Annexure-II

Minor Project Report

On

Indusind bank

Submitted in partial fulfilment of the requirements

for the award of the degree of

Bachelor of Business Administration (BBA)

To

Guru Gobind Singh Indraprastha University, Delhi

Guide: Promod Dubey Submitted by: Puneet Kumar

Designation Enrolment No.: 05321401721

Jagannath international management school

Vasant Kunj Batch (2021--2024)

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 Annexure- III

Certificate

This is to Certify that the Project Report (BBA-114) titled “Indusind bank”

done by Puneet Kumar Enrollment No. 05321401721

is completed under my guidance.

Signature of the Guide

Date:
Name of the Guide: Pramod Pandey

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CHAPTER 1
Banking, Financial Services and Insurance (BFSI)

1. It is the industry's umbrella term for companies that provide a range of such
financial products or services. This includes Banking, financial services and
insurance (BFSI) is the industry's umbrella term for companies that provide a
range of such financial products or services. This includes universal banks that
provide a range of financial services or companies that operate in one or more
of these financial sectors. BFSI comprises commercial banks, insurance
companies, non-banking financial companies, cooperatives, pensions funds,
mutual funds and other smaller financial entities.

2. The Banking part of BFSI may include core banking, retail, private, corporate,
investment and cards. Financial services may include stock broking, payment
gateways, mutual funds. Insurance covers both life insurance and general
insurance.

3. This term is commonly used by information technology (IT), Banking,

financial services and insurance (BFSI) is the industry's umbrella term for
companies that provide a range of such financial products or services. This
includes universal banks that provide a range of financial services or
companies that operate in one or more of these financial sectors. BFSI
comprises commercial banks, insurance companies, non-banking financial
companies, cooperatives, pensions funds, mutual funds and other smaller
financial entities.

4. The Banking part of BFSI may include core banking, retail, private, corporate,
investment and cards. Financial services may include stock-broking, payment
gateways, mutual funds. Insurance covers both life insurance and general
insurance.

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5. This term is commonly used by information technology (IT), information
technology-enabled services (ITES), business process outsourcing (BPO)
companies and technical/professional services firms that manage data
processing, application testing and software development activities in this
domain.

6. The Indian banking system consists of 12 public sector banks, 22 private

sector banks, 46 foreign banks, 56 regional rural banks, 1485 urban
cooperative banks and 96,000 rural cooperative banks in addition to
cooperative credit institutions as of September 2021, the total number of
ATMs in India reached 213,145 out of which 47.5% are in rural and semi
urban areas.

7. In FY18-FY21, bank assets across sectors increased. Total assets across the
banking sector (including public and private sector banks) increased to US$
2.48 trillion in FY21.

8. The main focus of this industry is to provide the services related to financing
the various needs of the individuals and corporates. It is the industry which
enables people to transfer money to one another. It finances individual (or
retail) for their financial needs such as financing a home, car, education and
their other personnel needs. And it helps corporates to finance their expansion
plans, their acquisitions, and even their working capital expenditures.

The sector consists of various financial services institutions.

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 They are as follows-

1. Public banks
2. Private banks
3. Non-banking financial corporations
4. Insurance services
5. Fintech industry

Public banks

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1. Public sector banks are those banks where the government holds more than
50% ownership. With these banks, the government regulates the financial
guidelines. Because of government ownership, most depositors believe that
their money is more secured in public sector banks. As a result, most public
sector banks have a large customer base.

2. For example, The State bank of India (SBI) is the largest public sector bank in
India. In this bank, the Indian government holds more than 63% share. A large
part of the remaining share is also traded in the Indian stock market.

3. Relative to other banks, the employees of public sector banks enjoy more job
security. They also enjoy other perks like pension after retirement. For this
reason, many of these employees are reluctant to give their best service. As a
result, the rate of loan defaulter is much higher in public sector banks. The
promotion in the public sector banks is based on seniority, which de-motivate
many employees.

4. Most public sector banks offer less customized service to customers. As a

result, Customer complaint due to poor service is very common in public
sector banks. However, public sector banks offer more interest rate to the
customer. Customers can also get different loans with a small interest rate.

5. The Central Government entered the banking business with the nationalization
of the Imperial Bank of India in 1955. A 60% stake was taken by the Reserve
Bank.

