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    Banking Industry: Recent Trends and The Road Ahead

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    dellfrog
    The banking industry in India originated in the late 18th century and has since undergone major changes and periods of growth. It experienced nationalization in the 1960s-1980s and liberalization in the 1990s. Recent trends show the industry maintaining resilience while providing growth opportunities. However, challenges remain around adopting new regulations like Basel 3, improving efficiency, ensuring adequate credit flow, and addressing human resource issues like hiring and retention. Overall, the future appears promising for the Indian banking sector if it can successfully navigate upcoming changes and continue to build on its current strengths.

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    Banking Industry: Recent Trends and The Road Ahead

    Uploaded by

    dellfrog
    21 views19 pages
    The banking industry in India originated in the late 18th century and has since undergone major changes and periods of growth. It experienced nationalization in the 1960s-1980s and liberalization in the 1990s. Recent trends show the industry maintaining resilience while providing growth opportunities. However, challenges remain around adopting new regulations like Basel 3, improving efficiency, ensuring adequate credit flow, and addressing human resource issues like hiring and retention. Overall, the future appears promising for the Indian banking sector if it can successfully navigate upcoming changes and continue to build on its current strengths.

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    The banking industry in India originated in the late 18th century and has since undergone major changes and periods of growth. It experienced nationalization in the 1960s-1980s and liberalization in the 1990s. Recent trends show the industry maintaining resilience while providing growth opportunities. However, challenges remain around adopting new regulations like Basel 3, improving efficiency, ensuring adequate credit flow, and addressing human resource issues like hiring and retention. Overall, the future appears promising for the Indian banking sector if it can successfully navigate upcoming changes and continue to build on its current strengths.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    21 views19 pages

    Banking Industry: Recent Trends and The Road Ahead

    Uploaded by

    dellfrog
    The banking industry in India originated in the late 18th century and has since undergone major changes and periods of growth. It experienced nationalization in the 1960s-1980s and liberalization in the 1990s. Recent trends show the industry maintaining resilience while providing growth opportunities. However, challenges remain around adopting new regulations like Basel 3, improving efficiency, ensuring adequate credit flow, and addressing human resource issues like hiring and retention. Overall, the future appears promising for the Indian banking sector if it can successfully navigate upcoming changes and continue to build on its current strengths.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 19

    Banking Industry

    Recent trends and the road ahead

    OBJECTIVES

    Main history of Indian Banking Industry.

    Past performance and trends.


    Major changes in recent past. Current scenario. The road ahead and challenges.

    History and introduction to banking industry


    Originated in the last decade of the 18th century. The General Bank Of India(started-1786),Hindustan Bank(started -1790). Formation of RBI in1934, got nationalized in January 1949 under RBI act. Nationalization:
    Except SBI every other bank was functioning independently. In 1969 ,14 banks got nationalized. 6 more banks got nationalized in 1980.

    Post liberalization era:


    Initially 10% FDI allowed, at present 74% with some restriction. Conversion from 4-6-4 model to 8 to 8 banking(present).

    Adaptation of technology:
    Internet banking Electronic fund transfer Automatic teller machines. Core banking solutions.

    Past performances and trends


    80.00
    70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 priority non priority public

    1) Non performing asset Priority sector worst performer in recent past. Non priority good performance till 2008. Public sector has been good and consistent performer throughout.

    8 10

    Profitability
    Despite high interest rates and high NPA and high provisioning requirement the banking sector witnessed growth
    Growth of investments decelerated Operating expenses grew at a higher rate Growth of other income decelerated

    1. ROA moved from 1.05% to 1.10 % 2. ROE also witnessed improvements.

    Soundness indicators

    Asset quality
    Private sector saw a growth, whereas public sector asset quality declined due to higher NPA Agriculture contributed 44% in Higher NPA

    Leverage Ratio
    Remained constant at 6%

    Credit boom
    No chances of credit boom despite higher credit growth

    CRAR

    Declined owing to decline in tier2 CRAR ratio. migrating to Basel II framework, the parallel run of Basel I is also continuing as a backstop measure. The CRAR of all bank groups under Basel I remained well above the stipulated regulatory norm of 9 per cent in 2010-1. Under Basel II also, the CRAR of SCBs remained well above the required minimum in 2010-11.

    This implies that, in the short to medium term, SCBs are not constrained by capital in extending credit

    Current scenario

    Indian banking industry maintaining resilience while providing for growth opportunities.

    Survey by Ficci shows:


    Regulatory framework, economic growth and insulation from external market is major reason for the better performance. Regulatory systems of Indian banks were rated better than China, Brazil, Russia, UK and at par with Japan, Singapore and Hong Kong. Indias Risk management systems more advanced than China, Brazil and Russia

    Overview

    A rigorous evaluation of the health of commercial banks, recently undertaken by the Committee on Financial Sector Assessment (CFSA) also shows that the commercial banks are robust and versatile.

    The single-factor stress tests undertaken by the CFSA divulge that the banking system can endure considerable shocks arising from large possible changes in credit quality, interest rate and liquidity conditions

    Current challenges

    Human resource challanges

    Thus, on the whole, we see that Public Sector Banks, Private Sector Banks as well as Foreign Banks view difficulty in hiring highly qualified youngsters as their biggest HR threat ahead of high staff cost overheads, poaching of skilled quality staff and high attrition rates

    Strong pillars

    Continued

    Continued

    Continued..

    Global expansion

    The road ahead.


    Is our banking industry ready for Basel 3 norms Are we ready for IFRS norms. Current and emerging environment offers sound business opportunities to the banks. Opportunities to the new entrants. Improving efficiency. Need to review laws governing the Indian banking sector Banking activities. Credit flow industry.

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