Banking Sector in India

Introduction
The banking sector in India emerged largely unscathed from the global
financial crisis of 2007-08, but faced a slowdown in the momentum of growth
due to the weakening of trade, finance and confidence channels. However,
post crisis, the economic growth in most emerging market economies (EMEs)
including India recovered, while growth remains anemic in advanced
economies. Instability of sovereign debt markets in the Euro zone, political
turmoil in the Middle East and North African (MENA) region, calamities in
Japan, sovereign debt downgrade of the United States in August this year and
the persistently elevated levels of commodity prices have together led to an
accentuation of downside risks to global growth. While these risks are
expected to recede gradually over time, the long-term sustainability of higher
growth in India will depend crucially on the ability of the banking sector to
mobilize the savings and meet the credit needs of the growing economy
through innovative financial instruments and services that foster financial
inclusion and provide efficient and transparent delivery of credit.
Despite the challenging headwinds from domestic and international

developments, the performance of Indian banks remained robust during 2010-
11. The resilience of the banking sector was marked by improvement in the
capital base, asset quality and profitability. The profitability of scheduled
commercial banks (SCBs) improved both in terms of return on assets (RoA)
and return on equity (RoE). Simultaneously, both gross and net NPA ratios
declined in comparison with the previous year. Since the Indian financial
system is bank dominated, banks ability to withstand stress is critical to
overall financial stability. A series of stress tests conducted by the Reserve
Bank in respect of credit, liquidity and interest rate risks showed that banks
remained reasonably resilient. However, under extreme shocks, some banks
could face moderate liquidity problems and their profitability could be
affected In India, banks have a stock of floating provisions which the Reserve
Bank has not permitted to be used, except under a situation of systemic stress.
While the floating provisions may serve the purpose of countercyclical
provision, a framework is necessary for allowing its use. As an interim
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measure, the Reserve Bank has been trying to develop a methodology based
on the Spanish dynamic provisioning system. This, however, has not been easy
given the lack of required data and analytics with the banks. Migration to
Basel III requires a high level of liquidity to be maintained through a pool of
liquid assets. The definition of liquid assets is very stringent including the
requirement that they should be freely available.
Domestic banks continued to manage growth with resilience during

2010-11 with ample reserves of capital and liquidity, improved performance in
profitability and asset quality. With high growth potential of the Indian
economy and favourable demographics, banks have immense opportunities to
further expand their business both with traditional and innovative products and
through financial inclusion using technology enabled sustainable business
models. However, the prevailing interest rate environment and slowing growth
in the near-term amidst somewhat skewed exposures to interest sensitive
sectors will require adept management of such exposures going forward.
Further, it will be challenging for banks to raise additional capital and liquidity
to support higher growth and to comply with Basel III stipulations. This would
require banks to use innovative and attractive market based funding channels,
especially when capital continues to remain expensive and the Government
support may be constrained by fiscal considerations. The challenge to
converge with the International Financial Reporting System would require
banks to upgrade infrastructure including information technology and human
resources. Given the focus on inclusive growth, banks are also expected to
renew efforts to broaden the scope of financial inclusion and use viable
business models to achieve their targets. Finally, sustained pursuit of forward
looking strategies aimed at mitigating risks, diversifying revenue sources,
containing asset-liability mismatches, providing effective response to
changing global market environment and improving customer relationships
should strengthen the overall growth of the banking sector in the medium
term.
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Objective
Our project work programmed was also directed to some particular

targets and the main objectives of the study are as below.
1. To clearly state the awareness level of industry.

2. To devise an approach by making people aware of industry.
3. To understand and analyze Baking Services.
4. To develop a knowledge in the area of Baking Sector.
5. To study the consumer behavior of customer in Baking Sector.
6. To study the marketing strategies of competitors.
7. To find out market position of Baking Sector in India.
8. To find out awareness about Banking Sector among all customer.
Methodology Of Study
Secondary Data:-
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Secondary data was used for carrying out research process
successfully. We have collected secondary data from various banks website
and also from Annual Report published by Reserve Bank Of India.
A clear benefit of using secondary data is that much of the background

work needed has already been carried out, for example: literature reviews,
case studies might have been carried out, published texts and statistics could
have been already used elsewhere, media promotion and personal contacts
have also been utilized.
This wealth of background work means that secondary data generally

have a pre-established degree of validity and reliability which need not be re-
examined by the researcher who is re-using such data.
Furthermore, secondary data can also be helpful in the research design

of subsequent primary research and can provide a baseline with which the
collected primary data results can be compared. Therefore, it is always wise to
begin any research activity with a review of the secondary data.
Websites
1. www.rbi.com
2. www.iba.com
3. www.financialservices.com
4. www.moneycontrol.com
5. www.investopedia.com
6. www.sbi.co.in
7. www.icicibank.com
8. www.pnbindia.in
9. Times of India
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Sector Profile
Industry Analysis-The Basics
Industry Analysis-The Basics

Nature Of Industry
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Bank is a Financial Institution and a Financial intermediary that
accepts deposits and channels those deposits into lending activity, either
directly by loaning or indirectly by through capital markets.
Banking Sector is a financial institutions that conduct current account

for customers and enable customers to pay and be paid by third parties.
In 2008, when the global banking industry was being shaken by the
tremors of the unfolding financial crisis, only one bank in India felt the
aftershocks, and this, only because one of its overseas subsidiaries had made
an opportunistic bet on debt issued by the failed investment bank Lehman
Brothers. While the market valuations of all the leading banks in India slipped
as equity prices tumbled, their businesses were not affected and their balance
sheets remained healthy. Most domestic commentators continue to hold up this
episode as evidence of the inherent strengths of the Indian banking industry
and have lauded the Reserve Bank of India (RBI), the countrys central bank
and banking regulator, for sticking with its conservative approach. When
regulators around the world were loosening their grasp over the banking and
financial services industry, RBI steadfastly held on to the strings that
prevented banks in India from making risky investments and following highly
aggressive business practices.
Though some of the countrys younger banks have fast growing asset
management and insurance businesses, the industrys bread and butter is still
industrial lending. Asset Backed Securities and Collateralized Mortgage
Obligations are still unheard of in the country, while Indian lenders warmed up
to the idea of teaser rate mortgages only after the global financial crisis. So far,
they do not appear to be any worse for it The Indian banking industry is also
well capitalized and capital ratios are above the global average. The average
tier-1 capital adequacy ratio of the Indian banking industry is above 10%,
when compared to the Basel III norm of 8.5% including the contingency
buffer. The average total capital of banks in India stood at 14.5% as of March
31, 2010, compared to the Basel III requirement of 10.5%.
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However, it can also be argued that the cautious regulatory controls
have stifled the growth of the banking industry in India. This is the sector with
the most entry barriers as the RBI has not issued new banking licenses for well
over a decade. Foreign shareholdings in domestic banks are restricted and
foreign banks have to wait years to get permission to start banking operations
or expand their network. Except for a few cases where the large banks were
encouraged by the RBI to acquire failing banks, the industry has not seen any
meaningful consolidation.
As a result, while India continues to move up the ranks of the largest