Private sector banks

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1. Private Sector Banks are those banks in which the majority of the stake is held by
shareholders of the bank and not by the government. RBL bank, HDFC Bank,
ICICI Bank, Yes Bank, etc. are the private sector banks in India. They provide all
the banking products and services to the customers. These products include Fixed
Deposit, Savings Deposit, RD, Home Loan, Personal Loan, Car Loan, Locker,
Demat Facilities, Debit/ Credit Card, ATM, Foreign Exchange Transactions,
Insurance, Wealth Management, Net Banking, etc. Private banks are known for
introducing information technology in the banking system.

2. There are total 9 banks which got licenses and came into being after liberalisation
in India that took place in 1990. These banks are called new age banks and include
HDFC Bank, ICICI Bank, Axis Bank, Yes Bank, etc.

3. Private Sector Banks offer innovative products and better services as compared to
public sector banks but they charge some extra amount for providing such
additional services. It has been seen that the financial performance of private
banks has remained better than that of public banks as they have managed their
net interest margin (NIM) and non-performing assets (NPA) very well.

4. If you are looking for IFSC, SWIFT, MICR or BSR codes or looking for bank
branch details including road direction or ATMs of a bank? You will get complete
information of all india private sector banks.

5. You can also find IFSC, SWIFT, MICR or BSR code for any branch of any bank
to make a NEFT payment or RTGS payment.

Non-banking financial corporations

1. Nonbank financial companies (NBFCs), also known as nonbank financial
institutions (NBFIs), are financial institutions that offer various banking
services but do not have a banking license. Generally, these institutions are

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 not allowed to take traditional demand deposits—readily available funds,
such as those in checking or savings accounts—from the public. This
limitation keeps them outside the scope of conventional oversight from
federal and state financial regulators.

2. Nonbank financial companies fall under the oversight of the Dodd-Frank

Wall Street Reform and Consumer Protection Act, which describes them as
companies "predominantly engaged in a financial activity" when more than
85% of their consolidated annual gross revenues or consolidated assets are
financial in nature. Examples of NBFCs include investment banks, mortgage
lenders, money market funds, insurance companies, hedge funds, private
equity funds, and P2P lenders.

3. Nonbank financial companies (NBFCs), also known as nonbank financial

institutions (NBFIs) are entities that provide certain bank-like financial
services but do not hold a banking license.

4. Investment banks, mortgage lenders, money market funds, insurance

companies, hedge funds, private equity funds, and P2P lenders are all
examples of NBFCs.

5. Since the Great Recession, NBFCs have proliferated in number and type,
playing a key role in meeting the credit demand unmet by traditional banks.

Insurance services

1. The insurance sector is made up of companies that offer risk management

in the form of insurance contracts. The basic concept of insurance is that
one party, the insurer, will guarantee payment for an uncertain future
event. Meanwhile, another party, the insured or the policyholder, pays a
smaller premium to the insurer in exchange for that protection on that
uncertain future occurrence.

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2. As an industry, insurance is regarded as a slow-growing, safe sector for
investors. This perception is not as strong as it was in the 1970s and
1980s, but it is still generally true when compared to other financial
sectors.

3. The insurance industry is made up of differrent types of players operating

in different spaces.

4. Life insurance companies focus on legacy planning and replacing human

capital value, health insurers cover medical costs, and property, casualty,
or accident insurance is aimed at replacing the value of homes, cars, or
valuables.

5. Insurance companies can be structured either as a traditional stock

company with outside investors, or mutual companies where
policyholders are the owners.

6. Among the largest categories of insurance companies are accident and

health insurers; property and casualty insurers; and financial guarantors.
The most common types of personal insurance policies are auto, health,
homeowners, and life.

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 Fintech Firms

1. Financial technology (abbreviated fintech or FinTech) is the technology and

innovation that aims to compete with traditional financial methods in the
delivery of financial services. Artificial intelligence, Blockchain, Cloud
computing, and big Data are regarded as the "ABCD" (four key areas) of
FinTech.

2. The Fintech industry is an emerging industry that uses technology to improve

activities in finance. The use of smartphones for mobile banking, investing,
borrowing services, and cryptocurrency are examples of technologies aiming
to make financial services more accessible to the general public.

3. Financial technology companies consist of both startups and established

financial institutions and technology companies trying to replace or enhance
the usage of financial services provided by existing financial companies.

4. The Americas saw about $51.4 billion of fintech investment in H1’21, with
the US alone accounting for $42.1 billion. In the EMEA region, investment in
fintech was very robust at $39.1 billion.

