EMIS Insights - India Banking Sector Report 2021 3rd Quarter

COVID-19 UPDATE
INDIA
BANKING
SECTOR 2021 Q3
An EMIS Insights Industry Report
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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

India Banking Sector, Q3 FY2021
Main Sector Indicators
Quarterly Summary
Sector Highlights
Assets
Loans and Deposits
Banking Sector Credit
Bank Lending Survey
Focus Point – No. of ATMs, Credit Cards, and
Debit Cards, Q3 FY2021
Inflation Rates
Interest Rates
Consumer and Business Outlook
Top M&A Deals
M&A Activity, Q1 FY2019 – Q3 FY2021

CONTENTS 04 COMPETITIVE LANDSCAPE
Timeline of the Indian Banking Sector
Highlights
Main Events
Top Companies
p.41
05 COMPANIES IN FOCUS p.46

State Bank of India
ICICI Bank
Bank of Baroda
Bank of India
Punjab National Bank
06 REGULATORY ENVIRONMENT p.62

Government Policy
07 OTHER FINANCIAL p.65

INSTITUTIONS
AIFIs
NBFCs
HFCs
SFBs
Co-Operatives
Primary Dealers
Fintech
08 RETAIL CHANNELS p.76

Branches
ATMs
Financial Cards
Mobile Banking
Pre-Paid Payment Instruments

INDIA BANKING SECTOR 2021 Q3
Foreword
Q3 FY2021 was a significant period in India’s COVID-19 recovery, as it

marked the country’s exit from the pandemic-induced quarterly recessions
and the news of COVID-19 vaccines being readied for roll-out in the next
quarter. To sustain the recovery, the Indian banking sector must gear itself
well as the lifting of regulatory forbearances might show the true impact of
the pandemic to the sector.
India’s economic recovery from the onslaught of the pandemic is slowly starting to take shape. After
suffering a contraction in Q1 FY2021, by -24.4% y/y, India’s economy showed signs of recovery with a
lower rate of contraction in Q2 FY2021 at -7% y/y. Finally, in Q3 FY2021, India was able to get out of the
technical recession by posting a growth of 0.41% y/y – a significant milestone in the recovery of the
world’s second most populous nation and the second most affected nation in terms of COVID-19
cases. The recovery was mainly attributed to the continuous and gradual re-opening of the economy
and the much-awaited news of COVID-19 vaccines being readied for large-scale deployment.
The Indian banking sector, together with the RBI, plays a crucial and complicated role in sustaining
this nascent economic recovery. With many corporations and small businesses crippled due to low
levels of activity, access to credit is very important to jumpstart these components of the economy.
On the consumer level, people will rely on the banks’ ability to secure their funds and provide
immediate financial assistance in times of need. However, despite these roles, the banking sector will
likely be cautious given that asset quality has historically been an issue for Indian banks.
In the quarters leading to Q3 FY2021, total assets in the sector generally increased as banks built
buffer. At the same time, loans exhibited minimal growth while deposits showed a slowing growth.
The Indian banking sector showed positive performance as well across key banking metrics such as
capital adequacy, asset quality, and liquidity. However, caution must be taken as the various
regulatory forbearances implemented had likely masked the true state of the banking sector. It is
therefore interesting to look at the sector once these temporary measures have come to an end; so as
to have a complete picture of the impact of the pandemic to the banking sector.
Contact Us:
Boryana Nedyalkova
editorial@isimarkets.com


An EMIS Insights Industry Report CONTENTS
01
EXECUTIVE
SUMMARY

Copyright © 2021 ISI Emerging Markets Group, all rights reserved. 7
01 EXECUTIVE SUMMARY CONTENTS
Sector in Numbers
INR
4.0% 166.0tn
Total Household
156.3 thou
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
Data for FY2019

Source: CEIC, RBI
INDIA BANKING SECTOR 2021 Q3 8

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

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

Sector Snapshot
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

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

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

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
Pr ivate Consumption, y/y change
Fixed Investment (ann. var. %)
Public Spending
Source: CEIC, Focus Economics

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%
7.4%
5.1% and exports by 0.9%. The prevalence of the 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
Exports Imports
next five years.
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%
Cur rent Account, USD bn FY2019 FY2020 FY2021f FY2022f FY2023f FY2024f FY2025f
Cur rent Account, as % of GDP
Source: CEIC, Focus Economics

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
Aug-17
Dec-17
Aug-18
Dec-18
Aug-19
Dec-19
Sep-17
Nov-17
Sep-18
Nov-18
Sep-19
Nov-19
Oct-17
Apr-18
Oct-18
Apr-19
Oct-19
Apr-20
Feb-18
Feb-19
Feb-20
Jul- 17
Jul- 18
Jul- 19
May- 17
May- 18
May- 19
May- 20
Mar-18
Mar-19
Mar-20
Jun-17
Jun-18
Jun-19
Jun-20
Jan-18
Jan-19
Jan-20
Source: Reserve Bank of India, CEIC

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%
11.6
175.6 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 Pr ivate 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

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

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
149.8
92.2 97.2 102.5 103.2

139.7
90.9

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.