economies in the world, most Indian banks are significantly smaller than their
global counterparts. They are no match to even banks in other emerging
economies like China, and only one bank from India is ranked among the
global top-100 in terms of asset size. Also the cost of financial intermediation
is relatively high in India and banks enjoy wide net interest margins. Access to
banking services is poor across vast areas of the countrys rural hinterlands
and as a result, more than 40% of the population does not have bank accounts
and only about 15% have received some form of bank credit. The World
Economic Forum currently ranks India 37th out of 55 countries in financial
development, behind other large emerging economies like China, South
Africa, and Brazil.
The origins of the banking industry in India go as far back as the 18th century
but many of the early banks promoted by groups of businessmen to finance
their trading activities did not survive long. Joint-stock banks made their entry
during the second half of the 19th century and a few of them, including
Allahabad Bank and Punjab National Bank, have survived to this day. So have
several of the banks promoted by the small kingdoms during the first half of
the 20th century, which later came under the control of the Indian government.
Foreign banks, including The Chartered Bank, which came to the country in
1858, and HSBC, which followed in 1867, were attracted to the increasing
trade between India and Britain in the 19th century. The early 19th century
also saw the emergence of three large banks, Bank of Bengal, Bank of
Bombay, and the Bank of Madras, named after the three major cities that were
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the regional administrative bases of the English East India Company, which
ruled most of the country during that period. Collectively called the presidency
banks, they dominated the industry as bankers to the government, and also
functioned as the countrys central bank. The Imperial Bank of India was
established during the first half of the 20th century by the merger of the
presidency banks, and gave up its role as the central bank only after the
Reserve Bank of India was formed by the British government in 1935. It was
subsequently renamed the State Bank of India after India became free from
British rule in 1947.
Interestingly, one of the earliest banking industry crises in India was triggered
by the American Civil War. As cotton supplies to Britain from the U.S. fell
sharply after the war started in 1861, demand for raw cotton exports from
India surged. To exploit this opportunity better, some cotton traders set up
banks to finance their export trade. However, as the war ended in 1865 and
exports from the U.S. resumed, demand for Indian cotton also reverted to the
levels. Traders who had large inventories and the banks financed them went
bankrupt. At the time of Indias independence, almost all major banks except
the State Bank of India were privately owned. They remained so for the next
two decades until 1969, when the federal government took control of more
than a dozen of the largest banks in the country. More than nine -tenths of the
banking industry came under government control after the forced acquisition
of private banks continued in 1980. The industry remained closed to
private promoters until the early nineties, when the government decided to
issue new banking licenses as part of economic liberalization.
Though the entry and growth of new private banks over the last two decades
has transformed the Indian banking industry, the government-controlled banks
still dominate. Together they command nearly three-fourths of the total
banking industry assets and an even bigger share of the branch network.
Types Of Banks
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Players In The Industry
Name of Bank Establishment Sector Corporate CEO/Chairman
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Office
State Bank of 1955 Public Mumbai, Pratip Choudhari
India Maharashtra
ICICI Bank 1954 Public Mumbai, Ms.Chanda Kochhar
Maharashtra
Punjab 1895 Public New Delhi, India K.R. Kamath
National Bank
Bank of 1908 Public Vadodara, India S.S. Mundra
Baroda
Union Bank 1919 Public Mumbai, India Debabrata Sarkar
HDFC 1994 Public Mumbai , Aditya Puri
Maharashtra
Bank of India 1906 Public Mumbai , Vijayalakshmi R Iyer
Maharashtra
Yes Bank 2004 Public Mumbai , Rana Kapoor
Maharashtra
IDBI 1964 Ltd Mumbai, Rajender Mohan
Maharashtra Malla
Citigroup 1812 Public Mumbai, Michael Corbat
Maharashtra
Nature of competition from economist perspective
1. High growth of Indian Economy:
The growth of the banking industry is closely linked with the growth of
the overall economy. India is one of the fastest growing economies in the
world and is set to remain on that path for many years to come. This will be
backed by the stellar growth in infrastructure, industry, services and
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agriculture. This is expected to boost the corporate credit growth in the
economy and provide opportunities to banks to lend to fulfil these
requirements in the future.
2.Rising per capita income:
The rising per capita income will drive the growth of retail credit.
Indians have a conservative outlook towards credit except for housing and
other necessities. However, with an increase in disposable income and
increased exposure to a range of products, consumers have shown a higher
willingness to take credit, particularly, young customers. A study of the
customer profiles of different types of banks, reveals that foreign and private
banks share of younger customers is over 60% whereas public banks have
only 32% customers under the age of 40. Private Banks also have a much
higher share of the more profitable mass affluent segment.
3.New channel
Mobile banking is expected to become the second largest channel for

banking after ATMs: New channels used to offer banking services will drive
the growth of banking industry exponentially in the future by increasing
productivity and acquiring new customers. During the last decade, banking
through ATMs and internet has shown a tremendous growth, which is still in
the growth phase. After ATMs, mobile banking is expected to give another
push to this industry growth in a big way, with the help of new 3G and smart
phone technology (mobile usage has grown tremendously over the years). This
can be looked at as branchless banking and so will also reduce costs as there is
no need for physical infrastructure and human resources. This will help in
acquiring new customers, mainly who live in rural areas (though this will take
time due to technology and infrastructure issues). The IBA-FICCI-BCG
report predicts that mobile banking would become the second largest channel
of banking after ATMs.
4.Financial Inclusion Program:
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Currently, in India, 41% of the adult population dont have bank
accounts, which indicates a large untapped market for banking players. Under
the Financial Inclusion Program, RBI is trying to tap this untapped market and
the growth potential in rural markets by volume growth for banks. Financial
inclusion is the delivery of banking services at an affordable cost to the vast
sections of disadvantaged and low income groups. The RBI has also taken
many initiatives such as Financial Literacy Program, promoting effective use
of development communication and using Information and Communication
Technology (ICT) to spread general banking concepts to people in the under-
banked areas. All these initiatives of promoting rural banking are taken with
the help of mobile banking, self help groups, microfinance institutions, etc.
Financial Inclusion, on the one side, helps corporate in fulfilling their social
responsibilities and on the other side it is fueling growth in other industries
and so as a whole economy.
Porters 5 Forces Model For Banking Industry
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Market Share Of Top 3 & Bottom 3 Players
Assets
SBI ICICI PNB YES IDBI CITY
3% 1% 1%
15%
17% 64%
Classification of Players
Leaders Challengers Followers Nichers
SBI HDFC Bank of Baroda YES Bank
ICICI IDBI Union Bank Citi Bank
PNB BOI
Positioning & Differentiation Strategies Of Key Players

Differentiation of ICICI from other banks
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Improving customer care.
Introduction of smart card.
Reduction of penalty fees and special service fees.
Complete separation of other businesses like mutual funds.
Widening loan portfolio.
Reserve mortgage.
Place and time mobility.
One stop shop for all financial needs.
Reducing response time.
Marketing Strategies of SBI

Participation in various consumer exhibition and meetings.
Tie-ups with builders/car and other motor bike dealer.
Festive loan products.
Advertising in TV and newspaper.
Oral marketing.
Professional offerings.
Targeting rural market
Demand and Supply Balance in the Industry

The global financial system is still far away from a full recovery on account of
a slowdown in the US economy, the soft landing in China and the Euro debt
crisis. The Indian banking sector has been relatively well shielded by the
central bank and has managed to sail through most of the crisis. But, currently
in light of slowing domestic GDP growth, persistent inflation, asset quality
concerns and elevated interest rates, the investment cycle has been wavering in
the country.
The cost of borrowings was higher on account of the various monetary

tightening measures undertaken by the central bank. People preferred to park
their funds in higher yielding fixed deposits rather than current or savings
account (CASA). CASA accretion slowed for most banks which led to a
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higher cost of funds. The savings bank account rate was deregulated by the
RBI, however most banks continue to hold the rate at 4%.
Apart from streamlining their processes through technology initiatives such as

ATMs, telephone banking, online banking and web based products, banks also
resorted to cross selling of financial products such as credit cards, mutual
funds and insurance policies to augment their fee based income. They are also
looking at various financial inclusion initiatives in order to spread the use of
financial services among Indias large unbanked population.
Key Points
Supply Liquidity is controlled by the Reserve Bank of
India (RBI).
India is a growing economy and demand for
Demand credit is high though it could be cyclical.
Barriers to entry Licensing requirement, investment in

technology and branch network, capital and
regulatory requirements.
Bargaining power of suppliers High during periods of tight liquidity. Trade

unions in public sector banks can be anti
reforms and orchestrate strikes. Depositors
may invest elsewhere if interest rates fall.
Bargaining power of customers For good creditworthy borrowers bargaining

power is high due to the availability of large
number of banks.
Competition High- There are public sector banks, private

sector and foreign banks along with non
banking finance companies competing in
similar business segments. Plus the RBI is
planning to issue new banking licenses.
Financial Year 2012
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The RBI had to revise its target for credit growth in FY12 a number of times
given the external environment. From starting off with a prediction of 19%
credit growth in May 2011, the central bank brought this estimate down to
16% in January 2012. Finally non-food credit growth came in at around 17%
in FY12 compared to 21.5% in FY11. Against a backdrop of GDP growth
deceleration, weak IIP data and persistent inflation banks became more risk
averse to lending credit. This deceleration also reflects banks risk aversion in
face of rising NPAs and increased leverage of corporate balance sheets.
Credit growth decelerated across all bank groups during 2011-12 ranging
between 16.3% in the case of public sector banks and 19.7% for private sector
banks. The comparable figures for the previous year were 21% and 24.7%
respectively.
The RBIs has not yet rolled back its aggressive interest rate policy and rates
continue to be elevated. The repo rate currently stands at 8%, with the reverse
repo rate at 7%. While inflation continues to remain high the RBI has
refrained from any further hikes in order to address the slowdown in growth. It
may ease rates once inflation comes under control.
Growth on the deposit front however remained relatively low coming in at

