to rural cooperatives and regional rural banks (RRBs). Income (i+ii) i.2 39.1 -1.61 RIDF was set up as a joint initiative by the Central Government and NABARD in order to develop infrastructure in rural areas. there was a significant increase in doubtful NPAs while sub-standard and loss NPAs decreased as at end-March 2010. Profits i.6) 458 (20.5 854 903 2010 2008-09 3 4.0 49.4 -9.2) 2.3 12.1 - Credit to StCBs constituted almost 70 per cent of total credit extended by NABARD 5.5 - -48. Total NPAs (i+ii+iii) i) Sub-standard ii) Doubtful iii)Loss B. StCBs absorbed almost 70 per cent while RRBs accounted for almost 29 per cent and the long term credit extended to the State Governments constituted less than one per cent.9 -12. The fund under RIDF .8 23.6) 191 (8.

3 59. The fall in profits of these cooperatives could be attributed to increasing operating expenses. Since only members can borrow from PACS. Chart 3.3 67.Some Emerging Issues The wide network of rural cooperatives spread across the country is considered as a potential instrument to reach out the marginalised and poor sections of the society.7 32.1 Percentage of rural artisans. As at end-March 2010. The process of adoption of Common accounting System (CAS) and Management Information System (MIS) for PACS should further become broad based. financial performances of DCCBs. the percentage of loss making entities are also observed to be higher in these two regions.As at end-March 2010.031 1. which has already started in some of the States. Within the short term credit structure.8 71.0 30. PACS. The low number of rural cooperatives operating in north-eastern region as well as their poor financial performance remains as a concern.3 35. the number of PCARDBs operating in western region is very few and also almost all of the entities in western region were loss making. As at end-March 2010. Not only a fewer number of DCCBs have presence in western and eastern parts of the country.2 52.064 1.9 Northern Eastern Central Western Southern North-Eastern All-India 862 2.130 665 571 3.7 86. borrowers per PAC were low in north-eastern.1). Notably. The application of modern technology in business activities is expected to improve the efficiency of rural cooperatives to wider extent. Further the membership per PAC was found to be low in western and central region. the ground level institutions within short term rural cooperatives are concentrated in western and eastern parts of the country.9 Percentage of rural artisans . Adequate reform initiatives are required in this regard to improve the financial soundness of PACS.0 0.8 38.0 20.3 13. the percentage share of loss making PACS in total number of PACS operating is highest in southern region of the country.8 82.1). Rising operating expenses of these cooperatives indicate operational inefficiencies. but the same further increased for PACS operating in north-eastern region.8 47. Region wise data on operations and performances of rural cooperatives revealed that while the StCBs. SCARDBs are concentrated in central regions while more than 60 per cent of total PCARDBs are located in southern region of the country. there is a need to increase membership per PACS to further utilize the effectiveness of the wide network of these grass root level institutions. western and central regions of the country (Table 3.2 28. though widespread are not uniformly present across different parts of the country.1 72. thus limiting the potential of these institutions for financial inclusion.9 27. which is posing threat to the financial health and soundness of these institutions.8 91.Report on Trend and Progress of Banking in India 2010-11 Box V. As at end-March 2010. SCARDBs operating in north-eastern region also witnessed NPA ratio close to 50 per cent.7 40. Among various regions. only 4 per cent of total PACS were operating in north-eastern region. which are the nodal institutions in short term structure of rural cooperatives are present in every State the DCCBs are heavily concentrated in central and southern regions of the country. More importantly. This suggest that a comprehensive planning to streamline the business activities and human resource development initiatives is required in this regard.1 Borrowers per PACS 464 720 297 147 2. proper training and orientation programme is needed for the employees of these institutions in order to familiarize them with the new technology.1: Region-wise Details Of Membership of PACS (As at end-March 2010) Regions Member per PACS Percentage of SC/ST members 27. High overdues are a serious problem for PACS. as at end-March 2010 (Chart 3.0 50.5 16.3 18. the number of members per PAC decreased to 1336 from 1384 at end-March 2009. Also computerization of PACS. Also.3: Role of Rural Cooperatives in Financial Inclusion . needs further impetus and PACS operating in other states should also start adopting the same. the percentage of overdues reduced marginally compared to the previous year at all-India level. Also.2 17.4). effort is needed to increase members per PAC for western region as well as for all-India level.small and marginal farmers 72.0 40. the network of rural cooperatives was found to be significantly weak in northeastern region of the country. SCARDBs and PCARDBs deteriorated.2 61.336 126 . small and marginal borrowers 83. However.7 64. From the region wise data of rural cooperatives it can be concluded that the network of these institutions.2 8. The percentage of overdues to demand was found to be very high for PACS operating at north-eastern and western regions in particular and at all-India level in general.215 73 632 Percentage of SC/ST borrowers 16. StCBs witnessed their highest NPA ratio in the north-eastern region of the country (Appendix table V. The banking network of DCCBs were found to be shallow in western and eastern regions of the country while there is no DCCB in northeastern region.0 10.0 Percentage share of loss making cooperatives Nuumber of cooperatives as percentage of total 100 80 60 40 20 0 Central DCCB Northern PACS SCARDB Eastern Western Southern PCARDB North-Eastern Central DCCB Northern Eastern PACS Western Southern PCARDB North-Eastern Note: Data on percentages of loss making SCARDBs in different regions was not available for 2009-10 Table 3.0 120 60.5 83. On the other hand.1: Geographical Presence of Rural Cooperatives (As at end-March 2010) 70.7 81. In this context a comparative analysis of the geographical spread as well as banking business undertaken by rural cooperatives across different regions of the country is necessary. Though the highest percentages of PACS were operating in western region of the county.

237 Outstanding 5 17.169 17.814 23.416 10.515 8 18. public health etc.169 0 199 6. RRBs (a+b) a.149 66 53 3.842 127 21.64 The purpose wise details of projects and loans sanctioned under RIDF showed that irrigation accounted for more than half of total projects sanctioned while almost one fifth of total projects sanctioned were on roads and bridges. # Medium Term includes MT Conversion.091 0 25.215 17. and another 19 per cent were for social sector projects.203 10. the total amount of deposits collected under RIDF scheme stood at `95.904 20 24.661 2009-10 Drawals Repayments 3 18. Others' include soil conservation and allied activities. * Short Term includes ST(SAO).500 crore. scheme was collected from commercial banks to the extent of their respective shortfalls from priority sector lending target for agriculture. schools and anganwadi centres.245 39 7. almost 44 per cent of Chart V.680 18.771 4 17.459 10.091 24.091 7. Repayments under Short Term during 2010-11 includes repayment under ST(SAO)A/C V and also A/C VI. the aggregate allocation under NRRDA stood at `18. ST(Others) and ST( weavers) 3.287 18.137 7. of Kerala in the extended period of 2009-10 (June 2010) Source: NABARD.273 2010-11 Drawals Repayments Outstanding 7 25. ***Long Term Loan sanctioned to Govt.63 A separate window. Notably. 2. as indicated by 100 per cent disbursement of loans sanctioned under the scheme (Table V.374 0 25. Social sector projects include projects related to supply of drinking water. 5.117 20 25.680 0 0 7. As against this.969 3. Short-term* b. NRRRA was introduced with the objective of funding the rural roads component of Bharat Nirman Programme introduced by the Central Government. **Sanction since withdrawn 5. One-fifth of the sanctioned loans was disbursed during the first year of RIDF XVI 5. rubber plantation etc. one fifth was disbursed during the first year.561 Notes: 1. Medium-term# Grand Total (1+2+3) 2 18. The number of projects under RIDF XVI increased as compared to its previous tranche. Short-term* b.Developments in Cooperative Banking Table V. However. ST(Others) and ST( Weavers) 4.13: Purpose-wise Details of Projects and Loans Sanctioned under RIDF (As at end-March 2011) Projects sanctioned under RIDF 0.924 6.875 23. out of the total loans sanctions under RIDF XVI.2% 7% 2% 30% 19% 14% Amounts sanctioned under RIDF 10% 53% 21% 44% Irrigation Roads and bridges Social sector Power sector Others Irrigation Roads and bridges Social sector Power sector Others Note: 1.975 839 0 10. animal husbandry.287 66** 8*** 7.62 As at end-March 2011.292 Limits 6 24. As at end-March 2011. MT(NS) & MT.785 crore. Medium-term# 2.26).liquidity support scheme 2.374 7.898 193 8 10. State Governments and RRBs (Amount in ` crore) Item Limits 1 1.682 193 167 10.416 35.25: NABARD’s Credit to StCBs.203 34. food process and allied activities. Long-term 3.400 59 35. 127 . 5.385 9 23. StCBs (a+b) a. there was no delay in disbursement of loans under NRRDA. namely National Rural Roads Development Agency (NRRDA) was introduced in 2006-07 under RIDF tranches XII- XV.385 18. State Governments a.

763 41.454 2. Developments under Kisan Credit Card Scheme (KCC) 5. It has been 128 1 2006-07 2007-08 2008-09 2009-10 2010-11 Source: NABARD .44.26: Tranche-wise Details of RIDF (As at end-March 2011) (Amount in ` crore) Tranches Year 1 I II III IV V VI VII VIII IX X XI XII XIII XIV XV XVI RIDF : Total NRRDA (XII to XV) Grand Total ‘-‘: Nil/Not Available.4 86. southern region accounted for a maximum share of 34 per cent followed by central and northern region.168 Amount sanctioned 3 46. Total number of cards issued as well as loans sanctioned under KCC increased in 201011 as compared to previous year (Table V.2 85.9 90.500 1.569 7.67 The task force on coverage issues related to Agricultural Debt Waiver and Debt Relief Scheme (ADWDR).500 2. One notable fact was that the number of KCCs issued as well as credit disbursed under KCC scheme was notably low in north-eastern region invariably for cooperatives.10).0 100.253 6.085 57. of Projects 3 4.162 4.16.193 14.001 8.13).345 6.000 14.377 12. Also.000 Percentage of loans disbursed to sanctioned 7 92.388 Disbursed 6 1.168 24.000 2.106 43.667 93.726 15.4 77.500 5.03.8 42.779 4.729 88.500 5. 5.916 6.34.810 85.Report on Trend and Progress of Banking in India 2010-11 Table V.623 18.000 1.264 53.4 66.148 4.638 7.774 36.636 2.761 2.678 72.000 16.010 8.000 5.888 18.629 3.969 9.168 8.489 4.075 84.44.9 84.40.000 18.5 total loans sanctioned were for development of roads and bridges followed by irrigation and social sector projects (Chart V.000 10.21. points of sale.500 8.903 3.731 80.4 20.398 2.000 3.482 29.27: Progress under Kisan Credit Card Scheme (Amount in `crore) Year KCCs issued during the year (in thousands) 2 8. 2 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 No.841 issued by cooperative banks in the year 201011.582 5.482 3.511 8.311 10. in terms of credit disbursement under KCCs by cooperative banks central region accounted a maximum of 35 per cent.8 85.651 8.428 38.500 18.500 Amount Sanctioned 5 1. commercial as well as regional rural banks (RRBs) (Appendix Table V.906 2.500 4.162 Corpus 4 2.470 8.0 70.000 8.500 99.887 19.053 5.7 88.598 20. majority of number of KCCs issued as well as loans disbursed was in the southern region.171 12.000 12.733 2.006 10.071 4. Initiatives to make KCC technology enabled 5.5 87.500 1.614 14. However.500 3. and through hand held machines.000 14.673 1. recommendations have been made to redesign the MIS of KCC.1 71.315 1. 2008 has stressed on the need of making KCC technologically enabled including the conversion of KCC into a smart card with withdrawals and remittances enabled at ATMs.66 An analysis of data on region wise as well as agency wise disbursement of number of KCCs issued showed that out of total number of KCCs Table V. Source: NABARD.592 9.1 62. In case of commercial banks.4 91.0 89.950 5.5 88.435 4.65 At end-March 2011.544 16.27).605 76. the total number of KCCs issued stood at 104 million all over the country.625 Cumulative number of KCCs issued (in thousands) 4 67.055 4.946 41.

639 PACS.75 In order to bring qualified professionals in the management of cooperatives.69 NABARD has been entrusted with the responsibility of implementing the revival package. 5.68 A task force was constituted by the Central Government under the chairmanship of Prof. Karnataka. Special Audit for PACS 5. training for master trainers and departmental auditors for conduct of special audit of PACS has been completed in all 25 implementing States. Maharashtra and some other States. A separate revival package for long term cooperatives was announced subsequently in the union budget of 2008-09.70 The process of implementing the revival package in any State necessarily begins with signing a Memorandum of Understanding (MoU) among the Central Government. Also some of the States have already implemented the prescribed criteria for appointment of CEO of cooperatives. So far. 773 PACS and completed in 80. Manipur. Legal. the State Level Implementing and Monitoring Committee (SLIC) supported by NABARD and DCCB level implementing and monitoring committee (DLIC) together monitor the implementation status in the concerned state. the concerned State Government and NABARD.380 PACS in sixteen States. 5. while the State Governments have released `817 crore as their respective share. Amendment of bye laws of StCBs and PACS is also in progress in various States. in the other States where MoUs have been signed the RCS concerned have been advised to adopt CAS on the lines suggested by NABARD. Institutional and Managerial Reforms 5. A National Implementing and Monitoring Committee (NIMC) monitors the status of implementation of the revival package all over the country. Arunachal Pradesh. Accordingly. special audit has been taken up in 80.Developments in Cooperative Banking proposed by the committee to fix the KCC limit to 5 years with increased flexibility given to the farmer to use it as and when needed without any sub target fixed for any crop or stages of cultivation.73 Guidelines and formats for conduct of special audit were circulated to all participating States. comprising more than 96 per cent of the rural cooperatives operating in the country.71 An amount of ` 8661 crore has been released by NABARD for recapitalisation of 53. Elected Boards are in place in almost all units of STCCS in all States except Andhra Pradesh. 129 Status of Revival Package for Rural Cooperatives 5. Further. Within each State. professional directors satisfying ‘fit and proper criteria’ have been put in place in the StCBs of Andhra Pradesh. Nagaland and Tamil Nadu. 21 States amended their State Cooperative Acts. Implementation of Revival Package for Short Term Rural Cooperative Credit Structure (STCCS) is in progress 5.74 So far. a revival package for short term rural cooperatives was announced in January 2006. A Vaidyanathan in 2004 to analyse the challenges and issues in the rural cooperative sector as well as to design future action plan for this sector. the Reserve Bank has prescribed ‘fit and proper criteria’ for appointment of the directors and chief executive officers (CEOs) of cooperatives. 5. Common Accounting System (CAS) and Management Information System (MIS) 5.72 While the process of adoption of CAS is underway in 16 States. . So far 25 State Governments have signed the MoU with Government of India and NABARD. Following the recommendations of this committee.

354 elected members of PACS have been trained in 14 States. i.037 PACS secretaries have been trained in 17 States and 1. There is a need to further expand the base of cooperatives in the north-eastern region.039 district level trainers to conduct field level training programme for PACS. the financial performances of UCBs improved while some segments of the rural cooperative sector witnessed deterioration in their financial 130 .e.. Regional concentration of cooperatives limits their role in financial inclusion 5. Also. health. 5. This suggests that initiatives need to be taken in order to rationalise the operating expenses of these cooperatives. Along with this. So far. PACS reported huge losses.78 During the year 2010-11.. Also.582 branch managers/senior officers of DCCBs/StCB have been trained. 5. PACS in order to enhance financial inclusion. Financial health of the rural cooperatives was weak sector 5.77 A new programme on business development and profitability for PACS secretaries has since been rolled out and 76 master trainers from 12 implementing States were trained at Bankers Institute of Rural Development. Though the overall profits of UCBs improved during 2010-11 there were some concerns regarding some of the UCBs reporting negative CRAR. efforts need to be taken to improve the financial health of grass root level rural cooperatives i. Lucknow. the ground level institutions. a five-day in-campus orientation programme for branch managers and senior officers of CCBs/ StCB for business development/ diversification has been developed and 1. 36. Conclusions UCBs’ profits increased though there are some concerns regarding their asset quality 5. while the StCBs and DCCBs reported profits. 81. particularly staff expenses increased significantly in the long term rural cooperative sector.80 Apart from regional concentration.e. banking penetration of cooperatives remained very low in the north-eastern part of the country. These master trainers have trained 2.12. Also there was an increase in gross NPAs of UCBs albeit the NPA ratio declined. Implementation of MIS/CAS and computerization of PACS also needs to be expedited.125 PACS staffs in eight States have been trained.Report on Trend and Progress of Banking in India 2010-11 Training and Human Resource Initiatives 5. operating expenses. Training has been imparted to 254 master trainers from 23 States.76 A working group set up by NABARD designs training modules for training of electoral directors and staffs of PACS.79 Within the rural cooperative sector. So far.

are mostly private sector institutions which provide a variety of services including equipment leasing. corporate and institutional clients. loans. The financial performance of deposit-taking Non-Banking Financial Companies (NBFCs-D) witnessed improvement as reflected in increased operating profits while expenditure declined marginally during 2010-11. The consolidated balance sheet of Systemically Important Non-Deposit taking NBFCs (NBFCs-ND-SI) have expanded but their net profit to total assets remain unchanged. Primary dealers (PDs). were created for long-term financing. have played an important role in both the primary and secondary Government securities market. Notwithstanding the turnaround in the trading income. which came into existence in 1995. Introduction 6. With the growing importance assigned to financial inclusion. on the other hand. hire purchase. enhancing competition and diversification of the financial sector. and investments. NBFCs-D are not subject to Cash Reserve Ratio (CRR) requirements like banks but are mandated to maintain 15 per cent of their public deposit liabilities in Government and other approved securities as liquid assets. Rapid financial diversification has posed new challenges for regulators. 1. Resources mobilised by financial institutions (FIs) were considerably higher during 2010-11.Chapter VI Non-Banking Financial Institutions Non-Banking Financial Institutions (NBFIs) are playing pivotal role in broadening access to financial services. They are increasingly being recognised as complementary to the banking system capable of absorbing shocks and spreading risk mitigation at the times of financial distress. They have been helping to bridge the credit gaps in several sectors where the institutions like banks are unable to venture. Business operations and financial performance of these entities are driven mainly by sector-specific factors. The regulatory focus in respect of these three types of NBFIs is also different. All-India financial institutions (AIFIs). the nature of operations of FIs. NBFCs have come to be regarded as important financial intermediaries particularly for the small-scale and retail sectors.1 Non-Banking Financial Institutions (NBFIs) sector in India comprises various types of financial institutions with each one of them having its roots at a particular stage of development of the financial sector. NBFCs and PDs are quite different from each other.2 NBFCs perform a diversified range of functions and offer various financial services to individual. Although commonly grouped as NBFIs. . especially in devising appropriate regulatory safeguards for the highly complex NBFI sector. NBFCs do not enjoy refinance facilities from the Reserve Bank and do not have chequable deposits and are thus not part of the payment and settlement systems. The public deposits do not have insurance cover. net profit of the primary dealers (PDs) declined mainly on account of disproportionate increase in interest expenses and decline in other income. Non-banking financial companies (NBFCs). largely an outcome of the development planning in India. 6. The regulations governing these institutions are less rigorous as compared to banks as they are not subject to certain regulatory prescriptions applicable to banks.

State Bank of India (15. viz. Subsequently. asset classification and Table VI.6 As at end-March 2011. followed by Conclusions in Section 5. SIDBI and EXIM Bank in meeting short term lending requirements. their ‘aggregate borrowing limit’ has been enhanced from 10 times of net owned funds (NOF) to 11 times of NOF for one year (for NHB up to September 30. Of these. there were five financial institutions (FIs) under the regulation of the Reserve Bank viz. 6.1). such entities are referred to as NBFCs-ND-Systemically Important. viz. EXIM Bank. Section 4 provides an analysis of the performance of PDs in the primary and secondary markets.e. NHB.4 Till recently. In April 2010.2 21. with effect from September 16. Section 3 discusses the financial performance of NBFCs-D and NBFCsND-SI. 2011 and for EXIM Bank up to March 31. NABARD.2 per cent).2 per cent) and Life Insurance Corporation of India (14. having asset size of `100 crore and above) from April 1. 2007. Financial Institutions 6.1 Ownership Pattern of Financial Institutions (As on March 31. subject to review. in view of the difficulties faced by NHB. SIDBI and IIBI. NHB and SIDBI) are under fullfledged regulation and supervision of the Reserve Bank... the Government of India (GoI) agreed to transfer ownership and shareholding of NHB from the Reserve Bank to GoI and also to transfer the registration and regulatory functions in respect of Housing Finance Companies from NHB to the Reserve Bank and retention of supervisory function with the NHB. capital adequacy and exposure norms have been made applicable to NBFCs-ND that are large and systemically important (i. Section 2 analyses the financial performance of FIs.4 per cent) are the three major shareholders in respect of SIDBI. NBFCs-ND were subject to minimal regulation as they were non-deposit taking bodies and considered as posing little threat to financial stability. Considering the growing importance of infrastructure finance.. ** IDBI Bank Ltd. up to June 30. their borrowing under ‘umbrella limit’ has been enhanced from 100 per cent of NOF to 150 per cent of NOF for a period of one year i. However. The guidelines regarding prudential norms on income recognition. and investment companies. 2012. Reserve Bank transferred its 71. IIBI is under the process of voluntary winding up as on March 31. a fourth category of NBFCs involved in infrastructure finance was introduced in February 2010. recognising the growing importance of this segment and its inter-linkages with banks and other financial institutions. in January 2011. 2011. viz.3 Since 2006.4 6. the share of GOI and RBI in NABARD equity stands at 99 per cent and 1 per cent respectively. Infrastructure Finance Companies (IFCs). the NBFCs were divided into three major categories. asset finance companies.7 During 2010-11. loan companies.. 2010. The chapter is organised into four sections. NBFCs were reclassified based on whether they were involved in the creation of productive assets. 132 * In terms of GOI notification dated September 16. Under the new classification. (19. systemically important non-deposit taking core investment companies (CIC-ND-SI) were brought under regulation and supervision of the Reserve Bank.4 2. 6.. four FIs (EXIM Bank. In September 2010. NABARD. . subject to review. 6.5 This chapter provides analysis of the financial performance and soundness indicators related to each of these segments of NBFIs during 2010-11.5 per cent capital stake-holding in NABARD to the Government of India (Table VI.. 2010. 2011) Institution 1 EXIM Bank NABARD * NHB SIDBI ** Ownership 2 Government of India Government of India Reserve Bank of India Reserve Bank of India Public Sector Banks Insurance Companies Financial Institutions Per cent 3 100 99 1 100 72.e.Report on Trend and Progress of Banking in India 2010-11 6. in view of the difficulties faced by NHB and EXIM Bank in meeting their overall lending requirements. a new category of companies. 2012). Further.

5 -29.9 The combined balance sheet of FIs expanded during 2010-11. external sources witnessed decline mainly (Amount in ` crore) Table VI. etc. UIIC and OIC).11 FIs raise resources from the money market through various instruments such as Commercial Paper (CP).231 87.637 106. FIs are mandated to raise resources from the money market within the sanctioned umbrella limit. EXIM Bank and SIDBI (Table VI. As a result. shortterm and foreign currency resources raised witnessed a sharp rise during 2010-11 as compared with the previous year. and term deposits. 133 .Non-Banking Financial Institutions provisioning pertaining to advances. Assets and Liabilities of Financial Institutions 6.762 92.2 and Appendix Table VI.3 59.1). SIDBI and IIBI. Certificates of Deposit (CDs). ‘Other sources’ formed only a small part of the funds of FIs. CP emerged as the single most important channel accounting for more than 70 per cent of the total resources mobilised by FIs from the money market in 2010-11. investments portfolio.069 S 4 55.6 per cent during 2010-11 (Table VI.432 882 45. 6. On the assets side.0 Percentage Variation 2010-11 D 7 24. ICICI Venture and TFCI.0 -5. followed by NABARD. FIs kept resorting frequently to this instrument during the year taking the cumulative amount raised through CP to a higher level.8 The financial assistance sanctioned and disbursed by FIs declined marginally during 2010-11. NHB mobilised the largest amount of resources. *: Relating to IFCI.1 -25.469 Amount 2010-11 D 5 47. resources raised from ‘other sources’ witnessed a decline.5 S: Sanctions. loans and advances continued to be the single largest component contributing more than four-fifth of the total assets of FIs and witnessed growth of 16. Though.lending Institutions* (ii) Specialised Financial Institutions# (iii) Investment Institutions @ Total Assistance by FIs (i+ii+iii) 2 42.552 590 63.12 Total sources/deployment of funds by FIs declined modestly during 2010-11. Source: Respective Financial Institution.155 101.5).3 49. restructuring of advances. gross resources raised by SIDBI from money market during 2010-11 were ` 8. there was a significant increase in the resources raised by FIs through CP (Table VI. Resources Mobilised by FIs 6. @: Relating to LIC and GIC & erstwhile subsidiaries (NIA.2: Financial Assistance Sanctioned and Disbursed by Financial Institutions Category 2009-10 S 1 (i) All-India Term. This was mainly due to the decline in sanctions and disbursements made by investment institutions especially LIC (Table VI. Note: All data are provisional. Among the Sources and Uses of Funds 6.964 S 6 30.987 320 53.779 D 3 37. All the components. On the liabilities side. While the funds raised from internal sources rose. four FIs.10 Resources mobilised by FIs during 201011 were considerably higher than the previous year.2 -4. the long-term. The major part of the funds of FIs was raised internally followed by external sources. deposits along with ‘bonds and debentures’ remain the major source of borrowings.224 509 40. at no point of time during the year amount outstanding under the above instruments exceeded the umbrella limit. However. During 2010-11. D: Disbursements.4).137 crore. issued to banks are also made applicable to the select FIs. Operations of Financial Institutions 6. #: Relating to IVCF.3). As CP is a short-term money market instrument.

813 2009-10 6 5.891 10.0) 92. due to uncertainty in the global financial markets during 2010-11.544 (6.4) Percentage Variation 4 6. Source:Respective FIs.226 12.097 (31. A large part of the funds raised were used for fresh deployments. Other deployments recorded a sharp increase.192 33.193 987 6.538 18.612 (14.091 -: Nil/Negligible.305 2010-11 9 23.802 (4.0 2.2) 19. 134 .0 16.50.9) 35.538 9.621 249 0.188 2010-11 5 1. Investments Loans & Advances Bills Discounted/ Rediscounted Fixed Assets Other Assets A.741 7.395 12.867 2. Source: Balance Sheets of respective FIs.2) 2.5) 2.150 16 7.5) 2011 3 4.7 26.1 . ICDs.472 (31.509 24. Utilisation of Umbrella limit (A as percentage of B) 56.996 13.238 (86.0) 2.8) 39.388 Total Resources Raised Short-Term Foreign Currency 2009-10 4 5.277 EXIM 5 1.180 2010-11 7 11.1 7.598 30.: Nil/Negligible.309 Total 2009-10 8 18.681 (14.500 39. NABARD.14.752 28. Note: Long-term rupee resources comprise of borrowings by way of bonds/debentures.26.5) 8. Table VI.676 (3. Total 7.977 38. EXIM Bank.7) 42. Reserves Bonds & Debentures Deposits Borrowings Other Liabilities 2010 2 4.408 Total 6 19.5 7.7) 90.2) 18.668 (1.037 (7.346 17.5: Resources Raised by Financial Institutions from Money Market (As at end-March 2011) (Amount in ` crore) Instrument 1 NABARD 2 SIDBI@ 3 8.9 -7. Capital 2.782 (31.4: Resources Mobilised by Financial Institutions (Amount in ` crore) Institution Long-Term 2009-10 1 EXIM Bank NABARD NHB SIDBI Total 2 8.90. Notes: i.0 145.7). 6.722 (7.814 (2. Umbrella Limit 12.458 2.052 12.9) 71.307 (14. barring NHB has also gone up over the year.616 5.179 5.610 NHB 4 2.285 51.186 1.900 (1.132 9.542 (1.4 36. 4.922 10.600 (1.Report on Trend and Progress of Banking in India 2010-11 Table VI.532 29.8 -2.538 71 4 1.7 20.518 13.02. 2011.6) 2.510 Total Outstanding (As at end-March) 2009-10 10 40. Maturity and Cost of Borrowings and Lending 6. (ii) Unaudited Off-site returns for NHB as on June 30.1) 553 (0.2 Table VI. while repayment of past borrowings registered a decline over the year (Table VI.083 1.215 2010-11 11 47.6).330 10.8 16.7) 17.9 16.548 110 141 13.983 3. viz. Cash & Bank Balances 2.103 i) Term Deposits 48 ii) Term Money 110 iii) Inter-corporate Deposits iv) Certificate of Deposits 137 v) Commercial Paper 6.306 11.1) 3. 5. followed by repayment of past borrowings.090 1.9) 42.7 57. 5.7 -0.824 25.694 (1.958 5.556 (15.398 2.2) 537 (0.675 C. 3.732 Total Liabilities/Assets Assets 1.918 34. Figures in parentheses are percentages to total Liabilities/ Assets.6 32.682 (6.462 4.253 28. NHB and SIDBI.937 2010-11 3 11. The weighted average maturity of Rupee resources raised by financial institutions. 4..13 The weighted average cost of Rupee resources raised went up across the board (Table VI.06. Source: Fortnightly return of resources mobilised by financial institutions. and short-term resources comprise of CP.1) 2.48.3 Liabilities and Assets of Financial Institutions (As at end-March) (Amount in ` crore) Item 1 Liabilities 1.0) 11. Foreign currency resources comprise of largely bonds and borrowings in the international market. CDs and borrowing from the term money. ii.489 1.5) 79. 6.671 (86. Interest payments formed only a small part of the utilisation of funds by FIs.448 vi) Short term loans from banks 360 B.273 36.2) 18. term deposits. 3.6 60. Data pertains to four FIs.011 (28.740 74.137 2.372 3.

