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