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BANKING INDUSTRY IN INDIA

Presented by Pushpa Boradhe Pooja Jadhav

CONTENTS

Banks Types of banks Structured of organized Banking sector in India Phases of the Banking Industry Lifecycle Banking Industry In India- An Overview Public Sector Or Private Sector point of view Top 10 Players in Indian Banking Sector Challenges faced by Banking Industry in India Strategic options with banks to cope with the challenges Deutsche Bank Online Banking Conclusion

BANK

A bank is a financial institution that accepts deposits and channels those deposits into leading activities

TYPES OF BANKS
TYPES OF BANKS

RETAIL BANKS

INVESTMENT BANKS

BOTH COMBINED

OTHERS

STRUCTURE OF THE ORGANISED BANKING SECTOR IN INDIA

PHASES OF THE BANKING INDUSTRY

Indigenous Banks

Direct Intervention

Liberali zation

Transition

PHASE-I: Indigenous banks

Vedas and the Manusmriti: Kautalyas Arthashastra suggested Maximum and Minimum Interest rate.
Kautalya, Yajnyavalkya and Manu recommended 15 per cent interest per annum on capital. British rule almost wiped out these tribes by bringing European Banks from urban

How Did Saukars Lend?

Borrowers is known Very little documentation Exorbitant rates of interests Compounded Shorter Intervals Mortgaged lending on Land, Properties, Jewels etc Most cases poor borrowers surrendered their properties

PHASE-II: Direct Intervention


Government Interventions began in 1930s The Reserve Bank which is the Central Bank was created in 1935 by passing RBI Act 1934 RBI is the sole authority for

Issuing bank notes The supervisory body for banking operations in India Supervising exchange control and banking regulations, and administers the government's monetary policy. Granting licenses for new bank branches.

Intervention: Nationalization

In the wake of the Swadeshi Movement, a number of banks with Indian management were established in the country namely, Punjab National Bank Ltd, Bank of India Ltd, Canara Bank Ltd, Indian Bank Ltd, the Bank of Baroda Ltd, the Central Bank of India Ltd. In 1955, Govt. nationalized Imperial Bank of India with extensive banking facilities on a large scale especially in rural and semi-urban areas. It formed State Bank of India to act as the principal agent of RBI and to handle banking transactions

PHASE-III :Liberalization

Constitution of Narasimham committee and its report on Banking reforms in 1991. It covered the areas of interest rate deregulation & directed credit rules. By March 2004, the new private sector banks and the foreign banks share shared almost 20% of total assets Prudential Norms act against NPAs

PHASE-IV :Transition

Most Indian banks lagging behind the areas of customer funds transfer and clearing systems. Over-staffed and not able to compete with new generation private banks New banks are well-capitalized, use modern equipment and attract high-caliber employees. Change in Indian Banking System like use of Credit cards, Debit cards, ATM ,Home Banking, Automatic Clearing House ,Stored value cards, Demat A/c ,RTGS,NEFT,NRI service Two of domestic banks in India have turned like Foreign Banks. About 74 per cent of holdings of ICICI and HDFC bank are in the hands of foreigners

BANKING INDUSTRY IN INDIAAN OVERVIEW


First bank started in 1786 Growth:


More qualitative than quantitative India Vision 2020 Total asset of all commercial banks is estimated at 40,90,000 crores Growth expected at an annual composite rate of 13.4% Nationalization resulted 91% of government holdings in banking sector Liberalization paved the path for private players to participate in the industry

Nationalization & Liberalization:

CONTD.

Public Sector banks (PSBs) accounts for more than 78% of the total banking industry assets. Private sector bank are making tremendous progress. The private players constantly improved services in order to retain customers and win the severe competition which had become a feature of the Indian banking industry.
Foreign Banks are likely to succeed in the Indian Banking Industry

Public Sector Or Private Sector point of view

Non Performing Assets:

At ICICI Considering the effect of high level of NPAs on the efficiency of banks, ICICI follows a certain procedure as far as loan advancements are concerned. Unlike most of the PSBs, the root cause for a high NPA level is considered; being solvency of the borrower At PSBs

Today, PSBs need to be given more power to enforce their security rights

Public Sector Or Private Sector point of view

Mergers:

At ICICI For ICICI and BoM merger, BoM has 277 branches in South India, thus ICICI now stands to create regional balance of branches and high connectivity throughout the country. At PSBs A merger should consider the human aspect, initially Balance Sheets will look good, but then working of two different human cultures, one may look down upon the other. Such trivial issues hamper the working

Public Sector Or Private Sector point of view

Introduction of prudential norms,Income Recognition, Asset Classification and compulsory disclosure of accounts

At ICICI Besides, banking regulation norms, the government needs to make a certain service level mandatory. This could be:

Customer service increase, i.e. basic training to employees Decrease NPA level by better evaluation of customer profile Technological up gradation, this has been implemented in PSBs Diversified portfolio, not just traditional Banking functions

At PSBs Any PSB is answerable at the Parliament level to the GOI; thus, disclosure should be higher in PSBs.

Top 10 players in Indian banking sector


State Bank of India HDFC Bank Citibank ICICI Bank Punjab National Bank UTI Bank Honkong & Shanghai Banking Corp. Kotak Mahindra Bank Sundaram Bank Oriental Bank of Commerce

Challenges faced by banking industry in India

Deregulation New rules Efficiency Diffused Customer loyalty Misaligned mindset Competency Gap

Challenges faced by banking industry in India

Strategic options with banks to cope with the challenges


Investing in state of the art technology as the back bone of to ensure reliable service delivery Leveraging the branch network and sales structure to mobilize low cost current and savings deposits Making aggressive forays in the retail advances segment of home and personal loans Implementing organization wide initiatives involving people, process and technology to reduce the fixed costs and the cost per transaction Focusing on fee based income to compensate for squeezed spread, (e.g. CMS, trade services) Innovating Products to capture customer mind share to begin with and later the wallet share Improving the asset quality as per Base II norms

Deutsche Bank- Introduction


Deutsche Bank is a leader in Germany & Europe Deutsche Bank established its first branch in India in 1980. Currently, it has over 7,800 employees in the country, operating branches in 15 cities. Deutsche Bank provides high quality banking products and services like private banking, insurance, investment, wealth management, credit cards & loans

Deutsche Bank

Deutsche Bank-Online Banking


1.

One Bank View: Access all your Bank, Credit


Card, Loan, Fixed Deposit, Investment and Demat accounts with one password.

2.

Safe & Secure : Use db Online Banking without


any worry about safety as we have the security of 128bit SSL encryption, two levels of passwords (Login & Transaction) and virtual keypad

3.

Balance Tracking : View your transactions along


with balances after each transaction. You can even download the same for your records free of charge

4.

Online RTGS : Transfer funds above 2 lakhs


across 5,900 cities in less than half an hour.

5.

Online NEFT : Transfer funds below 2 lakhs


across 5,900 cities without visiting the branch.

Deutsche Bank-Online Banking


7.Repetitive Payments: Add, edit and delete standing instructions real time to manage your frequent payments. 8. Bill Payments : Pay over 60 billers instantly, schedule payments, set up autopay instructions and forget reminders.

9.Direct Debit: Purchase air tickets, movie tickets, books online using your bank account or credit card with your transaction password.
10. Mailbox facility : Mail all your queries and track all our responses using the Send Mails feature. 11.Track your Cheques: Stop cheque payment instantly, track your issues cheques and request for new cheque books.

Conclusion

As the economy revives fee based activities and asset quality of banks could improve After adjusting for Non Performing Loans some public sector banks may have to go in for fresh capital infusion Due to increasing competition banks need to strive for customers, thus, offering all at the same desks for corporates as well as individuals i.e. retail banking is required; public sector needs to have a pace in this arena. A merger to improve the overall health, reach and customer base, has given a rise to the trend of mergers globally. The recent merger of ICICI and BoM proves that customer base has to develop for sustainability. Mergers constitute as a cheaper and a quicker form of expansion and Indian banks should explore such an opportunity.

Conclusion -contd

The opening of insurance has given banks a new opportunity to make the best out of their resources; how much advantage do our PSBs make is yet to see. As far as rural banks are concerned, GOI has to give personnel better career prospects in order to get them working, better products and convenience and safety has to be guaranteed by the bank. Personalized service in a crude form will help. All banks will have to adapt to new emerging technologies in order to exploit the new business opportunities it offers. It will be a new challenge and will require investment in technology and new systems. Some value-added services may also need to be provided, which will call for innovation standardization.