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    Banking Sector: Analysis of Liquidity

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    Udit Upreti
    This document provides an analysis of liquidity in the Indian banking sector. It begins with an overview of the various types of banks and financial institutions in India. It then discusses key metrics of the banking sector such as total banking assets, credit growth rates, and expectations for future growth. The document also provides a brief history of the evolution of the Indian banking sector from 1921 to the present. It analyzes several public sector banks including their total assets and profit figures. Finally, it discusses some of the regulatory standards introduced under Basel 3, including the liquidity coverage ratio and net stable funding ratio.

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    Banking Sector: Analysis of Liquidity

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    Udit Upreti
    31 views17 pages
    This document provides an analysis of liquidity in the Indian banking sector. It begins with an overview of the various types of banks and financial institutions in India. It then discusses key metrics of the banking sector such as total banking assets, credit growth rates, and expectations for future growth. The document also provides a brief history of the evolution of the Indian banking sector from 1921 to the present. It analyzes several public sector banks including their total assets and profit figures. Finally, it discusses some of the regulatory standards introduced under Basel 3, including the liquidity coverage ratio and net stable funding ratio.

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    Accounts presentation on banking sector

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    Accounts presentation

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    This document provides an analysis of liquidity in the Indian banking sector. It begins with an overview of the various types of banks and financial institutions in India. It then discusses key metrics of the banking sector such as total banking assets, credit growth rates, and expectations for future growth. The document also provides a brief history of the evolution of the Indian banking sector from 1921 to the present. It analyzes several public sector banks including their total assets and profit figures. Finally, it discusses some of the regulatory standards introduced under Basel 3, including the liquidity coverage ratio and net stable funding ratio.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    31 views17 pages

    Banking Sector: Analysis of Liquidity

    Uploaded by

    Udit Upreti
    This document provides an analysis of liquidity in the Indian banking sector. It begins with an overview of the various types of banks and financial institutions in India. It then discusses key metrics of the banking sector such as total banking assets, credit growth rates, and expectations for future growth. The document also provides a brief history of the evolution of the Indian banking sector from 1921 to the present. It analyzes several public sector banks including their total assets and profit figures. Finally, it discusses some of the regulatory standards introduced under Basel 3, including the liquidity coverage ratio and net stable funding ratio.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 17

    BANKING SECTOR :

    ANALYSIS OF LIQUIDITY
    Presented by

    Aditya Menon-14P003
    Gourav Baldewa-14P016
    Madhurya N S P-14P026
    Piyush Bagdi- 14P032
    Sambit Chaudhury- 14P041
    Udit Upreti- 14P056

    Banking sector - Overview


    RBI

    Commercial Banks

    Institutional Banks

    Specialized Banks

    Non Banking
    Financial
    Companies (NBFCs)

    Co-operative Banks

    Nationalized Banks

    IFCI

    Housing Finance

    NBFC MFI

    Central Cooperative Banks

    Private sector
    banks

    SFCs

    NABARD

    Loan Companies

    State Co-operative
    Banks

    Foreign Banks

    IRBI

    EXIM Bank

    Asset Finance
    Companies

    Primary Credit
    societies

    Banking Sector - Overview


    India considered among top economies of the world with tremendous potential for
    banking sector to flourish.
    Passing of the banking laws amendment bill duly changed the landscape of banking
    sector in India
    The sector expected to create up to two million new jobs with expansion into rural areas
    in next 5-10 years
    Banking assets totaled nearly $1.8 trillion FY 2013 and expected to touch $28.5 trillion
    by FY 2025
    Bank deposits have grown at an average annual CAGR of 21.2 percent over FY 2006-13 ;
    credit grew at 22.8 percent in the same period
    Credit to housing sector grew at a CAGR of 11.1 percent during FY 2008-13
    Total banking sector credit expected to grow at a CAGR of 18.1 percent and to reach $2.4
    trillion by 2017
    Indian banking to become the fifth largest globally by 2020 and third largest by 2025

    Evolution of Indian Banking sector


    1921

    Closed market
    State owned Imperial bank of India was the only bank existing
    in the country

    1935

    RBI established as the central bank of country


    Quasi central role of Imperial bank came to an end

    1936-1955

    Imperial bank expanded its network to 480 branches


    To increase penetration in rural areas, Imperial bank converted
    to State bank of India

    1956-2000

    Nationalization of 14 large commercial banks in 1969 and 6


    more banks in 1980
    Entry of private players like ICICI intensifies competition
    Gradual technology upgradation in PSU banks

    2000 onwards

    Number of banks increased to 26 public sector banks, 21


    private sector banks and 43 foreign banks
    Advent of mobile and internet banking
    Growing FDI in India banking sector

    RBI Controller of Credit


    Quantitative (quantum) and Qualitative (quantum + purpose) measures
    Bank Rate Rate at which RBI lends to commercial banks (Dear and Cheap Money Policy)
    Cash Reserve Ratio (CRR) Proportion of total deposits ( demand + time) which a commercial bank has to keep with RBI as
    reserve
    Open Market Operations Selling/purchasing of govt. securities by RBI to absorb/inject liquidity
    Statutory Liquidity Ratio (SLR) Proportion of total deposits to be maintained in the form of liquid funds mainly govt.
    securities, cash or gold.
    Repo Repurchase options exercised by RBI since 1992, whereby the RBI buys govt. securities from banks for a very short
    period, generally overnight with a promise of selling them back
    Reverse Repo Rate RBI sells/deposits govt. securities with banks for a very short period, generally overnight with a
    promise of buying them back
    Marginal Standing Facility (MSF) introduced in May 2011, under which RBI provides loans to banks which are in need of
    emergency funding on overnight basis, upto 1 % of total deposits of the bank
    Credit Rationing, Variation of Margin Requirements, Moral Suasion, Publicity and Direct Action
    Banks are required to lend to the priority sectors to the extent of 40% of their advances
    In order to contain rupee depreciation, RBI has taken slew of measures resulting in the tight liquidity situation for the
    banks.

