Banking Challenges India

7/30/2019 Banking Challenges India

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Asset liability management, loan procedure

current issues and challenges in banking

industry

Group 7:

Pankhil Shikha (39)

Ravil Patel (44)

Rishabh Diwakar (45)

Rohan Bhardwaj (46)

Samarth Mewada (48)

S c h o o l o f P e t r o l e u m M a n a g e m e n t

Submitted to

Prof. Ashish Shah

26th Aug 2013


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Interest

Rate Risk

Credit

Risk

LiquidityRisk

Risks managed under

ALM


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Tools used by banks for ALM

ALM information systems

ALM Organization

ALM Process


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New Developments in Micro financing

Alifinance, or Alibaba Financial

SME financing arm of Chinese e-commerce firmAlibaba Group

A credit payment service to its 80 million users (up to 5,000 yuan)

To use the service - pay a 1 percent service fee on credit payments

More than 130,000 small and micro-sized enterprises have borrowed atotal of 28.2 billion yuan from Aliloan since April 2010, with only 0.71

percent of the total amount not paid back.
http://www.ebridges-china.com/en/e-commerce-in-china/alibabahttp://www.ebridges-china.com/en/e-commerce-in-china/alibaba


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Government initiatives

Consolidation of some large banks to create two-three global ones.

Setting up of smaller banks, separate licenses for specific banking

operations instead of a single universal one.

Continuous licensing for new banks and conversion of some urbancooperative banks into full-fledged commercial banks

Relaxed the norm that stipulates non-banking finance companies(NBFCs) to have a minimum gap of six months between two non-convertible debentures (NCDs) issues


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Challenges in Banking Sector

1. Compliances with Basel III norms

CAR

Tier I capital 9% from 8%

Tier II capital 2.5%

2. Asset Quality Deterioration

Economic Slowdown

Elevated Interest rates

Mass restructuring of electricity boards and

infrastructure sector.


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Asset Quality

Source: RBI annual Report


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Kingfisher NPAs SBI consortium of 17 banks total loan exposure 7500 crore

SBI alone 1600 crore.

Slow Manufacturing growth

Poor performance of Infrastructure sector

3. Falling Net Interest Margins Decreased from 3.14% to 3.07 %

Reasons for NPAs


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As per census 2001 As per census 2011

Total

number of

households

Number of

households

availing

banking

services

Percent

Total

number of

households

Number of

households

availing

banking

services

Percent

Rural 138,271,559 41,639,949 30.1 167,826,730 91,369,805 54.4

Urban 53,692,376 26,590,693 49.5 78,865,937 53,444,983 67.8

Total 191,963,935 68,230,642 35.5 246,692,667 144,814,788 58.7

Source: Financial Inclusion ,Dept. of Financial services, Ministry of Finance

4. Financial Inclusion


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Steps to ensure Financial Inclusion

Aadhar Card

Opening of no-frills accounts

Relaxation on KYC norms

New banking licensing (after 1992)

Mandatory % of branches in rural areas

GCC General purpose credit card facility


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Documents

Banking Challenges India