Opportunities in Indian Banking Sector

Publication Date	January 2008
Publisher	RNCOS
Product Type	Report
Pages	110
ISBN Number	not applicable
Product Code	RCS00331

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Summary

The RNCOS report - "Opportunities in Indian Banking Sector" - provides extensive research and rational analysis on the Indian banking industry. This report has been made to help clients to evaluate the opportunities, challenges and driving forces critical to the growth of banking industry in India.

The forecast given in this report is not based on a complex economic model but is intended as a rough guide to the direction in which the market is likely to move. The future projection is done on the basis of the current market scenario, past trends, and rules and regulations laid by the regulator and supervisor of the financial system, Reserve Bank of India (RBI).

The report provides detailed overview of the Indian banking industry by contemplating and analyzing various parameters like assets size, and income level. It helps clients to understand various products available in the Indian banking industry and their future scope.

The future forecast discusses the future prospects of different arms of banking industry including rural banking, bancassurance, financial cards, mobile banking, role of technology in rural banking, pension funds, and the future course of action and strategies for pension fund industry to be taken at macro level.

Key Findings of the Report

Pension fund industry in India grew at a CAGR of 122.44% from 1999-00 to 2006-07.
Rural and semi-urban India is expected to account for 58.33% of the insurance sector by 2010.
In terms of ownership, debit cards are more in number than credit cards but in terms of transactions, credit cards are used more than debit cards.
The ATM outlets in India increased at a CAGR of 28.09% from March 2006 to March 2007.
Rural and semi-urban centers account for 66% of total bank branches.
Indian Mutual Fund industry witnessed a growth of 49.88% from May 2006 to May 2007, and higher growth is recorded in closed ended schemes at 215.61%.
Increasing number of millionaires in India is increasing the scope of Wealth Management Services.
Bankable households in India are anticipated to grow at a CAGR of 28.10% during 2007-2011.
Investment by banking sector in Information Technology is expected to increase at 18% in 2007 from last year.

Key Issues & Facts Analyzed in the Report

Market analysis of different product segments in the banking industry.
Evaluation of current market trends.
Basel II Accord and capital requirement by Indian Banking Industry.
Role of technology in banking industry.
Pension fund industry in India.
Urban Vs rural banking in terms of deposit, branches, and credit and future outlook of rural banking.
Drivers and constraints for credit and debit cards industry in India.
Analysis of various challenges and opportunities for the industry.

Key Players Analyzed

This section covers the key facts about the major players (including Public, Private, and Foreign sector) in the Indian banking industry, including Bank of Baroda, State Bank of India, Canara Bank, Punjab National Bank, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Citibank, Standard Chartered Bank, HSBC Bank, ABN AMRO Bank, American Express, etc.

Research Methodology Used

Information Sources

Information has been sourced from books, newspapers, trade journals, and white papers, industry portals, government agencies, trade associations, monitoring industry news and developments, and through access to more than 3000 paid databases.

Analysis Method

The analysis methods include ratio analysis, historical trend analysis, linear regression analysis using software tools, judgmental forecasting, and cause and effect analysis.