NPLs
Comments Gross NPLs, INR bn

After rising over the last five years, gross NPLs
11.0%
declined in FY2019. This was made possible
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 G ross 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 Pr ivate Sector Banks FY2020f FY2021f FY2022f FY2023f FY2024f
Others Total G ross NPLs Others

03
SECTOR
IN FOCUS

03 SECTOR IN FOCUS CONTENTS

Q3 FY2021
Key Banking Metrics by Scheduled Commercial Banks, Q3 FY2021
6.25% 10.73%
Loans, y/y change Deposits, y/y change
7.87% 69.91%
Loans-to-Deposit Ratio
15.8%
CAR (Q2 FY2021)
Assets*, y/y
7.5% 2.3%
Gross NPA (Q2 FY2021) Net NPA (Q2 FY2021)
No. of ATMs, Outstanding Credit and Debits Cards, Q3 FY2021
208.49 60.40 886.42

No. of ATMs, No. of Outstanding No. of Outstanding
thou Credit Cards, mn Debit Cards, mn
Total: 9.01% / 0.16%
Note: This does not account for the small amount of fixed and other assets which are not published on the RBI Monthly Bulletin.
Source: RBI

Main Sector Indicators

Q3 FY2020 Q4 FY2020 Q1 FY2021 Q2 FY2021 Q3 FY2021
GDP, constant prices, INR tn 36.08 38.33 26.97 33.00 36.22
GDP, q/q change 1.29% 6.26% -29.64% 22.35% 9.77%
GDP, y/y change 3.28% 3.01% -24.38% -7.35% 0.41%
Headline CPI, period average 148.73 149.30 151.37 155.00 158.20
Headline CPI, quarter average, q/q change 2.57% 0.38% 1.38% 2.40% 2.06%
Policy Rate 5.15% 4.40% 4.00% 4.00% 4.00%
Base Rate 9.18% 8.78% 8.20% 8.20% 8.05%
Deposit Rate 3.25% 3.00% 2.70% 2.70% 2.70%
Exchange Rate (USD-INR) 71.16 74.55 75.71 73.52 73.62
Loans-to-Deposit Ratio 73.63% 72.22% 73.24% 70.73% 69.91%
Total SCB Cash in Hand, INR tn 0.87 0.87 0.88 0.88 0.85
Total SCB Balances with RBI, INR tn 5.32 5.41 5.36 4.30 4.30
Total SCB Balances with Banks, INR tn 3.18 2.31 2.60 2.61 2.18
Total SCB Investments, INR tn 36.93 37.65 37.47 41.66 44.39
Total SCB Bank Credits

97.69 99.68 103.71 102.40 102.72
(Loans), INR tn
Total SCB Deposits, INR tn 132.68 138.02 141.60 144.78 146.92
No. of ATMs (onsite), thou 112.46 113.27 113.35 113.98 114.05
No. of ATMs (offsite), thou 97.18 97.49 97.13 96.07 94.44
Total No. of Credit Cards, as of quarter end, mn 55.33 57.75 57.29 58.69 60.40
Total No. of Credit Card Transactions 205.86 165.42 125.49 149.50 174.71
Total Value of Credit Card Transactions, INR tn 6.66 5.11 4.30 5.14 6.38
Total No. of Debit Cards, as of quarter end, mn 805.32 828.56 845.41 865.44 886.42
Total No. of Debit Card Transactions 1113.22 918.80 783.62 872.07 970.70
Total Value of Debit Card Transactions, INR tn 37.55 31.53 29.32 31.79 37.12
Source: CEIC, RBI

Quarterly Summary
Assets
After a slowdown in FY2020 due to dampened economic activity and deleveraging of corporate
balance sheets, total assets of the banking sector in Q3 FY2021 slightly grew by 2% q/q. Bank credits
(or “loans and advances” as the official Indian statistical term is), grew by 3% q/q and were the most
significant portion of the banking sector’s assets, accounting for approximately 67% of the total.
Investments followed at INR 44tn by Q3 FY2021 or roughly 28% of the total assets of the banking
sector. As at the most recent fiscal year end on March 31, 2020, the banking sector managed to
increase its total assets with investments accounting for majority of this increase. The increase in
resources in the recent quarters is the banking sector’s strategy of building up enough resources to
withstand the stress of asset quality deterioration after the height of the pandemic.
Loans
Loans and advances marginally changed in the recent quarters, reflecting the sector’s risk aversion
during times of uncertainty. Nevertheless, changes have been positive for two consecutive quarters
since the slight decline in Q1 FY2021. A similar trend was observed in the bank lending survey
conducted quarterly by the RBI, India’s central bank. A drop in loan demand was observed by the
country’s major banks in Q1 FY2021 although such demand has picked up since then with the same
banks being optimistic about demand in the last quarter of FY2021. The same survey suggests the
easing of loan terms and conditions after witnessing a tightening in Q1 of FY2021.
Deposits
Deposits to the banking sector have consistently increased in the past five quarters although at a
declining rate. The RBI reported that, in the current fiscal year, deposits with PSBs have been growing
at a higher pace than usual reflecting PSBs notion of being a safe place for deposits. The increasing
deposits with banks are due to many individuals trying to increase savings and to cut spending in the
middle of the pandemic. Lockdown measures have also made it impossible for high-income
individuals to pursue big ticket items such as leisure and travel. In addition, volatility in alternative
investments, such as equity and debt, have made bank deposits more attractive. Meanwhile, the
slowdown in the recent quarters may have been induced by the easing of lockdown measures and the
slow return to normalcy of most people’s spending and investment patterns.
Source: RBI, OECD, Mint

