m One of the fastest growing in the world

m Consumption growth fuelling economic growth ± consumption

expenditure forming 78% of GDP
m Services sector contributing over 60% to GDP
m Emerging as a hub of manufacturing excellence. new growth engines
of Indian economy include IT, ITes, pharmaceuticals, bio-technology,
nano technology, agri. businesses
m Where forces of competition are at work
m Innovation driving enterprises
m Economic reforms well on course ± entering second phase
m =Inclusive growth´ occupying central place

m High untapped potential in rural / agri - economy

m Indian companies on acquiring spree and going global

m Indian companies pursuing global best practices and producing

world-class managers
World Bank ± IFC Report on Doing Business in India
for 2007 has given a higher rank to India compared
to last year because :

- India has cut the time to start a business from 71 to 25 days

- þ

  
 

 
 
  
-  

 



 
 
 
  


   

- þ 
   
 þ 
 
 
 
 
m Robust financial system
m Well established institutions
m Strong supervisory system
m Progressive integration of financial markets - banking,
insurance, mutual funds, securities, commodities
m High competition marked by innovation
m High technology absorption
m Rediscovery of the Indian customer
m 21st century customer driving innovations in banking
m Banking plus financial services becoming the new offerings
m vlternate e-delivery channels becoming popular with Indian
customers
m Financial sector bracing to meet life cycle and life style needs of the
great Indian middle class
m =Cradle to Grave´ becoming the new spectrum of life cycle needs
m Banking graduating beyond traditional boundaries of vanilla banking
m Indian customer demanding TOTv FINvNCIv SO
TIONS
m Banking sector bracing itself to offer customized and structured
products
m Banking sector entering newer areas like wealth management, private banking,
doorstep banking, electronic banking, credit cards, investment advisory
services, etc.
m Indian banks in a war game to acquire and retain customers
m Indian middle class being reached out and wooed by banks
m Indian middle class and financial sector beginning to dream together and
weave a new bond of relationship
m Financial products like mutual funds, life policies, non-life policies competing
with traditional banking products
m Banking sector fully geared for helping Indian middle class realize its dream
m Banking sector in good health ± with low non-performing assets and
prudential accounting standards in place
m Indian banking entering the phase of consolidation (2nd Phase of Reform) ± on
way to acquire global size
m v free & open banking sector where most businesses are now covered at the
market-determined rates
m Full banking license system
m Highly Stable Sector despite a series of Exogenous Shocks like the vsian
Crisis, Sanctions due to Nuclear Explosions, Record High Oil Prices and arge
Corrections in Stock Markets
m Significant improvement in the vsset Quality: Net NPvs (%) have decreased
from 8.1% at end-March 1997 to 2.0% at end-March 2006 despite tightening of
prudential norms
m Capital vdequacy Ratio (%) of the banking sector has increased from 10.4% at
end-March 1997 to 12.8% at end-March 2006
m Operating Expenses of SCBs have declined from 2.1% of Total vssets in 1992
to 1.8% in 2005 indicative of improved efficiency
m Intermediation costs of SCBs have declined from 2.9% in 1995-96 to 2.1% in
2005-06
m Strong Regulatory & Supervisory system
