EMIS Insights - India Banking Sector Report 2020 - 2024

COVID-19 UPDATE
INDIA
BANKING
SECTOR 2020/2024
An EMIS Insights Industry Report
Any redistribution of this information is strictly prohibited.

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ABBREVIATIONS
ATM Automatic Teller Machine
BFS Board for Financial Supervision
bn Billion
BRICs Brazil, Russia, India, China and South Africa
CAGR Compound Annual Growth Rate
CAR Capital Adequacy Ratio
COVID-19 Coronavirus Disease 2019
CPI Consumer Price Index
CRR Cash Reserve Ratio
EPS Earning Per Share
FY Fiscal Year, ending March 31
GNDI Gross National Disposable Income
GNPA Gross Non-Performing Asset
HFC Housing Finance Company
INR Indian Rupee
MFI Microfinance Institution
mn Million
MPC Monetary Policy Committee
NABARD National Bank for Agriculture and Rural Development
NBFI Non-Banking Financial Institution
NHB National Housing Bank


ABBREVIATIONS
NPA/NPL Non-Performing Asset/Non-Performing Loan
OTS One-Time Settlement
PBT Profit Before Tax
PCA Prompt Corrective Action
PD Primary Dealer
PMJDY Pradhan Mantri Jan Dhan Yojana
PPI Prepaid Payment Instrument
PSB Public Sector Bank
RBI Reserve Bank of India
ROA/ROI Return on Asset/Return on Investment
ROAA Return on Average Asset

ROAE Return on Average Equity
SIDBI Small Industries Development Bank of India
SCB Scheduled Commercial Bank
SFB Small Finance Bank
thou Thousand
tn Trillion
UCB Urban Co-operative Bank
UPI Unified Payments Interface
USD US Dollar
y/y Year on Year


CONTENTS FOREWORD
01 EXECUTIVE SUMMARY
Sector in Numbers
Sector Overview
p.6
p.7
Sector Snapshot
Driving Forces
Restraining Forces
02 SECTOR OUTLOOK p.14

Microeconomic Outlook
Economic Sentiment
Assets
Loans
Deposits
NPLs
03 SECTOR IN FOCUS p.22

Main Economic Indicators
Main Sector Indicators
Assets
Loans
Focus Point – Total Loans by Scheduled
Commercial Banks by Region, INR bn, FY2020
Deposits
Focus Point – Total Deposits by Scheduled
Commercial Banks by Region, INR bn, FY2020
NPLs
Capital Adequacy
Profitability
Liquidity
Global Positioning
Consumer Confidence
Household Debt
Household Savings
Inflation Rates
Exchange Rates
Employment and Wages

CONTENTS 04 COMPETITIVE LANDSCAPE
Timeline of the Indian Banking Sector
Highlights
Main Events
Top Companies
p.45
Top M&A Deals

M&A Activity
05 COMPANIES IN FOCUS p.53

State Bank of India
ICICI Bank
Bank of Baroda
Bank of India
Punjab National Bank
06 REGULATORY ENVIRONMENT p.64

Government Policy
07 OTHER FINANCIAL p.67

INSTITUTIONS
AIFIs
NBFCs
HFCs
SFBs
Co-Operatives
Primary Dealers
Fintech
08 RETAIL CHANNELS p.78

Branches
ATMs
Financial Cards
Mobile Banking
Pre-Paid Payment Instruments

INDIA BANKING SECTOR 2020/2024
An EMIS Insights Industry Report
Foreword
Just when the efforts of the government and the RBI started bearing fruit in
the form of improved asset quality and enhanced capital adequacy of Indian
banks in FY2019*, the sector was hit when COVID-19 broke out.
The Indian banking sector is known for its stability and ability to somewhat shield itself from external
risks and although adverse economic conditions at both the domestic and global level provided
headwinds for the banking sector during FY2019, the sector was able to maintain its positive trend.
Since liberalisation started in the 1990s, public sector banks have held a relatively larger share of the
total banking sector, although over time this share has been declining. With increased competition
from the private sector in the form of customer centric services, innovative products, customer
friendly branches, private sector and foreign banks have built up a solid reputation. The Indian
government has consistently adopted a pro-banking sector approach and provided both direct and
indirect support. The biggest support in recent years has been in the form of its Financial Inclusion
programme for Indian citizens known as Pradhan Mantri Jan Dhan Yojana (PMJDY), providing
affordable access to financial services, along with introducing Aadhar cards and RuPay cards, and
consolidating public sector banks, among other features.
Apart from these, some of the main driving forces of the banking sector in India are the high
conversion of the unbanked into banked, strong economic fundamentals, risk averseness of a large
share of the population, adoption of digitisation, expanding middle class, rising disposable income,
favourable demographic dividend, and widening reach in rural areas.
On the other hand, the banking sector also faces many challenges, including NPAs, which has been
the main area of concern over the years. In response, the RBI introduced a framework for the
resolution of stressed assets in FY2019, with the aim of ring-fencing and saving the banking sector
from a further rise in NPAs. However, when the asset quality of the banks started to improve as a
result of the persistent efforts of the RBI and government, the Indian economy was affected by
COVID-19. With the objective of mitigating the impact of the pandemic on Indian businesses and
citizens, the RBI allowed a six-month moratorium on term loans, and deferred interest on working
capital, among many other regulatory and liquidity measures. However, these are only expected to
have a temporary effect. Once these measures are lifted, the NPAs will potentially rise again. The
degree and nature of the impact caused by COVID-19 and the economic lockdown on the banking
sector will become more apparent in the second half of FY2021 and first half of FY2022.
Contact Us:
Boryana Nedyalkova
editorial@isimarkets.com
*Running between April 1, 2019 and March 31, 2020


An EMIS Insights Industry Report CONTENTS
01
EXECUTIVE
SUMMARY

Copyright © 2020 EMIS, all rights reserved. 7
01 EXECUTIVE SUMMARY CONTENTS
Sector in Numbers
4.0%
Total Household
156.3 thou INR 166.0tn
Debt-to-GNDI Number of Bank Total Banking
Ratio Branches Assets
INR INR 61.7%

128.9tn 97.1tn Public Sector Bank
Total Deposits Total Loans Share of Loans
INR
9.4tn 75.3% 2.9%
Loan to Net Interest
Total Gross Deposit Ratio Margin
NPLs
Note: Data for FY2019

Source: CEIC, RBI
INDIA BANKING SECTOR 2020/2024 8

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Sector Overview
India’s banking sector is regulated and governed by the Reserve Bank of India (RBI), which was
established in April 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. The
government allowed the entry of private players in the country’s banking sector in the 1990s. As of
FY2019, the banking sector in India comprises public sector banks, private sector banks, foreign banks
and small finance banks along with co-operative banks (urban and rural), and non-banking financial
institutions (NBFIs). The share of public sector banks has been declining in recent years. Lately, the
banking sector has been witnessing increased competition, the launching of innovative products and
enhanced adoption of digitisation.
Entry Modes
In August 2016, the RBI issued guidelines for the licensing of universal banks in the private sector. In
December 2019, the RBI issued guidelines for the licensing of small finance banks, doubling the
minimum capital requirement to INR 2bn. The RBI issues licenses for carrying out banking business to
co-operative banks under the Banking Regulation Act, 1949. In June 2019, the RBI's Board of Financial
Supervision took an “in principle” decision not to issue any new bank licenses to allow the banks
already licensed in the past three to four years to stabilise.
Segment Opportunities
Although public sector banks still hold a relatively larger share of the total banking sector of India, it
has been declining over time. With increased competition from the private sector in the form of
customer centric services, innovative products and customer friendly branches, private sector and
foreign banks have been gaining a growing market share in the country. The fintech segment has
substantial potential for growth as India is moving towards digitisation, supported by evolving
customer behaviour and demands as well as the adoption of a Western lifestyle. Another promising
segment is Small Finance Banking (SFBs). In December 2019, the RBI allowed, under certain conditions,
existing NBFCs, MFIs, and local area banks in the private sector to convert into SFBs after complying
with all regulatory requirements.
Government Policy
The government of India has traditionally been supportive of the banking sector in the country. A
recent policy with vast repercussions has been the one on financial inclusion, called Pradhan Mantri
Jan Dhan Yojana (PMJDY). Launched in August 2014, it aims to provide universal banking services to
the unbanked by setting up bank accounts for them and issuing payment cards to all.
Source: Bloomberg, RBI, Ministry of Finance, GOI, Press Information Bureau

EMISPDF in-nmims001
Sector Snapshot
India Banking Sector
ASSETS: INR 166.0tn

DEPOSITS Public Sector Banks:
Total Deposits: INR 128.9tn INR 101.6tn
Public Sector Banks: INR 84.9tn Other Banks
Other Banks: INR 44.0tn INR 64.4tn
KEY DATA
Bank Branches: 156.3thou
ATMs: 211.1thou
LOANS Financial Cards: 886.3mn
Total Loans: INR 97.1tn Mobile Banking Transaction Value: INR 57.7tn (FY2020)
Public Sector Banks: INR 59.9tn PPI Transaction Value: INR 2.2tn (FY2020)
Other Banks: INR 37.2tn
KEY RATIOS
NPL Ratio: 9.7%
Capital Adequacy Ratio: 14.3%
Loans-to-Deposits Ratio: 75.3%
ROA: -0.09%
KEY PLAYERS NET-INTEREST INCOME KEY PLAYER ASSETS

1. State Bank of India: INR 41.9tn (FY2020)
1. State Bank of India: INR 1087.0bn (FY2020)
2. ICICI Bank: INR 12.3tn
2. ICICI Bank: INR 328.0bn
3. Bank of Baroda: INR 8.2tn
3. Bank of Baroda: INR 204.0bn
4. Punjab National Bank: INR 7.8tn
4. Punjab National Bank: INR 171.6bn
5. Bank of India: INR 6.3tn
5. Bank of India: INR 136.6bn
Note: Data for FY2019.
Source: CEIC, Company Data, RBI

EMISPDF in-nmims001
Sector Snapshot
India Banking Sector
The overall financial health of India’s banking sector improved in FY2019. This was the result of
declining NPAs, particularly of the public sector banks, as well as policy measures adopted by the RBI.
Total gross NPLs declined to INR 9364bn in FY2019, or by 9.9% y/y. However, unlike the NPLs of other
bank types, the NPLs of private sector banks kept growing in FY2019, consistent with the trend of the
previous five years. The supportive policies of the Indian government led to the improved capital
adequacy position of various banks. The overall profitability of scheduled commercial banks improved
in FY2019, after continuously deteriorating since FY2014.
Total assets of the banking sector in India grew at the CAGR of 8.1% from FY2016 to FY2019. Foreign
banks and private sector banks recorded a sharp jump in the growth rate of their total assets, while
the growth rate of total assets declined for public sector banks in FY2019. Over the period FY2015 to
FY2019, loans grew at a CAGR of 7.1%, to INR 97.1tn in FY2019. The 11% y/y growth rate in FY2019 was the
highest for four years, and higher than what it was pre-demonetisation. There has been high growth
in retail loans in India due to the technological progress, evolving consumer behaviour, and rising
standards of living of the middle class. Deposits accounted for 77.6% of total bank liabilities in FY2019
and have shown a continuous rising trend over the past five years, reaching INR 128.9tn in FY2019,
with a CAGR of 8.1% from FY2015 to FY2019.
The banking structure of India is headed by the Reserve Bank of India (RBI, India’s central bank) and
comprises commercial and co-operative banks. Commercial banks include Scheduled Commercial
Banks (SCBs) and non-scheduled commercial banks. SCBs, in turn, are divided into private, public, and
foreign banks as well as Regional Rural Banks (RRBs), whereas co-operative banks comprise urban and
rural lenders. The oversight of Housing Finance Companies (HFCs) was transferred from the National
Housing Bank (NHB) to the RBI in August 2019.
The Indian federal government approved the mega consolidation of ten PSBs into four entities in
March 2020, with effect from April 2020, with the aim of creating large PSBs with scale, national reach
and enhanced international competitiveness. The growth in the number of bank branches in India has
been stagnant at 2.4% over the three years ending in FY2019 due to the enhanced adoption of digital
channels, such as net banking and mobile banking among others, which has resulted in a declining
number of branch-based transactions.
Source: RBI, Economic Times, Business Standard, IBEF

EMISPDF in-nmims001
Driving Forces
The main driving forces of the Indian banking sector have been the high conversion rate of the
unbanked into banked population, the persistent government support, strong economic fundamentals
and the risk averseness of lager sections of the population who prefer saving in banks over investing
in equity markets. Additional drivers are increasing digitisation, intense competition and the
availability of innovative products. The government’s continuous support to promote the expansion of
banking technology in rural and remote areas have led to a strong and inclusive banking system in
India. The RBI plays an extensive role in enhancing the efficiency and profitability of the banking
system through maintaining liquidity, reducing money laundering activities, and reducing NPAs and
stressed assets.
External
The development of the banking sector in India is largely based on the favourable and strong
economic and socio-economic factors of the country. The increase in working population, growing
disposable incomes, and the rising demand for housing and personal finance, among others, have
been the effective demand drivers for banking services in India. Other factors supporting loan demand
include changing lifestyles with increased discretionary household spending as well as corporate
loans. The expansion of rural banking through the launching of the financial inclusion programme in
2014, as well as the passing of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 Bill
and the adoption of digitisation, among others, have helped develop the banking sector in India.
Moreover, the government has announced plans to invest USD 6.8bn in public sector banks in FY2020
with the aim of maintaining regulatory capital requirements and financial growth in India.
Internal
The government’s decision to consolidate public sector banks, which came into effect on April 1, 2020,
created fewer but larger banks with more financial strength, better international competitiveness and
an ability to support larger lending volumes. The banking sector has been witnessing increased
competition with the launch of innovative products, advancing digitisation, and a more customer-
centric approach, among others. The use of fintech solutions for payments as well as in insurance and
wealth management is a trend that will become more pronounced in the coming years. The RBI’s
proactive interventions through its monetary policy decisions have maintained favourable liquidity
conditions in the banking sector, shielding it from the effects of domestic and global economic
disruptions. Furthermore, regional rural banks with net worth of at least USD 15.3mn were allowed by
the RBI to launch internet banking facilities. Most banks have put in place a financial stability
framework, and credit and derivatives risk management. Most public sector banks, through their
internal efforts and with the support of the RBI, were able to improve their NPAs in FY2019.
Source: RBI, IBEF, India Today, InvestIndia