Quarterly Summary (cont’d)
NPA
In terms of asset quality, as measured by NPAs, improvement was observed based on the most recent
Financial Stability Report published by the RBI. Gross and net NPA ratios of SCBs were at 7.5 and 2.3,
respectively, as of September 2020. In light of the pandemic, the RBI extended regulatory
dispensations which resulted in improvements in these measures. The provision coverage ratio also
improved from 66.2% in March 2020 to 72.4% in September 2020. However, S&P noted that NPAs may
shoot up in the next 12 to 18 months to around 10% to 11%. It said that loan moratoriums and the
Supreme Court’s barring of classifying borrowers as NPAs have masked the underlying problems; and
with the end of the moratorium, banks will likely see the increase in NPAs. A similar comment was
raised by ICRA citing again the end of moratorium and the pending classification of assets from the
Supreme Court.
Capital Adequacy
Capital adequacy, as measured by capital to risk-weighted assets ratio (CRAR) and Tier 1 Leverage
Ratio, has generally improved based on the recent Financial Stability Report of the RBI which has
figures as of September 2020. In terms of CRAR, the ratio increased to 15.8 in September 2020 from
14.7 in March 2020. The Tier 1 Leverage Ratio increased from 7% to 7.3% in September 2020. The
improvements were mainly accounted by PVBs and FBs, while PSBs accounted for minimal
improvements. However, while improvements were observed, these ratios are likely inflated due to
regulatory forbearance. In fact, while PVBs have shown improvements in these ratios, they have been
aggressive in raising capital in view of the imminent restructurings after the regulatory forbearances.
Liquidity
Liquidity, as measured by the liquidity coverage ratio, has improved as well from the recent quarters
against figures by the end of FY2020. By end of September 2020, FBs were the most liquid, with LCR of
201.32 from 175.17 in March 2020; followed by PSBs and PVBs with LCRs of 181.83 and 148.35 from
148.64 and 130.65 in March 2020, respectively. In October 2020, the RBI announced its plan to enhance
its liquidity support to India’s financial markets with the objective of reviving activity on sectors with
linkages to other sectors. Part of this agenda is the “On Tap TLTRO” which enables banks to push
credit flow to targeted sectors in order to maintain liquidity in the economy. Through this scheme, the
RBI injects funds to banks, which in turn must be used to buy corporate bonds, commercial papers,
and non-convertible debentures or to extend bank loans and advances to targeted sectors.
Source: RBI, Economic Times, Business Today, India Today

Sector Highlights
Q3 FY2021 was a significant period for India and the entire world in general, as COVID-19 vaccines
started to appear and with the Indian government has unveiled its vaccination programme – argued to
be the world’s largest, in January 2020. This milestone resounded to India’s Q3 FY2021 GDP which
finally grew again y/y by 0.41% – the first time since the pandemic-induced contraction in Q1 and Q2
of FY2021. Further to the optimism brought on by vaccines, came the gradual opening of the economy
plus the revival in private consumption and government spending.
The Indian banking sector plays a pivotal role in the recovery. A sound and resilient banking system is
undoubtedly necessary for the sector to fully support other sectors. On paper, the banking sector
proved to be performing better than expected with asset quality, capital adequacy, and liquidity
improving from the recent quarters. However, it has been commented that regulatory forbearances
have masked the true state of the banking sector and that the worse might come after loan
moratoriums and restructurings take place. Nevertheless, the RBI has asserted itself through various
policy measures and banks have also started to stack up on resources as buffers for the events that
are yet to come.
Loan and deposit behaviour in the banking sector have also reflected the country’s gradual transition
to recovery. In Q3 FY2021, loans marginally increased and major banks forecast loan demand to
further pick up in the next quarter. On the other hand, the growth in deposits slowed down which
could have been the result of the increase in personal consumption due to the relaxation of
containment measures.
Meanwhile, the RBI and the banking sector continued to implement various initiatives outside the
parameters of the pandemic. In December 2020, the Real Time Gross Settlement (“RTGS”) was made
available 24 hours a day and 365 days in a year – making India one of the few countries with a real
time large value payment system. In November 2020, the RBI issued guidelines for its co-lending
model where NBFCs and banks can jointly lend so that risks and rewards are shared between parties.
At the minimum, NBFCs must retain 20% of the loans on their books. The main goal of the model is
for funds to flow to the underserved portion of the economy at a lower cost – an agenda under the
RBI’s goal of further promoting financial inclusion in the economy.
Source: RBI, Financial Express

Assets
Selected Asset Types by Scheduled Commercial Banks, INR tn
154.46 157.41
150.02 151.85
145.92
105.91
103.71
102.72
102.40
99.68
44.39
44.03
41.66
37.65
37.47
5.41
5.36
4.58
4.30
4.30
2.60
2.61
2.31
2.18
2.04
0.87
0.87
0.88
0.88
0.85
Dec-19 Mar-20 Jun-20 Sep-20 Dec-20
Cash in Hand Balances with RBI Balances with Banks Investments Bank Credits Total
Total Assets by Major Banks, Q3 FY2021, INR tn
41.97
15.81
13.77
12.00
9.28 8.51 7.41 6.63 5.56 4.43
State Bank of HDFC Bank ICICI Bank Bank of Axis Bank Ltd. Punjab Canara Bank Bank of India Union Bank of Kotak
India Ltd. Ltd. Baroda National Bank India Mahindra Bank
Ltd.
Note: Fixed and other assets are not included in the monthly RBI bulletin.
Source: RBI

Loans and Deposits
Total Loans by Scheduled Commercial Banks, INR tn
4.04%
3.11%
2.04%
105.91
103.71
0.31%
102.40
102.72
99.68
-1.26%
Bank Credits q/q change
Total Deposits by Scheduled Commercial Banks, INR tn
4.02%
2.60%
2.25%
146.92
144.78
141.60
1.47%
138.02
1.33%
132.68
Deposits q/q Change
Source: RBI

Banking Sector Credit
Banking Credit, Food Credit vs. Non-Food Credit, Q3 FY2021, INR tn
Services; 25.79 ; 27.6%
Personal Loans; 26.63 ;

28.5%
Industry (Micro & Small,

Medium and Large ); 27.60 ;
29.5%
Food Credit; 0.93 ;

1.0%
Agriculture & Allied Activities;

