Project for General Awarness related to banking sector and capital formation.

1. By:-
1. Isha Desai
2. Bhavika Oswal
3. Prachi Borana
4. Prajakta Pawale
5. Shobika D
6. Ronak Somani
7. Ankit Otwal
Current Trends In Banking Sector

2. ROAD MAP FOR PRESENTATION
 Introduction
 Some main features of banks.
 Overview ( current scenario) of our banking sector.
 Current trends in various sectors in relation with banking
sector :
1. Industry
2. Small scale sectors.
3. Agriculture.
4. E-commerce and banking.
5. FOREX
 Impact of Union Budget’14 on banking sector.
 Role of RBI
 Conclusion

4. SOME MAIN FEATURES

5. CAPITAL FORMATION

6. PROCESS
Banks
Creation of
investment
Mobilization
of savings
Creation
of savings
Money
Market
Capital
Market
Short term funds Long term funds
Whatever is left
after spending
Financial
Market
When money
is used in the
process of
making
Copyright : Sucharit Rajadhyaksha

7. CAPITAL FORMATION (CONT..)
 It means a sustained increase in the stock of real
capital in a country.
 Bank savings are being channelized into productive
investment.
 It helps in creation of capital goods and instruments
, machines , transport facilities, plant and
equipments.
 This leads to economic development of our country.

8. FUNCTIONS OF BANKS
 They also create new demand deposits in the process of
granting loans and purchasing investment securities.
 They facilitate trade both inside and outside the country
by accepting and discounting of bills of exchange.
 The banks can play an important role in controlling
speculation in maintaining a balance between
requirements and availabilities and in direct physical
resources into desired channels.
 It helps regulate the money supply in the markets which
helps in controlling trade cycles of economy.

9. OVERVIEW OF INDIAN BANKING SECTOR
 Commercial and Co-operative banks
 170 commercial banks and 166 scheduled.
 85, 000 branches and 45,000 ATMs
 35,000 centers out of 675,000 habitats.
 660 mn deposit and 110 mn credit accounts
 Deposits: Rs. 48 trillion
 Credit : Rs. 35 trillion
 Employment :1 million

10. GROWTH IN INDIAN BANKING
ASSETS
0
100
200
300
400
500
600
700
800
900
1000
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
8
201
0
Growth In Assets (US $
billions)
256 285 342 374 448 535 616 850 1000
Growth In Assets (US $ billions)

11. 1.INDUSTRY AND BANKING

12.  Traditionally, this business was divided into short-term and
Long-term segments, with banks providing short-term
operating capital, and development financial institutions
supplying long-term facility capital.
 The percentage of short-term lending for infrastructure and
further developmental purposes has shrunk from 82.5% at
the end of March 1995 to 46.1% at the end of March 2007.
 At 15.4%, the average yearly increase in credit to industry
was lower in the 1990s than in the 1980s, and the rate of
increase has not been especially high in recent times. As a
result, the amount of credit provided to industry has also
declined gradually as a percentage of total bank credit. This
is not a desirable trend from the viewpoint of support for
economic growth.

13. 2. SMALL SCALE SECTOR AND BANKING

14.  Small and medium enterprises (SMEs), account for over 40% of
added value and around one-third of exports.
 Until the 1960s, bank credit was limited to large enter- prices and
urban borrowers.
 After the nationalization of banks in 1969, the government created
schemes of priority sector lending in 1972 with the aim of
expanding the availability of credit to the other segments of
borrowers. SMEs were identified as one of the priority sectors for
these schemes.
 Due to the low rate of increase in credit to SMEs, this sector’s share
of total bank credit has tended to fall, and the number of accounts
regarding loans to SMEs has fallen from 5.8 million in March 1992
to 1.9 million in March 2007. The broadening of definitions of
priority sectors also led to a decline in credit to SMEs as a
percentage of total priority sector lending, from 43.7% in March
1998 to 18.6% in March 2007, though this share had recovered to
26.6% by March 2009. The fundamental reason for this lack of
growth in credit to SMEs is the low growth rate of SMEs, which is
reflected in a relatively high percentage of NPAs.