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Restraining Forces
The subdued economic conditions at the national and international level have affected the financial
sector in India. Specifically, they have had a negative impact on credit growth, economic output,
investment and productivity. The banking sector of India has been facing many issues including rising
NPAs, a liquidity crunch, and under-capitalisation, among others. The NPA situation improved during
FY2019 with the support of the RBI, but the level of NPAs in the sector is still substantial. Furthermore,
the health of the banking sector will be a matter of deep concern if the lending activities of banks do
not increase and there are no further measures taken to reduce the occurrence of bad loans in the
COVID-19 environment.
External
The global economy experienced subdued growth in FY2019 due to factors such as the US-China trade
war, the uncertain global policy environment, and weak business confidence in the euro zone, among
others. These circumstances also affected the domestic economy, which witnessed slow growth due
to lower consumer demand, business confidence and capacity utilisation. Separately, the COVID-19
pandemic resulted in a sharp drop in business and consumer confidence, a slump in production and
sales, subdued demand and declining working capital against rising inventories. This has created very
challenging conditions for banks and an atmosphere of uncertainty which is unlikely to ease in the
short term.
Internal
The liquidity crisis faced by Infrastructure Leasing & Financial Services (IL&FS) and Indian-based
NBFCs in 2018 led to a severe liquidity crunch and has adversely affected the growth of the NBFC
sector during the past two years. The crisis forced India’s banking regulator to re-examine liquidity
norms for the sector. A similar situation was created by the default of PMC Bank in 2019. Due to the
COVID-19 pandemic, there is a risk of a significant rise in NPAs in the next one-to-two years. This risk
is not visible currently as a result of the measures adopted by the central bank to mitigate the
immediate effects of COVID-19 on businesses and consumers. Once these relaxations end, the degree
and nature of the impact on the banking sector caused by COVID-19 and the economic lockdown will
materialise.
Source: Business Today, Financial Express, Nikkei Asian Review, PRS, Quartz India, The Hindu Business Line

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02
SECTOR
OUTLOOK

02 SECTOR OUTLOOK CONTENTS
Macroeconomic Outlook
Comments
India has been witnessing a demand led slowdown in real GDP growth since Q2 2018 and even though
signs of a turnaround had emerged around January 2020 the exogenous shock from the COVID-19
outbreak has ended all possibility of a near term improvement. Instead, growth expectations have
been substantially revised downwards. Real GDP is forecast to contract by 0.2% in FY2021, before
increasing by 7.2% in FY2022, all things being equal. Despite the imposition of a hard lockdown that
resulted in major economic disruption, the Indian government has announced a slew of measures that
aim to jump-start the economy, especially the massive fiscal stimulus of INR 20tn, amounting to 10%
of the GDP. As a result, public spending is estimated to increase sharply, from 10.5% in FY2019 to 17%
in FY2020. An increase in spending will most likely cause the fiscal deficit to widen beyond the target.
Private consumption has been subdued, registering an increase of 5.0%, compared with the five-year
average growth of 7.3% from FY2014 to FY2018. Fixed investment has contracted in FY2019 by 1.1%, and
even further in FY2020 by 4.9%. This trend is expected to turn around in FY2021, with growth of 7.3%.
Real GDP, y/y change Consumption, Investment, and Public

Spending, y/y change
7.2% 17.0%
6.8% 6.6%
6.4% 10.1%
6.1%
9.8% 10.5% 7.3% 6.8% 6.6% 6.0%
4.8% 7.2% 7.1% 6.9% 6.7% 6.4%
5.0% 6.4% 6.2% 6.1%
6.4%
-1.1% -0.3%
-4.9%
-0.2%
FY2019 FY2020 FY2021f FY2022f FY2023f FY2024f FY2025f
Private Consumption, y/y change
Fixed Investment (ann. var. %)
Public Spending
Source: CEIC, Focus Economics

EMISPDF in-nmims001
Macroeconomic Outlook (cont’d)
Comments Total Exports and Imports, y/y change

Due to the rise of global protectionism, alongside
a demand slowdown, foreign trade has 12.3%
9.7%
contracted in FY2020. Imports have declined by 8.6% 8.5%
7.8%
5.1% and exports by 0.9%. The prevalence of the 7.4% 7.0%
6.5%
6.8%
lockdown across countries due to COVID-19 has 5.8%
particularly adversely affected the transport and
-0.9%
logistics sector, and the FY2021 export-import
projections are reflective of that. Consequently, -5.1%
-7.1%
the current account deficit is expected to further
-9.5%
decrease in FY2021, after a reduction in FY2020.
The consumer price index has surged due to the
lockdown, but inflation is expected to remain FY2019 FY2020 FY2021f FY2022f FY2023f FY2024f FY2025f
within the target range of 2.5% to 4.5% over the
next five years. Exports Imports
Current Account Consumer Price Index, y/y change

-11.6
4.8%
-0.4%
-27.0
-45.2
-41.1
-44.7
-45.0
-0.9% 4.2% 4.2%

4.2%
-1.1% 4.1%
-57.0
-1.2%
-1.3% -1.3%
3.7%
3.4%
-2.1%
Current Account, USD bn FY2019 FY2020 FY2021f FY2022f FY2023f FY2024f FY2025f
Current Account, as % of GDP
Source: CEIC, Focus Economics

EMISPDF in-nmims001
Economic Sentiment
Comments
The future expectations index of the consumer confidence survey, remained in the range of 116 and
124 between May 2017 and November 2018, after which it increased rapidly over the next few months
to reach a new peak of 133.4 in March 2019. However, this exuberance was short-lived with the future
expectations index slowing down immediately after and declining sharply after the emergence of the
first few COVID-19 cases in India in March 2020. In contrast, the business expectations index (for the
next quarter) has shown an increasing trend since December 2019 which has continued despite the
pandemic and the lockdown. This shows that India is more pessimistic on the demand than supply
side, with consumers more downbeat, but businesses anticipating rapid recovery. The continued
decline in the consumer confidence future expectations index is reflective of underlying issues within
India, such as unemployment. In contrast, the resilient outlook of businesses stems from the large
fiscal stimulus, accompanied by policy changes such as labour reforms, the availability of ample
credit to micro, small, and medium enterprises, and extension of loan repayment deadlines.
Consumer Confidence Survey (Future Business Expectation Index (Next

Expectations Index) Quarter)
140 118
116
130
114
120 112
110
110
108
100 106
104
90
102
80 100
Jun-17
Oct-17
Apr-18
Oct-18
Apr-19
Oct-19
Apr-20
Dec-17
Jun-18
Dec-18
Jun-19
Jun-20
Aug-17
Feb-18
Aug-18
Feb-19
Dec-19
Aug-19
Feb-20
Jul-17
Jul-18
Jul-19
Nov-17
Jan-18
Mar-18
Nov-18
Jan-19
Mar-19
Nov-19
Jan-20
Mar-20
May-17
Sep-17
May-18
Sep-18
May-19
Sep-19
May-20
Source: Reserve Bank of India, CEIC

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Assets
Total Assets by Bank Type, INR tn Annual Change in Total Assets
241.9 18.1%
222.5 17.4%
205.2 13.1 15.2% 15.6%
189.7 14.4%
175.6 11.6
11.0 13.1%
11.2
10.8 111.9
97.9
72.1 84.6
61.1
3.7% 4.6%
2.6% 2.9% 3.2% 3.4%
2.1%
103.8 106.4 109.6 113.1 116.9
FY2020f FY2021f -1.5%
FY2022f FY2023f FY2024f
-5.3%
FY2020f FY2021f FY2022f FY2023f FY2024f
Public Sector Banks Private Sector Banks

Others Total Assets in all SCBs
Others
Comments
The total assets of India’s banking sector are expected to grow at the CAGR of 8.3% from FY2020 to
FY2024 as compared to a CAGR of 8.1% between FY2016 and FY2019. This growth is projected to be
driven by private sector banks whose total assets are expected to grow at a CAGR of 16.3% from
FY2020 to FY2024. However, the y/y growth in the total assets of private sector banks is expected to
witness a decline in the subsequent years after reaching a peak of 18.1% in FY2021. Loans by other
banks are expected to register a CAGR of 5% from FY2020 to FY2024. The y/y growth of total banking
sector assets is estimated to drop to 5.8% in FY2020 as compared to a range of 7.6% y/y to 8.8% y/y
over FY2016 to FY2019 due to the impact of COVID-19. However, as a result of the measures of the RBI
aimed at mitigating the impact of COVID-19 on the banking sector, the growth in total assets is
expected to accelerate in FY2021 and grow thereafter. Favourable factors such as an increasing
working population, rising disposable incomes, and rising demand for housing and personal finance,
among others, will be the main growth drivers of the banking sector in India.
Source: EMIS Insights

EMISPDF in-nmims001
Loans
Comments
Over the period FY2020 to FY2024, total loans are expected to grow at a CAGR of 10%, primarily as a
result of the growth in loans by private sector banks (CAGR: 17.2%), followed by other banks (CAGR:
9.7%), and public sector banks (CAGR: 5.3%). In FY2020, the y/y growth of loans by public sector banks
is estimated at 6.1%, rising from 4.4% in FY2019, as the share of total new rupee-denominated loans
sanctioned by public sector banks increased to 52.8% in February 2020 from 39.7% in August 2019,
according to the Business Standard. This increase in fresh loans mainly came from the personal loan
segment. According to the RBI, as quoted by the Business Standard, the slowdown in credit growth as
a result of COVID-19 was spread across all bank groups but was most pronounced in private banks.
The Indian economy is expected to revive a little in FY2021. As a result, loans by private and other
banks are projected to grow respectively by 19.1% and 20.8% in FY2021 as compared to 13.6% and -5.1%
in FY2020. The y/y growth of loans extended by public sector banks is estimated to decrease to 5.8%
from 6.1% in FY2020. It is expected that following COVID-19 there will be a huge spike in the demand
for personal and corporate loans driven by business expansion plans, a rise in personal consumption
expenditure and an increase in the number and scale of Indian wedding functions.
Total Loans by Bank Type, INR tn Annual Change in Total Loans
154.4
141.4 18.5 20.8%
128.5 17.9 19.1%
116.1 18.7%
17.1 16.5%
105.3 15.5
71.4 14.8%
12.8 62.2 13.6%
53.4
45.0 10.3%
37.8
6.1% 5.8% 5.4% 5.2% 4.9%
66.5 70.1 73.8 77.4 4.7% 3.4%
62.9
FY2020f FY2021f FY2022f FY2023f FY2024f -5.1%

Others Total Loans in all SCBs Others

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Deposits
Total Deposits in SCBs, INR tn Total Deposits by Bank Type, INR tn

178.8 189.1
9.4% 163.9 8.3
9.1%
149.8 7.9
8.4% 139.7 7.5
7.1 77.6
7.2% 6.7 68.4
59.2
42.2 50.5
5.7%
189.1
178.8
163.9
102.5 103.2
149.8
90.9 92.2 97.2

139.7

Total Deposits in SCBs, INR tn y/y Change Others Total Deposits in all SCBs
Comments
Total deposits in SCBs are projected to register a CAGR of 7.9% between FY2020 and FY2024 as
compared to a CAGR of 8.1% from FY2015 to FY2019. Central banks worldwide have been introducing
monetary policy stimulus in response to COVID-19. The RBI has been following the same trend,
decreasing its benchmark interest rate by 75 basis points to 4.4% in March 2020 from 5.15%, where it
had remained since October 2019, and then again reducing it to 4% in May 2020. This trend is expected
to continue in the short-to-medium term to revive demand in the economy. The RBI’s policy is one of
the major contributors to the forecast of lower deposit growth rates compared with the preceding
five-year period. However, deposit growth is likely to be supported by the volatility of Indian equity
markets, especially during the current COVID-19 crisis. If this continues, it is likely that a higher
number of investors as well as consumers may shift their savings and investments to fixed deposits
instead of the equity market.

EMISPDF in-nmims001
NPLs
Comments Gross NPLs, INR bn

After rising over the last five years, gross NPLs
declined in FY2019. This was made possible 11.0%
10.0%
through strict RBI measures and policies to keep
9.0%
a check on bad loans and increase the recovery 8.3%
rates. Public sector banks especially were able to 7.6%
manage their NPLs situation, However, the
14469.2
13443.8
problem created by the COVID-19 pandemic has
12416.6
11390.5
10358.7
once again increased the risk of NPLs. COVID-19

induced a national lockdown in the country which
has made it difficult for corporations and
individuals to pay their equated monthly
installments (EMIs). Although the RBI has
provided a six-month moratorium on term loans
until August 2020, this is just a temporary relief Total Gross NPLs y/y Change
and NPLs are expected to spike after this period.
Gross NPLs by Bank Type, INR bn Gross NPL Ratio by Bank Type
14,469.2
13,443.8
12,416.6 260.4 12.6% 12.7%
243.3 12.5% 12.5% 12.6%
11,390.5
10,358.7 224.4 4,400.7
206.9 3,884.1
184.9 3,367.5
2,850.6
2,332.4
6.2% 6.3% 6.3% 6.2% 6.2%

8,824.7 9,316.4 9,808.1
7,841.3 8,333.0
FY2020f FY2021f FY2022f FY2023f FY2024f 1.4% 1.3% 1.3% 1.4% 1.4%
Public Sector Banks Private Sector Banks FY2020f FY2021f FY2022f FY2023f FY2024f
Others Total Gross NPLs Others

EMISPDF in-nmims001
03
SECTOR
IN FOCUS

03 SECTOR IN FOCUS CONTENTS
Main Economic Indicators
FY2015 FY2016 FY2017 FY2018 FY2019
Total Population, mn 1,267.0 1,283.0 1,299.0 1,316.0 1,332.0
GDP, Current Prices, INR tn 124.7 137.7 153.6 171.0 190.1
GDP, Constant Prices, y/y Change, % 7.4% 8.0% 8.2% 7.2% 6.8%
GDP Per Capita, Current Prices, INR 98,405 107,341 118,263 129,901 142,719
Gross Value Added, Financial Services, Current Prices, INR bn 6,614.1 7,262.9 7,502.2 8,419.8 -
Gross Value Added, Financial Services, Current Prices, Share of

5.3% 5.3% 4.9% 4.9% -
GDP
Consumer Price Index, Annual Average, y/y Change 5.9% 4.9% 4.5% 3.6% 3.4%
Foreign Exchange Rate, USD/INR, Financial Year-End 62.48 66.89 65.80 65.05 69.49
RBI Benchmark Repo Rate, Financial-Year End 7.50% 6.75% 6.25% 6.00% 6.25%
Total Exports, INR tn 19.0 17.2 18.5 19.6 23.0
Total Imports, INR tn 27.4 24.9 25.8 30.0 35.9
Trade Balance, INR tn -8.4 -7.7 -7.3 -10.4 -12.8
FDI Inflows, USD bn 73.5 31.9 43.2 52.4 31.3
FDI Inflows, Services Sector, USD bn 3.2 6.9 8.7 6.7 9.2
FDI Inflows, Services Sector, % of Overall 4.4% 21.6% 20.1% 12.8% 29.2%
Source: CEIC, CSO, DIPP, RBI

EMISPDF in-nmims001
Main Sector Indicators
FY2016 FY2017 FY2018 FY2019 FY2020
Total Scheduled Commercial Bank

131.3 141.7 152.5 166.0 -
Assets, INR tn

79.0 81.2 87.5 97.1 -
Loans, INR tn

100.9 111.1 117.9 128.9 -
Deposits, INR tn
Scheduled Commercial Banks Loan-to-

78.2% 73.0% 74.2% 75.3% -
Deposit Ratio
Scheduled Commercial Banks Gross

7.7% 9.7% 11.8% 9.6% -
NPL Ratio
Public Sector Banks Gross NPL Ratio 9.7% 12.3% 15.7% 12.5% -
Private Sector Banks Gross NPL Ratio 2.9% 4.1% 4.7% 5.5% -
No. of Bank Branches, thou 140.8 146.5 148.4 152.0 156.3
No. of ATMs, thou 199.1 208.4 207.1 202.2 211.1
Total Assets in NBFCs, INR tn 17.2 19.7 26.2 30.9 -
Total No. of Financial Cards, mn 686.3 801.5 898.6 971.7 886.3
Total No. of Financial Card

