Banking Operations

2019-21

Assignment 2

A Competitive Analysis of Indian Bank

Submitted To: Submitted By:

Dr. Kalyani Parmal Ravi Jaiswani

(JI/2019-21/0091)
Main Competitors

Indian Bank is a public sector bank which was established in India in the year 1907 and is
headquartered in Chennai. It has over 20,924 employees, 6,089 branches with 5,022 ATMs
and 1,494 cash deposit machines and is one of the top performing bank in India with a market
capitalization of 6505.15 cr. If we talk about the competitors of Indian Bank, as per the
market capitalization there are two main competitors: Central Bank and Bank of Maharashtra
with a Market Capitalization of 9192.72 Cr. and 7609.78 Cr. respectively. Bank of
Maharashtra and Central Bank are both public sectors banks in India which were established
in 1935, in Pune and 1911 in Mumbai.

Profitability Analysis

The Profit after tax for Indian Bank as in 2019 was Rs. 3801 million whereas the Profit after
tax for Bank of Maharashtra was Rs. -47633 million.
The net profit margin % was 2% for Indian Bank and -43.9% for the Bank of Maharashtra. If
we talk about the EPS, for Indian Bank it is 7.9 per share and -17.9 per share for Bank of
Maharashtra. Both the banks have not distributed any dividend during the last year.
The Net Worth for Indian Bank is 197,155 million and Bank of Maharashtra is 58,831
million and the Net NPA’s is 3.8 % and 5.5 % respectively.

Ratio Analysis
Indian Bank Bank of Maharashtra
Return on Equity (%) 1.9 -81
Return on Assets (%) 0.1 -2.9

Cash Flow (In Million)

Indian Bank Bank of Maharashtra
From Operating Activity 149,653 -108,227
From Investment Activity -2486 -1259
From Financing Activity -76226 42196

If we compare Indian Bank with the Bank of Maharashtra, it can be clearly seen that Indian
Bank is performing far better than the Bank of Maharashtra in terms of Profitability.

The Profit after tax for Indian Bank as in 2019 was Rs. 3801 million whereas the Profit after
tax for Central Bank of India was Rs. -56414.8 million.
If we talk about the EPS, for Indian Bank it is 7.9 per share and -20.19 per share for Central
Bank and both the banks have not distributed any dividend during the last year.
The Net Worth for Indian Bank is 197,155 million and Central Bank is 191,474 million and
the Net NPA’s is 3.8 % and 5.5 % respectively.

Ratio Analysis
Indian Bank Central Bank
Return on Equity (%) 1.9 -29.79
Return on Assets (%) 0.1 -1.70
Cash Flow (In Million)
Indian Bank Central Bank
From Operating Activity 149,653 -14587.62
From Investment Activity -2486 -245.42
From Financing Activity -76226 6804.54

If we compare Indian Bank with the Central Bank, it can be clearly seen that Indian Bank is
performing far better than the Central Bank in terms of Profitability.

Shareholding Pattern (%)

Holder’s Name Indian Bank (%) Bank of Central Bank (%)

Maharashtra (%)
Promoters 88.06 93.33 92.39
Foreign Institutes 0.95 0.1 0.21
Bank/ Mutual Funds 2.1 0.03 0.02
Others 2.11 0.32 0.54
General public 4.79 2.74 2.4
Financial Institutions 1.99 3.49 4.45

Operational Efficiency

Liquidity Ratio’s

Ratio’s Indian Bank Bank of Central Bank

Maharashtra
Current Ratio 0.05 0.08 0.08
Quick Ratio 34.19 12.73 29.45

If we look at the above mentioned ratio’s, we can see that the quick ratio of Indian and
Central Bank is more than 2 times as compared to that of Bank of Maharashtra which means
that they both have more liquidity than it.

Turnover Ratio’s

Ratio’s Indian Bank Bank of Central Bank

Maharashtra
Debt Equity Ratio 15.60 34.54 16.11
Loan Turnover 0.13 0.11 0.15
Asset Turnover 0.07 0.07 0.07
Ratio
Advances / Loan 75.17% 56.27% 48.39%
Funds

Coming on to the turnover ratio’s, Bank of Maharashtra has the highest Debt to Equity Ratio,
whereas the asset turnover ratio for all the three banks is same. If we talk about the Loans,
Indian Bank is most ahead with 75.17% of its deposits given as loans. The ratio for Bank of
Maharashtra and Central Bank is almost same.
Comparison of Banks on the basis of Products

If we talk about the various products of the above mentioned banks, they are broadly
classified as the deposit products and the loan products. All the three are public sector banks
which offer a wide range of deposit and advance facilities according to the need of the
customer. On the deposit side, we have Savings A/C, Current A/C, Term Deposit and NRI
A/C. On the loans side, we have facilities like Agricultural Loan, Personal Loans, Loans
against deposit, Loan for MSMs etc. If we look at the broader picture we may not find any
major difference amongst these banks in terms of their offerings but if we further dig into the
type of accounts offered we have find a significant difference amongst them which are as
follows:

 Cent Bal Bhavishya Savings Account: It is a type of which is offered by the Central
Bank of India to any minor upto the age of 12 years. The initial deposit required is Rs.
50 for rural and semi-urban branches, whereas Rs. 100 for urban and metro locations.
It is a type of saving account with objective to cultivate the habit of saving from early
day a child. At least one credit entry month and aggregate credit of Rs. 500 every 6
months is mandatory in the account at rural and semi-urban locations. Whereas for
semi-urban and metro locations, 1 credit entry month and aggregate credit of Rs.
1,000 every 6 months is required. Withdrawal is not allowed till the child attains the
age of 18 years. However, the account balance in excess of Rs. 10,000 can be
converted into a term deposit.

