Banking Sector (1)

8/6/2019 Banking Sector (1)

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BANKING SECTOR

PRESENTED BY:-NIDHI

RACHITASHWETA

SHUBHIPRIYANKA

SAPNA


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INTRODUCTION:-

A banker or bank is a financial institution whoseprimary activity is to act as a payment agent for customers and to borrow and lend money.

REFORMS:-1. Interest rate deregulation2. Adoption of prudential norms3. Reduction in pre-emptions4. Banks enjoy greater operational freedom5. New instruments have been introduced EG.RTG


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TOTAL MARKET SHARE 40%SAVING RATE 3.5%

LENDING RATES 7.5% TO 8.25%CONTRIBUTION TO GDP 10%GROWTH RATE 15%


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PRIORITY SECTORThe Government of India through the

instrument of RBI mandates certain type of lending on the Banks operating in Indiairrespective of their origin.Financing Priority Sector in the economy is

not strictly on commercial basis as not only

the general approach is liberal but also therate of interest charged on such loans isless.


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Domestic banks (both publicsector and private sector banks)

Foreign banks operating inIndia

Total Priority Sector advances

40 percent of NBC 32 percent of NBC

Total agricultural advances 18 percent of NBC No target

SSI advances No target 10 percent of NBC

Export credit Export credit does not form part

of priority sector

12 percent of NBC

Advances to weaker sections 10 percent of NBC No target


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NATIONALISED BANK

BANK MARKET SHARE

1 SBI 32.7%

2 PNB 5.5%

3 BOB 4.1%


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PRIVATE BANK

BANK MARKET SHARE

1. ICICI 7.3%

2. HDFC 3.4%

3. AXIS BANK 2.1%


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FOREIGN BANKBANK MARKET SHARE

1. STANCHART 7.8%

2. CITI BANK 5.25%

3. HSBC 1.9%


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MAIN COMPETITORS

1. POST OFFICE2. NON BANKING FINANCIAL SECTOR

3. MUTUAL FUND4. SHARES5. INSURANCE

6. MONEY LENDERS


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MONETARY MEASURES

M onetary M easures

On the basis of the current macroeconomic assessment, it has beendecided to:

y increase the repo rate under the liquidity adjustment facility(LAF) by 25 basis points from 6.5 per cent to 6.75 per cent withimmediate effect; and

y increase the reverse repo rate under the LAF by 25 basis pointsfrom 5.5 per cent to 5.75 per cent with immediate effect.

On the basis of the current assessment and in line with the policystance as outlined in Section III, the Reserve Bank announces thefollowing policy measures :


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MONETARY POLICY

BANK RATE

The Bank Rate has been retained at 6.0

per cent.REPO RATEIncrease the repo rate under the Liquidity

Adjustment Facility (LAF) by 25 basispoints from 5.0 per cent to 5.25 per centwith immediate effect


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REVERSE REPO RATEIncrease the reverse repo rate under theLAF by 25 basis points from 3.5 per centto 3.75 per cent with immediate effect

CASH RESERVE RATIOIncrease the cash reserve ratio (CRR) of scheduled banks by 25 basis points from

5.75 per cent to 6.0 per cent


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Foreign direct investment

INDIA ranks second in the world in terms of financial attractiveness, people and skillsavailability and business environment.

India's external sector has displayedconsiderable strength since the reforms in 1991-despite several domestic as well as globalpolitical events and supply shocks in food andfuel. A major outcome of the economic reformsprocess has led to tremendous increase inForeign Direct Investment inflows into India.


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YEARWISE FDI LIMIT

Sector attracting highest FDI Equity Inflows (In Rs crore)

SECTOR2005-06 2006-07 2007-08 2008-09

(April-Jan'09

Cumulative(Apr.2000- Jan2009

% of total

inflows

Services(Financial& non-

financial )

2399

(543)

21047

(4664

26589

(6615

23045(5061

78742

(181189)22%


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INTEREST RATES

From 2000 until 2010, India's average interest rate was 5.82 percent reachingan historical high of 14.50 percent in August of 2000 and a record low of 3.25percent in April of 2009 .

INFLATION RATES

Inflation rate refers to a general rise in prices measured against a standardlevel of purchasing power. The inflation rate in India was last reported at 9.47

percent in December of 2010. From 1969 until 2010, the average inflation ratein India was 7.99 percent reaching an historical high of 34.68 percent in

September of 1976 and a record low of -11.31 percent in May of 1976.


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H ighlights of Budget 2011-12 for theBanking Sector

The Government is to infuse Rs.6,000 Crore in Andhra Bank, DenaBank, Oriental Bank of Commerce, Bank of Baroda & Union Bank of India.

Interest subsidy of 1% extended to Home loans up to Rs.15 Lakh

& Property Worth up to Rs.25 LakhThe government & Small Industries Development Bank of India(SIDBI) to float Rs.100 Crore fund to capitalize Small Micro FinanceInstitutions (MFI)

Banks told to lend more to Minority Community Borrowers at the

target of 6% of total PSU Bank loansBanks will have to lend Rs.1 Lakh Crore more to Farmers, where thetotal loans to touch Rs.4.75 Lakh Crore


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FISCAL DEFICIT

Fiscal deficit seen at 5.1 percent of GDP in

2010-11Fiscal deficit seen at 4.6 percent of GDP in2011-12

Fiscal deficit seen at 3.5 percent of GDP in2013-14


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SPENDING

Total expenditure in 2011-12 seen at12.58 trillion rupees

Plan expenditure seen at 4.41 trillionrupees in 2011-12, up 18.3 percent


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DISINVEST M ENT

Disinvestment in 2011-12 seen at 400

billion rupeesGovernment committed to retaining 51percent stake in public sector enterprises.


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BORROWINGNet market borrowing for 2011-12 seen at 3.43trillion rupees, down from 3.45 trillion rupees in2010-11Gross market borrowing for 2011-12 seen at4.17 trillion rupeesRevised gross market borrowing for 2010-11 at4.47 trillion rupees


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CURRENTSTATUS

FY 2010 11

PROPOSALFY 2010 11

IMPACT

1. The GOIprovided thesum of Rs.20157. for infusion inpublic sector bank.

2. No licensehas beenissued byRBI toNBFCs

Proposed toprovide Rs6000 Cr for PSU banksrecapitalization

To bring bill toenable RBI togrant morebanking

licenses

Positive for small psbs likedena bank,ucobank etc.

Positive for IFCI,IDFC,BAJ AJ finance etc.


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3. Rs.350 Cr.has been

given toRegionalRural Bankduring 2010

-11.4. Existing

credit flow tothe farmersstand at Rs350000 Cr

FM proposed toprovide Rs 500

cr to RRBs inFY 2010 11

FM proposed toraise the target

of Rs 475000 cr credit flow tofarmers.

Positive for Corp. Bank, city

union bank, etc

Negative for PSB who hastheir major

exposure infarm lending.


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5. FM providedan additional

subvention tofarmers whorepay their croploans on time.

FM proposed toenhance the

additionalsubvention to3% in FY 201011.

Positive interms of

doubtful debts.


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THANK YOU

Banking Sector (1)

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