10,037.8 12,055.9 13,358.6 16,046.2 16,153.4
Transactions, mn
Total Financial Card Transaction

29,386.1 30,214.0 38,214.6 45,121.4 49,717.2
Value, INR bn
Total No. of Mobile Banking

389.6 976.8 1,872.3 6,200.2 13,926.3
Transactions, mn
Total Mobile Banking Transaction

4,001.6 13,104.8 14,738.5 29,583.3 57,815.1
Value, INR bn
Source: CEIC, RBI

EMISPDF in-nmims001
Assets
Comments Total Assets by Bank Type, INR tn

The total assets of the banking sector in India 0.8
0.5 166.0
grew at a CAGR of 8.1% between FY2016 and 0.1 152.5
0.0 141.7 10.6
FY2019. Loans remain the dominant constituent of 131.3 8.7
8.2
total assets, increasing at a CAGR of 7.1%. Public 8.1
36.0 43.0 53.0
sector banks held the larger share of total sector 31.5
assets, posting a CAGR of 3.5% between FY2016

and FY2019. Foreign banks and private sector 97.4 100.4 101.6
91.7
banks recorded a sharp jump in their total assets
growth rate, while the growth rate dipped for
public sector banks. Although the RBI put in place FY2016 FY2017 FY2018 FY2019
effective policies to curb NPAs, the performance
of the banking sector has been affected by the
slowdown in the global economy for most of Foreign Banks Small Finance Banks
FY2019. The situation is now aggravated by the Total Assets in all SCBs
COVID-19 pandemic.
Annual Change in Total Assets Total Banking Assets by Asset Type, INR
tn
23.2% Assets/Year FY2016 FY2017 FY2018 FY2019
21.8%
Cash and
19.4% Balances with 5.6 6.8 7.3 7.0
RBI
14.5% Bank Balances

and Money at
5.2 7.4 5.9 6.3
Call and Short
Notice
6.2% Investments 33.3 36.5 41.3 43.2

5.2%
3.1% Loans 79.0 81.2 87.5 97.1
1.2% 1.3%
Fixed Assets 1.1 1.5 1.4 1.5
FY2017 FY2018 FY2019
Other Assets 7.0 8.4 9.1 10.9
Total Banking
131.3 141.7 152.5 166.0
Foreign Banks Assets
Source: RBI

EMISPDF in-nmims001
Assets (cont’d)
Public Sector Bank Assets by Type, INR tn

Assets/Year FY2016 FY2017 FY2018 FY2019
Cash and Balances with RBI 4.2 4.8 4.5 4.6
Bank Balances and Money at Call and Short Notice 3.9 5.3 3.9 3.6
Investments 22.5 25.5 27.9 27.0
Loans 55.9 55.6 57.0 59.3
Fixed Assets 0.8 1.2 1.1 1.1
Other Assets 4.3 4.9 6.0 6.1
Total Banking Assets 91.7 97.4 100.4 101.6
Private Sector Bank Assets by Type, INR tn

Investments 8.0 8.6 10.1 12.2
Loans 19.4 22.2 26.6 33.3
Fixed Assets 0.2 0.3 0.3 0.4
Other Assets 1.9 2.1 2.3 3.3
Foreign Bank Assets by Type, INR tn

Investments 2.8 2.4 3.1 3.8
Loans 3.6 3.3 3.5 4.0
Fixed Assets 0.1 0.0 0.0 0.0
Other Assets 0.8 1.3 0.9 1.5
Source: RBI

EMISPDF in-nmims001
Loans
Comments
Between FY2015 and FY2019, bank loans grew at a CAGR of 7.1%, to INR 97.1tn in FY2019. The highest
year-on-year growth rate over that period (11%) occurred in FY2019, which was even higher than the
pre-demonetisation level. Due to technological progress, consumer behaviour, rising standards of
living of the middle class and global trends, there has been high growth of retail loans in India. This
has been complemented by an increase in consumer confidence during FY2019, which rose from 94.2 in
May 2018 to 104.6 in March. In addition, the business expectations index remained in the high range of
114.1 to 116.2 in FY2019. These factors spurred the growth of loans during the fiscal year. However,
since the start of FY2020, the growth prospects of the global and Indian economy have been declining.
This has resulted in a sharp drop in consumer confidence, automobile sales, and consumer demand,
all of which have brought the demand for loans to a standstill. Nevertheless, the Indian government
has announced various measures to salvage the economy and the banking sector, such as allowing
lenders to extend loans to businesses at a concessional rate and/or without collateral. This is
expected to help improve the demand for loans in India.
Total Loans by Scheduled Commercial Total Banking System Loans by Bank

Banks, INR tn Type, INR tn
11.0%
9.7%
4.0
3.6 3.3 3.5
7.8% 3.3 33.3
6.9% 26.6
19.4 22.2
15.8
97.1
87.5
81.2
79.0
73.9
2.8% 54.8 55.9 55.6 57.3 59.9
FY2015 FY2016 FY2017 FY2018 FY2019 FY2015 FY2016 FY2017 FY2018 FY2019
Total Loans and Advances, INR tn y/y Change Public Sector Banks* Private Sector Banks Foreign Banks
*includes small finance banks

Source: CEIC, Economic Times, RBI

EMISPDF in-nmims001
Loans (cont’d)
y/y Growth in Loans by Bank Type Banking System Loans by Type of

Obligation, INR tn
25.0%
22.4%
20.0%
18.0%
14.4% 57.4
12.5% 13.0% 44.1 45.6 49.9
11.0% 40.7
7.4%
5.6%
4.4%
2.1% 3.0%
-0.5% 28.8 30.7 31.2 33.5 36.1
FY2015 FY2016 FY2017 FY2018 FY2019
4.4 4.2 4.3 4.0 3.6
-8.6% FY2015 FY2016 FY2017 FY2018 FY2019

Bills Purchased and Discounted Cash Credits, Overdrafts
Foreign Banks Term Loans
Banking System Loans by Loan Security, Banking System Loans by Sector of

INR tn Borrower, INR tn
20.0 7.3
13.4 13.9 16.9
11.6 3.2 8.3
3.9 3.4 8.6
4.0 3.8 8.8
8.6
52.1
46.8
67.1 73.8 41.3 43.3
58.3 61.8 63.4 38.6 0.5
0.3 0.3
0.2 0.4 6.4
4.5 3.7 5.3
5.0
FY2015 FY2016 FY2017 FY2018 FY2019 25.3 26.7 30.8
21.3 24.0
Unsecured FY2015 FY2016 FY2017 FY2018 FY2019

Covered by Bank and Government Guarantees
Secured by Tangible Assets Priority Sectors Public Sectors Banks Others Outside India
Source: CEIC, RBI

EMISPDF in-nmims001
FOCUS POINT
Total Loans by Scheduled Commercial Banks by Region, FY2020, INR bn
Northern
23,586.8 North Eastern
1,091.5
Central
8,992.2
Western
Eastern
33,949.8
7,456.9
Southern
29,418.5
Source: RBI

EMISPDF in-nmims001
Deposits
Total Deposits in Scheduled Commercial Deposits by Bank Type, INR tn and %,

Banks, INR tn FY2019
10.6% Private
10.1%
9.3% Sector
Banks; 37.7;
29.3%
7.0%
6.1%
128.9
117.9
111.1
100.9
Public Sector Foreign

94.3
Banks; 84.9; Banks; 5.8;

65.8% 4.5%
Small
Finance
FY2015 FY2016 FY2017 FY2018 FY2019 Banks; 0.5;
0.4%
Total Deposits, INR tn y/y Change
Comments
Deposits accounted for 77.6% of total bank liabilities in FY2019. Deposits were on a rising trend in the
five years ending in FY2019 and reached INR 128.9tn in FY2019. Deposits rose at a CAGR of 8.1%
between FY2015 and FY2019. Public banks accounted for 66% of the deposits of scheduled commercial
banks, followed by private sector banks (28%), foreign banks (4.5%) and small finance banks (1.5%).
Total deposits in the banking sector recovered from the slowdown since 2009 and 2010 interrupted
only by one-off growth due to demonetisation in 2017. The reason for this recovery can be attributed
to the low base effect and growth of term deposits which accounted for 60% of the deposits of all
scheduled commercial banks in FY2019. Term deposits reported a CAGR of 5% from FY2015 to FY2019. In
addition, the increase in deposits can be attributed to increasing per capita income, especially among
India’s middle class, as well as government efforts to promote financial inclusion. Due to the volatility
of the debt and equity markets resulting from the COVID-19 pandemic, and the ongoing lockdown,
many investors have opted for parking funds in bank deposits.
Source: CEIC, Livemint, RBI

EMISPDF in-nmims001
Deposits (cont’d)
Total Deposits in Scheduled Commercial Total Deposits in Public Sector Banks by

Banks by Type, INR tn Type, INR tn
128.9 80.8 82.9 84.9

117.9 74.9
111.1 71.9
100.9 50.6 51.3
94.3 50.4 50.8
68.1 77.3 49.6
70.8
66.4
63.6
24.7 26.6 28.0

17.3 19.5
35.9 39.1
32.5 5.0 4.9 5.4 5.4 5.5
22.4 25.5
8.4 9.0 10.5 11.3 12.4 FY2015 FY2016 FY2017 FY2018 FY2019
FY2015 FY2016 FY2017 FY2018 FY2019 Term Deposits

Term Deposits Savings Bank Deposits
Savings Bank Deposits
Demand Deposits
Demand Deposits
Total Deposits in Scheduled Banks Total Deposits in Public Sector Banks
Total Deposits in Private Sector Banks by Total Deposits in Foreign Banks by Type,
Type, INR tn INR tn
37.7
5.8
30.1
25.6 22.1 4.9
4.6 4.7
21.5 14.6 17.0 4.1 3.5
18.3 3.0 2.9 2.9
13.0
11.3 2.6
10.5 0.6
7.2 8.7
0.6
4.5 5.5 0.5 0.5
5.2 0.5
2.5 2.9 3.9 4.4 1.4 1.7
0.9 1.1 1.2
FY2015 FY2016 FY2017 FY2018 FY2019
Term Deposits FY2015 FY2016 FY2017 FY2018 FY2019
Term Deposits
Demand Deposits
Demand Deposits
Total Deposits in Public Sector Banks
Total Deposits in Public Sector Banks
Source: CEIC, RBI

EMISPDF in-nmims001
FOCUS POINT
Total Deposits by Scheduled Commercial Banks by Region, FY2020, INR bn
Northern
8,440.6 North Eastern
2,664.5
Central
18,682.1
Western
Eastern
36,028.5
17,965.3
Southern
33,720.6
Source: RBI

EMISPDF in-nmims001
NPLs
Comments
After a continuously worsening situation, total gross NPLs declined in FY2019 by 9.9% y/y to INR
9,364bn. This has occurred as a result of the dip in NPLs of public sector banks to INR 7,395bn in FY2019
from INR 8,956bn in FY2018. The NPLs of foreign banks followed a similar trend. However, unlike other
bank types, the NPLs of private sector banks kept increasing in FY2019, matching the four preceding
years. The asset quality of private sector banks deteriorated in terms of the GNPA ratio as a result of
the reclassification of IDBI Bank Ltd as a private bank with effect from January 21, 2019.
In FY2019, the RBI introduced a framework for the resolution of stressed assets. The aim of this
prudential framework is to ring-fence and save the Indian banking sector from a rise of NPAs. The
framework provides for early recognition, reporting and time-bound resolution of stressed assets and
strong disincentives in the form of additional provisioning for delays in the initiation of resolution or
insolvency proceedings.
Total Gross NPLs, INR bn Gross NPLs by Bank Type, INR bn
89.4%
138.5
1,293.4 122.4
136.3 1,836.0
10396.8
932.1
158.0
558.5
31.3%
9,364.7
29.5%
22.8% 107.6 8,956.0
7,395.4
6116.1
6,847.3
336.9
7917.9
5,399.6
3229.2
2,784.7
-9.9%
Total Gross NPLs, INR bn y/y Change Public Sector Banks Private Sector Banks Foreign Banks
Source: CEIC, RBI

EMISPDF in-nmims001
NPLs (cont’d)
Gross NPL Ratio by Bank Type Total Net NPLs, INR bn
15.6% 98.9%
5,206.79
12.3% 12.4%
4,331.21
9.7%
23.3% 23.8% 20.2%

4.0%
3,550.76
3,498.14
5.1% 5.5%
4.5% 4.9%
4.3% 4.2%
3.3% 3.9% 3.1%
1,758.41
2.1% 2.9% 4.1%

1.8%
-31.8%
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019
FY2015 FY2016 FY2017 FY2018 FY2019
Foreign Banks Total Net NPLs, INR bn y/y Change
Total Net NPLs by Bank Type, INR bn NPL Provisioning Ratio* by Bank Type
15.5 88.8%
83.6% 82.5% 84.3% 83.3%
642.2
21.4 72.7%
63.3%
477.8 63.4%
27.6 61.4%
20.5 58.1% 50.3%
266.8 52.2%
48.7% 49.3%
673.1
42.5% 42.6% 40.7% 44.1%
17.6 4,544.7
3,830.9
141.3 3,203.8
2,851.2
1,599.5
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019

FY2015 FY2016 FY2017 FY2018 FY2019
Public Sector Banks Private Sector Banks Foreign Banks Foreign Banks
* NPL provisioning ratio is the ratio of the amount set aside for NPLs by the banks to gross NPLs.
Source: CEIC, RBI

EMISPDF in-nmims001
Capital Adequacy
Comments
The Capital Adequacy Ratio (CAR) measures a bank’s capital in relation to its risk-weighted assets and
current liabilities. The ratio is generally set by the central bank to regulate the scheduled commercial
banks’ leverage limits and prevent them from becoming insolvent. The Basel III norms require a ratio
of capital to risk-weighted assets of 8%. However, the RBI’s norms set the CAR for India’s scheduled
commercial banks at 9% and for public sector banks at 12%. The capital to risk-weighted assets ratio
of scheduled commercial banks in India has recently been improving from a low of 13% in FY2015.
According to a study undertaken by the RBI, strengthening the capital base of banks leads to credit
expansion in a non-linear fashion. Re-capitalisations of INR 900bn in FY2018 and INR 1,060bn in FY2019
have improved the capital position of public sector banks, even though they have struggled with the
burden of low asset quality.
CARs of Public Sector Banks CARs of Major Private Sector Banks
14.2% 19.9%
13.2% 18.4%
12.6% 13.4%
13.1% 13.1% 12.9% 18.2%
17.2% 17.5%
12.2% 12.6% 12.7% 16.6% 17.4%
12.2% 17.0% 17.1%
12.0% 12.0% 12.1%
16.3% 16.6%
12.1% 16.8%
11.3% 16.8% 15.8%
15.5% 15.3%
11.7% 15.1% 15.0%
10.7% 15.5% 15.0% 14.2%
15.3% 14.6% 14.8%
9.7%
9.2%
12.1%
ICICI Bank HDFC Bank
State Bank of India Bank of India
Axis Bank Kotak Mahindra Bank
Bank of Baroda Punjab National Bank IndusInd Bank