12.46 ; 13.3%
Banking Credits by Industry, Q3 FY2021, INR tn
Infrastructure; 10.03 ; 36.3% Others; 3.97 ; 14.4%
Petroleum, Coar & Nuclear

Gems & Jewellery; 0.63 ; Products; 0.58 ; 2.1%
2.3%
Textiles; 1.91 ; 6.9%
Food Processing; 1.56 ;
5.6% Vehicles, Vehicle Parts &
Transport Equipment; 0.85 ;
Construction; 1.03 ; 3.7% 3.1%
Chemicals & Chemical
Products; 1.76 ; 6.4% All Engineering; 1.43 ;
Cement & Cement Products; Basic Metal & Metal Product; 5.2%
0.57 ; 3.30 ;
2.1% 11.9%
Note: Non-food credit is composed of services, industry, personal loans, and agricultural & allied activities.
Source: RBI

Bank Lending Survey
Loan Demand Net Response
50
40
30
20
10
0
Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21
-10
-20
-30
Cur rent Quarter Next Quarter
Loan Terms and Conditions Net Response
25
20
15
10
0
Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21
-5
-10
Cur rent Quarter Next Quarter
Note: Positive value suggests optimism in terms of loan demand and loan terms and conditions (or loosened T&C). Negative
value suggests pessimism in terms of loan demand and loan terms and conditions (or tightened T&C).
Source: RBI

FOCUS POINT
No. of ATMs, Credit Cards, and Debit Cards, Q3 FY2021
ATMs Credit Cards Debit Cards
No. of No. of Value of No. of No. of Value of

As of On-Site Off-Site Outstanding Transactions, Transactions, Outstanding Transactions, Transactions,
Cards, mn mn INR tn Cards, mn mn INR mn
Dec-20
114,045 94,435.00 60.40 174.71 6.38 886.42 970.70 3.7
Dec-19
112,458 97,181.00 55.33 205.86 6.66 805.32 1,113.22 3.8
Source: RBI

Inflation Rates
Inflation Rate
6.0%
4.8%
4.5%
3.6%
3.4%
155.0
146.3
139.6
135.0
130.3
FY2017 FY2018 FY2019 FY2020 FY2021
Headline CPI, yearly average Overall Inflation Rate
Headline CPI
165
155
145
135
125
115
105
95
Apr-12
Oct-12
Apr-13
Oct-13
Apr-14
Oct-14
Apr-15
Oct-15
Apr-16
Oct-16
Apr-17
Oct-17
Apr-18
Oct-18
Apr-19
Oct-19
Apr-20
Oct-20
Jul- 12
Jul- 13
Jul- 14
Jul- 15
Jul- 16
Jul- 17
Jul- 18
Jul- 19
Jul- 20
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Jan-20
Jan-21
Note: FY2021 pertains to the average of April 2020 to January 2021 headline CPI.
Source: CEIC, RBI

0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
3.50%
4.50%
5.50%
6.50%
7.50%
8.50%
9.50%
Jan-12 Jan-12
Apr-12 Apr-12
Jul- 12 Jul- 12
Policy Rate
Source: CEIC, RBI

Oct-12 Oct-12
Jan-13 Jan-13
Apr-13 Apr-13
An EMIS Insights Industry

Jul- 13 Jul- 13
Oct-13 Oct-13
EMISPDF intellinet
Jan-14 Jan-14
Report
Apr-14 Apr-14
Jul- 14 Jul- 14
Base Rate and Deposit Rate

Oct-14 Oct-14
Interest Rates
Jan-15 Jan-15
Apr-15 Apr-15
Jul- 15 Jul- 15
Oct-15 Oct-15
Base Rate, Five Major Banks

Jan-16 Jan-16
Apr-16 Apr-16
Jul- 16 Jul- 16
Oct-16 Oct-16
Jan-17 Jan-17
Apr-17 Apr-17
from 49.36.119.214 on 2022-04-02 13:37:32 BST. DownloadPDF.

Jul- 17 Jul- 17
Oct-17 Oct-17
Jan-18 Jan-18
Apr-18 Apr-18
Jul- 18 Jul- 18
Oct-18 Oct-18
Jan-19 Jan-19
Deposit Rate
Apr-19 Apr-19
Jul- 19 Jul- 19
03 SECTOR IN FOCUS
Oct-19 Oct-19
Jan-20 Jan-20
Apr-20 Apr-20
Jul- 20 Jul- 20
Oct-20 Oct-20
Jan-21 Jan-21
CONTENTS
34
Consumer Confidence Survey

140
130
120
110
100
90
80
70
60
50
40
Sep-15
Nov-15
Sep-16
Nov-16
Sep-17
Nov-17
Sep-18
Nov-18
Sep-19
Nov-19
Sep-20
Nov-20
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Jul- 15
Jul- 16
Jul- 17
Jul- 18
Jul- 19
Jul- 20
May- 15
May- 16
May- 17
May- 18
May- 19
May- 20
Jan-16
Jan-17
Jan-18
Jan-19
Jan-20
Jan-21
Cur rent Situation Index Future Expectation Index
Overall Business Situation Net Response – Services Sector
90
70
50
30
10
Sep-14
Dec-14
Sep-15
Dec-15
Sep-16
Dec-16
Sep-17
Dec-17
Sep-18
Dec-18
Sep-19
Dec-19
Sep-20
Dec-20
-10
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Mar-21
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
-30
-50
-70
Cur rent Quarter Future Quarter
Source: RBI


(cont’d)
Overall Business Situation Net Response – Infrastructure Sector

70
50
30
10
Sep-14
Dec-14
Sep-15
Dec-15
Sep-16
Dec-16
Sep-17
Dec-17
Sep-18
Dec-18
Sep-19
Dec-19
Sep-20
Dec-20
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Mar-21
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
-10
-30
-50
-70
Overall Business Situation Net Response – Manufacturing Sector