Content

1. Analyst View
2. Industry Overview
- 2.1 Global Banking Industry
  - 2.1.1 Overview
  - 2.1.2 Regional Segmentation
  - 2.1.3 Top Performing Banks
- 2.2 Asia Banking Industry
  - 2.2.1 Overview
  - 2.2.2 Top Performing Banks
- 2.3 Indian Banking Industry
  - 2.3.1 Overview
3. Indian Banking Industry Performance
- 3.1 Assets
- 3.2 Income (Interest & Other Income)
- 3.3 Profit
  - 3.3.1 Operating Profit
  - 3.3.2 Net Profit
- 3.4 Credit/Deposit Ratio
- 3.5 Investment/Deposit Ratio
- 3.6 Capital Adequacy Ratio
- 3.7 Non-Performing Assets
- 3.8 By Product
  - 3.8.1 Deposits
    - 3.8.1.1 Scheduled Commercial Banks
    - 3.8.1.2 Nationalized Banks
    - 3.8.1.3 Public Sector Banks
    - 3.8.1.4 State Bank Group
    - 3.8.1.5 Private Banks
    - 3.8.1.6 Foreign Banks
  - 3.8.2 Financial Card
    - 3.8.2.1 Credit Card
    - 3.8.2.2 Debit Card
    - 3.8.2.3 Drivers
    - 3.8.2.4 Constraints
  - 3.8.3 ATMs & Branch Network
  - 3.8.4 Mutual Fund
- 3.9 Urban vs Rural Banking
  - 3.9.1 By Deposits
  - 3.9.2 By Credit Demand
  - 3.9.3 By Bank Branches
- 3.10 Pension Fund Industry
- 3.11 Bancassurance
4. Industry Analysis
- 4.1 Risk Assessment of Banking Industry
- 4.2 Drivers
  - 4.2.1 Increasing Bankable Households
  - 4.2.2 Growing Industry Credit
  - 4.2.3 Growing Housing Finance Industry
  - 4.2.4 Declining NPA
- 4.3 Opportunities
  - 4.3.1 Wealth Management Services
  - 4.3.2 Rising Bankable Households
  - 4.3.3 Large Unbanked Population
  - 4.3.4 Call Centers (Support Services)
  - 4.3.5 Pension Fund Industry
  - 4.3.6 Auto Finance
  - 4.3.7 Increasing Retail Lending
  - 4.3.8 Booming Insurance Industry - Opportunity for Bancassurance
  - 4.3.9 IT Investment
- 4.4 Challenges
  - 4.4.1 Customer Retention
  - 4.4.2 Lack of Consumer Credit Information
  - 4.4.3 KYC (Know Your Customer) Issues & Money Laundering Risks
  - 4.4.4 Increasing Level of Liquidity
  - 4.4.5 Increasing Level of Risk Weightage to Commercial Real Estate Financing
  - 4.4.6 Basel II Accords
5. Future Outlook
- 5.1 Bancassurance - 2010
- 5.2 Rural Banking
  - 5.2.1 Strategy
  - 5.2.2 Technology
- 5.3 Credit & Debit Cards (2007-08 to 2010-11)
- 5.4 Mobile & Internet Banking
- 5.5 Pension Fund Industry
  - 5.5.1 Future Initiative/Strategy
- 5.6 Assets & Deposits (March 2008 to March 2011)
- 5.7 ATMs (2008-2011)
6. Key Players
- 6.1 Public Sector Banks
  - 6.1.1 Bank of Baroda
  - 6.1.2 State Bank of India
  - 6.1.3 Allahabad Bank
  - 6.1.4 Canara Bank
  - 6.1.5 Punjab National Bank
- 6.2 Private Sector Banks
  - 6.2.1 HDFC Bank
  - 6.2.2 UTI Bank
  - 6.2.3 ICICI Bank
  - 6.2.4 Kotak Mahindra Bank
  - 6.2.5 Centurion Bank of Punjab
- 6.3 Foreign Sector Banks
  - 6.3.1 Citibank
  - 6.3.2 Standard Chartered Bank
  - 6.3.3 HSBC Bank
  - 6.3.4 ABN AMRO Bank
  - 6.3.5 American Express
7. Annexure I: Indian Banking Industry - Regulatory Framework & Guidelines
- 7.1 Regulatory Framework
- 7.2 Ownership
  - 7.2.1 Phase-I (March 2005 to March 2009)
  - 7.2.2 Phase-II (April 2009)
- 7.3 Capital
- 7.4 Inspection & Reporting
- 7.5 Audit Requirements
- 7.6 Managing Pension Fund by Banks
  - 7.6.1 Eligibility Criteria
  - 7.6.2 Pension Fund Subsidiary
List of Figures:
- Figure 2-1: Global - Banking Industry Assets (in Trillion US$), 2002-2006
- Figure 2-2: Global - Forecast for Banking Industry Assets (in Trillion US$), 2007-2011
- Figure 2-3: Global - Banking Industry Deposits (in Billion US$), 2002-2006
- Figure 2-4: Asia - Banking Industry Assets (in Billion US$), 2004 & 2005
- Figure 3-1: India - Banking Industry Assets (in Rs Crore), March 2004 to March 2007