15. 3. AGRICULTURE AND BANKING

16.  Step up credit delivery to the agriculture sector, particularly for
small & marginal farmers in aggregation models, investment credit
and for value addition in the sector
 Some recent stats :
0
10
20
30
40
50
60
70
1980's 1990's
Long-term 38.4 61.64
Short-term 35.8 64.2
Share of short-term and long-term
credit to agriculture

17.  Small farmers are getting to way to expand
 Villagers who want to migrate to urban areas are now getting
a easy way to loans
 Rural areas are now connecting t urban areas
 the youth is getting employment opportunities
 Easy educational loans for the young ones to nourish
 Farmers are getting a chance to connect to the world at large.
 Farmers are now getting easy loans credit facilities .
 Schemes available for farmers :
1. Kisan Credit Card Scheme.
2. Dairy Vikas Card Scheme.
3. Scheme for financing minor irrigation.
4. PNB Kalyani card scheme.
5. PNB Krishak Sathi scheme (KSS).

18. 4. E-COMMERCE AND BANKING

19.  E-Commerce or Electronic commerce is a process
of buying, selling, transferring or exchanging
products, services, and/or information via
electronic networks and computers.
 E-Banking or electronic banking has led to rapid
growth in e-commerce. Banking and commerce
have come to door steps of people. It is a part
of e-commerce itself.
 Under this, any user with a personal computer
and a browser can get connected to his bank’s
website to perform any of the virtual banking
functions.

20. COMPARISON BETWEEN TRADITIONAL AND E-
BANKING

21. SERVICES OFFERED UNDER E-BANKING
 Answering routine queries
 ATM
 Bill payment services
 Electronic Clearing System (ECS)
 Electronic Fund Transfer (ETF)
 Credit card customers
 Shopping
 Track records of all transactions in real time.

22. THE INDIAN SCENARIO (FACTS AND
FIGURES)
 11 banks in India are currently providing internet banking
services at different levels and 22 banks propose to offer
internet banking in the near future.
 Graphical representation of banking activities :-

23. .
39%
61%
Usage of E-banking
Not Using
Using

24. 5.FOREX

25.  Active engagement in global trade has become one of the key
factors in the growth of firms and the prosperity of countries.
 Export-Import Bank of India (Exim Bank), set up in 1982 as an
apex ffinancial institution to finance, facilitate and promote
India’s international trade.
 Facilitating inclusive globalization.
 Export Capability in small and medium enterprises , grassroots
business enterprises and agro industries.
 In terms of globalized trading , it has 176 India ventures set up
by over 147 companies in 54 countries , in both industrial and
developing as well as emerging economies
 Most of the forex activity is ‘Export Credit Agencies’ , our banks
operative ‘Lines of Credit’ (LOC) of over 70 with credit commitment of
US$ 2.3 billion covering more than 80 countries.
 Banks have also played a pivotal and pioneering role in software
exports since mid 1980’s e.g. Infosys’s Pinnacle banking software.

26. BUDGET ‘14 IMPACTS

27.  Increased the cap on foreign direct investment (FDI) in
the insurance sector to 49%.
 Set aside Rs11,200 crore for recapitalization of public
sector banks by the way of shares outflow.
 Priority lending : six debt tribunals to be set up for
recovery of stressed assets.
 Banks to be encouraged to extend long term loans to
infrastructure sector with flexible structuring.

28. ROLE OF RESERVE BANK OF INDIA (RBI)

29.  It helps in making of the monetary policy of our
country.
 With the help OMOs and different measures of RBI
, it helps in controlling cash flows and economic
balance.
 Through selective measures it focuses on
development of particular economic sectors.
 Banks are under direct control of RBI because of
which exploitation of small scale sector and
agriculture has declined gradually.

30. CONCLUSION
 It is sure that the future of banking will offer more sophisticated
services to the customer with continuous product and process
innovation.
 Thus, there is a paradigm shift from the seller’s market to buyer’s
market in the industry and finally it affected at the bankers level
to change their approach from “conventional banking to
convenience banking.”
 Banking sector is progressing with increased growth in customer
base. FDI has provided a great fillip to the whole of banking
sector as banks are now competing at the global level.
 India’s banking industry could be the fifth largest banking sector
globally by 2020 and third largest by 2025.
 These days banks in India are turning their focus to servicing
clients and improving their technology. The popularity of internet
and mobile banking is at all time high with customer relationship
management and data warehousing anticipated to drive the next
wave of banking technology in the country.

31. THANK YOU
PPT by : Isha Desai