This action might not be possible to undo. Are you sure you want to continue?
project report Submitted to
Punjab Technical University in partial fulfillment of the requirements for the degree of
Master of Business Administration(MBA)
By Amandeep kaur (University. Roll.NO.80103317102)
Department of Business Management Guru Nanak Institute Of Management & Technology (GNIMT) Ludhiana-141002 2010
This is to certify that the Project Report Entitled
FUNDAMENTAL ANALYSIS OF BANKING INDUSTRY IN INDIA
Submitted in partial fulfillment of the requirements for the degree of Master of Business Administration(MBA) By Amandeep kaur (University. Roll.NO.80103317102) Has been prepared under my supervision and guidance and no part of it has been submitted for the award of my other degree and that the work has been published in any journal ,magazine or book.
Dr. Harmeet Kaur Lecturer GNIMT
This project Report
Of Amandeep kaur University Roll. No.(80103317102)
FUNDAMENTAL ANALYSIS OF BANKING INDUSTRY IN INDIA
Is approved And is acceptable in Quality and form
Dr. H S Singha Director GNIMT
Dr. Harmeet Kaur Lecturer GNIMT
Concentration, dedication, hard work & application are essential but not the only factors to achieve the desired goal. There must be supplemented by guidance, assistance and cooperative of people to make it a success. Every complete successful assignment is the result of many hands joined together. .I am highly indebted to Dr. Harmeet Kaur Lecturer of GNIMT Ludhiana, who gave me weighty guidance in the study. It was really nice experience to work in his guidance and helping me in knowing practical things, which was my main objective, before entering the corporate world. I sincerely thank Dr. (Col.) H.S. Singha (Director, GNIMT) who has given me an opportunity to show my skills and bag a great source of experience. It is warmth and efforts of my teachers, friends and well wishers who has been a source of strength and confidence for me in the endeavor. Finally, yet importantly, we would like to thank almighty for blessing me to do and complete this project. Through this acknowledgement I would like to grab the opportunity to thank all those, who helped me from the start of the project, to its end. It is
For convenience. in all sectors have been gaining paramount: importance. The variable for the study is the banks that are Allahabad Bank. The study brings the comparative efficiency of the selected banks.ABSTRACT Investment decisions . HDFC. and value in the market. growth. warranting the investors to be continuously cautious of risk and return involved in the same. I have broken them into separate articles. Dividend Payout Ratio.IDBI. Price to Earnings Ratio – P/E . They focus on earnings.Projected Earning Growth – PEG. Book Value. The Indian Banking sector has been witnessing bizarre changes in the terms of new product and services and stiff competition as well. Earnings per Share – EPS. Return on Equity. BOI. BOB. Price to Sales – P/S. Price to Book – P/B. Each article discusses related ratios. IOB. The sort of IPOs that have been taking place in banking sector amazing. SBI. PNB. BOB. The present study attempts to analyzing the profitability of the selected 10 banks. Axis Bank. 5 . These are the most popular tools of fundamental analysis.
Topic INTRODUCTION REVIEW OF LITERATURE RESEARCH METHODOLOGY RESULTS AND DISCUSSION SUMMARY REFERENCES APPENDIX VITAE Page 7-16 17 18-20 21-42 43-44 45 6 .CONTENTS Chapter 1. 2. 5. 4. 3. 6.
bottom up analysis and top down analysis. interest rates.CHAPTER:-1 INTRODUCTION Fundamental analysis of a business involves analyzing its financial statements and health. Even 'bad' companies' stock goes up and down. • Buy and hold investors believe that latching onto good businesses allows the investor's asset to grow with the business. and ignore the market. but with the goal of making financial forecasts. Contrarian investors distinguish "in the short run. and its competitors and markets. to evaluate its management and make internal business decisions. creating opportunities for profits. futures contract. to calculate its credit risk. Managers may use fundamental analysis to determine future growth rates for buying high priced growth stocks. When applied to futures and Forex. believing that 'it's hard to fall out of a ditch'. • • • • • • 7 . Managers may also include fundamental factors along with technical factors into computer models (quantitative analysis). The term is used to distinguish such analysis from other types of investment analysis. it focuses on the overall state of the economy. There are several possible objectives: • • • • to conduct a company stock valuation and predict its probable price evolution. Fundamental analysis allows you to make your own decision on value. Managers may use fundamental analysis to correctly value 'good' and 'bad' companies. When analyzing a stock. so they lower their risk and probability of wipe-out. earnings. Managers may also consider the economic cycle in determining whether conditions are 'right' to buy fundamentally suitable companies. Fundamental analysis lets them find 'good' companies. not a weighing machine". Use by different portfolio styles Investors may use fundamental analysis within different portfolio management styles. its management and competitive advantages. and management. Fundamental analysis is performed on historical and present data. or currency using fundamental analysis there are two basic approaches one can use. Value investors restrict their attention to under-valued companies. production. to make a projection on its business performance. The value comes from fundamental analysis. such as quantitative analysis and technical analysis. the market is a voting machine.
interest rates. and entry or exit from the industry. operating cash flow. The simple model commonly used is the Price/Earnings ratio. At some funds (called Quant Funds) the manager's decisions have been replaced by proprietary mathematical models Fundamental Analysis Tools 8 . The earnings estimates and growth rate projections published widely by Thomson Reuters and others can be considered either 'fundamental' (they are facts) or 'technical' (they are investor sentiment) based on your perception of their validity. along with the eventual sale price. It looks at dividends paid. It can be quickly assessed using the debt to equity ratio and the current ratio (current assets/current liabilities). the effects of competing products. productivity. or cash flows of the company. Growth estimates are incorporated into the PEG ratio but the math does not hold up to analysis. regardless of their industry/region. Computer modelling of stock prices has now replaced much of the subjective interpretation of fundamental data (along with technical data) in the industry. a new career has been invented. Since about year 2000. exchange rates. The foremost is the discounted cash flow model. The amount of debt is also a major consideration in determining a company's health. The determined growth rates (of income and cash) and risk levels (to determine the discount rate) are used in various valuation models. such as GDP growth rates. inflation. which calculates the present value of the future • • • dividends received by the investor. with the power of computers to crunch vast quantities of data. He narrows his search down to regional/industry analysis of total sales.Top-down and bottom-up Investors can use either a top-down or bottom-up approach. including both international and national economic indicators. foreign competition. Under Fundamental framework following three types of analysis is undertaken Procedures The analysis of a business' health starts with financial statement analysis that includes ratios. (Gordon model) earnings of the company. • The top-down investor starts his analysis with global economics. The multiple accepted is adjusted for expected growth (that is not built into the model). Its validity depends on the length of time you think the growth will continue. The bottom-up investor starts with specific businesses. Only then he narrows his search to the best business in that area. price levels. Implicit in this model of a perpetual annuity (Time value of money) is that the 'flip' of the P/E is the discount rate appropriate to the risk of the business. new equity issues and capital financing. and energy prices.