50
30
10
Sep-14
Dec-14
Sep-15
Dec-15
Sep-16
Dec-16
Sep-17
Dec-17
Sep-18
Dec-18
Sep-19
Dec-19
Sep-20
Dec-20
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Mar-21
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
-10
-30
-50
-70
Source: RBI

Top M&A Deals
Top M&A Deals in the Indian Banking Sector, Q1 FY2019 – Q3 FY2021

Country of Deal Value, Stake,
Date Target Company Deal Type Buyer
Buyer USD mn %
Life Insurance Corporation of India (LIC) India 2537.39
06/08/2020 Yes Bank Ltd Open market purchase 4%
(Official)
Singapore;
Qualified Institutional Buyers (QIBs); GIC Pte Ltd;
26/09/2019 Axis Bank Ltd Minority stake United States; 1760 (Official) 7%
BlackRock Inc; T. Rowe Price Group Inc
India
Caladium Investment Pte Ltd; Camas Investments
Singapore;
03/08/2020 Bandhan Bank Ltd Open market purchase Pte Ltd; Morgan Stanley Asia (Singapore) Pte.; 1400 (Official) 21%
France
Credit Suisse (Singapore) Ltd; Societe Generale SA
Qualified Institutional Buyers (QIBs) India 1338.09

11/08/2020 Axis Bank Ltd Minority stake 8%
(Official)
Kotak Mahindra Bank Buyer(s) unknown Undisclosed

26/05/2020 Minority stake 993 (Official) 0%
Ltd (KMB)
20/06/2019 Axis Bank Ltd Open market purchase Buyer(s) unknown Undisclosed 394 (Official) 2%
Societe Generale SA; Qualified Institutional Buyers 270.46
16/08/2019 Yes Bank Ltd Minority stake France; India 10%
(QIBs); BNP Paribas Arbitrage Fund (Official)
ICICI Prudential Life Insurance Co Ltd; IDFC
Financial Holding Company Ltd; HDFC Life United States;
01/05/2020 IDFC First Bank Ltd Minority stake Insurance Company Ltd.; Warburg Pincus LLC; Bajaj 265 (Official) 18%
India
Allianz Life Insurance Co
AU Small Finance Bank Kotak Mahindra Mutual Fund; Nomura India
10/08/2018 Open market purchase Japan; India 249 (Official) 9%
Ltd Investment Fund Mother Fund
Max Life Insurance Co Axis Bank Ltd India 210 (Market

21/04/2020 Minority stake 30%
Ltd est.)
AU Small Finance Bank Camas Investments Pte Ltd; Temasek Holdings Pte 146.72
17/06/2018 Minority stake Singapore 5%
Ltd Ltd (Official)
ICICI Bank Ltd India 135.06

14/03/2020 Yes Bank Ltd Minority stake 5%
(Official)
India; Mauritius;
lshana Capital Ltd; Bajaj Finance Ltd; East Bridge
Hong Kong
30/11/2019 RBL Bank Ltd Minority stake Capital Master Fund I Ltd; FEG Mauritius FPI Ltd ;
SAR, China; 115 (Official) 5%
WF Asian Reconnaissance Fund Ltd
United States
Undisclosed Institutional Investors; Qualified
Ujjivan Small Finance India
04/12/2019 IPO Institutional Buyers (QIBs); Retail Investors; 104 (Official) 14%
Bank Ltd
Shareholders of the company(ies)
India; Mauritius;
lshana Capital Ltd; East Bridge Capital Master Fund
Hong Kong 94.46
30/12/2019 RBL Bank Ltd Minority stake I Ltd; FEG Mauritius FPI Ltd ; WF Asian 4%
SAR, China; (Official)
Reconnaissance Fund Ltd
United States
ICICI Prudential Asset Management; Retail
Investors; Non Institutional Investors ; Aditya Birla 87.36
26/11/2019 CSB Bank Ltd IPO India 19%
Sun Life Mutual Fund ; Qualified Institutional Buyers (Official)
(QIBs)
Source: EMIS DealWatch

Top M&A Deals (cont’d)

Buyer USD mn %
IDBI Federal Life Ageas Group; Federal Bank Ltd Belgium; India 78.7 (Official)
Insurance Co Ltd
Retail Investors; HDFC Life Insurance Company
Ltd.; ICICI Prudential Life Insurance Co Ltd; BNP
Equitas Small Finance Paribas Arbitrage Fund; SBI Life Insurance India 69.38
22/10/2020 IPO 15%
Bank Ltd (Official)
Company Limited; Qualified Institutional Buyers
(QIBs); Non Institutional Investors
United Arab
AU Small Finance Bank Abu Dhabi Investment Authority; Reliance Mutual
30/07/2020 Open market purchase Emirates; India; 69 (Official) 2%
Ltd Fund; WestBridge Capital Partners
Mauritius
Buyer(s) unknown Undisclosed 47.32

(Official)
Jana Small Finance Centrum Group; Family office of Ranjan Pai India 42 (Market
Bank Ltd est.)
Existing investors; DEG - Deutsche Investitions- und
Suryoday Small Finance Entwicklungsgesellschaft mbH; Kotak Mahindra Life
03/04/2019 Minority stake Germany; India 35.8 (Market n.a.
Bank Ltd Insurance Co Ltd; Promoters of Suryoday Small est.)
Finance Bank Ltd
Naver Corporation; Softbank Ventures Asia;
Balancehero India Pvt South Korea 28 (Market
19/11/2020 Minority stake BonAngels Venture Partners ; Daesung Private n.a.
Ltd est.)
Equity; Shinhan Capital Co Ltd
Buyer(s) unknown 26.96