- Figure 3-2: India - Banking Industry Income (in Rs Crore), 2004-05 to 2006-07
- Figure 3-3: India - Banking Industry Investment/Deposit Ratio (%), 2000-01 to 2006-07
- Figure 3-4: India - Banking Industry Deposits (in Rs Crore), March 2004 to March 2007
- Figure 3-5: India - Comparison with Global Purchase through Credit Card (%), 2006
- Figure 3-6: India - Number of Credit Card Holders (in Million), 2003-04 to 2005-06 & January 2007
- Figure 3-7: India, Seoul, Sydney & Hong Kong - Credit Card Ownership by Affluent Class (%), 2006
- Figure 3-8: India - Number of Credit Card Transactions (in Million), 2003-04 to 2005-06 & January 2007
- Figure 3-9: India - Payment by Credit Card (in Billion Rs), 2003-04 to 2005-06 & January 2007
- Figure 3-10: India - Number of Debit Cards (in Million), 2003-04 to 2005-06 & January 2007
- Figure 3-11: India - Number of Debit Card Transactions (in Million), 2003-04 to 2005-06
- Figure 3-12: India - Payment by Debit Card (in Rs Crore), 2003-04 to 2005-06
- Figure 3-13: India - Branches of Commercial Banks in Rural Area (in Numbers), March 2000 & March 2006
- Figure 3-14: India - Number of People Served by a Bank Branch in Rural & Urban Area (1991, 2001 & 2005)
- Figure 3-15: India - Pension Fund Premium for LIC (in Rs Crore), 1999-00 & 2006-07E
- Figure 4-1: India - Number of Bankable Households (in '000), 2001-2006E
- Figure 4-2: India - Industry Credit (in Rs Crore), 2004 & 2005
- Figure 4-3: India - Housing Loan Disbursement (in Rs Crore), 2001 & 2006
- Figure 4-4: India - Number of Millionaires (2003-2007F)
- Figure 4-5: India - Forecast for Number of Bankable Households (in '000), 2007-2011
- Figure 4-6: India - Unbankable Urban & Rural Population (%), July 2007
- Figure 4-7: India - Forecast for Working Population (in Million), 2007-2011
- Figure 4-8: India - Two-Wheeler Finance Market (in Rs Crore) 2005-06 to 2009-10F
- Figure 4-9: India - Forecast for Share of Organized & Unorganized Players in Auto Finance Market (%), 2009-10
- Figure 4-10: India - Forecast for Share of Bancassurance in Life Insurance Industry (%), 2010
- Figure 4-11: India - Banking Industry Investment on IT (in Million US$), 2006 & 2007E
- Figure 4-12: India - Forecast for Banking Industry Investment on IT (in Million US$), 2008-2010
- Figure 4-13: India - Banking Industry Investment on IT by Product (in Million US$), 2007E
- Figure 5-1: India - Forecast for Insurance Industry (in Billion US$), 2010
- Figure 5-2: India - Forecast for Number of Credit Holders (in Million), 2007-08 to 2010-11
- Figure 5-3: India - Forecast for Number of Debit Cards (in Million), 2007-08 to 2010-11
- Figure 5-4: India - Mobile & Internet Penetration (%), June 2007
- Figure 5-5: India - Forecast for Banking Industry Assets & Deposits (in Billion US$), March 2008 to March 2011
- Figure 5-6: India - Forecast for Number of ATMs (2008-2011)
List of Tables:
- Table 2-1: Global - Banking Industry Loans by Region (in Trillion US$), 2002-2006
- Table 2-2: Global - Top Performing Banks by Capital Base, Assets & Capitalization (June 2007)
- Table 2-3: Asia - Top Performing Banks by Country, 2007
- Table 2-4: India - List of the Types of Bank
- Table 3-1: India - Banking Industry Assets by Type of Bank (in Rs Crore), March 2004 to March 2007
- Table 3-2: India - Banking Industry Interest Income by Type of Bank (in Rs Crore), 2004-05 to 2006-07
- Table 3-3: India - Banking Industry Other Income by Type of Bank (in Rs Crore), 2004-05 to 2006-07
- Table 3-4: India - Banking Industry Operating Profit by Type of Bank (in Rs Crore), 2004-05 to 2006-07