During 2010-11.63.8) 1. sub-standard assets of all the four FIs taken together have increased sharply (Table VI.9).56. Table VI. @: Includes cash and balances with banks.5 Financial Performance of FIs 6.813 (41.8) 1. however.1 -18.3 4. Source: Respective FIs.00 14. Doubtful and Loss assets had decreased during the year. SIDBI appeared at the top having the largest quantum of net NPAs.19.2 Weighted Average Maturity (years) 2009-10 4 1.11 and Chart VI. However.1 6.674 (58. Sources of Funds (i+ii+iii) (i) Internal 2010 2 3. Note: Data are provisional. there was an increase in the amount of net NPAs for FIs in 2010-11 as compared to the previous year. Sub-standard assets have come to zero level. but doubtful assets have increased.7 2010-11 5 2.6 4.971 (28.784 (100) 1. the CRAR was way above stipulated minimum norm of 9 per cent for each of the FIs (Table VI.8).4 6.6 -27. NHB and SIDBI.7 was declined marginally.610 (100) 1.16 There was a substantial increase in the Sub-standard assets of EXIM Bank. balances with the Reserve Bank and other banks. Table VI. Soundness Indicators: Asset Quality 6.065 (6.97. Among the four FIs. Moreover. EXIM Bank and NABARD showed decline. the NPA ratio (NPAs as per cent of net loans) was the highest for SIDBI followed by EXIM Bank (Table VI.5) 2011 3 2.515 (5. However.2 2010-11 3 8. 135 .1 Note: EXIM Bank.197 (54. Capital Adequacy 6. while EXIM Bank and SIDBI kept it unchanged (Table VI.2) 39.8) Percentage Variation 4 -1. Source: Respective FIs.610 (100) 1.8 Long-term PLR Structure of Select Financial Institutions (Per cent) Effective 1 March 2010 March 2011 Source: Respective FIs. NHB 2 10.7) 83. was attributable mainly to SIDBI.Non-Banking Financial Institutions NHB raised its Prime Lending Rate during the year. return on assets (ROA) is highest in case of EXIM Bank followed by NHB and SIDBI (Table VI.227 (4.673 (5. the capital adequacy as measured by CRAR has increased for NHB and SIDBI. Deployment of Funds (i+ii+iii) (i) Fresh Deployment (ii) Repayment of past borrowings (iii) Other Deployment Of which Interest Payments -14. whereas.139 (13. the interest income of FIs increased by 15.9 2.9 2.4 per cent (Table VI.5 1. It may be noted that.2) 2.8) 1.00 11.14 The financial performance of the FIs deteriorated during 2010-11 due to decrease in operating profit and net profit.015 (38.4 0. 6.97.25 10.00 (ii) External (iii) Others@ B.0 149.0 4.1).0 7. In case of SIDBI.0) 15.15.02.7: Weighted Average Cost and Maturity of Rupee Resources Raised by Select Financial Institutions Institutions Weighted Average Cost (per cent) 2009-10 1 EXIM Bank SIDBI NABARD NHB 2 7. Figures in parentheses are percentages to the totals.1 -6.733 (51.71.13).26.2) 16. in case of NABARD it Table VI. whereas. The increase in net NPAs.1 2.1) 14.072 (40.9) 19.6: Pattern of Sources and Deployment of Funds of Financial Institutions (As at end-March) (Amount in ` crore) Item 1 A.4 7.6 1.15 At the aggregate level. If the four FIs were ranked in ascending order of the amount of their net NPAs.1 7.784 (100) 1.50 EXIM Bank 3 14. NABARD.02. In case of NABARD.12).17 During 2010-11. Substandard and Doubtful assets had increased substantially during the year.6 -1.922 (56.00 SIDBI 4 11.74.3) 3. There was a sharp rise in operating expenses during the year mainly on account of wage revision.561 (5.10). while NHB was at the bottom with no NPAs.0) 15.

09 Net Profit per Employee (` Crore) 2010 10 2.862 (88.5 2. and (ii) Category ‘B’ companies (NBFCs not having public deposits or NBFCs-ND).0 15.10 0.11 Non-Interest Income/Average Working Funds 2010 4 0.54 6.808 2.18 NBFCs are classified on the basis of the kind of liabilities they access.7 Interest Income 6.22 7.32 2011 7 2. Source: Audited OSMOS Returns of EXIM Bank.75 1. NABARD & SIDBI as at March 31.14 4. liquid assets maintenance.4 0.251 595 627 -304 5 15.5 1 Table VI.624 15.1 -524 -219 -12.Report on Trend and Progress of Banking in India 2010-11 Table VI.5 Other Income 0. NABARD & SIDBI as at March 31.35 1. building and unquoted shares).15 0. 3.9 4. 2011.17 0.1) 1.5 27.62 2011 5 0.485 (97.7 Spread (Net Interest Income) 2.965 17.5 Interest Expenditure 4.21 0.773 E) Financial Ratios @ Operating Profit 1.50 *: Position as at end-June 2011.1 -19. NBFCs-D are subject to requirements of capital adequacy.10: Select Financial Parameters of Financial Institutions (As at end-March) (Per cent) Institution Interest Income/Average Working Funds 2010 1 EXIM Bank NABARD NHB * SIDBI 2 6.4 0.340 2.611 (91.74 8.35 Operating Profit/Average Working Funds 2010 6 1.9) 1.13 1.80 2.6) b) Operating Expenses 880 (8.2 Expenditure 4. 2011. 2011.25 1. NBFCs-ND are subject to minimal regulation as they were nondeposit taking bodies and considered as posing little threat to financial stability.4 0.11 1.147 (96.46 0.41 2011 11 2.9 @: As percentage of total average assets.846 2. Note: 1.492 a) Interest Expenditure 9.9 Net Profit 1.4 67.7) 13.095 1. there are two categories.2 Provisions 0.1 Other Operating Expenses 0. and of their perceived systemic importance. ALM discipline and reporting requirements.554 1.4 0.00 Return on Average Assets 2010 8 1.10 0. On the basis of liabilities. 6.1 23.88 1.559 Taxation D) Profit Operating Profit (PBT) 4.27 8.338 2. (i) Category ‘A’ companies (NBFCs holding and accepting public deposits or NBFCs-D). Particularly higher CRAR for SIDBI indicates the scope for utilisation of capital for further credit expansion.4 2.5 0.23 1.475 (11.04 0.27 3. *: Position as at end-June as per OSMOS returns.1 -7.9) b) Non Interest Income 478 (3.3) 480 (2.11 Net Non-Performing Assets of Financial Institutions (As at end-March) (Amount in ` crore) Institution 2010 2 78 33 69 180 Net NPAs 2011 3 93 30 132 255 15.21 1.6 134.2 4.9: Financial Performance of Select All India Financial Institutions (Amount in ` crore) 2009-10 Total 1 A) Income a) Interest Income 2 2010-11 Total 3 17.4 EXIM Bank NABARD NHB* SIDBI All FIs .39 0.15 2011 9 1. recognising the growing importance of this segment and its inter-linkages with banks and Table VI.15 0. However.2 Income 6.255 Variation Amount Percentage 4 2.332 Net Profit (PAT) 2.5 0. iii) Unaudited OSMOS returns of NHB as at June 30. the type of activities they pursue. ii) Audited/Unaudited OSMOS Returns of EXIM Bank.72 3.29 0.7 6. Source: i) Annual Accounts of respective FIs.21 0. exposure norms (including restrictions on exposure to investments in land.28 6.19 7.337 11. 2011 and Unaudited OSMOS Returns of NHB as at June 30.9 6. Non-Banking Financial Companies 3.42 2011 3 6.1) B) Expenditure 10. Source: Statements furnished by the FIs.: Nil/Negligible. Figures in parentheses are percentage shares to total Income/ Expenditure.4) of which Wage Bill 468 C) Provisions for 1.33 3. 136 .4 Wage Bill 0.

0 per cent.39.21 The total number of NBFCs registered with the Reserve Bank declined marginally to 12. Profile of NBFCs (including RNBCs) 6.563 1. 137 . such entities are referred to as NBFCs-ND-Systemically Important.922 2. in NBFCs-ND-SI and deposit taking NBFCs as against government companies having a share of 2.892 2.: Nil/Negligible.2 Per cent 0. NBFCs are classified into five categories: (i) Loan Companies (LCs).9 19. A new category of CIC-ND-SI was created in August 2010 for those companies with an asset size of `100 crore and above that was only in the business of investment for the sole purpose of holding stakes in group concerns.3 0. (ii) Investment Companies (ICs).35 0.2 21.00 EXIM Bank 2010 Note: NHB has no NPAs NABARD 2011 SIDBI other financial institutions (Box VI. *: Position as at end-June 2011 as per OSMOS returns. 2011.0 per cent.12: Asset Classification of Financial Institutions Institution Standard 2010 1 EXIM Bank NABARD NHB * SIDBI All FIs 2 38.14).8 per cent and 3.20.30 Table VI.5 24.459 22. respectively at endMarch 2011 (Table VI.20 EXIM Bank NABARD NHB * SIDBI 0. but not trading in these securities and accepting public funds.958 1. capital adequacy.1).2 2011 3 17.19 On activity-based classification.2 0. exposure norms.582 45.15 0.8 20. and (v) Systemically Important Core Investment Companies (CICsND-SI).02 0. 2007. 6.03 0. ALM discipline and reporting requirement have been made applicable to NBFCs-ND that are large and systemically important since April 1. NABARD and SIDBI for March 31.5 31. Source: Audited OSMOS Returns of EXIM Bank.525 Sub-Standard 2010 4 62 7 75 144 2011 5 197 143 339 Doubtful 2010 6 301 44 2 347 2011 7 246 68 136 450 2010 8 50 50 Loss 2011 9 36 1 37 .6 30. NABARD and SIDBI as at March 31.409 (Amount in ` crore) Table VI. 2011 and Unaudited OSMOS Returns of NHB as at June 30.20 The ownership pattern of NBFCs-ND-SI as well as deposit taking NBFCs suggests that these companies were predominantly nongovernment companies (Public Limited Companies in nature).487 19.173 2011 3 45. The percentage of nongovernment companies were 97.17.2 per cent and 97. 6. 0.25 0.53.2 0. respectively.Non-Banking Financial Institutions Chart VI. A regulatory framework in the form of adjusted Net Worth and leverage limits was put in place for CIC-ND-SIs and they were given exemption from NOF. Source: Audited OSMOS Returns of EXIM Bank.6 0.837 37. (iv) Infrastructure Finance Companies (IFCs). 2011 and Unaudited OSMOS Returns of NHB at June 30.10 *: Position as at end-June as per OSMOS returns. capital adequacy and exposure norms. (iii) Asset Finance Companies (AFCs).1: Net Non-Performing Assets/Net Loans (As at end-March) 0.13: Capital to Risk (Weighted) Assets Ratio of Select Financial Institutions (As at end-March) (Per cent) Institution 1 2010 2 18. 2011.05 0.

it needs to be underlined that.2 per cent of their total liabilities (which increased from 31. Banking system seems to be the major source of funding for NBFCs. NBFCs also do not have a ceiling on their capital market related activities unlike the banking system. their total assets as well as net owned funds registered an increase during 2010-11. not only will strain banks at the time of crisis but also place NBFCs themselves into vulnerable situation as banks can become over sensitive to a liquidity crisis or imminent crisis and they can either become too reluctant to lend to NBFCs or at the extreme case. the role of nonbank financial intermediaries had been highlighted for the nexus between the banking system and the NBFIs. NBFCs’ increased swapping public deposits with borrowings from the banking system seems to be a concern from the point of view of systemic interconnectedness. Accordingly.8 per cent as at the end of March 2001).. though there has been substantial progress over the period towards bringing the regulatory norms relating to NBFCs on par with the banking system. they may completely refrain from lending to NBFCs which would further aggravate the precarious condition. Banks' Exposure to Deposit taking NBFCs For the deposit taking NBFCs. The recent global crisis is a pointer in this direction. (nearly half of the total borrowings) are from banks and financial institutions. the public deposit is increasingly being substituted with their reliance mainly on borrowings. in general. banks fund NBFCs by subscribing to the debentures and the CP issued by them. 138 6. Non-Deposit taking Systemically Important NBFCs (NBFCs-ND-SI) Among the NBFCs-ND.1: Inter-connectedness of NBFCs and Banks in India Over a period. while public deposits recorded a decline. Understandably. insurance. The higher borrowings of NBFCs. With tightening of the prudential regulatory norms in respect of deposit taking companies. were known for taking higher risks than the banking system. both banks and non-bank financial companies have become key elements of India's financial system.22 Despite the decline in the number of NBFCs. both directly and indirectly. high dependency of NBFCs on the banking system for their resources. A similar trend was also observed in case of deposit taking NBFCs (NBFCs-D) during 2010-11 mainly due to cancellation of Certificates of Registration. it is pertinent to note that. As these NBFCs are not deposits taking. they are regulated with somewhat less rigour compared with NBFCs-D. In the wake of recent global financial crisis (2007-09). Till recently. exit of NBFCs from deposit taking activities resulting in conversion of NBFCs from deposit taking into non-deposit taking companies. are less stringently regulated. even in India the extant prudential regulation of NBFCs-ND-SI is in the process of convergence with that of the NBFCs-D. viz. as well as underscores higher systemic risks of the financial system. The share of Residuary Non-Banking Companies (RNBCs) in total assets of NBFCs showed a declining trend. banks had the incentive of lending directly to NBFCs as such loans were permitted to be classified as ‘priority sector’ lending by the banks. especially. as at end-June 2011 (Chart VI. A closer analysis of the sources of funds revealed that their total borrowings as at the end of March 2011 constituted as much as 66.2). it is necessary to establish adequate checks and balances to ensure that the banks’ depositors are not indirectly exposed to the risks of a different cost-incentive structure. NBFCs in general. In the post global financial crisis. the large NBFCs with `100 crore and above assets size classified as systemically important (NBFCND-SI) are also found to depend on banking system for their resources. However. the proportion of public deposits outstanding to their total liabilities has decreased to just around 3. which demonstrates the close financial inter-connectedness within the financial system. NBFIs. the debate regarding the banks expansion into non-banking financial areas veered around certain activities.Report on Trend and Progress of Banking in India 2010-11 Box VI. Traditionally. from the banking system raise some concerns about their liquidity position. the regulators’ attention world over has received increased attention towards the systemically important financial institutions (SIFIs).5 per cent at the endMarch 2011 from 20. Since the regulatory and cost-incentive structures are not identical for banks and NBFCs and that NBFCs borrow funds from banks to on-lend. The same trend also witnessed . These concerns will be further accentuated incase the banks’ own liquidity position becomes tight at the time of crisis or even at crisis like situation. investment banking etc. Moreover compared with regulation of banking sector. the recent global crisis has extended the debate to the inter-connectedness of the banking system with the NBFIs as excessive inter-institutional exposure tends to make the financial system vulnerable. Indirectly.9 per cent as at the end-March 2001. In any case. In view of the above.

Non-Banking Financial Institutions

Table VI.14: Ownership Pattern of NBFCs (As on March 31, 2011)
(Number of Companies ) Ownership 1 A. Government Companies B. Non-Government Companies 1. Public Ltd Companies 2. Private Ltd Companies Total No. of Companies (A)+(B) NBFCs ND-SI Deposit taking NBFCs 2 9 (2.8) 310 (97.2) 181 (56.7) 129 (40.4) 319 3 9 (3.0) 288 (97.0) 279 (93.9) 9 (3.0) 297

Note: Figure in parentheses are percentage share in total number of NBFCs.

in terms of net owned funds of RNBCs during 2010-11 (Table VI.15). 6.23 The ratio of public deposits of NBFCs to aggregate deposits of Scheduled Commercial Banks (SCBs) in 2010-11 indicated a decline. The ratio of deposits of NBFCs to the broad liquidity aggregate of L3 also declined during the year (Chart VI.3).

year, mainly due to conversion of two major NBFCs-D into NBFCs-ND (Table VI.16). It may be mentioned that borrowings constituted around two-third of the total liabilities of NBFCsD. The public deposits of NBFCs-D, which are subject to credit reating (Box VI.2), continued to show an increasing trend during 2010-11. On the assets side, loans and advances remained the most important category for NBFCs-D constituting about three-fourth of their total assets. The investment constituted second-most important category which witnessed a subdued growth during 2010-11 mainly due to decline in non-SLR investments. 6.25 Asset Finance Companies (AFCs) held the largest share in the total assets of NBFCs-D at end-March 2011 (Table VI.17).

Size-wise Classification of Deposits of NBFCs-D
6.26 A sharp increase was discernible in the share of NBFCs-D located at the upper-end having deposit size of `50 crore and above accounting for about 90.6 per cent of total deposits at end-March 2011. However, there were only 8 NBFCs-D belonging to this category constituting about 3.7 per cent of the total
Table VI.15: Profile of NBFCs
(Amount in ` crore) Item NBFCs As at end-March 2009-10 of which: RNBCs 3 2010-11P NBFCs 4 of which: RNBCs 5 11,466 (9.8) 7,902 (66.0) 2,988 (16.6)

Operations of NBFCs-D (excluding RNBCs)
6.24 The balance sheet size of NBFCs-D expanded at the rate of 11.9 per cent in 2010-11 as compared with 22.2 per cent in the previous

Chart VI.2: Number of NBFCs Registered with the Reserve Bank of India
14,077

16,000
13,815

13,849

13,764

13,261

13,014

12,968

12,809

12,740

12,000

7,855

8,451

10,000

12,409

14,000

12,630

1 Total Assets Public Deposits

2 1,12,131 17,352 16,424

8,000

6,000

Net Owned Funds
4,000

17,919 1,16,897 (16.0) 14,521 11,964 (83.7) 2,921 17,975 (17.8)

679

776

784

710

2,000
624

0
2001 2002 2003 1999 2005 2008 2009 2000 2004 2006 2007 2010 2011

Number of Registered NBFCs

Number of NBFCs-D

P: Provisional Note: 1) NBFCs comprise NBFCs-D and RNBCs. 2) Figures in parentheses are percentage shares in respective total. 3) Of the 297 deposit taking NBFCs, 217 NBFCs filed Annual Returns for the year ended March 2011 by the cut-off date September 8, 2011. Source: Annual Returns.

604

507

428

401

364

308

336

297

139

Report on Trend and Progress of Banking in India 2010-11

Box VI.2: Credit Rating of NBFCs – Practices and Prospects
Non-Banking Finance Companies (NBFCs) being heterogeneous in their operations, they are broadly grouped under four heads (i) asset finance companies, (ii) loan companies, (iii) investment companies, and (iv) infrastructure finance companies for regulatory compliance by the Reserve Bank. Credit rating for deposit taking NBFCs was recommended by ‘Working Group on Financial Companies (Chairman: A. C. Shah) in 1992. However, it was in January 1998 that the new regulatory framework for NBFCs by the Reserve Bank made it mandatory for NBFCs to get rated in order to protect the interest of the retail depositors. The credit ratings assigned are a symbolic representation of current opinion on the relative credit risk associated with the instruments rated by credit rating agency(CRA). This opinion is arrived at after a detailed evaluation of the issuer’s business and financial risks and on using such evaluation to project the level and stability of the future financial performance in various likely scenarios of the rated companies. Thus, conclusion derived from the analysis of the particular company based on the detailed information CRA received from within the company as well as from outside sources by the rating agency is reflected in a credit rating. Rating Methodology In rating an NBFC, the credit rating agency evaluates the company’s business and financial risks, and uses this evaluation to project the level and stability of its future financial performance in various likely scenarios. The broad parameters for assessing the risks of NBFCs are based on Business Risk: (i) Operating Environment, (ii) Ownership Structure, (iii) Franchise and Size, (iv) Competitive position, (v) Management, Systems and Strategy, and (vi) Governance structure; Financial Risk: (i) Asset Quality, (ii) Liquidity, (iii) Profitability, and (iv) Capital Adequacy. However, the relative importance of each of these parameters can vary across companies, depending on its potential to change the overall risk profile of the company concerned. Moreover, as many of these parameters are qualitative, the rating companies try to reduce the subjectivity by capturing and assessing information on defined sub-parameters and by comparison across various companies. One of the common practices among CRAs being that a careful evaluation of the risk management policies of the NBFC is done as it provides important guidance for assessing the impact of stress events on the liquidity, profitability, and capitalisation of the company concerned. The CRA evaluates the quality of an NBFC’s capital, apart from the level of capital. An NBFC’s ability to meet regulatory capital adequacy requirement is also evaluated. A very high return on equity may not necessarily translate into a high credit rating, given that the underlying risk could be very high as well, and being so it could be more volatile or difficult to predict. All ratings are kept under continuous monitoring throughout the period of validity. Regulatory Requirements for Credit Rating of NBFCs Effective January 31, 1998 the Reserve Bank made credit rating mandatory to all deposit taking NBFCs with NoF of ` 25 lakh and above. Presently, NBFCs-D with NoF of ` 2 crore and above have to necessarily get rated by one of the approved CRAs at least once a year. It is also mandated that they cannot raise public deposits without the ‘minimum investment grade’ and the copy of the rating should be submitted to the Reserve Bank. Moreover, any upgradation or downgrading of the rating also need to be informed to the regulator immediately.
Agency The Credit Rating Information Services of India Ltd (CRISIL) ICRA Ltd Credit Analysis and Research Ltd (CARE) FITCH Ratings India Pvt. Ltd FA- (FA minus) MA- (MA minus) CARE BBB (FD) [tA- (ind) (FD)] Minimum grade

Prospects for Credit Ratings of NBFCs The quantum of deposit raised by an NBFC is linked to the ratings. NBFCs have been incentivized to get rated by credit rating agencies through linking of their CRAR to the ratings. Accordingly, as of now a rated NBFC is required to maintain only 12 per cent of CRAR while unrated NBFCs need to maintain 15 per cent. Incidentally, the non-deposit taking NBFCs, though the rating is not mandatory by the regulator, get their instruments rated by the CRAs. In the wake of the sub-prime financial crisis, there is a growing concern among the regulators about the potential gap between expectation and realization, i.e. , between reliance on credit ratings and the reliability of such ratings. The concern emanates mainly from the fact that inaccurate credit ratings could disturb the market allocation incentives, cost structures and competition. With growing competition among credit rating agencies commercial aspirations appear to be too high. The most oft repeated complaint against CRAs are that they lack accountability as credit rating agencies do not have a legal duty of accuracy and are often protected from liability in case of inaccurate ratings. This requires the attention of regulators and the government. References: RBI (1992): Report of the Working Group on Financial Companies (Chairman: Shri A. C. Shah), Reserve Bank of India, Mumbai.

140

Non-Banking Financial Institutions

Chart VI.3: Ratio of Public Deposits of NBFCs to Broad Liquidity (L3) and Aggregate Deposits of SCBs
1.80 1.60 1.40 1.20
Per cent

Region-wise Composition of Deposits held by NBFCs
6.27 There was a concentration of NBFCs-D in the northern region of the country, which accounted for 66.4 per cent of companies in the total number of NBFCs-D at end-March 2011. However, the deposit size of NBFCs-D in the northern region was considerably smaller in comparison with the NBFCs-D located in the southern region, which accounted for 72.4 per cent of deposits at end-March 2011. There was also an increase in the share of deposits held by NBFCs-D in the southern region during 2010-11 (Table VI.19 and Chart VI.5). 6.28 Among the metropolitan cities, New Delhi from the Northern region accounted for the largest number of NBFCs-D, while Chennai from the Southern region held the largest share of 73.9 per cent in total deposits of NBFCs-D.
(Amount in ` crore)

1.00 0.80 0.60 0.40 0.20 0.00

2002-03

2004-05

2007-08

2008-09

2003-04

Ratio of Public Deposits of NBFCs to Broad Liquidity (L3) Ratio of Public Deposits of NBFCs to Aggregate Deposits of SCBs

number of NBFCs-D. Thus, only relatively bigger NBFCs-D were able to raise resources through deposits (Table VI.18 and Chart VI.4).

2005-06

Table VI.16: Consolidated Balance Sheet of NBFCs-D
Item As at end-March 2010 1 1. Paid Up Capital+ 2. Reserves Surplus 3. Public Deposits 4. Borrowings 5. Other Liabilities Total Liabilities/Assets 1. Investments (i) SLR Investments@ (ii) Non-SLR Investments 2. Loans and Advances 3. Bill Business 4. Other Assets 2 3,892 (4.1) 12,181 (12.9) 2,831 (3.0) 64,078 (68.0) 11,229 (11.9) 94,212 (100.0) 18,498 9,634 (10.2) 8,864 (9.4) 71,119 (75.5) 45 (0.0) 4,550 (4.8) 2011 P 3 3,643 (3.5) 13,506 (12.8) 4,062 (3.9) 69,816 (66.2) 14,404 (13.7) 1,05,431 (100.0) 21,102 13,487 (12.8) 7,614 (7.2) 77,901 (73.9) 89 (0.1) 6,339 (6.0) Variation 2009-10 Absolute Per Cent 4 75 2,769 860 8181 5,198 17,084 2,812 222 2,590 13,108 21 1,143 5 2.0 29.4 43.6 14.6 86.2 22.2 17.9 2.4 41.3 22.6 87.9 33.6 Variation 2010-11 P Absolute Per Cent 6 -250 1,325 1,231 5,738 3,175 11,219 2,604 3,854 -1,250 6,782 44 1,789 7 -6.4 10.9 43.5 9.0 28.3 11.9 14.1 40.0 -14.1 9.5 97.4 39.3

P: Provisional @ SLR investments comprises ‘approved Securities’ and ‘unencumbered term deposits’ in Scheduled Commercial Banks; Loans & advances includes Hire Purchase and Lease Assets + The fall in paid-up capital is on account of conversion of two major deposit taking NBFCs into non-deposit taking NBFCs. Note: Figures in parentheses are percentage shares in respective total. Source: Annual Returns.

2006-07

2009-10

2010-11

141

Report on Trend and Progress of Banking in India 2010-11

Table VI.17: Major Components of Liabilities of NBFCs-D by Category of NBFCs
(Amount in ` Crore) Classification of NBFCs No. of NBFCs 2009-10 1 Asset Finance Companies Loan Companies Total 2 225 65 290 2010-11 P 3 174 43 217 Deposits 2009-10 4 2,287 (80.8) 544 (19.2) 2,831 2010-11 P 5 3,628 (89.3) 434 (10.7) 4,062 Borrowings 2009-10 6 41,927 (65.4) 22,151 (34.6) 64,078 2010-11 P 7 49,022 (70.2) 20,795 (29.8) 69,816 Liabilities 2009-10 8 60,902 (64.6) 33,310 (35.4) 94,212 2010-11 P 9 74,008 (70.2) 31,424 (29.8) 1,05,431

P: Provisional Note: Figures in parentheses are percentage shares to total. Source: Annual Returns.

Interest Rate on Public Deposits with NBFCs
6.29 The largest amount of public deposits of NBFCs-D were raised at interest rates in the range of up to 10 per cent with the share accounting for about three-fourth as at endMarch 2011 (Table VI. 20 and Chart VI.6).

year maturity. In 2010-11, there was an increase in the shares of deposits belonging to more than 2 years and up to 3 years maturity category, while the shares of deposits belonging to almost all maturity categories showed a decline (Table VI.21 and Chart VI.7). 6.31 Banks and financial institutions were the dominant source of borrowings for NBFCs-D with a share of about 50 per cent at end-March 2011. The share of borrowings from the Government (extended only to Government Loan Companies) witnessed an increase, while there was a negligible amount from the external sources. Others (which include, inter alia, money borrowed from other companies, commercial paper, borrowings from mutual funds and any other type of funds, which were not treated as
Table VI.18: Public Deposits held by NBFCs-D by Deposit Ranges
(Amount in ` crore) Deposit Range As at end-March No. of NBFCs Amount of deposit 4 21 64 128 69 133 2,416 2,831 5 19 44 129 108 81 3,681 4,062

Maturity Profile of Public Deposits
6.30 The largest proportion of public deposits raised by NBFCs-D belonged to the short to medium-term end of the maturity spectrum. At end-March 2011, the largest percentage of deposits had a maturity of more than two years and up to three years followed by less than 1
Chart VI.4: Share of Public Deposits held by NBFCs-D by Deposits Ranges
100.0
90.6

90.0 80.0 70.0
Per cent to total

85.3

60.0 50.0 40.0 30.0 20.0 10.0
0.7 0.5 4.5 1.1 3.2 4.7

2009-10 2010-11P 2009-10 2010-11P 1 1. Less than Rs. 0.5 crore 2. More than Rs. 0.5 crore and up to Rs. 2 crore 3. More than Rs.2 crore and up to Rs.10 crore 4. More than Rs.10 crore and up to Rs.20 crore 5. More than Rs.20 crore and up to Rs.50 crore 6. Rs.50 crore and above Total P: Provisional Source: Annual Returns. 2 184 60 27 5 4 10 290 3 134 38 28 7 2 8 217

2.3

2.4

2.6

2.0

0.0
`0.5 crore to `2 crore `10 crore to `20 crore `20 crore to `50 crore < `0.5 crore `2 crore to `10 crore `50 crore and above

2009-10

2010-11 P

142

which Chart VI.2) 93 (3.5 per cent. advances accounted for predominant share of total assets followed by investment.996 (73.22).864 907 98 3.19: Public Deposits held by NBFCs-D Region-wise (Amount in ` crore) Region 2010 Number of NBFCs-D 1 North East West South Total Metropolitan cities: Kolkata Chennai Mumbai New Delhi Total P: Provisional Source: Annual Returns.062 Table VI.4 Distribution of NBFCs-D According to Asset Size 6.6 0. only 7 per cent of NBFCs-D had an asset size of more than ` 500 crore.0 43% 54% 40. Source: Annual Returns. Chart VI.0 3% 66.32 The total assets of deposit-taking NBFCs-D sector registered a moderate growth during 2010-11 mainly on account of increase in the assets of asset finance companies (Table VI.222 (43.812 592 207 2.8) 945 (23.1 2010-11 0.0 23% 3% Per cent 50. As at end-March 2011.3) 2. Component-wise.0 72.3 0.33 Based on their deposit taking capacity.876 2.9 20.0) 4.0 4.8 2009-10 10. At end-March 2011.831 4 144 8 20 45 217 P: Provisional Note: The rate of interest on public deposits cannot however exceed 12.873 2 189 9 27 65 290 As at end-March 2011 P Public Deposits 5 188 4 929 2. Figures in parentheses are percentage shares to total.942 4.0 North East 2009-10 West 2010-11 P South Upto 10 % 10 to 12 % 12 %and above 143 .6) 1.516 (53. public deposits) registered a significant growth in 2010-11 resulting in a rise in its share in total borrowings of NBFCs-D (Table VI.0 74% 30.062 Public Number of Deposits NBFCs-D 3 335 9 612 1. only bigger NBFCs-D had larger asset base.Deposit Interest Rate Range-wise 70.20: Public Deposits held by NBFCs-DDeposit Interest Rate Range-wise (Amount in ` Crore) Deposit Interest Rate Range As at end-March 2010 1 Up to 10 per cent More than 10 per cent and up to 12 per cent 12 per cent and above Total 2 1.0 21.6 22. Assets of NBFCs 6.3 60.23).5: Share of Public Deposits held by NBFCs-D: Region-wise 80.3) 121 (3. more than two-thirds of the total assets of the NBFCs-D sector were held by asset finance companies.831 2011 P 3 2.Non-Banking Financial Institutions Table VI.0 11. 6 37 11 55 109 9 1.619 5 26 6 50 87 4 2.6: Public Deposits held by NBFCs-D .

