Analysis of Macroeconomic & Banking Environment

7/23/2019 Analysis of Macroeconomic & Banking Environment

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Analysis of

Macroeconomic &Banking Environmen

Dr K Ramesha

Professor


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How to Understand MacroeconoEnvironment

Economic !rowth " !DP " sector#wise contri$%tion Monetary Policy " Money %''ly( )n*ation( )nterest Rat

cenario and +redit !rowth " all against the $ackdro' Banking ector,s Performance

-iscal Policy " -iscal De.cit & !DP( -iscal De.cit & )n*a-iscal De.cit & Banking ector

E/ternal ector " Balance of Payments( E/change Rate)n*ation " all against the $ackdro' of Banking ector,sPerformance

Banking ector & )ts Performance is a re*ection of theEconomy and Economic Environment


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Understanding MacroeconomicEnvironment

Please take a 0%ick look at the following slides ware self e/'lanatory

1hat do yo% infer from each slide -or economy$anking sector


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)ndian Economy " )m'rovingMacroeconomic Environment


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Better !rowth Pros'ects


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Declining )n*ation


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)nterest Rate cenario " )ncreasavings Ratio


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Declining !rowth of R%ral 1age2ow Demand


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)nvestment " A Key +oncern


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ome +harts3E/cer'ts from -R4%ne 5678


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Economic growth in )ndia is estimated to have imto 9:; 'er cent d%ring 567


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Banking Environment


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Banking Environment


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Banking Environment


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Banking Environment


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Banking Environment


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Banking Environment


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Banking Environment


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Banking Environment


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Banking Environment


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Performance Eval%ation of Bank

)ndian $anking system has a long way to go in s%''orting the

)ndian $anking system may $e considered as the one %nder t aving rate has declined " .nancial savings declined # only 78 'erce

savings availa$le for $anks

1eak .nancial dee'ening

High intermediation cost on acco%nt of !rand Bargain

High level of =PAs and restr%ct%red advances

2ow 'rod%ctivity 1eakening PBs " a threat to sta$ility & e@ciency of $anking system

P%$lic ector Banks >PBs? acco%nting for more than 98 'ercind%stry have shown 'oor 'erformance relative to Private ecco%nter'arts


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P%$lic ector Banks " A na'sho

ie # 9 'ercent of advances and 99 'ercent ofde'osits

C5 'ercent of $ranches and 7 'ercent of AMs

=ation B%ilding # C5 'ercent of infra .nance and'ercent of agri loans

teady growth in assets( $%t decline in RoA3'ro. =PAs are 0%ite high relative to Pvt Banks " restr%

assets are also high

+a'ital re0%irement is h%ge on acco%nt of Basel


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!ro%'#wise Performance of Ban


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+hallenges $efore the Bankingector # PBs Deteriorating asset 0%ality

-inancial e/cl%sion

-inancing MMEs

Declining 'ro.ta$ility3e@ciency " res%lting heavyde'endence on !overnment

+onstraints of !overnment wnershi' ocial and nation#$%ilding o$ligations

2imited a$ility to raise ca'ital " lack of a%tonomy

%$#o'timal decision making d%e to fear of +F+( +A!( R)

2eadershi' !a' with %$#o'timal %ccession Plannin


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hank yo% very m%ch

Analysis of Macroeconomic & Banking Environment

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