Banking means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable

on demand or otherwise, and withdrawal by cheque, draft, order or otherwise. "Banking organization" means any org. which transacts the business of banking in India.
Explanation: Any company which is engaged in the manufacture of goods or carries on any trade and which accepts the deposits of money from public merely for the purpose of financing its business as such manufacturer or trader shall not be deemed to transact the business of banking within the meaning of this clause."

PRESENTATION PATH
Global scenario
History of banking in India

Technology in banks
Nationalization of Banks in India Scheduled Commercial Banks in India Current position of banking in India

Services by banks
Central bank of India

GLOBAL SCENARIO
Growing sector Largest bank=city group

Tier

1 capital =$74billion Assets = $1484billion

Number of banks=1569 1st country in banking=

The first bank in India was established in 1786. From 1786 till today, the journey of Indian Banking System can be segregated into three distinct phases. They are as mentioned below:

Early phase -- from 1786 to 1969

From 1969 to 1991 New phase of Indian Banking System (Indian Financial & Banking Sector Reforms after 1991. )

* *

The General Bank of India was set up in the year 1786. The East India Company established Bank of Bengal(1809), Bank of Bombay (1840) & Bank of Madras (1843) In 1865 Allahabad Bank was established and first time exclusively by Indians. Punjab National Bank Ltd. was set up in 1894 with headquarters at Lahore. Reserve Bank of India came in 1935. IBA was formed on the 26th September, 1946 with 22 members. functioning of IBA To promote sound & progressive banking practices 1949 : Enactment of Banking Regulation Act. 1955 : Nationalization of SBI 1959 : Nationalization of SBI subsidiaries.

It formed SBI to act as the principal agent of RBI and to handle banking transactions of the Union and State Govt. all over the country. 14 major commercial banks in the country was nationalized. It was the effort of the then PM of India, Mrs. Indira Gandhi. 2nd phase of nationalization Indian Banking Sector Reform was carried out in 1980 with 6 more banks(having asset of 200 crore).

This step brought 80% of the banking segment under Govt. ownership.

The following are the steps taken by the Govt. of India to Regulate Banking Institutions in the Country: 1975 : Creation of regional rural banks. 1980 : Nationalization of 7 banks with deposits over 200 crore

After the nationalization of banks, the branches of the PSB India rose to approximately 800% and advances took a huge jump by 11,000% Banking in the sunshine of Govt. ownership gave the public implicit faith and immense confidence about the sustainability of these institutions.

Under the chairmanship of M Narasimham, a committee was set up which worked for the LIBERALIZATION of banking practices.

1993____guidelines for setting private banks are issued 1994____UTI(axis) received license to 1st private sector bank 1994____RBI issue guidelines regarding CAR(capital adeq.) 1994____OBC become 1st nationalized bank to access capital mkt. To raise fund(387.24 crore)

TECHNOLOGY DEVELOPMENT IN NEW PHASE

The country is flooded with foreign banks & their ATM stations. Customer oriented services Centralized computer tech . (became more convenient and swift.) Phone Banking , Net Banking & plastic money is introduced. Merchandised banking concept and NEFT

Why technology in banks

Complex Credit Calculations

Global Operations Pervasive Branch Network

Mass Transaction & Items Processing

Benefits of Technology

Increased operational efficiency, profitability & productivity Superior customer service Multi-channel, real-time transaction processing Better cross-selling ability Improved management and accountability Efficient NPA and risk management Minimal transaction costs

BANKS BUSINESS LOANS & MISC. SERVICES

RAISING DEPOSITS

Core Banking (CBS)

Electronic Banking Any Branch Banking

MIS & Intranet

ATMs Card Management

Document Management

Corporate Network

Risk Management

Resource Management

BANKS BUSINESS

Payments by credit card

TYPE CREDIT CARD DEBIT CARD

2004

2005

2006

2007 41361 8172

17663 25666 33886 -----5897

Total number of transaction in 2006-07=2297.13 lack

NATIONALIZATION is act of taking an industry into the . public ownership of a national govt. by acquiring their shares or stock or control by any other way. 1955 : 1959 : . 1969 : 1980 : Nationalization of SBI Nationalization of SBI 7 subsidiaries Nationalization of 14 banks Nationalization of 6 other banks(15/4/80)

OBJECTIVE OF NATIONALIZATION Provide strengthen to banking system as well as economy Increase public confidence Secure public fund Equal availability in different area

Distribution of branches
year No. of branches of commercial banks 8262 32419 60220 65933 69417 No. of branches in rural sector 1833 15105 35206 32547 30750 % of total branches 22.13% 46.59 58.46 49.36 44.30

1969 1980 1991 2001 2006

The commercial banking structure in India consists of: SCHEDULED COMMERCIAL BANKS UNSCHEDULED BANKS

SCHEDULED BANKS constitute those banks which have been included in the Second Schedule of RBI Act-1934. RBI in turn includes only those banks in this schedule which satisfy the criteria laid down vide section 42 (6) (a) of the Act.