around 13% YoY in FY12; this was as against an RBI target of 17%. Fixed
deposits saw good growth, while demand deposits saw a deceleration on lower
yields. The outstanding credit-deposit ratio rose from 74.5% FY11 to 76.7% in
FY12.
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In the retail portfolio, while home loans grew by 12% YoY, while vehicle
loans grew by 20%. Overall Other personal loans enjoyed a much smaller
growth of 8% YoY due to banks reluctance towards uncollateralized credit.
Credit card outstanding grew by 13% YoY.
Indian banks, however, saw lower levels of money supply, and deposits as a
percentage of GDP in FY12 as compared to that in FY11 on account of the
uncertain economic environment. However credit as a % of GDP was higher
as GDP growth slowed.
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Most private sector banks had a relatively better outing in
FY12. Increased pricing power helped some of these banks
sustain their net interest margins. Plus they were also able to
sustain their asset quality.
Net non performing assets (NPAs) in the system increased

from 0.9% in FY11 to 1.2% in FY12. However for PSU banks
this ratio increased from 1% in FY11 to 1.5% in FY12.
Increased provisioning affected the profitability of the banks in
question.
Professional Trade Bodies of the Industry

Indian Baking Association
Indian Banks' Association (IBA), formed on 26 September 1946 as a

representative body of management of banking in India operating in India - an
association of Indian banks and financial institutions based in Mumbai.[1] With
an initial membership representing 22 banks in India in 1946, IBA currently
represents 173 banking companies operating in India. IBA was formed for
development, coordination and strengthening of Indian banking, and assist the
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member banks in various ways including implementation of new systems and
adoption of standards among the members.
Indian Banks' Association is managed by a managing committee, and the

current managing committee consists of one chairman, 3 deputy chairmen, 1
honorary secretary and 26 members. Current chairman is K R Kamath of
Punjab National Bank[He has been working since 1/10/2012 after chairman
Alok K Misra, CMD of Bank of India and re-elected for the financial year
2013-14]. Previous notable chairman include M. D. Mallya of Bank of
Baroda, V. P. Shetty, M. V. Nair, Rashid Jilani and O P Bhatt.
Institute of Chartered Accountants of India
The Institute of Chartered Accountants of India (ICAI) is a national

professional accounting body of India. It was established on 1 July 1949 as a
body corporate under the Chartered Accountants Act, 1949 enacted by the
Constituent Assembly of India (acting as the provisional Parliament of India)
to regulate the profession of Chartered Accountancy in India. ICAI is the
second largest professional accounting body in the world in terms of
membership second only to American Institute of Certified Public
Accountants. ICAI is the only licensing cum regulating body of the financial
audit and accountancy profession in India. It recommends the accounting
standards to be followed by companies in India to the National Advisory
Committee on Accounting Standards (NACAS) and sets the accounting
standards to be followed by other types of organisations. ICAI is solely
responsible for setting the auditing and assurance standards to be followed in
the audit of financial statements in India. It also issues other technical
standards like Standards on Internal Audit (SIA), Corporate Affairs Standards
(CAS) etc. to be followed by practising Chartered Accountants. It works
closely with the Government of India, Reserve Bank of India and the
Securities and Exchange Board of India in formulating and enforcing such
standards.
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Members of the Institute are known as Chartered Accountants. However the
word chartered does not refer to or flow from any Royal Charter. Chartered
Accountants are subject to a published Code of Ethics and professional
standards, violation of which is subject to disciplinary action. Only a member
of ICAI can be appointed as auditor of an Indian company under the
Companies Act, 1956. The management of the Institute is vested with its
Council with the president acting as its Chief Executive Authority. A person
can become a member of ICAI by taking prescribed examinations and
undergoing three years of practical training. The membership course is well
known for its rigorous standards. ICAI has entered into mutual recognition
agreements with other professional accounting bodies world-wide for
reciprocal membership recognition.
Business Functions carried out Online by Banks
Internet Banking
Internet Banking is a product of e-commerce in the field of banking and

financial services. In what can be described as B2C domain for banking
industry, Internet Banking offers different online services like balance enquiry,
requests for cheque books, recording stop-payment instructions, balance
transfer instructions, account opening and other forms of traditional banking
services. Mostly, these are traditional services offered through Internet as a
new delivery channel. Banks are also offering payment services on behalf of
their customers who shop in different e-shops, emalls etc. Further, different
banks have different levels of such services offered, starting from level-1
where only information is disseminated through Internet to level-3 where
online transactions are put through.
Considering the volume of business e-commerce, particularly in B2B
domain, has been generating, it is natural that banking would position itself in
an intermediary role in settling the transactions and offering other trade related
services. This is true both in respect of B2C and B2B domains. Besides, the
traditional role of financial intermediary and settlement agents, banks have
also exploited new opportunities offered by Internet in the fields of integrated
service providers, payment gateway services, etc. However,the process is still
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evolving and banks are repositioning themselves based on new emerging e-
commerce business models.
Mobile Banking
Mobile phones, as a medium for extending banking services, have of-late
attained greater significance because of their ubiquitous nature. The rapid
growth of mobile users in India, through wider coverage of mobile phone
networks, have made this medium an important platform for extending
banking services to every segment of banking clientele in general and the
unbanked segment in particular.
In order to ensure a level playing field and considering that the technology is
relatively new, Reserve Bank brought out a set of operating guidelines for
adoption by banks. The guidelines, finalised following a wide consultative
process with the stakeholders, were first issued in October 2008 and since then
have been updated keeping in view the developments taking place.
For the purpose of the instructions contained in this Master Circular, Mobile
Banking transaction means undertaking banking transactions using mobile
phones by bank customers that involve accessing / credit / debit to their
accounts.
Banks are permitted to offer mobile banking services after obtaining necessary
permission from the Department of Payment & Settlement Systems, Reserve
Bank of India. Mobile Banking services are available to bank customers
irrespective of the mobile network. Customers need to first register for Mobile
Banking with their bankers and download the Mobile Banking application on
their mobile handsets.
SMS Banking
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SMS banking is a type of mobile banking, a technology-enabled service
offering from banks to its customers, permitting them to operate selected
banking services over their mobile phones using SMS messaging.
Push and pull message
SMS banking services are operated using both push and pull messages. Push
messages are those that the bank chooses to send out to a customer's mobile
phone, without the customer initiating a request for the information. Typically
push messages could be either Mobile marketing messages or messages
alerting an event which happens in the customer's bank account, such as a
large withdrawal of funds from the ATM or a large payment using the
customer's credit card, etc. (see section below on Typical Push and Pull
messages).
Typical push and pull services offered under SMS banking
Depending on the selected extent of SMS banking transactions

offered by the bank, a customer can be authorized to carry
out either non-financial transactions, or both and financial and
non-financial transactions. SMS banking solutions offer
customers a range of functionality, classified by push and pull
services as outlined below.
Typical push services would include:

1.Periodic account balance reporting (say at the end of month).
2.Reporting of salary and other credits to the bank account.
3.Successful or un-successful execution of a standing order.
4.Successful payment of a cheque issued on the account.
5.Insufficient funds.
6.Large value withdrawals on an account.
7.Large value withdrawals on the ATM or EFTPOS on a debit card.
8.Large value payment on a credit card or out of country activity on a credit
card.
9.One-time password and authentication.
Typical pull services would include:

1.Account balance enquiry.
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2.Mini statement request.
3.Electronic bill payment.
4.Transfers between customer's own accounts, like moving money from a
savings account to a current account to fund a cheque.
5.Stop payment instruction on a cheque.
6.Requesting for an ATM card or credit card to be suspended.
7.De-activating a credit or debit card when it is lost or the PIN is known to be
compromised.
8.Foreign currency exchange rates enquiry.
9.Fixed deposit interest rates enquiry.
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Promoters & Management Ethos
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Profiles of Key People
Bank-SBI
Arundhati Bhattacharya-chairperson
Arundhati Bhattacharya born in a Bengali HinduKuli Brahmin family in the

city of Kolkata ,is the first woman to be the Chairperson of State Bank of
India. Before being the Chairperson, she held the posts of managing director
and chief financial officer at SBI. Arundhati became the 24th Chairperson of
the bank by succeeding PratipChaudhuri who retired 30 Sep. Among her
contenders for the position included SBI MDs :Hemant Contractor, A Krishna
Kumar and S Viswanathan. Her longer service favoured the decision in her
favour.She spent her childhood in Bhilai. Her father, Pradyuman Kumar
worked at Bhilai Steel Plant. Her mother, Kalyani Mukherjee was a
homeopathy consultant in Bhilai.
Achievements
1. She is the first woman to ever lead a Fortune 500 company in India.
2. Considering only banking industry, she is the only woman banker in
the world on that list.
3. SBI is the largest bank in India with 15000+ branches and almost 22%
of the country's total deposits, therefore with this promotion, she
becomes one of the most powerful women in India.
Career
Arundhati joined State Bank of India in 1977 as a probationary officer

