Business Quest

14 February 2013

Banking Sector in India

Indian Banking Sector: Brief Introduction

Existence of an efficient banking system is paramount for achieving economic growth as banks are the mechanisms that channel the savings to investments. They have the capacity to promote economic growth as they allocate savings to those investments which have potential to yield higher returns.

With 86 scheduled commercial banks, 82 regional rural banks, 1,645 urban cooperative banks (53 scheduled cooperative banks) and 95,765 rural cooperative banks, India's banking system is a robust one and has proved its mettle by standing unaffected during the recent global financial turmoil.

Key Statistics

According to the Reserve Bank of India (RBI)'s 'Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks', March 2012, Nationalised Banks accounted for 53.0 per cent of the aggregate deposits, while the State Bank of India (SBI) and its Associates accounted for 21.8 per cent. The share of New Private Sector Banks, Old Private Sector Banks, Foreign Banks, and Regional Rural Banks in aggregate deposits was 13.0 per cent, 4.8 per cent, 4.4 per cent and 3.0 per cent, respectively

Nationalised Banks accounted for the highest share of 52.0 per cent in gross bank credit followed by State Bank of India and its Associates (22.5 per cent) and New Private Sector Banks (13.5 per cent). Foreign Banks, Old Private Sector Banks and Regional Rural Banks had shares of around 4.8 per cent, 4.8 per cent and 2.4 per cent, respectively
Another statement issued by the RBI revealed that foreign exchange reserves stood at, US$ 294.99 billion for the week ended January 4, 2013 wherein the value of gold reserves was recorded at US$ 27.21 billion and that of foreign currency assets (FCAs) was at US$ 261.06 billion

The value of special drawing rights (SDRs) was US$ 4.40 billion and the country's reserve position with the IMF was at US$ 2.30 billion
The number of mobile banking transactions in India has also increased by 6.39 per cent to 47, 20, 871 during November 2012, up from 44, 37, 205 recorded in October 2012, according to the RBI, wherein the total amount transacted showed a boost of 8.3 per cent

Recent Developments

In order to curb the risk of exchange rate volatility and ensure compatible relations among the banking systems of two countries, the Government of India (GoI) has directed state-run banks to encourage local currency payments for bilateral trade transactions. Under the proposed mechanism, Indian exporters will be allowed to issue invoices and receive payments in Indian rupees while payments for imports will be made by the partner country's bank in its local currency
The Small Industries Development Bank of India (SIDBI) has partnered with eight regional rural banks (RRBs) and urban co-operative banks in West Bengal. The scope of agreements includes training the staff of RRBs and co-operative banks in project appraisal, monitoring and collection as also providing free access to software on a down-scaling methodology developed for lending to micro enterprises
Indian Overseas Bank (IOB) has signed a memorandum of understanding (MoU) with Deutsche Bank for using its cross-currency payment solution namely FX4Cash to offer cash management services across 125 local currencies in more than 160 countries. The move would facilitate streamlined automated process for forex dealing and payments to the bank
In a bid to double its business turnover in the next three years and thereby clock an annual growth rate of 25 per cent to 30 per cent, the Karnataka Bank Ltd has signed an MoU with management consultant KPMG for its business process re-engineering initiative, named as Project Tejas
Meanwhile, the Export-Import Bank of India (EXIM) has decided to open a representative office in Myanmar in order to increase the bilateral trade between the Northeast India and Myanmar. The opening of the trade link with Myanmar and transit facility with Bangladesh is expected to offer new opportunities for the organic agriculture produce of Northeast India

Government Initiatives

The Indian Government keeps initiating various steps to ensure safe and hassle-free banking in the country. Recently, the RBI has relaxed the mandatory know your customer (KYC) norms for banks in order to make the process of opening a bank account simpler and faster.

Moreover, both the Houses of the Parliament have passed The Banking Laws (Amendment) Bill 2011. The Bill would strengthen the regulatory powers of the RBI Reserve Bank of India (RBI) and would further develop the banking sector in India. It will also help the nationalised banks to raise capital by issue of preference shares or rights issue or issue of bonus shares while enabling them to increase or decrease the authorised capital with approval from the Government and RBI without being limited by the ceiling of a maximum of Rs. 3000 crore (US$ 558.84 million)

Furhermore, the Bill would offer possibilities for new bank licenses by RBI resulting in opening of new banks and branches. This would not only help in achieving the goal of financial inclusion by providing more banking facilities, but would also provide additional employment opportunities to the people at large in the banking sector
The GoI has also approved the establishment of a Credit Risk Guarantee Fund Trust (CRGFT) for low income housing, with an initial outlay of Rs.1000 crore (US$ 186.28 million). The CRGFT, registered on May 1, 2012 and launched on October 31, 2012 would administer and operate the Scheme, which is demand-driven, as stated by Ajay Maken, Union Minister of Housing & Urban Poverty Alleviation (HUPA)

The Minister stated that under the Scheme, the Trust will provide guarantee to lending agencies for housing loans extended by them to persons belonging to the Economically Weaker Sections / Low Income Groups (upto Rs. 5 lakh [US$ 9,313.67]), without any third party guarantee or collateral security

Road Ahead

With the Parliament passing the much awaited Banking Laws Amendment Bill recently, the face of the Indian banking industry is set to get a lift in the coming years as the passage of the bill has paved the way for more banks. This will not only create a healthy competition among the players in the industry, but will also escalate the style of operation and technology.

26 October 2012

The Most Bribed city in India

Bangalore is the most bribed city in India!!