With large 9 . They focus on earnings. is the oldest Joint Stock bank in India. which. with some of its assets and liabilities being transferred to the Alliance Bank of Simla. growth. both of which are now defunct. and which survived until 1913. when it failed. however as you begin developing a picture of what you want in a stock. upon India's independence. which was established in 1863. which almost immediately became the Bank of Bengal. This was one of the three presidency banks. as did their successors. the other two being the Bank of Bombay and the Bank of Madras. The Allahabad Bank. these numbers will become benchmarks to measure the worth of potential investments. and the Bank of Hindustan. INDIAN BANKING INDUSTRY Banking in India originated in the last decades of the 18th century. Each article discusses related ratios. but it failed in 1848 as a consequence of the economic crisis of 1848-49. promoters opened banks to finance trading in Indian cotton. Indian merchants in Calcutta established the Union Bank in 1839. The oldest bank in existence in India is the State Bank of India. I have broken them into separate articles. For convenience. The three banks merged in 1921 to form the Imperial Bank of India. and value in the market. The first banks were The General Bank of India which started in 1786.These are the most popular tools of fundamental analysis. That honor belongs to the Bank of Upper India. which originated in the Bank of Calcutta in June 1806. For many years the Presidency banks acted as quasi-central banks. became the State Bank of India. all three of which were established under charters from the British East India Company. When the American Civil War stopped the supply of cotton to Lancashire from the Confederate States. • • • • • • • • • Earnings per Share – EPS Price to Earnings Ratio – P/E Projected Earning Growth – PEG Price to Sales – P/S Price to Book – P/B Dividend Payout Ratio Dividend Yield Book Value Return on Equity No single number from this list is a magic bullet that will give you a buy or sell recommendation by itself. established in 1865 and still functioning today. It was not the first though.
banking in India remained the exclusive domain of Europeans for next several decades until the beginning of the 20th century. The Swadeshi movement inspired local businessmen and political figures to found banks of and for the Indian community. A number of banks established then have survived to the present such as Bank of India. This segmentation let Lord Curzon to observe. and the social. followed. The next was the Punjab National Bank. It failed in 1958. Indian joint stock banks were generally under capitalized and lacked the experience and maturity to compete with the presidency and exchange banks. most of the banks opened in India during that period failed. The Bank of Bengal. HSBC established itself in Bengal in 1869. "In respect of banking it seems we are behind the times. the Indian economy was passing through a relative period of stability. Bank of Baroda. The Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860. particularly in Calcutta. divided by solid wooden bulkheads into separate and cumbersome compartments. industrial and other infrastructure had improved. All these banks operated in different segments of the economy. Foreign banks too started to arrive. and so became a banking center. From World War I to Independence The period during the First World War (1914-1918) through the end of the Second World War (1939-1945). Indians had established small banks. and it took its toll with banks simply collapsing despite the Indian economy gaining indirect boost due to war-related economic activities. The exchange banks. The fervour of Swadeshi movement lead to establishing of many private banks in Dakshina Kannada and Udupi district which were unified earlier and known by the name South Canara ( South Kanara ) district. The presidency banks dominated banking in India but there were also some exchange banks and a number of Indian joint stock banks. Hence undivided Dakshina Kannada district is known as "Cradle of Indian Banking"." The period between 1906 and 1911. The depositors lost money and lost interest in keeping deposits with banks. Four nationalised banks started in this district and also a leading private sector bank. Subsequently. concentrated on financing foreign trade. Around the turn of the 20th Century. established in 1881 in Faizabad. Around five decades had elapsed since the Indian Mutiny. Calcutta was the most active trading port in India. which has survived to the present and is now one of the largest banks in India. branches in Madras and Pondichery. mainly due to the trade of the British Empire. established in Lahore in 1895.exposure to speculative ventures. which later became the State Bank of India. mostly owned by Europeans. and another in Bombay in 1862. most of which served particular ethnic and religious communities. Canara Bank and Central Bank of India. We are like some old fashioned sailing ship. The years of the First World War were turbulent. and two years thereafter until the independence of India were challenging for Indian banking. At least 94 banks in India failed between 1913 and 1918 as indicated in the following table: 10 . then a French colony. The first entirely Indian joint stock bank was the Oudh Commercial Bank. Corporation Bank. Indian Bank. saw the establishment of banks inspired by the Swadeshi movement. in the 1860s.
1949 can be broadly classified into two major categories. 11 . Since then the number of scheduled commercial banks increased four-fold and the number of bank branches increased eight-fold. This resulted into greater involvement of the state in different segments of the economy including banking and finance. Lakhs) 35 109 5 4 25 1 Post-independence The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal. These banks have over 67. In terms of ownership. commercial banks can be further grouped into nationalized banks.Years 1913 1914 1915 1916 1917 1918 Number of banks that Authorized failed capital (Rs. Every bank had to earmark a minimum percentage of their loan portfolio to sectors identified as “priority sectors”. This in turn resulted in a significant growth in the geographical coverage of banks. The first phase of financial reforms resulted in the nationalization of 14 major banks in 1969 and resulted in a shift from Class banking to Mass banking. The manufacturing sector also grew during the 1970s in protected environs and the banking sector was a critical source. and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. regional rural banks and private sector banks (the old/ new domestic and foreign). The next wave of reforms saw the nationalization of 6 more commercial banks in 1980. paralyzing banking activities for months. which is governed by the Banking Regulation Act of India. Lakhs) 12 274 42 710 11 56 13 231 9 76 7 209 Paid-up Capital (Rs. • • non-scheduled banks and scheduled banks. the State Bank of India and its group banks. The Indian Banking industry. India's independence marked the end of a regime of the Laissez-faire for the Indian banking. Scheduled banks comprise commercial banks and the co-operative banks. The Government of India initiated measures to play an active role in the economic life of the nation.000 branches spread across the country.
following economic reform from the socialist-inspired economy of post-independence India. The new private sector banks first made their appearance after the guidelines permitting them were issued in January 1993. In the 21st century.7 percent. Eight new private sector banks are presently in operation.85 percent respectively in credit during the year 2000.2% and 6. India is an emerging economic power with vast human and 12 .5% respectively BANKING STRUCTURE IN INDIA INDIAN ECONOMY The economy of India is the twelfth largest economy in the world by nominal value and the fourth largest by purchasing power parity (PPP). According to a report by ICRA Limited.14 percent and 12.9 percent and 12. In the 1990s. They have a combined network of over 53. The 20 nationalized banks accounted for 53.2 percent respectively in deposits and 8. The share of foreign banks (numbering 42). These banks due to their late start have access to state-ofthe-art technology.5 percent of credit during the same period. a rating agency. the Public Sector Banks (PSB) s found it extremely difficult to compete with the new private sector banks and the foreign banks.000 branches and 17.After the second phase of financial sector reforms and liberalization of the sector in the early nineties.2 percent of the deposits and 47. regional rural banks and other scheduled commercial banks accounted for 5. which in turn helps them to save on manpower costs and provide better services. 3. as markets opened for international competition and investment.27 public sector banks (that is with the Government of India holding a stake). Currently. 3. the State Bank Of India (SBI) and its 7 associates accounted for a 25 percent share in deposits and 28. 31 private banks (these do not have government stake.41 percent. the public sector banks hold over 75 percent of total assets of the banking industry.000 ATMs. During the year 2000. with the private and foreign banks holding 18.1 percent share in credit. India has 96 scheduled commercial banks (SCBs) . they may be publicly listed and traded on stock exchanges) and 38 foreign banks. the country began to experience rapid economic growth.