(PO). She has held several key positions during her 36-year career with the
bank which include, chief executive of the bank's merchant banking arm- SBI
Capital Markets; chief general manager in charge of new projects. She has also
served at the bank's New York office. She has been actively involved in the
launch of several new businesses such as SBI General Insurance, SBI
Custodial Services and the SBI Macquarie Infrastructure Fund.
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2. ICICI
K. V. Kamath-chairman
KundapurVamanKamath, commonly referred to as K.V. Kamath, has served

as theChairman of Infosys Limited, the second-largest Indian IT services
company, and as the Non-Executive Chairman of ICICI Bank, India's largest
private bank. Kamath also served as ICICI Bank's Managing Director and
CEO from May 1, 1996 until his retirement from executive responsibilities on
April 30, 2009
Kamath took charge as the Chairman of Infosys from N R Narayana

Murthy on August 21, 2011. Before serving in this position, he was the Non-
Executive Chairman of the company from May 2, 2011.
Kamath also serves as an Independent Director on the boards of the

Houston-based oil services company Schlumberger and the Indian
pharmaceutical manufacturer Lupin. He is also a member of the Board of
Governors of the PanditDeendayal Petroleum University.
Early life
Kamath was born on December 2, 1947 in

MangaloreKarnataka, where he spent most of his early years.
After completing Higher Secondary and Pre-University from St.
Aloysius College, he joined the Karnataka Regional
Engineering College (KREC, now called National Institute of
Technology Karnataka) in Surathkal for a Bachelors Degree in
Mechanical Engineering. After graduating from KREC in 1969,
he joined the Indian Institute of Management, Ahmedabad
(IIM-A) for a Masters Degree in Business Administration.
Career
After graduating from IIM-A in 1971, Kamath started his career with
ICICI (Industrial Credit and Investment Corporation of India) in the Project
Finance division and moved on to different departments to gather experience,
including establishing new business lines such as leasing, venture capital, and
27
credit ratings as well as handling general management responsibilities. As part
of his general management responsibilities, he initiated and implemented
ICICI's computerisation program. Substantial investments in technology from
those early years have resulted in systems that are today a competitive
advantage for ICICI. Kamath has generally been credited with expanding
ICICI's businesses to evolve it into a technology-enabled financial
organisation catering to the financial needs of corporate and retail customers.
In 1988, Kamath joined the Asian Development Bank, Manila in their

Private Sector department. His principal work experience at ADB was in
various projects in China, India, Indonesia, Philippines, Bangladesh, and
Vietnam. He was the ADB representative on the boards of several companies.
In May 1996, Kamath returned to ICICI as its Managing Director and

Chief Executive Officer. Kamath was instrumental in expanding the Group's
services to the retail customers. He initiated a process of a series of
acquisitions of non-banking finance companies in 1996-98 and led the way to
the formation of ICICI Bank.
On May 2, 2011, he was appointed as Non-Executive Chairman of the

second-largest software exporter, Infosys Ltd. (earlier Infosys Technologies
Ltd.).
He currently is a Lead Independent Director at Infosys after having

stepped down from chairmanship to make way for N.R.Narayana Murthy.
3. ICICI Bank
Chanda Kochhar-MD &CEO
Chanda Kochhar (born 17 November 1961) is the managing director (MD)

of ICICI Bank and its chief executive officer (CEO). ICICI Bank is India's
largest private bank and overall second largest bank in the country. She also
heads the Corporate Centre of ICICI Bank.
28
Early life
Kochhar was born in Jodhpur, Rajasthan and raised in Jaipur, Rajasthan.

She is an alumnus of St. Angela Sophia School, Jaipur. She then moved to
Mumbai, where she joined Jai Hind College for a Bachelor of Arts degree. After
graduating in 1982 she then pursued Cost Accountancy ICWAI, Later, she
acquired the Masters Degree in Management Studies from Jamnalal Bajaj
Institute of Management Studies, Mumbai. She received the Wockhardt Gold
Medal for Excellence in Management Studies as well as the J. N. Bose Gold
Medal in Cost Accountancy for highest marks in the same year.
Kochhar resides in Mumbai, and is married to Deepak Kochhar, a wind

energy entrepreneur and her Business schoolmate. She has two children, a son and
a daughter
Career
In April 2006, Kochhar was appointed as Deputy Managing Director of

ICICI Bank. She managed the Corporate and Retail banking business of ICICI
Bank. From October 2006 to October 2007, she handled the International and
Corporate businesses of ICICI Bank. From October 2007 to April 2009, Kochhar
was also the bank's chief financial officer (CFO), Joint managing director (JMD)
and the official spokesperson. She also headed the Corporate Centre of ICICI
Bank. She is also a director of different ICICI group companies. She is the
chairperson of ICICI Bank Eurasia Limited Liability Company and ICICI
Investment Management Company Limited. Kochhar is the Vice-Chairperson of
ICICI Bank UK PLC and ICICI Bank Canada. She is a director in ICICI
International Limited and ICICI Prudential Life Insurance Company Ltd. and part
of the Governing Council in 1964. The ICICI Foundation for Inclusive Growth-
Member.
Kochhar is CEO and MD of ICICI Bank from May 2009 for a period of five
years. She succeeds K. V. Kamath, who was CEO of the bank since 1996.
CSR Policy
BANKS IN INDIA
Introduction
29
Banking sector is reckoned as a hub and barometer of the financial system.
As apillar of the economy, this sector plays a predominant role in the economic
development of the country. Thus the banking sector has been playing a
significant role as growth facilitator. In
recent years corporate social responsibility has become an important issue at
global level. The concept of corporate social responsibility recognizes as
commitment of an organization to operate in a socially responsible manner. It
takes into consideration the social and environmental implications of corporate
financial decisions. It is also associated with corporate governance and ethical
business procedure.
1.STATE BANK OF INDIA
Major CSR areasCommunity Services Banking,Rural Community

Development,Adoption of the Girl Child,Research and Development on
Education.
Having a strong philosophy on CSR, the Bank was acts as a responsible

corporate citizen. The bank is committed to nationbuilding through Community
Services Banking, apart from normal banking operations. A separate section is
given on CSR. Report on CSR on GRI standard is not yet published. Adoption of
girl child is the unique activities of the bank. Another significant contribution of
the bank is the funding for Research and Development on Education. The bank
also involves in Micro financing and other community development activities.
Bank spends a huge sum for the CSR activities but no fixed budget is allocated
for CSR activities. Further, the bank had implemented MoRD Guidelines for
Rural Self Employment Institutes (RSETIs).
2.PUNJAB NATIONAL BANK
Major CSR areasPNB Farmer Welfare Trust, Farmers Training Centers,