0) 5.034 (36.Report on Trend and Progress of Banking in India 2010-11 Table VI.21: Maturity Pattern of Public Deposits held by NBFCs-D (Amount in ` Crore) Maturity Period As at end-March 2010 1 1.25). while income as a percentage to average total assets more or less remain same resulting in an increase in net profit to total average assets (Return on Assets) ratio of NBFCs-D (Chart VI.0) 5. < 1 year 3 to 5 years 1 to 2 years 5 years and above 2 to 3 years had a share of 97.22: Sources of Borrowings by NBFCs-D by Classification of NBFCs (Amount in ` crore) Classification Government 2009-10 2010-11 P 1 Asset Finance 2 3 0 (0.5) 77 (1.4) 81 (2. More than 3 and up to 5 years 5.943 (19.2) 2.6) 64.991 (19.285 (85.329 (80.2) 6.0) Loan Companies 4.0) 0 (0.405 (59.850 (41. assets held in the form of loans and inter corporate deposits and investments of NBFCs-D witnessed a significant growth.805 (57.8). 5 years and above@ Total 2 1. 144 . 2011 (Rs.0) 14.973 9 12.3) 14. @ Includes unclaimed public deposits of Rs.785 11 8. increase in their operating profits during 201011.9) 90 (3.831 2011 P 3 982 (24.151 (34. These two categories of activities constituted 93.2) 794 (19.7) 11. Source: Annual Returns.3) 6.710 (100.8) 35.2) 31.031 (36.4) 22.159 (75.030 (80.980 (42.35 The financial performance of NBFCs-D witnessed improvement as reflected in the Table VI.58 crore in the previous year).36 Expenditure as a percentage to average total assets witnessed a marginal decline during 2010-11.927 (65.6) 1. More than 2 and up to 3 years 4.7) 2.2) 20.9) 4.022 (70.24).078 2010-11 P 13 49.045 (14. Distribution of Assets of NBFCs – Type of Activity 6.0) 1. @ : Comprises (i) Foreign Government. The operating profit along with an increase in tax provision resulted in almost doubling of net profit during 2010-11 (Table VI.256 Total Borrowings 2009-10 12 41.710 P: Provisional.988 (48. Financial Performance of NBFCs-D 6.3) 2.9 per cent share in total assets of the NBFCs-D sector (Table VI.0) 757 5 3 (100.26). Less than 1 year 2.908 (100.0) 5. More than 1 and up to 2 years 3.0) 0 (0.795 (29.9) 222 (5.0) 3 Banks and Financial Institutions 2009-10 2010-11 P 6 24.330 Others 2009-10 2010-11 P 10 4.34 During 2010-11.853 7 28.33 crore as on Mar 31. and (iii) Foreign Citizen or Person. This increase in profit was mainly on account of growth in income (fund based) while expenditure declined marginally.0) Total 4. Note: Figures in parentheses are percentages to respective total.693 (24.320 Debentures 2009-10 2010-11 P 8 12. 6.5 per cent in total assets of all NBFCs-D (Table VI.5) 595 (21.7) 14.8) 7. (ii) Foreign Authority.062 Chart VI.816 0 (0. Source: Annual Returns.8) 69.908 External Sources @ 2009-10 2010-11 P 4 757 (100.7: Maturity Pattern of Public Deposits held by NBFCs-D 2009-10 5% 2% 3% 3% 24% 36% 49% 37% 2010-11 21% 20% P: Provisional Note: Figures in parentheses are percentages to respective total.

119 2011 P 5 55. More than 10 Crore and upto 50 Crore 6.4) 71.102 P: Provisional Figures in parentheses are percentages to respective totals.431 As at end-March Advances 2010 4 46.472 (40.5 14.178 (28. Source: Annual Returns.431 Percentage Growth 2011 P 4 9. of Companies 2010 1 1.8) 94.25 Crore and upto 0.24: Assets of NBFCs-D by Asset-Size Ranges (Amount in ` crore) No.9) 8.550 (4.05.0) 89 (0. Source: Annual Returns.8) 1.6) 24.724 (71.901 Investment 2010 6 10.688 (57. Note: Figures in parentheses are percentages to respective total.212 2011 P 3 74.9) 21.008 (70. there was an improvement in share of standard assets at end-March 2011 to 98.9 P: Provisional. In case of loan companies.28). 6. doubtful and loss assets of all companies in 2010-11 underlining the improvement in asset quality of these institutions.7 per cent (Table VI. 199 out of 204 NBFCs had CRAR of more than 15 per cent or more (Table VI.498 2011 P 7 12.1 97. Source: Annual Returns.2) 31.23 : Major Components of Assets of NBFCs-D by Classification of NBFCs (Amount in ` crore) Classification Assets 2010 1 Asset Finance Companies Loan Companies Total 2 60.27).25: Distribution of Assets of NBFCs-D by Activity (Amount in ` crore) Activity As at end-March 2010 1 Loans and Inter-corporate deposits Investments Bills Other assets Total 2 71.02. This indicates that the NBFC sector is witnessing a consolidation process in the last few years. 145 .3 11.38 There was an improvement in the asset quality of asset finance and loan companies in 2009-10 as evident from a decline in the gross Table VI.Non-Banking Financial Institutions Table VI.50 Crore 3. 7 17 290 6 15 217 1.212 2011 P 3 77.902 (64.212 1.29).8) 7.630 (59.25 Crore 2.1) 21.5) 22. Less than 0.431 10 8 702 508 37 34 831 822 91 73 416 347 105 70 125 80 20 9 8 3 2 3 2011P 3 2 Assets 2010 4 0 2011P 5 0 NPAs to gross advances ratio for these companies (Table VI.901 (73. More than 100 Crore and upto 500 Crore 8.6) 45 (0. More than 0.753 1.6) 33.1) 4.05.119 (75.424 (29.4 39.102 (20. More than 0.05. More than 50 Crore and upto 100 Crore 7.30).2) 18.37 There was a significant decline in the gross NPAs to credit exposure ratio of NBFCs-D in 2010-11 in line with the trend observed in recent years.651 (65. Above 500 Crore Total P: Provisional. Soundness Indicators: Asset Quality of NBFCs-D 6. Net NPAs remained negative with provisions exceeding NPAs for last four consecutive years up to end-March 2011 (Table VI. 6. More than 2 Crore and upto 10 Crore 5.5) 18.1) 6.839 94.5) 77.50 Crore and upto 2 Crore 4.310 (35.40 At end-March 2011.39 There was a decline in the shares of all three NPA categories of sub-standard.810 (42.0) 1.339 (6.377 831 90.4) 94.498 (19. Capital Adequacy Ratio 6. wherein the weaker NBFCs are gradually exiting and paving the way for Table VI.468 (34.

8) 10.27: NPA Ratios of NBFCs-D (per cent) End-March 1 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011P #: Provision exceeds NPA. bonds/ debentures and fixed deposits/certificates of Table VI.482 94.046 64. E.77 0.978 70.70 Net Advances 5 44.3 2.8: Financial Performance of NBFCs-D 18.861 1.807 19.1) 1.666 (24. This increase was mainly concentrated in the NOF size category of ` 500 crore and above (Table VI. Source: Annual Returns.0 1.0 1.31).449 51.3 0.7 3.5 12.8 1.0 10.150 (10.3 per cent at endTable VI.748 20.5 6.546 (59.263 2.825 (16. Residuary Non-Banking Companies (RNBCs) 6.0 0.968 (27.63 1.0 Income Expenditure Net Profit 14.2 2.5 0. Expenditure (i+ii+iii) (i) Financial of which Interest Payment (ii) Operating (iii) Others C.043 Amount 3 350 251 541 243 891 494 % to Gross Advances 4 0.4 2.5 14.7) 11.1 2.49 2.7 2. Note : Figures in parentheses are percentage shares to total. TAX Provisions Operating Profit (PBT) Net Profit (PAT) Total Assets Financial Ratios (as % to Total Assets) i) Income ii) Fund Income iii) Fee Income iv) Expenditure v) Financial Expenditure vi) Operating Expenditure vii) Tax Provision viii) Net Profit H.3) 730 (6.0 March 2011 (Table VI.41 Assets of the RNBCs declined by 36 per cent during the year ended March 2011. Cost to Income Ratio 2010 2 13.393 68.7 Net NPAs to Credit Exposure 3 3.1 2.480 50.7 0. P: Provisional.2) 2.212 2011 P 3 15.388 (98. G.0 2.0 .1 2.5 0.33 1.Report on Trend and Progress of Banking in India 2010-11 Table VI.2 # # # # P: Provisional.8 1.2) 1.196 15.4 14.577 1.9 2.2 0.295 65.3) 902 (8.35 0.0 2. Source: Half-Yearly return on NBFCs-D.0 1.431 Income and expenditure as per cent to average total assets Chart VI.2) 127 (0.3) 227 (1.1 14.038 6. The ratio of public deposits to Net Owned Funds (NOF) of NBFCs taken together has increased marginally to 0.0 3.5 (Amount in ` crore) 16.26: Financial Performance of NBFCs-D As at end-March Item 1 A.0 8. The assets mainly consist of investments in unencumbered approved securities.615 13.5) 1.096 2.853 stronger ones.6 81.069 (99.816 (62.402 4.3 0.0 14. There was an increase in NOF and public deposits of NBFCs-D during 2010-11.0 2. F.0 11.529 18.0 10. D.05. Income (i+ii) (i) Fund Based (ii) Fee-Based B.4 0.2 5.0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 P 0.8 8.934 6.28: NPAs of NBFCs-D by Category of NBFCs (Amount in ` Crore) Classification/ End-March 1 Asset Finance 2009-10 2010-11P Loan Companies 2009-10 2010-11P All Companies 2009-10 2010-11P Gross NPAs Gross Advances 2 45. Source: Half-Yearly return on NBFCs-D. 146 Net profit as per cent to average total assets 3. Gross NPAs to Credit Exposure 2 10.5) 1.0 4.32).2 1.913 18.6 2.7 72.6) 2.5 0.6 8.

6.0) Gross NPAs 6 350 (0. Note: AFC-Asset Finance Companies.818 4.3 per cent in 2010-11 (Table VI. of which. Despite the decline in the provision for taxation. while the other was in the central region.0) 8 (0.503 2010-11 3 10.170 14.0) 74 (0.2) 51.831 (0.8) 140 (0.098 (99. the net profits of RNBCs decreased sharply during 2010-11 compared to a significant increase in the previous year.31: Net Owned Fund vis-à-vis Public Deposits of NBFCs-D by Category (Amount in ` Crore) Classification Net Owned Fund 2009-10 1 Asset Finance Companies Loan Companies Total 2 8. RNBCs are in the process of migrating to other business models and the companies would reduce Table VI.5) Doubtful Assets 4 46 (0.9) 316 (0.978 (100.42 The decline in the income of RNBCs during 2010-11 was more than the decline in expenditure.8) 214 (0.0) 70.2) 2010-11 5 3. deposit of SCBs.3) 545 (0. Source: Half-Yearly return on NBFCs-D.1) 2.043 (100.053 (98. NOF of RNBCs increased marginally by 2.3) 891 (1. Note: Figures in parentheses are percentages to total credit Exposures.30: Capital Adequacy Ratio of NBFCs-D (Number of companies) CRAR Range AFC 1 1) Less than 12% a) Less than 9% b) More than 9% and up to 12% More than 12% and up to 15% More than 15% and up to 20% More than 20% and up to 30% Above 30% Total 2 2 2 0 1 5 21 182 211 2009-10 LC 3 1 0 1 0 3 7 53 64 Total 4 3 2 1 1 8 28 235 275 AFC 5 1 1 0 1 5 19 142 168 2010-11P LC 6 1 1 0 2 3 3 27 36 Total 7 2 2 0 3 8 22 169 204 2) 3) 4) 5) P: Provisional.43 At end-March 2011.697 4. However.529 (100.0) 20.3) Regional Pattern of Deposits of RNBCs 6. Source: Half-yearly returns. one was located in the eastern region Note: Figures in parentheses are ratio of public deposits to net owned fund.29: Classification of Assets of NBFCs-D by Category of NBFCs (Amount in ` Crore) Classification/ End-March 1 Asset Finance Companies 2009-10 2010-11P Loan Companies 2009-10 2010-11P All Companies 2009-10 2010-11P Standard Assets 2 45.0) 92 (0.8) 251 (0.287 (0.806 13.4) 494 (0. 147 . LC-Loan Companies.7) 65.Non-Banking Financial Institutions Table VI.6) 243 (1.5) 19. Source: Annual Returns.987 Public Deposits 2009-10 4 2.6) 214 (0.449 (100.6) 585 (0.7) Gross Advances 7 45.0) P: Provisional.0) 65. as a result of which the operating profits of RNBCs declined significantly during the year.497 (99.295 (100.5) 541 (2.5) 102 (0.1) 8 (0.062 (0.1) 4.628 (0.4) 0 (0.748 (100.0) 18.1) 29 (0.0) 51.4) 298 (1.33).3) Sub-standard Assets 3 287 (0.1) Loss Assets 5 18 (0. there were two RNBC.6) 69.3) 169 (0.549 (99.989 (97.3) 434 (0.1) 169 (0.087 (98. Table VI.4) 18.

405 11.467 4. Public deposits held by the two RNBCs registered a significant decline in 2010-11 mainly on account of a substantial decline in the deposits held by the RNBC located in the central region (Table VI.32: Range of Net Owned Fund vis-à-vis Public Deposits of NBFCs-D (Amount in ` Crore) Range of NOF No.5 -3. 148 .Report on Trend and Progress of Banking in India 2010-11 Table VI. of Companies 5 2 113 65 20 2 7 8 217 2010-11P Net Owned Fund 6 -200 84 266 453 120 1. E.920 26 1.830 No. G.535 13.44 Following the decline in deposits.400 974 343 83 164 546 382 2011P 3 11.2 -19.1 2010-11P 5 -36.1 -74. there was a decline in the investments of RNBCs in 2010-11. Institution/Corporation (iv) Other Investments (v) Other Assets Net Owned Fund Total Income (i+ii) (i) Fund Income (ii) Fee Income Total Expenses (i+ii+iii) (i) Financial Cost (ii) Operating Cost (iii) Other Cost Taxation Operating Profit(PBT) Net Profit(PAT) PAT: Profit After Tax As at end-March 2010 2 17.3 -40.9 56. Source: Annual returns.754 2.0 -45. NBFCs-ND-SI 6.34).876 49 4.5 10.1 -35.920 2.25 crore More than 0. C.860 5.860 710 4. D.308 2.652 2.0 -16.1 57.4 -41.987 Public Deposits 7 32 32 136 113 104 453 3.0 -47.4 -50. P: Provisional PBT: Profit Before Tax Source: Annual Returns.062 their deposit liabilities to ‘nil’ by 2015.192 4.1 B.503 Public Deposits 4 174 46 134 189 52 480 1.128 31 1.4 130.159 1.6 -53.2 137. constituting around twothirds of the total liabilities (Table VI. Banks/Public Fin.25 crore and up to 2 crore More than 2 crore and up to 10 crore More than 10 crore and up to 50 crore More than 50 crore and up to 100 crore More than 100 crore and up to 500 crore Above 500 crore Total P: Provisional.2 18.2 -71.946 1.3 -9.36).45 The assets of NBFCs-ND-SI for the year ended March 2011 showed an increase of 24 per cent over the year ended March 2010.0 -19.5 -17. Total borrowings (secured and unsecured) by NBFCsND-SI increased by 30 per cent during the year ended March 2011.9 -76.466 1.33.553 14. of Companies 1 Up to 0.988 1. F. Institutions (iii) Debentures / Bonds/ Commercial Papers of Govt. Profile of RNBCs (Amount in ` crore) Item 1 A.9 2.2 -32.022 2.4 -39.921 1.2 7.712 12. The decline was noticeable in the Table VI. case of unencumbered approved securities (Table VI.5 93.3 -91.4 -62. 2 4 172 70 27 1 6 10 290 2009-10 Net Owned Fund 3 -436 130 265 538 66 1. Assets ( i to v) (i) Investment in Unencumbered Approved Securities (ii) Investment in Fixed Deposits / Certificate of Deposits of Scheduled Comm.35).8 -28. Investment Pattern of RNBCs 6.1 13.582 2.006 631 368 7 62 153 91 Percentage Variation 2009-10 4 -11.9 -93. Companies/ Public Sector Banks/Public Fin.

0 13.131 3.575 2.526 61.127 24.143 95.698 7. Others B. Note: 1 .743 10.086 2.30. 2.5) 5.0 67. Other Assets Memo Items 1.2 3.45.285 3.662 40.788 82.153 31. Note: Figures in parentheses as percentages to ALDs. Source: Annual Returns.6 8.8 102.4) 710 (4.946 45. 2009-10 2 36.4 -9.612 2.1.3 4. Hire Purchase Assets 3.6 8. Note: Figures in parentheses are percentages to respective totals. mostly sourced from banks/FIs.74.5.9) 2.285 (22.48.883 32. Commercial Paper B.521 3.544 43.860 (33. Un-Secured Borrowings B.46 NBFCs-ND-SI sector is growing rapidly and borrowings comprise their largest source of funds.905 27. Borrowings from FIs B.1) 7.590 45.877 42.129 2.1.9 55.971 3. Debentures B.9 14. Un-Secured 2. Inter-Corporate Borrowings B.7 24.08. Debentures A.8 20.7 2.0 31.77. of RNBCs 1 Central Eastern Total Metropolitan Cities Kolkata Total 2 1 1 2 1 1 Public Deposits 3 11.990 98.173 3.9 15.471 2.6) 2.36.844 25.462 1.321 4.6) 14.34: Public Deposits Held by RNBCs .431 78.36: Consolidated Balance Sheet of NBFCs-ND-SI Item 1 Share Capital Reserves & Surplus Total Borrowings Secured Borrowings A.Region-wise (Amount in ` Crore) 2009-10 No.308 (16.2 29.854 22. 6.399 31.1 17.5 10. followed by unsecured borrowings.876 (36. Borrowings from FIs A. These ND-SIs constitutes 93.177 5.4 30. Secured 1.5 33. P: Provisional. Capital Market Exposure Of which Equity Shares 2.35.696 21.88.652 (33.6 18.7 15.32.850 7.2. Others 4. Source: Annual Returns. of RNBCs 4 1 1 2 1 1 Public Deposits 5 5.Non-Banking Financial Institutions Table VI.655 99.612 1 Table VI.60 2010-11P 3 40.408 58.565 12. they have a systemic linkage and need to be monitored closely to ensure that they do not pose (Amount in ` Crore) Table VI.235 (77.4.902 2.2 12.4) 3. and (ii) CME related loans & advances. Current Investments 4.769 5. Thus.029 39.48.944 36.1.93 Percentage Variation 4 11.923 1.517 2.6) P: Provisional.862 41.Data presented above pertaining to ND-SIs which have consistently reported for time periods March 2010.25.3 P: Provisional. Loans & Advances 1.9) Aggregate Liabilities to the Depositors (ALD) (i) Unencumbered approved securities (ii) Fixed Deposits with banks (iii) Bonds or debentures or commercial papers of a Govt.292 92.467 (17.5 45.2 2.444 13. Long Term Investments 3.471 1. 3.7.9 15. Borrowings from Relatives B.7 25.19.8 91. Investments 3.019 1.938 2.8.433 5.2.772 10.6) 2.285 2010-11P No.612 (33. A.860 (40. Borrowings from Banks A. Cash & Bank Balances 5.4. Other Current Assets 6.25.3. Interest Accrued A.591 1. Interest Accrued B. Secured borrowings constitute the largest source of funds for NBFCs-ND-SI.049 3.779 1.3 9. Current Liabilities & Provisions Total Liabilities/ Total Assets Assets 1.5.371 82.806 3.948 74.393 59.290 (66.1.521 2.144 71. March 2011 and June 2011. and reserves and surplus.27. Leverage Ratio 1.6.3.629 50. Capital market exposure (CME) includes: (i) investments in listed-instruments.857 40.5 4.2 -2.3 -39.648 7. CME as % to Total Assets 3.00. Source: Monthly Return on ND-SI.4 per cent of total assets of all reporting ND-SI.3 14. 149 .902 1.0) 4.263 43.4) 49 (0. Company/ public sector bank/public financial Institution/corporations (iv) Other Investments 2010-11P 3 7. Investment Pattern of RNBCs (Amount in ` Crores) 2009-10 2 14.481 29.58.2.355 40. Borrowings from Banks B.366 4.2.685 1.544 1.85. 2.

30. While the concentration of funding has risks. Both the Gross and Net NPAs as a ratio to Table VI.228 18.38: Financial Performance of NBFCs.88.118 15. Table VI.72. all regions continued with the same trend (Table VI. and debentures/CPs.667 7. Total Income 60.3 0. Net Profit 12. This indicates that there was considerable scope for NBFC-NDSI to utilise its capital for further expansion. This sector’s exposure towards the sensitive sector that is prone to potential boom-bust cycles such as capital market also shows an increase.779 March 2011P 3 2.40). P: Provisional.93 during 2010-11. Net NPA to Net Advances 3.3 1. The leverage ratio of the entire NBFCs-ND-SI sector rose to 2. especially in devising appropriate regulatory safeguards for the highly complex NBFI sector (Box VI.3).458 1.842 4.9 March 2011P 3 1.2 2. the majority of reported companies maintained stipulated minimum norm of 15 per cent capital adequacy as measured by CRAR (Table VI. few companies showed their dependence on ICDs/commercial paper/banks to fund the significant portion of their assets (Table VI.877 78.41).39).932 2. Table VI. this trend continued during the quarter ended June 2011 also.1 (iv) Net Profit to Total Assets 2.68.36.00.619 7. Rapid financial diversification has also posed new challenges for regulators.3 (ii) Expenditure as % to Total Assets 7.38). However.49 As on March 2011. The ROA remained same during the same period (Table VI. Gross NPA to Gross Advances 2.7 1.09. there is an indirect exposure to depositors. Northern region along with the western region continued to account for more than 80 per cent of the total borrowings during the year ended March 2011 and March 2010.24.9 21. As on June 2011.500 1. Total Expenses 43.47 The region-wise analysis of the total borrowings of the NBFCs-ND-SI reveals that the. Gross NPA to Total Assets 4. working capital loans.937 1.37: Borrowings of NBFCs-ND-SI (By Region) (Amount in ` Crore) Region 1 North East West South Total Borrowings March 2010 2 2.366 9.42).5 0.85. total asset of the entire NBFCs-ND-SI sector declined during the year ended March 2011.39: NPA Ratios of NBFCs-ND-SI (Amount in ` Crore) Item 1 1.806 Financial Ratios (i) Income as % to Total Assets 10.6 1. Source: Monthly Return on NBFCs-ND-SI.ND-SI (Amount in ` Crore) Item 1 March 2010 2 March 2011P 3 71.8 1. there was marginal increase in NPA ratio (Table VI. Borrowings of NBFCs-ND-SI by Region 6.48 The financial performance of the NBFCsND-SI sector improved significantly as reflected in the increase in net profit during 2010-11 compared to the previous year.765 14.823 P: Provisional.356 16. Total Assets 5.9 Financial Performance 6.37). the caps on bank lending to NBFCs may constrain their growth.5 June 2011P 4 2.768 5.938 June 2011P 4 2.9 22.07.0 0.8 2. New private banks have emerged as a second major bank group for these companies to raise term loans and working capital loans (Table VI. All regions registered significant growth during the year ended March 2011 compared with the previous year.8 6.609 3.943 3. Net NPA to Total Assets March 2010 2 2.1 P: Provisional.846 54. Source: Monthly Return on ND-SI (` 100 Crore and above).1 June 2011P 4 20.847 5. Source: Monthly Return on ND-SI (` 100 crore and above) 150 .Report on Trend and Progress of Banking in India 2010-11 any risk to the system. 6.8 0.2 1.7 0.291 85. At end-March 2011.4 (iii) Net Profit to Total Income 20.805 2. These companies were also largely dependent on the nationalised banks for their term loans.7 1.491 13. To the extent that they rely on bank financing.696 50. 104 companies out of 253 NBFCs-ND-SI companies relied on owned fund to fund their assets.48. During the quarter ended June 2011.231 4.61.

Supervisory risk assessment of such companies should take into account the risk of the parent company. whether listed or not. structured products and securitizations/assignments. should be required to comply with mandatory disclosures under Clause 49 of SEBI Listing Agreements. bank balances and holdings of government securities fully cover the gaps. change in control. asset liability profile. offbalance sheet exposures. (iii) To revisit the current framework on exemptions to certain categories of NBFCs. where there is an NBFC in the group. Primary Dealers 6. (xiii) For the purpose of applicability of registration and supervision. 4. (vii) Asset classification and provisioning norms similar to banks to be brought in phased manner for NBFCs. (iv) The twin criteria of assets and income for determining the principal business of an NBFC should be increased to 75 per cent of the total asset and 75 per cent of the total income.000 crore. (ii) NBFCs not accessing public funds may be exempted from registration provided their assets are below `1. (v) Tier I capital for Capital to Risk Weighted Assets Ratio (CRAR) purposes may be specified at 12 per cent to be achieved in three years for all registered deposit taking and non-deposit taking NBFCs.Non-Banking Financial Institutions Box VI. The Report was placed on the Reserve Bank website on August 23. (vii) To examine the need to prescribe professional qualifications for Independent Directors on the Boards of NBFCs-ND-SI. In case of bank sponsored NBFCs. (iii) Any transfer of shareholding. as specified by the Securities and Exchange Board of India (SEBI). of which 13 were banks 151 carrying on Primary Dealership business departmentally (Bank-PDs) and the remaining eight were non-bank entities. (vi) To recommend comprehensive ‘Disclosure norms’ for NBFCs. there were 21 Primary Dealers (PDs).50 As on June 30. A time period of three years may be given to fulfill revised principal business criteria. (iv) To frame policy on multiple NBFCs within a single group and captive NBFCs floated by manufacturing or industrial houses. (x) Government owned entities that qualify as NBFCs may comply with the regulatory framework applicable to NBFCs at the earliest. liquidity ratio. the business models of which focus mainly (90 per cent and above) on financing parent company’s products. Accounting norms applicable to banks may be applied to NBFCs. (i) To review the concept of ‘principal business’ and to re-examine the need for separate regulatory categories of NBFCs. (ix) Financial conglomerate approach may be adopted for supervision of larger NBFCs that have stock brokers and merchant bankers in the group. (xv) Disclosure for NBFCs with assets of `100 crore and above may include provision coverage ratio. (xvi) NBFCs with assets of `1. Suitable income tax deduction akin to banks may be allowed for provisions made under the regulations.. the risk weights for CME and CRE may be the same as specified for banks. 2011 for eliciting public comments. (ii) To reassess the entry point norms for NBFCs. (v) To examine the need for convergence of regulation of NBFCs with that of best regulatory practices of banks. (vi) Liquidity ratio may be introduced for all registered NBFCs such that cash. Usha Thorat) to examine a range of emerging issues pertaining to the regulation of NBFC sector. The risk weights for NBFCs that are not sponsored by banks or that do not have any bank as part of the group may be raised to 150 per cent for capital market exposures (CME) and 125 per cent for commercial real estate (CRE) exposures. (viii) To examine the need for monitoring assets in one or other type of NBFC. The key recommendations of the Working Group are as follows: (i) The minimum net owned fund (NOF) requirement for all new NBFCs wanting to register with the Reserve Bank could be retained at the present `2 crore till the Reserve Bank of India Act is amended. of 25 per cent and above. known as .000 crore and above should be inspected comprehensively on an annual basis and be subjected to annual stress testing to ascertain their vulnerability. (xiv) All NBFCs with assets of ` 100 crore and above. (ix) To arrive at a set of principles to guide the frequency and depth of supervision of NBFCs based on their size and interconnectedness with other institutions. (xi) Board approved limits for bank’s exposure to real estate may be made applicable for the bank group as a whole. movement of non-performing assets (NPAs). 2011. direct or indirect. extent of financing of parent company products. while undertaking margin financing.3: Recommendations of the Working Group on the Issues and Concerns in the NBFC Sector The Reserve Bank constituted a Working Group on the 'Issues and Concerns in the NBFC Sector' (Chairperson: Smt. respectively. if any. insist on a minimum asset size of more than `50 crore for registering any new NBFC. viz. however. The Reserve Bank should. (xii) Captive NBFCs. merger or acquisition of any registered NBFC should have prior approval of the Reserve Bank. (viii) NBFCs may be subject to similar regulations as banks while lending to stock brokers and merchant banks and to similar regulation for stock brokers. between cumulative outflows and cumulative inflows for the first 30 days. may maintain Tier I capital at 12 per cent from the time of registration. Existing NBFCs below this limit may deregister or be asked to seek a fresh certificate of registration at the end of two years. the total assets of all NBFCs in a group should be taken together to determine the cut off limit of `100 crore.