India's per capita income (nominal) is $1032. India was under social democratic-based policies from 1947 to 1991. 40% of children under the age of three are underweight and a third of all men and women suffer from chronic energy deficiency. India's total merchandise trade (counting exports and imports) was valued at $294 billion in 2006 and India's services trade inclusive of export and import was $143 billion. Thus. cotton. India's trade has grown fast. India's large service industry accounts for 62. tea. sugarcane. mining. The labor force totals half a billion workers. jute. accounting for about 52% of employment. Even though the arrival of Green Revolution brought end to famines in India. According to the World Trade Statistics of the WTO in 2006. India continues to face many major problems. The service sector makes up a further 34%.5% respectively. and a huge knowledge base. sheep. up by a record 72% from a level of $253 billion in 2004. wheat. The recent economic development has widened the economic inequality across the country. petroleum. India currently accounts for 1. protectionism. food processing. cattle.932 is ranked 128th. OBJECTIVES OF THE STUDY • To take investment Decisions cautiously after studying risks involved in the same. transportation equipment. ranked 139th in the world. Major agricultural products include rice. leading to pervasive corruption and slow growth.6% of the country's GDP while the industrial and agricultural sector contribute 20% and 17. However. Since 1991. Major industries include telecommunications. and public ownership. continuing economic liberalisation has moved the economy towards a market-based system. information technology enabled services and software. steel. oilseed. the year 2009 saw a significant slowdown in India's official GDP growth rate to 6. goats. Despite sustained high economic growth rate.5% of World trade as of 2007 according to the WTO. India will be among the leading economies of the world. Previously a closed economy. India's trade has reached a still relatively moderate share 24% of GDP in 2006. while its per capita (PPP) of US$2. Agriculture is the predominant occupation in India. up from 6% in 1985. cement. 13 . textiles. chemicals. water buffalo.1% as well as the return of a large projected fiscal deficit of 10. India's global economic engagement in 2006 covering both merchandise and services trade was of the order of $437 billion.3% of GDP which would be among the highest in the world. The economy was characterised by extensive regulation. India had established itself as the world's second-fastest growing major economy. potatoes. poultry and fish. and industrial sector around 14%.natural resources. By 2008. approximately 80% of its population lives on less than $2 a day (PPP). machinery. A revival of economic reforms and better economic policy in 2000s accelerated India's economic growth rate. Economists predict that by 2020. Despite robust economic growth.
CHAPTER:-2 14 . To know the soundness and Resilient of the Indian Banking Sector.• • • • • To acquire practical exposure of financial analysis of an enterprise. To know the Growth Trends of the selected Banks. To study the crucial Role of Banks in India’s Economic Development. To analyze the profitability position of the sample Banks.
Senior Research Analyst from SHAN Stockbroking’s Research Department provides some briefs pointers on what information to look for and how to make sense of what is available. The objective was to identify companies that may be considered undervalued in the market with a view to investing when the time is right . Finnie G. “Share Market Analysis-Fundamental vs Technical Analysis”’. which reveals that in recent times. “A Review of Fundamental Analysis Research in Accounting. It also helps the researchers to update the past data. They verified its descriptive validity regarding the mapping of accounting numbers into stock prices. if any in the researches. This study Examined that fundamental analysis looks at the fundamental issues that drive the value of the particular company. This article explains the difference between the fundamental and technical analysis. Jim Berg outlined more about what Fundamental analysis is and how it could be used. Thus the review in the present study consist of the ones discussed below and they reveal that there are very scant studies in India emphasizing on the fundamental analysis of banking sector. data sources and results and identify the gaps.“Enhancing Security Selection in the Australian Stock Market Using Fundamental Analysis and Neural Network”. its industry sector and the current economic environment. This paper also examines the practice of fundamental analysis and demonstrates how neural networks can be practically employed to enhance the fundamentalist selection process. in this study. an accounting-based expression for a firm’s equity value has been developed into a rich theoretical framework. and Tan C. Jon Lynch conducted a study. the most common methods adoped to conduct research on the performance of stock market. First. These issues include its financial position.REVIEW OF LITERATURE Literature review is a study involving a collection of literature in a selected area of research in which the researcher has limited experiences. This paper identified three major issues associated with practical implementation of the model. In this study John Colnan (1994). Jim Burg(1999) Conducted a study – “Fundamental Analysis Using Internet”. Mark P.” This paper has outlined the development of fundamental valuation model and reviewed related empirical work. This has been possible through the vast amount of information on the Australian stock market. This paper Examines Financial trading from the aspect of security selection. the prediction of future profitability.Bauman (1996) conducted a study named. which is being conducted by private individuals. 15 . (2004) conducted a study entitled.Vanstone B. and the determination of the appropriate discount rate. there has been a bigger push towards stock market research. and critical examination and comparison of them to have a better understanding. now available online to any subscriber. the length of appropriate forecast horizon.
SBI. 3.3 SAMPLING PLAN A finite sample size of Ten Banks listed on the BSE. 3. PNB. BOI. Bank of Baroda.Bankex) has been selected for the purpose of the study.IDBI. ICICI. balance sheets published by the companies and the websites of the companies. The major data of the economy has been collected from the Magazines and newspapers.4 DATA ANALYSIS TECHNIQUE Ratio analysis: Ratios have been calculated for the past five years for the purpose of analysis. of Outstanding Equity Shares 16 .1 RESEARCH DESIGN The present study adopts an analytical and descriptive research design. HDFC.2 DATA COLLECTION METHODS The data has been collected from annual reports. 3. Axis Bank. The data of the sample companies (for a period of five years from 2005 to 2009) has been collected from the annual reports and the balance sheet published by the companies and the websites of the companies. The variables used in the analysis of the data are Earning Per Share (EPS) Operating Profit Margin (OPM) Net Profit Margin (NPM) Debt Equity Ratio (DER) Return On Equity (ROE) Price Earning Ratio (PER) Return On Assets (ROA) Earnings Per Share = Prifit After Tax – Preference Dividends No. IOB. That are Allahabad bank.CHAPTER:-3 RESEARCH METHODOLOGY 3.
