Banking Sector in India, Indian Banking Industry, About, Trends, Statistics

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Banking Sector in India

Latest update: July, 2014

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Banking
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Indian banks total asset

size is recorded at US$ 1.5
trillion in FY12.

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Updated: July, 2014
AGRICULTURE
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SECTORAL REPORT | APRIL, 2014

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AVIATION
BANKING
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FINANCIAL SERVICES
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OIL AND GAS
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REAL ESTATE
RESEARCH AND DEVELOPMENT

Introduction
India is considered among the top economies in the world, with tremendous potential for its banking sector to
flourish. The last decade witnessed a significant upsurge in transactions through ATMs, as well as internet and
mobile banking.
The country's banking industry looks set for greater transformation. With the Indian Parliament passing the Banking
Laws (Amendment) Bill in 2012, the landscape of the sector has duly changed. The bill allows the Reserve Bank of
India (RBI) to make final guidelines on issuing new licenses, which could lead to a greater number of banks in the
country. The style of operation is also slowly evolving with the integration of modern technology into the banking
industry.
In the next 5-10 years, the sector is expected to create up to two million new jobs driven by the efforts of the RBI
and the Government of India to expand financial services into rural areas.Two new banks have already received
licences from the government, and the RBI's new norms will offer incentives to banks to spot bad loans and take
necessary recourse to curb the practices of rogue borrowers.

Market size
The size of banking assets in Indiatotalled US$ 1.8 trillion in FY 13 and is expected to touch US$ 28.5 trillion in FY
25.Bank deposits have grown at a compound annual growth rate (CAGR) of 21.2 per cent over FY 06-13. In FY
13, total deposits were US$ 1,274.3 billion.

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The revenue of Indian banks increased from US$ 11.8 billion to US$ 46.9 billion over the period 2001-2010. Profit
after tax also reached US$ 12 billion from US$ 1.4 billion in the period.

http://www.ibef.org/industry/banking-india.aspx[9/13/2014 10:50:41 PM]

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Banking Sector in India, Indian Banking Industry, About, Trends, Statistics

Credit to housing sector grew at a CAGR of 11.1 per cent during the period FY 08-13. Total banking sector credit
is anticipated to grow at a CAGR of 18.1 per cent (in terms of INR) to reach US$ 2.4 trillion by 2017.

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RSS

In FY 14, private sector lenders experienced significant growth in credit cards and personal loan businesses. ICICI
Bank saw 141.6 per cent growth in personal loan disbursement in FY 14, as per a report by Emkay Global
Financial Services. The bank also experienced healthy growth of 20.8 per cent in credit card dues, according to the
report. Axis Bank's personal loan business also grew 49.8 per cent, with its credit card business expanding by 31.1
per cent.

Investments
HDFC Bank and state-owned United Bank of India plan to tap the equity markets to raise funds to enhance capital
base and lending. HDFC Bank plans to raise Rs 10,000 crore (US$ 1.66 billion) while the board of Kolkata-based
United Bank will seek approval for raising about Rs 1,300 crore (US$ 216.47 million) by selling shares to increase
its capital base.
Export-Import Bank of India (Exim Bank) will increase its focus on supporting project exports from India to South
Asia, Africa and Latin America, as per Mr Yaduvendra Mathur, Chairman and MD, Exim Bank. The bank has
moved up the value chain by supporting project exports so that India earns foreign exchange. In 2012-13, Exim
Bank had lent support to 85 project export contracts valued at Rs 24,255 crore (US$ 4.03 billion) secured by 47
companies in 23 countries.

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India is one of the world's largest

growth markets
Oliver Bolitho
Head, Goldman Sachs Asset
Management (Asia)

IndusInd Bank will soon begin its asset reconstruction business. The private-sector lender plans to partner asset
reconstruction companies (ARCs) for this venture. "I think our new initiative, which is going to launch in the next
two months, is about asset reconstruction. We will do asset reconstruction within the bank but in tie-ups with
ARCs. The business plan is ready. We believe a huge stock of assets is coming into the ARCs as a business area
that we need to look at and we will exploit," as per Mr Romesh Sobti, CEO and MD, IndusInd Bank.
Jammu and Kashmir (J&K) Bank plans to increase its presence outside India. The bank is looking to establish
branches in London and Dubai to enhance its relationship with current customers who have business interests in
West Asia and Europe. "We have a number of business relationships in these countries and it makes sense for us
to have a presence there," as per Mr Mushtaq Ahmad, Chairman and CEO, J&K Bank.

Government Initiatives
The RBI has announced a few measures in its bi-monthly monetary policy on June 3, 2014 which includes an
increase in the foreign exchange remittance limit to US$ 125,000 from the previous limit of US$ 75,000.
State Bank of India (SBI) has announced a one-year rural fellowship programme 'SBI Youth for India (SBI YFI)' for
2014 to draft the country's youth to become change agents in the country's rural regions. The programme is for
young professionals who are keen to leadthe change for a better India.
The RBI has simplified the rules for credit to exporters. Exporters can now receive long-term advance credit from
banks for up to 10 years to service their contracts. Exporters have to have a satisfactory record of three years to
receive payments from banks, who can adjust the payments against future exports.
The RBI has enabled overseas investors, including foreign portfolio investors (FPIs) and non-resident Indians
(NRIs), to invest up to 26 per cent in insurance and related activities through the automatic route.

Road Ahead
India's banking industrycould become the fifth largest banking sector globally by 2020 and the third largest by 2025.
These days, banks in India are turning their focus to servicing clients and improving their technology infrastructure,
which can help better customer experience and give them a competitive edge. The popularity of internet and mobile
banking is at an all-time high, with customer relationship management (CRM) and data warehousing anticipatedto
drive the next wave of banking technology in the country.
Exchange Rate Used: INR 1 = US$ 0.0166 as on July25, 2014
References: Media Reports, Press releases, RBI Documents
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

BANKING INDIA
GROSS NPAS TO GROSS ADVANCES
(FY12)

POSTERS
INDUSTRY CONTACTS

Indian Banks Association

Reserve Bank of India
Institute for Development and
Research in Banking Technology

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