- Table 3-5: India - Banking Industry Net Profit by Type of Bank (in Rs Crore), 2004-05 to 2006-07
- Table 3-6: India - Credit/Deposit Ratio by Type of Bank (%), March 2006 & March 2007
- Table 3-7: India - Capital Adequacy Ratio by Type of Bank (%), 2001-02 to 2006-07
- Table 3-8: India - Gross NPA by Type of Bank (in Rs. Crore), March 2005 to March 2007
- Table 3-9: India - Schedule Commercial Bank Deposits* by Segment (in Rs Crore), March 2005 to March 2007
- Table 3-10: India - Nationalized Bank Deposits by Segment (in Rs Crore), March 2005 to March 2007
- Table 3-11: India - Nationalized Bank Deposits (in Rs Crore), March 2004 to March 2006
- Table 3-12: India - Public Sector Bank Deposits by Segment (in Rs Crore), March 2005 to March 2007
- Table 3-13: India - Public Sector Bank Deposits (in Rs Crore), March 2004 to March 2006
- Table 3-14: India - SBI Group Deposits by Segment (in Rs Crore), March 2005 to March 2007
- Table 3-15: India - SBI & Associate Bank Deposits (in Rs Crore), March 2004 to March 2006
- Table 3-16: India - Private Bank Deposits by Segment (in Rs Crore), March 2005 to March 2007
- Table 3-17: India - Old Private Bank Deposits by Segment (in Rs Crore), March 2005 to March 2007
- Table 3-18: India - New Private Bank Deposits by Segment (in Rs Crore), March 2005 to March 2007
- Table 3-19: India - Foreign Bank Deposits by Segment (in Rs Crore), March 2005 to March 2007
- Table 3-20: India - On-site & Off-site ATM by Type of Bank (in Numbers), March 2006 & March 2007
- Table 3-21: India - Branches by Type of Bank (in Numbers), March 2006
- Table 3-22: India - Branches by Type of Bank (in Numbers), March 2007
- Table 3-23: India - Mutual Fund Industry by Assets under Management (in Rs Crore), May 2006 & May 2007
- Table 3-24: India - Banking Industry Deposits by Urban, Semi Urban & Rural Centers (in Rs Crore), December 2001 & December 2006
- Table 3-25: India - Banking Industry Credit Demand by Urban, Semi Urban & Rural Centers (in Rs Crore), December 2001 & December 2006
- Table 3-26: India - Number of Bank Branches in Urban, Semi Urban & Rural Centers (December 2001 & December 2006)
- Table 3-27: India - Bank Life Insurance Business (in Rs Crore), 2004 & 2005
- Table 3-28: India - Public Sector Banks & their Collaboration with Insurance Companies, 2006
- Table 4-1: India - NPA by Type of Bank (in Rs Crore), March 2004 to March 2006
- Table 6-1: Bank of Baroda - Key Financials (in Rs Crore), March 2007
- Table 6-2: State Bank of India - Key Financials (in Rs Crore), March 2007
- Table 6-3: Allahabad Bank - Key Financials (in Lakh Rs), March 2007
- Table 6-4: Canara Bank - Key Financials (in '000 Rs), March 2007
- Table 6-5: Punjab National Bank - Key Financials (in Rs Crore), March 2007
- Table 6-6: HDFC Bank - Key Financials (in Lakh Rs), March 2006 & March 2007
- Table 6-7: UTI Bank - Key Financials (in Rs Crore), March 2007
- Table 6-8: ICICI Bank - Key Financials (in '000 Rs), March 2007
- Table 6-9: Kotak Mahindra Bank - Key Financials (in Lakh Rs), March 2007
- Table 6-10: Centurion Bank of Punjab - Key Financials (in Rs Crore), March 2007
- Table 6-11: Citibank - India Specific Credit Cards
- Table 6-12: Citibank India - Key Financials (in '000 Rs), March 2007
- Table 6-13: Standard Chartered India - Key Financials (in Rs Crore), March 2007
- Table 6-14: HSBC India - Key Financials (in Rs Crore), March 2007
- Table 6-15: ABN AMRO India - Key Financials (in Rs Crore), March 2007
- Table 6-16: American Express India - Key Financials (in Rs Crore), March 2007