Are Indian Nationalised Banks Strong Enough to Face Present Economic Down Turn?

Topics: Bank, Banks of India, Government-owned banks in India Pages: 9 (2857 words) Published: July 21, 2012
Assoc. Prof. and Head MIT COE’s CMSR

Abstract: In any economy, banks assume a greater importance as they perform much higher role in the total economy than any other factor. Banks are backbone of any economy. The researcher in this paper has proved that how economic ups and downs reflect overall performance of banks. Performance of banks depend on three counts i.e. Ratio of Non Performing Assets, Profitability, and Capital Risk Adequacy Ratio. The whole world was affected during the downturn of 2008-9 due to recession in US. The world is again gripped with a fear of recurrence of the past as the most of the European countries are facing another downturn of sorts. US have already initiated the steps to be taken against the economic slump. Indian banks which survived the earlier downturn quite robustly are again getting sketchy as their results have started rolling out. In this research paper, the researcher has studied position of Key Indian Nationalised Banks on the three counts mentioned above and also the position of banking system as a whole Key Words: Economic Downturn, Indian Banks, NPA, CRAR, Profitability.

Globalisation is inevitable if one has to survive in the present era. However, globalisation brings its perils which at times seem to be overweighing the advantages. During past five years, the whole world is witnessing one more downturn round the corner. The economic environment on a macro level has become particularly turbulent. Rebalancing of changing risk perceptions and appetite have resulted due to a direct effect of global conditions. Over the past two years, the performance of the major advanced economies has raised significant concerns about sustainability of the global recovery. In fact, by contrast, emerging market economies have generally shown reasonable growth, suggesting that their domestic drivers and increasing linkages with each other have provided some offset to the slower growth in advanced economies. The concerns have been heightened due to periodic sovereign debt pressure in Europe or growth volatility in US. The European debt problem has unquestionably been the dominant global factor over the past few months, which has in turn caused a volatility in the global economies and more particularly ours. The impact of this recent global instability on India has been enormous. However, are Indian banks well placed to pose the onslaught of the global slowdown is a matter of concern, the Indian Economists are facing. The Finance Minister has categorically denied any collapse of economy however, global tremors are going to cause some concern, though, as accepted by him recently. On the backdrop of this situation, the researcher has studied some key indices of Indian Banking System, mostly nationalised banks, as they constitute more than 50% of bank branch spread all over the country. Table No. 1

No. of Nationalised Bank Branches as of Mar. 2010
Sr. No.| Name of the Bank| Branches on 31.3.2010|
1| Allahabad Bank| 2260|
2| Andhra Bank| 1371|
3| Bank of Baroda| 3000|
4| Bank of India| 2644|
5| Bank of Maharashgtra| 1292|
6| Canara Bank| 2542|
7| Central Bank of India| 3228|
8| Corporation Bank| 906|
9| Dena Bank| 423|
10| Indian Bank| 1657|
11| Indian Overseas Bank| 1956|
12| Oriental Bank of Comm.| 1148|
13| Punjab and Sind Bank| 813|
14| Punjab National Bank| 4525|
15| Syndicate Bank| 2600|
16| UCO Bank| 2000|
17| Union Bank of India| 950|
18| United Bank of India| 1325|
19| Vijaya Bank| 948|
| Total Bank Branches| 35588 (69781)|
Source: Various Bank websites

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