5. The nascent financial technology industry in London has seen rapid growth
over the last few years, according to the office of the Mayor of London. Forty
percent of the City of London's workforce is employed in financial and
technology services.

6. Fintech companies use a variety of technologies, including artificial

intelligence (AI), big data, robotic process automation (RPA), and
blockchain.AI algorithms can provide insight on customer spending habits,
allowing financial institutions to better understand their clients. Chatbots are
another AI-driven tool that banks are starting to use to help with customer
service.

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1. IndusInd Bank Limited is a new-generation[a] Indian bank headquartered in
Mumbai (Maharashtra). The bank offers commercial, transactional and electronic
banking products and services. IndusInd Bank was inaugurated in April 1994 by
then Union Finance Minister Manmohan Singh. IndusInd Bank is the first among
the new-generation private banks in India. citation needed.

2. The bank started its operations with ₹100 crores (10 billion) in capital, of which
₹60 crores were raised by Indian residents and ₹40 crores were raised by Non-
Resident Indians (NRI). The bank specializes in retail banking services and is
also working on expanding its network of branches all across the country.
According to the bank, its name is derived from the Indus Valley Civilisation.

3. IndusInd Bank, which commenced operations in 1994, caters to the needs of both
consumer and corporate customers Its technology platform supports multi-
channel delivery capabilities. As on September 30, 2021, IndusInd Bank has
2,015 Branches/Banking Outlets and 2,886 ATMs spread across 760
geographical locations of the country. Bank also has representative offices in
London, Dubai and Abu Dhabi. The Bank believes in driving its business through
technology. It enjoys clearing bank status for both major stock exchanges - BSE
and NSE - and major commodity exchanges in the country, including MCX,
NCDEX and NMCE. IndusInd Bank was included in the NIFTY 50 benchmark
index on April 1, 2013.

4. The company has its market capitalization worth INR 65,540.24 Cr. as of 16th
April 2021. The company was established in 1994. The company has reported

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 quarterly revenue of INR7,241.50 crore at the end of December 2020. This
company is listed on the Bombay Stock Exchange (BSE), having the code
532187 and on the National Stock Exchange (NSE) with the symbol
INDUSINDBK. Bank has its headquarters in Pune; the bank offers commercial,
transactional and electronic banking products and services and boasts about being
the first among the new-generation private banks in India. IndusInd Bank is one
of the new generation's private sector banks of India.

5. It has a broad reach with over 5000 distribution points, 1911 branches and a
network of 205 crore customers across. The services offered by the bank include
branch banking, consumer finance, commercial and transactional banking,
corporate banking and finance, cash management services, treasury services,
trade services utility (TSU), wealth management and depository operations. The
bank operates under the leadership of MD CEO Mr Sumant Kathpalia and
Chairman R. Seshasayee. IndusInd Bank built on its Fingerprint Banking on its
app, launching its form of an all-in-one store on the Indusmobile App.

6. The bank was awarded TIMES NOW India Digital Awards 2019 for its
innovative money transfer product and services. In 2020, Bharat Financial
Inclusion Limited was strategically merged with IndusInd Bank post, which, the
bank was able to serve 22.2 million customers. The bank is also a part of the
strategic alliance with Religare Securities to offer a value-added savings account-
linked package for the customers, such that one saving would comprise a
depositor account, an internet trading account, along with a normal savings
account.

7. The bank showed a 3-year CAGR growth of 24.4% in revenue collected and a net
profit of 15.8% during the same tenure. In February 2021, it also got a capital
boost of INR 2021 crore from its promoters which also shot the share price to
INR 1,032.6 per share. The bank's deposit base declined to INR 2.02 lakh crore

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 in March 2020, but the preceding quarter figure stands at INR 2.16 lakh crore.
However, the RoA consistently improved to 1.05%.

8. As a Bank, they have built on the strong innovations and digitisation platforms
that they already have and constantly remained focussed on innovating and -
simple but robust solutions. The single-minded objective is that they should
continue to provide banking solutions that simplify banking, and fulfil every
customer’s financial requirement in a convenient, simple and speedy manner. It,
as always, is critical to be totally connected with the customer, and to be in sync
with their needs and expectations in a dynamic and fast changing world. Keeping
this in view, their marketing and communication strategy too, has moved towards
showcasing convenience and simplicity as important attributes that underpins their
approach towards providing banking services.

