ISBN - 978-93-81583-46-3

An Analysis of Financial Strength of Indian Banking Sector through Analytical Financial Performance of Pre and Past Global Recession Impact
Dr. P. S. Vohra1, Prerna Singhal2, Vikrant Jaswal3 1 Association Professor & Head, 2Assistant Professor 1,2,3 Chandigarh Group of Colleges, Landran (Mohali), Punjab 1 drpsvohra@gmail.com

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An Analysis of Financial Strength of Indian Banking Sector Through Analytical Financial

An analysis of financial strength of Indian banking sector through analytical financial performance of pre and past global recession impact
Authors Dr. P.S. Vohra1 Prof. Prerna Singhal2 Mr. Vikrant Jaswal3

Abstract
Financial performance is the concluding results of a firm's policies and operations in monetary terms. If gives true reflection of return on investment, return on assets, value added, etc. It can be evaluated through careful and critical analysis of financial statements. Banks are the main participants of any financial system, because they play a vital role in an inclusive growth of economy. India is one of the most preferred banking destinations as its economy is not only growing at +8 percent annually, but it is also going through a transformation to the next level of maturity. After liberalization & economic reforms Indian banking sector underwent major changes and it has been totally changed especially after arrival of private and foreign sector banks. This research work will provide an assessment of comparative study of financial efficiency of Indian banking sector through their deposit performance and lending performance. The purpose of this attempt is to analyze the financial performance of public and private banking in post Indian banking reforms era in the light of pre global recessionary period (Before year 2006) and post global recessionary period (2006 onwards). The findings of the research will have managerial implication for understanding the global recessionary impacts on Indian banking performance, which will comprise a sample size of 6 banks. The research analysis will base on secondary source and primarily all data will collect & analyzed through audited annual reports only. Key words Financial performance, financial efficiency, Global recession, economic reforms, banking sector

Introduction
Banks play a vital role in the economic development of a country; their performance undertakes or determines the pace of development of economy. Mostly they engage in the money transactions including accepting deposits from the customers and lending them to the needy ones in the form of loans. The last 2 decade witnessed many positive developments in the Indian banking sector, especially after arrivals of Private Banks. Some banks established an outstanding track record of innovation, growth and value creation. The financial performance of banking sector always puts an impact on the performance of the economy. The growth of banks mainly depends on its conventional business services like deposits and loans. The expenditure made by the banks either in borrowing funds or acquiring assets should be cautiously done. The variables like growth, profitability and nonperforming assets (NPAs) are used to compare the performance of the banks. The recent global financial crisis has triggered fall of many economies, contributed by financial losses and large non performance assets in banking sector. Hence the stability of banking sector is pivotal for the growth of any economy.

Previous Research
In the past, various studies relating to the financial performance of banks have been conducted by researchers. Most of the studies compared the performance of public, private and foreign banks by using measures of profitability, productivity and financial management. Biresh K Sahoo and
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An Analysis of Financial Strength of Indian Banking Sector Through Analytical Financial