(Official)
Fedbank Financial True North Fund VI LLP; True North India 23.46 (EMIS
Services Ltd est.)
15/04/2020 IndusInd Bank Ltd Open market purchase Goldman Sachs Singapore Pte Singapore 23.3 (Official) 1%
United Arab
Emirates;
VentureSouq; Mubadala Investment Company
China;
PJSC; Global Ventures; MSA Capital; Global
Germany; India;
08/12/2020 Tabby Minority stake Founders Capital; Outliers Ventures; Saudi Telecom
Saudi Arabia; 23 (Official) n.a.
Ventures ; Raed Ventures; JIMCO; Arbor Ventures;
Singapore;
HOF Capital; Arab Bank Plc
United States;
Jordan
National Securities HDFC Bank Ltd India 22.34 (EMIS

Depository Ltd (NSDL) est.)
BofA Securities Europe SA France 19.85

03/11/2020 IndusInd Bank Ltd Open market purchase 0%
(Official)
The Clearing
HDFC Bank Ltd India 17.38 (EMIS
20/11/2018 Corporation Of India Minority stake 4%
est.)
Limited

Top M&A Deals (cont’d)

Buyer USD mn %
Open market India Infoline Investment Services Ltd (IIISL) India

05/06/2018 Lakshmi Vilas Bank Ltd. 15.76 (Official) 5%
purchase
Open market Rakesh Jhunjhunwala - private investor India

04/11/2019 Yes Bank Ltd 12.33 (Official) 1%
purchase
Capital Small Finance Bank Oman India Joint Investment Fund; Amicus Capital; 11.75 (Market
27/11/2019 Minority stake India n.a.
Ltd Pi Ventures est.)
Lok Capital Group; Kotak Mahindra Life Insurance

Suryoday Small Finance India; United 8.2 (Market
28/05/2020 Minority stake Company Ltd; Teachers Insurance and Annuity n.a.
Bank Ltd States est.)
Association of America (TIAA); Gaja Capital
05/08/2020 DCB Bank Ltd Block trade Oman India Joint Investment Fund India 5.53 (Official) 2%
India International Exchange ICICI Bank Ltd India 4.36 (EMIS

Ltd est.)
ICICI Bank Ltd India 2.51 (EMIS

04/03/2019 Kisan Rural Finance Ltd Minority stake 10%
est.)
24/07/2018 Arthashastra Fintech Pvt Ltd Minority stake ICICI Bank Ltd India 1.26 (Official) 10%
Indian banking portfolio of DCB Bank Ltd India

10/09/2019 Acquisition n.a. 100%
ADCB
Astarc Ventures; Valpro Capital ; Undisclosed

09/01/2019 Rebanko Venture Pvt Ltd Minority stake India n.a. n.a.
buyer(s)
ICICI Bank Ltd; GMO Global Fintech Fund ; Buyer(s)

10/01/2019 Arthashastra Fintech Pvt Ltd Minority stake India; Japan n.a. n.a.
unknown
28/06/2018 Swadhaar Finserve Pvt Ltd Minority stake RBL Bank Ltd India n.a. 40%
IL&FS Securities Services IndusInd Bank Ltd India

26/06/2018 Acquisition n.a. 100%
Ltd
Smallcase Technologies Pvt HDFC Bank Ltd India

08/12/2020 Minority stake n.a. n.a.
Ltd
Boi Axa Trustee Services

03/12/2020 Pvt Ltd; Boi Axa Investment Acquisition Bank of India India n.a. 49%
Managers Pvt Ltd

M&A Activity, Q1 FY2019-Q3 FY2021
Number and Value of Deals Number of Deals by Deal Value (USD)
6 6 6 6
50.1-100mn
11.1%
4 4 4 100.1-500mn
20.0%
3 3
5,377
2 Undisclosed
1 15.6%
2,078
1,578
162
250
434
425
135
140
63
45
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
500.1-
2019 2020 2021 1000mn
2.2%
0-50mn
Value of Deals, USD mn Number of Deals 42.2%
Number of Deals by Deal Type, % Number of Deals by Region

of Investors, %
Germany
2.9% Japan 2.9% Mauritius
4.3%
Open Market Hong Kong
Purchase SAR 2.9%
Minority 24.4% China 4.3%
Stake 60.0%
United States
8.7%
Singapore
7.2%
IPO 6.7% United Arab
India 52.2% Emirates
2.9%
Block Trade Undisclosed
2.2% 4.3%
France 4.3%
Acquisition South Korea
6.7% 1.4% Belgium 1.4%

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
The passage of the State Bank of India (Subsidiary

Banks) Act 1959 merges the State Bank of India with 8
former State-associated banks, paving the way for SBI
1969 Development Milestones
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.
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

approximately INR 114bn to fraudulent behaviour by
2020 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:

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

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

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

05
COMPANIES
IN FOCUS

05 COMPANIES IN FOCUS CONTENTS
State Bank of India
Quarterly Update, INR bn
45%
283
44%
244
271
253
43%
42%
180
318
310
305
296
39%
255
68
64
54
52
46
Net Interest Income Non-Interest Income Net Pr ofit Net Interest Margin
Highlights
The State Bank of India (SBI) tallied growth from Q2 to Q3 FY2021 across selected key banking metrics.
Its net interest margin was at its highest at 45% in the five most recent quarters. However, net profit
in Q3 FY2021 was slightly lower against the comparable period in FY2020.
SBI reported that its financials dipped due to higher provisions arising from bad loans and a drop in
income from corporate banking operations. Nevertheless, it is optimistic on the recovery from retail
lending as India gradually returns to normalcy. SBI’s chairman also reported that asset quality
remains healthy and that the bank’s recovery is faster than expected. This was despite the RBI’s
advisory on banks to be cautious, given the impact of the pandemic. It was further commented that
government interventions improved the cashflows of many corporations which gave these
corporations confidence. In addition, there was the vaccine roll-out in India, which signaled a new
phase of recovery from the pandemic.
Source: BSE, Times of India, Economic Times