EMISPDF in-nmims001
Profitability
Comments ROAs by Bank Type

The overall profitability of the scheduled
1.84%
commercial banks improved in FY2019, bucking 1.65% 1.68% 1.61% 1.56%
the trend of continuous deterioration since 1.50%
1.54% 1.30% 1.34%
FY2014. Public sector banks recorded an improved 1.45%
1.14%
performance in all aspects, such as return on 0.81% 0.81%
assets, net interest margins, and investment 0.63%
0.50% 0.46% 0.40% 0.36%
returns in FY2019 compared with the previous
year. Profitability improved as a result of the -0.07% -0.10% -0.09%
-0.15%
improving asset quality of banks, especially FY2014 FY2015 FY2016 FY2017 FY2018 FY2019
public sector banks in India. For private sector -0.65%
banks, both the RoA and net interest margin -0.84%
worsened in FY2019 as compared to the previous Public Sector Banks Private Sector Banks
year but were better than those of public sector
Foreign Banks Scheduled Commercial Banks
banks.
Net Interest Margins by Bank Type Investment Returns by Bank Type
4.22% 4.16% 7.73% 7.80%

4.06% 3.92% 3.98% 3.62% 7.69% 7.49%
3.66% 3.63% 3.70% 7.64% 7.68%
3.47% 3.58% 3.54% 7.58% 7.20%
7.54% 7.49% 7.49%
2.91% 7.34% 7.06%
2.82% 2.78% 2.75% 7.28% 7.44% 7.06%
2.69% 2.69%
2.44% 2.50% 7.32% 7.16% 7.00%
2.53% 2.35% 2.26% 2.25%
6.92% 6.99%
6.83%
6.61%
6.23%
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019

FY2014 FY2015 FY2016 FY2017 FY2018 FY2019
Foreign Banks Scheduled Commercial Banks Foreign Banks Scheduled Commercial Banks
Source: RBI

EMISPDF in-nmims001
Liquidity
Loans-to-Deposit Ratio
78.3% 78.2%
75.3%
74.2%
73.0%
FY2015 FY2016 FY2017 FY2018 FY2019
Comments
The liquidity of scheduled commercial banks, measured in the form of the loans-to-deposits ratio,
improved to 75.3% in FY2019. The Basel III framework emphasises two minimum liquidity standards,
the liquidity coverage ratio (LCR) and the net stable funding ratio (NSFR). In India, the LCR has been
implemented since January 1, 2015, and the NSFR was to come into effect from April 1, 2020, but in
March 2020 its implementation was deferred by six months to October 2020. The lockdown related to
COVID-19 has made the banking sector face a liquidity crunch, reduced capacity, with the provision of
only essential services, and is likely to lead to a potential spike in bad loans, among other negative
features. However, the RBI has taken timely measures to reduce the risk to the banking sector
associated with COVID-19. Some of the significant measures to reduce the cost of funds and inject
adequate liquidity into the banking system include cuts of 115 bps to the repo rate, 100 bps to the
Cash Reserve Ratio (CRR), and 115 bps to the reverse repo rate, along with auctions of long term repo
operations (LTROs), an increase in the Marginal Standing Facility (MSF) limit, the provision of INR
250bn to the National Bank for Agriculture and Rural Development (NABARD), INR 150bn to the Small
Industries Development Bank of India (SIDBI) for refinancing commercial banks and NBFCs, and INR
100bn to NHB, as well as an increase in the Ways and Means Advances (WMA) limit, among others.
Source: BIS, CEIC, The Hindu Business Line, World Bank

EMISPDF in-nmims001
Global Positioning
Key Banking Ratios, 2019

158.8%
84.3%
66.9%
57.0%
48.8%
30.8%
22.9%
21.8%
19.7%
16.1%
15.3%
14.8%
14.7%
14.0%
13.7%
11.8%
9.2%
3.1%
2.5%
2.4%
2.0%
1.9%
1.7%
1.5%
1.5%
1.5%
1.3%
1.3%
1.0%
0.9%
0.3%
0.2%
China India Indonesia Malaysia Philippines Singapore Thailand US
Non-Performing Loans to Total Gross Loans Regulatory Tier 1 Capital to Risk-Weighted Assets
Liquid Assets to Short Term Liabilities Return on Assets
Domestic Credit to Private Sector, % of Comments

GDP, 2018/2019 India’s Non-Performing Loans to Total Gross Loans
ratio remains the highest (9.2%) among its peers
Indonesia 38.8% such as Indonesia (2.4%), Malaysia (1.5%) and
India 50.0% Philippines (2%), plus developed economies such
Brazil 61.2% as the US (0.9%). Concomitantly, the return on
Philippines 66.3% assets remains the lowest (at 0.2%) in comparison
Russian Federation 76.4% with these countries. In addition, domestic credit
Malaysia 120.4%
to the private sector remains the lowest among
the BRICs countries, at 50% of GDP in 2018/2019,
Singapore 121.9%
compared with 76.4% in Russia, 61.2% in Brazil and
Vietnam 133.3%
161.1% in China. In India, a major portion of
Thailand 144.6%
domestic borrowing is undertaken by the
South Korea 150.3%
government, which leaves very little lending to the
China 161.1%
private sector. Low credit to the private sector
US 179.3%
indicates low capital available for expansion,
which is a major hindrance to economic growth.
Source: IMF, equitymaster

EMISPDF in-nmims001
Consumer Confidence
Comments
Consumer confidence measures the level of consumer optimism about the overall economic situation
and the state of the personal finances and income stability of consumers. Thus, consumer confidence
is correlated to economic growth.
Although the RBI’s Current Situation Index had been on an overall declining trend since December
2011, a sharp decline has been recorded since March 2019. This has resulted from subdued economic
growth globally and in India, a situation that has been made worse by the COVID-19 crisis.
According to RBI, as consumers reduced spending, companies also reduced their production. In
response to this situation, the RBI reduced its benchmark interest rate to 4% in May 2020 and
undertook a slew of unconventional monetary measures to reduce the cost of capital and boost
demand in the Indian economy.
RBI Current Situation Index

130
120
110
100
90
80
70
60
50
Dec-10
Mar-11
Jun-11
Jun-12
Mar-14
Jun-14
Mar-15
Jun-15
Mar-16
Jun-16
Mar-17
Jun-17
Sep-11
Dec-11
Mar-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Sep-14
Dec-14
Sep-15
Dec-15
Sep-16
Dec-16
Sep-17
Dec-17
Mar-18
Jun-18
Mar-20
Sep-18
Dec-18
Mar-19
Jun-19
Sep-19
Dec-19
Source: Economic Times, CEIC, RBI

EMISPDF in-nmims001
Household Debt
Household Debt-to-GNDI Ratio Household Debt by Source, 2019, INR bn
Cooperative Banks
4.3% and Societies; 59.1;
4.0% 0.8% Financial
Corporations
and NBFCs;
3.0% 3.1% 2364.1;
2.8% 31.9%
7,655.2
7,380.6
4,686.5
3,853.9
3,768.3
Banks;
4880.6; Government;
65.9% 8.4; 0.1%
FY2015 FY2016 FY2017 FY2018 FY2019
Insurers;
Total Household Debt, INR bn 93.4; 1.3%
Household Debt-to-GNDI Ratio
Comments
The household debt to GNDI ratio stood at 4.3% in FY2019, and total household debt increased to INR
7,655.2bn in FY2019 from INR 7,380.6bn in FY2018. The Indian household debt to GNDI ratio is very low
and, except for FY2018, has been mostly stagnant over the past few years. In India, most household
debt flows through informal channels such as friends, family and landlords, among other sources. This
trend has been shrinking in importance over the years, in parallel with the increased awareness of
formal banking services. Lenders, in turn, have made access to loans easier by making rules more
transparent and reducing their interest rates.
Furthermore, the government’s continuous support for banking technology, banking expansion in rural
and remote areas and increasing access to financial services has contributed to a surge in household
debt. Other factors that have been boosting the indebtedness of Indian households have been a focus
on consumption and a westernised lifestyle evinced by more vehicle and home ownership and the
higher propensity to spend on travel and leisure activities.

EMISPDF in-nmims001
Household Savings
Comments
Gross household savings increased to INR 41,765bn in FY2019 from INR 39,738.4bn in FY2018, while
gross financial savings rose to INR 19,957.1bn in FY2019 from INR 12,572.5bn in FY2015. By type, gross
financial currency savings totalled INR 4,708.1bn in FY2018, while deposits decreased to INR 5,352.8bn.
Indian households have the reputation of being among the biggest savers in the world. Thus,
household financial savings in India account for the bulk of overall savings in the Indian economy.
Over the years, gross financial savings have been in the range of around 7% to 10% of GDP.
Household financial savings increased in FY2019 mainly because household liabilities declined at a
higher rate than the increase in household deposits with SCBs. Household investments in insurance
and mutual funds did not witness any major change compared with FY2018.
Also, in FY2019, a slowdown in the pace of economic growth led to a more cautious attitude
concerning the financial outlook, which led to higher savings and a decrease in consumption and loan
growth.
Gross Household Savings, INR bn Gross Financial Savings by Type, INR bn
FY2015 FY2016 FY2017 FY2018

41,765.0
39,738.4
Currency 1,333.45 2,005.18 -3,164.73 4,708.09

32,092.5 21,808.0
19,128.0
27,703.7 28,138.3
15,945.7 Deposits 6,123.64 6,456.75 9,679.8 5,352.8
13,176.0
15,131.3
Shares and
203.64 283.56 443.09 630.05
Debentures
20,610.3 19,957.1
14,962.3 16,146.8 Government
12,572.5 9.69 679.39 630.79 821.52
Claims
Insurance
FY2015 FY2016 FY2017 FY2018 FY2019 2,993.22 2,641.77 3,543.2 3,504.46
Funds
Gross Financial Savings Physical Assets Savings Provident and

1,908.83 2,917.42 3,251.53 3,678.81
Gross Household Savings Pension Funds
Source: CEIC, CSO, Economic Times, Financial Express

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Interest Rates
Comments
The repo rate is the rate at which the RBI lends money to the commercial banks. This rate is used to
monitor liquidity and inflation in the economy. Since 2012, the RBI has generally decreased the repo
rate (from 8.5% in January 2012 to 4.0% in May 2020), except for the occasional increases in September
and October 2013, January 2014, and June 2018. These increases have mainly been due to strong
economic activity, normal monsoons, and a healthy rate of investment, among other factors.
As a result of the lockdown imposed to contain the spread of COVID-19 in India, the RBI lowered its
benchmark rate by 75 basis points to 4.4% in March 2020 from 5.15% (where it has remained since
October 2019) and then again reduced it to 4% in May 2020, alongside adopting other liquidity and
regulatory measures. These measures were taken to provide adequate liquidity to the system, bring
down the cost of capital for businesses and mitigate the impact of COVID-19. The lower cost of capital
and increased liquidity will help businesses meet their day-to-day liquidity requirements and combat
the effects of COVID-19.
Policy Rate Average Borrowing and Lending Rates

9.00% 12.0%
8.50% 10.0%
8.00%
8.0%
7.50%
6.0%
7.00%
4.0%
6.50%
2.0%
6.00%
5.50% 0.0%
Jul-14
Apr-13
Jan-12
Jun-12
Oct-15
Nov-12
Mar-16
Apr-18
Sep-13
Feb-14
Dec-14
May-15
Jan-17
Jun-17
Aug-16
Nov-17
Sep-18
Feb-19
Jul-14
Apr-13
Jan-12
Jun-12
Oct-15
Nov-12
Mar-16
Apr-18
Sep-13
Feb-14
Dec-14
May-15
Jan-17
Jun-17
Aug-16
Nov-17
Sep-18
Feb-19
Base Rate, Five Major Banks Deposit Rate
Source: Bloomberg, CEIC, RBI, Wall Street Journal

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Exchange Rates
USD-INR Exchange Rates

80
75
70
65
60
55
50
45
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jul-19
Apr-12
Apr-13
Apr-14
Jan-12
Oct-12
Jan-13
Oct-13
Jan-14
Oct-14
Apr-15
Apr-17
Apr-18
Jan-15
Oct-15
Apr-16
Jan-16
Oct-16
Jan-17
Oct-17
Jan-18
Oct-18
Apr-19
Jan-19
Oct-19
Apr-20
Jan-20
Comments
The USD-INR exchange rate has been increasing over the years. The depreciating rupee makes exports
cheaper and therefore more competitive as well as imports more expensive. While a falling rupee is
good news for sectors such as information technology, textiles, handicrafts and leather, the extent of
the benefit depends on global demand and growth, both of which are currently subdued because of
the standstill in economic activity seen across service sectors including aviation, hotels and the
tourism industry.
As a result of the COVID-19 pandemic, the Indian rupee is expected to average INR 77 per USD in 2020,
and INR 80 per USD in 2021, amid low global risk appetite and possibly steep monetary easing, The
Economic Times (ET) reported in March 2020, quoting the Fitch Solutions consultancy. In the short
term, the rupee is expected to depreciate further which would be partially counteracted by a
significant enhancement to India's terms of trade due to the decline in oil prices. In the long term, the
rupee's over-valuation and higher inflation rate relative to that registered in the US is expected to
push the Indian currency downwards.
Source: Economic Times

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Employment and Wages
Total Employment by Bank Category, Total Wage Payments and Provisions to

thou Bank Employees, INR bn
FY2015 FY2016 FY2017 FY2018 FY2019

12.4%
Public Sector
844.5 856.1 857.5 845.4 807.0
Banks 9.3%
8.3%
Private Sector
1,489.9
310.0 374.8 403.5 421.6 477.5 6.8%
Banks
1,325.9
1,194.9
1,103.0
1,275.8
Foreign Banks 25.6 25.2 24.9 24.4 23.2 3.9%
Small Finance
0.0 0.0 14.2 44.3 55.8
Banks
FY2015 FY2016 FY2017 FY2018 FY2019
Total Banking
Sector 1180.1 1256.1 1300.0 1335.7 1363.5 Total Payment and Provision for Employees, INR bn
Employment y/y Change
Comments
Total employment at foreign banks operating in India increased to 1,363.5 thou people in FY2019.
Employment at private sector banks rose to 477.5 thou in FY2019, while employment at public sector
banks decreased to 807 thou in FY2019 from 845.4 thou in FY2018. Total wage payments and provisions
for bank employees increased to INR 1,489.9bn in FY2019 from INR 1,325.9bn in FY2018.
The manpower cost of public sector banks has been increasing steadily over the years resulting in
activities aimed at optimising staff numbers and levels of payment. Another major reason for
decreasing employment in public sector banks has been the consolidation drive of the government,
which merged various PSBs into a few large banks. These mergers were announced in August 2019 and
came into effect in April 2020.
On the other hand, employment at private sector banks has increased over the years due to their
gradual expansion and the launch of new products driving the requirement for staffing. Private banks
have become a desired employer because of the attractive remuneration they offer and the growth
prospects they enjoy.
Source: CEIC, Economic Times, Financial Express, RBI

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04
COMPETITIVE
LANDSCAPE

04 COMPETITIVE LANDSCAPE CONTENTS
Timeline
India Banking 1949 Development Milestones
Sector The RBI is nationalised and the Banking Regulation Act