Anandadeep Mandal (2011) examined the Performance of Banks in India in Post Transition Period and concluded that the positive trend of the reform process is visible through the increase in technical efficiency over the years of the post transition period. Dr Ashok Khurana, Kanika Goyal (2011) analyzed the Performance of Public Sector Banks and concluded that there is a need for increased absorption of enhanced technological capability by several banks to further argument yield of the banking sector. B.Sathish Kumar (2009) evaluated the Financial Performance of Private Sector Banks in India and said that the new generation private sector bank has best used the technology; utilize the manpower in an effective manner. They are professionally managed which made them to attract more customers and made them to grower faster and stronger. Milind Sathye (2005) studied the efficiency of Indian banks and found that partially privatized banks have performed better as compared to the fully public sector banks in respect of certain financial performance and efficiency parameters. In this paper an attempt is made to study the performance of Indian banking sector by comparing the performance of different banking groups viz. nationalized, SBI & its associates, Private and Foreign Banks. P.Janaki Ramudu and S.Durga Rao (2006) conducted a study on A fundamental analysis of Indian banking industry, by analyzing the performance of SBI, ICICI and HDFC. Gunjan M Sanjeev (2009) conducted a study on efficiency of Indian public sector banks and found that the efficiency of public sector banks did not increase during the period 2003-07. Dangwal and Reetu Kapoor (2010) conducted a study on financial performance of nationalized banks. In the study, they compared the financial performance of 19 commercial banks with respect to eight parameters and they classified the banks as excellent, goods, fair and poor categories. Das, A et al (2004) studied the efficiency of Indian Banking in the post liberalization era. The authors estimated various efficiency scores of Indian banks during 1997-2003 using data envelopment analysis (DEA). The authors observed that Indian banks are still not much differentiated in terms of input or output oriented technical efficiency and cost efficiency. However, they differ sharply in respect of revenue and profit efficiencies. The results provided interesting insight into the empirical correlates of efficiency scores of Indian banks. Bank size, ownership, and the fact of its being listed on the stock exchange are some of the factors that are found to have positive impact on the average profit efficiency and to some extent revenue efficiency scores are. It is found based on the analysis that the median efficiency scores of Indian banks in general and of bigger banks in particular have improved considerably during the post-reform period. Krueger, A and Tornell, A (1999) studied the Asian financial crisis in Mexico and the resulting credit crunch and increased level of NPAs. The reasons for the increase in NPAs were analyzed in the report and the rationale for partial bailout policy adopted in 1995. The authors called for an alternate strategy under which all non-performing loans were recognized at once and the fiscal costs were all paid up-front as preferable to solve the issue of NPAs in the banking sector. Adhikari, R and Oh Soo Nam (1999) studied the banking sector reforms after Asian Financial Crises. The authors noted that in countries where not only the financial sector, but also the whole process of economic reform is less than complete, the banking sector bears a huge financial burden. The NPA ratios in Indonesia was estimated around 80%, 60% in Thailand etc. The authors stressed the need for financial sector reforms. Montreevat, S and Rajan, R (2003) studied financial crisis, bank restructuring and foreign bank entry in Thailand. The study focused on both on the crisis scenario of 1997-98 as well as the steps taken towards financial sector restructuring and liberalization post-crisis the impact that the entry of foreign banks has thus far had on the Thai banking system. One of the notable facts during the period is the growing trend of banks towards risk adverse lending policy as they have been burdened by large NPLs and remain undercapitalized. Borio, C (2011) studied the impact of global financial crisis on central banks. The author noted that the global financial crisis has shaken the foundations of the deceptively
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An Analysis of Financial Strength of Indian Banking Sector Through Analytical Financial

comfortable pre-crisis central banking world. Central banks face a threefold challenge: economic, intellectual and institutional. The study puts forward a compass to help central banks sail in the largely uncharted waters ahead. The compass is based on tighter integration of the monetary and financial stability functions, keener awareness of the global dimensions of those tasks, and stronger safeguards for an increasingly vulnerable central bank operational independence.

Objectives of the study:

1. To know the study of deposit performance of Indian Public banks and Private Banks during two session Pre-recessionary period (i.e. 2004-05 to 2006-07) and Post-recessionary period (2007-08 to 2010-11) 2. To evaluate the lending performance of Indian Public banks and Private Banks during two session (i.e. 2004-05 to 2006-07) and (2007-08 to 2010-11) 3. To present the major finding and conclusion as outcome of the study.

Research Methodology:
To achieve the above stated objectives and to calculate the value of various performance parameters, the secondary data was used. The secondary data that are mainly used are published in annual reports of various banks and survey reports of leading business magazines. The current research attempts have been conducted on Indian Banking Sector comprises 3 Public & 3 Private Banks. The financial performance through deposit performance and lending performance of the selected samples have been made for last 7 years. The time duration of the study have been divided in two sections; pre-recessionary (2004-05 to 2006-07) & post-recessionary (2007-082010-11)

Analysis:
Part A Analysis of Deposit Performance of selected Public and Private Banks Deposits play a significant role in running a banking industry. A bank purchases deposits in order to produce and sell the loans and advances, therefore, purchases of deposits is an important activity of bank marketing. Survival and development of the banks are mainly influenced by their ability to attract deposits from different segments of the community rather than by the volumes of their capital resources. Thus, it can be concluded that deposits are the life blood of the banking industry and are the mainstay of bank funds. Bank purchases deposits to produce and sell loans. In other words, deposits are the basic source for financing. Every bank tries to produce and sell more to gain economies of scale in operations. Deposit mobilization has greater significance because of the confinement of credit policies and tough competition for deposits among banks, between banks and non-banking companies. Since the nationalization the major commercial banks, the lending policies have been diversified to meet the needs of the priority sector of economy and neglected sections of society, viz, agriculture, small-scale industries, weaker sections, self-employed persons etc. At the same time, a greater volume of financial resources is required for a higher economic development. Table No 1
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An Analysis of Financial Strength of Indian Banking Sector Through Analytical Financial

DEPOSIT PERFORMANCE OF SELECTED PUBLIC BANKS (Rs. In Lakhs)

