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Indian Banking Industry

Notice
This publication has been discontinued on April 10, 2014.

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.

Table of Contents

SECTION- I CARE Research's OUTLOOK

Outlook

  • Outlook on credit and deposit growth in FY14
  • Outlook on agricultural and allied activity credit growth in FY14
  • Outlook on retail credit growth in FY14
    • Housing credit growth outlook
    • Vehicle credit growth outlook
  • Asset quality trend of PSU and Private sector banks till 4QFY13 and outlook for FY14
    • Non performing advances (NPA)
    • Restructured advances
  • Quarterly trend of NIM till 4QFY13 and outlook for FY14
  • Outlook on operating cost (employee + others) of PSU and Private sector banks

SECTION- II INDUSTRY SECTION

Credit & Deposit

  • Credit growth outlook for FY14
  • Sensitivity analysis of credit growth with GDP multiplier and real GDP growth
  • Agriculture & allied activities credit growth analysis and outlook
  • Retail credit growth analysis and outlook
    • Housing credit growth analysis and outlook
    • Vehicle credit growth analysis and outlook
  • Deposit growth outlook for FY14
  • Sensitivity analysis of deposit growth with credit growth and loan to deposit ratio

Non Performing Assets (NPA)

  • Trend analysis of NPA
  • Trend analysis of provision coverage ratio
  • Trend analysis of restructured advances

Net Interest Margin (NIM)

  • NIM outlook for FY14
  • Impact of interest rate cut on NIM and investment portfolio

Operating Cost

  • Trend analysis of operating cost of PSU and Pvt banks
  • Trend analysis of employee cost of PSU and Pvt banks
  • Trend analysis of other cost of PSU and Pvt banks

Capital Adequacy

  • BIS guidelines on BASEL III
  • RBI guidelines on BASEL III
  • Quarterly trend analysis of capital adequacy level of PSU and Pvt banks

Return Ratios

  • ROE outlook for FY14

SECTION- V ANNEXURES

Data & Statistics

  • Key Macro Economic Indicators from FY01-13
  • Sectoral deployment of bank credit from FY06-13
  • Key ratio of Schedule Commercial Banks from FY01-13
  • Key ratio of PSU banks from FY01-13
  • Key ratio of Private banks from FY01-13
  • Bank-wise statistics of
    • Asset quality statistics of PSU and private banks
    • Quarterly Net Interest Margin (NIMs) of PSU and private banks
    • Quarterly Provision Coverage Ratio of PSU and private banks
    • Quarterly restructured assets of PSU and private banks
    • Quarterly capital adequacy level of PSU and private banks
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