1949 is passed to make the RBI the de facto and de jure
banking sector regulator.
1959 Market Players
1969
The passage of the State Bank of India (Subsidiary
Banks) Act 1959 merges the State Bank of India with 8 Development Milestones
former State-associated banks, paving the way for SBI
to be India's largest commercial bank. The government issues the Banking Companies
(Acquisition and Transfer of Undertakings) Ordinance 1969,
nationalising 14 large commercial banks including Bank of
Baroda, Bank of India, and Punjab National Bank.
1981 Market Players
Andhra Bank, a medium-sized public sector bank,

becomes the first bank in India to issue credit cards.
1991 Development Milestones
The Narasimham-I Committee's report paves the way for

sweeping changes in India's banking sector, including the
1994 Market Players introduction of capital adequacy ratios and paving the way
for the entry of private players into the banking sector.
The Industrial Credit and Investment Corporation of
India establishes ICICI Bank which ultimately becomes
India's largest privately owned bank (by total assets).
1998 Market Players
ICICI Bank becomes the first bank in India to offer

2000 Development Milestones Internet banking services to its customers.
HDFC Bank and Times Bank merge in February

2000 in the banking sector's first merger of
private sector banks.
Indian banks begin implementing Basel III

capital regulations in phases.
The Indian government announces the demonetisation

of all INR 500 and INR 1,000 banknotes, replacing them
with new INR 500 and INR 2,000 banknotes.
2018 Market Players
Punjab National Bank alleges that it had lost
2020
approximately INR 114bn to fraudulent behaviour by
Development Milestones jeweller Nirav Modi in what was to become one of
India's largest bank fraud cases in history.
The government consolidates ten PSBs into four, with effect
from April 1, 2020. Subsidiaries of Infrastructure Leasing & Financial
Services Ltd default on their loans, triggering concerns
The RBI approves a six-month moratorium on the payment about broader financial troubles at Indian NBFCs.
of installments with respect to all term loans until August
31, 2020, in response to the COVID-19 situation. Development Milestones
Banks are permitted to defer the implementation of the last
tranche of 0.625% of the CCB (Capital Conservation Buffer)
from March 31, 2020, to September 30, 2020.
Source:

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Highlights
Overview
In India, public sector banks play a dominant role extending loans and collecting deposits, although
over the years competition has substantially increased due to the emergence of private sector and
foreign banks. Public sector banks accounted for around 72% of total deposits in FY2019, while private
sector banks held 32%. Out of total loans extended, public sector banks accounted for 62%, while
private sector banks claimed 34%. Public sector banks dominate the market but they are burdened
with most of India’s non performing loans (NPLs). In FY2019, public sector banks accounted for 79% of
total gross NPLs of the banking sector, followed by private sector banks with 20%.
Market Structure
The banking structure of India is headed by the Reserve Bank of India and comprises commercial
banks and co-operative banks. Commercial banks include Scheduled Commercial Banks (SCBs) and
non-scheduled commercial banks. SCBs are further segmented into private, public and foreign banks
as well as regional rural banks (RRBs), whereas co-operative banks comprise urban and rural co-
operative banks. There were 156.3 thou bank branches in India as of December 2019. By number of
branches, the State Bank of India (SBI) dominates the market with a share of 15%, followed by Punjab
National Bank (4.6%). India’s southern region has the maximum number of branches (43 thou),
followed by the central region with 31 thou branches. Apart from the scheduled commercial banks,
NBFCs and HFCs also extend credit to consumers.
Main Players
The SBI is the largest commercial bank in the country in almost all aspects including assets, deposits,
branches, profits, customers and number of employees. SBI is a Fortune 500 company, whose largest
shareholder is the government of India, with more than 50% ownership. ICICI bank is the second-
largest bank with total assets of INR 13,772.9bn in FY2019. It is also one of India’s oldest financial
services brands. HDFC is the third-largest bank with total assets of INR 12,928.1bn in FY2019.
Source: Emkay Securities, GKToday, Livemint, Quartz India, RBI

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Main Events
 The Indian federal government approved the mega consolidation of ten PSBs into four in March
2020 (announced in August 2019), with effect from April 2020. These include:
(a) Amalgamation of Oriental Bank of Commerce and United Bank of India into Punjab National Bank;
(b) Amalgamation of Syndicate Bank into Canara Bank;
(c) Amalgamation of Andhra Bank and Corporation Bank into Union Bank of India;
(d) Amalgamation of Allahabad Bank into Indian Bank;
The merger was undertaken with the aim of creating large PSBs with national reach and scale
comparable to that of global banks to increase the competitiveness of the Indian banking sector in
both the domestic and international market.
 The RBI revised the existing guidelines on liquidity risk management for NBFCs in November 2019,
to strengthen the standard of the Asset Liability Management (ALM) framework applicable to
NBFCs. A liquidity coverage ratio was introduced for the NBFCs in a move that will increase the
resilience of NBFCs to potential liquidity disruptions.
 The RBI linked all new floating rate retail loans and floating rate loans to micro and small
enterprises extended by banks with effect from October 1, 2019, to one of several specified external
benchmarks. The proposed benchmarks include the policy repo rate, the government of India’s
three-month or six-month treasury bill yields, or any other benchmark indicated by Financial
Benchmarks India Private Ltd.
Source: Business Standard, Economic Times, RBI

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Top Companies
Top 10 Banks in India by Total Assets, INR bn, 2019
1. State Bank of India (SBI)

INR 38,884.6bn
2. ICICI Bank
INR 13,772.9bn 3. HDFC Bank
INR 12,928.1bn
4. Bank of Baroda
INR 8,196.7bn
5. Axis Bank
INR 8,140.5bn
6. Punjab National Bank

INR 7,892.6bn
7. Canara Bank
INR 7,117.8bn
8. Bank of India
INR 6,308.8bn
9. Union Bank of India
INR 4,985.8bn 10. Kotak
Mahindra Bank
INR 3,951.7bn
Source: EMIS Company Database

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Top M&A Deals
Top M&A Deals in the Indian Banking Sector, January 2018-June 2020
Country of Deal Value, Stake,
Date Target Company Deal Type Buyer
Buyer USD mn %
Qualified Institutional Buyers (QIBs); Singapore;
26-09-19 Axis Bank Ltd Minority stake GIC Pte Ltd; BlackRock Inc; T. Rowe United States; 1760 (Official) 7%
Price Group Inc India
26-05-20 Kotak Mahindra Bank Ltd (KMB) Minority stake Buyer(s) unknown Undisclosed 993 (Official) 0%
Open market
20-06-19 Axis Bank Ltd Buyer(s) unknown Undisclosed 394 (Official) 2%
purchase
Societe Generale SA; Qualified
270.46
16-08-19 Yes Bank Ltd Minority stake Institutional Buyers (QIBs); BNP France; India 10%
(Official)
Paribas Arbitrage Fund
ICICI Prudential Life Insurance Co
Ltd; IDFC Financial Holding
United States;
01-05-20 IDFC First Bank Ltd Minority stake Company Ltd; HDFC Life Insurance 265 (Official) 18%
India
Company Ltd.; Warburg Pincus LLC;
Bajaj Allianz Life Insurance Co
Kotak Mahindra Mutual Fund;
Open market
10-08-18 AU Small Finance Bank Ltd Nomura India Investment Fund Japan; India 249 (Official) 9%
purchase
Mother Fund
210 (Market
21-04-20 Max Life Insurance Co Ltd Minority stake Axis Bank Ltd India 30%
est.)
Camas Investments Pte Ltd; 146.72
17-06-18 AU Small Finance Bank Ltd Minority stake Singapore 5%
Temasek Holdings Pte Ltd (Official)
135.06
14-03-20 Yes Bank Ltd Minority stake ICICI Bank Ltd India 5%
(Official)
India;
lshana Capital Ltd; Bajaj Finance Ltd;
Mauritius;
East Bridge Capital Master Fund I
30-11-19 RBL Bank Ltd Minority stake Hong Kong 115 (Official) 5%
Ltd; FEG Mauritius FPI Ltd; WF Asian
SAR, China;
Reconnaissance Fund Ltd
United States
Undisclosed Institutional Investors;
Qualified Institutional Buyers (QIBs);
04-12-19 Ujjivan Small Finance Bank Ltd IPO India 104 (Official) 14%
Retail Investors; Shareholders of the
company(ies)
India;
lshana Capital Ltd; East Bridge
Mauritius;
Capital Master Fund I Ltd; FEG
30-12-19 RBL Bank Ltd Minority stake Hong Kong 94.46 (Official) 4%
Mauritius FPI Ltd; WF Asian
SAR, China;
Reconnaissance Fund Ltd
United States
ICICI Prudential Asset Management;
Retail Investors; Non-Institutional
26-11-19 CSB Bank Ltd IPO Investors; Aditya Birla Sun Life India 87.36 (Official) 19%
Mutual Fund; Qualified Institutional
Buyers (QIBs)
Open market
19-09-19 Yes Bank Ltd Buyer(s) unknown Undisclosed 47.32 (Official) 2%
purchase
Source: EMIS DealWatch

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Top M&A Deals (cont’d)
Top M&A Deals in the Indian Banking Sector, January 2018- June 2020
Country of Deal Value, Stake,
Date Target Company Deal Type Buyer
Buyer USD mn %
Centrum Group; Family office of Ranjan

06-02-19 Jana Small Finance Bank Ltd Minority stake India 42 (Market est.) 5%
Pai
Existing investors; DEG - Deutsche
Investitions - und
Entwicklungsgesellschaft mbH; Kotak 35.8 (Market
03-04-19 Suryoday Small Finance Bank Ltd Minority stake Germany; India n.a.
Mahindra Life Insurance Co Ltd; est.)
Promoters of Suryoday Small Finance
Bank Ltd
23.46 (EMIS
15-11-18 Fedbank Financial Services Ltd Minority stake True North Fund VI LLP; True North India 17%
est.)
Open market
15-04-20 IndusInd Bank Ltd Goldman Sachs Singapore Pte Singapore 23.3 (Official) 1%
purchase
22.34 (EMIS
26-10-18 National Securities Depository Ltd (NSDL) Minority stake HDFC Bank Ltd India 5%
est.)
17.38 (EMIS
20-11-18 The Clearing Corporation Of India Limited Minority stake HDFC Bank Ltd India 4%
est.)
Open market India Infoline Investment Services Ltd
05-06-18 Lakshmi Vilas Bank Ltd. India 15.76 (Official) 5%
purchase (IIISL)
Open market
04-11-19 Yes Bank Ltd Rakesh Jhunjhunwala - private investor India 12.33 (Official) 1%
purchase
Oman India Joint Investment Fund; 11.75 (Market

27-11-19 Capital Small Finance Bank Ltd Minority stake India n.a.
Amicus Capital; Pi Ventures est.)
Lok Capital Group; Kotak Mahindra Life

Insurance Company Ltd; Teachers India; United
28-05-20 Suryoday Small Finance Bank Ltd Minority stake 8.2 (Market est.) n.a.
Insurance and Annuity Association of States
America (TIAA); Gaja Capital
20-05-19 India International Exchange Ltd Minority stake ICICI Bank Ltd India 4.36 (EMIS est.) 10%
04-03-19 Kisan Rural Finance Ltd Minority stake ICICI Bank Ltd India 2.51 (EMIS est.) 10%
24-07-18 Arthashastra Fintech Pvt Ltd Minority stake ICICI Bank Ltd India 1.26 (Official) 10%
10-09-19 Indian banking portfolio of ADCB Acquisition DCB Bank Ltd India n.a. 100%
Astarc Ventures; Valpro Capital; n.a. (Market

09-01-19 Rebanko Venture Pvt Ltd Minority stake India n.a.
Undisclosed buyer(s) est.)
ICICI Bank Ltd; GMO Global Fintech n.a. (Market

10-01-19 Arthashastra Fintech Pvt Ltd Minority stake India; Japan n.a.
Fund; Buyer(s) unknown est.)
28-06-18 Swadhaar Finserve Pvt Ltd Minority stake RBL Bank Ltd India n.a. (Official) 40%
26-06-18 IL&FS Securities Services Ltd Acquisition IndusInd Bank Ltd India n.a. 100%
Source: EMIS DealWatch

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M&A Activity
Number and Value of Deals Number of Deals by Deal Value (USD)
6
5 50.1-100mn
6.3%
4 4 4
3 3
2 2,078 Undisclosed
15.6%
1
1,500
100.1-500mn
0
28.1%
0 162 250 63 45 434 425 135
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
500.1-
2018 2019 2020 1000mn
3.1%
0-50mn
Value of Deals, USD mn Number of Deals 43.8%
Number of Deals by Deal Type, % Number of Deals by Region

of Investors, %
Mauritius
4.2% Hong Kong
SAR 4.2%
Japan 4.2%
China 4.2%
Germany
2.1%
Minority
Stake 73.3% United States
10.4%
Singapore
Open Market 6.3%
Purchase
20.0%
India 56.3% Undisclosed
6.3%
Acquisition France 2.1%
6.7%
Source: DealWatch

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05
COMPANIES
IN FOCUS

05 COMPANIES IN FOCUS CONTENTS
State Bank of India
Highlights Operational Performance Summary, INR

bn, FY Ended March 31
SBI is the largest bank in India, with more than a Indicator FY2016 FY2017 FY2018 FY2019 FY2020
20% market share of loans, around 23% market
share of deposits, 0.4 billion customers and more Revenue - Treasury 613.0 785.3 821.6 777.1 751.0
than 22,000 branches, among other strong Revenue - Corporate /
868.4 836.9 643.7 801.4 918.0
credentials (as of March 2020). Wholesale Banking
SBI is headquartered in Mumbai and provides a Revenue - Retail Banking 972.0 1,064.1 1,119.6 1,212.5 1,312.3
wide range of products and services to

Revenue - Other Banking 48.7 61.7 86.4 116.4 142.7
individuals, commercial enterprises, large
corporates, public bodies and institutional Profit Margin - Treasury 14.8% 18.5% 6.1% 9.1% 19.9%
customers through its various branches and Profit Margin - Corporate /
-13.0% -34.8% -59.5% -19.8% 4.2%
outlets, joint ventures, subsidiaries and associate Wholesale Banking
companies. Profit Margin - Retail
21.5% 14.2% 17.4% 10.6% 13.8%
Banking
SBI’s flagship, all-encompassing digital platform, Profit Margin - Other
28.2% 27.8% 1.5% 19.7% 22.2%
YONO, reflects the company's prowess delivering Banking
cutting-edge digital services to millions of retail

customers. Annual Results, INR bn, FY Ended March
31
According to the bank’s FY2020 annual report
Indicator FY2016 FY2017 FY2018 FY2019 FY2020
data (as of March 2020), services provided by the
SBI include personal banking (with 360mn Home Net Interest Income 775.9 813.3 823.7 974.5 1,087.3
Loan Customers), SME Banking (INR 2,676bn total Net Non-Interest
528.3 681.9 775.6 773.7 982.0
SME loans), international banking (with 233 Income
offices across all time zones), rural banking (with Net Profit 122.2 2.4 -45.6 23.0 197.7
a client base of 14.2mn farmers), government
banking (with INR 52,626bn in total government Total Assets 30,734.8 34,451.2 36,164.4 38,884.7 41,974.9
business turnover), corporate banking (providing Total Equity 1,868.6 2,236.7 2,349.4 2,405.3 2,590.0
INR 8,442bn of total corporate loans) and
investments (with 27.4% ROE recorded by the SBI ROAA, % 0.4% 0.0% -0.1% 0.1% 0.5%
Card).
ROAE, % 6.9% 0.1% -2.0% 1.0% 7.9%
Basic EPS, INR 16.0 0.3 -5.3 2.6 22.1
Source: Company Data