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

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%
32,741
2.27%
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
FY2016 FY2017 FY2018 FY2019 FY2020 FY2016 FY2017 FY2018 FY2019 FY2020
Total Loans Total Deposits
Net Interest Income Non-Interest Income
Net Pr ofit 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
FY2016 FY2017 FY2018 FY2019 FY2020

Insurance 9.3 13.1 18.3 21.1 23.7
Tier 1 Capital Ratio Tier 2 Capital Ratio

Other Banking 13.8 17.2 16.8 22.9 31.7 Capital Adequacy Ratio

ICICI Bank

184
182
171
167
53%
155
51%
49% 49%
60
54
51
48%
118
113
111
107
103
36
16
Highlights
ICICI Bank’s net interest income remained relatively stable and increasing in the recent five quarters.
On the other hand, non-interest income continued to exceed net interest income and appears to be on
an increasing trend after dropping during Q1 FY2021. Net profit and net interest margin remained
favourable as well. Across all metrics presented, ICICI posted a relatively favorable performance in Q3
FY2021 compared to the same three-month period in FY2020.
The strong y/y performance of ICICI was mainly attributed to its loan book, as domestic loans grew by
13% y/y. Similarly, ICICI’s retail loans also jumped 15% y/y due to increased demand for consumer
credit in India. The bank was also aided by expenses which dropped by 3% y/y and by fee income-
based operations which grew by 15% y/y due to increased customer spending, borrowing, and
investment activities. Its domestic corporate portfolio also grew by 10% y/y due to disbursements to
highly-rated corporations’ demand for additional capital requirements.
Source: BSE, Economic Times

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
Directors of ICICI and ICICI Bank approved the Net Interest Income 226.5 253.0 261.0 279.0 328.1
merger of ICICI and two of its wholly-owned retail Net Non-Interest 352.5 421.0 524.6 568.1 593.2
Income
finance subsidiaries, ICICI Personal Financial
Net Profit 122.5 101.8 101.9 77.1 42.5
Services Limited and ICICI Capital Services
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.
These are provided by the bank for a very short Revenue - Retail Banking 329.9 391.9 453.9 502.6 591.7
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
transactions, even before the customer reaches Revenue - Other Banking 38.1 39.3 38.4 31.1 15.6
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 - Wholesale
18.6% -3.8% -24.3% -27.5% -30.0%
Banking
stood at INR 12.39tn, with INR 220.7bn of core
operating profit, a 1.89 capital adequacy ratio and Profit Margin - Treasury 14.7% 17.8% 22.3% 15.0% 9.6%
3.42% net interest margin. Profit Margin - Other
17.5% 17.3% 7.9% 18.3% 40.4%
Banking

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
6,813
100.5%
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

Bank of Baroda
45%
43%
38% 38%
36%
85
35
80
77
32
31
75
30
68
22
18
12
12
7
5
Highlights
In Q3 FY2021, Bank of Baroda’s net interest income and net interest margin increased to their highest
in the five most recent quarters. However, net profit dropped by 33% from Q2 FY2021 and was
stagnant when compared to the same three-month period in FY2020.
Bank of Baroda experienced growth in the retail loan segment and favorable margins due to lower
provisions. Consumer loans and loans to the agriculture sector also increased y/y. Asset quality also
improved as shown by the decline in its gross NPA from 10.43% y/y to 8.48% y/y, and net NPA from
4.05% to 2.39% y/y. Meanwhile, its provision increased to 85.46% as of the Q3 FY2021 from 77.77% as of
the same period last year.
Source: BSE, Business Today

Bank of Baroda
Operational Performance Summary, INR

Highlights
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
Total Equity 422.0 427.0 433.0 468.4 553.4
overseas branches in 21 countries, 9,572 ATMs and
cash recyclers (machines that handle tasks such ROAA, % 0.6% -0.7% 0.3% -0.3% 0.1%
as 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

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
427
433
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
Treasur y Cor porate/Wholesale Banking

Capital Adequacy Ratio Retail Banking Other Banking

Bank of India
38% 38%
25
21
17
17
16
42
41
37%
38
38
35
36%
9
5
5
1
34%
-36
Highlights
In Q3 FY2021, Bank of India reported net interest income of INR 38bn – by 8.9% lower from the
immediately preceding quarter, and by 9.2% lower from the same quarter in FY2020. In terms of
income from non-core operations, Bank of India tallied its highest score in FY2021 so far in Q3,
although it was lower when compared to the same period in the previous fiscal year. The bank has
been posting net profits since Q4 FY2020 after reporting a net loss due to high provisions in that
quarter.
BOI’s favorable Q3 FY2021 figures were mainly due to lower provisions and better asset quality. Its
gross and net NPAs improved to 13.25% and 2.36% from 16.3% and 5.975, respectively. On the other
hand, decline on its net interest income from the preceding quarter was due to the slower effect of
deposits pricing. Hence, the Bank of India is optimistic that this metric will be more favorable in the
coming quarters.
Source: BSE, Economic Times

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

Bank of India (cont’d)
2.56% 75.7%
68
57
2.20%
2.11% 2.11%
137
51
120
1.92%
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
334
337
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