Model Villages, PNB century Rural Development Trust, PNB
SwarozgarVikasSanthan.
PNB regards Corporate Social Responsibility (CSR) as an investment in

society and in its own future. The aim of the bank is to create social capital. The
Bank has its own report
on CSR but fails to publish global standard CSR report. Moreover, no fund is
earmarked for pursuing CSR activities. The thrust of the bank on CSR revolves
around in sustainability, social investment, education and health. The bank
establishes two TRUST for the rural development and to foster financially
inclusive growth in the economy. In addition, the Bank has laid emphasis on
capacity building and training of intermediaries. The Bank has also set up Rural
30
Development and Self Employment Training Institute (RUDSETI) as per the
direction of the Ministry of Rural Development. Adoption of villages for
development is the unique feature of PNBs CSR policy.
3.BANK OF BORODA
Major CSR areas Rural development, Women's empowerment, Vocational

training, Community Welfare, Physically Challenged, Poverty Eradication.
The Bank has a well-knit principle on CSR and a long vision to empower
the community through socio-economic development of underprivileged and
weaker sections of
society. No separate report on CSR except a brief statement on CG report. Again,
no fixed budget allocated for CSR spending. Establishment of large number of
rural consultancy centre is the unique feature of the bank CSR policy. Another
significant contribution of the Bank is the adoption of village for their all round
development. The Bank has also set up Rural Development and Self Employment
Training Institute (RUDSETI) as per the direction of the Ministry of Rural
Development.
Corporate Governance Initiatives
Self Help Group Bank Linkage Programme (SBLP):
Designed and developed by the NABARD to promote and link Self Help
Groups (SHGs) to banks in 1992, NABARD still supports this initiative by
refinancing and promoting stakeholders such as banks, Non-Government
Organizations (NGOs), and other government agencies and departments5. As on
March 2011, NABARD has provided Rs. 25.45 billions to banks covering their
lending to SHGs. Around 4.82 million SHGs received loans from banks with an
outstanding amount of Rs 306.27 billion while 7.54 million SHGs have been
linked to the banking system.
1.Induction of SHG-2:
NABARD has recently acknowledged SHGs inadequate outreach in many

regions in recent years, delays in opening of savings accounts and disbursement
of loans, and non-approval of repeat loans even when first loans are repaid on
time9. This has motivated NABARD to prepare a strategy to revitalize the SHG
movement leading with the induction of SHG-2 model. While the primary
31
function of the SHG-2 model continues to be the promotion of savings-led credit
product, some additional features have been added such as:
1. Voluntary savings apart from compulsory savings
2. Allowing the sanction of a cash credit / overdraft system of lending for
SHGs for a longer operational tenure, and
3. Graduating selected members of the group that have entrepreneurship
potential into a joint liability groups for borrowing larger amounts.
A.Women SHGs Development Fund:
The Union Budget 2011-2012 has proposed to set up a Womens SHGs

Development Fund with a corpus of Rs. 500 crore. The GoI created this fund to
empower women and promote their SHGs11 and it is operated by NABARD12
through its two major microfinance funds- Financial Inclusion Fund (FIF) and the
Financial Inclusion Technology Fund (FITF).
2.No-Frills Accounts (NFAs):
In the year 2005, the RBI, in its annual policy statement expressed the
concerns of banking policies and practices that tend to exclude rather than attract
vast sections of the population14. The RBI urged banks to review their existing
practices to align with the objective of financial inclusion by providing all
unbanked households in a district, with savings account by opening no-frills
account (NFAs) with nil or very low minimum balance. While opening such bank
accounts, banks are asked to relax their Know Your Customer (KYC) norms for
individuals who do not foresee having more than Rs. 50,000 in all their combined
accounts and whose annual total borrowing will not exceed more than Rs.
100,00015. In addition, the RBI also announced a targeted drive for financial
inclusion throughout the country, wherein each household would receive one no
frills bank account.
3.General Purpose Credit Cards (GCC) and Kisan Credit Cards (KCC):
The RBI has advised all Scheduled Commercial Banks (SCBs), including
Regional Rural banks (RRBs) to provide General purpose Credit Card (GCC)
facility at their rural and semi-urban branches. The credit card is provided based
on the assessment of income and cash flow of the household similar to that
prevailing under normal credit cards21. Likewise, the RBI has also introduced
Kisan Credit Cards (KCC) scheme to provide adequate and timely credit support
from the banking system under a single window to the farmers for their
cultivation and other needs.22 As on March 2011, almost 22.49 millions farmers
are provided with Kisan Credit Cards23 and 950,000 clients are provided with
General purpose Credit Cards.
4.Business Facilitators (BFs) and Business Correspondents (BCs):
32
In order to ensure greater financial inclusion and increase the outreach of the
banking sector, the RBI has proposed that banks use the services of NGOs/SHGs,
MFIs and other civil societies (excluding NBFCs) as intermediaries in providing
financial and banking services through the usage of Business Facilitators (BFs)
and Business Correspondents (BCs)25. The BCs are permitted to carry out
transactions on behalf of the banks as agents. The BFs can refer clients, pursue the
clients proposals and facilitate banks to carry out their transactions26. The BCs
can offer savings, credit, insurance and remittance services depending on the
location and infrastructure. Today, a number of organisations such as Financial
Information Network & Operations (FINO), EKO India Financial Services, and
Zero Mass Foundation have begun working as BCs. By the year 2011, FINO and
Zero Mass Foundation have reportedly linked 30 million and 8 million customers
respectively with the banking system.
5.Swarnjayanti Gram SwarozgarYojana (SGSY):
It is a centrally sponsored scheme that follows the mechanism of forming

SHGs of rural poor households, providing capacity building training and linking
groups to banks. SGSY is primarily designed to promote self-employment
oriented income generating activities for the Below Poverty Level (BPL)
households in rural areas.
Since the inception of this program in 1999, approximately 3.13 million groups
have been formed. However, only 0.92 million groups are reported to be having
outstanding loans from banks in March 200829. The loan size in the SGSY is
reported to be higher than normal SHGs but SGSY groups have been faring
poorly in repayment rates. It has been reported that non-performing assets (NPAs)
in SGSY loans are at 5.72 % compared to NPAs of all groups of SHGs of 2.9 %
30. Even though some improvements were seen during the year 2010-2011,31
banks are still reluctant to lend to SGSY groups due to issues with group quality
and in certain cases, faulty selection of livelihood activities such as cottage
industries set up without ensuring a market linkage to sell the products.
33
External Environment
34
Controlling Ministry
Ministry of Finance
The Ministry of Finance is an important ministry within the Government

of India. It concerns itself with taxation, financial legislation, financial
institutions, capital markets, centre and state finances, and the Union Budget. The
following cadre controlling authority of the Civil Services (including Indian
Revenue Service, Indian Economic Service, Indian Cost Accounts Service and
Indian Civil Accounts Service) are under the administration and supervision of the
Finance Ministry. P. Chidambaram is the current Finance Minister following
Prime Minister Manmohan Singh's brief stint, which in turn came after Pranab
Mukherjee left the office to be elected the 13th President of India.
The Union Finance Ministry of India comprises five departments.

1.Department of Economic Affairs
The Department of Economic Affairs (DEA) is the nodal agency of the Union
Government to formulate and monitor country's economic policies and
programmes having a bearing on domestic and international aspects of economic
management. A principal responsibility of this Department is the preparation of
the Union Budget annually (excluding the Railway Budget).
2.Department of Expenditure
The Department of Expenditure is the nod Department for overseeing the
public financial management system in the Central Government and matters
connected with ate finances. The principal activities of the Department include
pre-sanction appraisal of major schemes/projects (both Plan and non-Plan
expenditure), handling the bulk of the Central budgetary resources transferred to
35
States, implementation of the recommendations of the Finance and Central Pay
Commissions, overseeing the expenditure management in the Central
Ministries/Departments through the interface with the Financial Advisors and the
administration of the Financial Rules / Regulations / Orders through monitoring
of Audit comments/observations, preparation of Central Government Accounts,
managing the financial aspects of personnel management in the Central
Government, assisting Central Ministries/Departments in controlling the costs and
prices of public services, assisting organisational re-engineering through review
of staffing patterns and O&M studies and reviewing systems and procedures to
optimize outputs and outcomes of public expenditure. The Department is also
coordinating matters concerning the Ministry of Finance including Parliament
related work of the Ministry. The Department has under its administrative control
the National Institute of Financial Management (NIFM), Faridabad.
3.Department of Revenue
The Department of Revenue functions under the overall direction and
control of the Secretary (Revenue). It exercises control in respect of matters
relating to all the Direct and Indirect Union Taxes through two statutory Boards
namely, the Central Board of Direct Taxes (CBDT) and the Central Board of
Excise and Customs (CBEC). Each Board is headed by a Chairman who is also ex
officio Special Secretary to the Government of India ( Secretary level). Matters
relating to the levy and collection of all Direct taxes are looked after by the CBDT
whereas those relating to levy and collection of Customs and Central Excise
duties and other Indirect taxes fall within the purview of the CBEC.
4.Department of Financial Services

The Department of Financial Services covers Banks, Insurance and
Financial Services provided by various government agencies and private
corporations. It also covers pension reforms and Industrial Finance and Micro,
Small and Medium Enterprise.
36
5.Department of Disinvestments
Initially set up as an independent ministry (The Ministry of
Disinvestment) in December 1999, The Department of Disinvestments came into
existence in May 2004 when the ministry was turned into a department of the
Ministry of Finance. The department took up all the functions of the erstwhile
ministry which broadly was responsible for systematic policy approach to
disinvestment and privatisation of Public Sector Units (PSUs).
Reserve Bank of India