1 per cent of total bids of the PDs were accepted. pursuant to the merger of IDBI Gilts Limited with its parent entity. 2011) (Number of Companies) Dependence (per cent to Total Liabilities) 1 0 per cent 0 to 20 per cent 20 to 40 per cent 40 to 60 per cent 60 to 80 per cent 80 to 100 per cent Total Reporting Companies Owned Fund 2 0 46 47 27 29 104 253 Banks Debentures 4 187 35 18 9 4 0 253 InterCorporate Deposits 5 182 49 10 7 2 3 253 Commercial Paper 6 216 23 8 3 3 0 253 Table VI.634 4. Note: AFC-Asset Finance Companies.495 crore. 2011) (Number of Companies) CRAR Range 1 Less than 12 per cent More than 12per cent and up to 15 per cent More than 15 per cent and up to 20 per cent More than 20 per cent and up to 30 per cent Above 30 per cent Total AFC 2 7 4 4 15 IFC 3 1 1 1 3 IC 4 4 3 3 9 127 146 LC 5 2 1 22 19 66 110 Total 6 6 4 33 33 198 274 3 179 30 24 15 5 0 253 standalone PDs.42: Bank Exposure of NBFCs-ND-SI (As on March 31.541 1.525 152 .. IDBI Bank Limited was authorised to undertake PD business departmentally from April 2011.806 8.18.37. the actual bids submitted by PDs collectively (including bankPDs) in Treasury Bills (T-Bills) auctions were ` 6. 6.37.356 Working Capital Loans 3 14. 43). 2011) (Amount in ` Crore) Bank Group 1 A. PDs submitted bids Table VI.59.089 1. In April 2011. State Bank Group C.320 crore. PDs (including bankPDs).52 During the year 2010-11.41.233 5. All the PDs had achieved the stipulated minimum success ratio in both the first and second half of 2010-11.947 1.081 6.712 33. In Cash Management Bills (CMBs) auctions.0 per cent in 2009-10 (excluding devolvements) (Table VI.416 crore compared to their bidding commitment of `3. dated G-Sec were issued for ` 4.000 crore.545 crore against the notified amount of `4. 1934. Source: Annual returns.625 1.450 10.076 6. Goldman Sachs (India) Capital Markets Private Limited was given authorisation to undertake PD business on a standalone basis. i.750 Others 5 312 25 85 370 725 1. New Private Banks E.51 During the year 2010-11. IC-Investment Companies. out of which 68.868 6. The success ratio. PDs are required to achieve a minimum success ratio of 40 per cent for T-Bills and CMBs put together on a half-yearly basis.6 per cent in 2010-11 from 42. registered as NBFCs under Section 45 IA of the RBI Act. Foreign Banks All Banks Source: Monthly returns. Old Private Banks D. In the dated G-Sec auctions. for `38.Report on Trend and Progress of Banking in India 2010-11 Table VI.120 653 3.870 14. Partial devolvement on the PDs took place on 6 Operations and Performance of PDs 6.000 crore.97. LC-Loan Companies. offered to underwrite dated G-Sec amounting to ` 7. as against the total notified amount of `12.000 crore by the Government of India under the market borrowing programme. IFC-Infrastructure Finance Companies. Nationalized Banks B. Further.958 28.463 995 10.892 23. the share of the PDs (bids accepted to the securities issued) increased to 49.902 Debentures/CPs 4 4. Term Loans 2 74. Capital Adequacy Ratio of NBFCs-ND-SI (As on March 31.e.517 Total 6 93.40: Dependence on Public Funds (As on Mar 31.66. the total amount of bids of the PDs accepted to the total commitment of the PDs increased to 62 per cent from 56 per cent during 2009-10.519 1.87.

9 per cent to 19 per cent with respect to outright transactions and from 7 per cent to 14 per cent in the case of repo transactions. Securities Notified Amount Actual Bids submitted Bid to Cover Ratio Bids Accepted Share of PDs (in per cent) 4.472 16.904 19.46 and Appendix Table VI.41.926 1. IDBI Gilts Ltd.1 per cent in 2010-11 following the decline in net profit by 22 per cent while average assets rose by 30 per cent (Table VI. and Nomura Fixed Income Securities Ltd.02.98.000 3. However.40. the share of turnover of standalone PDs to the total turnover of market participants increased from 15.84.320 6. The CRAR of the stand-alone PDs as a group worked out to 46.68.55 As regards application of funds.0 2 2011 3 1 Table VI.04.2).000 4.229 7.067 8. Stand-alone PDs continued to be well capitalised.041 2.54. Overall.66.609 42. 49).47).33.39.35.98. Financial Performance of Standalone PDs 6.416 2..00.060 7.7 per cent to 16 per cent (Table VI.87.8 per cent in 2009-10 to 1.45).0 Outright Turnover of standalone PDs Turnover of market participants Share of PDs (per cent) Repo Turnover of standalone PDs Turnover of market participants Share of PDs (per cent) Total Turnover of standalone PDs Turnover of market participants Share of PDs (per cent) Source: CCIL. Performance of Standalone PDs 6.57 Overall.53 During 2010-11.44: Performance of Standalone PDs in the Secondary Market (At end-March) (Amount in ` Crore) 2010 2 9.Non-Banking Financial Institutions Table VI.16.0 11. had infused fresh capital.6 3.970 81.56 Notwithstanding the turnaround in the trading income.3 2.89.4 2.722 1.37.219.000 6.35.23.093 56.939 1.382 2.41.75.18. The Government securities held by primary dealers as percentage to total assets has gone up to 66 per cent as at end-March 2011 from 61 per cent in the previous year (Table VI.43 Performance of the PDs in the Primary Market (At end-March) (Amount in ` Crore) 2010 1 Treasury Bills Notified Amount Bidding Commitment Actual Bids Submitted Bid to Cover Ratio Bids Accepted Success Ratio (in per cent) Central Govt. However.02.772.956 57.44).0 2. Hardening of G-Sec yields during the year impacted the treasury profits of standalone PDs (Table VI.648 56. 6.475 2. While the unsecured loans of the PDs declined by 24 per cent.104 62.535 49.568 14.27. net profit of the PDs declined by about 22 per cent in 2010-11 mainly on account of increase in interest expenses and decline in other income.2 per cent as at end-March 2011 (Table VI.48 and Appendix Table VI. investments in corporate bonds increased by 32 per cent as compared with 77 per cent in 2009-10 (Table VI.0 26.3 1.17.7 2011 3 10.838 15. the share of standalone PDs increased from 8. 6.0 22.2 crore in 2009-10.000 5.9 17. Return on Assets (ROA) decreased from 1.80. investments in G-Sec increased by 38 per cent in 2010-11 compared to a decline of 14 per cent in .45.0 4.54 During the year 2010-11. on account of partial buy-back of its capital by SBI DFHI Ltd. instances for `5.0 3. the capital as also reserves and surplus of the PDs put together declined marginally. 2009-10. in the secondary G-Sec market.3). The CRAR of individual standalone PDs remained above the prescribed minimum of 15 per cent as at end-March 2011.83. secured loans increased by 152 per cent.7 crore during 2010-11 as compared to 18 instances for `7. 153 Sources and Application of Funds of Standalone PDs 6.

64 151.01 40.815 1. 2009-10 2 227 12.271 13. etc.25 0. Source: Annual Reports of the PDs.9 -26.160 429 0 25 2. loans and advances remain the most important source Table VI.33 61.01 37.46: Financial Performance of Standalone Primary Dealers (Amount in ` crore) Item 2009-10 2010-11 Variation over 2009-10 Amount 1 A.71 -22.308 14 7.9 -181.121 2. Expenses (i + ii) i) Interest ii) Administrative Costs Profit Before Tax Profit After Tax 2 804 690 -30 144 452 302 150 343 227 3 1. 154 .308 1.307 1.40 169.36 7.541 1.945 4.973 2.522 4. All resource raising components. On the asset side.08 31. The size of balance sheet of NBFCs-D has expanded.422 End-March 2010 3 10.280 6.2 -27.4 the year mainly on account of wage revision.320 10. Conclusions 6.648 10 1.352 3.213 6.307 13 7.3 53.258 142 880 741 0 68 2. 6 Others* 2 10.817 8.8 151. 6. doubtful and loss assets of NBFCs-D underlining the improvement in asset quality.01 -1.19 -93. Most of the NBFCs-D had CRAR of more than 15 per cent indicating the consolidation process in the sector. long-term and foreign currency resources witnessed a sharp rise.29 26.69 -7.47: Financial Indicators of Primary Dealers (Amount in ` crore) Indicator 1 i) Net profit ii) Average Assets iii) Return on Average Assets (in per cent) Source : Returns submitted by PDs.76 -42.45: Sources and Applications of Funds of Standalone Primary Dealers (Amount in ` crore) Item 2009 1 Sources of Funds 1 Capital 2 Reserves and Surplus 3 Loans (a+b) a) Secured b) Unsecured Application of Funds 1 Fixed Assets 2 Investments (a+b+c) a) Government Securities b) Commercial Papers c) Corporate Bonds 3 Loans and Advances 4 Non-current Assets 5 Equity. There was a decline in the shares of all three NPA categories such as sub-standard.07 2011 6 26.891 7.86 38. The financial performance of the FIs deteriorated during 2010-11 due to decrease in operating profit and net profit.3 44. 5.86 34.079 970 58 51 811 653 158 272 178 4 275 280 88 -93 359 351 8 -71 -49 Percentage 5 25.030 1.40 -1.88 -14. There was a sharp rise in operating expenses during Table VI.886 9.09 55. Income (i + ii + iii) i) Interest and discount ii) Trading Profit iii) Other income B.12 -63.5 28. shortterm. the weighted average cost of Rupee resources raised went up across the board.305 88 498 959 0 22 1.85 -24.1 Source: Annual Reports of the PDs.697 1.030 38 9.59 23.30 -2.028 10.925 6.521 1. However.47 -13.Report on Trend and Progress of Banking in India 2010-11 Table VI.58 The resources raised by FIs during 201011 were significantly higher over the previous year.721 Percentage Variation 2010 5 0.73 209. Mutual Funds.205 2011 4 13.8 2010-11 3 178 16.36 76.842 2.59 The financial performance of NBFCs-D showed improvement as reflected in an increase in the ratio of net profit to total assets during 2010-11. There was an increase in the amount of net NPAs of the FIs in 2010-11.38 *: Others include cash + CDs + bank balances + accrued income + deferred tax assets – current liabilities and provisions.8 4.74 -14. The CRAR of all the FIs were above the stipulated minimum norm of 9 per cent indicating the scope for utilisation of capital for further credit expansion.622 6.01 7.

More than two-thirds of total assets of the NBFCs-D sector were held by asset finance companies.000 followed by investment. the net profit as a ratio to total assets remained same during 2010-11.648 66 3. 6.803 5. 2010 2 10. Total Net Capital Funds 2. CRAR (per cent) Source: Returns submitted by PDs. 6. Thus.5 2011 3 3.62 The existing supervisory framework relating to NBFCs sector has to be enhanced to reflect the ongoing changes in perception of risk due to existence of regulatory arbitrage.030 8.61 The net profit of the PDs declined in 2010-11 mainly due to disproportionate increase in interest expenses and decline in other income. This sector is growing rapidly and borrowings comprise their largest source of funds mostly sourced from banks/FIs. extent of interconnectedness with the financial sector. The hardening of G-Sec yields during the year had impact on the profits of stand-alone PDs.505 43.2 Table VI.Non-Banking Financial Institutions Table VI. But.610 8.48: CRAR of the Standalone Primary Dealers (At end-March) (Amount in ` crore) Particulars 1 1. Total Risk Weighted Assets a) Credit Risk b) Market Risk 3. 155 . 2010 2 3.60 The financial performance of the NBFCsND-SI sector also improved significantly as reflected in the increase in net profit. 49: Select Indicators of Primary Dealers (At end-March) (Amount in ` crore) Item 1 Total Assets of which: Government securities Government securities as percentage of total assets Liquidity Support Limit Source: Returns submitted by PDs.350 4.508 46. they have systemic financial linkage that need to be monitored closely to ensure that they do not pose any risk.308 6.858 3.000 2011 3 13.626 7.308 2. 6.258 61 3. There was an increase in the share of deposits ranging more than two years and up to three years maturity category. rapid asset growth.

0) 7.059 (35.40.8 21.135 (15.7) 23.177 (8.1) 12.5 28.203 (1.7) 6.415 (54.7) 5.89.589 (65.3 24.9) 2010-11 Percentage Variation 7 13.833 (37.60.4) 4.136 (45.006 (207.63.6) 12.535 (105.02.397 (13.435 (7.8 27.543 (194.20.389 (174.7) 2010-11 Percentage Variation 4 11.0 25.19.750 (5.9) 69.59.31.684 (25.241 (1.949 (13.793 (10.8) 2.9) 156 34.12.9) 5.05. Sr No.7) 17. 2.8) 8 33.529 (133.62.4) (149.77.5) 1.996 (17.7) 1.78.0 37.00. Item No.1) 69.91.455 (125. Note: Figures in parantheses are percentages to total liabilities of the concerned bank-group.303 (26.743 (49.116 (10. .679 1.9 Private Sector Banks 2009-10 12 11.558 (115.454 (21.23.7) 19.7) Foreign Banks 2010-11 Percentage Variation 10 80.441 (13.802 (39.47.2) 2.0) 2010-11 Percentage Variation 7 7.6) 2.18.30.7) 1.7 12.31.642.673 (11.3 1.363 (8.369.84.0 22.892.6 31.0) 8.5) 5.2) 22.2) 10.973 (8.58.410 (32.7) 11 35.20.1 39.4) 1.24.32.0) 3.9) 1.742 (49.4) 5 24.0) 11 20.4) 24.2 26.1 24.9) 21.05.674 (160.0 State Bank Group 2009-10 9 3. Contingent Liabilities 3 9.4 Report on Trend and Progress of Banking in India.0 17.20.47.1) 2010-11 13 14.26.022 (4.719 (167.583 (202.753 (22.05.222 (236.092 1.3) 17.9) Percentage Variation 14 31.820 (16.552 (7.4) 5.30.664 (41.238 (8.7) (192.0) 2.2 Scheduled Commercial Banks 2009-10 12 2010-11 Percentage Variation 13 14 33.317 (7.5) 4.248 (1. Public Sector Banks 2009-10 2 Forward exchange contract Guarantees given Acceptances.359 (10.4 16.8 47.276 (4.543 (14.07.8) 2010-11 Percentage Variation 10 4.306 (5. endorsements.131 (46.89.9 22. Source:Balance sheets of respective banks.68.4) 2.5 2009-10 9 59.2) 6.8) 9.536 (9.25.25.0) 5 5.1) 93.993 (62.1 20. 3.611 (51.4) 6.Appendix Table IV. Contingent Liabilities 3 99.07. 3.2) 1.08. 2 Forward exchange contract Guarantees given Acceptances.555 (7.18. 2. endorsements.60.70.450 (20.590.3) 13. etc.38.4) 1.1 New Private Sector Banks 2009-10 6 10.2) 80.73.71.63.01. etc.68.33.5) 17.0 28.42.94.7 23.76.1 Nationalised Banks * 2009-10 6 6.6) 3.57.006 (1.61.6) * : Include IDBI Bank Ltd.7 17.2 28.38.68.6 39.2) 11.080 (34.770 (19.324 (33.63. 2010-11 1 1.248 (35.39.73.9) 8 26. Item Old Private Sector Banks 2009-10 2010-11 Percentage Variation 4 1.4 1 1.0) 1.0) 16.1: Off-Balance Sheet Exposures of Scheduled Commercial Banks in India (As at end-March) (Amount in ` crore) Sr.61.0) 59.390 (97.3 32.2) 18.

4 41.0 19.259 2.4 16.024 1. Indian Overseas Bank 12.2 17.161 270 2.2 24.3 6.6 18. United Bank of India 19. Vijaya Bank 20.589 3.4 26.220 549 116 772 898 313 663 418 217 138 219 447 425 66 1.171 328 697 856 320 363 244 5.567 278 411 13.5 16.647 996 2.3 33. Syndicate Bank 16.7 57.2(A): Non-Performing Assets of Public Sector Banks .3 42.2 17.982 2.9 19. Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank 3 41.5 14. Public Sector NPAs Amount to total 14 0.4 63.4 21. Oriental Bank of Commerce 13.064 326 414 225 1.939 888 1.379 2.637 1.361 278 227 1.8 73.5 11.5 36.2 24.1 9 12.4 0.7 12.6 0.405 760 155 1. Name of the Bank No.229 430 473 1.1 36. -: Nil/Negligible.1 22. State Bank of Bikaner and Jaipur 22.2 67.1 55.6 21.7 11.138 184 273 59 Of which.2 60.6 32.573 2.4 49. State Bank of India 24.6 26.7 64.1 11.034 387 297 300 396 170 474 226 136 97 135 308 374 35 222 946 368 460 149 385 170 6.090 3.2 Total NPAs 15 = (3+11) 15 71.5 39.0 24.793 1.0 31. Punjab and Sind Bank 14. IDBI Bank Ltd.8 9.078 1.5 18.174 2.618 54 241 221 Of which.3 30. Others Amount Per cent to total 10 17.1 0.245 25. 9.8 8.9 16. State Bank Group 21.4 26.1 59.7 49.5 18. 2.Sector-wise (as at end-March 2011) (Amount in ` crore) Sr.4 11 29.5 33.262 1. Priority Sector NPAs Amount Per cent to total 1 2 Public Sector Banks Nationalised Banks* 1.6 58.8 10.2 26.1 47.3 44.6 28.5 75.8 34.1 15.9 12. Indian Bank 11.6 60.9 9. 8.9 45.7 60.5 23.3 11.6 23.786 4.0 22.799 345 624 508 Non-Priority Sector NPAs Amount Per cent to total 12 41.5 63.0 68.573 558 740 9.0 19.6 22.4 79.3 5.8 13 278 273 99 14 40 56 4 25 1 33 6 6 Of which.8 37.8 11.7 4.8 39.803 17.3 13.6 36.7 20.9 30. 7.6 50.275 519 757 327 4 58.3 17.6 6.7 22.Appendix Table IV.5 27.7 55.268 98 79 4.388 1.645 404 555 687 111 194 141 633 361 169 1.6 28. Agriculture Amount Per cent to total 6 20.5 15.6 17.8 7.921 424 4.047 42.4 37.3 49. 5.349 295 508 946 609 284 453 3.357 1.331 464 428 495 1.3 35.1 14.074 864 1.1 54.742 1.418 286 1. Punjab National Bank 15. Micro and Small Enterprises Amount Per cent to total 8 20.5 24.0 0.518 282 243 47 Of which.7 27.356 1.8 18.487 9.290 1.8 32.424 282 109 690 1.3 50. UCO Bank 17.3 43.7 56.678 1.020 1.518 1.8 68.5 29.032 866 15.8 6. Union Bank of India 18.4 16.340 10.916 139 122 3.785 28. 157 Appendix Tables .7 50.6 62.1 44.2 5 14. State Bank of Mysore 25.9 52.7 11.8 18.4 39.217 522 1.5 8.3 39.150 23.8 1. 6.6 20.9 44.7 14.6 5.0 30.5 26.569 1.5 18.918 12.5 82.6 13.417 6.3 19.0 23.9 22. Source: Off-site returns (domestic).7 22.7 66.4 17.5 60.383 40 209 5.6 16.907 1.1 37.9 40. State Bank of Hyderabad 23.2 11.7 11.623 1.9 62.7 10.2 31.6 7 14.1 23. State Bank of Patiala 26.382 835 Per cent Amount 10.762 2.8 39. State Bank of Travancore *: Include IDBI Bank Ltd.140 835 1.395 790 842 720 2.6 3.8 2.692 1. 4. 3.3 4.

0 1.8 70.5 9.6 13. Karnataka Bank Ltd. 16.3 30. 5. ICICI Bank Ltd.4 1.694 192 112 67 1. Public Sector NPAs Amount to total 14 0.147 2.7 15. 9.6 11 13. Tamilnad Mercantile Bank Ltd.Sector-wise (as at end-March 2011) (Amount in ` crore) Sr.4 57. 12.1 18.2 29. Priority Sector NPAs Amount Per cent to total 1 2 Private Sector Banks Old Private Sector Banks 1.9 15.8 12.2 14. Source: Off-site returns (domestic).6 11.7 60. 158 .971 3.0 10.9 9.0 24.148 152 519 702 228 158 21 20 2 230 141 14.6 37.4 40.4 56.3 Total NPAs 15 = (3+11) 15 17. ING Vysya Bank Ltd.2(B): Non-Performing Assets of Private Sector Banks .2 22.1 5.5 17.2 5.0 100.1 63.1 13.9 61.4 6.7 50. 7.8 27. Yes Bank Ltd.094 134 56 32 694 94 206 379 153 100 9 2 147 87 11. 17.0 4. 8.6 43.3 39.3 14.9 100.4 0. 6. 19.3 3.2 0.353 631 18 21 23 142 4 216 97 11 24 3 3 2 27 40 722 85 3 17 603 11 4 Of which.2 12.9 36.6 59.7 69. City Union Bank Ltd.6 78.0 11.2 46.3 5.9 41.9 67. 11.587 264 1. Lakshmi Vilas Bank Ltd.4 12.1 32.9 52.660 9.3 49. 3. Federal Bank Ltd.8 43.4 100.9 7.8 28.3 15.4 2. Ratnakar Bank Ltd.7 10.6 42. SBI Commercial and International Bank Ltd.8 77. -: Nil/Negligible.6 34.2 14. Jammu and Kashmir Bank Ltd.5 17.4 18. Development Credit Bank Ltd.0 13 153 153 153 Of which. 3 4.3 26.116 32 27 Of which. 2. 4.8 4.599 58 56 35 454 57 312 324 75 57 12 18 2 83 54 3.6 10. Nainital Bank Ltd. New Private Sector Banks 15.8 39.0 23.9 23. IndusInd Bank Ltd.1 4.2 10.8 53.7 9.1 38. 13.816 266 603 81 Report on Trend and Progress of Banking in India.5 7 1.9 81.053 914 208 1.9 84.1 15.4 21.7 28. 14.1 9. Micro and Small Enterprises Amount Per cent to total 8 7.8 4.5 90.4 6. HDFC Bank Ltd.224 673 56 484 1. Axis Bank Ltd.172 417 10 26 6 135 42 47 93 8 16 3 3 12 14 1.177 8.823 1.298 551 31 9 6 177 10 49 133 56 17 6 12 45 746 169 38 322 89 64 66 Of which.2 56.5 19.1 16.277 1. 18.0 36. Name of the Bank No.Appendix Table IV.5 8.9 11.1 63. Karur Vysya Bank Ltd.4 62.0 8.808 107 97 4 26. Dhanalakshmi Bank Ltd.0 5 2.6 14. 20.7 11.0 9 1.0 5.755 419 16 145 1. Kotak Mahindra Bank Ltd.3 19.1 11.9 58. 2010-11 Per cent Amount 10. 21. South Indian Bank Ltd. Others Amount Per cent to total 10 7. Agriculture Amount Per cent to total 6 12.3 19.1 13. Catholic Syrian Bank Ltd.2 60.008 159 507 81 Non-Priority Sector NPAs Amount Per cent to total 12 73.1 47.0 9.4 5.0 6.

00070 Mizuho Corporate Bank Ltd.0 100.5 92. Mashreqbank PSC 0. Micro and Small Enterprises Amount Per cent to total 8 6.4 15.0 100.0 2.0006 6 1 295 28 - 11 3. Ltd. Agriculture Amount Per cent to total 6 Of which.5 59. - 159 Appendix Tables -: Nil/Negligible.6 Non-Priority Sector NPAs Amount Per cent to total 12 77. 5.5 100.0 12.3 0.5 59.0 100. export trade have been added to NPAs of other priority sectors and non priority sector NPAs have been adjusted accordingly. 33.7 4.00010 8 - 9 789 50 0. 6 Oman International Bank S. 36. 35. 5 American Express Banking Corp.1 6.3 6 0. .9 40. Ltd. 3. 32.0 25.148 18 614 - 1 1.5 53 0.0 100. 21. Priority Sector NPAs Amount Per cent to total 4 22.0001 0. 20.1 - 7 352 5 49 0.7 100.2(C) : Non-Performing Assets of Foreign Banks . 218 Commomwealth Bank of Australia Credit Agricole Corporate and Investment Credit Suisse AG DBS Bank Ltd.7 0. 17.0 74.Sector-wise (as at end-March 2011) (Amount in ` crore) Sr. Antwerp Diamond Bank NV 100 Bank International Indonesia Bank of America National Association Bank of Bahrain & Kuwait B. 10.S.5 41.7 Of which. 16.O. The Royal Bank of Scotland N V 28 UBS AG United Overseas Bank Ltd. 25. 13.5 100. 12.141 AB Bank Ltd.8 348 0.7 4. 11. 26.0 45. Sber Bank Shinhan Bank Societe Generale 1 Sonali Bank Standard Chartered Bank 303 State Bank of Mauritius Ltd.7 2.9 100.7 10 50 165 4 60 0. 14.2 49. Name of the Bank No. Others Amount Per cent to total 10 15.2 100. 24. 6. 30.4 4.5 Chinatrust Commercial Bank Citibank N.8 100.5 100. 34.5 0.A. 408 JPMorgan Chase Bank National Association JSC VTB Bank Krung Thai Bank Public Co.Appendix Table IV. Deutsche Bank (Asia) 4 First Rand Bank HSBC Ltd.0 100.7 845 18 586 - 13 - Foreign Banks 1.6 38.1 6.0 26. 7.0 95. 3) ‘SBER Bank’ has started submitting returns from June 2011 only. 29.0 100.924 8 20 0.0 75. 2) ‘Bank International Indonesia’ has discontinued its operations in India.0 7. The Bank of Tokyo-Mitsubishi UFJ.0 54.0 97.0 12. Abu Dhabi Commercial Bank Ltd. 9.5 35.1 0.6 50. Public Sector NPAs Amount Total NPAs Per cent Amount to total 15 = (3+11) 14 15 5.065 13 20 100 1 14 2 10 781 11 3 839 199 83 179 996 27 6 1 1 1. 8.2 4. 15. 2 3 5 0. 27.4 Of which.C. 28.8 725 11 3 621 199 83 174 588 27 0.1 26. 19. Source: Off-site returns (domestic). but was not closed technically. Bank of Ceylon 1 Bank of Nova Scotia 10 Barclays Bank PLC 56 BNP Paribas 0. and has not been filing returns for the last two years.0 73. 4.G.6 100.0 6.A.4 19.8 95.5 40. 18. 22.6 Of which. 2.0 87. Note: 1) In case of sector-wise gross NPAs of foreign banks.0 100. 31. 23.7 14 0.0 100.

615 112 179 2. Name of the Bank NPAs in Advances to Weaker Sections Amount 1 2 Public Sector Banks Nationalised Banks 1. 160 .8 1. 7.9 0. 26.7 6.Public Sector Banks (As at end March 2011) (Amount in ` crore) Sr.0 2. 14.6 5. 10.8 11.7 3. 19. 18. 5.0 7. 8.9 3. 2. 12. 16.3 5. State Bank Group 21.5 6. 11. 15. No. 25.2 1.4 2. 6.5 3. 24.6 3.Report on Trend and Progress of Banking in India 2010-11 Appendix Table IV.6 3. 20. Source: Based on off-site returns submitted by banks(domestic).2 3.8 1.4 3.6 3. Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab and Sind Bank Punjab National Bank Syndicate Bank UCO Bank Union Bank of India United Bank of India Vijaya Bank IDBI Bank Ltd.8 2.013 129 53 129 Per cent 4 3.0 Note: Nationalised banks include IDBI Bank Ltd. 3. 23.2 10.0 11.5 1.1 0. 13. 4. 17. 22.3(A): Non-Performing Assets in Advances to Weaker Sections . 9.1 0.9 4. State Bank of Bikaner and Jaipur State Bank of Hyderabad State Bank of India State Bank of Mysore State Bank of Patiala State Bank of Travancore 3 7.929 5.8 2.314 155 47 557 800 263 354 152 52 105 17 422 213 49 852 229 288 426 77 234 22 2.

Nainital Bank Ltd. Ratnakar Bank Ltd.6 3. 9. 13.1 1. Catholic Syrian Bank Ltd. 6. IndusInd Bank Ltd. 8. Karnataka Bank Ltd. Federal Bank Ltd. HDFC Bank Ltd. 16.3(B): Non-Performing Assets in Advances to Weaker Sections . 21. 2.: Nil/Negligible. 12. 20. 161 . 5. Name of the Bank NPAs in Advances to Weaker Sections Amount 1 2 Private Sector Banks Old Private Sector Banks 1. 3. Lakshmi Vilas Bank Ltd. South Indian Bank Ltd. Tamilnad Mercantile Bank Ltd.9 0. ICICI Bank Ltd.8 2.3 0.2 0. 11.5 1. Kotak Mahindra Bank Ltd. 7. 4.Private Sector Banks (As at end March 2011) (Amount in ` crore) Sr. 19. Source: Based on off-site returns submitted by banks (domestic).0 0. 14.2 2. No.8 1. ING Vysya Bank Ltd. 3 283 145 5 36 4 43 10 5 14 1 6 21 138 2 24 95 18 Per cent 4 1. 18. Yes Bank Ltd.9 - . 10.8 1. Jammu and Kashmir Bank Ltd.3 1. New Private Sector Banks 15.Appendix Tables Appendix Table IV. 17. Karur Vysya Bank Ltd. City Union Bank Ltd.6 0. Development Credit Bank Ltd.8 0. Axis Bank Ltd.0 1. SBI Commercial and International Bank Ltd. Dhanalakshmi Bank Ltd.1 0.