Net Profit Margin = Profit After Tax * 100 Net Sales Debt Equity Ratio = Total Debt(Long term + Short term) Equity (Equity + Preference) Or Total Debt Net Worth Return On Equity = Profit After Tax – Preference Dividends * 100 Paid – Up Equity Capital + Reserves Or ROE = Worth Net Profit Margin*Total Asset Turnover Ratio*Total Assets to Net Dividend Payout Ratio = Earning Per Share Dividends Per Share Return On Assets = Earnings after Taxes and Preferred Dividends * 100 Total Assets 3.5 LIMITATIONS OF THE STUDY Some limitations of the study are as follows it can be due to any reason: • • Absence of Standard universally Accepted Termology. 17 . Incorrect information or the incomplete information is also the limitation of the study because sometime companies does not provide the right information.
• • • • • • • Different methods are adopted by the different persons while analyzing the particular company or industry so Biasness is there in the result. The present study adopts an analytical and descriptive research design. 18 . The study is not providing the fair knowledge about the investment and the risk involved in the same. In the study only few tools that the ratios are used on the basis of only that ratios one cannot judge the profitability or the efficiency of the companies or the industry. The study may not include all the factors that are important for the analysis. Study does not baste on the facts it is just baste on the figures that can’t be true. That is also one of the limitations. Study is purely based upon the past performance of the companies and Indusry that can be misunderstood.
655 31.024 22.4.266 Real GDP growth (%) 4. FDI. Table no. In this section we undertake an objective analysis of the economy.672 41.4 Nominal GDP (US$431 5. The trend shows that there is a growth in the communication sector as compare to the other that are declining in the year 2008-09.811 24.CHAPTER:-4 ANALYSIS AND DISCUSSIONS ANALYSIS OF INDIAN ECONOMY The analysis of the economy is a very difficult task there are many factors that effects the indian economy that can be Inflation. Understanding the Indian economy is more difficult than it ever was. Per capita income. sectoral growth that can be in the Agriculture.5 514 19 7. Analysis of Indian Economy Base Year: 1999-00 = FY01 FY02 FY03 FY04 FY05 100 Nominal GDP (Rs bn) 21.0 602 9. communication or Manufacturing etc. National Income. The material is sourced legaly from the RBI.581 27. in this study the Inflation and GDP are taken as a base for the analysis.8 456 3.8 473 8.1 Source: CSO data on components of GDP (2004-05 base year) As shown in the table the combination of the Agriculture.5 552 FY06 FY07 35. communication and Manufacturing.257 9. GDP.4 911 . It provides the various inputs on economic conditions of the country. Ministry of Finance and the Centre for Monitoring the Indian Economy (CMIE).
1 8.2 20.4 28.1 9.6 9.9 5.2 4.8 26.2 2.4 52.6 27.3 5.9 11 Inflation Annual Averages (%) FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 Wholesale Price Index All Commodities 12.6 Consumer Price Index 20 .6 8.4 3.0 2.5 19.9 4.0 23.0 9.7 3.375 2.8 9. US$ bn) 434 436 488 533 579 819 - 2.7 Sectoral composition of GDP (%) Agriculture and allied 23.7 Fuel.8 2.9 and Lubricants Manufactured Products 10.7 9.3 27.4 2.6 6.420 2.2 25.7 activities Industry Services 26.2 6.3 13.2 7.6 51.0 26.0 7.3 2.4 4.7 5.3 5.7 6. Light 8.0 1.5 8.bn) Per capita GDP (US$) 438 GDP (PPP.4 10.2 18.2 -7.3 50. 2.1 12.773 2.5 0.4 3.930 - Per capita GNP (PPP.1 2.840 US$) Pvt Consumption growth Final Expdt7.7 10.7 3.7 54.4 4.4 5.9 10.0 6.7 8.7 Value added at constant prices (%) Agriculture Industry Services -0.3 7.1 Primary Articles 15.8 3.6 2.1 3.3 53.9 3.6 6.7 12.730 2.6 21.580 2.2 2.3 1.9 9.3 5.4 2.1 7.9 8.7 52.2 6.574 2.2 8.4 10.6 27.7 5.6 54.3 4.1 17. Power.9 3.7 7.5 3.4 8.7 10.5 9.9 12.
5 General Index 9.40 INR the USD. information technology and other significant areas such as auto components.3 4.3 10.3 6. and 68.4 4.7 Currency The Indian rupee is the only legal tender accepted in India.9 2.1 3.3 1.8 4.General Index (1982=100) Agricultural/Rural 12.4 .7 3.4 3.1 3. In March 2005.7 9.4 3.8 3. The Rupee hit a record low during early 2009 on account of global recession. FDI inflows into India reached a record $19.4 11.2 3.8 4.19 to a GBP. due to a strong domestic market.45 to a EUR. India has strengths in telecommunication. This was more than 21 . according to the government's Secretariat for Industrial Assistance.3 4. chemicals. apparels. the government amended the rules to allow 100 per cent FDI in the construction business.5 billion in fiscal year 2006-07 (April-March).9 3.93 to a British Pound. The exchange rate as on 23 March 2010 is 45.50 to a United states dollar and on 10 January 2010 as high as Rupee 73.0 3. and jewellery.1 3.0 9. India is a preferred destination for foreign direct investments (FDI).5 5.Industrial Workers 10. On 11 January 2010 Rupee went as high as 45. pharmaceuticals.6 5.0 4.4 -0.0 10. India managed to bounce back sooner than the western countries. A rising rupee also prompted Government of India to buy 200 tonnes of Gold from IMF. India's recently liberalized FDI policy (2005) allows up to a 100% FDI stake in ventures.1 Labourers (1986-87=100) Urban Non Manual Employees -9.6 4.8 13.9 11. Since September 2009 there has been a constant appreciation in Rupee versus most Tier 1 currencies.5 9.0 6. 61. Foreign direct investment in India As the fourth-largest economy in the world in PPP terms. However.
