A

MINI PROJECT REPORT

ON
TREND AND PROGRESS OF INDIAN BANKING SYSTEM

SUBMITTED IN
PARTIAL FULLFILLMENT OF REQUIREMENT
OF DEGREE IN MASTER
OF BUSINESS ADMINSTRATION

SESSION 2010-12

SUBMITTED TO :
Dr. Buteshwar

SUBMITTED BY:
RAHUL CHOUDHARY

NITIN SHARMA
(ASBM)
ID NO: - 11 & 48

ARNI UNIVERSITY, KATHGARH INDORA

INTRODUCTION
Banking in India originated in the first decade of 18 century with The General
Bank of India coming into existence in1786. This was followed by Bank of
Hindustan. Both these banks are now defunct. The oldest bank in existence in
India is the State Bank of India being established as "The Bank of Bengal" in
Calcutta in June 1806.

The Reserve Bank of India formally took on the responsibility of regulating the
Indian banking sector from1935. After India's independence 1947, the Reserve
Bank was nationalized and given broader powers.

Currently (2010), banking in India is generally fairly mature in terms of supply,

product range and reach-even though reach in rural India still remains a
challenge for the private sector and foreign banks. In terms of quality of assets
and capital adequacy, Indian banks are considered to have clean, strong and
transparent balance sheets relative to other banks in comparable economies in
its region. The Reserve Bank of India is an autonomous body, with minimal
pressure from the government. The stated policy of the Bank on the Indian
Rupee is to manage volatility but without any fixed exchange rate-and this has
mostly been true.

The Modern Banking Functions are Fund based and Non-Fund based functions.
These functions of a bank are those in which banks extend various services to
their customers or add their commitments to certain transactions undertaken by
their clients and charge their fees/ commissions for the services rendered by
them / their commitments added to the transactions undertaken by the clients.
The activities popularly known as Non-fund facilities provided by Banks.

Thus, we conclude

Definition of the Bank:-

Financial institution whose primary activity is

to act as a payment agent for customers and to borrow and lend money.

Banks are important players of the market and offer services as loans and
funds.

Banking was originated in 18th century

First bank were General Bank of India and Bank of Hindustan,

now defunct.
Punjab National Bank and Bank of India was the only private

bank in 1906.
Allahabad bank first fully India owned bank in 1865.

OBJECTIVES OF THE STUDY:

To study the NPAs, C/D Ratio, capital adequacy ratio, business per
employee and net profit of all public sector banks, private sector banks &

foreign banks.
To analyze the performance of bank after the liberalization.

To understand the importance of banking sector.

To study the Indian bank scenario and its problem.

To study the Indian bank scenario and its problem.

To offer suggestions based upon the findings.

The study aims at learning the techniques involved to manage the various types of
Banks, various methodologies undertaken.

SCOPE OF THE STUDY

A healthy banking system is essential for any economy striving to
achieve good growth and yet remain stable in an increasingly global
business environment. The Indian banking system, with one of the
largest banking networks in the world, has witnessed a series of reforms
over the past few years like the deregulation of interest rates, dilution of
the government stake in public sector banks (PSBs), and the increased
participation of private sector banks. The growth of the retail financial
services sector has been a key development on the market front. Indian
banks (both public and private) have not only been keen to tap the
domestic market but also to compete in the global market place.
Studying the increasing business scope of the bank.
Find out the performance of the bank in last few years. The report seeks
to present a comprehensive picture of the various types of bank. The
banks can be broadly classified into two categories:-

Nationalize Bank

Private Bank

RESEARCH METHODOLOGY:The first stage included the introduction of Indian Banks and how they work
in India. I choose five criteria NPAs, C/D ratio, business per employee,
capital adequacy ratio and net profit of all banks.my whole project is totally
depends upon the secondary data.
The Preparation of the project report required data from various journals,
newspapers (like Times, Times of India etc.)
I had chosen the descriptive research technique to analyze the data.

SCOPE OF BANKING SECTOR

Banking business has a history of over 200 years. From the times of
the Bank of Bengal (1806) the sector has been witnessing qualitative and
quantitative changes. Main players during the pre-independence period were
Credit Lyonnais, Allahabad Bank, Punjab National Bank and Bank of India.
With 1935 regulation the Reserve Bank of India was proclaimed the Central
Bank of India and was vested with controlling powers over the commercial
banks.
The drastic development taken place during the first 25 years since
independence was Nationalization of many private banks. With this, the
central government became major policy maker for these nationalized banks
With economic liberalization measures many private and foreign
banking companies were allowed to operate in the country. Favorable
economic climate and a variety of other factors such as demand for wide
range of financial products from various sections of the society led to
mutually beneficial growth to the banking sector and economic growth
process. This was coincided by technology development in the banking
operations. Today most of the Indian cities have networked banking facility
as well as Internet banking facility. A customer is empowered to operate his

account from any part of the country. UTI Bank, ICICI, HDFC Bank and Bank
of Punjab are the main winners of the race.

DATA ANALYSIS AND INTERPRETATION:NET PROFIT:-

1.8
1.6
1.4
1.2
all banks

public sector

0.8

private sector

0.6

foreign bank

0.4
0.2
0
1998-99 1999-00 2000-01

2001-02 2002-03 2003-04 2004-05 2005-06

So from the following data we can say that the performance

of foreign banks are very good than the public sector banks
After the liberalization the growth of foreign bank is fast.
The net profit of foreign banks is 2 times more than the
public sector banks.

NPA AS PERCENTAGE OF TOTAL ADVANCES:-

9
8
7
6
all banks

public sector

private bank

foreign bank

2
1
0
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

So with the above diagram we can conclude that the NPA of

all banks are at a constant level. But in case of foreign

banks the NPA are balanced.

In private & public sector banks the NPA are very high in last
few years but they had recovered their NPA after 2005-06.

Capital to Risk-weighted Asset Ratio (CRAR) of Indian Banks:-

16
14
12
10

all banks
public banks

private banks

foreign banks

4
2
0
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

The CRAR of all the banks are equal so we can say that the

current position after liberalization of all the banks is same.

But after year 2002-03 the CRAR of foreign banks are
reduced as compare to other banks.

C/D Ratio:-

100
90
80
70
60

all banks
public banks

50

private banks

40

foreign banks

30
20
10
0
2001-02

2002-03

2003-04

2004-05

From the above analysis the C/D ratio of foreign banks

are good as compare to other banks.

 the C/D ratio of other psbs, private sector

banks is also increased but not as compare to
foreign banks.
BUSINESS PER EMPLOYEE:-

From the above analysis the business per employee

of foreign bank is very high as compare to other
banks.

 We can say that the BPE of foreign bank is 4 times

more than the other banks.

Findings & conclusion:-

So we can conclude that after the liberalization the banks had

reformed and growth of Indian banks are good as compare to past
few years.

After the liberalization the banks start using the 4-6-4 method
(Borrow at 4%; Lend at 6%; Go home at 4) of functioning to do best.

The above study give stress on the factors with directly affects the
performance of the banking system.

In this study we will study that how the banks had reduced their
NPAs to survive in the market.

The net profit ratio of all the banks is increased as compare to last
few years.

The business per employee & C/D ratio of foreign bank is praise
worthy than other Indian banks

The overall data analyse that the performance of foreign banks are
very good as compare to any other banks.