Pre Recession Period

2004-05 Bank/Year Bank of Baroda Bank of India Canara Bank Total Amount 8,133,346.43 7,881,887.85 9,690,841.86 25,706,076.14 % 32 31 38 2005-06 Amount 9,366,199.16 9,393,203.17 % 31 31 2006-07 Amount % 32 31 38 Avg

12,491,597.93 32 11,988,173.62 31 14,238,145.19 37

11,680,323.19 38

100 30,439,725.52 100 38,717,916.74 100 100

Sources Annual Report of selected Banks

The above table shows the deposit performance of the selected Indian public banks during the pre recessionary period (i.e 2005-2007). In case of Bank of Baroda in the year 2005 the deposits stood at 8133346.43 showing 32% share in the total deposits of selected Public banks in year 2005 which increased to 9366199.16 with 31% share in the year 2006. It is showing a growth trend in the Bank of Baroda by an increased deposits of 1232852.73 (approx. 15.16% growth) although its share has been decreased by 1% due to the increase in the market share of other public banks of study. Similarly in the year 2007 the deposits were 12491597.93 with 32% share in that year witnessing a growth of 3125398.77(approx.33.37% growth) as compared to the year 2006 and this growth has also increased market share by 1% and finally it was 32% in the selected public banking sector of study. In case of Bank of India in the year 2005 the deposits were 7881887.85 with 31% share in the selected banks of study which increased upto 9393203.17 and revelled the growth of Rs 1511315.32 which was nearly 19.17% growth of deposits; although the market share is 31% similar to the year 2005. In the same way the year 2007 has also shown continuous growth for Bank of India with an increase of 2594970.45 with a growth rate of 27.63% as compared to last year 2006 but their share in industry was constant 31%. In case of Canara Bank in the year 2005 the deposits stood at 9690841.86 with 38% share in the total deposits of selected banks; which increased upto 11680323.19 showing 20.53% growth in its deposits though its share is 38% which is similar to the previous year. The Canara bank has also shown continuous growth trend in its deposits in the year 2007 which stood at 14238145.19 with an increase of 2557822 making 22% growth as compared to the year 2006. Due to an increase in the share of other public banks of study the share in industry was slightly reduced by 1% of Canara Bank. The overall performance of these three banks during the period of 2005-2007 (Pre-recessionary period) the growth is being observed. In the year 2005 the total deposits were 25706076.14 which increased upto 30439725.52 in the years 2006; which shows the growth of almost 18.41%
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An Analysis of Financial Strength of Indian Banking Sector Through Analytical Financial

in the Public Banking Sector comprised by (Bank of Baroda, Bank of India and Canara Bank) as per our study, which indicates trust shown by the people in public banks. Similarly in the year 2007 the deposits were 38717916.74 showing an increase by 8278191.22 making a growth of 27.2%.

Table 2 DEPOSIT PERFORMANCE OF SELECTED PUBLIC BANKS Post Recession Period (Rs. In lakhs)
Bank/Ye ar BOB BOI Canara Bank Total
2007-08 Amount 15,203,412.72 15,001,198.12 15,407,242.22 45,611,853.06 % 33 33 34 100 2008-09 Amount 19,239,695.17 18,970,847.97 18,689,250.73 56,899,793.87 % 34 33 33 100 2009-10 Amount 24,104,426.42 22,976,194.39 23,465,144.32 70,545,765.13 % 34 33 33 100 2010-11 Amount 30,543,948 29,888,580.63 29,397,265 89,829,793 % 34 33 33 100 Av g. % 33 33 33 100

Sources Annual Report of selected Banks

The second table shows the performance of the public banks during the post recessionary period which has taken as year 2008 to 2011. In case of Bank of Baroda the deposits in the year 2008 stood at 15203412.72 with 33% share in the total deposits of selected banks of study; which increased upto 19239695.17 in 2009 showing the growth of 26.55%, also its share has increased by 1% as compared to the previous year. In the year 2010 there is again an increase of 25.28% has recorded and the consolidated amount have reached on Rs 24104426.42 but the share in the selected banking sector was 34% similar to the year 2009. In the year 2011 the deposits have upgraded with 34% and amount have reached on Rs similarly with 34% share of total deposits. In case of Bank of India in the year 2008 the deposits were Rs 15001198.12 and their share in the total deposits of selected variables was 33%. In the next year the deposits have gone by 26.5% and reached on Rs 18970847.97. The year 2010 is also showing an increase in the deposits which stood at 22976194.39 at a growth rate off 21.1% as compared to year 2009. Interestingly in first 3 consecutive years the share of total volume of deposits was remained similar with 33% in the selected banking sector for Bank of India, in the last year of study again an increase in the deposits has witnessed by 30.08% and it has taken the total deposits on Rs 29888580.63; through this the share was also slightly increased by .3% in the selected banks of study. In case of Canara Bank in the year 2008 the deposits were 15407242.22 with 34% share which increased upto 18689250.73 at a growth rate of 21.3% in the year 2009. In 2009 the share of Canara Bank has decreased by 1% making it 33% due to increasing share of other banks in the market. In the year 2010 the deposits increased upto 23465144.32 at a growth rate of 25.55% but with the similar share of 33%. The increasing trend is being observed in the deposits of Canara Bank as also in the year 2011 when the deposits reached upto 29397265; which are more than
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An Analysis of Financial Strength of Indian Banking Sector Through Analytical Financial