1% in 1981. behind US and China. but is still even more than the 73. which is around 20 rupees or $0.2009) 22 . By 2035.O.6% of the population lives on less than $2 a day (PPP). literacy rates and food security.double the total of US$7. the economy has grown constantly. Goldman Sachs predicted that India's GDP in current prices will overtake France and Italy by 2020.6% of its population is living below the new international poverty line of $1. it was projected to be the third largest economy of the world.0% in Sub-Saharan Africa. around $0. down from 92.30 billion (31Dec. UK and Russia by 2025 and Japan by 2035. This has been accompanied by increases in life expectancy. • • Interpretation: Since 1990 India has emerged as one of the fastest-growing economies in the developing world.25 in nominal terms) a day in 2005.3% of the population earned less than $1 (PPP. during this period. 41. it has been raised to investment level in 2007 by S&P and Moody's. In 2009 India purchased 200 Tons of Gold for $6. As of 2005: • • 85. This is much higher than the 80.2010 was 9. Exports $155 billion F. it is expected to be above $35 billion.B (2009) FDI stock $156.89% which is rising day by day. In 2003. Inflation as on Feb.B (2009) Imports $232.242 trillion which shows the growth at 67%.8% in 1981.4 a month).O. The World Bank further estimates that a third of the global poor now reside in India. 24. Germany. Income and consumption Percentage of population living under the poverty line of $1 (PPP) a day.5% in Sub-Saharan Africa.8bn in the previous fiscal year. While the credit rating of India was hit by its nuclear tests in 1998.35 rupees a month in rural areas (around $7. It was down from 86. 75. The FDI inflow for 2007-08 has been reported as $24 billion and for 2008-09.5 a day in nominal terms.6%. down from 42. currently 356.5% in 1981.25 (PPP) per day.7% of the population lives on less than $2. down from 59. but with a few major setbacks.50 (PPP) a day.3 billion F. GDP in 2009 was $1.7 Billion from IMF as a total role reversal from 1991.
The study is based upon the analysis of the Indian banking industry. As we approach the 225th anniversary of the Country. The opportunities for this Industry are amazing and progress that will hopefully be made should invigate our country and others during this new Millennium. For this study the performance of the Scheduled Commercial Banks is analyzed. Infrastructure Development of SCBs in India Indicators No.of banks Total branches [a]urban branches [b]rural branches Population June1969 89 8262 3108 5154 64 June1979 75 30202 9024 21178 21 June1989 78 57699 13519 44281 14 March1999 301 64939 17914 47025 15 March2006 222 69417 23271 46146 16 March2007 -----73836 26792 47044 ----- 23 . present and future of the Banking Industry has outlined. In this Industry Analysis. The US and other economies are growing and technology has changes how business is conducted.INDUSTRY ANALYSIS Industry analysis involves the analysis of different growth opportunities in the economy in relative to the other industries. the past. our Nations financial industry has never seen a time such as this.
Indian banking Industry has done remarkably well in developing its Infrastructure Total Credits and Deposits of SCBs Indicators Total deposits Demand deposits Time deposits Total Credits Credit / deposit ratio Deposit per capita(in rs.68 Infrastructure Development The number of SCB’s has increase from 89 in 1969 to 301 in 1999.68 crore in 2007.71 29. Interpretation 24 .44 Table no.2 10.3 364640 1744409 1507077 70.88 72.There has been an increase in the urban as well as rural Branches from 3108 and 5154 in 1969 to 26792 and 47044 in 2007 respectively.39 28093 33225 Source: Money and Banking Centre for Monitoring Indian Economy. 35.1 19069 429731 2182203 1947100 73.94 23279 524310 523085 2672630 3311025 2417006 --73.80 35.4. This table reveals that the deposits per office has increased from 2.32 1788 117423 604780 368837 51.5 ------19116 65.1 7264 Table no.per office Deposite per office Interpretation --- --- 2.4.But in later years the number of SCB’s has decreased due to the merger and acquisition taking place in the banking system.44 crore in june 1989 to Rs.) June1969 June1979 June1989 March1999 March2006 March2007 March March 2008 2009 4646 28671 147854 722203 2109049 2611933 3196939 3834110 2104 2542 3599 77.87 417 ----89080 60. The population per office has coe down from 64 in 1969 to 2006.
542crore to Rs.3.4. Crore) %Share of Rural Credit Total Credit June1969 55 1.37 2417006 89361 382425 Table no. Demand deposits of SCB’s have increased from Rs.3085crore in 2009. The growth of time deposits in absolute term has been more than demand deposits. Rural Credit by SCBs Indicators Rural credit (Rs.4 19822 June1989 14553 16.3. 3609crore and Rs.37% in same period.5% to 13. Rural credit has however decreased from 16. 24.This table shows that the analytical results of the credit and deposits by SCBs operating in INDIA.11 1947099 13. 33. 2.5 to 72. 24. 25 . 52. Deposits per capita has increased from Rs. 4. been significant over the period under study.006crore and Rs.39 during the same period.33.006crore in 2008.17.599crore in 1969 to Rs.11.37. Total credits of SCBs has increased from Rs.1 13.17crore in 1969 to Rs.133crore in March 2008 respectively.17 1513842 12. time deposits of banks have increased from Rs. However .4 Source: Money and Banking Centre for Monitoring Indian Economy various issues.5 3609 June1979 1661 8.225crore.While credit deposits ratio has decreased from 77.2 March1999 March2006 March2007 March2008 53909 199423 235704 323133 14. Interpretation The credit as well as rural credit has increased from Rs. 55crore in June 1969 to Rs.025crore in same period. The growth of the credit and deposits has therefore. The proportion of rural credit to Total Credit has also increased from 1.17.2 in 1989 to the present level of 13.23.
In Crore) Gross NPA(%) Net NPA(Rs.90 17. sector to deposit ratio (%) Credit/ GDP ratio (in %) June 1971 23.51 22.51 June 1989 25.4.91 51.42 30.23 March 2007 29.07 % and 10.39 March 1999 31.6 2009 67.78 23.07 June 1979 24.99 March 2009 30.71 March 2008 29.14 10.497 2.10 54.4.90 % in June 1971 to 30. Securities to deposit ratio as % to GDP ratios are important indicators of growth of banking industry.26 % in March 2009 respectively. The Composition of NPAs of Scheduled Commercial Banks.66 56.891 Table no.26 Table no.Ratio as % of GDP and Investment in Government Security to Total Deposits Indicators Investment in govt.82 45.26 March 2006 33. Interpretation Investment in Govt.924 Source: The Economic Challanger Pp14 26 .14 % and 56. In Crore) 1998 48.306 14. Both ratios have increased from 23.013 2008 55.39 24.842 2.62 22. Item Gross NPA (Rs.5 Source: Money and Banking Centre for Monitoring Indian Economy various issues.
