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Big bank merger, bigger expectations Aadhaar, niraadhaar and banking The paradox: clamour for the Goliath and David Insatiable appetite for credit Too big to fail and too small to sail Reaching the Unreached… Banking overhauling or reorganisation? Good, bad and ugly Who is the real beneficiary? Needed a Banking Atlas Cradle of banks to a smart city... What is the priority – mergers or NPA reduction? Bottomlines shrink, bad loans rise... Two banks: their jubilees and performances Why any time money? From lazy banking to easy banking One down in private sector How ‘secure’ are the secured loans? A bank for women, by women Bank deposits account for 46.3 per cent of household savings Drop in SLR- sparing lendable resources Grows Bigger Growing gainfully Small is ‘more’ beautiful Another route for achieving financial inclusion Mega merger is on Merger mania haunts banks Targets continue to be ad hoc LVB- A supermarket of financial services Payment banks have arrived Fund healthcare clinics in villages... Rationalised Hesitancy in announcing year-end results Well-lived... New capitals of Migrant banks Ernakulam excels... Small finance banks offer high interest rates Governance in Reverse Gear? Reaching out: is it slowing down? It’s a war on black money, support it. Perhaps small is more beautiful than big! Financial inclusion vs unclaimed deposits Capital base of regional rural banks raised Banking on Risk Anytime banking to anywhere banking Banking in Telangana Growing volume of stressed assets… New bank licences, at last... The collaboration suite of cyber criminals Managing NPAs... Ferrying digital banking to Lakshadweep All that glitters is not gold... Greet Lakshmi the banking robot A development bank for BRICS Just 660 days! Target over-ambitious... How okay are new banks? Holy or unholy? Nothing much can happen…. Stage set for Indian ‘avatar’ of foreign banks Small finance payment banks... Thirty more cities seek to become SMART Why priority status? Cautious and considerate Smart banking in smart cities Monetary policy continues to adopt dis-inflationary path Emerging crisis United India Insurance - Rs 110 crore losses have been claimed till now due to floods in Tamil Nadu Indian customers are tech savvy Drastic decline in asset quality Cut in repo rate – lower than expected A new development bank rising in the east… Lacklustre credit expansion
 
Drastic decline in asset quality
The Financial Year 2015 was replete with lack lustre performance of the banking sector.

Working under the growing stress of stressed assets of the major industrial sectors, many banks have found it difficult to maintain growth in their net profits. While quite a few have tried to maintain their bottom lines, one of them has slipped into red. There was deceleration in the rates of growth of both total deposits mobilised and total credit lent.

Deposits grew at 10.7 per cent in FY2015 as against 13.9 per cent during the previous year. As far credit expansion, it has declined to 9.8 per cent from 13.8 per cent. A surprising revelation is that the annual growth rate of credit deployment was higher at 14.7 per cent in the rural branches, compared to 8.5 per cent in the metros.

Reserve Bank of India in its Financial Stability Report of June 2015 has unequivocally expressed concern about the deterioration in the health of bank assets. It states, “macro stress tests suggest that current deterioration in the asset quality of SCBs may continue for few more quarters and PSBs may have to bolster their provisions for credit risk from present levels, to meet the ‘expected losses’ if macroeconomic environment were to deteriorate under assumed stress scenarios.”

One area of business where all banks have taken great interest is the efforts made to reach out to the unreached under the PM Jan Dhan Yojana. According to published data, 16.43 crore new accounts were opened till June 2015, of which 9.9 crore accounts were opened in rural areas. The amount of deposits mobilised through these new accounts is Rs.19,015 crore. Undoubtedly,  it is a remarkable achievement.

 

Stunted business growth

At the macro level, business growth has been moderate. Increase in total business was not very high, though a few banks were operating with a credit-deposit ratio ranging between 70 and 86 per cent. SBI has maintained its unique position by expanding its total business to Rs. 29,12,217 crore. Bank of Baroda is the second public sector bank to cross the total business level of Rs 10 lakh crore. With its business level of Rs. 943,633, Bank of India has improved its rank to the third position. Out of 26 public sector banks, 12 are managing with a business level less than Rs.2 lakh crore. Among the new generation private sector banks, out of six banks three are in this group. As far as the old generation banks are concerned. Two crossed the business level of one lakh crore rupee out of 12.

A notable feature of development during FY 2015 was the expansion of branch network; adding 10,041 new branches, of which 4392 were located in rural areas. This accelerated move into rural areas is induced by the efforts to reach out to the unreached. As a result, the total number of bank branches has gone up to 125,863 and along with this, the number of ATMs has crossed 181,398. It is interesting to note that the volume of transactions, particularly in the off-site ATMs and the POS terminals is increasing steadily. Bank of India, which was not seen outside metropolitan centres till bank nationalisation, has reported to have now 38 per cent of its branches located in rural areas covering 22,824 villages. Only a few among the old generation banks could match the rural presence of this nature.

 

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