529 21.809 14.8 3.5 21.606 49.1 14.677 8.217 2.066 18. 5.6 14.1 12.143 7.808 8.643 1.5 16. 2.4 4.590 17. 3) Indirect agriculture is reckoned up to 4.054 5.470 73.8 32.5 4.5 7.009 4.5 2.413 35. 6.3 17.2 3.389 10.7 14.056 12.192 2.0 59.6 16.765 13.6 17. concessional priority sector lending and agriculture lending targets have been fixed at 34 per cent and 14 per cent of ANBC respectively .365 3.962 5.2 10.5 1.4 10. whichever is higher 4 Total Agricultural Advances Amount Per cent to ANBC or credit equivalent of OBE. 4) For IDBI Bank Ltd.676 5.7 44. 10.8 4.6 14. Name of the Bank Total Priority Sector Advances Amount Per cent to ANBC or credit equivalent of OBE.648 34. 3.8 5.3 10. with effect from April 30.179 8.6 20.885 57.807 12.6 9.6 4.254 5.699 10.5 14.158 15.824 10.5 10. 22.579 1.4 2.3 10. 4.0 38.573 32.0 29.0 41.291 4.319 6.855 27.364 60.354 4. 8.1 15.9 5. 24.270 6.7 10. whichever is higher.9 * : Include IDBI Bank Ltd.1 10.483 29. 13.371 5.793 4.5 14. whichever is higher 8 Of which.838 43.787 8.442 2.547 7.969 14.953 2.1 16.289 10.8 51.2 18.370 2.0 5.671 40.210 2.816 1.245 10.4 5.808 24. 15.963 14.8 14. whichever is higher 10 Advances to Weaker Sections Amount Per cent to ANBC or credit equivalent of OBE.0 7.Adjusted net bank credit or credit equivalent amount of off-balance sheet exposures.1 9.325 17.3 9. 20. 11.656 19.135 4. Note: 1) Data are provisional.993 15.1 94.669 13.128 8.3 11.8 19.180 11.143 20.0 2.6 11. 30.249 36.6 4.2 41.851 5.228 7.5 41.3 10.6 4.075 20.1 44.6 45.5 4.8 16. 26.713 2.5 16.835 22.626 26. 23.0 10.442 11.0 7. 12. 2.1 2.2 10.073 7.957 18.6 8.5 40. 18.1 7.0 7. 2010-11 Appendix Table IV.986 16.692 1.4 11.580 16.1 12.663 5. 14.308 15. 17.692 12.237 3. 9.4A: Advances of Public Sector Banks to Agriculture and Weaker Sections (As on the last reporting Friday of March 2011) (Amount in ` crore) Sr.9 41.1 37.808 3.724 8.8 35.301 3.837 3. 2007.184 4. 25.5 3.236 773 4.6 10.3 14. whichever is higher 12 1 2 Public Sector Banks Nationalised Banks* Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab National Bank Punjab & Sind Bank Syndicate Bank Union Bank of India United Bank of India UCO Bank Vijaya Bank IDBI Bank Ltd.0 5.2 68. 16.128 17.505 11.1 13.277 2.106 19.680 70.1 42.757 40.8 13.6 11.898 648 6.9 10.5 46.9 12.150 25.5 per cent of ANBC for calculation of percentage for Agriculture.210 5.712 11.969 7.363 42.035 3.1 13.565 1.5 12.6 5.2 6.5 13.0 18.Report on Trend and Progress of Banking in India.387 9. .213 6. 2) ANBC .478 12.4 18.2 7.3 40.4 43.3 15. Indirect Agricultural Advances Amount Per cent to ANBC or credit equivalent of OBE.7 162 21.as on the last reporting Friday of March 2011.708 4.6 2. whichever is higher 6 Of which.8 14.1 12.2 17.4 17.7 11.751 27.9 6.390 7.7 40. Source: Data furnished by respective banks.7 14.4 9.764 21.332 3.1 18.4 9.0 11.987 5.191 3.38.192 2.1 9.1 11. State Bank Group State Bank of India State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of Mysore State Bank of Patiala State Bank of Travancore 3 5 7 9 11 1.615 4.5 41.5 43. 19.963 8.8 14.000 13.4 5.901 4.2 25.196 6.035 15.849 5.996 13.550 3.163 1.5 38.9 4.496 3.5 2.463 6.418 17.6 38.294 3. Direct Agricultural Advances Amount Per cent to ANBC or credit equivalent of OBE.773 7.245 17. No.0 44.519 3.690 6.8 10.4 4. 7.5 6.

179 773 915 3.085 4.982 728 104 109 24 3.8 14.908 3.848 9.8 14.9 12.657 2.186 1.0 4. Nainital Bank Ltd.3 17.424 6. 20. SBI Commercial & International Bank Ltd.8 8.7 40.381 891 1. 15.3 9. with effect from April 30. Kotak Mahindra Bank Ltd.103 3.1 46.888 22.763 455 2. 12.817 15.4 41.724 10. whichever is higher.2 11.614 8.7 51.517 991 948 1. Karur Vysya Bank Ltd. Dhanalakshmi Bank Ltd.9 41.3 8.4 11.494 5 16.415 1.2 9. 3.5 14. 8.9 15.238 1.420 34 198 340 198 864 2.4B: Advances of Private Sector Banks to Agriculture and Weaker Sections (As on the last reporting Friday of March 2011) (Amount in ` crore) Sr.7 4.0 8. whichever is higher 12 5.9 14. whichever is higher 4 44.6 2.Appendix Table IV. ICICI Bank Ltd. ING Vysya Bank Ltd.0 5.2 11.9 9.555 11.9 56. Indirect Agricultural Advances Amount Per cent to ANBC or credit equivalent of OBE.6 10.5 per cent of ANBC or credit equivalent amount of off-balance sheet exposures.6 15.180 930 206 165 46 3.8 2.501 4. 7.2 9. Karnataka Bank Ltd.3 Advances to Weaker Sections Amount Per cent to ANBC or credit equivalent of OBE.5 18.300 2.897 2.615 811 500 97 6. Name of the Bank Total Priority Sector Advances Amount Per cent to ANBC or credit equivalent of OBE.9 3.4 8. 11. 2 Private Sector Banks Axis Bank Ltd.312 10.Adjusted net bank credit or credit equivalent amount of off-balance sheet exposures. Development Credit Bank Ltd.1 14.4 1 1. South Indian Bank Ltd.6 48. City Union Bank Ltd. Source: Data furnished by respective banks.0 24. Jammu & Kashmir Bank Ltd.006 251 70 63 4 144 275 11 4.9 3.2 21.897 1.6 9.5 7. 2) ANBC .1 42. 5.395 9 6.8 5. Tamilnad Mercantile Bank Ltd.1 10.3 4.974 2.411 9. 21.5 62.6 Of which.1 13.275 1.0 12.5 23. 9.4 45.1 53.064 55. whichever is higher 8 10. Lakshmi Vilas Bank Ltd.437 7.612 1. 13. whichever is higher 10 6.8 38.1 50.8 2.418 1.443 1.3 12.2 62.388 2.285 704 398 1.0 14. Catholic Syrian Bank Ltd.whichever is higher. 6. 19.5 16.5 13.1 45.5 22.9 0. Federal Bank Ltd.8 8.4 15.414 3.4 2.390 1.0 16.1 6.163 58.9 4. 2.348 5. 3 41.0 41.4 19.3 3. Appendix Tables .0 5. 2007.4 4.1 16.0 20.654 827 528 340 859 1. 16. for computation of achievement in lending to agriculture sector.6 20.406 2.0 3.6 Total Agricultural Advances Amount Per cent to ANBC or credit equivalent of OBE.4 46. 17.7 46.270 2.0 18.2 19. whichever is higher 6 15.588 5.9 45.725 3.1 11.9 0. 14. 3) Indirect agriculture is reckoned up to 4. Yes Bank Ltd.961 857 981 433 717 2.7 18.9 43.0 18. 18.173 9.6 10.9 Of which.501 2.6 16.3 3. Ratnakar Bank Ltd.5 11. Direct Agricultural Advances Amount Per cent to ANBC or credit equivalent of OBE.346 1.6 53.807 536 1. IndusInd Bank Ltd.1 1.5 19. HDFC Bank Ltd.056 959 163 Note: 1) Data are provisional.3 18.3 19.670 7 9.969 5.5 8.6 17.552 1.1 18.477 12. 4.181 276 228 50 3. 10.2 7.991 2.3 20.117 3. No.

115 51 6.0 10.1 11.6 12 12.6 12.7 7.2 36.642 3. 12. 33. Note: 1) Data are provisional.600 7.9 25. 14.8 Export Credit Amount Per cent to ANBC or credit equivalent of OBE.0 59.O.1 41. 164 .103 3. Commomwealth Bank of Australia Credit Agricole Credit Suisse AG DBS Bank Ltd. with effect from April 30. 2.6 23.1 41. 13. whichever is higher 4 33.518 132 33 2. 32.1 36.7 33. Deutsche Bank (Asia) First Rand Bank HSBC Ltd. Abu Dhabi Commercial Bank Ltd. 29. 31.7 31.3 - 1 1. 27.5 25.1 73.0 14.9 26.A.8 15.6 21. 2007.1 48.8 105.3 27.709 49 - . Sber Bank Shinhan Bank Societe Generale Sonali Bank Standard Chartered Bank State Bank of Mauritius The Bank of Tokyo-Mitsubishi The Royal Bank of Scotland UBS AG United Overseas Bank Ltd. 21. 5.790 4. JP Morgan Chase Bank JSC VTB Krung Thai Bank Mashreqbank PSC Mizuho Corporate Bank Oman International Bank S.828 57 10. 11.G. 35.0 22.406 1.810 887 10 40 282 64 196 8.476 65 335 2.8 34.3 43. 18. Source: Data furnished by respective banks. 9.463 1.7 28.2 34. 34.3 19.2 10.2 40.8 42.410 3.9 69.070 100 - 7 8 28 349 537 1.4C: Advances of ¢¨¸™½©¸ú ¤¸ÿˆÅ to Micro and Small Enterprises (MSE) and Export sectors (As on the last reporting Friday of March 2011) (Amount in ` crore) Sr.A.8 64. 24.188 176 1. 4.3 47. 22.275 1.6 12. 36.1 34.9 17.6 53. 28.C. American Express Banking Corp.174 350 687 1. Name of the Bank No. 19.8 20 36.8 40.5 20.S.4 94.088 73 18 2.1 72.: Nil/Negligible.4 12.Adjusted net bank credit or credit equivalent amount of off-balance sheet exposures.246 1. 10.1 1. 25.6 34.792 149 - 5 13 43 162 738 430 41 17 509 2.5 41.4 26.9 283.2 20.097 102 1.729 3.005 40 4.5 34.9 35. 3 21 71 511 1. 23.3 52.0 26. 2 Foreign Banks AB Bank Ltd. 20.043 40 13.9 10. 8.8 17.220 1. 17.1 MSE Advances Amount Per cent to ANBC or credit equivalent of OBE.3 64.1 94.4 104. 2010-11 Appendix Table IV. Antwerp Diamond Bank NV BNP Paribas Bank International Indonesia Bank of America National Association Bank of Bahrain & Kuwait B.9 42.664 6 2.0 26. 6. Total Priority Sector Advances Amount Per cent to ANBC or credit equivalent of OBE.0 11. 16. 7. whichever is higher. 3. whichever is higher 8 12. 15.060 3. 26.5 19.977 4.Report on Trend and Progress of Banking in India.1 43. whichever is higher 6 20.4 10.8 255.1 30.1 72 10. 30.994 295 5 1 206 59 50 4.9 10. 2) ANBC . Bank of Ceylon Bank of Nova Scotia Barclays Bank PLC Chinatrust Commercial Bank Citibank N.8 11.182 10 5 41 488 172 267 4 14.

12. 18. Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab National Bank Punjab and Sind Bank Syndicate Bank Union Bank of India United Bank of India UCO Bank Vijaya Bank IDBI Bank Ltd. 9. 10. 7. 5. State Bank Group 21. 11. 15. concessional priority sector lending and agriculture lending targets have been fixed at 34 per cent and 14 per cent of ANBC respectively. as on the last reporting Friday of March 2011. 17. 25. NA: Not applicable. 23. 22. 3. 8. 14. 24. 19. * : Nationalised banks include IDBI Bank Ltd. State Bank of India State Bank of Bikaner and Jaipur State Bank of Hyderabad State Bank of Mysore State Bank of Patiala State Bank of Travancore √ √ √ √ √ √ X √ √ X X X √ √ X √ √ √ √ X √ √ X √ X X √ √ √ √ √ √ √ √ √ X X X √ X X X X √ X X X √ √ X √ X √ X X X X X √ √ √ √ X √ √ X X √ √ X √ X √ √ √ √ X NA 3 4 5 Name of the Bank Overall Agriculture Weaker Sections √ : Indicates meeting the respective norm for priority sector. 6. 13. 16.Appendix Tables Appendix Table IV. No. 4. 26. 2. ×: Indicates shortfall in the respective norm for priority sector. Note: For IDBI Bank Ltd.5A: Targets Achieved by Public Sector Banks under the Priority Sector (As on the last reporting Friday of March 2011) Sr. 165 . 20. 1 2 Public Sector Banks Nationalised Banks* 1.

Development Credit Bank Ltd. 7. 12. 20. Kotak Mahindra Bank Ltd. Axis Bank Ltd. Jammu & Kashmir Bank Ltd. 5. 14. 17. Ratnakar Bank Ltd.Report on Trend and Progress of Banking in India 2010-11 Appendix Table IV. SBI Commercial & International Bank Ltd. Nainital Bank Ltd. 9. 166 . Yes Bank Ltd. 11. HDFC Bank Ltd. 3. 16. Dhanalakshmi Bank Ltd. ×: Indicates shortfall in the respective norm for priority sector. ICICI Bank Ltd. 15. ING Vysya Bank Ltd. 4. Catholic Syrian Bank Ltd.5B: Targets Achieved by Private Sector Banks under the Priority Sector (As on the last reporting Friday of March 2011) Sr. 21. IndusInd Bank Ltd. 10. √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ X √ √ X √ X X √ X X X X X X X √ √ √ √ √ √ √ √ √ X √ X X √ X X X X X √ X √ X √ X √ √ √ √ √ 3 4 5 Name of the Bank Overall Agriculture Weaker Sections √ : Indicates meeting the respective norm for priority sector. 18. Lakshmi Vilas Bank Ltd. Tamilnad Mercantile Bank Ltd. 1 2 Private Sector Banks 1. 19. 8. 6. Karnataka Bank Ltd. City Union Bank Ltd. No. 2. Federal Bank Ltd. South Indian Bank Ltd. Karur Vysya Bank Ltd. 13.

8. The Bank of Tokyo-Mitsubishi UFJ The Royal Bank of Scotland UBS AG United Overseas Bank Ltd. 20. 32. Abu Dhabi Commercial Bank American Express Banking Corporation Antwerp Diamond Bank NV Bank International Indonesia Bank of America National Association Bank of Baharin and Kuwait B. . 34. 28. 11. which have started their opeations in 2010-11. 22. 17. 18. 33. 13. 31. Deutsche Bank (Asia) First Rand Bank HSBC Ltd. 26.S.Appendix Tables Appendix Table IV. 16. Name of the Bank 2 Foreign Banks A B Bank Ltd. Mashreqbank PSC Mizuho Corporate Bank Ltd. 7. 4. 15. 6. 9.C. X : Indicates not meeting the respective norm for priority sector. Bank of Ceylon Bank of Nova Scotia Barclays Bank PLC BNP Paribas China Trust Commercial Bank Citi Bank Commonwealth Bank of Australia Credit Agricole Corporate and Investment Credit Suisse AG DBS Bank Ltd. Overall 3 √ √ √ √ √ √ √ √ √ X √ √ √ √ √ √ √ X √ √ √ X √ √ √ √ √ √ √ √ Advances to Micro and Small Enterprises 4 √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ X √ X X X √ √ X √ √ √ √ √ Export Credit 5 √ √ √ √ X √ √ X X X √ √ √ √ √ √ √ √ X √ X X X √ X √ √ X √ √ - √ : Indicates meeting the respective norm for priority sector. 27.O.: Nil/Negligible/Not Applicable Note: Priority sector lending target will only be applicable from 2011-12 onwards to banks. Ltd. 19. JPMorgan Chase Bank National Association JSC VTB Krung Thai Bank Public Co. 1 1. Sber Bank Shinhan Bank Societe Generale Sonali Bank Standard Chartered Bank State Bank of Mauritius Ltd. 5. 23.5C: Targets Achieved by Foreign Banks under the Priority Sector (As on the last reporting Friday of March 2011) Sr. 21. 29. 24. 167 .G. 14. 36. 2. 35. 3. No. 10. 25. 30.A. 12. Oman International Bank S.

758 (15.4 Private Sector Banks 2009-10 11 23.5) 62.221 (27.9 13.05.6) 7.6) 55.900 (18. Capital Market # Real Estate @ Commodities Total Advances to Sensitive Sectors Public Sector Banks 2009-10 2 37.3) 5.4) 22.2 13 12.412 (14.735 (32.6) 13.96.1) 17.641 (14. Source: Balance sheets of respective banks.86.1 13 7.68.9) 5.0 New Private Sector Banks 2009-10 5 21.0) 1.17.4 Nationalised Banks* 2009-10 5 27.1) 2010-11 Percentage Variation 6 32.060 (13.9 29.Appendix Table IV.60.9) 2010-11 Percentage Variation 9 11.83.5) 1.746 (14.735 (14.023 (1.412 (1.1) 46.7) 1.6) 2.11.71.73.348 (1. Note: Figures in parentheses are percentages to total loans and advances of the concerned bank-group. Capital Market # Real Estate @ Commodities Total Advances to Sensitive Sectors Old Private Sector Banks 2009-10 2 2.80.4) 3.084 (15.1 23.272 (16.675 (17.0) 1.1 22.6) 2010-11 Percentage Variation 12 76.0) 25.3 43.86.7) 53. 3.1 Report on Trend and Progress of Banking in India.045 (30.913 (15.471 (14.2) 1.8 State Bank Group 2009-10 8 9.573 (3.0 10 6.23. .5 7 17.771 (28.407 (26.48.7) 2010-11 Percentage Variation 3 44.1) 41.5) 23.1 4 9.5 26.8) 7.37.934 (30.15.2) 3.0) 25.4) 3.6) 27.91. 1 1.481 (4.3) 1.659 (28. 3.176 (16.665 (13.80.279 (1.3) 2.8) 1.47. * : Include IDBI Bank Ltd.3) 4.4) 1.1) 2010-11 Percentage Variation 12 25.718 (1.24.975 (1. @ : Exposure to real estate sector is inclusive of both direct and indirect lending.7) 2010-11 Percentage Variation 9 7. Item No.6) 6.2 7 6.075 (3. 2.971 (3.286 (18.250 (3.4) 23.645 (4. 2.551 (16.5) 2.6: Bank Group-wise Lending to the Sensitive Sectors (As at end-March) (Amount in ` crore) Sr.195 (13.4 10 16.9) 9.473 (14. 2010-11 Sr.963 (26.68.2) 1.1 9.6 4 17.830 (16.501 (1. Item No.9 Foreign Banks 2009-10 8 6.46.091 (1.526 (1.5 19.17.415 (32.549 (18.3) 4.1) 1. # : Exposure to capital market is inclusive of both investments and advances.564 (26.7 168 .7) 22.7) 1.5) 2010-11 Percentage Variation 6 22.158 (23.5 Scheduled Commercial Banks 2009-10 11 67.3) 2010-11 Percentage Variation 3 2. 1 1.: Nil/Negligible.27.2) 25.648 (23.611 (1.

2 5. 169 .9 -39. 21.2 34.4 8.8 8.9 19.3 8.9 3.6 33.220 122 347 79 2.6 5.3 3. Kotak Mahindra Bank Ltd.5 28. 2. # : Bank of Rajasthan merged with ICICI Bank in August 2010. Yes Bank 3 39 45 235 220 21 166 34 181 32 83 46 110 411 48 147 23 1.1 8.9 32.4 4. 14.3 -12. 35.4 5.2 12.9 15.9 14.1 8.3 10.7 32.9 7.2 21.4 6. 24.4 3. 9.6 -3. 16.6 28.9 12.9 8. 11.768 520 653 745 107 142 6 61.9 7.0 5.6 52.4 4.6 9.2 5.7 – : Not Available.4 3.3 5.0 4. Source: BSE and Bloomberg.4 6. 2 Public Sector Banks Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab National Bank Syndicate Bank Union Bank of India Vijaya Bank State Bank of India State Bank of Bikaner and Jaipur State Bank of Mysore State Bank of Travancore UCO Bank IDBI Bank Ltd.0 7.* Lakshmi Vilas Bank South Indian Bank Ltd.7 3. 37.7 2. Private Sector Banks Axis Bank Bank of Rajasthan Ltd.1 56.169 55 29 133 32 267 279 171 679 120 458 749 78 178 1.6 3. 29.1 14.9 18. 12.5 8.933 953 255 1. Karnataka Bank Ltd. 39.9 5.1) 21. 2010. 4. 27.7 4. 38.9 7.8 1.3 6.4 19.7 8.6 3.8 -10.2 5.7 18.2 2.4 11.0 23.4 41.4 34.6 50.5 2. ING Vysya Bank Indusind Bank Ltd.Appendix Tables Appendix Table IV.6 67. 18.404 45 113 46 419 321 264 875 108 399 457 98 23 2.9 6. Closing Prices (`) (End-March) 2008-09 1 1.3 19.7 40. 8.6 20.4 12.2 4.6 8.4 5. 6.9 4. 31.6 89.079 454 637 613 57 115 2010-11 5 231 151 963 478 59 626 141 638 104 232 144 387 1. 2010.7 2.6 36.013 86 293 47 2. 5.2 56.3 9. Name of the Bank No.9 15.1 4.6 -87.1 5. Figure in parenthesis is split adjusted change.2 3.** HDFC Bank Ltd.067 196 331 212 24 45 2009-10 4 143 108 639 341 50 410 147 481 78 176 92 321 1.5 8.9 Percentage variation in closing prices (2010-11 over 2009-10) 2008-09 7 2.# City Union Bank Ltd.1 - 17. * : The stock was split in the ratio 1:2 on Sep 13.1 36.9 6.9 5. 28.6 3.4 9. 32.5 1. 33. Figure in parenthesis is split adjusted change. 22.1 5.8 21.2 2010-11 9 7.7 42.9 8.9 7.4 56.1 5.2 4.1 8.9 2. 26. 415 37 12 50 19 138 128 32 315 65 200 283 63 51 968 333 50 1.2 8.1 7.3 P/E Ratio (End-March) 2009-10 8 5.6 4.9 5. 13.8 27.0 54. Karur Vysya Bank Ltd.3 2.3 20.2 20.1 16. 15.113 310 20.7 7.0 (22.1 2.9 32.6 14. 3.5 21.4 4.4 2. Jammu and Kashmir Bank Ltd.1 22. 25.8 8.9 -14.2 3.2 2.7 : Share Prices and Price/Earning Ratios of Bank Stocks at BSE (As on the last reporting Friday of March) Sr.0 4.5 9.3 10.9 39. 20. 34. 10.3 2.8 4.2 (28.4 5.0) 25. ** : The stock was split in the ratio 1:10 on Sep 23.6 23.6 10.2 16. ICICI Bank Ltd.1 7.9 5. 7. 30.9 21. 36.6 6.7 18.343 1. 19. Dhanalakshmi Bank Development Credit Bank Ltd Federal Bank Ltd.3 6. 17.

9 89.0 76.6 1.7 9.1 14.7 19.7 4. 7.1 85.9 3. 14.0 58. State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of India State Bank of Mysore State Bank of Patiala State Bank of Travancore 59.5 8.7 65.0 15.1 0.3 94.8 5.1 14.8 3.0 57. 25.7 80.7 1.6 100.0 96.5 3.3 100.7 4.8 0.2 1.4 5.2 95.0 12.1 8.9 58. 26.6 0. 16.1 6.3 4.5 58.Report on Trend and Progress of Banking in India 2010-11 Appendix Table IV.1 10.6 5.2 2.9 85.9 3.2 100.0 3.0 69.8 13.5 95. 11.9 1.9 0.5 1.1 58.2 82.9 15.2 0. 13.0 93.0 14.4 .0 85.8 11.1 94.3 0.1 0.5 13.4 0.5 17. Name of the Bank No.0 80. 12.0 5.4 5. 24. Source: Off-site Returns (domestic).1 6.5 0.2 100.2 0.3 13.3 14.9 79.9 85.3 4.5 68.3 6.1 3.1 30.3 5.3 10.4 4. Total Financial Financial Govern InstituInstitument tions tions and RBI . 2.1 57. 15.2 5.7 3.3 98.3 100. 17.Resident Non Resident Resident 3 4 5 Other Corporates Resident 6 Other Corporates Non Resident 7 Total Individual Resident 8 Total Individual Non Resident 9 Total Resident Total Non Resident 1 2 Nationalised Banks* 10 11 1.9 1.0 3.6 99.0 80. State Bank Group 58.9 0. 23.5 2.0 65.2 58.9 100.5 8.5 - 10.4 0.0 99.0 19.3 4. 3.5 - 13.6 2.4 1.5 11.9 91. 9.6 2.4 0.0 12.2 15.5 3. 6.5 16.5 14.7 95.: Nil/Negligible.2 0.1 0.8 5.3 3.2 67.1 4.2 27.7 0.6 22.0 82.3 1.0 2.6 0.3 0. 5.6 94.9 4.8 17.2 86.1 0. Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab & Sind Bank Punjab National Bank Syndicate Bank UCO Bank Union Bank of India United Bank of India Vijaya Bank IDBI Bank Ltd.3 12.3 4.8 0.3 14.3 15.2 10. 18.2 10.6 5.2 1.6 11.0 9.1 0.8: Shareholding Pattern of Domestic Scheduled Commercial Banks (Continued) (As at end-March 2011) (Per cent) Sr.8 11.4 7.4 1. 170 .6 14.5 57.9 6.0 65. 4. * : Include IDBI Bank Ltd.5 0.1 0.3 36. 22.2 99. 19.6 2.5 21. 20. 10.6 14.2 6.1 2.6 19.7 15.7 85.0 16.1 10.3 3.0 84.7 1.4 12.7 5.3 3.4 5.5 8.1 77.8 93.7 16.5 4. 8.6 9.

4 0. HDFC Bank Ltd.5 6.9 47.6 - 17.9 0.6 31.2 - 9.9 8.0 12.0 - 100.9 45.1 23.1 1.0 100.2 15.0 7. ING Vysya Bank Ltd. 16.2 3.0 33.7 6.7 12.6 13.2 8.5 0. Ratnakar Bank Ltd. 18.0 10.4 2.1 36.9 66.8 43.2 38.0 98.3 9.0 61.8 52.1 8.0 0.5 9. 14.5 19. Yes Bank Ltd.6 16.7 16. 7.6 52.4 32.7 6.1 0.8 5.5 46.8 4.0 56.0 60.4 47. Source: Off-site Returns (domestic).6 75. 4.9 22.1 11.0 0.5 5.1 3.9 7. South Indian Bank Ltd.9 61.0 22.9 76.8 23.4 39.0 42.6 16. 6.4 68.5 32.9 46.Resident Non Resident Resident 3 4 5 Other Corporates Resident 6 Other Corporates Non Resident 7 Total Individual Resident 8 Total Individual Non Resident 9 Total Resident Total Non Resident 1 2 Old Private Sector Banks 10 11 1.2 100. Jammu & Kashmir Bank Ltd.6 4.0 26.0 22.7 48. 21.0 11.2 55.4 0.9 0. 12.5 11.8 19. 19. Tamilnad Mercantile Bank Ltd.1 5.1 51.2 66.1 .0 43.8 55.4 18.9 48.7 29. 20.4 0. ICICI Bank Ltd.8 44. Development Credit Bank Ltd. 5. SBI Commercial & International Bank Ltd 53.1 39.2 71.2 - 11.1 4. Total Financial Financial Govern InstituInstitument tions tions and RBI . Nainital Bank Ltd.: Nil/Negligible. Lakshmi Vilas Bank Ltd.1 9.9 0.2 20.0 61.3 9.5 70. 2.6 4.8 17.3 7. 11.9 24.4 2.7 14.7 35. 10.2 66. Dhanalakshmi Bank Ltd. - 42.5 29.5 30.8: Shareholding Pattern of Domestic Scheduled Commercial Banks (Concluded) (As at end-March 2011) (Per cent) Sr.8 28.9 11.4 83.9 60.6 0. Name of the Bank No.2 74.1 23.5 38.1 92.1 10.6 99. IndusInd Bank Ltd.2 5.8 33.9 - 13. Catholic Syrian Bank Ltd. Axis Bank Ltd. New Private Sector Banks 15.5 14. Kotak Mahindra Bank Ltd.0 0. 17.1 71.4 38.6 3. 3.1 48. Karnataka Bank Ltd. 8.8 25.4 24.7 36.0 39. Federal Bank Ltd.Appendix Tables Appendix Table IV.0 32.5 5. 171 .9 6.2 9.9 11.7 5.5 - 36.6 19. Karur Vysya Bank Ltd. 9. City Union Bank Ltd.3 1.8 55.

