Overview of the indian banking sector

The banking sector continued to report high slippages on account of farm loan waivers and default in their corporate loan portfolio.

According Randstad India, global HR service provider in India, the banking sector will generate lakh jobs in the coming decade and the sector would be the among top job creators in The net interest margin NIM witnessed decline during the year due to loss of interest from standard assets slipping into NPAs.

Federal Reserve hiked interest rates thrice in and the same now stands in a range of 1. The Indian banking system continued to battle falling asset quality issues and the need to maintain capital adequacy in the light of piling bad loans.

Reserve Bank of India: The improved prospects of global economic growth will be positive for the banking sector. As at the end of March, We are like some old fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome compartments.

The concentration ratio of five-bank asset has turned down to 0. The sector of commercial banking consists of 33 foreign banks, 40 private sector banks, and 27 public sector banks where majority ownership is included by the government. Still it showed a turn down to 0. The IBA—BCG survey of banks revealed that the level of confidence in finding profitable solutions for financial inclusion is not very high.

Given the increasing inflation, it is highly unlikely that the RBI reduces interest rates from hereon.

Overview of the Indian Banking Sector Essay Sample

It provides and regulates credit in rural sectors, and promotes development mainly in agriculture, handicrafts and village industries.

For the full transmission of rates, the RBI has asked banks to follow the marginal cost of funds while setting the base rate. Profitability, liquidity, safety and social welfare are the primary principles of commercial banks.

Barriers to entry Licensing requirement, investment in technology and branch network, capital and regulatory requirements. In relation to exposure norms, provisioning, asset classification, income recognition, and capital adequacy, the execution of prudential norms has been found. Their main function is to lend to primary credit societies.

Assuming a consultative method so as to originate policy through measures that are being ushered by the participants of market to supply lead time useful to the market players in order to create required adjustments. Retrieved November 23,from Finance and investment Guide: With its large population of 1, and comparatively low literacy rate of Hence, the profitability of the banks could come under pressure going forward as the accounts are referred to IBC.

There is a free movement of capital. Development Financial Institutions At the Crossroads. Bargaining power of customers For good creditworthy borrowers bargaining power is high due to the availability of large number of banks. Note Issuer Apart from Rupee notes and coins, or other subsidiary coins, RBI issues currency to maintain an adequate money supply and currency-note quality for public circulation.

During the reform period, the noteworthy and critical reforms in the financial system have incorporated the following: Currently, public sector banks have more branches than any other bank group in the rural and semi-urban areas.

The unemployment rate has dropped to lowest in seventeen years and now stands at 4. In recent years, there is a sharp increase in the number of primary co-operative banks India Finance and Investment Guide. Ministry of Finance, Government of India. IndusInd Bank was the first pivate bank in India to be set up.

Retrieved November 23,from Investment: Manager of Foreign Exchange RBI manages the Foreign Exchange Management Act,supervises trade payments and promotes orderly development of the foreign exchange market.

They attract the idle savings of the people in the form of deposits and are the most important depositaries and lenders. Through contrast, the share of the public sector banks of entire banking system assets has been a little above 90 percent, during the year Till now, it is still one of the fastest growing private banks in India.

Inwhile the foreign and private banks apprehend 25 percent, the public sector banks comprise of about 75 of the banking system assets. Although banks have reduced base rates but not to the same extent. Developmental Role RBI performs a wide range of functions in line with state policies and helps realize national objectives as regards the banking system.

Poor earnings growth by companies, slow pace of investments, risk aversion of banks due to rising bad loans, and availability of alternative funding sources for corporates pulled down credit growth during the year.Overview of the Indian Banking Sector Essay Sample 1 Introduction According to the International Monetary Fund, as ofthe Indian economy is the ninth-largest economy by market exchange rates.

Banking & Financial Services Industry

The Indian banking sector consists of 26 public sector banks, 20 private sector banks and 43 foreign banks along with 61 regional rural banks (RRBs) and more than 90, credit cooperatives.

Factors promoting growth of Banking and Financial Services. The Indian Banking Sector On the Road to Progress G. H. Deolalkar Overview of Banking and Financial Institutions The Banking Sector The banking system in India is significantly different from that of other Asian nations because of the country’s unique geographic, social, and economic characteristics.

India has a large population and land. Indian Banking Sector is at par with global standards thanks to RBI's prudent policies. Find out what gives public banks the edge over commercial banks &. 1 CHAPTER – 1 AN INTRODUCTION TO INDIAN BANKING SYSTEM INTRODUCTION The banking sector is the lifeline of any modern economy.

It is one of the important. An Overview of Indian Banking Industry Sunindita Pan, Lecturer in Economics, Loyola Academy Degree & killarney10mile.come, Alwal, Secunderabad, Telangana This paper is the outcome of secondary data on Indian banking sector collected from various sources mainly from annual reports and periodicals of Reserve Bank of India.

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Overview of the indian banking sector
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