EFMA - India
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India

 

The following data have been gathered by Capgemini and are part of the World Retail Banking Report published annually in March. 


Macro economic indicators (2006)
 

 

GDP at current prices   
Rs 39771 billion
Inhabitants   
1095.4 million
GDP per head    
Rs. 36307
Economic growth rate
8.7%
Consumer confidence indicator
 135
Unemployment rate
7.6%
Consumer Price Index
5.3%
Banking staff
895,131
Number of branches
58,725
Number of ATMs
25,000
Households savings ratio
32.4%
Inflation rate
6.1%
Interest rate, consumer credit
15.50%
Interest rate, residential    
     9.25%
Interest rate on long term bonds
8.0%

 

Retail banking environment

 

Macroeconomic Factors

 Fear of Overheating: India faced remarkably high inflation during 2006, so RBI is in favour of tight monetary policy
RBI Stance: Interest rate environment that supports exports and demand of investment to continue growth momentum while reinforcing price stability and anchoring inflationary expectations
RBI Stance: Adequate liquidity to meet credit needs of economy with emphasis on credit quality

Supervisory Institutions

Reserve Bank of India (RBI): The Central bank which is the monetary authority & regulator of financial system, issuer of currency and manager of foreign currency.
Securities and Exchange board of India (SEBI): Regulatory body that monitors the stock market transactions and compliance thereof.
Insurance Regulatory & Development Authority (IRDA): An insurance regulatory body to protect the interests of the policyholders.

 

Type and size of players

Net Banking income 

India Net banking income

The major Indian Banks fall into three categories: Public sector (State Bank of India, Bank of Baroda, Bank of India, Punjab National Bank, Canara Bank), Private sector (ICICI Bank, HDFC Bank) and Foreign Banks (Citibank, Standard Chartered Bank)

Non-interest income

Inde Branches Shares

RBI’s shareholding in State Bank of India (SBI) transferred to Government of India in accordance with Narasimhan Committee II’s report that RBI should not own the institutions it regulates
Banks in India earn a significant portion (75%-85%) of their income from interest

 

Products

• Improved Asset Quality: Gross and Net NPA’s declined to 2.7% and 1.1% respectively in India
• Strong Growth: 41.4% growth on loans and advances  

India Deposits & Loans

Housing Credit: Housing comprises 52% of all retail credit and it grew at 44.35%
Due to strong credit growth, there was marginal rise in Interest Income but significant rise in expense hence lower profit (as %) before tax & provisions. But with lower provisions, profit after tax & provisions was higher.

 

Trends

Favourable Demographics: India population is considerably young and income levels are rising – this has led to higher retail banking activity
High growth: Aggregate balance sheet of banks expanded by 18.4%
Equity Markets: To meet the high credit demand, banks tapped equity markets
Increasing share of international liabilities: International sources of funds in banks’ operations have increased, indicating growing integration of Indian banks with the global markets
RBI advise on reasonable service charges: Several customer complaints regarding excessive interest and charges levied by banks – So, RBI has advised banks to establish appropriate internal principles and norms; Working Group established to study situation and suggest appropriate norms
Basel II: Phased migration to Basel II norms beginning March 2008

 

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