386 216 362 496 573 333 299 1.018 411 1.830 262 447 668 14.3 ATMs to Branches 12 100.084 977 1.6 61.556 1.044 1. 15.398 444 319 723 622 383 772 679 352 307 358 504 416 254 799 527 445 647 294 308 245 2.0 51.505 49. 17. 14.130 62.978 10.043 1.145 72 529 563 670 94 758 632 505 105 322 324 314 2 2.298 2.013 797 8 40. 7. 18.6 23.065 172 220 194 150 78 7 74.0 74. Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab and Sind Bank Punjab National Bank Syndicate Bank UCO Bank Union Bank of India United Bank of India Vijaya Bank IDBI Bank Ltd.050 1. 22.5 27.006 202 197 804 246 98 702 10. State Bank of India State Bank of Bikaner and Jaipur State Bank of Hyderabad State Bank of Mysore State Bank of Patiala State Bank of Travancore 3 21. 19.303 1.651 20.7 8. 16. 5.1 26.972 768 802 828 627 260 81 6.382 164 292 152 249 176 Urban Metropolitan 6 15.051 1.299 534 803 1.9: Branches and ATMs of Scheduled Commercial Banks (Continued) (As at end-March 2011) Sr.104 10. 9.913 13. 4.220 608 2.4 18. 172 .7 48.9 36.5 31.0 49.8 3.800 15.634 508 545 1.185 968 407 1.9 62. 13. 26.6 53.5 Note: Nationalised Banks include IDBI Bank Ltd.192 3. 23.0 21.3 39.561 455 422 833 769 290 912 948 338 258 502 547 396 150 1.3 32.879 2.2 107.1 9.705 20.680 12.182 496 1.425 417 2.776 9.171 1.795 15.6 46. Branches Rural Semiurban 1 2 Scheduled Commercial Banks Public Sector Banks Nationalised Banks 1.0 27.7 21.173 1. 8. 10.0 105.370 24. 25.2 41.8 104.210 700 1. 24.7 66.2 46.1 72.387 14.415 374 677 391 806 719 878 81 3.252 3.729 29.1 40.0 61.0 137.9 93.547 9. 12.268 1.7 29.5 105.258 391 273 203 178 244 10 74.640 941 4.2 42.737 1.6 32.192 83 5.5 56.505 3.154 506 455 625 613 298 765 724 362 264 473 543 495 238 993 591 479 730 349 358 293 3.561 1.6 151. 2 3.7 86.091 605 466 846 286 260 187 5. 6.8 42.0 170.2 104.284 909 1.167 1.1 47.186 806 17.836 214 981 1.5 48.8 46.1 27.006 1.6 43.270 735 752 833 Total On-site ATMs Off-site Total Per cent of Per cent of Off-site to total ATMs 11 45.5 79.417 3. State Bank Group 21.829 2. Source: Master office file (latest updated version ) on commercial Banks.491 2. 20.691 142 452 998 755 323 1.277 9.352 3.Report on Trend and Progress of Banking in India 2010-11 Appendix Table IV. 11. Name of the Bank No.5 34.945 13.191 1.4 39.569 10.128 1.2 28.8 26.211 44.855 2.972 317 311 213 334 55 4 19.202 4.865 256 387 141 280 488 5 16.8 36.4 30.373 1.603 3.415 2.7 16.0 22.3 2.692 9.826 586 997 532 574 589 9 33.487 24.

20. Kotak Mahindra Ltd.648 2.3 57.6 28.817 360 248 273 741 504 503 483 369 269 101 100 8 10.9: Branches and ATMs of Scheduled Commercial Banks (Continued) (As at end-March 2011) Sr.485 54 47 292 342 194 100 75 117 105 10 23. Dhanalakshmi Bank Ltd.7 241. 10.6 37.651 4.8 49.3 63.2 56.814 1.4 78.8 455.3 132.0 77.641 105 185 167 462 206 262 192 371 145 32 9 13.7 44. 19.076 449 14 619 803 78 57 56 1. 65 49 304 96 160 54 2 103 33 2 632 232 2 398 114 91 68 2 489 182 18.007 1.0 36.0 New Private Sector Banks 15.2 92. Yes Bank Ltd. 547 94 4 123 260 22 21 23 2. 8. 14.8 55.2 93.963 2.162 966 49 49 59 112 175 64 144 81 48 22 25 7 11. South Indian Bank Ltd.311 764 18 34 24 49 83 231 90 33 38 25 25 4 3.722 3.315 1.471 6. No.6 42.4 278. 6.3 163.5 79. 4.Appendix Tables Appendix Table IV.0 34.5 48. Karur Vysya Bank Ltd.743 78 2. 18. Ratnakar Bank Ltd. Karnataka Bank Ltd.270 134 5. 9.104 594 710 242 59. 21. 3.003 1. Tamilnad Mercantile Bank Ltd.5 168.4 72. Axis Bank Ltd.0 20. 17.0 42.525 6.5 112.6 – : Nil/Negligible. Source: Master office file (latest updated version ) on commercial Banks.523 303 322 215 8.9 196.749 2. 13.785 1.8 38.5 27. SBI Commercial and International Bank Ltd.1 24.0 ATMs to Branches 12 203.9 32. Federal Bank Ltd. 11.377 340 403 93 19. ING Vysya Bank Jammu and Kashmir Bank Ltd.4 100. 2. 173 .196 382 52 673 767 93 162 67 6. City Union Bank Ltd.2 41.527 56 2.4 3 1. Development Credit Bank Ltd. 5.0 55.727 254 307 149 11. HDFC Bank Ltd.0 72. Lakshmi Vilas Bank Ltd. ICICI Bank Ltd.0 220.1 108.738 194 82 107 402 84 84 101 128 97 29 30 5 3.602 4. Nainital Bank Ltd. Name of the Bank Rural Semiurban 1 2 Private Sector Banks Old Private Sector Banks 1.9 85. 12.966 452 12 548 693 110 82 69 2.4 287.377 82 1. IndusInd Bank Ltd. 16.126 159 232 459 804 400 362 267 488 250 32 Total On-site ATMs Off-site Total Per cent of Per cent of Off-site to total ATMs 11 55.518 4. 7.349 99 83 83 178 162 124 148 127 86 25 20 Branches Urban Metropolitan 6 3. Catholic Syrian Bank Ltd.

Commomwealth Bank of Australia Credit Agricole Corporate and Investment Credit Suisse AG DBS Bank Ltd. 27.514. JPMorgan Chase Bank National Association JSC VTB Bank Krung Thai Bank Public Co.2 339. Sber Bank Shinhan Bank Societe Generale Sonali Bank Standard Chartered Bank State Bank of Mauritius Ltd. 2 10 3 19 1 1 3 31 1 1 35 85 120 70.9: Branches and ATMs of Scheduled Commercial Banks (Concluded) (As at end-March 2011) Sr. 24.0 91. Name of the Bank Rural Semiurban 1 2 Foreign Banks 1. 33. 34.C. 5. 31. Ltd. 6. 28.9 1. 21.0 400. Oman International Bank S.0 1 2 1 4 12 5 2 1 4 4 1 29 1 5 2 1 5 9 1 43 1 7 58 28 593 35 651 80. The Royal Bank of Scotland N V UBS AG United Overseas Bank Ltd. AB Bank Ltd. 30. 16. 12. 20. Abu Dhabi Commercial Bank Ltd. 10. Bank of Ceylon Bank of Nova Scotia Barclays Bank PLC Chinatrust Commercial Bank Citibank N. Deutsche Bank (Asia) First Rand Bank HSBC Ltd.G.0 3 7 4 8 5 61 Branches Urban Metropolitan 6 241 1 2 1 1 9 1 7 317 1 2 1 1 9 1 8 286 9 1.1 1 1 1 16 1 1 1 2 2 1 1 2 2 1 78 3 1 1 1 2 2 2 1 3 2 2 94 3 1 95 224 1 319 70. 2. 35.A.3 250.0 302.1 388.4 3 1 1 3 1 6 10 6 1 6 8 1 38 6 1 12 15 1 50 4 14 72 26 46 79 30 60 151 76. 32.081 10 1.Report on Trend and Progress of Banking in India 2010-11 Appendix Table IV. 7. 36. 14. No. 13. 9. 11.O. Ltd. 18. 174 .A. American Express Banking Corp.367 Total On-site ATMs Off-site Per cent of Per cent of Total Off-site to total ATMs 11 79. 29. 8. 22. 15. Mashreqbank PSC Mizuho Corporate Bank Ltd.1 ATMs to Branches 12 431. Source: Master office file (latest updated version ) on commercial Banks. 19. 4.8 387.S. 23. 3. The Bank of Tokyo-Mitsubishi UFJ. 25. 26. 17.7 52. Antwerp Diamond Bank NV BNP Paribas Bank International Indonesia Bank of America National Association Bank of Bahrain & Kuwait B.2 - – : Nil/Negligible.

04 0. Punjab National Bank 15.160 1.03 0.03 0.04 0.61 0.03 0.05 0.268 173 205 63 142 23 4. Total No.491 466 295 686 22. of Number Complaints of compReceived laints other than credit/ debit card complaints/ 1000 accounts* 3 4 Number Number Deposit of of comp.02 0. 10.746 1.810 5.874 5.495 459 593 719 754 686 278 2. Indian Overseas Bank 12.02 0.02 0. Punjab and Sind Bank 14. 7.05 0.946 969 922 1.340 8.724 20.02 0. 2.85 1.871 9.07 0.Account credit/ laints debit per card branch# complaints/ 1000 credit/ debit card accou nts@ 5 6 7 Remittances Loans/ Advances General & Housing ATM/ Credit/ Debit Cards Charges without prior notice Pension Failure Non on Comm.11 0.02 0.799 4.03 0. Oriental Bank of Commerce 13.02 0. Vijaya Bank 20.02 0.05 0.05 0.53 0.435 1.45 0.40 0.598 4. 4.25 0.119 3. 9.31 0.03 0.02 0.03 0.35 0.37 0.371 1.07 0. 8.971 1.574 74 33 176 137 36 177 135 34 27 46 46 64 16 247 55 73 92 38 24 44 1.03 0.879 1.06 0.04 0.005 628 305 548 386 0. State Bank of Hyderabad 25.010 3.307 19.343 71 160 343 304 34 393 130 122 45 95 127 136 16 676 197 82 220 41 39 112 5.25 1.683 92 98 56 65 6 2.983 1.04 0.42 0.336 1. State Bank of Patiala 27.05 0.231 107 36 25 37 9 4.898 1.Appendix Table IV.02 0. Name of the Bank No. Syndicate Bank 16.03 0.000 3.445 1. State Bank of Bikaner and Jaipur 23.42 0.746 67 89 136 151 34 192 195 10 92 49 49 16 34 376 69 77 72 27 8 3 4. UCO Bank 17.700 995 28 20 123 49 24 80 30 31 67 37 35 43 11 98 59 78 82 19 8 73 705 543 78 36 8 27 13 5. Indian Bank 11.293 3.02 0.02 0.03 0. IDBI Bank Limited State Bank Group 21.217 3.08 0.018 1.034 1.02 0.03 0.06 0.05 0.90 0.262 1.927 42.06 0.675 109 132 219 181 48 289 208 52 47 83 81 120 49 387 117 113 229 60 56 95 2.63 0.46 1.02 0.54 0.03 0.02 0. United Bank of India 19.30 0.48 1.02 0.02 0.02 0.10: Statement of Complaints Received at Banking Ombudsman Office (Continued) (For the period 2010-11) Category-wise break up of complaints Sr.263 113 8 180 72 8 83 101 12 22 9 25 49 23 271 84 36 117 15 12 23 720 652 12 5 18 30 3 7.03 0.00 0.05 0.417 834 842 2.019 1.00 0.047 1.05 0.47 0.39 0.835 2.08 0.49 0. Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank 175 5.01 0.035 38 56 90 63 16 128 65 17 10 75 70 30 4 128 35 46 86 21 17 40 936 797 86 19 5 17 12 13.69 0.485 249 94 81 49 161 130 86 36 1 7 2 1 3 4 4 8 4 2 50 39 6 1 4 - 2.30 0.532 369 2. State Bank of India 22. State Bank of Mysore 26.44 0. 6.35 0.660 726 379 7 14 52 21 3 45 23 8 5 14 18 5 5 42 14 16 40 6 6 35 347 297 17 14 4 10 5 4.04 0.706 120 58 11 3 2 9 1 2 3 4 3 3 4 7 3 1 1 1 62 52 3 2 5 - 2.50 0.25 0.61 0.034 85 48 13 74 117 16.680 230 173 489 425 119 324 450 120 228 66 113 160 58 482 200 304 285 193 71 190 4. State Bank of Travancore Appendix Tables 87 51 26 83 15 .260 742 49 53 75 48 21 89 54 15 34 14 16 16 13 52 34 31 66 24 22 16 518 456 10 19 6 5 22 1.03 0.52 0.04 0.276 1.03 0.03 0.Observitments ance made of Fair Practices code Notes and Coins BCSBI Recovery Agents Out of Others Subject 1 2 Scheduled Commercial Banks Public Sector Banks Nationalised Banks** 8 9 10 11 12 13 14 15 16 17 18 19 66.39 0.03 0.16 0. Union Bank of India 18.03 0. 3.891 47 104 133 76 23 235 103 38 14 224 166 44 46 175 98 63 197 21 31 53 1.

1 0.1 0. Laxmi Vilas Bank Ltd. 7.08 0.1 0. Indus Ind Bank Ltd. Karur Vysya Bank Ltd. Jammu and Kashmir Bank Ltd.3 2. 10.47 0. ING Vysya Bank Ltd.895 373 728 48 0.836 120 11 1 18 24 32 12 43 1 13 747 94 2 9 3 16 21 14 3.1 0. Kotak Mahindra Bank Ltd.1 1. 17. 4.215 94 5.323 167 3 2 13 29 51 Remittances Loans/ Advances General & Housing ATM/ Credit/ Debit Cards Charges without Prior Notice Pension Failure Non on Comm.1 0.6 1. ICICI Bank Ltd.2 2. 2010-11 176 5.2 2.943 2. SBI Commercial and International Bank Ltd. 16.Observitments ance made of Fair Practices code Notes and Coins BCSBI Recovery Agents Out of Others Subject Report on Trend and Progress of Banking in India. 11. Ratnakar Bank Ltd.3 0.1 0.10: Statement of Complaints Received at Banking Ombudsman Office (Continued) (For the period 2010-11) Category-wise break up of complaints Sr. 14.1 0.124 392 40 1. City Union Bank Ltd. 8. Development Credit Bank Ltd.1 0. New Private Sector Banks 15.179 43 41 100 190 324 4 0. HDFC Bank Ltd.35 1.156 227 12 553 1.6 7 641 50 2 2 4 10 20 8 816 65 2 3 1 9 20 9 832 185 9 11 17 22 27 10 4.2 0. Catholic Syrian Bank Ltd. 2.2 0.967 42 110 18 1 7 11 1 1 1 6 6 1.458 149 2 8 11 22 46 11 1.195 1.1 Number Number Deposit of of comp.7 1. Karnataka Bank Ltd.2 0. 19.1 0.590 6. Tamilnad Mercantile Bank Ltd. Federal Bank Ltd.1 0.223 53 81 7 3 17.3 0.Appendix Table IV.378 254 7 4 29 47 75 15 25 1 16 812 51 5 1 1 6 18 17 928 12 2 2 3 18 283 30 1 3 11 19 2. South Indian Bank Ltd.1 0. 12.716 346 12 680 510 56 107 5 1 42 8 12 19 1 1 1 3 15 9 8 8 653 90 5 256 242 20 37 3 8 14 16 5 5 3 1 26 14 3.1 0.309 624 5 1. Dhanalakshmi Bank Ltd. Nainital Bank Ltd.02 0. Total No.9 2.01 6 1. 9.122 1.2 0.205 112 173 7 1 24 4 12 5 3 1 3 6 2 1 6 1 761 67 2 297 358 12 24 1 1 1 1 2 916 79 1 280 471 7 78 5 2 2 5 1 253 56 86 94 7 9 1 13 9 11 10 5 1 1 11 8 2. Name of the Bank No. 6. 3. 18.07 0.1 0. . 47 74 109 55 22 9 2 102 61 15. 21. of Number Complaints of compReceived laints other than credit/ debit card complaints/ 1000 accounts* 1 2 Private Sector Banks Old Private Sector Banks 1.Account credit/ laints debit per card branch# complaints/ 1000 credit/ debit card accou nts@ 5 0. Yes Bank Ltd.1 0. 20. Axis Bank Ltd.3 0.1 0. 13.08 0.4 0.2 0.12 0.0 0.2 3 1 2 3 1 1 1 591 68 4 223 220 25 47 4 3 8 8 1 2 7 1 751 155 8 208 323 21 35 1 3 9 25 19 2 27 14 647 99 5 245 258 17 23 9 17 12 4 2 1 9 6 4.3 0.543 1.25 0.1 0.

49 3. Antwerp Diamond Bank NV BNP Paribas Bank International Indonesia Bank of America National Association Bank of Bahrain & Kuwait B. Name of the Bank No.09 0.30 22. 20.196 38 299 367 82 941 869 600 - 11 482 38 36 12 126 183 87 - 12 21 3 4 6 8 - 13 161 10 22 2 38 68 21 - 14 1. Commomwealth Bank of Australia Credit Agricole Corporate and Investment Credit Suisse AG DBS Bank Ltd. 36.34 67.865 2.081 67 1 629 1 967 36 208 1.40 0. 24.144 1 1. 22.65 0.10: Statement of Complaints Received at Banking Ombudsman Office (Concluded) (For the period 2010-11) Category-wise break up of complaints Sr. 2011. 28. 2009.Appendix Table IV. 34. 2. 5.A. 26.07 0.03 6 22. JPMorgan Chase Bank National Association JSC VTB Bank Krung Thai Bank Public Co.27 0.G.3 37.00 22.Account credit/ laints debit per card branch# complaints/ 1000 credit/ debit card accou nts@ 5 0. Oman International Bank S. 27.O.00 13. ** Include IDBI Bank Ltd.8 0. 8 175 5 16 34 3 34 65 18 - 9 199 3 1 20 31 11 44 69 20 - 10 3. 2011. 31. Mashreqbank PSC Mizuho Corporate Bank Ltd. 21. 16.87 37. 30. 12.36 0. Ltd.34 0. 33. # The number of branches as on March 31.80 0.162 4 0. Total No.S. .163 8 73 1 196 2 41 292 389 1 160 - 15 19 1 8 8 2 - 16 204 16 42 13 39 71 23 - 17 658 10 107 158 17 161 98 107 - 18 70 3 15 3 4 31 14 - 19 440 3 28 64 15 97 170 63 - 177 Appendix Tables * The number of accounts as on March 31. Abu Dhabi Commercial Bank Ltd. 23.89 0. The Royal Bank of Scotland NV UBS AG United Overseas Bank Ltd. 14. 11. 32.65 0. The Bank of Tokyo-Mitsubishi UFJ. 17. 2 Foreign Banks AB Bank Ltd.5 7 293 16 35 9 77 117 39 Remittances Loans/ Advances General & Housing ATM/ Credit/ Debit Cards Charges without Prior Notice Pension Failure Non on Comm. 10.27 0. 29. 9.Observitments ance of Fair Practices code Notes and Coins BCSBI Recovery Agents Out of Others Subject 1 1.91 0. 7.13 0. '-' Nil/Negligible/Not applicable. Bank of Ceylon Bank of Nova Scotia Barclays Bank PLC Chinatrust Commercial Bank Citibank N.11 0. Deutsche Bank (Asia) First Rand Bank HSBC Ltd. 6.Ltd.07 0.A. 19. 35. Sber Bank Shinhan Bank Societe Generale Sonali Bank Standard Chartered Bank State Bank of Mauritius Ltd.47 1.35 0. @ The number of credit/debit card accounts as on June 30. 13. 15. American Express Banking Corp. 8. 3.45 Number Number Deposit of of comp.89 1. 18.00 0. of Number Complaints of compReceived laints other than credit/ debit card complaints/ 1000 accounts* 3 7. 25.C.11 69. 4.

3 52.3 57.5 54.1 47.0 37.3 57.8 36.8 86.0 59.6 26.5 37.1 26.2 33.0 35.6 31.6 60.5 29.1 54.6 32.4 131.6 31.1 47.5 43.7 84.7 47.3 124.3 60.5 72.4 69.7 124.8 26.8 58.3 74. state Government loans and shares.8 123.9 82.3 81.2 7 75.5 55.Report on Trend and Progress of Banking in India 2010-11 Appendix Table IV.7 94.9 38.1 42.11: Credit-Deposit Ratio and Investment plus Credit-Deposit Ratio of Scheduled Commercial Banks .8 39.2 102.1 70.6 73.3 51. municipal corporations.1 67.3 34.5 57.6 68.3 43.7 57.3 95.7 62.9 51.9 30. debentures.3 61.9 75.5 36.2 82.5 80.3 81.1 32. co-operative institutions.0 26.6 55.Sanction tion 4 72.5 119.6 75.9 43.5 44.7 70. Note: 1) Deposits and Credit (as per place of sanction and utilisation) data for 2009 and 2010 are based on BSR-1 and 2 Surveys as on March 31.6 133.7 43.6 87.1 51.0 25.4 63.5 60.9 56.9 61.0 50.0 40.0 69.5 61.4 64.7 As per As per Utilisa Sanction tion 11 79.7 63.9 44.3 53.7 49.7 105.8 55.1 74.5 64.7 118.3 46.3 87.6 60.1 77.5 38.7 72.0 47.7 55.8 78.8 40.4 77.2 82.5 82.1 72.5 50.5 28. 2) Deposits and credit data (as per sanction) for 2010 are based on BSR 7 as on March 31.0 20.2 37.8 73.1 19.2 25.8 122. etc.2 82.9 76.2009 and March 31.2 31.2 18.9 108.2 58.9 94.3 33.8 41.7 91.8 42.3 82. state electricity boards.9 122.5 65.4 38.6 74.9 51.7 48.3 81.7 70.7 50.6 78.7 73.6 49.6 117.5 106.2010.4 51.6 40.7 53.7 34.8 75.1 34.9 83.8 80.6 115.1 82. No.5 123.5 36.5 75.7 87.8 32.5 37.8 5 73.7 33.8 47. housing boards.6 92.6 53.1 74. municipalities and port trusts. Region/State/Union Territory Credit-Deposit Ratio Investment plus CreditDeposit Ratio @ Investment plus Credit plus RIDF-Deposit Ratio @ March 2010 As per Utilisation 12 81.3 73.7 80. state industrial development corporations.9 46.2 30.7 73.Sanction tion 9 78.0 72. 4) RIDF outstanding data are based on information provided by NABARD.4 83.8 75.7 13 81.5 55.8 79.2 60.2 154.6 38.6 59.5 87.8 33.7 71.4 70.5 7.6 38.6 77.9 48.4 51.3 82.8 76.1 49.2 65.7 7.7 79.0 46.0 60.8 62.2 101.6 39.3 60.2 46.6 45.7 37.8 103.7 84.5 113.0 51.3 76.7 36.6 55.1 74.8 32.8 26.5 66.3 81.9 71.8 44.9 59.9 68.8 92.9 96.3 49.3 30.7 52.0 28.5 68.1 72.4 36.2 80.5 41.9 76.2 85.7 63.5 73.0 As per As per Utilisa.1 5.9 68.8 57.1 113.2 131.1 110.7 83.7 105.9 86.4 61.4 March 2010 March 2011 March 2009 March 2010 As per As per Utilisa.7 44.2 49.6 71.8 70.6 63.3 142.5 41.7 62.8 79.8 22.5 55.0 66.0 25.9 32.5 36.5 5.8 61.0 20.4 64.0 48.2 92.7 71.6 37.2 56.7 51.8 78.3 59.8 7.2 61.9 44.2 69.0 31.7 72.2 77.9 41.9 85.0 96.0 7.7 73.1 25.2 29.8 41.9 44.2 74.5 35.8 115.6 35.2 50.3 63. such as.3 85.5 88.4 74.4 56.5 37.4 57.0 74.7 87.5 27.9 66.3 33.3 42.1 60.4 57.7 121.1 57.5 31.8 87.3 90.3 7.4 40.4 75.7 2 3 4 5 6 @ : Bank’s State-wise investment represent their holdings of state-level securities.8 7.6 59.2 55.5 47.8 24.0 114.2 35.7 44.4 52.7 108.3 57.1 40.1 29.1 101.9 48.5 39.7 104.3 71.2 75.7 31.6 74.0 55.9 36.0 96.3 77.Region/State-wise (Per cent) Sr.1 82.9 59.4 42.4 38.4 37.8 60.5 66.6 36.5 37.7 131.2 As per As per As per Utilisa Sanction Sanction tion 6 73.3 59.2 38.8 50.2 71.3 38.1 45.1 67.1 19.9 92.4 71.8 30.2010.9 89.0 69. of regional rural banks.0 43. road transport corporations and other government and quasi-government bodies.6 35.2 34.2 31.1 39.3 63.4 84.9 73.9 60.7 80.1 38.8 57.1 60.0 133.3 74. 3) The investment figures are based on BSR-5 survey as on March 31.7 49.7 115.0 20.5 32.7 70.6 63. All-India investments plus credit-deposit ratio is worked out by excluding investments in Central Government and other securities not mentioned above.1 56.1 63.2 68.1 77.1 104.6 47.4 58.8 20.4 67.6 53.1 34.6 32.1 51.6 35.8 109.2 78.3 54.0 119.8 52. state financial corporations.4 94.1 31.2 75.3 65.4 86.7 103.6 85.7 59.3 8 78.1 8.1 64.0 68.9 78.5 46.3 37.0 129.7 40.7 114.5 64.6 43.2 115.4 10 79.1 18.3 87.4 48.2 7.3 67.6 59.3 40.7 27. 178 .0 35.1 7. bonds.4 83.8 41.6 41.1 59.1 94.2 61.3 71.1 48.2 114.1 31.4 133.0 82.7 March 2009 As per Sanction 1 2 ALL INDIA 1 NORTHERN REGION Haryana Himachal Pradesh Jammu & Kashmir Punjab Rajasthan Chandigarh Delhi NORTH-EASTERN REGION Arunachal Pradesh Assam Manipur Meghalaya Mizoram Nagaland Tripura EASTERN REGION Bihar Jharkhand Orissa Sikkim West Bengal Andaman & Nicobar Islands CENTRAL REGION Chhattisgarh Madhya Pradesh Uttar Pradesh Uttarakhand WESTERN REGION Goa Gujarat Maharashtra Dadra & Nagar Haveli Daman & Diu SOUTHERN REGION Andhra Pradesh Karnataka Kerala Tamil Nadu Lakshadweep Puducherry 3 72.6 47.9 41.7 73.7 52.2 77.8 73.4 46.8 29.0 47.3 116.