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State Bank of India (cont’d)
Consolidated Income Statement, INR bn Consolidated Balance Sheet, INR bn
3.19% 83.0%
2.95%
682
776
982
774
2.52%
2.36% 2.27%
32,741
27,222
528
23,743
1087
75.7%
975
19,601
824
813
29,405
776
73.0%
198
72.5%
22,539
22,269
72.0%
122
18,969
18,703
25,998
2589.95
23
2,405
2,349
2
2,237
1,869
-46
Total Loans Total Deposits
Net Interest Income Non-Interest Income
Net Profit Net Interest Margin Shareholders' Equity Loan-to-Deposit Ratio
Segment PBT, INR bn Capital Adequacy Ratios
FY2016 FY2017 FY2018 FY2019 FY2020 13.9%

3.3%
3.5% 2.4%
13.6% 2.7% 2.5%
Treasury 90.7 145.6 50.2 70.6 149.8
13.1%
Corporate/Whole
-112.7 -291.3 -383.2 -158.9 -38.3 12.9%
sale Banking 12.7% 10.7%
10.4% 10.3% 10.4%
10.0%
Retail Banking 209.4 151.6 194.6 128.4 181.7
Insurance 9.3 13.1 18.3 21.1 23.7 FY2016 FY2017 FY2018 FY2019 FY2020
Tier 1 Capital Ratio Tier 2 Capital Ratio

Other Banking 13.8 17.2 16.8 22.9 31.7 Capital Adequacy Ratio

EMISPDF in-nmims001
ICICI Bank

ICICI Bank was set up in 1994 by ICICI Limited, an
Indian financial institution, and was its wholly- Indicator FY2015 FY2016 FY2017 FY2018 FY2019
owned subsidiary. In October 2001, the Boards of
Net Interest
Directors of ICICI and ICICI Bank approved the 226.5 253.0 261.0 279.0 328.1
Income
merger of ICICI and two of its wholly-owned retail Net Non-Interest
352.5 421.0 524.6 568.1 593.2
finance subsidiaries, ICICI Personal Financial Income
Services Limited and ICICI Capital Services Net Profit 122.5 101.8 101.9 77.1 42.5
Limited, with ICICI Bank. Total Assets 8,260.8 9,187.6 9,857.2 11,242.8 12,387.9
In FY2019, ICICI Bank had a network of 4,874 Total Equity 872.1 974.7 1,095.0 1,166.4 1,189.2
branches, 14,987 ATMs, 1,167 Insta-banking kiosks,
ROAA, % 1.6% 1.2% 1.1% 0.7% 0.4%
391,625 point-of-sale (POS) terminals, and 1,451
cash acceptance machines. The lender provides ROAE, % 14.8% 11.0% 9.8% 6.8% 3.6%
services in retail, SME, rural and wholesale
Basic EPS, INR 21.2 17.5 15.9 12.0 6.6
banking.
In fiscal year 2019, ICICI Bank extended the range Annual Results, INR bn, FY Ended March
of its “insta” offerings which include many 31
banking services such as opening a savings
account and obtaining overdraft facilities etc.
Revenue - Retail
These are provided by the bank for a very short 329.9 391.9 453.9 502.6 591.7
Banking
duration of time and involve digital modes. For Revenue - Wholesale
335.0 328.9 306.4 300.9 341.6
instance, Insta Banking is a new feature in the Banking
iMobile App by ICICI bank. The app saves time at Revenue - Treasury 439.7 483.4 542.9 515.9 539.2
the branch filling out forms required for various
Revenue - Other
transactions, even before the customer reaches 38.1 39.3 38.4 31.1 15.6
Banking
the branch physically. Profit Margin - Retail
8.3% 9.9% 11.9% 14.2% 13.9%
Banking
As of March 2019, the total assets of the bank Profit Margin -
18.6% -3.8% -24.3% -27.5% -30.0%
stood at INR 12.39tn, with INR 220.7bn of core Wholesale Banking
Profit Margin -
operating profit, a 1.89 capital adequacy ratio and 14.7% 17.8% 22.3% 15.0% 9.6%
Treasury
3.42% net interest margin. Profit Margin - Other
17.5% 17.3% 7.9% 18.3% 40.4%
Banking

EMISPDF in-nmims001
ICICI Bank (cont’d)

593
6,470
568
3.48% 3.49%
525
4,937
5,669
113.6%
5,153
3.42% 109.5%
421
4,385
353
5,858
100.5%
6,813
1,189
5,126
3.25%
4,511 96.8%
3.23% 95.0%
3,860
1,095
122
328
1,166
102
102
975
872
279
261
253
226
77
43
FY2015 FY2016 FY2017 FY2018 FY2019 2.5%

18.4%
Retail 3.0% 1.8%
27.2 39.0 53.9 71.4 82.3 4.2% 3.6%
Banking
Wholesale
62.2 -12.5 -74.3 -82.8 -102.4
Banking 17.4%
17.0%
Treasury 64.7 86.2 120.8 77.5 51.6 15.9% 16.9%
15.1%
14.4%
12.8% 13.1%
16.6%
Other Banking 6.7 6.8 3.0 5.7 6.3
Life Insurance 16.3 17.7 17.8 17.2 11.6

FY2015 FY2016 FY2017 FY2018 FY2019
General
6.9 7.1 9.1 12.0 16.0
Insurance
Capital Adequacy Ratio
Others 14.6 14.3 21.8 21.0 20.1

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Bank of Baroda

Bank of Baroda, headquartered in Vadodara, Indicator FY2015 FY2016 FY2017 FY2018 FY2019
Gujarat, is a public sector banking and financial
services company. The bank was founded by the Net Interest Income 143.7 136.9 148.8 169.0 204.0
Maharaja of Baroda, Maharaja Sayajirao Gaekwad Net Non-Interest

54.5 59.9 79.4 79.9 78.9
III in 1908 and was nationalised in July 1969. Income
Net Profit 39.1 -50.7 18.1 -18.9 11.0

In FY2019, Bank of Baroda had a wide network of
more than 86 million customers, 55,754 Total Assets 7,339.8 6,911.8 7,192.2 7,478.0 8,196.7
employees, 5,553 domestic branches, 100 overseas
Total Equity 422.0 427.0 433.0 468.4 553.4
branches in 21 countries, 9,572 ATMs and cash
recyclers (machines that handle tasks such as ROAA, % 0.6% -0.7% 0.3% -0.3% 0.1%
accepting and dispensing cash) and 15,356
business correspondent outlets. They are small ROAE, % 9.8% -11.9% 4.2% -4.2% 2.2%
outlets near to the bank branch where business

Basic EPS, INR 18.2 -22.4 7.9 -8.2 4.2
correspondents sit for a customer interface that
are also known as a sub or base branch.
Vijaya Bank and Dena Bank amalgamated into Annual Results, INR bn, FY Ended March
Bank of Baroda with effect from April 1, 2019. The
31
merger resulted in a wider geographical reach Indicator FY2015 FY2016 FY2017 FY2018 FY2019
with a combined distribution network of more
Revenue - Treasury 145.6 161.8 183.5 176.7 180.7
than 9,500 branches and more than 13,400 ATMs
in India. Revenue – Corporate /
220.3 223.8 194.0 192.7 213.5
Wholesale Banking
Domestic deposits at the bank rose by 10.9% in Revenue - Retail Banking 124.9 115.5 126.6 150.7 189.0
FY2019 compared with an increase of 6.1% y/y in
the previous year. Bank of Baroda recorded an Revenue - Other Banking 12.9 16.9 20.0 20.3 24.8
operating profit of INR 13,4.86bn in FY2019, up by
Profit Margin - Treasury 24.5% 16.7% 28.7% 16.8% 13.7%
12.3% y/y.
Profit Margin – Corporate /
5.1% -25.7% -14.6% -22.4% -24.9%
Wholesale Banking
Profit Margin - Retail
25.2% -11.5% 20.2% 10.6% 36.9%
Banking
Profit Margin - Other
13.5% 33.3% 26.3% 21.6% 11.5%
Banking

EMISPDF in-nmims001
Bank of Baroda (cont’d)
2.72% 72.7%
72.1%
2.43%
2.31%
2.19%
2.05% 69.1%
204
80
79
79
66.7%
169
60
149
6,656
54
144
6,173
137
6,300
6,075
39
5,867
18
4,842
11
63.5%
4,379
4,354
3,915
3,923
553
468
-19
433
427
422
-51
1.9% 2.8
2.4%
13.4% 1.7 5.3
13.2% 1.7% 31.4 25.6
2.7% 2.3% 69.8
4.4
11.2
12.6% 5.6 52.6 15.9
35.6 27.1 29.7 24.8
12.2% 12.1%
10.8% 11.6%
9.9% 9.9% 10.5%
-43.1 -53.1
-57.5
-28.2
-13.3
Treasury Corporate/Wholesale Banking

Capital Adequacy Ratio Retail Banking Other Banking

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Bank of India

Bank of India was founded in 1906 by a group of
businessmen from Mumbai. Initially, the bank
was privately owned and controlled until July
1969, after which it was nationalised along with
13 other banks. Revenue - Corporate /
219.3 200.6 165.9 151.8 156.1
Wholesale Banking
The Bank of India provides a wide range of
Revenue - Retail
banking products and financial services to 130.6 142.3 139.5 141.0 168.5
Banking
corporate and retail customers. This includes
specialised banking services for businesses Profit Margin - Treasury 13.7% 12.7% 35.6% 15.9% 13.7%
(dealing in foreign exchange) and non-resident
Indians (NRIs) merchant banking etc. The Bank Profit Margin - Corporate
3.4% -46.9% -66.4% -89.8% -67.0%
/ Wholesale Banking
also has specialised branches that deal in asset
recovery, hi-tech agricultural finance and lease Profit Margin - Retail
1.5% 4.1% 21.1% 23.3% 5.7%
Banking
financing etc. The bank also offers products
such as mutual funds, venture capital,
depository services, bullion trading and credit Annual Results, INR bn, FY Ended March
cards. The bank operates in three business 31
segments, namely treasury operations, Indicator FY2015 FY2016 FY2017 FY2018 FY2019
wholesale banking operations and retail
banking operations. According to the Business Net Interest Income 114.6 118.5 119.8 105.1 136.6
Standard website, the bank has over 5,092 Net Non-Interest
42.8 36.7 68.2 57.3 51.3
branches in India spread over all states/union Income
territories, including specialised branches in Net Profit 20.1 -62.0 -14.7 -60.4 -55.5
India.
Total Assets 6,252.8 6,166.3 6,320.3 6,095.7 6,252.2
The bank has undertaken or launched various
Total Equity 326.9 334.4 337.1 355.4 463.2
initiatives with the aim of strengthening
internal systems, procedures and structures. As ROAA, % 0.3% -1.0% -0.2% -1.0% -0.9%
result of these, the bank was able to bring down
its net NPA ratio to 5.61 in March 2019 from ROAE, % 6.3% -18.8% -4.4% -17.5% -13.6%
8.26% in March 2018.

Basic EPS, INR 31.3 -84.6 -14.8 -52.6 -29.8

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Bank of India (cont’d)
2.56% 75.7%
68
57
2.20%
2.11% 2.11%
137
51
1.92%
120
43
37
115
5,424
118
70.1%
105
20
5,345
5,209
5,209
5,157
67.9%
4,044
3,683
3,613
65.5% 65.5%
-15
3,410
3,414
463
355
337
334
327
-55
-60
-62
29.5 14.2%
12.9% 3.1%
1.3 12.0% 12.1%
32.8 3.2%
7.5 5.8 55.3 10.8% 3.0% 3.2%
9.5
15.1 15.3 23.2 18.6 3.2%
FY2015 FY2016 FY2017 FY2018 FY2019
11.1%
-94.0 -104.6 9.7%
-110.1 9.0% 8.9%
-136.4 7.6%
FY2015 FY2016 FY2017 FY2018 FY2019

Treasury Corporate/Wholesale Banking Retail Banking Capital Adequacy Ratio

EMISPDF in-nmims001

Punjab National Bank (PNB) was incorporated in
1984 but started its operations in April 1895. At Indicator FY2015 FY2016 FY2017 FY2018 FY2019
the start of operations, the authorised capital of
the bank was INR 0.2mn, and its working capital
Revenue - Corporate /
was INR 20,000. Since the start of the bank’s Wholesale Banking
232.7 234.4 234.2 174.7 213.8
operations, seven banks have merged with PNB.
Revenue - Retail Banking 155.9 153.6 151.9 190.9 191.3
In recent years, PNB has witnessed a growing
customer base and brand image. Revenue - Other Banking 4.7 8.7 11.1 15.2 14.7
As of December 2019, PNB had two overseas Profit Margin - Treasury 9.0% 23.0% 28.0% 22.9% 21.4%
branches, in Hong Kong and Dubai. The bank has Profit Margin - Corporate /
31.6% 26.7% -25.3% -127.3% -91.0%
two overseas subsidiaries - PNB International Ltd Wholesale Banking
(a 100% owned subsidiary in the UK) and Druk Profit Margin - Retail Banking 31.6% 26.7% 24.1% 1.7% 10.2%
PNB Bank Ltd – Bhutan (with a 51% shareholding).
Profit Margin - Other Banking 31.6% 26.7% 26.7% 14.7% 21.7%
The lender also has one associate company,
namely JSC Tengri Bank, Kazakhstan (41.64%
shareholding) and one joint venture bank in Annual Results, INR bn, FY Ended March
Nepal known as Everest Bank Ltd Nepal (20.03% 31
shareholding).
The bank continues to maintain its strength in Net Interest Income 173.7 153.1 149.9 149.2 171.6
low cost Current Account and Savings Account
Net Non-Interest
(CASA) deposits, while qualitative business 61.7 60.0 89.5 88.8 73.8
Income
growth remains the bank’s primary focus. In
Net Profit 34.0 -39.7 13.2 -122.8 -99.8
FY2019, the bank had more than 110mn customers.
Total Assets 6,360.1 7,127.9 7,203.3 7,658.3 7,749.5
Total Equity 425.9 418.0 421.0 382.0 525.4
ROAA 0.6% -0.6% 0.2% -1.7% -1.3%
ROAE 8.4% -9.4% 3.2% -30.6% -22.0%
Basic EPS, INR 18.8 -20.8 6.5 -55.4 -21.7

