Pandora of Knowledge

State Bank of India, Reserve Bank of India, Porter five forces analysis

APRIL 2012

The Indian banking sector has emerged as one of the strongest drivers of India’s economic growth. The Indian banking industry (US$ 1.22 trillion) has made outstanding advancement in last few years, even during the times when the rest of the world was struggling with financial meltdown. India's economic development and financial sector liberalization have led to a transformation of the Indian banking sector over the past two decades. Today Indian Banking is at the crossroads of an invisible revolution. The sector has undergone significant developments and investments in the recent past. Most of banks provide various services such as Mobile banking, SMS Banking, Net banking and ATMs to their clients. Indian banks, the dominant financial intermediaries in India, have made high-quality progress over the last five years, as is evident from several factors, including annual credit growth, profitability, and trend in gross non-performing assets (NPAs). While annual rate of credit growth clocked 23% during the last five years, profitability (average Return on Net Worth) was maintained at around 15% during the same period, while gross NPAs fell from 3.3% as on March 31, 2006 to 2.3% as on March 31, 2011. The Indian banking sector is a mixture of public, private and foreign ownerships. The below table highlights top 10 banks which contributed 58% share of the total credit as on March 31, 2011. The State bank of India has recorded highest market share. The Net Interest Margin of HDFC Banks is 4.2% which is highest among others. Name of Bank Credit Portfolio (Rs.Bn) – Mar 2011 7567 2421 2287 2164 2131 2125 1600 1571 1424 1297 Market Share (%) NIM (%) Mar-11 Tier I Capital (%) - Mar 2011 RONW (%) Mar - 11 Gross NPA(%) Mar 11 3.3 1.8 1.4 4.5 2.2 1.5 1.1 1.8 1.1 2.2

State Bank of India Punjab National Bank Bank of Baroda ICICI Bank Bank of India Canara Bank HDFC Bank IDBI Bank Axis Bank Central bank of India Source : Annual Report, ICRA...
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