17-09-2014, 11:43 AM
An overview & Importance of the banking Sector
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Indian Banking Sector: Brief Introduction
India’s banking sector is currently valued at Rs.81 trillion (US$ 1.31 trillion). It has the potential to become the fifth largest banking industry in the world by 2020 and the third largest by 2025, according to an industry report. The face of Indian banking has changed over the years. Banks are now reaching out to the masses with technology to facilitate greater ease of communication, and transactions are carried out through the Internet and mobile devices.
With the Parliament passing the Banking Laws (Amendment) Bill in 2012, the landscape of the sector will likely change. The bill allows the Reserve Bank of India (RBI) to make final guidelines on issuing new bank licenses. This could lead to a greater number of banks in the country; the style of operation could also evolve with the integration of modern technology into the industry.
Online Banking
IDBI Bank Ltd has started an online Public Provident Fund (PPF) subscription facility for its customers. The bank had already received approval from the government to operationalize PPF transactions through the Internet. The facility would help accomplish the government’s initiative of electronic transactions in banking services, and also provide a strong platform to mobilize funds through the Small Saving Schemes. PPF account holders of the bank will have the benefit of accessing their PPF account online, view account details, print statements, and make subscription to PPF by way of online transfer of funds.
Simple steps such as memorizing personal identification number (PIN), bringing down credit limits on cards, using virtual cards for internet transactions and deactivating transactional services linked to a mobile number can limit bank frauds, according to experts. Changing the password regularly can also save an account from fraud attacks.
Online money transfers and money credited directly to an account are the second preferred mode of inward remittances in India, rising to 22 per cent in fiscal 2013 from 14 per cent in 2009, according to an RBI report. "While electronic wires/SWIFT continue to be the dominant mode of transferring remittances by overseas Indians, in the recent period, there has been a significant increase in the share of remittances transmitted through direct transfer to bank accounts and through online mode," the report stated.
Indian Banking Sector: Brief Introduction
India’s banking sector is currently valued at Rs.81 trillion (US$ 1.31 trillion). It has the potential to become the fifth largest banking industry in the world by 2020 and the third largest by 2025, according to an industry report. The face of Indian banking has changed over the years. Banks are now reaching out to the masses with technology to facilitate greater ease of communication, and transactions are carried out through the Internet and mobile devices.
With the Parliament passing the Banking Laws (Amendment) Bill in 2012, the landscape of the sector will likely change. The bill allows the Reserve Bank of India (RBI) to make final guidelines on issuing new bank licenses. This could lead to a greater number of banks in the country; the style of operation could also evolve with the integration of modern technology into the industry.
Online Banking
IDBI Bank Ltd has started an online Public Provident Fund (PPF) subscription facility for its customers. The bank had already received approval from the government to operationalize PPF transactions through the Internet. The facility would help accomplish the government’s initiative of electronic transactions in banking services, and also provide a strong platform to mobilize funds through the Small Saving Schemes. PPF account holders of the bank will have the benefit of accessing their PPF account online, view account details, print statements, and make subscription to PPF by way of online transfer of funds.
Simple steps such as memorizing personal identification number (PIN), bringing down credit limits on cards, using virtual cards for internet transactions and deactivating transactional services linked to a mobile number can limit bank frauds, according to experts. Changing the password regularly can also save an account from fraud attacks.
Online money transfers and money credited directly to an account are the second preferred mode of inward remittances in India, rising to 22 per cent in fiscal 2013 from 14 per cent in 2009, according to an RBI report. "While electronic wires/SWIFT continue to be the dominant mode of transferring remittances by overseas Indians, in the recent period, there has been a significant increase in the share of remittances transmitted through direct transfer to bank accounts and through online mode," the report stated.
Key Statistics
The revenue of Indian banks increased four-fold from US$ 11.8 billion to US$ 46.9 billion in the period 2001–2010. In that phase, the profit after tax rose about nine-fold from US$ 1.4 billion to US$ 12 billion.
Banking Index with the Sensex (Bankex) that tracks the performance of primary banking sector stocks grew at a compounded annual growth rate (CAGR) of nearly 20 per cent over the period 2003–2012.
Total number of onsite and offsite ATMs of Indian Banks reached 100042 in July 2012.
Recent Developments
The central banks of Japan and India have agreed to a proposal that expands the maximum amount of the Bilateral Swap Arrangement (BSA) between the two countries to US $50 billion. The agreement is for a three-year period (2012–15); the previous size of the BSA was US $15 million. The new agreement will enable the two countries to swap their local currencies against the US dollar for an amount up to US$50 billion.
Public sector banks will soon offer customers insurance products from different companies as against products from one company. The finance ministry has asked public sector banks to become insurance brokers instead of corporate agents. This move was one of the steps stated by finance minister Mr. P Chidambaram in early 2013, as a way to increase insurance penetration.
Citi has promoted Mr. Anand Selvakesari as the head of consumer banking for the Association of Southeast Asian Nations (ASEAN) region. Mr. Selvakesari will continue his present role as Citi’s consumer banking business head in India – a post he has occupied since July 2013 – as well as look after the consumer banking operations in Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam.
Indian Overseas Bank (IOB) has received approval from the RBI to open a second branch in Bangkok, according to the bank’s chairman and managing director Mr. M Narendra. The bank will likely open the second branch before March 31, 2014. Also, the bank is looking to expand its presence. "Our focus is on opening more rural branches and taking banking to villages. We have covered 3,000 villages under the financial inclusion scheme,” said Mr. Narendra.
In an effort to expand its revenue streams, Bank of India (BOI) plans to enter the merchant banking space through BOI Shareholding Ltd. BOI is looking to buy Bombay Stock Exchange’s (BSE) entire shareholding in their joint venture BOI Shareholding Ltd (BOISL). Another reason for BOI’s inclination to foray into merchant baking is to offer a greater range of financial services to its customers.
Conclusion of Central Bank of India:
• Central Bank of India plays important role in achieving economic growth of developing country
• It promotes economic growth with satiability
• It helps in attaining full employment of sources , in overcoming balances of payment disequilibrium in stabilizing exchange rates
• . To cope with external shocks, most developing countries of Asia have undertaken economic reforms and improved their financial systems.
• Some of these countries have also introduced political reforms to develop sound economic policies.
• Given the increasing importance of monetary policy in macroeconomic stability, Central banking and monetary policy and has reviewed contemporary monetary, fiscal and exchange rate policy issues.
• At the risk of some repetition, the remainder of this chapter summarises the key ideas, concepts and principles in central banking and monetary policy that have been covered in this book. CENTRAL BANKING The book has reviewed the evolution and...