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(cont’d)
3.15% 78.5% 78.2%

172
90
74
2.60%
89
149
2.38% 2.41%
174
62
60
153
2.16%
6,760
34
150
6,422
6,217
13
68.5% 68.7%
5,704 67.5%
5,152
4,645
4,461
4,401
4,195
4,046
-40
525
426
421
418
382
-100
-123
12.2%
11.3% 11.7%
FY2016 FY2017 FY2018 FY2019
2.9%
2.8%
2.9% 9.7%
9.2%
2.2%
2.1%
Tier 1 Capital Ratio 8.4% 8.9% 7.1% 7.5%
9.3% 8.9%
8.4%
7.1% 7.5%
Tier 2 Capital Ratio 2.9% 2.8% 2.1% 2.2%
FY2015 FY2016 FY2017 FY2018 FY2019

Capital Adequacy
11.3% 11.7% 9.2% 9.7%
Tier 1 Capital Ratio Tier 2 Capital Ratio Ratio
Capital Adequacy Ratio

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06
REGULATORY
ENVIRONMENT

06 REGULATORY ENVIRONMENT CONTENTS
Government Policy
Reserve Bank of India - Formation and History

The Reserve Bank of India (RBI) is the central bank of India and was established on April 1, 1935, under
the provisions of the Reserve Bank of India Act, 1934. The central office of the RBI is located in
Mumbai. The basic function of the RBI is to "regulate the issue of bank notes and keep reserves with a
view to securing monetary stability in India and generally to operate the currency and credit system
of the country to its advantage; to have a modern monetary policy framework to meet the challenge
of an increasingly complex economy, to maintain price stability while keeping in mind the objective of
growth.“ The RBI conducts its supervisory functions under the guidance of the Board for Financial
Supervision (BFS), set up in 1994.
Working and Statutory Instruments

The core functions of the RBI can be divided into six broad categories, namely: (1) price stability -
monetary policy framework and market operations; (2) financial stability – the regulation of the
financial system, regulation and supervision of commercial banks, co-operative banks, and non-
banking financial companies, development and regulation of financial markets and regulation of
financial market infrastructure; (3) currency and banking functions - currency management, banker to
banks and government, and public debt management; (4) foreign exchange management and reserves;
(5) developmental functions - consumer education and protection, financial inclusion and
development, and development of institutions; and (6) research and data dissemination. The RBI
maintains financial stability in India through various monetary policy tools such as the repo and
reverse repo rate, cash reserve ratio (CRR), open market operations, and statutory liquidity ratio,
among others.
Transfer of HFCs under RBI

The regulation of Housing Finance Companies (HFCs) was transferred from the National Housing Bank
(NHB) to the RBI in August 2019. At the time of the transfer, the RBI reviewed the regulatory
framework applicable to HFCs to improve the resiliency of the housing finance sector. As a result of
this revision, HFCs were moved into the category of systemically important banks (for those with
assets of INR 5bn and above) and non-systemically important banks (those with assets less than INR
5bn). Furthermore, the amendments extended the RBI’s liquidity risk framework applicable to NBFCs
to HFCs.
Source: Business Standard, SEBI, RBI

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06 REGULATORY ENVIRONMENT CONTENTS
Government Policy (cont’d)
Liquidity Management
The RBI sets the repo rate and reverse repo rate with the aim of achieving the medium-term target for
consumer price inflation of 4% within a band of +/- 2%, while supporting economic growth. In FY2019,
the RBI shifted its monetary policy from neutral to a tightening bias due to rising oil prices which
increased the risk of inflation. After the inflation risks subsided, the RBI’s focus shifted to India’s
slowing economic growth. As a result, the monetary policy stance changed to an accommodative one
from June 2019 onwards. The rapid spread of COVID-19 resulted in a liquidity crunch in India. To
address the problem, the RBI took extensive monetary and regulatory measures to reduce the cost of
capital and increase liquidity in the economy.
RBI’s response to COVID-19 Situation

 The RBI cut the repo rate cut by 115 bps to 4% from 5.15% (where it had remained since October
2019). This rate cut was undertaken in two phases, with a 75 bps cut on March 27, 2020, and a 40 bps
cut on May 22, 2020.
 Similarly, the RBI cut the reverse repo rate by 115 basis points to 3.75% from 4.9% (where it had also
remained since October 2019). This rate cut was undertaken in three phases, one of 90 bps on
March 27, 2020, a 25 bps cut on April 17, 2020 and a 40 bps cut on May 22, 2020.
 It announced a moratorium of six months on the payment of instalments in respect of all term
loans until August 31, 2020.
 It provided for the deferment of interest on working capital repayments by six months until August
31, 2020.
 Auctions were undertaken of long-term repo operations (LTROs) of three-year tenor up to INR 1tn
and Targeted Long Term Repo Rate Operations (TLTROs) of INR 500bn.
 The liquidity coverage ratio requirement of scheduled commercial banks was reduced from 100% to
80%.
 The RBI provided INR 250bn to NABARD, INR 150bn to SIDBI for refinancing commercial banks and
NBFCs, and INR 100bn to NHB.
 It announced that asset classification will remain unchanged on all loan accounts where
moratorium or deferment has been applied.
 The NBFCs' loans to delayed commercial real estate projects were extended by a year without
restructuring, and loans from NBFCs to real estate companies would receive similar benefit as that
provided by scheduled commercial banks.
Source: Economic Times, Press Information Bureau, RBI

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07
OTHER FINANCIAL
INSTITUTIONS

07 OTHER FINANCIAL INSTITUTIONS CONTENTS
AIFIs
Comments
There are four RBI-regulated All-India Financial Institutions (AIFIs) in India, namely NABARD (the
National Bank for Agriculture and Rural Development), NHB (National Housing Bank), SIDBI (Small
Industries Development Bank of India) and EXIM Bank (Export-Import Bank of India). The RBI
disinvested its entire shareholding in the NHB in March 2019 and as a result the NBH has become an
entirely government-owned institution. AIFIs are also called financial institutions as they act as an
intermediary between borrowers and final lenders. AIFIs were established with the objective of
providing an adequate flow of long-term financial resources to sectors, i.e. agriculture, rural
development and Micro Small and Medium Enterprises (MSMEs), among others. The total assets of the
RBI-regulated AIFI have increased at a CAGR of 14% over the period FY2015-FY2019 and mostly include
loans. Funds sanctioned by AIFIs increased at a CAGR of 6.5% during FY2015-FY2019 and recorded a y/y
increase of 7.6% in FY2019, whereas disbursements grew at a CAGR of 9.6% over the same period,
down by 6.9% y/y in FY2019. To mitigate the impact of COVID-19, the RBI provided INR 250bn to
NABARD; INR 150bn to SIDBI for refinancing commercial banks and NBFCs; and INR 100bn to the NHB
to maintain adequate liquidity in the financial system and facilitate bank credit flow.
Assets of RBI Regulated AIFIs by Type, Total Funds Sanctioned and Disbursed by
INR bn RBI Regulated AIFIs, INR bn
8,318
4,337
4,198
179
4,031
7,022
3,926
3,895
6,034 193
5,614
3,366
4,956 150
3,137
157
2,912
154
7,292
6,097
4,762 5,283
4,273
324 422 408 495 613

205 273 193 237 234
FY2015 FY2016 FY2017 FY2018 FY2019
Other Assets
Loans and Advances
Investments FY2016 FY2017 FY2018 FY2019
Cash and Bank Balances
Total Assets of RBI-Regulated AIFIs Sanctioned Disbursed
Source: Business Standard, RBI

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NBFCs
Total Assets of NBFCs by Type, INR bn NBFC Loans by Sector

30,855 FY2016 FY2017 FY2018 FY2019
26,178 2,964
Agriculture 392 354 468.21 701.89
2,446 5,124
19,671
17,284 17,232 4,106 Industry 8,063 8,940 11,224.96 12,553.17
2,152
2,817 1,810 2,673
Services 1,865 2,224 3,168.72 3,671.67
2,603 2,253
22,766
19,626
13,169 14,846 Retail Loans 2,047 2,490 3,595.86 4,474.96
11,864
Other Non-
801 847 1,164.45 1,362.01
Food Credit
FY2015 FY2016 FY2017 FY2018 FY2019
Food Credit 1 1.7 2.4 2.3
Loans and Advances Investments
Gross Loans 13,169 14,856.7 19,624.6 22,766
Other Assets Total Assets of NBFCs
Comments
As per the RBI’s definition, NBFCs are registered under the Companies Act, 1956, and perform
functions/operations such as the extension of loans and provision of leasing and hire-purchase
services, as well as the acquisition of shares, stocks, bonds, debentures and government securities. In
recent years, NBFCs have been facing issues such as asset liability mismatches and over-leveraging.
The consolidated balance sheet of NBFCs increased moderately in FY2019 and in the first half of
FY2020. In response to this, the government and the RBI took several initiatives to improve the
performance and strengthen the regulatory framework of NBFCs. Under the prudential policies of the
RBI it has been decided that exposures to all NBFCs will be risk-weighted according to the ratings
assigned by credit rating agencies registered with the Security and Exchange Board of India (SEBI) and
accredited by the RBI. NBFCs are typically quick to adopt digital innovation and fintech services such
as a digital platform for peer-to-peer (P2P) lending. To mitigate the COVID-19 impact, the government
announced an INR 300bn Special Liquidity Scheme, an INR 450bn Partial Credit Guarantee Scheme 2.0,
and allowed NBFCs to exclude the loans of borrowers under moratorium from its list of NPAs.
Source: RBI

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NBFCs (cont’d)
Total Assets of NBFCs by NBFC Total NBFCs Net Income, INR bn

Category, FY2019
33.7%
NBFCs-ND-
SI 86.3%
NBFCs-D 16.6%
13.7%
10.2%
367
419.8
462.65
365
0.5%
314
-14.4%
FY2015 FY2016 FY2017 FY2018 FY2019
D is Deposit; ND-SI is Non-Deposit, Systematically Important Total Net Income, INR bn y/y Change
NBFC Financial Ratios
78.9% 80.0% 79.8%

74.4% 76.0%
2.1% 2.1% 1.6% 1.6% 1.5%

FY2015 FY2016 FY2017 FY2018 FY2019
ROA Cost-to-Income Ratio
Source: RBI

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HFCs
Comments
Housing finance companies are specialised institutions lending to the housing sector, including both
property developers and homebuyers. Initially, the HFCs were regulated and supervised by the NHB
under the provisions of the NHB Act, 1987. Later, the NHB expanded and was established as a
refinancer and lender to the housing sector. India’s Union Budget 2019-2020 transferred the regulatory
authority for the housing finance sector to the RBI with effect from August 9, 2019.
In June 2020, the RBI proposed that HFCs should not be simultaneously allowed to lend to a property
developer as well as homebuyers in the developer’s project.
In FY2019, HFCs witnessed a dip in credit growth and lower profitability due to declining market
confidence in the sector and the slow pace of growth in credit and investments. In July 2020, the
government approved a scheme to boost the liquidity of HFCs registered under the National Housing
Bank Act, 1987, through a Special Purpose Vehicle (SPV) to avoid any potential systemic risks to the
financial sector, especially in the COVID-19 environment.
HFC Loans, INR bn HFC Performance
FY2015 FY2016 FY2017 FY2018 FY2019

28.2%
Cost to Income
Ratio (Total
72.6 71.6 73.6 73.6 79.1
Exp./Total
Income)
11,917.27
Return on
9,451.49
Assets (RoA)
7,374.60
2.0 2.0 2.1 2.0 1.4

26.1% (PAT/Total
Assets)
GNPA Ratio 1.1 1.1 1.1 1.3 1.3

FY2017 FY2018 FY2019
NNPA Ratio 0.5 0.5 0.5 0.6 0.8
Loans and Advances Growth
Source: Business Standard, RBI

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SFBs
Comment Total Assets of SFBs, INR bn

In 2016, Small Finance Banks (SFBs) were
331.7%
established with the objective of providing basic
banking services to the unserved and the under-
served, including MSMEs, farmers and the shadow
economy.
835.37
In FY2019, SFBs recorded strong growth in
deposits, loans and investments. Given that still a
516.6
significant portion of the population in India does
119.7
not have access to financial services, the 61.7%

potential for growth of SFBs remains high as it
caters to the need of the unbanked and
FY2017 FY2018 FY2019
financially under-served population.
Total Assets of SFBs, INR bn y/y Change
Share of Assets in SFBs, INR bn, FY2019 Total Loans of SFBs, INR bn
Suryodaya
Small Finance 393.3%
Equitas Small Bank Ltd; 37.9;
Finance Bank 4.5% Ujjivan Small
Ltd; 157.6;
Finance Bank
18.9%
Ltd; 137.4;
Capital Small 16.5%
Finance Bank
594.9
Ltd; 43.2; Utkarsh Small

5.2% Finance Bank
Ltd; 62.4; 7.5%
348.6
ESAF Small 70.7%

70.7
Finance Bank
AU Small Ltd; 70.6; 8.4%
Finance Bank FY2017 FY2018 FY2019
Ltd; 326.2;
39.1% Total Loans and Advances of SFBs, INR bn
y/y Change
Source: Next Billion, RBI, The Hindu Business Line

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Co-Operatives
Comment Total No. of Rural Co-operatives

As of March 2019, there were a total of 97,792 co-
operatives in India, comprising 96,248 rural co- 96,612
614 96,248
operatives and 1,544 urban co-operatives. Rural
614
co-operatives are further divided into 33 State Co-
operative Banks (StCBs), 51 District Central Co- 614
operative Banks (DCCBs), 95,238 Primary 94,384
722 95,998
Agricultural Credit Societies (PACS), 13 State Co- 93,516
95,634
operative Agriculture and Rural Development 93,770
Banks (SCARDBs) and 601 Primary Co-Operative 92,794
Agriculture and Rural Development Banks
(PCARDBs). Urban co-operatives are further
FY2015 FY2016 FY2017 FY2018
divided into 54 Scheduled UCBs and 1,490 Non-
Scheduled UCBs. Short-Term Co-operatives Long-Term Co-operatives
Total Rural Co-operatives
Over the years, UCBs have been consolidating to
deal with dwindling profitability.
Total deposits of urban co-operative banks grew Total No. of UCBs

at a CAGR of 8.1% between FY2015 and FY2019,
while total loans increased at a CAGR of 7.8%
1,579
over the same period. 1,574
Total deposits at rural co-operative banks 1,562

recorded a CAGR of 7.4% from FY2015 to FY2019,
1,529 1,522 1,508 1,497
1,551 1,490
whereas total loans recorded a CAGR of 6% over
1,544
the same period.
50 52 54 54 54
FY2015 FY2016 FY2017 FY2018 FY2019
Scheduled UCBs Non-Scheduled UCBs Total UCBs
Source: GKToday, RBI

EMISPDF in-nmims001
Co-Operatives (cont’d)
Total Deposits in Rural Co-operatives by Total Deposits in UCBs by Type, INR bn

Type, INR bn
FY2015 FY2016 FY2017 FY2018
State Co-operative Banks 1,028.1 1,093 1,220 1,235.3 4,843.2

4,434.7 4,565.1
District Central Co-operative 3,921.8
2,588.1 2,982 3,309 3,479.6
Banks 3,551.3 2,586.3
2,362.2 2,444.7
Primary Agricultural Credit 2,077.7
846.2 1,011 1,159 1,196.32 1,909.1
Societies
State Co-operative
Agriculture and Rural 18.4 24 24 23.41 2,256.9
1,844.0 2,072.5 2,120.4
Development Banks 1,642.2
Primary Co-operative
Agriculture and Rural 10.2 14 13 13.06 FY2015 FY2016 FY2017 FY2018 FY2019
Development Banks
Scheduled UCBs Non-Scheduled UCBs
Total Deposits in Rural Co-
4,491 5,124 5,725 5,947.69 Total Deposits in UCBs
operatives
Total Loans by Rural Co-operatives by Total Loans by UCBs by Type, INR bn