9. IndusInd Bank executed two strategically planned radio campaigns on the Bank's
Fixed Deposit propositions which aired in 6 languages viz. Hindi, Tamil, Telugu,
Kannada, Malayalam and Bengali. The radio campaign was aired across 24
markets. The key idea behind the campaign was to communicate the high, best-in-
class FD interest rates to the audience. The activity spanned from August 27 to
October 1, 2020 (5 Weeks), while the second one spanned from February 15 to
March 12, 2021 (4 Weeks).

10. In September and October 2020, we did a 360-degree campaign on the Bank's
fixed deposit offerings that was spread across 150 cities. The campaign included
mobile van deployments; newspaper inserts as well as merchandising at branches.
We used the alternative media and reached out to housing societies and senior
citizens in particular with our FD propositions.

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 CHAPTER 2
IndusInd Bank and the big problem with small loans

1. Misgivings around risk management are not new for India’s banks. However, they
are by far the most troublesome for lenders because they easily erode investor
confidence. Be it public sector banks or even the most valuable lender HDFC
Bank, slip-ups in lending processes have invited investor angst. IndusInd Bank
now finds itself at the receiving end of such angst with its shares losing more than
10% on Monday.

2. The issue has cropped up from its micro finance arm Bharat Financial Inclusion
Ltd (BFIL), which it had acquired in March 2019 through an all-stock deal. A
group of whistleblowers have alleged that BFIL may be evergreening loans and
highlighted lapses in the processes of loan disbursal, according to a 5 November
story in The Economic Times. The whistle-blowers warned the banking regulator
and IndusInd Bank’s board about it, the report said.

3. What’s more is that a pile of loans was disbursed in May without explicit
borrower consent at the time of the disbursal. In episodes that have a negative
impact on both the balance sheet and the reputation of a bank, the best way to
alleviate investor concern is proactive disclosures. Unfortunately, disclosures have
been a sore point between investors and lenders time and again. In IndusInd
Bank’s case, too, timely disclosure seems to be a point of concern.

4. IndusInd Bank explained its position through a statement and an investor call over
the weekend. Even so, there seems to be little comfort considering the share price
drop on Monday.

5. The lender failed to disclose the exit of BFIL non-executive chairman M.R. Rao
to investors though it had the opportunity to do so and this has caught attention.

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6. “We believe that the bank’s turnaround story remains intact, but it needs to work
more on strengthening credit underwriting/risk management and communication
with stakeholders to sustain the long-term re-rating," analysts at Emkay Global
Financial Services Ltd wrote in a note.

7. With regard to media reports that more top management personnel at BFIL are set
to exit, the lender has clarified that it did not receive any resignations so far.
Analysts at Macquarie said top management changes should be closely monitored
for the bank.

8. In the meantime, some analysts do not seem to think that these lapses would hurt
the bank in a big way. The lender has denied the allegations on evergreening but
has admitted that 84,000 loans were given without borrower consent in May due
to a ‘technical glitch’.

9. “This issue was highlighted by the field staff within two days and the technical
glitch was rectified expeditiously. Out of the above, only 26,073 clients were
active with the loan outstanding at ₹34 crore, which is 0.12% of the September-
end portfolio," IndusInd Bank said.

10. Analysts at Jefferies India Pvt. Ltd said the bank has adequate provisioning
against microfinance loans and the behaviour of the loans is not adverse.
However, investors are concerned about the microfinance book, as the allegations
will be lifted only by an independent forensic audit. The stress on its microfinance
book has surged during the September quarter. Gross bad loans have risen to 3%
of the book from 1.5% in the previous quarter. More than 3% of the book has been
restructured as well.

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11. The microfinance book needs to be closely watched because it has become a big
contributor of growth and profitability for IndusInd Bank. Microfinance loans
now form 12.7% of the bank’s total loan book. The book has grown 22% on a
compound annual growth rate basis over the past two years.

12. At the current pace of return on assets, the microfinance book has the potential to
contribute more than a quarter of the bank’s profits. Therefore, it is essential for
IndusInd Bank to address the concerns surrounding Bharat Financial Inclusion at
the earliest.

13. IndusInd Bank’s overall performance during the September quarter had passed
muster. Excluding Monday’s fall, shares of the lender have outperformed the
broad Nifty by a big margin over the past six months.

