Organization of Banking

Industry
Types of Bank Organizations
Unit Banks
Holding Companies
Branch Banks
Banking Entities
Unit Banks
Indiana Community Bank, USA
Heartland Community Bank, USA
Holding Companies
Citi Group
State Bank of India Group
Branch Banks
Punjab National Bank
Indian Oversees Bank
Unit Banks
Single entity.
Located in a specific area.
Functions as a community bank.
Banks are customer based.
Capital is comparatively lesser than other banking
structures.
Structure is based on the needs of the customers.
Holding Companies
Organization owns and manages subsidiaries.
Utilizes its financial strength to acquire ownership of
subsidiary banks.
Large capital structure.
Standardization of subsidiary organizational structure.
Possibility of establishing banks across several
localities.
Branch Banking
Single entity.
Establishment of branch offices.
Possibility of functioning across several localities.
Location of banks based on the needs of the society.
Possibility of operating banks on a large or small scale.
Scope for future expansion of banking functions.
Comparative Features
Feature
Unit
Bank
Holding
Company
Branch
Company
Efficiency Scale Less Some Most
Efficiency Scope Most Most Some
FlowofFunds Low Possible Easy
Competition Exists No Exists
NewEntry Easy Little Easy
MarketAccess Tough Easy Easy
Liquidity Low High High
DecentralizedPower Most Little Moderate
SensitivitytoSociety Most Little Moderate
ConveniencetoCustomers Most Little Most
Organization of Banks based on Ownership Pattern
Nationalized Banks (Government owned)
Private banks
Foreign Banks
Banking Entities (Illustrative)
Nationalized Banks
Indian Bank
Corporation Bank
Andhra Bank
Private Banks
ICICI Bank
Axis Bank
HDFC Bank
Banking Entities
Foreign Banks
Sonali Bank
Oman International Bank
Mizuho Corporate Bank
Societe Generale
Bank Performance Comparison (2011)
Nationalized
Banks
Private
Banks
Foreign
Banks
NumberofOffices 45640 11968 316
NumberofEmployees 475082 218679 27968
BusinessperEmployee(lakh) 1144.77 823.26 1559.74
ProfitperEmployee(lakh) 6.95 8.1 27.59
CapitalandReserves&Surplus
(lakh) 205857 138589 80972
CostofFunds 4.93 4.56 3.11
ReturnonAssets 1.03 5.11 1.74
CapitaltoRiskAdjustedAsset
Ratio(CRAR) 13.47 16.46 16.72
NetNonPerformingAssets(NPA)
Ratio 0.92 0.56 0.67
Reference:
http://www.rbi.org.in/scripts/AnnualPublications.aspx?head=Statistical%20Tables%
20Relating%20to%20Banks%20of%20India
Banks Functioning in India
Bank
Classification 1999 2003 2006 2009 2010 2011
SBI&Associates 9 9 9 8 6 6
Nationalized
Banks 19 19 20 20 21 21
Domestic
PrivateBanks 34 30 24 23 21 21
ForeignBanks 41 36 29 31 34 34
Reference:
http://www.rbi.org.in/scripts/AnnualPublications.aspx?head=Statistical%20Tabl
es%20Relating%20to%20Banks%20of%20India
Organization of Banks Based on Size
Large Banks
Large Capital
Large Depositor base
Small Banks
Less Capital
Small Depositor base
Banking Business Models
National banks
Regional banks
International banks
Community banks
Development banks
Core banks
Service banks
National Banks
Banks are entitled to operate across the country.
Usually have operations in more than one region of the
country.
Large number of bank branches.
Comparatively large size capital banks.
Centralized operational structure.
Regional Banks
Local banks.
Banking operations are within the region.
Cater to the specific needs of the region.
Regional banks are established to focus on the
requirements of the place of operation of the bank.
Focus on a specific locality and function as specialized
banks.
Community Banks
Specialty banks.
Cater to the banking requirements of a specific society.
Based on a specific locality or built on the branch
structure to cater to the needs of the community in
different areas.
Subject to the same regulations as that of other bank
models.
Development Banks
Focus is on development activities.
Funded by the government.
Objective of the bank is to meet the government targets.
Meets the funding requirement of large projects or
activities that are considered essential for the community
but not necessarily profit based.
International Banks
Engage in banking operations across several countries.
Large customer base.
Familiar with regulatory requirements of each country.
Banking risks are prominent since operations are subject
to the impact of banking functions across other nations.
Core Banks
Function as deposit mobilization and lending agencies
for project finance.
Subject to regulations fromthe Central bank.
Services are based on the interest rate prevalent in the
system.
Larger capital base.
Subject to capital adequacy requirements to meet the
core banking risks.
Requires investor trust.
Service Banks
Function as supportive players of core banks.
Performroles such as insurance / asset management /
mutual funds / credit card / venture capital assistance /
consumer finance / leasing activities / trustee services
etc.
Uses the customer base acquired fromcore banks.
Income is based on operations of the banks and not
entirely on the interest rates.
Commercial Banking Functions
Investment Functions