m RBI has strengthened prudential norms with respect to income recognition,
disclosures and capital adequacy
m India complies with BIS 26 norms of best practices of supervisory criteria, country
risk & convertibility
m Indian banks are well on road towards BvSE II compliance
m Credit Deposit Ratio is increasing ± PSB : 66.2%, Pvt. Banks : 76.3%
m Bank credit is growing by about 30%
m Indian banks compare favourably with its vsian peers in asset quality
m Indian banking sector grew by 6 times in the last decade ± from Rs. 5,984 bn in 1995
to Rs. 36,105 bn.
m KYC norms and vnti Money aundering regulations in force
m Indian banks are serving the =Two Faces´ of India ± the
nderprivileged, the
Progressive & the Opulent ± with equal aplomb
 ü PSBs : 72%
m vbout 70000 strong branch network ± More
ü Pr.Bks : 19%
than 60% presence in Rural areas ü Fgn. Bks.: 7%
ü Others include
CBs,
m Consistent growth in profitability ± Spread is
RRBs, vBs & NBFCs
getting healthier ± from 3.1% in 2004-05 to
ü Spread : 3.2%
3.2% in 2005-06 ü CvR : 12.0%
ü ROv : 1.0%+
m NP Ratios compare favourably with global
ü Gross NPv : 3.34%
trends
ü Net NPv : 2.00%
m Consistently out-performing stock indices ±
TRS vpr 01 ± vpr 05
Total Return to Shareholders continues to be
ü PS
Banks : 61.2%
attractive ü India Banking : 51.3%
ü Old Private : 40.0%
ü New Private : 33.9%
m India has one of the strongest financial sector with low systemic risk
m
pturn in economic activity is mirrored in the sustained growth in
=Demand for Bank Credit´
m Bank credit has increased sharply from 30% of GDP at end-March
2000 to 48% at end-March 2006
m Non-food credit by SCBs increased by an average of 26.1% between
2002-2006 versus its long-term average of 17.8% from 1970 to 2006
m Deployment of credit is quite broad-based with increasing flows going
to infrastructure , SMEs, agriculture and retail sector (especially
residential mortgages) during the past three years
vccording to Moody¶s Investor Services vnalysis :
m Indian lenders have highest Return on Equity (ROE) in vsia
(20.38%), followed by Indonesia (20.19%), New Zealand
(18.83%), Japan (-6.42%)
m vverage gross bad loans as share of total loans ± India
(8.18%), Philippines (15.05%), Thailand (13.08%), China
(11.80%) and Malaysia (9.73%)
m Cost to Income Ratio in India at 44.56% is in line with the best
regulated vsian countries like Singapore (44.15%), Taiwan
(42.61%) and Hong Kong (40.05%)
 Requirements Fulfillments
m Banking Regulations ü Deregulated Interest rate
ü Greater freedom to banks
ü Significant steps towards Full capital
ü vccount Convertibility
m Credit & Recovery ü SvRFvESI vct 2002
ü Debt Recovery Tribunal (DRT)
m Payment Systems ü Real Time Gross Settlements(RTGS)
ü Electronic Clearing System (ECS)
ü Electronic Fund Transfer (EFT)
ü Cheque Truncation - in the pipeline
m Communications & ü Internet Banking, E-Banking, On-line
Infrastructure ü Tax Payment /
tility Payments,
ü vTM, Mobile Banking
 vrea
m Capital Norms
m Credit Information
m Financial Track record
m Other Regulatory Initiatives -
Status
- Min. Capital @ 9% as against 8% by BIS
 Indian Banks are ahead in Basel II readiness
± implementation road-map targets March
2009
 Min. Capital requirement for entry set @ Rs.
3 bn. for all banks in private sector
 Credit Information Bureau of India td
 ist of defaulters on RBI website
- No financial crisis ± escaped contagion
effect of South East vsian meltdown
Strong Regulatory Practice & Prudence in
place for =Managing vffluence´
 Regulatory provisions to bring NBFCs &