Total number of scheduled bank in India=198

ACCORDING TO OWNERSHIP & /OR NATURE OF OPERATION

(i) SBI & its associates (ii) Nationalized Banks, (iii) Regional Rural Banks (iv) Foreign Banks (v) Other Indian Sh. Commercial Banks (in the private sector).

Scheduled Co-operative Banks

Scheduled State Co-operative Banks Scheduled Urban Co-operative Banks

year credit 1970-71 1980-81 1990-91 2000-01 2004-05 2005-06 10.3 17.6 20.5 24.2 35.3 42.7

AGGREGATE DEPOSITS VS. GDP

COMMERCIAL BANKS
Year Year deposits GROWTH RATE

1999 1999 2000 2001 2002 89 298 2001 300 2002 297 2003 2004 2005 2006 2000

722203 851593 989141 1131188 1311761 1504416 1700198 2109049

17.91602 16.15185 14.36064 15.96313 14.68675 13.01382 24.04726

2003
2004 2005 2006

292
290 289 222

CURRENT SITUATION

ACCORDING TO A REPORT BY ICRA LIMITED,

88 scheduled commercial banks 28 public sector banks 29 private banks (no govt stake; they may be publicly listed and traded on stock exchanges) 31 foreign banks, Combined network of over 69,000 branches & 17,000 ATMs the PSBs hold over 75 % of total assets of the banking industry, the private & foreign banks holding 18.2% & 6.5% of total assets respectively Over 18500 branches of 53 bank having NEFT tech.

SBI largest commercial bank ICICI 2nd largest commercial bank Nationalized bank having 2.8 lack employees, over 9 lack in schedule banks Contribution in GDP =35% Growth of banking sector=15-17% FDI in public sector bank=24% FDI in private sector bank=74% CAR require to maintain=9% The overall level of NPLS around rs. 1,20,000 crore. 50,000 crore on account of the corporate sector, the rest by the rural and cooperative sector.

Standard Chartered Bank, Citibank & HSBC are the top 3 foreign banks in India with more than 65% of the total assets of foreign banks Most global players in banking & financial services - Morgan Stanley, Merrill Lynch, JP Morgan, Deutsche Bank, UBS, ABN Amro, Barclays, Calyon etc. - are in India 5 largest bank of India include SBI, ICICI, PNB, CANARA BNAK, BANK OF INDIA (basis of assets) In top 1000 India has 20 representatives SBI=82 ICICI=268 PNB=313 CANARA BNAK=425 BANK OF INDIA=477

SBI

6.4*SBI

CHINA BANK

1.

Private Sector Banks:Not more then 10% of the total voting rights Nationalized Banks:Not more than 1% of the total voting rights SBI: Not more than 10% of the issued capital. SBI Associates :Not more than 1%.

2.

3.

4.

FOREIGN BANKS GOING TO SET UP BUSINESS IN INDIA

Royal Bank of Scotland Switzerland's UBS US-based GE Capital Credit Suisse Group Industrial and Commercial Bank of China

EMPLOYEE DISTRIBUTION WITHIN INDIA

Southern Region 28% Northern Region 17% Northern Region North-Eastern Region 2% North-Eastern Region Eastern Region Central Region Western Region Southern Region Eastern Region 16%

stern Region 21%

Central Region 16%

i) UP =8591 II) MAHARASHTRA =6845 III) ANDRE PRAD. =5621

PUNJAB = 2823 (11TH) DELHI =1812 (13TH) (14TH)

HARYANA=1758

SERVICES OF BANK

Personal Banking Gold Banking NRI Banking Corporate Banking Small Scale Industries

Small Business Finance

Rural Banking Government Business Home Loans

RESERVE BANK OF INDIA

Central bank of India Proposed by HILTON YOUNG COMMISSION Established in1931, active since 1935 RBI act-1934 Share capital=5 crore Chairman= Gold value held by RBI=4699.79 CRORE(2006) Foreign Securities=345244(2005), 399769(2006)

Function of RBI

CENTRAL BOARD OF RBI

RBI affairs are governed by a central board of directors. appointed by the Govt in keeping with the RBI Act. Appointed/nominated for a period of 4 years Constitution:

1. 2.

