BANKING
SECTOR
PRESENTED BY:-
NIDHI
RACHITA
SHWETA
SHUBHI
PRIYANKA
SAPNA
INTRODUCTION:-
A banker or bank is a financial institution whose
primary activity is to act as a payment agent for
customers and to borrow and lend money.
REFORMS:-
1. Interest rate deregulation
2. Adoption of prudential norms
3. Reduction in pre-emptions
4. Banks enjoy greater operational freedom
5. New instruments have been introduced EG.RTG
• TOTAL MARKET SHARE – 40%
• SAVING RATE – 3.5%
• LENDING RATES – 7.5% TO 8.25%
• CONTRIBUTION TO GDP – 10%
• GROWTH RATE – 15%
PRIORITY SECTOR
• The Government of India through the
instrument of RBI mandates certain type of
lending on the Banks operating in India
irrespective 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 the
rate of interest charged on such loans is
less.
Domestic banks (both public Foreign banks operating in
sector and private sector India
banks)
Total Priority Sector 40 percent of NBC 32 percent of NBC
advances
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 12 percent of NBC
of priority sector
Advances to weaker sections 10 percent of NBC No target
NATIONALISED BANK
BANK MARKET SHARE
1 SBI 32.7%
2 PNB 5.5%
3 BOB 4.1%
PRIVATE BANK
BANK MARKET SHARE
1. ICICI 7.3%
2. HDFC 3.4%
3. AXIS BANK 2.1%
FOREIGN BANK
BANK MARKET SHARE
1. STANCHART 7.8%
2. CITI BANK 5.25%
3. HSBC 1.9%
MAIN COMPETITORS
1. POST OFFICE
2. NON BANKING FINANCIAL SECTOR
3. MUTUAL FUND
4. SHARES
5. INSURANCE
6. MONEY LENDERS
MONETARY MEASURES
Monetary Measures
On the basis of the current macroeconomic assessment, it has been
decided to:
increase the repo rate under the liquidity adjustment facility
(LAF) by 25 basis points from 6.5 per cent to 6.75 per cent with
immediate effect; and
increase the reverse repo rate under the LAF by 25 basis points
from 5.5 per cent to 5.75 per cent with immediate effect.
On the basis of the current assessment and in line with the policy
stance as outlined in Section III, the Reserve Bank announces the
following policy measures:
MONETARY POLICY
BANK RATE
• The Bank Rate has been retained at 6.0
per cent.
REPO RATE
Increase the repo rate under the Liquidity
Adjustment Facility (LAF) by 25 basis
points from 5.0 per cent to 5.25 per cent
with immediate effect
REVERSE REPO RATE
• Increase the reverse repo rate under the
LAF by 25 basis points from 3.5 per cent
to 3.75 per cent with immediate effect
CASH RESERVE RATIO
• Increase the cash reserve ratio (CRR) of
scheduled banks by 25 basis points from
5.75 per cent to 6.0 per cent
Foreign direct investment
• INDIA ranks second in the world in terms of
financial attractiveness, people and skills
availability and business environment.
• India's external sector has displayed
considerable strength since the reforms in 1991-
despite several domestic as well as global
political events and supply shocks in food and
fuel.
• A major outcome of the economic reforms
process has led to tremendous increase in
Foreign Direct Investment inflows into India.
YEARWISE FDI LIMIT
Sector attracting highest FDI Equity Inflows (In Rs crore)
2005-06 2006-07 2007-08 2008-09 Cumulat % of
SECTOR (April- ive total
Jan '09 (Apr.200
0- Jan inflows
2009
Services 2399 21047 26589 23045 78742
(Financial (5061 22%
& non- (543) (4664 (6615 (181189)
financial )
INTEREST RATES
From 2000 until 2010, India's average interest rate was 5.82 percent reaching
an historical high of 14.50 percent in August of 2000 and a record low of 3.25
percent in April of 2009 .
INFLATION RATES
Inflation rate refers to a general rise in prices measured against a standard
level 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 rate
in 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.
Highlights of Budget 2011-12 for the
Banking Sector
• The Government is to infuse Rs.6,000 Crore in Andhra Bank, Dena
Bank, 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 Lakh
The government & Small Industries Development Bank of India
(SIDBI) to float Rs.100 Crore fund to capitalize Small Micro Finance
Institutions (MFI)
Banks told to lend more to Minority Community Borrowers at the
target of 6% of total PSU Bank loans
Banks will have to lend Rs.1 Lakh Crore more to Farmers, where
the total loans to touch Rs.4.75 Lakh Crore
FISCAL DEFICIT
• Fiscal deficit seen at 5.1 percent of GDP in
2010-11
• Fiscal deficit seen at 4.6 percent of GDP in
2011-12
• Fiscal deficit seen at 3.5 percent of GDP in
2013-14
SPENDING
• Total expenditure in 2011-12 seen at
12.58 trillion rupees
• Plan expenditure seen at 4.41 trillion
rupees in 2011-12, up 18.3 percent
DISINVESTMENT
• Disinvestment in 2011-12 seen at 400
billion rupees
• Government committed to retaining 51
percent stake in public sector enterprises.
BORROWING
• Net market borrowing for 2011-12 seen at 3.43
trillion rupees, down from 3.45 trillion rupees in
2010-11
• Gross market borrowing for 2011-12 seen at
4.17 trillion rupees
• Revised gross market borrowing for 2010-11 at
4.47 trillion rupees
CURRENT PROPOSAL IMPACT
STATUS FY – 2010 11
FY – 2010 11
1. The GOI Proposed to Positive for
provided the provide Rs small psb’s like
sum of Rs. 6000 Cr for dena bank,uco
20157. for PSU banks bank etc.
infusion in recapitalization
public sector
bank. To bring bill to Positive for
2. No license enable RBI to IFCI,IDFC,BAJ
has been grant more AJ finance etc.
issued by banking
RBI to licenses
NBFCs
3. Rs.350 Cr. FM proposed to Positive for
has been provide Rs 500 Corp. Bank, city
given to cr to RRBs in union bank, etc
Regional FY 2010 11
Rural Bank
during 2010
-11.
4. Existing Negative for
credit flow to FM proposed to PSB who has
the farmers raise the target their major
stand at Rs of Rs 475000 cr exposure in
350000 Cr credit flow to farm lending.
farmers.
5. FM provided FM proposed to Positive in
an additional enhance the terms of
subvention to additional doubtful debts.
farmers who subvention to
repay their crop 3% in FY 2010
loans on time. 11.
THANK YOU