14. The management alluded that the governance structure and risk framework remain
strong and have been strengthened over the years with strict supervision. The
RBI’s review process is underway, while it has also suggested an external audit to
provide further comfort. The business environment continues to improve, having
surpassed pre-COVID levels in Oct’21, while the credit cost guidance is
maintained.

15. The stock could witness some pressure due to adverse media articles and asset
quality stress reported by some other MFI lenders. Nevertheless, we expect the
impact to be controlled.

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 SWOT ANALYSIS

1. Strengths-

a) Rising Net Cash Flow and Cash from Operating activity

b) Company with high TTM EPS Growth

c) Growth in Net Profit with increasing Profit Margin (QoQ)

d) Growth in Quarterly Net Profit with increasing Profit Margin (YoY)

e) Increasing Revenue every Quarter for the past 4 Quarters

f) Increasing profits every quarter for the past 4 quarters

g) Book Value per share Improving for last 2 years

h) FII / FPI or Institutions increasing their shareholding

i) Companies with rising net profit margins - quarterly as well as TTM basis

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 2. Weaknesses-

a) Negative Breakdown First Support (LTP < S1)

b) Inefficient use of capital to generate profits - RoCE declining in the last 2

years

c) Promoter decreasing their shareholding

d) Companies with High Promoter Pledge

e) Near 52 Week Low

f) Weak Momentum: Price below Short-, Medium- and Long-Term Averages

g) High volume, top losers

3. Opportunities

a) Companies with current TTM PE Ratio less than 3 Year, 5 Year and 10 Year PE

b) Brokers upgraded recommendation or target price in the past three months

c) Street Favorite: High Analyst Rating with at least 20% upside

d) Decrease in NPA in recent results

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e) Decrease in Provision in recent results

f) Insiders bought stocks

Threats-

a) There are no major threats for this company.

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 Reports

1. Loan growth to accelerate in FY23E; asset quality improves  IIB reported an in

line operating performance, with total revenue growing 12% YoY.

2. Asset quality ratios improved sequentially, even as stress in the MFI portfolio
remained elevated.  Loan book grew 3.5% QoQ, led by 6.5% growth in the
Corporate book.

3. The CV book also reported a sequential growth, led by Utility Vehicles. Its
Tractor and Credit Card portfolio also witnessed healthy sequential growth.

4. Fresh slippages stood at INR25.98b (4.7% annualized), led by MFI. The

management prudently increased coverage in the MFI business.

5. It also carries 10% provisions on its 30+dpd book. GNPA/NNPA ratio moderated
by 29bp/9bp QoQ to 2.48%/0.71%, while net SR book stood at 85bp of loans. We
estimate IIB to deliver 37% earnings CAGR over FY22-24E, leading to 16% RoE
in FY24E.

6. We maintain our Buy rating. Steady improvement in its liability franchise; PCR
healthy ~72%  IIB reported a PAT of INR12.41b (7% beat; 49% YoY growth) in
3QFY22, led by an 11% YoY decline in provisions, while revenue growth stood
in line.

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7. NII grew ~11% YoY to INR37.94b (in line), while other income grew 14% on
healthy treasury gains. NIM improved by 3bp QoQ to 4.1%, aided by declining
cost of funds, even as corporate yields fell 42bp QoQ.

8. Operating expenses grew 13% YoY to INR23.58b (in line). C/I ratio stood at
41.6% v/s 41.3% in 3QFY21. PPOP grew 12% YoY to ~INR33.1b.
NII/PPOP/PAT grew 10%/11%/70% YoY to INR110b/INR97b/INR34b in
9MFY22.

9. On the business front, advances grew 3.5% QoQ and 10% YoY, largely led by the
Corporate book, which grew 6.5% QoQ.

10. In the Consumer business, disbursement growth picked up in the Vehicle segment,
with disbursements higher than pre-COVID levels. The Tractor business
maintained its healthy momentum at 24% YoY, while Credit Card spends grew
28% QoQ. Retail to Wholesale mix stood at 54:46.

11. Deposit growth stood at 19% YoY, with CASA mix stable at 42.2%, and Retail
deposit mix at 40% as per LCR.  On the asset quality front, fresh slippages stood
elevated at INR25.98b (MFI slippages of INR13.4b).

12. GNPA/NNPA ratio moderated by 29bp/9bp QoQ to 2.48%/0.71%. PCR ratio

stood stable ~72%. Outstanding restructured loans declined to 3.3% v/s 3.6% in
2QFY22, while the net SR book stood at 85bp of loans.

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