The generic slowdown in the Indian economic growth has impacted the domestic banking industry. Credit off take has been negatively impacted by low investment confidence, falling numbers of loan sanctions and inherent regulatory/environmental/transactional hindrances across sectors such as iron and steel, construction, power and other infra. In absence of demand for new loans from such dominant sectors, banks are expected to focus on retail lending and continue disbursals to projects which are in advanced stage of commissioning/implementation.
CARE Research expects no major improvement in the macro-economic scenario, which would enable banks to lend more in FY14. Enhanced competition from other financial sector participants could lead to a declining market share for banks. The elevated interest rate regime is unlikely to see major revisions in view of the sharp rupee depreciation in recent times. Challenging macro conditions and weak job prospects/salary levels are expected to impact existing loan pool performance and limit new loan additions, thereby reducing the scope of any credit recovery in the near future. Further, the competition in the industry is expected to heat up with the new banks being granted licenses by the Reserve Bank of India (RBI) soon.
The report on 'Indian Banking Industry' evaluates the present industry scenario and presents its future outlook based on past cyclical performance and the evolving economic variables affecting the industry. It details the macro-economic situation and analyses the impact it has on the various determinants of growth and development. The regulatory scenario and the BASEL III guidelines on Capital Adequacy issued by the Bank for International Settlements (BIS) and the timetable fixed for its domestic implementation by the RBI have been evaluated in detail.
The report explains the operating cost environment and the performance metrics of both groups of banks (as per majority ownership)-Private and Public. The comprehensive report is indispensable for any company in financial services industry, policy makers, research & academic organizations, other international and national agencies, etc. Additionally, the monthly updates (for the period Aug-13 to Jul-14) accompanying the subscription of the said report would form a potent tool for the subscribers to keep abreast of the happenings in the industry.