the previous years, this increase is at the rate of 25.3%, but the share of Canara Bank has decreased by .3% in the year 2011. In case of overall performance of all the three banks in the post recessionary period of 20082011 we can observe the increasing trend throughout in the deposits in the selected Banks of our study. In the year 2008 the deposits were 45611853.06 which increased upto 56899793.87 at the growth rate of 24.75%. In the year 2010 the deposits stood at 70545765.13 which increased by 13645971.26 as compared to the previous year 2009. The growth in the year 2010 was at the rate of 24%. The deposits again increased in the year 2011 which were 89829793.63 showing a growth rate of 27.34%.

Table No 3
DEPOSIT PERFORMANCE OF SELECTED PRIVATE BANKS (Rs. In Lakhs)

Pre Recession Period

2004-05 Bank/Year ICICI Bank HDFC Bank Axis Bank Total Amount 9,981,878 3,635,425 3,171,200 16,788,503 % 59 22 2005-06 Amount 16,508,317 5,579,682 % 63 21 2006-07 Amount 23,051,019 6,829,794 % 64 19 Average 62 21

19 4,011,353 100 26,099,352

15 5,878,560 100 35,759,373

16 17 100 100

Sources Annual Report of selected Banks

The above table shows the deposit performance of the selected Indian Private Banks during the pre recessionary period (i.e. 2005-2007). In case of ICICI Bank, in the year 2005 the deposits were Rs 9981878 with 59% share in the total deposits of selected private banks; it was increased with Rs 6526439 (approx. 65% growth) and it had also taken the share in selected variable at 63% in the year 2006. Similarly in the year 2007 the deposits were 23051019 with 64% share in that year witnessing a growth of 39.6% as compared to the year 2006, subsequently the share had also increased by 1% and it was 64% in the total share of selected banks of our study in the last year of pre-recessionary period. In case of HDFC Bank, in the year 2005 the deposits were Rs 3635425 with 22% share in the total deposits which increased upto Rs 5579682 showing the growth of Rs 1944257 ( approx. 53% growth) although the market share was slightly redue3d by 1% due to rapid growth of ICICI banks in the selected banks of study. In the same way the year 2007 has also shown growth for the HDFC Bank with an increase of Rs 1250112 over the last year 2006 making the fall in the share of selected banks by 2%; but showing the growth rate of approx. 22.4%. In case of AXIS Bank in the year 2005 the deposits stood at Rs 3171200 with 19% share in the of selected banks which increased upto 4011353 in the year 2006 showing 26.5% growth in its deposits though its share is 15% as compared to the previous year. In the year 2007 the continuous growth trend has been observed with an increase of Rs 1867207 making 46.5%
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An Analysis of Financial Strength of Indian Banking Sector Through Analytical Financial

growth as compared to the year 2006, as an effect it also increased the share in the selected variable by 1% and it reached on 16%. In case of overall performance of selected Private Banks during the period of 2005-2007 the growth is being observed consistently with a remarkable growth of 112%. In the year 2005 the total deposits were Rs 16788503 which increased upto Rs 26099352 in the year 2006 and it was 55% high over the previous year in the particular Private Banking sector comprised by (Bank of Baroda, Bank of India and Canara Bank).Similarly in the year 2007 the amount increased by 37% as compared to the year 2006.