According to statistics released by iPaidabribe.com, Bangalore comes out on top as the most bribed city in India. This is quite a surprising statistic, as one may have thought it would be either of the two metros, Delhi or Mumbai, who would witness maximum amount of corruption!

iPaidabribe.com, is an initiative by Janagraha, encourages Indians to disclose the bribes they pay to anyone. One of the reasons why the finding may be skewed is because it is prepared based on the what people from various cities have disclosed on the website. Bangalore being an IT hub, maximum number of people have made entries from that city and hence the number 1 position. Bangaloreans are at the forefront when it comes to paying bribe to evade a challan for illegal parking; On an average, Bangaloreans pay Rs 378 as bribe to evade an illegal parking ticket. Delhi came second with Rs 350.

Although, the city statistic may be skewed, the report has some interesting finding about the Government departments that lead in taking bribes – Police is by far the most bribed department. Over Rs. 3 Crore of bribes were accepted by Police officials in 5705 instances. Police department was followed by registrations, Municipal Corporations & Vehicle as the next 3 departments who accepted maximum bribes.

You can check out the entire interactive report by ipadabribe.com . Also, if you have paid a bribe, do not hesitate to send a sms or go to their website to disclose the same.

Here is a question to readers, which city do you think is the most bribed city in India – My vote would go to Chennai, what about you?

Media & Entertainment

Introduction

The Indian M&E sector is making significant space for itself on global canvas owing to which many international production houses and business conglomerates are venturing into the country. For instance, Disney’s big stake buy in UTV Software Communications majorly drove the foreign direct investment (FDI) in 2011-12 in the sector, which stood at Rs 32.64 billion (US$ 588.95 million) 72 per cent higher than Rs 18.87 billion (US$ 340.86 million) received in 2010-11.

Television

Healthy advertisement spends coupled with increased penetration in rural and semi-urban areas are propelling the growth of the television sector in India. Emergence of direct-to-home (DTH) technology in a big way has made the television industry mark a value of US$ 7.1 billion by the end of 2011, which was 14 per cent higher than that in 2010.

A report prepared by KPMG, along with an industry body, has stated that while the current level of penetration is estimated at around 60 per cent, there is still a room for expansion in the Indian TV landscape. The report estimates that pay-TV subscription revenue will increase from 65 per cent in 2011 to 69 per cent by 2016.

Radio

While TV is a captive medium, radio allows freedom of movement. Other than being a popular medium with the youth, radio has far-reaching impact on people in remote places.

Recently, Yashwantrao Chavan Maharashtra Open University (YCMOU) has launched an interactive live web-radio from its campus studio in Nashik, Maharashtra. Through this technology, the university intends to connect students from anywhere in the world to experts of various subjects and enable them to listen to lectures, hold discussions and interviews.

Online and Mobile Entertainment

Internet has emerged as one of the strongest mediums to reach out to people, due to better broadband speeds, easy availability and reasonable pricing of internet-enabled devices and awareness among today’s youth. The online viewership of video content is on an upsurge – be it for news or for entertainment (social networking, shopping, et al). Due to this increased popularity, mobile phones have become the second most-viewed screen for Indian consumers. About two crore internet users in India are opting for the service over their mobile phones, according to a study by online audience and ad measurement platform Vizisense.

Social networking sites have also gained a lot of attention over past few years. They reach to about 82 per cent of the world’s online population and the numbers are increasing day by day. India’s small and medium enterprises (SMEs) are also looking to capitalise this medium as social media in the country is growing at 100 per cent and 129.3 million Indians are anticipated to join the forums. SMEs are looking forward to reach and develop a strong consumer base through social networking sites. An industry body has even joined hands with Facebook to organise road shows to spread awareness among SMEs about the benefits of using social media for business transformation.

Films

The Indian film fraternity will complete its century in 2013. The industry is anticipated to grow by 9 per cent per annum till 2015 to reach US$ 2.8 billion, according to Deloitte.

In an effort to make India a hub for international films, the Ministry of Information and Broadcasting (I&B) is contemplating to establish a Film Commission that will initially act as a single-window clearance agency to grant permits for shooting. If the initiative gets materialised, international production houses will save a lot of time and energy which are currently diverted in seeking multiple approvals.

Investments

The Indian advertising industry clocked revenues worth Rs 25,594 crore (US$ 4.62 billion) in 2011, which were 8 per cent higher than the figures achieved in 2010, according to a report by Pitch Madison India.

The fast moving consumer goods (FMCG) sector has numerous brands and categories to offer to consumers. The sector players keep introducing new products and hence, seek sales-support with ads and promos. The industry segment contributes more than half to TV advertising and 9 per cent to the print media.
In order to target multi-tasking and busy viewers, M&E industry major Zee Entertainment Enterprises has launched its over-the-top (OTT) distribution platform called Ditto TV. The new service, which facilitates live TV channels and on-demand video content to users on their mobile phones, tablets, laptops, desktops, entertainment boxes and connected TVs, was launched in Februry 2012 and also offers features such as adaptive streaming, an electronic program guide and a content recommendation application.
Aegis Group has acquired Communicate 2 to merge it with its iProspect global network. Communicate 2 is a specialist performance marketing firm that counts search marketing, digital strategy consulting, social media and digital content production as its forte.
Getit, pioneer of the concept of Yellow Pages in India, has appointed Aidem ventures to handle its corporate advertising sales for next 5 years. Getit has upgraded itself into a digital media firm that specialises in local search and classifieds. It is India’s leading ‘directional media’ service provider that facilitates quality prospects to businesses and brands across the categories. Aidem is an independent media consulting, marketing and advertising, sales company.