 Lok Bachat Yojna: It is a type of savings account which is offered by the Bank of
Maharashtra. This account is somewhat similar to that of Jan Dhan Account. If we
look at the features of this account it includes people belonging to “bottom of the
pyramid” (Low income group) to open an account with the Bank. Account can be
opened with any amount. It can be as low as Rs. 1/- (Rs. One only). Other features of
this includes that a cheque book of 10 pages allowed free of cost, Debit card facality
available to new & existing accounts for the scheme and Collection of outstation
cheques, issuance of DD/MT/TT¬ permissible at normal charges.

 Mahabank Purple Savings Account: It is type of savings bank account which is

offered by the Bank of Maharashtra and the target audience for the same is Ultra High
Net Worth Individuals (UHNIs). The amazing fact is that the account can also be
opened by a zero balance but minimum monthly average balance of Rs. 300000 is
required. Upto Rs. 100000 of limit on ATM card. Also you get many additional
features like free Credit card, special assistance of the Relationship Manager, Demat
Services etc.

 IB I-Freedom Current A/C: it is a type of special current account which is offered

by the Indian Bank to its customers where they have “their own way” in choosing a
product variant which meets their specific business needs. The   product   has   been   
designed   keeping   in   mind   the diverse business needs and provides the flexibility
to hand pick host of services of your choice and convenience. Each  product  has
different  average  monthly  balance  ranging from  Rs.50,000 to Rs 5,00,000 and
offers a host of  privileges carefully chosen keeping in mind the business model of the
end user.
  SB Platinum : Savings Bank Platinum Account with Sweep Facility: As the name
itself suggests that it is a type of savings bank account which is offered by Indian
Bank with Sweep Facility. None of the other two banks provides such facility.

 IB Mahila Shakti for Women: it is a type of savings bank account which is offered
by the Indian Bank and is especially designed for the Women. Aadhar card is a must
for this type of account. Any major girl (18+) can opt for this type of account. Further
two variants of this category is available: Variant I is where no salary is credited,
Variant II is where salary is credited. It also provides them with the Sweep facility.

 CENT-555: it is a type of fixed deposit scheme which is offered by Central Bank.

The tenure of this is 555 days and the rate of interest which if offered is 6.65%.
Interest is compounded quarterly and the minimum amount to start this is Rs. 1000.

 CENT-777: it is a type of term deposit offered by the Central Bank which has a
maturity tenure of 777 days with an option of interest payment monthly/ quarterly/
half yearly intervals or cumulative type. It will attract a rate of interest of 6.45% and
additional benefits for senior citizens and staff as per existing norms. Minimum
amount to start this is Rs. 1000.

 Maha Saraswati Scheme: it is a type of term deposit offered by Bank of Maharashtra

and its target audience is Minors aged 6 months and above. Monthly deposit if
minimum of Rs.50/- and in multiple of Rs.10/- there in Rural & Semi Urban
Minimum of Rs.100/- and in multiple of Rs.10 thereafter in Urban & Metro. It
includes features like free insurance, additional interest benefits for BPL cardholders
and Free VISA international ATM card. TDS is not applicable.

 Salary Gain Scheme: it is a kind of OD facility which is provided by the banks over
the savings accounts. The customer should be in permanent employment with total
minimum 1 year of Service, with Corporate concern of repute, Central Government /
State Govt. Department / undertakings (including Government and Government
Aided Educational Institutions) /Co-operative Societies. It is basically given to meet
personal needs of the customers who are salary earners.

 Stand up India: it is a type of loan which is provided to the SC/St/ and other women
entrepreneurs. The loan offered if only for green field projects. The rate of interest is
very low i.e. @MCLR. For the convenience of the borrower, RuPay credit card is also
offered.

 Maha Doc + Loan Scheme: it is a type of unique loan which is offered by the Bank
of Maharashtra for For acquiring premises on ownership basis required for running
Clinics/Nursing Homes, Polyclinics, pathological lab subject to compliance with
license / registration requirements under laws of State / Central Govt. as the case may
be, be ensured. The minimum qualification for the borrower is BAHMS/BAMS / BPT
/ MBBS / BDS . Flexible interest rates and repayment tenure of 12 years.

All the above mentioned products are unique in its own way and it also helps in differencing
the three public sector banks in India. All the three banks have offered the loans upto Rs. 25
Cr. due to Covid- 19 pandemic. Also, there are many facilities that are very common like
demat services, locker facilities etc.