Type, INR bn
FY2015 FY2016 FY2017 FY2018
3,030.2
State Co-operative Banks 1,145.5 1,229 1,270 1,319.3
2,805.0
2,612.0
District Central Co-operative 2,449.4
2,194 2,427 2,527 2,770.79
Banks 2,243.0 1,564.5
1,436.4
1,320.2
Primary Agricultural Credit 1,262.3
1,472.3 1,808 2,009 2,073.22 1,185.6
Societies
State Co-operative Agriculture

211.9 204 212 207.88
and Rural Development Banks 1,291.8 1,368.6 1,465.7
1,057.4 1,187.1
Primary Co-operative
Agriculture and Rural 148.1 127 151 158.21 FY2015 FY2016 FY2017 FY2018 FY2019
Development Banks
Scheduled UCBs Non-Scheduled UCBs
Total Loans in Rural Co-
5,171.8 5,795 6,169 6,529.4 Total Loans by UCBs
operatives
Source: RBI

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Co-Operatives (cont’d)
Urban Cooperative Bank Branches by Region, FY2019
Northern
427 North Eastern
49
Central
496
Western
Eastern
7,577
138
Southern
2,428
Source: RB

EMISPDF in-nmims001
Primary Dealers
Comments Total Income by Source, INR bn

Primary dealers regulated by the RBI, fall into the
category of non-bank intermediaries. Their 42.3
35.2
0.7
primary function is to underwrite issuances of 32.5 0.6
30.2 30.4
government securities and participate in primary 0.6
14.3
0.6 0.8
auctions. There are 21 primary dealers (PDs) in 7.7
3.1
India as of FY2019, comprising 14 bank PDs run as
38.0
bank departments and seven stand-alone PDs 29.7
24.1 26.5 27.3
registered as NBFCs. In FY2019, all PDs performed
well in terms of minimum bidding commitments.
In FY2019, they witnessed a significantly higher 0.0 -3.4
2015 2016 2017 2018 2019
share (totaling 71.4%) in total issuance of T-Bills
and commercial mortgage-backed securities Interest Income Trading Profit
(CMBs), as compared to 66.5% reported in FY2018.
Other Income Total Income
Total Capital Funds, INR bn Primary Dealer Capital Adequacy Ratio
12.2% 47%
9.6%
43%
6.7%
60.28 42%
55 55
48 49
40%
40%
2.1%
0.0%
2015 2016 2017 2018 2019
Total Capital Funds, INR bn y/y Change 2015 2016 2017 2018 2019
Source: RBI, The Times of India

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Fintech
Overview
Fintech typically refers to companies that leverage technology and innovation to provide financial
services to businesses or consumers. Within the fintech space, digital payments, digital lending,
banktech, insurtech and wealthtech are the key segments. According to InvestIndia, the fintech
market’s overall transaction value is predicted to increase to USD 140bn in 2023 from around USD 65bn
in 2019. The Indian fintech ecosystem is very diversified and is populated by many start-ups that are
involved in a broad spectrum of fintech activities.
Drivers and Constraints

India offers substantial opportunity for a fintech revolution. This can be attributed to factors such as
a large market base, growing banking penetration, high smartphone penetration, rising disposable
incomes, rapid middle-class expansion and favourable government initiatives.
However, the growth of the fintech segment in India is hampered by factors such as bureaucracy,
administrative delays, the high risk of cyber security breaches, complex relations with the banking
industry, lack of specialisation and low awareness, among others.
Outlook
Fintech companies are believed to have bright prospects in India because of their ability to serve
people in remote regions and cater to evolving consumer demands by providing customised, targeted
products and services, with increased convenience, personalisation, transparency and accessibility.
Banks are facing increasing competition from fintech companies which are leveraging the digital
revolutions that are ongoing in India as much as in the rest of the world. Thus, the demand for fintech
services has been rising as the NBFC sector has been rapidly adopting digital innovation, for instance,
in the areas of digital platforms such as peer-to-peer lending.
Source: InvestIndia, Startuped.net deloitte

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08
RETAIL
CHANNELS

08 RETAIL CHANNELS CONTENTS
Branches
Comments Total Branch Offices, thou

The growth in the number of bank branches in
India has been increasing since FY2018 with 2.8%
6.8%
y/y growth recorded in FY2020. In FY2020, public
sector banks accounted for 60% of bank branches
in the country, followed by private sector banks
(23%) and regional rural banks (14%). The slow
156.32
4.0%
152.0
pace of growth can be attributed to the rising
adoption of digital channels such as online and 2.8%
148.4
2.5%
146.5
mobile banking, which has significantly reduced

140.8
bank transactions at brick-and-mortar branches. 1.3%

The government has vowed to support the
opening of bank branches in villages and remote
FY2016 FY2017 FY2018 FY2019 FY20
areas within its financial inclusion initiative.
Total Branch Offices, thou y/y Change
Branch Offices by Bank, thou, FY20 Branch Offices by Bank Type, thou,
FY2020
Private
Sector Banks
Others 35.7
104.1
Foreign
Banks 0.3
Bank of India Regional
5.4 Rural Banks
22.3
Bank of Local Area

Baroda 9.8 Banks 0.1
Canara Bank State Bank of

6.6 India 23.3
Punjab Public Sector Small Finance
National Banks 92.7 Payments Banks 4.4
Bank 7.2 Banks 0.8
Source: The Hindu Business Line, Economic Times

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Branches (cont’d)
Branch Offices by Region, thou, 2020
Northern
28.0 North Eastern
4.7
Central
30.8
Western
Eastern
23.7
25.8
Southern
43.4
Source: RBI

EMISPDF in-nmims001
ATMs
Comments
The total number of ATMs reached 211 thou in FY2020, rising from 199 thou in FY2016. The increase can
partly be attributed to the growth in white label ATMs* (WLAs). The growth in WLAs has been pushed
by favourable policy changes introduced in 2019, such as allowing WLA operators to source cash
directly from the RBI, offer non-bank services and advertise non-financial products on their premises.
The growth in the number of ATMs in FY2020 is also the result of the financial inclusion efforts of the
Indian government and the non-bank institutions operating in the country. The total transaction
volume of ATMs increased at a CAGR of 2.4% from FY2016 to FY2020, whereas transaction values
recorded a CAGR of 8.7% over the same period.
In June 2019, the RBI appointed a committee to review the ATM interchange fee structure. The
committee recommended an increase in interchange charges for all transactions carried out on ATMs
across the country. As of July 2020, these recommendations have not been officially adopted but if
they do they will likely cause a decline in the volume of ATM transactions in the country.
Note: ATMs set up, owned and operated by non-banks are called white label ATMs. They are authorised by the RBI, under the
Payment and Settlement Systems Act, 2007. As of 2019, there were eight white label ATM operators in India, according to
information published on the RBI website.
Total ATMs, thou No. of ATMs by Bank, FY2020, thou
Bank of
211.1 Baroda 13.18
Others 90.4
208.4
207.1 Axis Bank
Ltd 17.47
98.5 100.3 97.8
97.1 95.8
202.2
HDFC Bank
199.1
Ltd 14.05
102.0 109.8 106.8 106.4 113.3
ICICI Bank
Ltd 17.428
FY2016 FY2017 FY2018 FY2019 FY2020
On-Site ATMs Off-Site ATMs Total ATMs State Bank of

India 58.55
Source: Money life, RBI, Fintechfutures

EMISPDF in-nmims001
ATMs (cont’d)
Total ATM Transaction Volume by Financial Card, mn
9,869.4
8,569.4 8,610.1 8,876.6
8,078.5
8,563.1 8,602.3 9,859.6 8,866.6

8,072.5
6.0 6.4 7.8 9.8 10.0

FY2016 FY2017 FY2018 FY2019 FY2020
Credit Card Debit Card Total ATM Transactions
Total ATM Transaction Value by Financial Card, INR bn
35,388.9
33,153.2
29,024.3
25,388.2 23,631.1
33,107.9 35,341.1
25,357.9 28,987.6
23,602.7
30.2 28.4 36.7 45.3 47.8

FY2016 FY2017 FY2018 FY2019 FY2020
Credit Card Debit Card Total ATM Transaction Value
Average Transaction value, INR
5,042
4,696 4,639 4,759
4,455
3,986
3,141 3,370 3,358 3,987
2,756 3,371 3,359
3,143
2,758
FY2016 FY2017 FY2018 FY2019 FY2020

Credit Card Debit Card Average ATM Transaction Value
Source: RBI

EMISPDF in-nmims001
ATMs (cont’d)
No. of ATMs by Region, thou, FY2020
Northern
28.0 North Eastern
6.2
Central
38.9
Western
Eastern
52.4
31.2
Southern
77.4
Source: RBI

EMISPDF in-nmims001
Financial Cards
Comments No. of Financial Cards, mn

Over recent years, financial card transactions
have recorded significant growth, owing to the
government’s demonetisation initiative of 2016
and the ongoing financial inclusion initiative. 971.7
Under the latter, many new account holders 898.6 886.3
have been supplied with RuPay* cards. RuPay 801.5
cards were first launched in 2012 by the
National Payments Corporation of India (NPCI) 686.3
and have become the most widespread debit
cards in terms of their circulation in the 924.6
country. 861.1 828.6
771.6
The economic slowdown caused by the COVID- 661.8
19 lockdown has significantly affected the

volume and value of card payments in
India. The value of debit and credit cards
transactions fell rapidly in March 2020 24.5 29.8 37.5 47.1 57.7
compared with transaction values in the FY2016 FY2017 FY2018 FY2019 FY2020
previous months. Credit Cards Debit Cards Financial Cards
Transaction Volume, mn Transaction Value, INR bn
16,046.2 16,153.4 49,717.2

45,121.4
13,358.6 38,214.6
12,055.9
10,037.8 13,955.3 29,386.1 30,214.0 42,346.5
14,273.9 39,042.6
10,962.4 11,945.6 33,588.3
9,246.2 26,949.3 26,901.8
791.7 1,093.5 1,413.0 1,772.4 2,198.2 2,436.8 3,312.2 4,626.3 6,078.8 7,370.7
Credit Cards Debit Cards Financial Cards Credit Cards Debit Cards Financial Cards
* RuPay is an Indian payment system that provides similar services to Visa and Mastercard.
Source: RuPay, pmjdy.gov

EMISPDF in-nmims001
Mobile Banking
Comments Average Transaction Value, INR

Mobile banking has witnessed exponential
72.7%
growth in recent years in India. This trend is
expected to continue in the future, reflecting
India’s vast untapped potential. Over the past few
30.6%
years, the RBI has recorded an increasing
customer base for mobile banking, with rising
13,415.4
transaction volume and value. Also, mobile
4,771.4
7,872.1
10,269.8
banking is being viewed as a catalyst for the -13.0%

government’s programme for financial inclusion.
4,151.5
-41.3% -39.4%
FY2016 FY2017 FY2018 FY2019 FY2020
Average Transaction Value, INR y/y Change
Total Transaction Volume, mn Total Transaction Value, INR bn
231.2%
292.9%
227.5%
150.7%
127.6%
57,815.1
124.6%
14,738.5
13,104.8
13,926.3
91.7%
100.7% 95.4%
1,872.3
4,001.6
6,200.2
29,583.3
976.8
389.6
12.5%
FY2016 FY2017 FY2018 FY2019 FY2020
FY2016 FY2017 FY2018 FY2019 FY2020
Total Transaction Volume, mn y/y Change Total Transaction Value, INR bn y/y Change
Source: RBI

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Prepaid Payment Instruments
Comments Average PPI Transaction Size, INR

According to the RBI, Prepaid Payment
Instruments (PPIs) are those that facilitate the 1,769
purchase of goods and services, including
financial services, remittances and funds
transfers, among others.
The growth of PPIs is driven by rising smartphone

833
penetration and numerous young people in the 717
615 627 404
country. PPIs play an important role in increasing 462
413 404 306
digital payments in India. 341
444 429
327 359
FY2016 FY2017 FY2018 FY2019 FY2020
m-Wallet PPI Cards Average PPI Transaction Value
Total Transaction Volume, mn Total Transaction Value, INR bn
5,329.9
4,604.3 2,127.9 2,151.3
1,084.4 291.3 331.9
465.0
3,458.6
432.6 1,397.2
310.4
1,963.1
4,245.6 1,836.5 1,819.4
4,139.3 809.9
747.5 333.1
3,026.0 277.5
459.6 1,086.7
143.5
1,630.0 253.8 532.4
604.0 205.8
PPI Cards m-Wallet Total PPI Transaction Volume PPI Cards m-Wallet Total PPI Transaction Value
Source: Economic Times, RBI

EMISPDF in-nmims001
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EMIS Insights - India Banking Sector Report 2020 - 2024

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BRICs Brazil, Russia, India, China and South Africa

CAGR Compound Annual Growth Rate

CAR Capital Adequacy Ratio

COVID-19 Coronavirus Disease 2019

CPI Consumer Price Index

CRR Cash Reserve Ratio

EPS Earning Per Share

FY Fiscal Year, ending March 31

GNDI Gross National Disposable Income

GNPA Gross Non-Performing Asset

HFC Housing Finance Company

INR Indian Rupee

MFI Microfinance Institution

MPC Monetary Policy Committee

NABARD National Bank for Agriculture and Rural Development

NBFI Non-Banking Financial Institution

NHB National Housing Bank

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OTS One-Time Settlement

PBT Profit Before Tax

PCA Prompt Corrective Action

PMJDY Pradhan Mantri Jan Dhan Yojana

PPI Prepaid Payment Instrument

PSB Public Sector Bank

RBI Reserve Bank of India

ROA/ROI Return on Asset/Return on Investment

ROAA Return on Average Asset

SIDBI Small Industries Development Bank of India

SCB Scheduled Commercial Bank

SFB Small Finance Bank

UCB Urban Co-operative Bank

UPI Unified Payments Interface

y/y Year on Year

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02 SECTOR OUTLOOK p.14

03 SECTOR IN FOCUS p.22

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Top M&A Deals

05 COMPANIES IN FOCUS p.53

06 REGULATORY ENVIRONMENT p.64

07 OTHER FINANCIAL p.67

08 RETAIL CHANNELS p.78

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*Running between April 1, 2019 and March 31, 2020

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INR INR 61.7%

Note: Data for FY2019

INDIA BANKING SECTOR 2020/2024 8

Source: Bloomberg, RBI, Ministry of Finance, GOI, Press Information Bureau

INDIA BANKING SECTOR 2020/2024 9

ASSETS: INR 166.0tn

KEY PLAYERS NET-INTEREST INCOME KEY PLAYER ASSETS

INDIA BANKING SECTOR 2020/2024 10

Source: RBI, Economic Times, Business Standard, IBEF

INDIA BANKING SECTOR 2020/2024 11

Source: RBI, IBEF, India Today, InvestIndia