.9 6.6 3.6 4.9 5. Mumbai NKGSB Co-operative Bank Ltd.3 0.9 1.2 2.0 1.2 1..5 0.7 3.Bank Ltd.7 6.58 903.4 2. Thane Janata Sahakari Bank Ltd.5 6 1.4 2.44 629.9 -848.48 85.4 1.2 1.96 427.87 701.9 5.6 -0..6 -2.6 387.9 1.1 0.93 400.9 6..0 5.0 4.2 0.3 344.7 6.16 240.7 3. Sangli Urban Co-operative Bank Ltd.8 1.3 3. Ahmedabad Pravara Sahakari Bank Ltd.0 0.21 211.6 11.04 716.4 5.Appendix Tables Appendix Table V.2 4.3 1.8 -0.1 -6.2 5.69 656.4 2.6 2.4 0.4 3.7 0.3 5. Bombay Mercantile Co-operative Bank Limited Charminar Co-operative Urban Bank Ltd.0 4.0 5.8 20.9 13.7 27.1 12.4 0.6 0.52 224 295.43 455.2 0.6 3. Kalyan Janata Sahakari Bank Ltd.7 12.4 Return on Assets Average Profit per Cost of Employee Deposits (` Lakh) Business per Employee (` Lakh) 9 436.6 17.0 1.3 0.9 0.2 0.4 0.4 0.3 -1.3 1. Ahmednagar Nagpur Nagrik Sahakari Bank Ltd.4 7.6 3.65 481.04 163.46 401.7 0.3 1.8 7 5.0 0.077.2 3.2 0.8 1.3 6.04 656.9 5...4 1.4 0. 3 13.2 3..2 18.8 4.5 2.2 4.2 0.05 315.3 0. Mumbai Janalaxmi Co-operative Bank Ltd.6 6.9 10.2 19.18 370.4 5.2 0.9 14.5 9.89 239.5 2.6 5 3.9 5.7 18.4 1. Mumbai Ahmedabad Mercantile Co-Op Bank Ltd.4 0. Thane Bharat Sahakari Bank Ltd.0 -2.9 10.6 0.1 6.6 0.7 1.87 224.32 287.9 4.73 469.9 3.8 3.1 2.8 -1.6 5.3 3.1 16.2 15.1 0. Bombay ‘-’: Nil/Negligible. Bank Name CRAR (%) Net Non Interest Interest Income to Income to Working Working Funds (%) Funds (%) 4 3. Bassein Catholic Co-operative Bank Ltd.2 0. Shamrao Vithal Co-operative Bank Ltd.7 31.8 10. Rupee Co-operative Bank Ltd..2 1. Akola. Thane Greater Bombay Co-operative Bank Limited Indian Mercantile Co-operative Bank Ltd.2 2.4 351. Rajkot Nagrik Sahakari Bank Ltd.7 -2. Source: OSS Returns.3 0.Lucknow Jalgaon Janata Sahakari Bank Ltd.5 5.1 1.2 3.. Solapur Janata Sahakari Bank Ltd. Goa Urban Co-operative Bank Limited.02 249.7 0.2 3.5 3. Nagpur.7 0. Gopinath Patil Parsik Janata Sahakari Bank Ltd. Janakalyan Sahakari Bank Ltd.2 2.0 3.4 6.4 5.6 0.5 0.5 5. Nagar Urban Co-operative Bank Ltd..21 489.2 2. The Akola Janata Commercial Co-operative Bank Ltd.47 143. Mumbai Cosmos Co-operative Urban Bank Ltd.8 1.4 1.5 0.43 135.. Mumbai Nutan Nagarik Sahakari Bank Ltd.3 0.7 2..5 0.3 11.852.8 5.5 20.7 0. Nashik Janata Sahakari Bank Ltd.0 13.0 -76.8 1. Bangalore Andhra Pradesh Mahesh Co-Op Urban Bank Ltd.2 0.5 1.2 0.10 704.5 10. Surat Peoples Coop Bank Ltd.9 6.4 6.5 13.4 2.0 17.8 3.9 2..67 515..3 0.9 0.2 0.1 4. Citizen Credit Co-operative Bank Ltd.8 10.1 12.6 11.7 1.4 0.49 368.9 1.8 11.0 5.8 3. Pune.4 1.0 1.2 14.1 1. Dombivli Nagari Sahakari Bank Ltd. The Kapol Co-operative Bank Ltd..3 5. New India Co-operative Bank Ltd.3 3.6 9.08 309.9 6.3 0.7 14. Amanath Co-operative Bank Ltd.0 2.2 14.6 4. Nasik Merchant’s Co-operative Bank Ltd.1 3.29 635.5 6.7 3.3 0.0 1.0 4.. Kallappanna Awade Ichalkaranji Janata Sahakari Bank Ltd.1: Select Financial Parameters of Scheduled UCBs (As at end-March 2011) Sr.5 6.6 18. Khamgaon.4 12.2 2.0 0.0 2.6 5.9 0.6 5.9 0..3 2.6 1.8 0.2 Note: Data are provisional.14 184.3 0.2 0.1 1.6 -67.4 6.6 1.1 0. Zoroastrian Co-operative Bank Ltd.6 6. Shikshak Sahakari Bank Ltd..1 1..4 4.7 0.64 323.3 -4.12 421.1 2.7 14.1 1.3 6.5 2.5 12.95 9.2 9.2 6.1 20.86 745.8 0.6 6.9 0.0 3.4 1.5 -9.8 5.7 0.11 366. Vasavi Coop Urban Bank LImited.2 172.9 31.9 19.4 11.3 0.6 1. Mapusa Mehsana Urban Co-Op Bank Ltd.9 5.9 0.7 39.1 0.4 3.5 2.2 5 1.6 0.5 4.3 0. 179 .1 6.32 822.1 3.5 1.2 5.8 -12.0 0.7 4.5 0.0 11.6 0.3 0.1 3. The Akola Urban Co-operative Bank Ltd.1 3. Mumbai Mapusa Urban Co-operative Bank of Goa Ltd.4 0. Mumbai The Khamgaon Urban Co-operative Bank Ltd.8 4. Mahanagar Co-operative Bank Ltd.1 0.15 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 2 Abhyudaya Co-operative Bank Ltd..3 2.9 14.1 7.2 -1.1 1.4 2. Kalupur Commercial Coop.5 6.3 0. No.5 8.1 0.3 4. Sangli Saraswat Co-operative Bank Ltd.46 445.4 0.9 12.1 8 3.8 6.64 327.1 3.7 0. Bombay Sardar Bhiladwala Pardi Peoples Coop Bank Ltd.85 688.3 5.6 3.8 -1.2 4.8 0..3 13.7 0.3 0. Bharati Sahakari Bank Limited.5 5.1 4.4 5.9 5.7 5.0 7.05 575.2 373.6 3.1 5. Madhavpura Mercantile Co-Op Bank Ltd.02 575..7 0.4 2.5 1. Punjab & Maharashtra Co-operative Bank Ltd.9 6. Bharat Co-operative Bank (Mumbai) Ltd.3 0.0 2.29 636.05 275. Akola.7 10. Kalyan Karad Urban Co-operative Bank Ltd.8 4.9 2.0 0.98 677.1 2.2 1.

1 8.9 1.4 7.9 1.59 1. Amanath Co-operative Bank Ltd.0 1. Sangli Urban Co-operative Bank Ltd.9 1. Gopinath Patil Parsik Janata Sahakari Bank Ltd. Shamrao Vithal Co-operative Bank Ltd.6 8.7 0.3 0.4 2.0 7.6 8. Bombay Mercantile Co-operative Bank Limited Charminar Co-operative Urban Bank Ltd.1 0. Rajkot Nagrik Sahakari Bank Ltd.3 -0.79 1.9 7.7 8. Mahanagar Co-operative Bank Ltd.9 8. Khamgaon.4 0.3 8..3 0.3 2.5 2.4 8.4 0. Mumbai The Khamgaon Urban Co-operative Bank Ltd.1 1.2 3.0 3.3 1.5 1.4 8.0 3.6 1..7 1. Kallappanna Awade Ichalkaranji Janata Sahakari Bank Ltd.0 8.3 -0.2 2.3 -0.5 0.3 7.0 8.9 1.8 5.3 30.2 1.1 2. Bombay Sardar Bhiladwala Pardi Peoples Coop Bank Ltd.7 1. Mapusa Mehsana Urban Co-Op Bank Ltd.6 1.8 2.5 1.7 0...8 1.1 8.7 0.Report on Trend and Progress of Banking in India 2010-11 Appendix Table V.3 7.8 7.2 8. Mumbai NKGSB Co-operative Bank Ltd.2 1.6 2.3 0.1 0.0 6.8 0.7 1.6 1.6 1.4 0. Bharat Co-operative Bank (Mumbai) Ltd.. Citizen Credit Co-operative Bank Ltd..9 0.5 26.0 -0.8 8..4 0.0 1. Bangalore Andhra Pradesh Mahesh Co-Op Urban Bank Ltd..1 0. Nasik Merchant’s Co-operative Bank Ltd.4 1.4 1.8 0.0 7.9 8. Vasavi Coop Urban Bank LImited. Kalyan Karad Urban Co-operative Bank Ltd.8 0.3 8.6 -0.7 1.3 7.2 -0.4 7. Rupee Co-operative Bank Ltd.8 1.1 0.8 Net Profit after Taxes 2009-10 5 0.4 -1.7 1.0 1.8 0.3 2..4 0.1 7..4 0.1 1.2 0.8 Interest Income 2009-10 7 7..8 3.1 0. The Akola Urban Co-operative Bank Ltd.1 1.6 8.4 8.8 1.3 8. Bharati Sahakari Bank Limited.6 0.9 0.7 6..3 1.5 1.0 0.4 8.7 0.5 0.5 7.7 0.Lucknow Jalgaon Janata Sahakari Bank Ltd.4 2.9 1.7 7.8 6.8 0.6 7. Ahmedabad Pravara Sahakari Bank Ltd. Goa Urban Co-operative Bank Limited. Akola.2 0.6 -0.5 6.1 1. Mumbai Nutan Nagarik Sahakari Bank Ltd. Surat Peoples Coop Bank Ltd.07 0.7 8.1 0.4 1.1 2.5 1. Sangli Saraswat Co-operative Bank Ltd.6 8.2 0. No 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 Bank Name Operating Profit 2009-10 2 Abhyudaya Co-operative Bank Ltd.8 14.9 2.3 7.8 8.4 1. Kalupur Commercial Coop.3 2.2 0.2 0.3 8.0 -1.6 3.6 2. Nagpur. Ahmednagar Nagpur Nagrik Sahakari Bank Ltd.7 0. Punjab & Maharashtra Co-operative Bank Ltd.5 10. Akola. Solapur Janata Sahakari Bank Ltd.2 2. Mumbai Janalaxmi Co-operative Bank Ltd.9 8.2 8.3 1.1 2.5 -1.3 1.6 3.4 2.4 2.8 -0.8 -6.7 2010-11 4 2.8 7.0 7.8 2. Bassein Catholic Co-operative Bank Ltd.7 1.8 1.2 1.3 8..8 1.8 2.5 0.1 1.2 4.4 8. Thane Janata Sahakari Bank Ltd.2 1.2 -0.5 8.0 4.1 1.3 1.8 0.2 1.4 7. Thane Bharat Sahakari Bank Ltd.7 7. The Akola Janata Commercial Co-operative Bank Ltd.0 1.56 1.5 7.6 0.2 0.7 0.9 0.4 7.5 8..5 0.6 0.6 1.1 1.9 8.5 -0.5 0.3 7.3 1.9 0.6 1.6 -2.5 -15 0.1 8..9 0.6 0.2 6.2: Major Indicators of Financial Performance of Scheduled UCBs (Continued) (As at end-March) (As per cent to Total Assets) Sr.0 -2 0.7 5.0 0..1 0.5 0.4 1.4 0.4 180 .2 1.4 7.0 2.1 0.6 0.2 -1.5 0.5 1.8 0.1 0.7 1.6 -0.7 0.9 1.5 8.4 0.5 1..1 2.3 1.0 0. New India Co-operative Bank Ltd.4 7. Zoroastrian Co-operative Bank Ltd.3 0. Nagar Urban Co-operative Bank Ltd.1 8. Nashik Janata Sahakari Bank Ltd.4 2010-11 6 1.5 7.6 8..3 7.8 1.7 1.Bank Ltd.7 0.1 1.7 1.9 4.1 0.. Mumbai Ahmedabad Mercantile Co-Op Bank Ltd. Janakalyan Sahakari Bank Ltd. Shikshak Sahakari Bank Ltd.1 0. Bombay 3 1.1 0.8 1.7 8.3 0.0 1.7 1.6 0.9 1.1 1.6 1.2 0.6 0.6 7.5 0.1 0.7 3.8 2.2 2.2 1.5 8.1 -5.3 8.8 8.0 1.2 6..3 1.6 5.8 1.1 6.76 0.2 0.0 1.0 8.1 7.6 0.5 8..0 2.8 0.. Mumbai Cosmos Co-operative Urban Bank Ltd.7 2.6 5.6 0.2 0.3 0.9 8. Dombivli Nagari Sahakari Bank Ltd. Mumbai Mapusa Urban Co-operative Bank of Goa Ltd.3 0. The Kapol Co-operative Bank Ltd.1 2. Madhavpura Mercantile Co-Op Bank Ltd.8 6.1 2.4 8.6 9.5 2.4 7. Pune. Thane Greater Bombay Co-operative Bank Limited Indian Mercantile Co-operative Bank Ltd. Kalyan Janata Sahakari Bank Ltd.9 7.4 7.7 0.9 4.7 8.0 -0.3 2010-11 8 7.

Appendix Tables

Appendix Table V.2: Major Indicators of Financial Performance of Scheduled UCBs (Concluded) (As at end-March)
(As per cent to Total Assets) Sr. No. 2009-10 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 2 Abhyudaya Co-operative Bank Ltd., Mumbai Ahmedabad Mercantile Co-Op Bank Ltd. Amanath Co-operative Bank Ltd. Bangalore Andhra Pradesh Mahesh Co-Op Urban Bank Ltd. Bassein Catholic Co-operative Bank Ltd. Bharat Co-operative Bank (Mumbai) Ltd. Bharati Sahakari Bank Limited. Bombay Mercantile Co-operative Bank Limited Charminar Co-operative Urban Bank Ltd. Citizen Credit Co-operative Bank Ltd., Mumbai Cosmos Co-operative Urban Bank Ltd. Dombivli Nagari Sahakari Bank Ltd. Goa Urban Co-operative Bank Limited. Gopinath Patil Parsik Janata Sahakari Bank Ltd., Thane Greater Bombay Co-operative Bank Limited Indian Mercantile Co-operative Bank Ltd.,Lucknow Jalgaon Janata Sahakari Bank Ltd. Janakalyan Sahakari Bank Ltd., Mumbai Janalaxmi Co-operative Bank Ltd., Nashik Janata Sahakari Bank Ltd., Pune. Kallappanna Awade Ichalkaranji Janata Sahakari Bank Ltd. Kalupur Commercial Coop.Bank Ltd. Kalyan Janata Sahakari Bank Ltd., Kalyan Karad Urban Co-operative Bank Ltd. Madhavpura Mercantile Co-Op Bank Ltd. Mahanagar Co-operative Bank Ltd., Mumbai Mapusa Urban Co-operative Bank of Goa Ltd., Mapusa Mehsana Urban Co-Op Bank Ltd. Nagar Urban Co-operative Bank Ltd., Ahmednagar Nagpur Nagrik Sahakari Bank Ltd. Nasik Merchant’s Co-operative Bank Ltd. New India Co-operative Bank Ltd., Mumbai NKGSB Co-operative Bank Ltd., Mumbai Nutan Nagarik Sahakari Bank Ltd., Ahmedabad Pravara Sahakari Bank Ltd. Punjab & Maharashtra Co-operative Bank Ltd. Rajkot Nagrik Sahakari Bank Ltd. Rupee Co-operative Bank Ltd. Sangli Urban Co-operative Bank Ltd., Sangli Saraswat Co-operative Bank Ltd., Bombay Sardar Bhiladwala Pardi Peoples Coop Bank Ltd. Shamrao Vithal Co-operative Bank Ltd. Shikshak Sahakari Bank Ltd., Nagpur. Solapur Janata Sahakari Bank Ltd. Surat Peoples Coop Bank Ltd. Thane Bharat Sahakari Bank Ltd. Thane Janata Sahakari Bank Ltd. The Akola Janata Commercial Co-operative Bank Ltd., Akola. The Akola Urban Co-operative Bank Ltd., Akola. The Kapol Co-operative Bank Ltd., Mumbai The Khamgaon Urban Co-operative Bank Ltd., Khamgaon. Vasavi Coop Urban Bank LImited. 9 4.5 3.3 2.6 5.9 5.3 1.6 5.0 3.0 3.8 4.7 6.1 5 4.8 3.4 5.8 24.61 5.0 5.9 3.8 6.0 5.5 4.5 4.4 6.0 1.02 4.5 5.4 5.7 5.1 5.3 3.6 4.9 6.2 5.0 5.8 4.9 5.2 3.6 5.0 5.0 3.0 5.8 4.1 5.7 4.8 5.8 5.2 6.6 7.1 5.8 6.9 2.0 5.9 2010-11 10 4.3 3.2 2.3 5.1 4.6 1.3 4.8 3.0 1.3 4.9 4.8 4.6 4.4 3.5 5.7 25.8 4.7 5.5 3.7 5.3 4.7 3.7 4.3 5.5 1 4.8 4.9 5.5 5.0 4.9 3.5 4.9 5.7 4.2 5.4 5.3 3.4 2.9 4.7 4.7 3.2 9.1 3.5 5.2 4.7 5.2 4.8 5.5 5.7 5.4 4.9 2.1 5.2 Bank Name Interest Expended Provisions & Contingencies 2009-10 2010-11 P 11 0.3 0.2 0.1 0.5 0.3 0.7 0.7 0.4 0.6 0.7 0.7 0.3 0.4 15.8 0.9 5.5 0.6 0.2 0.2 0.5 0.3 0.6 0.1 0.4 0.7 0.4 0.4 0.8 0.2 0.4 0.2 0.6 0.2 0.7 0.4 0.8 0.2 0.5 0.1 0.2 0.6 0.5 0.1 3.2 0.1 12 0.4 0.1 0.2 0.6 0.2 0.2 0.6 0.4 0.4 0.2 1.1 0.5 0.4 0.3 0.4 0.5 0.1 3.1 0.3 0.3 0.4 0.4 0.3 0.6 0.5 0.5 0.5 0.4 0.8 0.2 0.3 1.5 0.8 0.3 0.7 0.7 0.6 0.5 1.6 0.2 0.4 0.8 1.0 0.2 0.4 0.9 Total Operating Expenses 2009-10 13 7.1 5.1 4.2 8.2 6.4 2.2 7.0 4.8 4.7 6.2 7.7 6.7 6.7 5.4 8.1 30.1 6.9 8.2 4.9 7.6 7.7 5.7 6.5 8.2 1.24 7.1 7.6 6.9 7.3 8.1 6.2 7.8 7.8 7.7 7.8 7.1 6.7 5.1 7.3 6.6 5.0 7.5 6 8.1 6.9 8.2 7.1 8.2 8.1 8.8 9.2 4.3 8.1 2010-11 14 6.3 5.6 3.7 7.2 5.7 1.9 6.7 4.9 2.8 6.4 6.4 6.3 6.5 5.5 8.3 32.65 6.9 7.9 4.7 6.7 6.9 5.0 6.5 8 1.1 7.2 7.1 6.7 7.5 7.7 5.9 7.6 7.1 7.4 7.8 7.6 4.5 4.4 7.0 6.3 5.1 11.7 5.5 7.6 6.7 7.8 6.5 7.3 6.8 8.2 6.7 4.6 7.2 2009-10 15 3.0 3.8 0.9 4.2 3.3 0.6 2.9 2.0 -0.4 2.2 2.1 2.8 3.5 4.1 1.7 0.5 1.9 1.9 -0.1 2.2 2.6 2.3 3.1 2.5 -0.58 3.4 1.7 2.6 3.3 2.2 4.9 3.7 2.2 2.5 2.1 3.1 2.4 0.1 2.5 1.4 4.2 2.7 1.6 3.1 3.2 1.9 3.2 1.8 1.4 2.2 0.1 2.3 2.4 2010-11 16 3.4 4.0 1.4 4.5 3.9 1.0 2.9 2.4 -0.3 2.8 2.5 3.7 4.0 4.1 2.6 1.0 2.3 2.7 1.1 2.7 3.1 2.9 3.3 3.2 -0.5 3.3 2.0 3.0 3.9 3.2 4.9 3.2 2.6 3.0 3.1 3.3 2.3 0.8 2.7 2.5 3.6 5.6 2.9 3.7 4.0 3.1 3.3 2.9 2.2 3.0 2.1 2.3 3.2 Spread

53 Zoroastrian Co-operative Bank Ltd., Bombay ‘-’: Nil/Negligible. Note: Data are provisional. Source: OSS Returns.

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Report on Trend and Progress of Banking in India 2010-11

Appendix Table V.3: State-wise Distribution of UCBs (As at end-March 2011)
Sr No. State Total number of UCBs Total number of branches (including head office cum branches) 4 260 22 5 22 79 66 853 17 9 19 2 840 358 90 4,526 10 4 1 46 6 19 200 3 313 2 242 61 103 8,178 19 2 2 180 0 4 0 9 3 3 1,118 4 0 1 3 9 2 1 117 1 1 2 1 1 2 1 1 4 Total number of Extension Counters Total number of ATMs Number of Number of districts districts with a without a presence presence of of UCB branch UCB branch 7 21 5 2 8 1 2 24 7 3 6 2 30 14 23 35 2 3 1 13 1 2 23 2 32 2 39 8 11 322 0 26 0 7 4 7 17 3 18 10 2 0 3 33 5 8 268 8 2 22 22 10 0 0 1 13 3 16 36 Deposits (` Cr.) Advances (` Cr.)

1 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28.

2 Andhra Pradesh Assam Bihar Chhattisgarh Delhi Goa Gujarat Haryana Himachal Pradesh Jammu & Kashmir Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Orissa Puducherry Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttar Pradesh Uttarakhand West Bengal All India

3 106 8 3 12 15 6 243 7 5 4 2 268 60 52 539 3 3 1 12 1 4 39 1 129 1 70 5 46 1,645

5 6

6 3 0 1 0 0 0 70 0 0 0 0 18 1 0 1,003 0 0 0 0 0 0 3

9 5,348 438 65 369 1,563 1,696 22,422 397 346 307 17 14,333 5,522 1,317 1,38,124 176 106 23 1,017 122 717 3,711 13 4,822 1 4,052 2,037 2,969 2,12,031

10 3,963 187 33 120 854 1,019 13,250 219 193 156 9 9,602 3,844 624 90,260 80 49 8 578 100 356 2,159 9 3,773 9 1,953 1,340 1,593 1,36,341

Note: Data are provisional.

182

Appendix Tables

Appendix Table V.4: Working Results of State Cooperative Banks - Region and State-wise (As at end-March)
(Amount in ` crore) Sr. No. Region/State Amount of Profit/Loss 2009 1 1. 2. 3. 4. 5. 6. 7. 2 NORTHERN REGION Chandigarh Delhi Haryana Himachal Pradesh Jammu & Kashmir Punjab Rajasthan NORTH-EASTERN REGION Arunachal Pradesh Assam Manipur Meghalaya Mizoram Nagaland Sikkim Tripura EASTERN REGION Andaman & Nicobar Bihar Orissa West Bengal CENTRAL REGION Chattisgarh Madhya Pradesh Uttar Pradesh Uttarakhand WESTERN REGION Goa Gujarat Maharashtra SOUTHERN REGION Andhra Pradesh Karnataka Kerala Puducherry Tamil Nadu ALL-INDIA 3 106 7 32 11 28 0 12 16 18 3 -1 9 15 2 -13 1 2 33 2 6 10 15 68 2 30 35 1 -34 1 -53 18 127 61 13 20 -1 34 318 2010 P 4 72 3 26 -14 36 0 8 13 68 9 6 9 19 2 1 2 20 33 2 6 10 15 45 5 18 20 2 64 1 60 3 -29 137 9 -194 0 19 253 Total NPAs NPAs as Percentage of Loans Outstanding 2010 P 6 364 9 30 2 217 17 56 33 455 110 112 105 40 24 29 2 33 386 29 154 115 88 470 63 59 317 31 1,927 61 195 1,671 751 40 137 394 15 165 4,353 2009 7 3.1 11.9 10.8 0.1 14.1 21.4 1.2 1.9 37.4 79.7 38.3 58.0 17.7 17.0 45.5 7.0 29.7 9.6 12.7 37.3 6.9 4.0 10.0 16.7 4.0 13.6 6.3 20.1 12.3 16.9 21.8 11.3 20.2 5.5 14.0 8.9 3.1 11.8 2010 P 8 3.2 15.6 9.4 0.1 13.2 19.1 1.2 1.8 36.1 99.9 34.6 69.1 15.0 18.9 41.9 7.0 18.1 7.1 20.0 24.2 4.6 4.0 7.3 10.1 2.4 10.3 12.4 18.4 10.9 10.2 20.9 5.3 1.0 4.4 19.2 6.2 3.6 8.8 Recovery to Demand (Per cent as at end-June) 2009 9 97.3 61.9 92.4 97.7 85.5 56.7 99.2 96.5 49.2 11.8 68.7 43.7 21.0 75.3 70.4 62.2 64.6 87.2 74.8 46.3 95.6 91.1 93.0 59.2 96.2 92.9 91.7 83.3 80.3 86.8 82.2 95.0 93.3 95.3 88.8 90.8 99.8 91.8 2010 P 10 97.9 60.9 89.0 99.9 80.0 58.3 99.2 97.1 45.5 14.4 64.3 19.6 20.1 75.3 67.1 62.2 65.7 91.6 59.2 72.1 96.7 91.1 92.4 80.0 96.9 90.2 97.4 81.6 80.7 87.2 79.6 93.9 88.9 97.6 81.8 92.0 99.8 91.8

2009 5 347 6 35 2 197 19 55 33 435 96 119 84 37 22 29 2 46 468 15 229 136 88 607 63 92 443 9 2,268 61 300 1,907 1,600 948 192 338 19 103 5,725

8. 9. 10. 11. 12. 13. 14. 15.

16. 17. 18. 19.

20. 21. 22. 23.

24. 25. 26.

27. 28. 29. 30. 31.

P: Provisional. Note: 1. Data for StCBs in the states of Bihar, Kerala, Manipur and West Bengal are repeated for the year 2010 from previous year. 2. Jharkhand StCB is not yet functional and hence is not included. Source: NABARD

183

Appendix Table V.5: Working Results of District Central Cooperative Banks - Region and State-wise (As at end-March)
(Amount in ` crore) Sr. Region/State No. 2009 Number of reporting DCCBs Profit Number of DCCBs Amount Loss Number of DCCBs Amount Number of reporting DCCBs Number of DCCBs 2010 Profit Amount Loss Number of DCCBs Amount Total NPAs 2008-09 NPA to Recovery Loans to ratio Demand (per cent) (per cent) as at end-June 14 6.6 9.6 7.7 17.9 7.3 13.6 17.7 54.5 75.9 9.3 16.0 27.7 24.7 29.2 30.0 13.7 15.3 18.1 23.5 15.6 20.4 12.9 13.5 15.3 17.9 15 77.8 61.4 84.4 61.6 91.2 79.0 62.7 50.8 17.2 59.6 75.6 63.7 69.5 65.2 57.8 83.4 66.8 74.7 63.8 80.6 74.2 81.6 87.0 82.2 72.7 Total NPAs 2009-10 NPA to Recovery Loans to ratio Demand (per cent) (per cent) as at end-June 17 8.9 10.2 7.8 14.8 7.0 10.4 5.1 54.5 75.9 1.5 16.0 24.7 23.1 24.9 27.9 13.7 17.7 15.9 18.1 11.6 12.6 10.9 12.4 10.9 12.9 18 79.6 63.7 87.4 73.3 92.5 79.0 68.4 50.8 17.2 69.6 75.6 68.0 72.1 68.3 63.6 87.4 71.8 75.6 70.6 82.4 78.9 74.5 87.8 86.5 75.7

Report on Trend and Progress of Banking in India, 2010-11

1

2 NORTHERN REGION

3 73 19 2 3 20 29 64 22 8 17 17 104 6 38 50 10 49 18 31 80 22 21 14 23 370

4 69 18 2 2 19 28 50 13 5 15 17 90 6 37 37 10 41 14 27 74 19 21 13 21 324

5 148 31 50 1 38 28 77 12 8 29 28 294 40 122 91 41 573 101 472 503 213 70 31 189 1,595

6 4 1 1 1 1 14 9 3 2 14 1 13 8 4 4 6 3 1 2 46

7 28 9 7 2 10 93 23 2 37 31 43 4 39 55 18 37 22 11 1 10 241

8 73 19 2 3 20 29 64 22 8 17 17 104 6 38 50 10 49 18 31 80 22 21 14 23 370

9 65 15 2 2 18 28 46 13 5 14 14 95 6 38 41 10 42 17 25 74 22 18 11 23 322

10 112 9 48 1 32 22 50 12 3 7 28 305 44 119 102 40 593 113 480 600 134 85 27 354 1,660

11 8 4 1 2 1 17 9 3 2 3 9 9 7 1 6 6 3 3 47

12 35 19 3 9 4 115 23 14 47 31 38 38 322 3 319 14 6 8 524

13 1,807 535 112 83 540 537 1,136 339 101 289 407 3,357 236 1,583 1,387 151 6,502 1,116 5,386 5,187 1,237 773 1,285 1,892 17,989

16 1,812 587 129 76 562 458 1,136 339 101 289 407 3,135 242 1,496 1,233 164 5,597 994 4,603 4,553 785 740 1,442 1,586 16,233

1 2 3 4 5

Haryana Himachal Pradesh Jammu & Kashmir Punjab Rajasthan EASTERN REGION

6 7 8 9

Bihar Jharkhand Orissa West Bengal CENTRAL REGION

184

10 11 12 13

Chattisgarh Madhya Pradesh Uttar Pradesh Uttarakhand WESTERN REGION

14 15

Gujarat Maharashtra SOUTHERN REGION

16 17 18 19

Andhra Pradesh Karnataka Kerala Tamil Nadu ALL-INDIA

'-': Nil/Negligible Note: 1. Data for 2010 are provisional. 2. One DCCB in Orissa was in no profit no loss position in 2009-10. 3. Profit and loss in respect of DCCBs in Bihar and West Bengal are repeated for the year 2009-10 from previous year. Source: NABARD

Appendix Tables

Appendix Table V.6: Select Indicators of Primary Agricultural Credit Societies-State wise (Continued) (As at March 31, 2010)
Sr. No. Region/State No. of PACS Deposits Borrowings (` crore) (` crore) Working Capital (` crore) Loans and Advances Issued (` crore) Shortterm 7 13,401 0.03 4,279 1 10 6,199 2,913 19 7 3 3 1 2 3 0.04 4,566 3 353 1 3,034 1,175 4,026 578 2,371 291 786 7,718 2 3,611 4,106 32,220 3,007 3,159 17,631 29 8,395 61,951 Loans and Advances Outstanding (` crore) Societies in in Profit No. 11 7,767 15 33 1,650 275 2,504 3,290 637 12 309 68 83 78 87 5,110 33 1,180 60 1,365 2,472 7,419 816 1,632 435 4,536 14,711 56 4,786 9,869 5,292 951 1,909 772 23 1,637 40,936 Amount (` crore) 12 156 0.03 2 17 1 92 44 82 3 76 0.23 1 2 49 0.06 6 1 25 17 152 28 78 28 18 470 0.24 86 384 316 23 51 165 1 76 1,226

Medium- Agriculture Nonterm Agriculture 8 282 0.10 38 26 3 54 162 2 1 0.01 0.12 0.47 0.13 0.07 865 0.47 568 297 219 50 125 32 12 1,493 8 307 1,178 10,126 332 108 8,522 9 1,154 12,987 9 7,441 4,443 34 22 128 2,812 40 6 5 10 1 2 1 17 4,374 3 171 2.64 2,978 1,220 3,692 529 2,097 266 800 10,315 5 3,584 6,726 15,261 3,644 3,198 5,692 10 2,718 41,123 10 542 0.05 389 1 152 7 0.30 1 4 0.02 2 150 7.23 125 17 281 52 229 0 0 1,736 16 35 1,686 7,926 227 150 4,199 0.08 3,350 10,642

1

2 Northern Region

3 12,623 16 628 2,097 765 3,990 5,127 3,583 33 766 204 179 245 1,719 169 268 20,308 46 8,463 208 3,565 8,026 15,454 1,213 4,633 679 8,929 29,082 79 7,763 21,240 13,597 2,721 4,694 1,608 52 4,522 94,647