    ICICI Bank - About


    Indias largest private sector bank in India headquartered in Vadodara; among the big four in
    India
    Has a network of 3,753 branches and 11,292 ATMs in India; presence in 18 countries; employs
    nearly 72,226 people
    Total assets of Rs. 5,946.42 billion and PAT Rs. 98.10 billion for the year ended March 31, 2014
    Chairperson is K V Kamath and Managing Director is Chanda Kochhar
    ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and
    was its wholly-owned subsidiary
    In 1999, ICICI become the first Indian company and the first bank or financial institution from
    non-Japan Asia to be listed on the NYSE
    The Bank, together with its subsidiaries, joint ventures and associates, is a diversified
    Financial services group providing a range of banking and financial services. It operates under
    four segments: retail banking, wholesale banking, treasury and other banking.
    Offers a wide range of banking products and financial services to corporate and retail
    customers in the areas of investment banking, life and non-life insurance, venture capital and
    asset management

    Axis Bank
    Axis Bank is the third largest private sector bank in India; headquartered in Mumbai, Maharashtra
    Has a network of 1947 domestic branches and 12,292 ATMs spread across India; also has
    overseas offices in Singapore, Hong Kong, Shanghai, Colombo, Dubai and Abu Dhabi
    Chairman is Dr. Sanjiv Mishra and Managing Director is Shikha Sharma
    Total assets of Rs. 3832.44 billion and PAT Rs.62.17 billion for the year ended March 31, 2014
    Employs nearly 42,420 people
    The Bank was promoted in 1993, jointly by Specified Undertaking of Unit Trust of India (SUUTI)
    (then known as Unit Trust of India), Life Insurance Corporation of India (LIC), General Insurance
    Corporation of India (GIC), National Insurance Company Ltd, The New India Assurance Company
    Ltd, The Oriental Insurance Company Ltd and United India Insurance Company Ltd
    Offers the entire spectrum of financial services to customer segments, covering large and midcorporates, MSME, agriculture and retail businesses


    =

    Current Assets include Cash in hand, Balances with RBI, Balances with
    banks and money at call and short notice.
    Current Liabilities include Demand deposits from banks and others,
    savings bank deposits and term deposits from banks and others.

    Current Ratio ICICI BANK vs AXIS BANK


    0.16

    0.1418

    0.1415

    0.14

    0.1251

    0.12

    0.1005

    0.1

    0.08

    0.0809
    0.06

    0.0633
    0.04

    0.02

    0
    2011-12

    2012-13
    ICICI BANK

    AXIS BANK

    2013-14

    +
    =

    The cash and bank balances have to be considerably brought down
    taking advantage of the improved telecommunication system and
    facilities provided by the Reserve Bank.
    Since the culture of ATMs has been spreading fast, no doubt the banks
    need to maintain hard cash to meet the demands of customers.

    CASH TO DEPOSITS RATIO ICICI BANK vs AXIS BANK


    0.09
    0.08

    0.0801

    0.07

    0.0651

    0.0657
    0.0607

    0.06
    0.05
    0.04

    0.0486

    0.0586

    0.0475
    0.04

    0.04
    0.03
    0.02
    0.01
    0
    2011-12

    2012-13

    ICICI BANK

    AXIS BANK

    2013-14

    CRR

    Capital Adequacy Ratio (CAR)


    Ratio of capital fund to risk weighted assets expressed as percentage
    1 + 2
    =

    CAPITAL ADEQUACY RATIO - ICICI BANK vs AXIS BANK


    25

    19.41

    20

    19.5
    18.5

    18.74

    19.08

    15.53
    17
    15

    15.8

    13.69

    16.07

    12.65

    13.66

    10

    0
    2008-09

    2009-10

    2010-11
    ICICI BANK

    2011-12
    AXIS BANK

    2012-13

    2013-14

    Advances to Total assets Ratio


    Ratio of advances made by the bank to the total assets of the bank
    Advances to total assets ratio = Advances
    Total Assets
    Advances given in the form of cash credit, bank overdraft and loan
    payable

    Advances to Total Assets ratio ICICI BANK vs AXIS BANK


    0.62

    0.6003

    0.6

    0.5943
    0.58

    0.5784

    0.56

    0.5407

    0.54

    0.54

    0.5326
    0.52

    0.5

    0.48
    2011-12

    2012-13

    ICICI BANK

    2013-14

    AXIS BANK

    BASEL 3 NORMS LCR & NSFR


    Basel Committee on Banking Supervision (BCBS) released a comprehensive
    reform package in Dec 2010.
    Provided a regulatory framework for banking systems throughout the
    world in order to make them more resilient and robust.
    Introduced LCR (Liquidity Coverage ratio) and NSFR (Net Stable Funding
    Ratio)
    LCR defines how much liquid assets have to be held by a financial
    institution
    NSFR establishes a minimum acceptable amount of stable funding based
    on the liquidity characteristics of an institutions assets and activities over a
    one year horizon.

    Thank You

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