Reserve bank of India was established to regulate the issue of Bank notes
and the keeping of reserves with a view to securing monetary stability in India
and generally to operate the currency and credit system of the country to its
advantage.
The formulation, framework and institutional architecture of monetary policy in

India have evolved around these objectives maintaining price stability, ensuring
adequate flow of credit to sustain the growth momentum, and securing financial
stability.
The responsibility for ensuring financial stability has entailed the vesting of
extensive powers in and operational objectives for the Reserve Bank for
regulation and supervision of the financial system and its constituents, the money,
debt and foreign exchange segments of the financial markets in India and the
payment and settlement system. The endeavour of the Reserve Bank has been to
develop a robust, efficient and diversified financial system so as to anchor
financial stability and to facilitate effective transmission of monetary policy. In
addition, the Reserve Bank pursues operational objectives in the context of its
core function of issuance of bank notes and currency management as well as its
agency functions such as banker to Government (Centre and States) and
37
management of public debt; banker to the banking system including regulation of
bank reserves and the lender of the last resort.
Regulatory Actions
Government mulls action against ICICI Bank for lapses in farm loan waiver
scheme
The finance ministry is contemplating punitive action against the country's

largest private bank, ICICI Bank, for withdrawing Rs 164 crore from the RBI
under the government's 2008 farm debt waiver scheme but not extending the
benefit to individual farmers, instead paying it to micro finance institutions.
In one of the biggest recoveries of farm debt waivers so far, the finance ministry
informed Parliament's Public Accounts Committee (PAC) that RBI had recovered
Rs 164 crore from ICICI Bank which had claimed reimbursement from RBI but
the money did not go to individual beneficiaries. ICICI Bank paid all of this
money to micro finance institutions but could not provide proof of individual
farmer beneficiaries.
The finance ministry told the PAC that it had accepted all issues pointed out by
the government's official auditor, Comptroller and Auditor General (CAG), in its
performance audit on the debt relief scheme and has started recoveries. The
government has also asked RBI to register FIRs against bank officials involved in
irregularities.
Action against some banks on the Anvil
Reserve Bank said that it will take action against some more banks for alleged
violation of regulatory norms following an expose by a news portal.
38
Those named in the expose include SBI, LIC, Punjab National
Bank (PNB), Bank of Baroda, Canara Bank, Yes Bank, Reliance Life, Tata AIA,
Indian Bank, Indian Overseas Bank, IDBI Bank, Oriental Bank of Commerce,
Dena Bank, Corporation Bank, Allahabad Bank, Central Bank of India,
Dhanlaxmi Bank, Federal Bank, DCB Bank and Birla Sun Life.
Regulatory policies
Reconnect with the customer.
Slow growth in existing markets will push banks to reconnect with

customers through a combination of state-of-the-art technology and personal
service.
Promote compliance.
In an increasingly strict regulatory environment, banks adopt a principles-

driven approach to policies, standards and systems to ensure compliance.
Adapt to demographic shifts.
An aging population will continue to drive the development of banking

products and services targeted to older customers.
Key Issues Affecting the Industry
Rebound in the housing market
Recent reports have shown some improvements in the national housing

market this year. The average sale price for existing homes in June 2012 rose to
$189,400 which was a 7.9% increase from last year according to the National
Association of REALTORS (NAR). The REALTORS Association of York and
Adams Counties (RAYAC) reported that the median home sale price in York
County for August was $142,000 down from $142,500 in 2011. There were 349
39
properties sold in August 2012 compared to 322 sold last year. RAYAC also
reported that in August 2012, Adams Countys median home sale price was
$162,000 with a total of 73 properties sold compared to 2011 when the median
home sale price was $163,000 and 58 properties sold.
Competitors
The mortgage and banking industries have always been very competitive.
(In York County alone, there are 275 banking and lending institutions.) The
historically low interest rates are fueling buyers to shop around for the best
possible deals, while it is believed that new federal regulations will make it harder
for small community banks to compete with the larger regional and national
banks.
Interest rates
According to Freddie Mac, interest rates for a 30 year fixed rate mortgage at the
end of August 2012 was 3.55% while a 15 year fixed rate mortgage was 2.86%.
Presidential Election
The economy is no doubt, the center of attention in the upcoming presidential

election. Whoever the next president may be will have a huge impact on the future
of real estate and mortgages. Economic and employment policies will help drive
the affordability and sustainability of the real estate market while implementing or
repealing the Dodd-Frank Act will largely impact the mortgage market.
Supply and demand

The increase in average sale price nationally, is said to be due to a tightening in
housing supply in markets across the country. The shortage of inventory is
limiting purchasing opportunities and therefore is driving prices up. Although
average prices are aising some, many homeowners are still upside down on their
mortgages (they owe more than their home is currently worth). This is said to be
40
the cause for the tightening in the housing supply. Demand for housing is being
fueled by historically low mortgage interest rates. Buyers are starting to get back
out there and take advantage of the interest rates while they last.
Key Initiative by the Government to Promote the Industry
Key Initiative of RBI
Revenue Measures
The major focus of tax policy measures is on augmenting tax revenues

through rationalisation of various taxes and tax rates and simplifying tax
procedures so as to improve tax compliance. Towards this end, modernisation and
computerisation of tax departments and e-payments and e-filing of tax returns
have also been announced by the states in their budgets.
In general, while taxes on necessities have been abolished/reduced in most states,

taxes on sumptuary goods such as tobacco and liquor have been raised. Many
states have increased taxes on tobacco and tobacco products/cigarettes/beedis
(Bihar, Jammu and Kashmir, Assam, Punjab, Himachal Pradesh, Kerala,
Maharashtra and West Bengal) and liquor products (Andhra Pradesh, Bihar,
Kerala, Maharashtra and Madhya Pradesh). Other tax measures announced by the
states include increasing tax rates on luxuries provided in hotels (Arunachal
Pradesh); value added tax (VAT) on marble, granite and wallpaper (Andhra
Pradesh); entry tax on furniture, lift, battery and battery chargers (Bihar); increase
in tax on powder, tablets and cubes for preparing non-alcoholic beverages,
industrial goods, paver boxes and cosmetics and an increase in the upper VAT rate
by 1 per cent (West Bengal); and green cess on petroleum products and increase
in stamp duty rates on various financial instruments (Goa). Jammu and Kashmir,
the only state which is permitted to tax services, has widened the service tax base
by bringing more services into the tax net.
41
Expenditure Measures
Expenditure measures announced by the states indicate continuation of the

importance assigned to sectors such as education, medical and public health,
social security and welfare, agriculture, rural development, irrigation and power.
In preparation for the implementation of the National Food Security Act, several
states have accorded priority for improving and strengthening the public
distribution system (PDS) and increasing food storage capacities through
increased allocation for construction of warehouses. Emphasis has also been
placed on the effective implementation of the DBT scheme. Allocations for the
power sector have been enhanced to strengthen the financial health of state power
utilities and for meeting the commitments under the financial restructuring plan
(FRP), announced for state-owned power distribution companies by the Ministry
of Power in October 2012. Other important policy initiatives include improving
governance, providing transparency in fiscal operations and using information
technology to improve operational efficiency.
Education
As in the past, several measures have been announced by state

governments to improve education facilities in their respective states. These
include establishing/upgrading schools/colleges (Chhattisgarh, Haryana, Madhya
Pradesh, Rajasthan, Tamil Nadu, Tripura, Uttar Pradesh, Uttarakhand and West
Bengal); constructing kitchen sheds in all schools (Andhra Pradesh); a new fixed
deposit scheme VIDYA for girl students of class five for continuing school
education (Arunachal Pradesh); setting up of a law university (Haryana); free
travel facility for government school students (Himachal Pradesh); an Integrated
Educational Management System for creating a database relating to education
(Karnataka); new schemes for comprehensive development of universities and
government colleges (Odisha); providing free laptops (Sikkim, Tamil Nadu);
constructing classrooms (Gujarat); placement cells in educational institutions
42
(Kerala); non-salary grants for private schools aided by the government; and
setting up hostels for girls to arrest drop outs in secondary schools (Maharashtra).
Agriculture
In view of the contribution of agriculture to their GSDP, states have