TABLE 4 DEPOSIT PERFORMANCE OF SELECTED PRIVATE BANKS Post Recession Period (Rs. In lakhs)
Bank/Year ICICI Bank HDFC Bank Axis Bank Total
2007-08 Amount 24,443,105 10,076,860 8,762,622 43282587 % 56 23 21 100 2008-09 Amount 21,834,782 14,281,158 11,735,766 47,851,706 % 46 30 25 100 2009-10 Amount 20,201,660 16,740,444 14,127,866 51,069,970 % 40 33 28 100 2010-11 Amount 22560211 20828721 18923780 62312712 % 36 33 30 100 Avg. % 44 30 26 100

Sources Annual Report of selected Banks

Table No 4 shows the performance of the private banks during the post recessionary period of 2008-2011. In case of ICICI Bank the deposits in the first year of study period were Rs 24443105 with a share of 56% which was the dominating Table in the selected variables. But in the year 2009 deposits were reduced by Rs 2608323 with a fall rate of 10.7%, thus 10% share was also diluted in the total volume of selected banks and it had been reached on 46%. Over again the fall has been witnessed in the subsequent year, when the deposits were Rs 20201660, this time it was 7.5% negative and share in total volume had deleted by 6%. But in the year 2011 growth has been witnessed positively with 11.6 % for the bank and making its deposits at Rs 22560211 but surprisingly the share has again decreased by 4% due to consistent performance of HDFC banks and rapid upwards growth of AXIS banks in the selected banking sector of our study. In case of HDFC bank in the year 2008 the deposits were Rs 10076860 and it presented 23% share. There is an increase of 42% in the deposits in then next year which has taken it to Rs 14281158; as a result the share has also increased by 7%. The year 2010 has also recorded a growth of 17% in the total amount over the last year and it had also placed 3% increase in the market share of selected banks of our study. Again an increase in the deposits has witnessed in the year 2011 which stood at Rs 20828721 showing the growth of 24% but with the share was similar i.e 33%. In case of AXIS BANK in the year 2008 the deposits were Rs 8762622 with 21% share, which increased upto Rs 11735766 at a growth rate of 34% in the year 2009, accordingly the share of AXIS Bank has increased by 4%. In the year 2010 the amount of deposits were recorded high
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An Analysis of Financial Strength of Indian Banking Sector Through Analytical Financial

with a growth rate of 20% and it had also increased the share by 3%, which had reached on 28%. The increasing trend is being observed in the year 2011 also when deposits reached upto Rs 18923780 which are 34% more than the previous year and this growth had also increased market share of Banks in the selected banks by 2% in the year 2011. In case of overall performance of selected 3 Private Banks in the post recessionary period of 2008-2011 we can observe the increasing trend in the deposits in the industry, in fact total amount was increased by Rs 19030125 which was a growth of 44 which was a symbol of consistent and significant financial performance. In the year 2008 the deposits were Rs 43282587 which increased upto Rs 47851706 at the growth rate of 10.6%. In the year 2010 the deposits were increased by Rs 3218264 with a growth rate of 6.7%. In the last year of study period the amount was increased by 22% and reached on Rs 62312712. Part B Analysis of Loan Performance of Selected Public and Private Banks Lending is one of the two principal functions of commercial banks not only because of their social to cater to the credit needs of different sections of the community but also because lending is the most profitable activity, for the interest rates realized on business loans have always been well above those realized on investments. Having sterilized a portion the of deposits in the cash reserve and highly liquid assets, which yield little or no earnings for the purpose of satisfying the liquidity requirements, a banker has to deploy the residual funds in profitable outlets so that he may be able to pay interest on deposits, salary to the staff, meet other establishment expenses, build up reserves and pay dividend to the shareholders. This is why bank loans account for a major portion of residual funds of a commercial bank. An examination of some of the important characteristics of bank loans would provide us an insight into the lending activities of a commercial bank. TABLE 5 LOAN PERFORMANCE OF SELECTED PUBLIC BANKS (Rs in Lakhs) Pre Recession Period Bank/Year Bank of Broada Bank of India Canara Bank Total 2004-05 Amount 1,759,713.93 2,109,111.28 2,797,112.40 6,665,937.61 % 26 32 42 2005-06 Amount 2,341,455.31 2,459,884.16 3,598,447.48 % 28 29 43 2006-07 Amount 3,786,496.22 3,320,608.60 4,576,064.85 % 32 28 39 100

100 8,399,786.95

100 11,683,169.67

Sources Annual Report of selected Banks

The above Table shows the loan performance of some Indian public banks during the pre recessionary period during 2005 to 2007 year. In the year 2005 the amount of Term loan of selected public banks were Rs 6665937.61 which increased to Rs 8399786.95 in the subsequent year showing the growth of almost 26% in the banking industry. Again the growth has been witnessed in the year 2007 taking the total term loans to Rs 11683169.67 with 39.1% rate of growth.
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An Analysis of Financial Strength of Indian Banking Sector Through Analytical Financial