Interpretation The table shows the compositions of INDIAN BANKING INDUSTRY.Pp360. for India and China.78 % in 1998 to 2.0 2004 0.6 2007 1.7 0.Reserve Bank Of India and banks themselves have resulted in making the indian banking sector not only sound enough but also resilient enough to face challenges produce both by internationel finacial system as well as the indion economic developments.6 0. Interpretation This table shows the banking profitability as returns on assets . But in term of ratio the gross NPA has decreased from 14.3 1.1 0.924crore in 2009 respectively.sustained efforts by the governtment.and particulrarly during the last decade.That is why the banking system in the India remained largely unaffected by the globel financial crisis which had forced the developed countries like USA and UK to bailout banks with large sovereignsupport.8 2003 0.5 1.9 2006 0. Stress test findings for Indian banks by the RBI proved’a strong resilience of the finacial system in the face of the severe externel contagion from the globel finacial crisis. 27 .4.42 % in 2009.all the Indian scheduled commercial banks had migrated to the simpler approaches available under the Basel 2nd framework.497crore and 30.9 Table no.1 2005 0. Banking Profitability:(Return of assets) (As Percentage) Country China India 2002 0.0 0.It is a measure of great achievement for the RBI that as at end – march 2009.306crore and 23. The gross and net NPAs of Indian banks have increase from 48.013crore in 1998 to 67. The table shows that the ROA ratio of INDIAN BANKING INDUSTRY has always been more than that for China. There is adequate evidence to show that over a period.7 Source: Indian Journal of Finance.
there are 4 local area banks.062 of the State Bank Group . 75. The financial sector in India has seven major components: Commercial banks. There were 64.376 were of nationalized banks.9% in total assets.5%.Banking Segment in the Indian Financial System: Notwithstanding significant expansion of the capital market over a period particularly during the last two decades. 76. Besides . Development Financial Institution (DFIs) and the Insurance sector. In total there were 43. rural financial institutions.6% in total deposits.204 of new private sector banks and 293 of the foreign bamks.9% in total investment of SCBs. The Ratio of assets of SCBs to GDP was 98. Bank Deposit as a proportion of GDP wasn56% from 29% in the end of March 2000. • • • • 28 . 19 nationalised banks and the IDBI Bank Limited).4673 of old private sector banks. Urban Co-operative Banks (UCBs).3% in total advances and 69. Together with Co-Operative banks. 16.608 bank branches of which 39.651 ATMs which constituted of Branches of SCBs. bank intermediation continues to dominate the financial system. Public Sector Banks (PSBs) share was 71. 86 RRBs. Housing Finance Companies(HFCs). 7 new private sector banks and 31 foreign banks. At the end March 2009 • Scheduled Commercial Banks (SCBs) comprised 27 public sector banks(State Bank of India and its 6 associates. the banking sector accounts for nearly 70% of the total assets of Indian financial institutions. and 1721 UCBs.NonBanking Financial Companies(NBFCs). Commercial Banks accounts for around 60% of the total assets of the financial sector. 4.
2 11.2 10.4 11.3 12.1 2001 2009 29 .Soundness indicator of select bank groups: 2001 and 2009 (end March) Soundness Indicators Capital Adequacy: CRAR (capital to Risk Weighted Asset Ratio) All scheduled commercial banks(SCBs) Public Sector Banks(PSBs) National Banks New Private Sector Banks(NPSBs) Non Performing Assets(NPAs)NNPA(Net NPA to Net Advances Ratio) SCBs 6.5 13.2 12.20 1.1 15.1 11.
0 INTERPRETATION Capital Adequacy and asset quality of Indian banks.5 2.3 2.0% . Subsequently it was more than 13.3% during the decade.8 2.4. the two crucial parameters reflecting the soundness of the Banking institutions.3 11.7 1. Leverage ratio for Indian banks risen from about 4.61* .40 12. CAPITAL ADEQUACY: The overall Capital to Risk weighted Assets Ratio (CRAR) for all the Scheduled Commercial Banks has increased to 13.8 2.2% to 12.1% in March 2001 to reach a level of 6. have shown a significant improvement during the last dacade in Particular.75 1.PSBs Nationalised Banks NPSBs Gross NPAs( GrossNPA to Gross Advances Ratio) SCBs PSBs Nationalised Banks NPSBs Operational Efficiency (Operating expenses to Assets Ratio) SCBs PSBs Nationalised Banks NPSBs Profitability Return On Equity(ROE) Return On Assets(ROA) *Low due to VRS payments by PSBs. For PSBs also the CRAR has also increased from 11.2 9.10 2.4% as at end March 2001. Table no.16 5.72 2.7 1.5 1.8 6.64 2.50 13.3 1.40 12.76 1. ASSET QUALITY: The most significant improvement indicating enhanced soundness of theIndian Banking System has been a sharp fall in the ratio of non performing assets (NPA) 30 .01 3.3% by March 2009.10 0.7 0.70 7.0 1.2% at the end March 2009 from 11.
Thus the intermediation cost ratio for SCBs has fallen to 1. supervisory andprecautionary measures taken by the banking system. is used as an alternative measure of profitability reflecting efficiency with which capital is being uesd by bank. it is important to note that even against a close possibility of significantslippage in NPAs as a consequence to international financial turmoil. For SCBs the NNPA ratio reduced to 1.5% in 2007-08 despite the pressure on profitability owing to external circumstances. Benchmarking of Indian Banking Sector: Country 1 India Return Assetss 2 1.02% at end March 2009.6* 6.to Gross advances. the slippage for Indian banks during the year 2008-2009 was moderate when compared to the problem faced by banks all over the World.March 2009 from 6.1% as at end. using the data envelopment analysis (DEA) has shown that there has been a significant improvement in efficiency levels across the bank groups since the initiation of reforms.3 % at end March 2009.64 as at end March 2001.5% only during the decade.72% to 1.8% as at the end March 2009 from 2. INTERNATIONAL BANKING TURMOIL AND INDIAN BANKING Owing to some important regulatory.2% during 2008-09 from 12. Finally. the Indian Banks could be insulated from the international banking and financial crises. For PSBs also the reduction in the gross NPA ratio in sharp from 12. EFFICIENCY: Operational efficiency of the Indian banking system as reflected by the ratio of operating expenses to total assets(intermediation cost ratio) has been consistently improving particularly for the PSBs.0% during the decade.0* on Gross NPL to CRAR Gross Advances 3 4 2. The ROE of SCBs increased to 13. Finally. The gross NPA ratio for SCBs touched an all time low at 2. For PSBs also the decline is from 2.2% at end March 2001. a study in an RBI Report (Report on Currency and finace: 2006-08). COMMERCIAL SOUNDNESS: Return on Assets(ROA): The commercial soundness of Banking Systemgets reflected from the ROA which was 1.4% to 2. ROE defined as the ratio of net after tax to total equity capital.0* 31 Provision to Capital NPL Assets 5 6 52.4** to .3* 13.0% at the end 2008 and 1.