3.

4.

Official Directors Full-time : Governor and not more than four Deputy Governors Nominated by Government: 10 Directors from various fields and one government Official Others: four Directors - one each from four local boards

NEWS OF RBI
i)

ii)

iii) iv)

RBI transfered of shareholding in SBI to Govt in June,2007 amount to be determined on market price in accordance with the SEBI guidelines. Transfer of ownership of shareholding of RBI in NABARD and NHB to Government of India in June, 2008 at book value. RBI has increase CRR by 50 basis points RBI revised guide lines for implementation of new car framework has hiked the tier-I ratio from 4.5 to 6% (by 2010)

TOP BANKS IN INDIA

State Bank Of India (SBI) ICICI PNB CANARA BANK BANK OF INDIA HDFC Bank HSBC Bank IDBI Allahabad Bank American Express Bank In India

Andhra BanK Central Bank Of India CITI Bank Standard Chartered Bank United Bank Of India Bank Of Baroda

SBI came into existence by an act of Parliament as successor to the Imperial Bank of India

Nationalized in 1955 SBI is India's largest commercial bank Chairman= Mr.OM PRAKASH BHATT On the basis of assets, its global position last year was 84; on profits on average capital, 104, and return on assets, 407.

Even within Asia, its rank was 11.

On the strength of its balance sheet, the bank ranked 93rd among top global banks.

serves to 90 million customers through a network of 9,000 Branches (approximat 14% of all bank branches) commands 20% of deposits & loans of all scheduled commercial banks. offers -- either directly or through subsidiaries -- a wide range of banking services SBI HAS ISSUED 3 CRORE DEBIT CARD SBI Credit Card is acceptable over 1,05,000 merchants in India and Nepal

SBI Group includes a network of eight banking subsidiaries & several non banking subsidiaries offers

Bank in SBI group inclued: 1-State Bank of Bikaner and Jaipur (SBBJ) 2-State Bank of Hyderabad (SBH) 3-State Bank of India (SBI) 4-State Bank of Indore (SBIR) 5-State Bank of Mysore (SBM) 6-State Bank of Patiala (SBP) 7-State Bank of Saurashtra (SBS) 8-State Bank of Travancore (SBT)

SBI has in 34 countries. SBI serves the international needs of its foreign customers, in addition to conducting retail operations.

SHARE HOLDING IN SBI

FINANCIAL ANALYSIS
BVS 700 600 500 400 300 200 100 0 YEAR 2002 YEAR 2003 YEAR 2004 YEAR 2005 YEAR 2006 YEAR 2007 BVS

NPA 6 5 4 3 2 1 0 YEAR 2002 YEAR 2003 YEAR 2004 YEAR 2005 YEAR 2006 YEAR 2007 5.63 4.5 3.48 2.65 1.88 NPA 1.56

ICICI Bank (ICICI 1955)

India's largest private sector bank in market capitalization second largest overall in terms of assets. total assets of about USD 79 Billion (end-Mar 2007), a network of over 950 branches, about 3600 ATMs, and 24 million customer ICICI Bank offers a wide range of banking products and financial services to corporate and retail ICICI Bank's equity shares are listed in India on stock exchanges at Kolkata , BSE and the NSE

2002--- merger of ICICI,with ICICI Bank 2004 ICICI opens a office in Bangladesh to tap the extensive trade between that country 2005 ICICI acquires I-K Bank , a Russia bank with about US$4mn in assets, ICICI Bank offers a high-interest (5.4% gross) internet savings account to UK customers ICICI establishes a branch in Dubai International Financial Centre & in Hong Kong. 2006 ICICI Bank opens a branch in Belgium. ICICI opens representative offices in Bangkok, Jakarta, and Kuala Lumpur.

2007 ICICI amalgamates Sangli Bank, which is headquartered in Maharashtra and which has 158 branches in Maharashtra and another 31 in Karnataka.