In the case of Bank of Baroda, the amount was Rs 1759713.93 in the end of year 2005, at that time it was 26% of total loan of selected Public Banks. In the end of year 2006, the amount reached to Rs 2341455.31 with increased the share by 2% making it to 28%. This increase in the term loan of BANK OF BARODA has shown a growth of 33%. Further, the term loan increased to Rs 3786496.22 in the year 2007 with 4% increase in the share and huge growth of 62% over the previous year. In the case of Bank of India, in the year 2005 the term loan stood at Rs 2109111.28 with 32% share in the total term loans. In the next year of study period the amount of term loan was increased by 17% but the share in the selected variables was reduced by 3% and reached on 29% reason being the increase in the share of other banks in the industry. In the year 2007 the amount recorded the upwards growth of 35% and accordingly amount has reached on Rs 3320608.60. In case of Canara Bank, the amount of Term loan was Rs 2797112.40 and it represented the share of 42% in the total term loans of selected public banks of our study. In the year 2006 an increase of 29% had been observed which had taken the amount upto Rs 3598447.48, thus the share in the total volume was also increased by 1%. In the last year of pre-recessionary period the term loan has again increased by 27% but the share in the selected industry was reduced by 4%. So it can be observed overall that, amount of loan was increased nearly by 75% in 3 years, so it was great success of selected Public banking industry along with the performance was consistent in every selected banks also. TABLE 6

LOAN PERFORMANCE OF SELECTED PUBLIC BANKS (Rs. In lakhs) Post Recession Period
Bank/Y ear BOB BOI Canara Bank Total
2007-08 Amount 4,958,460.89 4,394,906.58 5,548,366.30 14,901,733.77 % 33 29 37 100 2008-09 Amount 6,279,511.8 6,064,104.7 6,779,367.2 19,122,983.8 % 33 32 35 100 2009-10 Amount 7,613,788.44 7,237,094.18 8,311,348.18 23,162,230.80 % 33 31 36 100 2010-11 Amount 10118159 8,178,792 10274719.1 28571670.1 % 35 29 36 100 Avg % 34 30 36 100

Sources Annual Report of selected Banks

The above table shows the loan performance of the selected Public Banks during the post recessionary period i.e (2008-2011) In the case of Bank of Baroda, in the year 2008 the amount of term loan was Rs 4958460.89 which was increased upto Rs 6279511.84 in the year 2009 and had recorded the growth of 26.6% with the 33% share which is equal to the previous year. In the year 2010 amount was increased by 21% and reached on Rs 7613788.44, but the share in the total volume remained same. In the last year of study Table of term loan was increased Rs 2504370.56 which was 33% more from
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the previous year, as a result it has also put 2% positive effect in the market share of the selected banks. In the case of Bank of India, in the year 2008 the amount of Term loan stood at Rs 4394906.58 with a share of 29% in the total term loans. The loans increased upto Rs 6064104.73 in the year 2009 showing a growth of 38%, also it positively affected the share in the selected banks by 3%. In the year 2010 the share in the total volume was reduced by 1% but the growth rate was 19% as compared to the last year in the Table of term loan. The increase in the term loan has also been witnessed in the year 2011 taking the loan amount to Rs 8178792 showing a growth of 13% though there is a fall in the share by 2% as the share of other banks has increased in the industry. In the case of Canara Bank, the growth has been seen consistent in the term loans through out the study period, but the share was mixed in the selected industry. In the year 2008, the term loans stood at Rs 5548366.30 with 37% share in the banking industry. This Table was increased by 22% in the next year but the share in total volume of selected banks was reduced by 2% and reached on 35%. There is again an increase in the term loan in the year 2010 which stood at Rs 8311348.18 making a growth of almost 22% which also increased the share by 1%. In the year 2011 the term loans stood at Rs 10274719.18 with a similar share of 36% but making a growth of 24% in its loans. In case of overall performance of all 3 selected Public Banks comprising a banking industry as per our study growth has been seen in the term loans repeatedly and it was 92% which can be always taken as incredible financial performance. Every year it was increased by 28%, 21% and 23% respectively for 2009, 2010 and year 2011. TABLE 7 LOAN PERFORMANCE OF SELECTED PRIVATE BANKS (Rs. In Lakhs)

Pre Recession Period

2004-05 Bank/Year ICICI Bank HDFC Bank Axis Bank Total Amount 7,225,889 1,537,435 1,040,543.30 9,803,868 % 74 16 11 2005-06 Amount 11,179,046 2,580,250 1,568,380 % 73 17 10 2006-07 Amount 15,125,504 3,579,549 2,571,616 % 71 17 12 73 16 11 Average