China UK Germany 1* -0. Source: Trend and Progress in Indian Banking 2008-09(RBI 2009) An Overall Assesment A comprehencive self assessment of India’s Banking Sector by the Committee of Financial Sector Assessment (CFSA) in its report jointly prepared and released by the Government of India and RBI in March 2009.6* 2.55 27.75 28.9** 134.5* 0.41 83.64 28.70 11.79 27.4 4.96 2006 15.9 12.39 45.3 54. Earning per Share Allahabad Axis year bank Bank SBI HDFC ICICI IDBI BOB BOI PNB IOB 2005 15.5* *: Data Pertains to 2008.22 6. IMF.81 17.73 35.08 6. October 2009.63 11.7* 5. ^: Data Pertain to 2006. allowing for vital comparisons that are not possible when dealing with a single number.0* 12.” CHAPTER:-4 Company Analysis Financial ratio analysis provide for last 5-years plus most recent quarter in depth financial analysis.6^ 56. earnings and efficiency indicators.55 7.3** 1.36 23.7** Table no.9* 12. Note: Data Pertains to 2009. **: Data Pertains to 2007. Based on : Global Financial Stability report.8 1. asset liquidity.83 14.4. The insight gained through financial analysis of multi year financial ratios will assist in gaining vital understanding of any given company or industry.83 81.56 14.98 44.38 32 .4 4. found that: “Banks have shown a healthy growth rate and an improvement in performance as is evident from capital adequacy.
A company with an erratic profitability record is perceived to have a higher degree of business.39 9.86 15. and other banks.87 52.99 60.77 34.74 6.57 143.55 14.76 8.06 11.01 10. 11.4 86. PNB. Allahabad Bank. 9.77 5.21% ) .30 8.94 106.82 32.23 10.2007 2008 2009 Average 16.32 9.13 27.21 15. 13.78 8.04 38.77 in 2005.82 10.21 Interpretation Investors or Analysts are primarily interested in the profitability and the Leverage position of the company. 14.84 10.77%.08% respectively.07 11.67 17. but in average we can conclude that IOB .22 11.54 Table no. the NPM of Indian Overseas bank is 14. BOB.76 11.Allahabad bank and HDFC are the most efficient companies in controlling indirect expenses in comparison to others. The highest NPM of HDFC is 17. Allahabad Bank(14% ).56 17.46 14.4.56 50.18 39.31 14.31 12.59 37.47 10.44 14.87 14 13.43 13.97 24.96 12.51 7.08 13. IOB.07 97.39 18.54% the highest followed by HDFC(14.94 36. IDBI and BOI are 16. Net Profit Margin(%) Year 2005 2006 2007 2008 2009 Average Allahabad Axis bank Bank SBI HDFC ICICI IDBI BOB BOI PNB IOB 15. 15.3%.82 18.18 13.26 48.34 40.7 10.12 13.4 1 43. The EPS Show the profitability of the company.33%.51 64.31 14. Axis bank.38 13.47 11.23 Interpretation Net Profit Margin indicates how much a company is able to earn after accounting for all the indirect expenses to every rupee of revenue.84 14.68 13.92 13.22 10. which of ICICI.39% and 5.29 44.56%.79 10. 14.82 17.57 10.48 12. SBI.29 29.69 12.32%.63 100.81 8.89 13.53 16.81 13.94 9.30 8.65 12. 9.21 23.14 23. The measure of EPS can be analyzed that the SBI is having the higher profitability because the EPS is higher than from all other companies/ banks.85 28. The data in the table reveals that HDFC outperformed other banks in terms of net profit margin.65 12.27%. 33 .45 26.2 5 Table no.12 8.79 21.31%.03 11. IDBI is having the lowest NPM among the sample banks with 8. In 2009 BOI is having the highest NPM and PNB is having the 2nd highest.21 12.71 12.27 16. On average basis .94 22.41 61.77 16.26 57.4.74 10.35 9.33 11.63 14.50 16.84%.37 33.
99 0.40 Table no.11 Average 1.33 60.86 0.72 0.12 124.18 2009 0.44 77.47 71. BOB.42 1.89 57.87 89.19 69.22 0.35 100.63 0.24 Allahabad Axis Year bank Bank SBI HDFC ICICI IDBI BOB BOI PNB IOB 2005 1.03 0.51 75.63 0.80 1.21 73.60 70.13 1.07 1.57 0.79 87.66% in 2005 and 1.36 1.39 69.28 0.23 2008 1.93 1.73 87.97 68.93 0.98 0.99 1.44 65.67 68.52% in 2006 and 2007.19 1.85 65.08 83.11 73.52 1.88 65.50% in 2009.79 52. year 2005 2006 2007 2008 2009 Average Allahabad bank 50.36 65.55 72.36% in the year 2005 and IDBI of .90 0. The data in the Table indicate that BOI registered the lowest ROA of .62 0.13 140.99 0.72 72.98 1.64 91.85 1.34 1.51 74.60 65.22 73.89 1.20 1.51 0.94 68.52 0. Thus HDFC and IOB are more efficient in generating yield over assets and hence their overall efficiency is better than other sample companies.20 59. The average ROA of HDFC is highest among the other banks.95 1. IOB is having the 1.17 65.04 65.79 0.04 0.40 52.23% and Allahabad Bank is having 1.12 1.29 2006 1.11% after the HDFC.71 0.Return on Assets(ROA): Return on Assets measures the overall efficiency of the capital invested in business.57 SBI 52.77 0.78 63. While that of IDBI.71 34 .4.55 62.27 68.47 PNB 56.90 1.01 0.99 66.27 IOB 53.assets created by Banks from the deposits received.79 166.4. Credit Deposit Ratio: This ratio indicate the performance of loan.95 1.90 0. It indicate what the yield is for every rupee invested in assets.18 0.10 238.66 1.99 70.48 BOI 67.26 IDBI 73.94 1.97 70.12 HDFC ICICI 64. BOI.23 Interpretation Among all the Ten Banks.30 62.15 Axis Bank 47.79 1. HDFC has achieved the highest yield of 1.83 0.98 0.50 0.26 1.52 56.28 84. Table no.35 65.32 2007 1.49 BOB 51.23 0.08 63.59 66.80 1.11 0. Axis Bank and SBI are bit lower.04 1.15 70.83 65.20 0. The amount of the bank loans divided by the amounts of its deposits at any given time.11 0.
35 14.05 14.46 13.79.86 13.44 20.97 13.42 Table no.53 7.96 16.78 14.52 11.18 13.30 17. Debt Equity Ratio: This ratio indicate a measure of a Company Financial Leverage.08 11.98 2.27 Interpretation Debt Equity Ratio helps in assessing the financial risk of a firm. which are generally more costly than most type of the deposits. It means BOI is more relying on the borrowed funds.44 17.17 15.91 18.33 13. On the average IDBI is having the highest ratio it means it is relying on the borrowed funds.76 5.50 6.10 14.62 9. Table shows that In 2006 IDBI is having the highest ratio that is 238.77 17.34 9.45 4. This ratio indicate what proportion of equity and debt company is using to finance its assets.92 10.71 13.81 9.27 10.46 13.18 13.04 7.99 10.00 15.75 10.19 16. Table shows that BOI is having the highest DER as 20.96 8.75 13.74 13.54 13.25 8.Interpretation This ratio based on that higher the ratio the more the Bank is relying on borrowed funds.85 14. which are generally more Costly than most type of the deposits.28 13.14 18. A company with the high Debt-Equity Ratio that mean the bank is more relying on borrowed funds.4.33 13.65 9. Axis Bank is having least ratio which represents that it is not more relying on the borrowed funds. CHAPTER:-5 FINDINGS 35 .49 12.42 15.92 7.54 6.75 4. calculated by dividing its total liabilities by S/H equity.58 14.94 19.86% in 2007 and on average it is also having the highest DER as compare to other banks.99 16. Year 2005 2006 2007 2008 2009 Average Allahabad Axis bank Bank SBI HDFC ICICI IDBI BOB BOI PNB IOB 17.79 17.30 17.51 13.1 15.45 18.