4 2,781 0.03 371 1,191 1 908 310 72 1 3 64 4 3,763 0.44 67 13 2,382 1,301 1,098 250 504 276 68 375 33 241 100 27,198 1,153 1,618 20,907 70 3,450 35,286

5 11,413 0.09 4,485 64 37 4,020 2,806 65 13 1 13 9 2 27 4,405 3 501 3 2,332 1,566 4,732 538 2,914 310 971 13,263 5 3,870 9,388 17,885 4,790 3,708 2,781 33 6,574 51,764

6 20,336 0.23 6,992 1,577 79 5,901 5,787 378 18 111 4 22 6 112 4 100 10,574 4 493 15 6,153 3,909 7,510 995 4,561 695 1,259 18,735 58 5,741 12,937 77,658 34,278 6,058 25,952 129 11,241 1,35,191

1. 2 3 4 5 6

Chandigarh Haryana Himachal Pradesh Jammu & Kashmir Punjab Rajasthan North-Eastern Region

7 8 9 10 11 12 13 14

Arunachal Pradesh Assam Manipur Meghalaya Mizoram Nagaland Sikkim Tripura Eastern Region

15 16 17 18 19

Andaman &Nicobar Island Bihar Jharkhand Orissa West Bengal Central Region

20 21 22 23

Chhattisgarh Madhya Pradesh Uttarakhand Uttar Pradesh Western Region

24 25 26

Goa Gujarat Maharashtra Southern Region

27 28 29 30 31

Andhra Pradesh Karnataka Kerala Puducherry Tamil Nadu ALL INDIA

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Appendix Table V.6: Select Indicators of Primary Agricultural Credit Societies-State wise (Concluded) (As at March 31, 2010)
Sr. No. Region/State Societies in Loss No. 1 2 Northern Region 1. 2 3 4 5 6 Chandigarh Haryana Himachal Pradesh Jammu & Kashmir Punjab Rajasthan North-Eastern Region 7 8 9 10 11 12 13 14 Arunachal Pradesh Assam Manipur Meghalaya Mizoram Nagaland Sikkim Tripura Eastern Region 15 16 17 18 19 Andaman &Nicobar Island Bihar Jharkhand Orissa West Bengal Central Region 20 21 22 23 Chhattisgarh Madhya Pradesh Uttarakhand Uttar Pradesh Western Region 24 25 26 Goa Gujarat Maharashtra Southern Region 27 28 29 30 31 Andhra Pradesh Karnataka Kerala Puducherry Tamil Nadu ALL INDIA '-’ : Nil/Negligible Source: NAFSCOB 13 3,718 1 595 390 356 970 1,406 983 20 419 108 111 116 28 181 10,870 7 3,962 0 2,143 4,758 5,192 397 2,610 217 1,968 13,212 23 2,310 10,879 7,704 1,789 2,320 682 29 2,884 41,679 Amount (` crore) 14 356 294 3 15 13 32 109 5 99 0.02 0.29 2 3 107 0 1 0 93 13 250 8 230 11 2 597 0 202 395 946 476 73 123 6 269 2,365 15 9,058 15 628 443 275 3,206 4,491 2,052 11 709 195 169 93 457 158 260 15,547 39 8,463 60 2,913 4,072 12,066 1,117 3,373 461 7,115 18,409 59 5,027 13,323 8,408 2,163 2,946 1,324 23 1,952 65,540 16 2,656 1,613 173 290 580 426 16 57 10 96 228 11 8 2,946 4 85 502 2,355 2,654 96 1,183 106 1,269 9,711 12 1,782 7,917 3,979 546 1,192 226 29 1,986 22,372 17 667 1 24 96 490 56 668 5 8 655 771 1 29 27 714 478 0 6 90 382 563 8 555 0 334 5 294 35 0 0 3,481 18 223 219 4 435 1 1 54 379 532 2 0 4 526 185 0 0 22 163 231 0 231 0 59 7 50 1 0 1 1,665 583 1,589 212 22 817 168 168 71 34 119 359 71 512 2 2 19 19 17 2 Viable Potentially viable Dormant Defunct Others

186

9 59.947 6.3 20.2 36.04 28.9 92.424 307 1. 2 NORTHERN REGION Haryana @ Himachal Pradesh # Jammu & Kashmir* Punjab @ Rajasthan @ NORTH-EASTERN REGION Assam* Manipur* Tripura* EASTERN REGION Bihar* Orissa @ West Bengal # CENTRAL REGION Chattisgarh @ Madhya Pradesh @ Uttar Pradesh* WESTERN REGION Gujarat* Maharashtra @ SOUTHERN REGION Karnataka @ Kerala @ Puducherry* Tamil Nadu @ ALL INDIA 3 85 0 33 45 0 7 35 30 0 5 138 131 5 2 349 0 7 342 181 181 0 56 23 14 1 18 844 2009 4 69 13 12 -5 25 24 -3 -3 0 0 -1 -1 -1 1 207 0 -75 282 22 26 -4 22 0 18 2 2 316 2010 5 50 5 1 -2 27 19 -3 -3 0 0 7 -1 -1 9 -50 0 -61 11 32 36 -4 -63 -83 18 0 2 -27 2009 6 761 232 102 7 1 419 16 8 0 8 369 59 110 200 1.7 2010 11 58.5 4.8 59. 11. 15.4 2010 9 15.9 41.5 36.9 80.7 1. 14.8 0 39.4 0 61.9 52.5 46.0 46.6 42.381 264 1.0 41. Data for the states of Bihar.4 29.7 51. 10.4 51.0 49.4 91.7 32.3 51.1 38.4 36.3 42. 8.4 95.0 28.8 54.642 2009 8 13.0 80.3 51.1 13.7 19.3 33.7 19. 3.9 43.8 37.4 38.4 80.09 18.6 43.724 89 391 1.9 5.9 48.4 30.9 63.4 85. Region/State Branches Profit/Loss Total NPAs NPAs as percentage of Loans Outstanding 2010 7 899 550 68 5 2 274 16 8 0 8 314 59 110 145 2. Manipur SCARDB is defunct.4 19. 13.5 37.9 48.1 39.3 39.2 34. @ Federal structure # Mixed structure * Unitary structure Note: 1.5 95.3 30.0 78.1 0.1 52. Maharashtra.2 44. Source: NABARD.1 49.7: Working Results of State Cooperative Agriculture and Rural Development Banks .9 0 61.9 27.9 56.6 49.3 57.2 13.7 4.6 28.State-wise (As at end-March) (Amount in ` crore) Sr No. 20.0 2010 1 1. 5. Tamil Nadu and Tripura repeated for the year 2010 from previous year. 17. 9.0 77. 3.6 4.7 0 39.2 Recovery (Per cent) 2009 10 64.2 27.6 40.117 696 382 92 1 221 4.1 95.9 41.3 20.7 35.2 28.2 53.244 1.5 27.9 40.5 1. Orissa.1 0.9 13. 19.9 51.4 88.0 40. 2.9 17.7 5.685 1.1 43.5 31. 12.266 95 486 1. 7. 16.Appendix Tables Appendix Table V.8 79.0 31. 2.3 99.3 99. Data for 2010 are provisional.2 26.1 10. 18. 4.0 78.3 85.117 723 395 106 1 221 5. 187 .

9 42. Karnataka 11.6 49.0 61.8 35.6 33.252 408 690 154 4.5 188 Note: Data for 2009-10 are provisional Source: NABARD.1 97.0 56.2 57.3 59.6 40.2 42.5 36.1 61.841 NPAs NPAs as Percentage of Loans Outstanding 2009 13 35.3 37.743 2010 12 2.1 41.8 37.9 35.8 33.1 49.0 50.2 35.7 63.9 20.3 48.5 35.8 95.9 95. 8.0 Recovery (Per cent) as at end-June 2009 15 39.0 37. 4 2 NORTHERN REGION Haryana Himachal Pradesh Punjab Rajasthan CENTRAL REGION 5.1 22.9 66.5 2010 16 41.9 38.4 35.3 59.9 36.7 49.5 23.3 46.2 28.2 43.8: Working Results of Primary Cooperative Agriculture and Rural Development Banks -State-wise (As at end-March) (Amount in ` crore) Sr.1 37. Maharashtra SOUTHERN REGION 10.3 38.881 661 26 795 399 746 72 674 250 30 220 614 614 1.2 27.2 2010 14 34.5 20.Appendix Table V.288 952 28 762 546 623 73 550 175 30 145 481 481 1. Appendix Tables .1 39. Kerala 12. Tamil Nadu ALL INDIA 3 99 4 0 64 31 23 6 17 50 32 18 4 4 167 79 39 49 343 Amount 4 72 25 0 25 22 24 0 24 15 1 14 6 6 71 26 36 9 188 Loss Number 5 46 15 1 25 5 27 6 21 19 14 5 25 25 236 98 7 131 353 Amount 6 76 45 3 16 12 69 3 66 5 3 2 132 132 60 39 1 20 342 Profit Number 7 105 0 1 80 24 16 3 13 11 4 7 0 0 144 56 39 49 276 Amount 8 52 0 2 38 12 2 0 2 2 1 1 0 0 67 22 36 9 123 2009-10 Loss Number 9 40 19 0 9 12 34 9 25 54 39 15 29 29 259 121 7 131 416 Amount 10 204 166 0 4 34 36 6 30 37 18 19 184 184 77 56 1 20 538 2009 11 1.0 8. 6. 2.8 20.5 61.7 97.274 457 663 154 4.3 48.9 42.3 56.3 38.8 98.5 44. State No. 2008-09 Profit Number 1 1.8 37.9 12.5 52.2 42.5 34.0 98.7 46.4 37.1 12.8 48. Orissa West Bengal WESTERN REGION 9.1 66. Chhattisgarh Madhya Pradesh EASTERN REGION 7. 3.2 42.1 58.0 8.

Sanctions ments 3 1.State-wise (Continued) (At end-March 2011) (Amount in ` crore) Name of State/Region RIDF I Sanctions 1 All India Southern Region Andhra Pradesh Karnataka Kerala Tamil Nadu UT of Puducherry Western Region Goa Gujarat Maharashtra Northern Region Haryana Himachal Pradesh Jammu & Kashmir Punjab Rajasthan Uttar Pradesh Uttarakhand Central Region Chhattisgarh Madhya Pradesh Eastern Region Bihar Jharkhand Orissa West Bengal North Eastern Region Arunachal Pradesh Assam Manipur Meghalaya Mizoram Nagaland Sikkim Tripura 2 1.435 925 379 173 127 246 Disburse.489 1.398 780 308 180 73 219 6 2.761 460 215 159 86 4 2.174 511 275 159 229 Disburse.Sanctions ments 5 2.055 856 359 165 117 216 12 4.006 62 128 155 200 245 218 0 310 43 267 442 0 0 86 356 258 92 45 8 29 4 48 5 28 189 Appendix Tables .071 1.Sanctions ments 7 2.482 640 273 167 57 143 10 3.Sanctions ments 11 3.636 865 337 195 87 246 Disburse.279 559 292 175 253 345 7 151 187 527 27 14 6 61 124 296 0 241 82 159 286 22 0 170 95 9 0 0 2 3 2 1 0 0 322 7 145 170 499 19 14 6 61 117 282 0 215 78 137 257 13 0 162 82 8 0 0 1 3 2 1 0 0 359 127 232 792 64 53 63 152 461 0 250 10 241 307 0 0 151 156 63 0 63 0 0 0 0 0 0 319 114 204 713 62 53 62 129 407 0 239 6 233 286 0 0 141 145 61 0 61 0 0 0 0 0 0 408 154 254 838 67 51 36 89 158 414 22 280 57 223 432 58 4 199 171 23 0 16 0 7 0 0 0 0 381 135 246 753 62 49 24 85 140 389 2 262 58 204 363 27 2 172 161 23 0 16 0 7 0 0 0 0 426 9 115 302 935 53 88 107 96 64 475 51 242 69 173 481 0 119 149 214 117 0 65 0 9 0 0 21 22 380 9 91 280 749 48 79 103 75 49 389 6 218 65 153 392 0 82 117 193 103 0 52 0 9 0 0 21 21 572 222 350 868 90 110 111 103 132 317 5 263 34 229 442 0 91 128 222 364 25 186 0 31 54 16 9 44 511 179 332 810 80 108 109 91 120 300 0 245 32 213 363 0 82 100 181 270 23 117 0 31 54 14 9 22 964 19 506 439 1.Appendix Table V.070 65 127 162 229 254 233 0 372 51 321 512 0 0 104 408 291 103 50 8 30 4 56 5 35 881 9 462 410 1.Sanctions ments 9 2.903 702 287 172 64 179 Disburse.906 499 227 176 96 RIDF II RIDF III RIDF IV RIDF V RIDF VI Disbursements 13 4.733 752 282 171 89 209 Disburse.454 673 252 162 74 186 8 2.9: Sanctions and Disbursements under Rural Infrastructure Development Fund .

Sanctions ments 15 4.010 2.082 405 134 504 0 812 0 778 34 1.343 1.386 153 142 154 287 140 218 292 708 433 275 538 97 49 185 207 257 15 190 0 16 14 17 3 3 954 0 899 55 1. 2010-11 586 16 41 530 1.706 904 220 194 388 Disburse.542 153 79 47 286 241 444 291 500 39 461 753 52 113 285 303 81 24 13 0 0 7 28 8 0 22 8.State-wise (Continued) (At end-March 2011) (Amount in ` crore) Name of State/Region RIDF VII Sanctions 1 All India Southern Region Andhra Pradesh Karnataka Kerala Tamil Nadu UT of Puducherry Western Region Goa Gujarat Maharashtra Northern Region Haryana Himachal Pradesh Jammu & Kashmir Punjab Rajasthan Uttar Pradesh Uttarakhand Central Region Chhattisgarh Madhya Pradesh Eastern Region Bihar Jharkhand Orissa West Bengal North Eastern Region Arunachal Pradesh Assam Manipur Meghalaya Mizoram Nagaland Sikkim Tripura 14 4.783 856 290 90 548 Disburse.229 372 178 563 0 1.377 2.311 2.149 406 89 293 360 557 93 376 0 28 19 34 6 0 24 10.439 150 168 217 232 375 298 0 396 85 311 672 58 0 149 464 101 69 0 0 18 7 1 5 0 471 10 22 439 1.350 0 1.220 200 240 420 360 491 108 207 16 22 8 21 16 93 Disburse.346 249 273 461 553 742 1.480 752 202 168 358 18 5.126 1.962 607 433 190 732 0 781 0 346 435 2.Sanctions ments 19 4.407 239 154 158 198 281 311 65 736 242 494 704 161 0 211 332 131 0 62 0 15 2 7 5 41 966 0 899 67 1.053 1.948 164 194 80 269 488 701 53 419 86 333 1.817 1.267 449 205 604 0 992 891 101 2.035 32 766 38 729 1.286 744 483 261 799 0 1.202 178 225 80 283 592 788 57 497 108 389 1.264 125 112 147 254 125 212 289 570 351 219 445 62 39 156 189 203 12 141 0 14 14 17 3 3 190 .651 2.9: Sanctions and Disbursements under Rural Infrastructure Development Fund .423 459 107 397 459 671 149 402 28 32 19 34 6 0 Disburse.950 1.396 0 1.525 1.582 1.558 267 169 176 206 347 323 70 823 282 540 964 199 0 247 519 156 0 76 0 16 2 7 5 50 690 10 284 396 1.638 1.051 75 174 376 426 84 26 14 1 0 7 29 8 0 Disburse.720 166 92 49 311 313 481 308 583 53 531 1.916 1.256 558 212 159 327 16 5.360 140 175 207 206 347 269 16 322 70 253 544 38 0 137 369 99 69 0 0 17 7 1 5 0 743 16 284 443 1.975 631 331 500 513 674 142 283 16 24 8 25 16 161 Report on Trend and Progress of Banking in India.388 609 235 192 353 RIDF VIII RIDF IX RIDF X RIDF XI RIDF XII Disbursements 25 8.312 84 1.149 1.533 407 219 658 0 1.275 75 1.569 2.Sanctions ments 21 6.915 235 203 426 481 617 923 31 631 31 600 1.481 651 261 74 494 20 7.Appendix Table V.329 0 816 513 3.Sanctions ments 17 5.Sanctions ments 23 7.001 1.

333 674 501 905 55 2.302 6.21.076 56 300 4 135 75 187 177 142 Disbursements 31 6.163 1.388 13.420 6.731 687 272 20 116 275 4 822 46 528 248 1.034 106 2.104 5.458 89 118 102 175 446 407 121 200 5 196 456 265 0 38 153 108 0 46 30 7 16 3 7 0 STATE TOTAL Sanctions 34 1.500 21.648 8.328 736 2.569 738 1.425 1.086 0 284 272 143 146 79 78 86 Disbursements 33 3.042 3.330 69 1.261 2.331 4.574 803 654 261 856 0 1.005 1.115 4.390 6.368 1.364 426 1.052 752 631 849 820 946 122 113 0 66 1 240 99 305 Disbursements 29 9.537 3.123 3.771 7.298 78 12.169 589 407 509 665 407 29 88 0 57 22 15 42 154 191 Appendix Tables .160 1.150 718 396 313 677 47 1.969 2.345 57 1.770 1.059 4.760 27 649 1.229 239 17.907 3.452 459 289 312 392 219 14 49 0 51 22 15 40 29 26 12.176 3.726 3.293 86 1.125 877 567 760 922 1.708 190 159 430 291 611 917 111 628 54 573 1.944 2.733 159 220 226 365 809 753 201 390 50 340 1.906 8.575 10.293 510 1.919 274 425 342 525 1.324 193 170 317 264 433 744 202 484 55 429 1.888 31.200 3.264 5.034 149 972 914 4.894 404 507 464 519 359 54 63 0 48 1 49 53 91 RIDF XV Sanctions 30 15.022 487 424 903 602 1.771 1.104 11.125 6.727 86 870 771 2.092 138 1.084 3.300 1.State-wise (Concluded) (At end-March 2011) (Amount in ` crore) Name of State/Region RIDF XIII Sanctions 1 All India Southern Region Andhra Pradesh Karnataka Kerala Tamil Nadu UT of Puducherry Western Region Goa Gujarat Maharashtra Northern Region Haryana Himachal Pradesh Jammu & Kashmir Punjab Rajasthan Uttar Pradesh Uttarakhand Central Region Chhattisgarh Madhya Pradesh Eastern Region Bihar Jharkhand Orissa West Bengal North Eastern Region Arunachal Pradesh Assam Manipur Meghalaya Mizoram Nagaland Sikkim Tripura Note: Data are provisional Source: NABARD RIDF XIV Sanctions 28 14.527 7.466 221 299 602 336 778 1.185 657 370 850 79 2.237 861 532 1.Appendix Table V.253 2.9: Sanctions and Disbursements under Rural Infrastructure Development Fund .336 24.386 7.225 339 298 236 353 321 22 100 0 41 44 55 17 43 RIDF XVI Sanctions 32 18.012 105 537 369 2.388 16 500 872 2.801 298 7.100 952 300 1.090 623 898 1.201 4.047 72 975 3.005 6.667 1.085 1.347 55 322 201 293 195 371 Disbursements 27 8.731 21.499 8.320 121 1.019 2.985 4.379 1.197 7.362 5.075 3.266 961 298 957 0 1.167 5.003 Disbursements 35 80.130 329 588 362 706 474 1.015 2.987 531 454 654 553 1.315 3.261 86 1.518 385 9.623 3.241 2.741 3.188 2.629 1.140 1.482 1.317 2.447 3.440 10.747 35.614 3.416 3.264 395 178 143 520 28 1.469 1.

714 1.Report on Trend and Progress of Banking in India 2010-11 Appendix Table V.427 100 0 490 140 58 997 300 718 62 0 2 0 0 209 759 1.812 10.270 11 5.(1998-99) Total 3 549 0 0 0 61 1 14 11 0 124 101 312 118 0 0 0 1 318 32 450 0 188 5 231 97 0 0 0 0 0 0 0 0 178 21 Amount Sanctioned 4 378 0 0 0 389 1 91 162 1 540 567 2.647 5.740 4. Source: NABARD.615 2.685 451 10 3.456 621 109 5.292 2.940 3 22 2 28 5 0 87 621 1.432 in cumulative number of cards issued by Tiruchirapally DCCB.348 449 0 4 0 2 0 0 10 155 272 73 0 Amount Sanctioned 10 8.179 675 0 0 0 0 0 0 0 106 205 46 Commercial Banks () Cards Issued 7 1.865 1.986 0 64 25 2.063 79 2 305 171 1 98 30 6 371 179 239 600 4 4 2 3 177 159 311 1 614 13 748 196 0 4 0 2 0 0 9 104 42 47 Amount Sanctioned 8 7.655 4.37.875 319 50 4.840 10 1.727 8.780 2.329 12 2.174 lakhs.625 # StCB functions as Central Financing Agencies. Bks.078 1. No.582 50. of cards issued by Co-operatives in Tamil Nadu during the year is 95.774 11. ## No.438 0 10.033 741 0 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 2.556 282 10 1. of banks implementing the Scheme ** Data under reconciliation.362 22 15 11 9 1. effected during the year.497 5.176 11 6.573 80 9.898 117 2 567 243 2 148 57 16 650 301 627 726 4 4 2 3 571 213 843 1 828 32 1.089 and amount sanctioned ` 25. * No.307 3.169 0 72.053 0 0 0 1 524 313 1. State/UT Co-operative Banks Cards Issued 2 Andhra Pradesh ** Assam Arunachal Pradesh # Bihar Gujarat Goa $ Haryana Himachal Pradesh Jammu & Kashmir Karnataka Kerala Madhya Pradesh Maharashtra Meghalaya # Mizoram # Manipur # Nagaland # Orissa Punjab Rajasthan Sikkim #$ Tamil Nadu Tripura # Uttar Pradesh West Bengal Andaman and Nicobar Islands #$ Chandigarh #$ Daman & Diu @#$ New Delhi #$ D & N Haveli @$ Lakshdweep @$ Puducherry # Jharkhand** Chhattisgarh Uttarakhand Other States Statewise breakup not available for Comml. () Data pertaining to Commercial Banks upto September 30.776 47 7.10: Kisan Credit Card Scheme: State-wise Progress (As at end-March 2011) (Amount in ` crore and Number of cards issued in '000) Sr.920 0 734 8 424 336 0 0 0 1 0 0 1 0 486 74 Regional Rural Banks Cards Issued 5 286 38 0 262 11 0 36 15 10 156 21 75 8 0 0 0 0 77 23 82 0 27 13 369 156 0 0 0 0 0 0 0 51 53 5 Amount Sanctioned 6 751 168 0 1. 2010.694 1.247 22 13 11 8 765 4. 192 . @ No Cooperative Banks in these UTs.092 929 2 22 2 27 5 0 86 515 342 621 Total Cards Issued 9 1. However the same is nullified to reflect the reduction of 2.468 5.719 1. $ No RRB in these States/UTs.

654.006. 5.1 .102.1 .8 63.6 50.334.478.8 40.9 0.9 3...6 98..4 20.4 38.3 99. * : Loans include rupee loans. 516 26..0 3.7 47.546.1 1.056.1 40. Total Assistance by All Financial Institutions (D+E) S : Sanctions. SIDCs F.872. . .4 -25.8 .9 30.896.581.0 .4 26.0 570.3 508.7 13. .0 29.637. 239 143.334..06.8 .0 138.289.897. 5.8 24.045. .399.989 31.824..936. Specialised Financial Institutions (4.081.. .069.321.2 92.963.552.1 40.9 1. 49.4 2.4 37.8 50. .623.468.919.0 25. GIC @ 13.6 102....468. 378. . TFCI 20.3 7. : Not available. . SIDBI 3. Source: Respective Financial Institutions.149.0 100.7 1.149. 72. .4 7..8 29.7 24.0 220. .0 1.9 8. State level Institutions (9 and 10) 9...9 36.6 34.0 .5 53.0 866.6 1.3 58.0 29...2 5.1: Financial Assistance Sanctioned and Disbursed by Financial Institutions (Amount in ` crore) Institutions 2009-10 S 1 A.06.6 Appendix Tables .01. ICICI Venture 6..741. All India Financial Institutions Banks (1. .2 62.2 36. .080.. .1 20.623.9 374.7 1.6 1.7 51.891.4 821.5 13.01.0 ..7 51. 738.6 8.1 43. LIC 8.872. .6 427..8 50.8 1.5 45.0 .6 53.0 24.987.941.1 . Investment Institutions (7 and 8) 7..0 .5 40.3 48.3 46.2 2. @ : Data include GIC and its subsidiaries..5 54.6 1.257.3 612. .2 130. IVCF 5.3 38.. . # : Others include guarantees. D : Disbursements.555..531.: Nil..545.655.. 9.3 48.2 881..0 193 D Financial Institutions (A+B+C) E.1 617. . .6 570.461 34.0 8.6 1. .069.4 .5 2.010..963.3 88.007.5 54. 866.0 190..3 143.5 63. .232.7 800.505. .9 25.4 .237.1 0.6 49.3 4.3 -29.5 18.4 536.6 49. SFCs 10.9 21.1 40.237.2 -26.2 581.0 -4. 9..149.9 310.761..188.730.156.128.1 87.0 11.5 190.4 31..0 0.0 40..780. 49.0 30.581.987.3 38.0 .237.4 29.3 38.559.0 220.6 403.0 385.7 266.. 125.9 175.859.3 841..431.519. 5 and 6) 4.0 20.080.050. 570.2 590.505.3 .223.208. Note: All data are provisional.1 87..0 0.555.. IIBI B.6 -5.3 125.0 53.3 35.0 -4.1 55.4 36..1 1.9 630.154.478.993.1 .2 92.1 42. . foreign currency loans.. IFCI 2...8 49.0 3.5 42.4 6. . .938. .. .223. 403.1 1. 657 130.2 35.9 320.0 -30.1 1.883.005.0 354.3 38.198 41. .. 298 . 293.Appendix Table VI.6 .349 38.987. 72.2 62.3 38. .1 .. -5.6 49.. 2 and 3) 1. ...780. .5 2 D 3 Loans* 2010-11 S 4 D 5 Underwriting and Direct Subscription 2009-10 S 6 D 7 2010-11 S 8 D 9 2009-10 S 10 D 11 Others# 2010-11 S 12 D 13 2009-10 S 14 D 15 Total 2010-11 S 16 D 17 Percentage variation Over 2009-10 S 18 D 19 C.0 ..231.3 38..399. ..0 30.3 3.5 1.

0 9. Name of the Primary Dealers No. Source: Primary Dealers’ Returns.079 7 44 105 40 67 134 226 35 52 13 80 7 69 17 19 13 36 303 653 8 16 16 14 19 72 53 11 8 17 19 14 27 4 4 9 9 157 154 9 60 121 54 86 206 279 46 59 30 98 21 96 21 23 22 45 460 807 10 20 8 135 85 116 80 56 44 10 27 1 18 23 7 -18 1 343 272 11 13 5 89 53 85 53 37 31 5 18 1 12 15 5 -18 1 227 178 12 4. Deutsche Securities (India) Pvt Ltd IDBI Gilts Ltd TOTAL 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 7 8 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 All amounts rounded off to the nearest crore. 2010-11 1 1 STCI-PD 4 -31 -13 50 23 24 36 -30 -11 3 14 -10 12 -10 -8 -26 6 -30 58 5 11 4 15 3 52 22 31 15 7 3 15 1 7 1 6 2 144 51 6 80 129 192 171 321 359 102 103 39 126 23 115 44 30 3 46 804 1.0 6.3 15.7 2.3 6.1 194 .3 1.0 0. Year Interest Income including Discount Income 2 2009-10 2010-11 2 3 4 5 6 SBI DFHI LTD ICICI Securities Ltd PNB Gilts Morgan Stanley .PD Nomura FI Sec.9 5.4 3.7 1.0 -17.9 7.9 5.Appendix Table VI.9 6. Ltd. 3 100 138 127 145 245 301 101 99 29 110 18 101 47 37 23 39 690 970 Income Trading Profit Other Income Total Interest Income Expenses Expenditure Other Expenditure Total diture Profit Before Tax Profit After Tax Return On Net worth (per cent) Report on Trend and Progress of Banking in India.5 5.2: Financial Performance of Primary Dealers (Amount in ` crore) Sr.5 0.9 6.

Ltd.225 960 6.e.f.311 707 1.* Nomura Fixed Income Securities Pvt. 2009.657 2.e. 2009.308 1.141 1.067 13. Ltd ICICI Securities Primary Dealer Ltd. Morgan Stanley India Primary Dealer Pvt.453 8.230 1. Capital Funds (Tier I + Tier II + eligible Tier III) 2009-10 1 1 2 3 4 5 6 7 8 Deutsche Securities (India) Pvt. Source: Primary Dealers’ Returns.Appendix Table VI.258 2010-11 7 333 3. SBI DFHI Ltd. 195 Appendix Tables . STCI Primary Dealer Ltd.643 5 265 29 248 21 41 94 130 26 46 Total Assest (Net of current liabilities and provisions) 2009-10 8 279 3.f. Total 2 228 807 142 267 246 553 1. IDBI Gilts Ltd.007 1.3: Select Financial Indicators of Primary Dealers (Amount in ` crore) Sr. Ltd. Name of the Primary Dealers No.240 10.917 1.148 368 271 808 1.308 2010-11 9 385 5.427 1.505 443 316 1.275 793 1. September 7.122 1.046 449 1.** PNB Gilts Ltd.610 2010-11 3 224 891 164 286 373 569 853 266 3.109 258 3. July 20.626 CRAR (Per cent) Stock of Government Securities and Treasury bills (Book Value/MTM) 2009-10 6 235 639 175 1.030 2009-10 4 53 29 72 17 50 42 149 33 44 2010-11 * Morgan Stanley India PD commenced PD operations w. ** Nomura FIS commenced PD operations w.

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