100 15,327,676

100 21,276,670

100 100

Sources Annual Report of selected Banks

The above Table shows the loan performance of some Private Banks during the pre recessionary period during 2005 to 2007 year. In the case of ICICI Bank, the loan amount was Rs 7225889 in the end of year 2005 with a huge share of 74 % of total amount of Term Loan of selected Private Banks. In the end of year 2006, the amount increased by 5% and reached to Rs 11179046 but the share in the selected variables
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was slightly reduced by 1% making it to 73%. Further the term loan increased by 35% in the year 2007 with 2% decrease in the share. In the case of HDFC Bank, the continuous increase have been recorded in the pre-recessionary period during our study, in the year 2005 the term loan stood at Rs 1537435 with 16% share in the total amount of term loan. The term loan increased to Rs 2580250 showing a growth of almost 68% which has also reported an increase of 1% in the share of selected banks. There is again an increase 39% in the Table of loan and making it upto Rs 3579549 with a similar share of 73%. In the case of AXIS bank, in the year 2005 the term loan stood at Rs 1040543.30 making a share of 11% in the total term loans. The amount of next year was tremendously increased by 51% and reached upto Rs 1568380, but surprisingly the share in the total volume was decreased by 1%, due to well performed by other selected banks also. The term loan has again increased in the year 2007 with a growth of 64% and accordingly it also increased the share by 2% making it upto 12%. So it can be observed overall that, amount of term loan has increased in 3 years, in all the selected banks, consequently the share of industry was increased by 117%. Moreover the share of ICICI Banks has been prominent in each year. Notwithstanding every bank has shown a considerable growth in its loan performance. In the year 2005 the total loan amount stood at Rs 9803868 which increased in the year 2006 taking it upto Rs 15327676 with a growth of 56%. Again a growth of 39% has been recorded in the year 2007 over the previous year. TABLE NO 8

LOAN PERFORMANCE OF SELECTED PRIVATE BANKS (Rs. In lakhs) Post Recession Period
Bank/Year ICICI Bank HDFC Bank Axis Bank Total
2007-08 Amount 2,009,110,3 46,351,83 4119428 28845714 % 70 16 14 100 2008-09 Amount 2,167,574,6 7,243,051 5,772,443 34,691,240 % 62 21 17 100 2009-10 Amount 18,090,266 9,548,386 7,487,950 35,126,602 % 52 27 21 100 2010-11 Amount 20577753 11794232 10394619 42766604 % 48 28 24 100 Avg % 58 23 19 100

Sources Annual Report of selected Banks

The above table shows the loan performance of the selected private banks during the post recessionary period i.e (2008-2011) In the case of ICICI Bank, the all Tables have shown a mixed trend, in the year 2008 the loans stood at Rs 20091103 with 70% share in the total term loans which was increased by 8% in the next year and Tables reached upto Rs 21675746 but the share in the selected variables were reduced by 8% and recorded on 62%. In the year 2010 the negative growth rate of 17% were observed and it had also reduced the share of bank in total volume by 10%. But after the year
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An Analysis of Financial Strength of Indian Banking Sector Through Analytical Financial

2010 an increase of 14% has been seen in the term loans of bank which stood at Rs 20577753 but again the decrease in the share was witnessed by 4%. In the case of HDFC Bank, in the year 2008 the loans stood at Rs 4635183 with a share of 16% in the total term loans. The banks had recorded a remarkable growth of 56% in the year 2009 which has also increased the share by 5%. The Table was again increased by 32% and reached upto Rs 9548386 in the year 2010; accordingly it also increased the share by 6%. In the last year of study period the increase in the term loan has also been witnessed taking the loan amount to Rs 11794232 showing a growth of 24% along with the share of 28% in the market . In the case of AXIS Bank, the growth has been seen consistent in the term loans as well as in its share. In the year 2008, the amount of term loan was Rs 4119428 with 14% share in the banking industry. The term loan increased to Rs 5772443 showing a growth of 40% also there is an increase in the share of bank by 3% making it 17%. There is again an increase of 30% in the 2010 which stood at Rs 7487950 with an increase in the share by 4%. In the last year of study period the amount of term loan stood at Rs 10394619 with a share of 24% but making a growth of 39% over the previous year. If we look at the overall performance of all 3 banks comprising a banking industry as per our study growth has been recorded by 48% in the term loan. The share of ICICI bank in the total volume of selected banks has been witnessed decreased continuously but rest of 2 banks have increased their share as well. In the year 2008 the loans stood at Rs 28845714 which increased by 20% in the year 2009. The loans again increased in the year 2010 making it upto 35126602 with a minimal growth of 1.3%. In the year 2011 the loans stood at 42766604 showing a growth of 22% in its term loans.