The rupee hit a record low during early 2009 on account of global recession.4% in 2001-02 and 9. • India's per capita income (nominal) is $1032. HDFC and IOB are more efficient in generating yield over assets and hence their overall efficiency is better than other sample companies.66%. In 2007-08 fiscal high prices of food items were primary cause behind the high rate of inflation. However. Industry and Company which are as follows: In 2007-08 Average Inflation was around 4.3% of GDP which would be among the highest in the world. rate was lower than Av.932 is ranked 128th. India's large service industry accounts for 62.Allahabad bank and HDFC are the most efficient companies in controlling indirect expenses in comparison to others. In 2009 BOI is having the highest NPM and PNB is having the 2nd highest. Industry estimates indicate that out of 274 commercial banks operating in the country. • while its per capita (PPP) of US$2. That high rate of inflation had to be controlled by banning a no. accounting for about 52% of employment. the year 2009 saw a significant slowdown in India's official GDP growth rate to 6.4% in 2007-08 which is a good indicator. The industry is highly fragmented with 30 banking units contributing to almost 50% of deposits and 60% of advances. Agriculture is the predominant occupation in India. ranked 139th in the world. of necessary commodities as well as various financial steps. Inflation of financial year 2006-07. The Earning Per Share of SBI is substantially higher than the other banks for the data taken from 2005-09.1% as well as the return of a large projected fiscal deficit of 10. 223 banks are in the public sector and 51 are in the private sector By 2008.There are some major findings related to the Economy.6% of the country's GDP while the industrial and agricultural sector contribute 20% and 17. but in average we can conclude that IOB .5% respectively. CHAPTER:-6 Concusion and Suggessions 36 . High prices of oil were responsible for proportionatly high rate of inflation in2008-09. India had established itself as the world's second-fastest growing major economy. Real GDP growth is Increasing that was 4.
loan processing officer. One could work in a variety of areas in banking industry including Recurring Deposit account. Rural and semi-urban India is expected to account for 58. assessor. loan manager.The most important factor that affects the value of a company is its earnings.10% during 2007-2011. banking officer. it isn't going to stay in business.99% to reach 20. If a company never makes money.33% of the insurance sector by 2010. Banking sector investment in Information Technology is expected grow at 18% in 2007 from last year. Public companies are required to report their earnings four times a year (once each quarter).000 in 2006 from 2000. Bankable household India is anticipated to grow at a CAGR of 28. Pension fund industry in India grew at a CAGR of 122. In the industry. Investment Banking and Retail Banking. mortgage loan underwriter. a position in Treasury or Forex is considered right on top and this is followed by careers in Private Banking. some of the important jobs include that of a stockbroker who is essentially a person who buys and sells securities on behalf of individuals and institutions for some commission. home loan agent. Security analysts are those who advise companies on floatation’s of shares as they are expected to have sound knowledge of capital markets. 37 . probationary officer.In the Financial Services. Major Challenges and Issues Facing the Indian Banking Industry. accountant. It makes sense when you think about it. Opportunities The Banking sector is considered the most lucrative option in today’s job market. • • • • • • • Rural and semi-urban India is expected to account for 58. loan officer. and customer service executive among others.44% from 1999-00 to 200607. Brokers who work for institutional investors are often called securities traders. While some brokers like to practice with individual clients others work for institutions. Rural and semi-urban centers account for 66% of total bank branches. and in the long run no company can survive without them. Many prefer to work as dealers. The ATM outlets in India increased at a CAGR of 53.33% of the insurance sector by 2010. home loan officer. personal loan officer. Earnings are the profit a company makes. product marketing and sales executive. advisors and securities analysts.
SUGGESTIONS Some suggestions through which the banking industry can improve their performance more that are: • • • • • • • • • • Improve governance. Raise educational achievement Increase quality and quantity of universities Control inflation Introduce a credible fiscal policy Liberalize financial markets Increase trade with neighbors Increase agricultural productivity Improve infrastructure and Improve environmental quality. 38 .
Company analysis includes the Study of Financial and Non Finacial. That are 39 . Industry analysis includes the Study of Capacity. A finite sample size of Ten Banks listed on the National Stock Exchange(NSE) has been selected for the purpose of the study. Inflation Rate. To acquire practical exposure of financial analysis of an enterprise. Market Position. To know the soundness and Resilient of the Indian Banking Sector. METHODOLOGY The present study adopts an analytical and descriptive research design. To know the Growth Trends of the selected Banks. The data of the sample companies (for a period of five years from 2005 to 2009)has been collected from the annual reports and the balance sheet published by the companies and the websites of the companies. Money Supply and Growth Rate. To analyze the profitability position of the sample Banks. policy and Changes etc. Govt. OBJECTIVES OF THE STUDY • • • • • • To take investment Decisions cautiously after studying risks involved in the same. To study the crucial Role of Banks in India’s Economic Development.CHAPTER:-6 SUMMARY Fundamental analysis of the Indian Banking Indusrty the Study is based on the Analysis of three things that are: • • • Economy Analysis Industry Analysis Company Analysis Economy Analysis includes the study of GDP.
rbi.investopedia.org and other company websites. www.moneycontrol. Communication and manufacturing for study of past performance of economy with context to GDP.com. 40 . www. Ratios have been calculated for the past five years for the purpose of analysis. TOOLS USED FOR ANALYSIS Study of the three major factors of indian economy that are Agriculture. Inflation and money supply etc.• • • • • • • • • • Allahabad Bank Axis Bank SBI HDFC ICICI IDBI BOB BOI PNB IOB DATA COLLECTION Financial Statements are thr raw data collected from various websites such as www.com.
Mark P.Bauman (1996) conducted a study named.com www. 41 .com www.investopedia.rbi.moneycontrol.org.countrydata. “A Review of Fundamental Analysis Research in Accounting.org www.” www.developmentgateway. Jon Lynch conducted a study.BIBLIOGRAPHY Jim Burg(1999) Conducted a study – “Fundamental Analysis Using Internet”.worldbank.com www.com www. “Share Market Analysis-Fundamental vs Technical Analysis”’.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.