Report on Indian Banking Sector

 |  Published By: Care Research | Format: PDF
Request Free Sample

Indian Customers kindly click here

Indian Banking Sector: Edgy but Resilient

Indian Banking sector is dominated by Public sector banks (PSBs) which accounted for 72.6% of total advances for all SCBs as on 31st March 2008. PSBs have rapidly expanded their foot prints after nationalisation of banks in India in 1969 and further in 1980. Although there is a restrictive entry/expansion for private and foreign banks in India, these banks have increased their presence and business over last 5 years.

Peculiar characteristic of Indian banks unlike their western counterparts such as high share of household savings in deposits (57.4% of total deposits), adequate capitalisation, stricter regulations and lower leverage makes them less prone to financial crisis, as was seen in the western world in mid FY09.
The Scheduled Commercial Banks (SCBs) in India have shown an impressive growth from FY04 to the mid of FY09. Total deposits, advances and net profit grew at CAGR of 19.6%, 27.4% and 20.2% respectively from FY03 to FY08. Banking sector recorded credit growth of 33.3% in FY05 which was highest in last 2 and half decades and credit growth in excess of 30% for three consecutive years from FY04 to FY07, which is best in the banking industry so far. Increase in economic activity and robust primary and secondary markets during this period have helped the banks to garner larger increase in their fee based incomes.
A significant improvement in recovering the NPAs, lowest ever increase in new NPAs combined with a sharp increase in gross advances for SCBs translated into the best asset quality ratio for banking sector in last two decades. Gross NPAs to gross advances ratio for SCBs decreased from the high of 14% in FY2000 to 2.3% in FY08.

With in the group of banks, foreign and private sector banks grew at higher rate than the industry from FY03 to FY08 primarily because of lower base effect and rapid expansion undertaken by these banks. In FY09, overall growth in credit and deposits was led by PSBs. However, growth of private and foreign banks was significantly lower in FY09 due to their high exposure to stressed sectors and problem at parent level for foreign banks.
Unsecured bank credit has risen over the years and stood at 23.3% of bank credit in FY08 as compared to just 10.9% in FY2000. Lending to sensitive sector has also grown at CAGR of 46.1% from FY05 to FY08. In the backdrop of the economic downturn, CARE Research feels that the excellent performance seen in last five years ended FY08 will be difficult to repeat in coming years.
CARE Research expects that with the downturn in the economy, credit and deposit growth will moderate in coming years. Credit growth will be led by spending on the infrastructure while retail credit will show a moderate growth. Margin pressures due to lag effect of rate cuts between interest rate on deposits and advances, lower treasury gains and core fee income and increasing in provisions for NPAs is likely to put pressure in the bottom line of the banks.
Going forward, PSBs’ which are close to the required lower level of government stake and have concentrated presence in particular region are likely to consider its merger with other PSB as an important option if they want to sustain the growth seen in past.


With the downturn in the economy, CARE Research expects that credit and deposit growth will moderate in coming years. Credit growth will be led by spending on the infrastructure while retail credit will show a moderate growth. Margin pressures due to lag effect of rate cuts between interest rate on deposits and advances, lower treasury gains and core fee income and increasing in provisions for NPAs is likely to put pressure in the bottom line of the banks.

The report elucidates facts about the Indian Banking Sector, supplemented by latest statistical data and comprehensive analysis. The report, comprising of 16 chapters provides an in-depth view of the Banking Sector with FY09 result analysis and Statistics on banks from FY04-FY08.

  • History of Indian Banking sector since inception followed by role of regulator and policy measures adopted in FY09.

  • Detail study of total resources of the banks from FY01 onwards, trend in deposits mobilisation by various bank groups, low cost deposits and movements in interest rate on deposits and on competing instruments.

  • Trend in credit offtake since FY01 with detailed analysis of credit offtake in FY09. Trend in sectoral credit, sensitive and priority sector lending, Industrial credit, type-wise and securitiywise credit for SCBs and for various banking groups. The report also includes bank group-wise analysis of maturity mismatch between deposits and advances.

  • Analysis of trend in SLR and Non-SLR investments over the years and bank-group wise analysis of credit to deposit and investment to deposit ratio.

  • Break-up of total income and its trend analysis. Comprehensive study of trend in operating cost and staff cost of the SCBs as a whole and various banking groups.

  • In-depth analysis of spread and Net Interest Margins (NIMs) for banking sector and various banking groups.

  • Analysis of trend in profitability for the sector and bank-groups over last 5 years including the growth drivers and factor impacting the bottomline.

  • Trend in Non-performing Assets (NPAs) since year 2000 for the sector and various bank groups. Sectoral break-up of the NPAs and recovery in NPAs over the years. Detailed study of the restructuring regulations and impact on banks

  • Need for high capital adequacy ratio and soundness of banking system in Indian is envisaged by presenting the trend in CAR over the years and resources raised by the banks over the years.

  • Comprehensive study on the need for consolidation with in the banking industry as a viable option to sustain growth with detailed reasoning Quick analysis of FY09 results by dividing banks into PSBs and private sector banks. Analysis of trend in CASA ratio and restructured assets for FY09

  • Outlook on Advances and deposit growth in FY10 and FY11 for the banking sector and various banking groups along with the detailed presentation of the methodology adopted for the projections. Outlook on investments and treasury gains, fee income for the banks, Net Interest Margins and NPAs and overall profitability going forward in FY10 and FY11.