Major Findings of the Study:

1. The deposit had grown continuously for all selected public banks and the growth of 51% was recorded in the pre-recessionary period (2004-05 to 2006-07) in the industry overall. 2. The growth of 97% was recorded in the total volume of deposits for all selected public banks during the post recessionary period. 3. In case of selected private sector banks, the share of ICICI bank was continuously increased as compared to HDFC and AXIS banks and overall growth of 113% was recorded during the prerecessionary period (2004-05 to 2006-07). 4. The amount of deposit was increased by 44% in case of post recessionary period (2007-08 to 2010-11) for all selected private banks; this reduction was the effect of negative performance of ICICI bank during 2008-09 and 2009-10 which the impact of global recession. 5. The lending performance of selected public bank was continuously increased during prerecessionary period (2004-05 to 2006-07) and overall growth of 75% was recorded and the share of BOB was consistently increased and BOI was repeatedly reduced. 6. During the post-recessionary period (2007-08 to 2010-11) the overall growth of 92% recorded for all selected public banks and the positive commendable growth was recorded for each banks performance.
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An Analysis of Financial Strength of Indian Banking Sector Through Analytical Financial

7. In case of all selected private banks the lending performance was overall increased by 117% during the pre-recessionary period (2004-05 to 2006-07), the major contributor was ICICI bank who hold share in the share of total volume of term loan of all selected private banks. 8. During the post-recessionary period (2007-08 to 2010-11) the overall growth of 48% was recorded which was comparatively 69% less as compared to pre-recessionary period. This was due to less growth of deposits which was affected from global recession.

Conclusion:
The year 2008-09 was a very crucial year for the final system of the whole world, as it witnessed the greatest global financial crisis in the human history. The financial system and banks of many countries collapsed during this year. This study throws light onto the performance of the public and private sector banks both for 2004-2007 and 2008-2011 to whom researchers had considered pre-recessionary and postrecessionary period respectively. In this study only 3 banks from each public and privates were selected but further studies can be done n more banks. Besides that, we can also use many other tools for evaluation of financial performance apart from deposit and lending performance. Moreover, the academic researchers in a developing economy like India can gain further, by using the result of this study for similar studies.

References:
1. Agarwal, N.P. (1982) Analysis of Financial Statements, New Delhi, National Publishing House, pp. 55-71 2. Biresh K Sahoo and Anandadeep Mandal - Examining the Performance of Banks in India: Post Transition Period, The IUP Journal of Bank Management, 2011, vol. X, issue 2, pages 7-31 3. Chowdari Prasad and K. S. Srinivasa Rao (2004), Private Sector Banks in India - A SWOT Analysis, Banker Profession, pp 28-33. 4. Ganesan. P. (2001), Determinants of Profits and Profitability of Public Sector Banks in India: A Profit Approach, Journal of Financial Management and Analysis, Vol. 14, No.1, January-June, pp. 27-37. 5. Dr. Ashok Khurana, Kanika Goyal - Performance of Public Sector Banks: An Analysis IJBEMR Volume 2, Issue 2 (February2011) 6. Dr.N.Bharathi (2010), Profitability Performance of New Private Sector Banks-An Empirical Study, Indian Journal of Finance, Vol. 4, No.3, March, pp. 16-24. 7. Jyoti Saluja and Dr. Rajinder Kaur (2010), Profitability Performance of Public Sector Banks In India, Indian Journal of Finance, Vol. 4, No.4, April, pp. 17-25. 8. Narasimham M. (1998). Report of the committee on banking sector reforms, Govt of India. pp. 15-40.

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An Analysis of Financial Strength of Indian Banking Sector Through Analytical Financial

9. Parasmal Jain. (2004), Basel II Accord: Issues and Suggestion, IBA Bulletin, June 2004, pp. 9-19 10. Patnaik V.C & Manaj Patnaik, Profitability in Public Sctor Banks, Sonali Publications, New Delhi 11. Sanjay J Bhayani (2006), Performance of the New Indian Private Banks: A Comparative Study, Banking Review, pp 55-59. 12. Suryachandra Rao.D, Banking Reforms in India: An evaluate study of performance of Commercial Banks Regal Publications, New Delhi Websites: 1. www.rbi.org.in 2. www.banknetindia.com

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