accorded priority for its development in their budgetary allocations. Specific
proposals include providing anti-hail nets to horticulturists on subsidy (Himachal
Pradesh); increasing subsidies to encourage drip irrigation (Jammu and Kashmir);
measures to improve irrigation (Jharkhand); constitution of the Agricultural Prices
Commission (Karnataka); setting up a technology centre for vegetables, flowers
and fruits and a soil museum for comprehensive information on all varieties of
soil (Kerala); and establishing Agri-Market Intelligence and Business Promotion
Centres (Rajasthan).
Health
Many states have come out with new schemes/initiatives for improving the
health facilities provided by them. These include strengthening medical services
(Andhra Pradesh); establishing primary health centres (Chhattisgarh, Gujarat and
Rajasthan); community health centres (Gujarat); hospitals (Tripura); functioning
of a hospital in the PPP mode in Ranchi (Jharkhand); free health services for
certain groups of people (Karnataka and Rajasthan); setting up an Indian Institute
of Public Health (Karnataka); medical cities (Kerala); and rural and urban health
institutes (Maharashtra). Other measures include provision of additional vehicles
for ambulance services (Madhya Pradesh), a health management information
system (Odisha) and strengthening the Indian system of medicine (Tamil Nadu).
Infrastructure
43
Some states have announced initiatives for improving road connectivity
through construction of roads/bridges (Himachal Pradesh, Karnataka, Gujarat,
Jharkhand, Madhya Pradesh, Tamil Nadu, Uttar Pradesh and West Bengal),
infrastructure development through the PPP mode (Haryana, Karnataka and Tamil
Nadu), constructing cement concrete roads (Odisha and Arunachal Pradesh),
economic stimulus packages for infrastructure investment (Haryana), road
development through privatisation, the Nagpur and Pune metro rail projects
(Maharashtra) and setting up State Rural and Urban Infrastructure Development
Initiatives for creating essential rural and urban infrastructure (Meghalaya).
44
Financials
Key Financial Ratios Of Top 3 & Bottom 3 Comapany
45
State Bank of India
------------------- in Rs. Cr. -------------------
Mar '13 Mar '12 Mar '11 Mar '10 Mar '09
Investment Valuation Ratios

Face Value 10.00 10.00 10.00 10.00 10.00
Dividend Per Share -- -- -- -- --
Operating Profit Per Share (Rs) 144.99 175.52 117.59 144.46 169.69
Net Operating Profit Per Share (Rs) 2,455.71 2,393.43 2,071.54 1,939.33 1,616.96
Free Reserves Per Share (Rs) -- 851.48 645.63 571.22 502.39
Bonus in Equity Capital -- -- -- -- --
Profitability Ratios
Interest Spread -- -- -- -- --
Adjusted Cash Margin(%) 9.92 9.87 8.56 9.87 10.83
Net Profit Margin 8.93 8.70 7.26 8.67 9.80
Return on Long Term Fund(%) 106.13 106.66 103.78 104.21 112.68
Return on Net Worth(%) 14.32 14.44 12.80 14.11 15.13
Adjusted Return on Net Worth(%) 14.65 15.08 13.41 14.46 15.44
Return on Assets Excluding
1,827.89 1,583.05 1,314.51 1,309.46 1,140.22
Revaluations
Return on Assets Including
1,827.89 1,583.05 1,314.51 1,309.46 1,140.22
Revaluations
Management Efficiency Ratios
Interest Income / Total Funds 8.49 8.48 7.35 8.95 8.82
Net Interest Income / Total Funds 3.09 3.33 2.95 4.11 3.44
Non Interest Income / Total Funds 1.65 1.71 2.21 0.88 0.78
Interest Expended / Total Funds 5.40 5.15 4.40 4.85 5.38
Operating Expense / Total Funds 2.59 2.62 2.92 3.44 2.51
Profit Before Provisions / Total Funds 2.07 2.35 2.15 1.45 1.63
Net Profit / Total Funds 0.93 0.91 0.72 0.87 0.96
Loans Turnover 0.29 0.29 0.26 0.15 0.15
Total Income / Capital Employed(%) 10.14 10.19 9.56 9.83 9.60
Interest Expended / Capital
5.40 5.15 4.40 4.85 5.38
Employed(%)
Total Assets Turnover Ratios 0.08 0.08 0.07 0.09 0.09
Asset Turnover Ratio 0.09 0.10 7.50 7.75 7.30
Profit And Loss Account Ratios
Interest Expended / Interest Earned 63.59 60.68 59.92 66.58 68.32
Other Income / Total Income 16.25 16.79 23.14 8.94 8.13
Operating Expense / Total Income 25.55 25.71 30.53 34.99 26.18
Selling Distribution Cost Composition -- 0.21 0.32 0.27 0.32
Balance Sheet Ratios
Capital Adequacy Ratio -- -- -- -- 14.25
Advances / Loans Funds(%) -- -- -- 75.12 78.20
Debt Coverage Ratios
Credit Deposit Ratio -- -- 36.66 76.11 75.69
Investment Deposit Ratio 32.23 32.96 34.65 36.41 36.13
Cash Deposit Ratio 5.55 7.44 8.50 7.35 8.33
46
Total Debt to Owners Fund 13.02 13.32 15.04 13.43 13.98
Financial Charges Coverage Ratio 1.40 1.31 1.34 1.32 1.32
Financial Charges Coverage Ratio Post
1.18 1.19 1.18 1.20 1.19
Tax
Leverage Ratios
Current Ratio 0.81 0.05 0.04 0.04 0.04
Quick Ratio 8.97 8.91 7.26 7.96 5.70
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit 18.52 17.83 21.13 18.97 19.63
Dividend Payout Ratio Cash Profit 17.02 16.36 18.69 17.04 18.09
Earning Retention Ratio 81.89 82.92 79.84 81.49 80.76
Cash Earning Retention Ratio 83.32 84.28 82.08 83.33 82.24
AdjustedCash Flow Times 81.78 81.28 99.65 83.62 83.58
Source : Dion Global Solutions Limited
ICICI Bank
Key Financial Ratios
Mar
Mar '12 Mar '11 Mar '10 Mar '09
'13

Face Value 10.00 10.00 10.00 10.00 10.00
Dividend Per Share 20.00 16.50 14.00 12.00 11.00
Net Operating Profit Per Share (Rs) 347.66 290.99 225.51 293.74 343.59
Free Reserves Per Share (Rs) -- -- -- 356.94 351.04
Interest Spread -- -- -- 5.66 3.66
578.65 524.01 478.31 463.01 444.94
Revaluations
Return on Assets Including 578.65 524.01 478.31 463.01 444.94
47
Revaluations
Loans Turnover 0.34 0.18 0.30 0.17 0.18
5.11 5.10 4.41 4.74 5.83
Employed(%)
Selling Distribution Cost Composition -- -- -- 0.72 1.74
Capital Adequacy Ratio 18.74 18.52 19.54 19.41 15.53
1.34 1.29 1.33 1.26 1.20
Tax
Leverage Ratios
Current Ratio 0.98 1.00 0.96 0.14 0.13
Quick Ratio 10.53 9.37 15.86 14.70 5.94
Mar
Mar '12 Mar '11 Mar '10 Mar '09
'13
Earnings Per Share 72.22 56.09 44.73 36.10 33.76

Book Value 578.65 524.01 478.31 463.01 444.94
48
Punjab National Bank
Mar '13 Mar '12 Mar '11 Mar '10 Mar '09

Face Value 10.00 10.00 10.00 10.00 10.00
Net Operating Profit Per Share (Rs) 1,185.19 1,074.01 851.81 777.82 694.81
924.45 820.13 678.91 514.77 416.74
Revaluations
924.45 820.13 678.91 562.09 464.75
Revaluations
Loans Turnover 0.29 0.15 0.29 0.14 0.16
5.78 5.50 4.51 4.79 5.55
Employed(%)
49
Credit Deposit Ratio 38.10 -- 33.19 74.34 72.88
Financial Charges Coverage Ratio
1.19 1.22 1.31 1.32 1.27
Post Tax
Leverage Ratios
Current Ratio 0.78 0.77 0.77 0.02 0.02
Quick Ratio 22.40 23.81 22.24 20.47 9.75

Book Value 924.45 820.13 678.91 514.77 416.74
Yes Bank
Mar
Mar '12 Mar '11 Mar '10 Mar '09
'13