CBs under uniform prudential norms
4
 





  4
  
å  !

"
#$ 
å  
!%&! #4'
å  (( #)
å  *+,"
#-4
å  "
#'
å 
,.
"
#-

More than 25% of the Bank oan vssets are in Retail sector
ensuring high returns - likely to cross Rs. 5700 bn by 2010
6
    

Growth of e-Commerce Transactions

ü Estimated 4.6* million Indian Internet

users are Banking Online today

$$
$- $$-
$) $$)
$ $$
$' $$'
$/
ü Indians paying bills online is expected to
$$

$$$ increase from the current 0.3 million in

-$$
4$$
2005-06 to 1.8 million by 2007-2008.
Rs CR

44$

4$$$
/$ ü E-commerce transactions will cross the Rs
$$ 
4-$
$ 2000 crore mark (2006-2007) which

translates into an increase of over 300%

from financial year 2004-05.

m Is there any
ntapped Potential in Indian Financial

Market ?

m What is the µBig Picture¶ ?

Consumption boom in India
m      

40
60 58 37
35
50
30
India
40 India 25
36 Thailand
Thailand
20 Malaysia
30 Malaysia 17
26 Taiwan
Taiwan 15 13
20 Korea
Korea 10 9
13
10 8 5 4
0
0 India Thailand Malaysia Taiwan Korea
India Thailand Malaysia Taiw an Korea

m
m
 6
  

140
121.9 45
120
40
41
100 India 35
82.4 30 India
80 Thailand
25 Thailand
Malaysia
60 20 Malaysia
Taiwan 16 17 Taiwan
40 Korea 15
Korea
20
10 8
9.8 5 4
0.4 2.8
0 0
India Thailand Malaysia Taiwan Korea India Thailand Malaysia Taiwan Korea

In each of the area, huge untapped potential left

Mutual Funds ± Global Perspective

[
  
 

100
87
90
80 72
70
60
50 


 



40
30
30 23 21
20 4
6 4
44
10 5 4 
0 4
Brazil

Korea
Australia

India
UK
USA

Japan


4


   4


 

4





4 44


 



'!()*!
#


!"



 

"$




 

%&


ow Penetration ± Indian industry still in early stages

 Insurance Penetration ± Global andscape
^    

10
Insurance density (
S$ premiums per
8.9
9
8
8.32
7.27 7.08
capita)
7
6
5 4.14
3.6 3.51
4
2.53 m    
3 1.78
2
1
0.82 è
 


Indonesia
Australia

0
Malasiya
France
Korea

India

China
Japan

South

p 
  
UK

US

  

è 


 
 


^    
   

  

K

K I  

 KK
  
    

  
  I  







!









!




ow Penetration ± v large potential still untapped

 Gwthadpendinginndia  
m nceaingtendPlaticpend
Gwtheditandebitadinndia
m Highechnlgy ankingPduct

m
eedvalueaddedevicencad
 pduct



  

  Gwthinndia
  
h h

h

 h
h h h


m age
umbeccePint
utme 

m nveniencetcutmeithekey 

m haednetwkitheutue 
h h hh h h h h
m O
( 
010 fastest-growing àà!
0 1+O  
m *,23 O
(
2
%
,,àà
,
à

m 1
(
O
(



O
(

m 1 0 1+O
O
( 4$$3$$$45 - ,
$$
m 

O
( 13.9% ,, ,
,(
m O

O
%

! 36!
(3%%(
m .

0wealth management services in India - 10% 

%à
7!à
%'$5$
m *,
!% 0%à
(
,8% 79,
3%
,
6,000, is second only to NYSE 
m 7,2,500 tonnes of gold %
(00,0,(: (!à! 

(3,500 tonnes 
!%(30,,1,000 tonnes is consumed in
India 

India is fast emerging as the =Back Office´ of the World & the
=Global Knowledge Hub´

m 100 Global Companies outsource from India

m Top Global Banks are present in India
m argest talent pool
m World class educational / professional institutions
m Increasing Trade activities
m Cost of operations ± low
m Savings Rate @ 29% is low ± Offers high potential from an
increasingly affluent community
m ess than 40% of Indian household has a bank account
m Bulging Middle Class ± likely to exceed 300 mn
m Only 2% of the Indian population have insurance cover
m ess than 1% of the population is actively participating in the
Stock market
m Number of high net worth households (> Rs. 500,000) is likely
to grow from 200,000 to 400,000 by 2010
m Consumer Finance stands at about 2% to 3% of GDP as
compared to 25% in European market
m Real Estate Market is projected to touch
SD 50 bn by 2008
m SME Sector is catching up fast creating huge prospect of
growth
m Capital Requirements ± %à,6
 

,à
$$5à,
m Financial Inclusion  %% 


% ,
m Banking Sector Consolidation  0%à
%à


(0(%à0;<
 (
(
=
m HR Challenges  ,



(
3
3
%à


m à
,,%technology adoption programme 
,
%
 %
 0%%à>!%>
àà
m High intermediation costs

m ow Productivity

m 8Corporate Governance  , ,0!

 

m O%à%

productivity and efficiency 

,(
(

%

m *
0%
0%.
?
 

>=multi-specialist´




 Thank You

þ