  • A section which focuses on the profile of the Top-11 players in the Indian banking sector. It includes

  •  profit and loss account analysis from FY05 to FY09,

  •  analysis of results of last 8 quarters i.e. Q1FY08 to Q4FY09,

  •  balance sheet analysis & ratio analysis,

  •  trend in shareholding pattern in the last 5 years and

  • pictorial presentation of trend in NPAs in last 8 quarters.

Table of Contents :


Executive Summary


1 History of Banking Sector in India

1.1 History of SBI and Associates
1.2 History of Other (Nationalised,
Private and Foreign) Banks
1.2.1 Pre Independence (1840 to 1947)
1.2.2 Post Independence to
Nationalisation (1947 to 1969)
1.2.3 Nationalisation to
Liberalisation (1969 to 1991)
1.2.4 Liberalisation to current date (1991 to 2008)
1.3 Various Banking Groups
1.4 Regional Distribution of Branches

2 Role of Reserve Bank of India
2.1 RBI monetary and Credit Policy
2.2 Development in FY09 and role of RBI
2.3 Liquidity Adjustment Facility (LAF)
2.4 Cash Reserve Ratio (CRR)

3 Deposits
3.1 Sources of Funds for Banks
3.2 Distribution of Deposits of Banks
3.2.1 Distribution of Deposits by
3.2.2 Distribution of Deposits by
3.3 Deposits mobilisation from
household Sector

3.4 Type of Deposits
3.4.1 CASA Deposits
3.4.2 Term Deposits
3.5 Bank Group-wise Deposits
3.5.1 SBI and Associates
3.5.2 Nationalised Banks
3.5.3 Private Sector Banks
3.5.4 Foreign Banks

4 Advances
4.1 Total Advances and growth for SCBs
4.2 Credit offtake in FY09
4.3 Sectoral Bank Credit
4.4 Retail loans
4.5 Lending to Sensitive Sector
4.6 Priority Sector lending
4.6.1 Priority Sector Lending for
PSU and Private Banks
4.6.2 Priority Sector Lending for
Foreign Banks
4.7 Bank Group-wise Performance
4.7.1 SBI and Associates
4.7.2 Nationalised Banks
4.7.3 Private Sector Banks
4.7.4 Foreign Banks
4.8 Bank group-wise deposit and
advance maturity matching


5 Investments
5.1 SLR Investments
5.2 Non SLR Investments
5.3 Bank group-wise Credit and
Investment to deposit ratios

6 Total Income
6.1 Interest on Advances and
6.2 Other Income
6.2.1 Core Fee Income
6.2.2 Non-fee Income

7 Total Expenses
7.1 Operating Expenses
7.1.1 Staff Cost
7.1.2 Non-staff Cost

8 Spread and Net Interest Margin
8.1 Spread for SCBs
8.2 Bank Group-Wise Performance

9 Profitability
9.1 Profitability for SCBs
9.2 Bank Group-Wise Performance
9.2.1 SBI and Associates
9.2.2 Nationalised Banks
9.2.3 Private Sector Banks
9.2.4 Foreign Banks

10 Non-Performing Assets (NPAs)
10.1 Trend in NPAs for SCBs
10.2 NPAs, Provisions and write back for
banking groups

10.3 Sector-wise NPA Break-up
10.4 Recovery of NPAs
10.5 Bank Group-wise Performance
10.5.1 PSU Banks
10.5.2 Old Private Sector Banks
10.5.3 New Private Sector Banks
10.5.4 Foreign Banks

11 Capital Adequacy Ratio (CAR)

12 Consolidation: Is it imminent for the
Indian banking sector??

13 FY09 Result Analysis

14 Outlook on Indian Banking Industry
14.1 Advances
14.2 Deposits
14.3 Investments
14.4 Core Fee Income
14.5 Net Interest Margins (NIMs)
14.6 Non-Performing Assets (NPAs) and
14.6.1 Restructuring of Assets
14.7 Profitability

15 Statistics on Banks from FY04 to FY08
15.1 No. of Branches of banks
15.2 Total Business for banks
15.3 Net Profit for the banks
15.4 Net interest Margins for the banks
15.5 Return on Asset for the banks
15.6 Return on Equity for the banks

15.7 CASA for the banks
15.8 Core spread for the banks
15.9 Capital Adequacy Ratio for the banks
15.10 Tier 1 Capital Adequacy Ratio for the
15.11 Ratio of Gross NPAs to Gross
Advances for the banks
15.12 Ratio of Net NPAs to Net Advances
for the banks
15.13 Ratio of Unsecured advances to total
advances for the banks
15.14 3 Year (FY05 to FY08) CAGR in
total advances
15.15 3 Year (FY05 to FY08) CAGR in
total deposits
15.16 3 Year (FY05 to FY08) CAGR in Net
15.17 Business per Branch for the banks
15.18 Profit per Branch for the banks
15.19 Profit per employee for the banks


16 Players
16.1 Axis Bank
16.2 Bank of Baroda
16.3 Bank of india
16.4 Canara Bank
16.5 Central Bank of india
16.6 HDFC Bank
16.7 ICICI Bank
16.8 IDBI Bank
16.9 State bank of India
16.10 Syndicate Bank
16.11 Union Bank of India

If the above report does not have the information suitable for your business, we can provide custom research that can be lucrative for your business or enhance your profession.