Face Value 10.00 10.00 10.00 10.00 10.00
Dividend Per Share 6.00 4.00 2.50 1.50 --
50
Interest Spread -- 4.53 3.60 3.21 4.12
161.94 132.49 109.29 90.96 54.69
Revaluations
161.94 132.49 109.29 90.96 54.69
Revaluations
Non Interest Income / Total Funds -0.05 0.04 0.03 0.18 0.17
Loans Turnover 0.23 0.20 0.16 0.17 0.22
7.03 7.07 5.86 5.34 7.48
Employed(%)
Other Income / Total Income -0.42 0.37 0.31 1.85 1.40
Advances / Loans Funds(%) 62.17 65.53 81.65 88.94 76.05
Credit Deposit Ratio 73.20 76.09 77.75 80.52 74.16
1.22 1.22 1.27 1.32 1.22
Tax
Leverage Ratios
Current Ratio 0.72 0.08 0.05 0.04 0.07
Quick Ratio 10.18 7.83 15.34 14.54 5.14
Dividend Payout Ratio Net Profit 19.22 14.45 11.93 12.47 --
Dividend Payout Ratio Cash Profit 18.49 13.87 11.38 11.73 --
51
Book Value 161.94 132.49 109.29 90.96 54.69
Bank Of India
Mar
Mar '12 Mar '11 Mar '10 Mar '09
'13

Face Value 10.00 10.00 10.00 10.00 10.00
Interest Spread -- 4.43 5.06 4.57 4.96
401.38 343.79 292.26 243.75 224.39
Revaluations
52
401.38 365.33 316.40 270.96 256.96
Revaluations
Loans Turnover 0.26 0.13 0.12 0.13 0.14
5.48 5.50 4.47 4.87 5.41
Employed(%)
Advances / Loans Funds(%) -- 74.14 74.37 74.66 80.20
Credit Deposit Ratio 35.54 74.85 72.18 74.24 75.47
1.13 1.14 1.19 1.15 1.28
Tax
Leverage Ratios
Current Ratio 0.76 0.03 0.04 0.02 0.03
Quick Ratio 28.08 20.79 19.06 22.15 12.30
53
HDFC Bank
Mar
Mar '12 Mar '11 Mar '10 Mar '09
'13

Face Value 2.00 2.00 10.00 10.00 10.00
152.20 127.52 545.46 470.19 344.44
Revaluations
152.20 127.52 545.46 470.19 344.44
Revaluations
Non Interest Income / Total Funds 1.86 1.70 1.73 0.01 --
Loans Turnover 0.36 0.18 0.32 0.18 0.24
5.22 4.87 3.76 3.84 5.63
Employed(%)
Other Income / Total Income 16.35 16.12 17.87 0.09 --
54
1.38 1.38 1.47 1.43 1.29
Tax
Leverage Ratios
Current Ratio 0.78 0.76 0.73 0.03 0.04
Quick Ratio 7.84 6.20 6.89 7.14 5.23
Mar
Mar '12 Mar '11 Mar '10 Mar '09
'13

Book Value 152.20 127.52 545.46 470.19 344.44
55
Recent Developments
Merger and Acquisition of Top 3 Banks

SBI
Chairman PratipChaudharihas said in August 2013 that all subsidary banks of
SBI- State bank of Hyderabad, State bank of Mysore, State bank of Travancore,
56
State bank of Bikaner and Jaipur and State bank of Patiala would be merged with
SBI in coming 10 years
ICICI
ICICI bank was Merged with Bank of Rajasthan in August 2010.
PNB
In 1986-Punjab National Bank Acquired Hindustan Commercial Bank.
In 1993-Punjab National Bank Acquired New Bank of India.
In 2003-Punjab National Bank Took over Nedungadi bank (oldest private sector
bank inKerela).
In Dec 2012 it signed on agreement with US based life insurance company

Metlife. The company would be renamed PNB Metlife India Ltd. and PNB
would sell Metlifes products in its branches
Technological Developments
SBI
ATM: Over 27000+ ATMs in India and already the largest ATM network in
India.
57
Mobile banking: 5.2 million registered mobile banking customer.
Net banking: Over 4 million Customers
ICICI
ATM: 11162 machines
Net banking: Over 2 million registered customers
Mobile banking: 4 million registered customers
PNB
ATM: 6059 machines
Net banking: 1.5 million registered customers
Mobile banking:3.8 million registered customers
Conclusion
From this study we conclude that Banking Industry plays an important role in
Indian Economy. The future depends on the growth of Indian economy.Banking
58
Industry plays an important role in the flow of cash in different forms in the
country.
Limitations Of Study
59
1] Banking Industry being a wide sector to study we had limited our research upto
just top 10 Banks in the industry.
2] Financial ratio analysis report information for city bank was unavailable .
3] Data for some category companies was difficult to be found.
Value Addition
60
1]We are now aware about the varied upcoming new opportunities for our
carindustry.
2] This project, group effort to study the Banking industry enlightened us all to
know more about this sector as whole, its contribution to the GDP and thus one of
the top industry contributing to the income of our nation, a booming sector.
3] Personal communication skills, Presentation skills, Upgradation in our

knowledge are improved to a greater extent.
Bibliography
1. www.rbi.com (25-01-2014)
2. www.iba.com (26-01-2014)
3. www.financialservices.com (1-02-2014)
4. www.moneycontrol.com (2-2-2014)
5. www.investopedia.com (7-02-2014)
61
6. www.sbi.co.in (9-2-2014)
7. www.icicibank.com (10-2-2014)
8. www.pnbindia.in (13-2-2014)
9. Times of India(13-2-2014)
62
Annexure
63

Banking Sector in India

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Banking Sector in India

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Introduction

Despite the challenging headwinds from domestic and international

Domestic banks continued to manage growth with resilience during

Our project work programmed was also directed to some particular

1. To clearly state the awareness level of industry.

A clear benefit of using secondary data is that much of the background

This wealth of background work means that secondary data generally

Furthermore, secondary data can also be helpful in the research design

Industry Analysis-The Basics

Industry Analysis-The Basics

Banking Sector is a financial institutions that conduct current account

As a result, while India continues to move up the ranks of the largest

Nature of competition from economist perspective

1. High growth of Indian Economy:

2.Rising per capita income:

Mobile banking is expected to become the second largest channel for

4.Financial Inclusion Program:

Porters 5 Forces Model For Banking Industry

Positioning & Differentiation Strategies Of Key Players

Marketing Strategies of SBI

Demand and Supply Balance in the Industry

The cost of borrowings was higher on account of the various monetary

Apart from streamlining their processes through technology initiatives such as

Barriers to entry Licensing requirement, investment in

Bargaining power of suppliers High during periods of tight liquidity. Trade

Bargaining power of customers For good creditworthy borrowers bargaining

Competition High- There are public sector banks, private

Financial Year 2012

Growth on the deposit front however remained relatively low coming in at

Net non performing assets (NPAs) in the system increased

Professional Trade Bodies of the Industry

Indian Banks' Association (IBA), formed on 26 September 1946 as a

Indian Banks' Association is managed by a managing committee, and the

Institute of Chartered Accountants of India

The Institute of Chartered Accountants of India (ICAI) is a national

Business Functions carried out Online by Banks

Internet Banking is a product of e-commerce in the field of banking and

Depending on the selected extent of SMS banking transactions

Typical push services would include:

Typical pull services would include:

Arundhati Bhattacharya born in a Bengali HinduKuli Brahmin family in the

Arundhati joined State Bank of India in 1977 as a probationary officer

KundapurVamanKamath, commonly referred to as K.V. Kamath, has served

Kamath took charge as the Chairman of Infosys from N R Narayana

Kamath also serves as an Independent Director on the boards of the

Kamath was born on December 2, 1947 in

In 1988, Kamath joined the Asian Development Bank, Manila in their

In May 1996, Kamath returned to ICICI as its Managing Director and

On May 2, 2011, he was appointed as Non-Executive Chairman of the

He currently is a Lead Independent Director at Infosys after having

Chanda Kochhar-MD &CEO

Chanda Kochhar (born 17 November 1961) is the managing director (MD)

Kochhar was born in Jodhpur, Rajasthan and raised in Jaipur, Rajasthan.

Kochhar resides in Mumbai, and is married to Deepak Kochhar, a wind

In April 2006, Kochhar was appointed as Deputy Managing Director of

1.STATE BANK OF INDIA

Major CSR areasCommunity Services Banking,Rural Community

Having a strong philosophy on CSR, the Bank was acts as a responsible

2.PUNJAB NATIONAL BANK

Major CSR areasPNB Farmer Welfare Trust, Farmers Training Centers,

PNB regards Corporate Social Responsibility (CSR) as an investment in

Major CSR areas Rural development, Women's empowerment, Vocational

Corporate Governance Initiatives