Treasur y Cor porate/Wholesale Banking Retail Banking Capital Adequacy Ratio

40% 41%
34% 33%
32%
39
86
85
30
69
26
25
24
48
45
6
5
5
-5
-6
Highlights
The Punjab National Bank (PNB) earlier stated that its Q3 FY2021 results were not comparable with its
Q3 FY2020 figures following the government’s amalgamation of United Bank of India and Oriental
Bank of Commerce with PNB, effective April 2020. The merger created the second-largest nationalised
bank in India in terms of business and branch network.
Following the merger of the three mentioned banks, net interest income soared to INR 85bn in Q3
FY2021 – an 89% y/y increase from INR 45bn in Q3 FY2020. As a result, PNB’s quarterly net profit
jumped to INR 6bn.
Source: BSE, Times Now News, Mint


PNB was incorporated in 1984 but started its
operations in April 1895. At the start of Indicator FY2015 FY2016 FY2017 FY2018 FY2019
operations, the authorised capital of the bank
was INR 0.2mn, and its working capital was INR
20,000. Since the start of the bank’s operations, Revenue - Corporate /
232.7 234.4 234.2 174.7 213.8
Wholesale Banking
seven banks have merged with PNB. In recent
Revenue - Retail Banking 155.9 153.6 151.9 190.9 191.3
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, SAR and Dubai. The Profit Margin - Corporate /
31.6% 26.7% -25.3% -127.3% -91.0%
bank has two overseas subsidiaries - PNB Wholesale Banking
International Ltd (a 100% owned subsidiary in Profit Margin - Retail Banking 31.6% 26.7% 24.1% 1.7% 10.2%
the UK) and Druk PNB Bank Ltd – Bhutan (with a
Profit Margin - Other Banking 31.6% 26.7% 26.7% 14.7% 21.7%
51% shareholding). The lender also has one
associate company, namely JSC Tengri Bank,
Kazakhstan (41.64%shareholding) and one
Annual Results, INR bn, FY Ended March
joint venture bank in Nepal known as Everest
31
Bank Ltd Nepal (20.03%shareholding).
The bank continues to maintain its strength in
low cost Current Account and Savings Account Net Interest Income 173.7 153.1 149.9 149.2 171.6
(CASA) deposits, while qualitative business Net Non-Interest

61.7 60.0 89.5 88.8 73.8
Income
growth remains the bank’s primary focus. In
FY2019, the bank had more than 110mn Net Profit 34.0 -39.7 13.2 -122.8 -99.8
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


(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
418
421
382
-100
-123
12.2%
11.3% 11.7%
2.9% FY2016 FY2017 FY2018 FY2019
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

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

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

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
150
3,137
4,956
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

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
2,603 Services 1,865 2,224 3,168.72 3,671.67
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

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
Total Net Income, INR bn y/y Change

Note: D is Deposit; ND-SI is Non-Deposit, Systematically Important
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

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
9,451.49
Return on Assets
7,374.60
26.1% (RoA) (PAT/Total 2.0 2.0 2.1 2.0 1.4

Assets)
GNPA Ratio 1.1 1.1 1.1 1.3 1.3

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

SFBs
Comments 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
financially under-served population. FY2017 FY2018 FY2019
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
Equitas Small Finance Finance Bank Ltd; 37.9; 393.3%
Bank Ltd; 157.6; 4.5% Ujjivan Small
18.9% Finance
Bank Ltd;
137.4; 16.5%
Capital Small
Finance
594.9
Bank Ltd; Utkarsh

43.2; Small
5.2% Finance
348.6
Bank Ltd;
62.4; 7.5% 70.7%
70.7
AU Small
Finance ESAF Small
Bank Ltd; FY2017 FY2018 FY2019
Finance
326.2;
Bank Ltd;
39.1% Total Loans and Advances of SFBs, INR bn
70.6; 8.4%
y/y Change
Source: Next Billion, RBI, The Hindu Business Line

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
96,248
operatives and 1,544 urban co-operatives. Rural 614
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-Ter m Co-oper atives
Total Rural Co-oper atives
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

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 2,243.0 1,564.5
Banks
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

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

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 Pr ofit
(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

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

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

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

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

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

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

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
861.1 828.6
country.
771.6
661.8
The economic slowdown caused by the COVID-
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 Car ds
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 Car ds Credit Cards Debit Cards Financial Car ds
* RuPay is an Indian payment system that provides similar services to Visa and Mastercard.
Source: RuPay, pmjdy.gov

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% 124.6%
57,815.1
14,738.5
13,104.8
91.7%
13,926.3
100.7% 95.4%
1,872.3
6,200.2
4,001.6
976.8
29,583.3
389.6
12.5%
Total Tr ansaction Volume, mn y/y Change Total Tr ansaction Value, INR bn y/y Change
Source: RBI

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
627
615 404
country. PPIs play an important role in increasing 462 306
413 404
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
1,397.2
432.6
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

INDIA BANKING SECTOR 2020/2024
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ATM Automatic Teller Machine

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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NPA/NPL Non-Performing Asset/Non-Performing Loan

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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05 COMPANIES IN FOCUS p.46

06 REGULATORY ENVIRONMENT p.62

07 OTHER FINANCIAL p.65

08 RETAIL CHANNELS p.76

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Q3 FY2021 was a significant period in India’s COVID-19 recovery, as it

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INR INR 61.7%

Data for FY2019

INDIA BANKING SECTOR 2021 Q3 8

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

INDIA BANKING SECTOR 2021 Q3 9

ASSETS: INR 166.0tn

KEY PLAYERS NET-INTEREST INCOME KEY PLAYER ASSETS

INDIA BANKING SECTOR 2021 Q3 10

Source: RBI, Economic Times, Business Standard, IBEF

INDIA BANKING SECTOR 2021 Q3 11

Source: RBI, IBEF, India Today, InvestIndia