Submitted By:
Mahesh Raut
IB Anand
-- IIM JAMMU
Banking Sector of India - Overview
Sufficiently capitalised and well-regulated.
Financial and Economic condition in India is much better.
According to studies over Credit, market and liquidity risk, Indian banks are
generally resilient and have withstood the global downturn well.
The Indian Banking industry is currently worth US $ 2.202 trillion in FY17.
Market Size: Public Sector Banks-27, Private Sector Banks-26, Foreign
Banks-46, Regional Rural Banks-56, 1,574Urban Cooperative Banks-1574
and Rural Cooperative Banks-93913.
ICRA estimates that credit growth in Indias banking sector would be at 7-8
per cent in FY 2017-18.
Insurance Sector of India-Overview
53 Life Insurance companies-24 Life Insurance, 29-Non Life Insurance.
Life Insurance Corporation of India-Sole Public Sector Life Insurer.
General Insurance Corporation of India-Sole National re-insurer.
30% of Indias population was covered under Health Insurance in
2015-16.
Recorded Premium income of Rs. 1.38 trillion (US$ 20.54 billion) in
2015-16.
Life Insurance Industry growth rate for last fiscal year-22.5%
General Insurance Industry growth rate-12%
Evolution of Banking Sector
Foreign Exchange Reserves
of approximately US$
363.14 billion.
Closed market RBI allowed foreign banks
Nationalisation of 14 large
to invest in local private
Pre State-owned Imperial Bank Post commercial banks in 1969
lenders & supranational
of India was the only bank & 6 more banks in 1980 2000 and
Independence existing Independence institutions like LIC,
Entry of private players Onwards SBI launched special
Era RBI was established as the Era such as ICICI intensifying
finance scheme Hope
central bank of country the competition
Loans, where customers
can avail credit facility at
lower rates
Current and Future Trends
Current Trend
Deregulation of Savings Bank deposit interest rates
Provision Coverage Ratio (PCR) of 70 per cent mandatory for banks
Implementation of Basel III norms
Relaxation of branch authorisation policy for tier II cities
Relaxation of mobile payment guidelines
Subsidiary route for foreign banks
Future Trend
Expansion into rural markets
Intensifying competition due to homogeneous products
Blockchain Technology
Artificial Intelligence
Open banking
Governments schemes and Initiatives
Amendment of Section 35 A of the Banking Regulation Act to allow the RBI
to direct banks for the recovery of NPAs.
The RBI has allowed banks to raise funds through issuance of rupee-
denominated bonds overseas, within the current limit of US$ 36.6 billion
set for foreign investment in corporate bonds.
The Ministry of Labour and Employment has opened around 3,840,863
bank accounts in 2016, for workers in the unorganised sector, to promote
and ensure cashless transfer of wages.
The Government of Indias digital payments application initiatives like
BHIM (Bharat Interface for Money).
The Ministry of Finance is taking major steps for attaining the goal of
complete digitisation of government payments.
SWOT Analysis of Banking Sector of India
Strength Weakness
Banking is as old as Human race Short-term uncertainty due to the debt crises
Source of employment & GDP growth Vulnerable to risk
Hedge from risk High Non Performing Assets
Diversified services Cant reach to Under-penetrated market
Connecting people Structural weaknesses
Changing from mere savings & loan facilitator role
Opportunity Threat
Expansion: Penetrating to the rural Recession: Traumatic shock of Economic crises &
Changing Socio-cultural & demographic factors collapse of the several businesses
Rise in private sector banking Stability of the system
Competition from NBFCs (Non-banking financial
companies) like insurance companies & mutual
fund companies
Growth Drivers
Economic and Demographic Driver Policy Support
Rising Income Level Simplification of KYC norms
Strong GDP Growth More licenses to private sector players to
Structural economic stability and continued increase banking penetration
credibility of Monetary Policy Introduction of GST
Amendment of Banking Regulation Bill 2017,
to empower RBI to deal with NPAs
Infrastructure Financing Technological Innovations
Current expenditure on infrastructure (which Use of alternate channels like ATMs, internet
is 6% of GDP) is expected to increase. banking & mobile banking
Investments in a US$ 1 trillion project on Cloud Technology & Analytics
infrastructure, in the 12th five year plan.