First Bank in India to launch website 1996

First Bank in India to launch Internet Banking 1997

FOR YEAR ENDING 31-3-07

Profits: USD 715 mln (prev. USD 569 mn) Assets: USD 79 bn (prev. USD 56.3 bn) Employees: over 33,000 (prev. 25,384)

PNB

PNB was set up in 1894 with headquarters at Lahore. PNB is serving over 3.5 crore customers through 4540 Offices PNB with 112 year tradition of sound & prudent banking is one among 300 global companies & 7 Indian companies The Banker, the leading magazine in London, has placed PNB at the 248th position Bank has set up representative offices at Almaty: Kazakhistan, Shanghai: China and in London. Besides, Bank has opened a full fledged Branch in Kabul, Afghanistan.

HDFC BANK

The bank was promoted by the housing development finance corporation limited ( 1977) Incorporated in 1994 754 branch and 1800 ATMs in 327 cities.

All branches of the bank are linked on an online real-time

total income of the bank for the quarter ended September 30, 2007 grew by44.0% to Rs.2,845.1 crores. deposits increase of 43.5% from September 2006

CAR as of September 30, 2007 14.9%

HSBC
it has a presence in 77 countries it has made an investment of $ 150 million this year in India alone. Revenues from Indian operations is growing by about 22 %in . India, which contributes about one per cent of HSBCs global profits, is still slightly behind China that adds up to two per cent of its profits.

CSR BY INDIAN BANKS

Directors established a basic policy. Each group co. that earns over 300 million yen, donates 1% of its profit to the Children's Social Welfare Corp. Charitable activities took hold. SBI donated 167.1 million yen to children's homes and infant homes SBI established the SBI Child Welfare Corp. SBI became the first enterprise to make use of stock options and securities as donations SBI Child Welfare Corp. became fully active. SBI representatives visit child welfare facilities across Japan to learn about child welfare facilities.

ICICI donated Rs 11.5 million towards Gujarat Earthquake

.

TOP BANKS OF WORLD

CITI GROUP JP MORGAN CHASE HSBC HOLDING BANK OF AMERICA CREDIT AGRICOLE ROYAL BANK OF SCOTLAND MITSUBISHI TOKYO HBOS BNP PARIBUS

STRENGTH

Growing economy Support by government Huge pool of skilled professionals Existence of related industry High population Growing saving-investment ratio

WEAKNESS

Lack of networking among bank branches

(the rural and semi-urban banks have still to see information technology as an enabler. Complete integration of branch network involves huge investments for creating IT and communication infrastructure.)

Low savings rate Restriction by govt regarding investment

OPPORTUNITY

Data mining Banks have a huge customer database which has to be properly leveraged. Target segments should be identified and tapped. Wide distribution networks of banks provides a great opportunity to sell insurance products through banks Another potential area of growth of bancassurance is exploiting the corporate customers and tying up for insurance of the employees of corporate clients

THREAT

Human Resource Challenges Success in bancassurance venture requires a change in mindset. Though we have a large talent pool, the inability to sell complex insurance products on the part of bank professionals and their reluctance to learn can be severe setback. There has to be a change in the thinking, approach and work culture. Non-response from the target groups can also pose a challenge as it happened in the USA in 1980s.

EASY BANKING--This section is fully dedicated to the Tech banking, include mobile banking, SMS banking, net banking & ATMs.

CORE BANKING is all about knowing customers' needs. Provide them with the right products at the right time through the right channels 24 hours a day, 7 days a week. Proxy banking (see in notes) Mercantile banking in law note book

FUTURE IN INDIA
Fast growth & more employment Centre is planning to raise the upper limit on foreign equity in PSB PSU raise rs. 31300 crore by march 2009 IBA proposal to lower the minimum dividend payment requirement for PSB The government is seeking proposal to splitting of share to improve liquidity of bank stock National banks will raise rs.14728 crore equity 2% decline in wages and salary compare to 14% growth of employment

THANKS!!!

QUESTIONS
what is Presidency Banks Diff b/w banks and NBFI Interest checking account (NOW) checking account (NOW)

EXTRA POINT
actual acquisition cost for the stake transfer is likely to be around Rs. 40,000 crore. The NEFT, was introduced in 2005. Since its inception the coverage of NEFT has increased. Currently it is available in 28000+ bank branches, through 67 banks at 3000+ centers. The first regular institution resembling what we call a Bank, was established at Venice, nearly 700 years ago.

BANGING SECTOR

BANGING SECTOR