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Balance Sheet Analysis of Various Constituents of Indian

Financial Sector - A Bird's Eye View

Saket Kumar Sharma *1

Abstract: This paper discusses the structure of Indian Financial Sector. It

presents the analysis of major items of Balance sheets of various constituents of

Indian Financial Sector (i.e. viz. Scheduled Commercial Banks (SCBs), Urban

Cooperative Bank (UCBs), Rural Cooperative Banks (RCBs), Regional Rural Banks

(RRBs), Non Banking Financial Institutions (NBFIs), Non Banking Financial Companies

(NBFCs), Residual Non Banking Financial Companies (RNBCs), and Mutual funds). It

also highlights issues relating to data availability and data gaps with respect to UCBs

and NBFCs.

1 Author is currently working as a Research Officer in Reserve Bank of India. The views expressed in this paper

are those of author alone and not of the institution to which he belongs.

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Introduction

The saving and investment process in an economy is organised around a financial framework

that facilitates economic growth. A well designed financial system promotes growth through

effective mobilisation of savings and their allocation to the most productive uses by either

following a centralized approach or a decentralised approach or a combination of both.

Typically, economies with underdeveloped capital markets adopt a centralized approach,

whereby financial intermediaries mobilise resources from savers and allocate them to

borrowers. Traditionally, banks have played a critical role in the financial intermediation

process as they are able to deal more appropriately with transaction costs and information

asymmetries in a financial system. As financial markets develop, transaction costs and

information asymmetries reduce, the decentralized approach for guiding the saving-

investment process also gains significance, and households with surplus resources

increasingly invest in capital market instruments. The modern economic system depends on a

reliable flow of financing through intermediaries. Modern life requires the smooth operation

of banks, cooperatives, insurance companies, securities firms, capital market institution,

mutual funds, finance companies, non-banking financial companies, pension funds and

Governments. These institutions channel resources from those who save to those who invest,

and they are supposed to transfer risk from those who cannot afford it to those who are

willing and able to bear it. India too has a well-diversified financial system which comprises

of several types of institutions with newer innovative instruments which ultimately foster

soundness of financial sector. India's two decades of economic reforms has brought structural

reforms in Indian financial sector which increased the interdependence among financial

institutions, especially through inter-institutional exposures and payments and settlement

channels. Hence, deterioration in the financial position of any area could therefore get easily

transmitted to the other segments of the financial sector, which may lead to a systemic

problem for financial sector as banks also held inter-bank deposits from a large number of

banks, institutions, financial companies, etc.

Section I describes structure of Indian Financial sector. Section II elaborates about the major

items on the liability side of the Balance Sheet of the various constituents/ segments of

Indian Financial sector viz. Scheduled Commercial Banks (SCBs), Urban Cooperative Bank

(UCBs), Rural Cooperative Banks (RCBs), Regional Rural Banks (RRBs), Non Banking

Financial Institutions (NBFIs), Non Banking Financial Companies (NBFCs), Residual Non

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Banking Financial Companies (RNBCs), and Mutual funds. Section III discusses assets side

of the Balance Sheet of these constituents. Section IV deals with the issues relating to data

availability and data gaps with respect to the financial sector of India. Section V concludes

the paper.

Section I

1. Structure of Indian Financial Sector

Commercial Banks, Cooperative Banks and Non Banking Financial institution are the major

constituents of Indian Financial Sector. Commercial banks (171 in number as on end-

September 20092) can be divided as Scheduled Commercial banks (167 in number as on end-

September 2009), Regional Rural Banks (86 in number as on end-September 20092) and

Non-Scheduled Commercial banks (4 in number as on end-September 20092). Cooperative

banks occupy very significant position in Indian financial sector and they are of two types i.e.

Urban Cooperative Banks (UCBs) and Rural Cooperative Banks (RCBs). UCBs (1721 in

number as on end-March 20093) can be subdivided into Scheduled UCBs (53 in number as

on March 20092) and Non-Scheduled UCBs (1668 in number as on end-March 2009

2).

Rural cooperative credit institution (96061 in number as on end-March 20084) is bifurcated

into short-term and long-term structure. Short-term cooperative structure (95344 in number

as on end-March 20083) is a three tier structure having State Cooperative Banks (StCBs) (31

in number as on end-March 20083) at the apex level followed by District Central Cooperative

Banks (DCCBs) (371 in number as on end-March 20083) at the intermediate district level

followed by Primary Agricultural Credit Societies (PACS) (94942 in number as on end-

March 20083) at the village level. This structure is often referred to as federal structure of the

short term credit cooperatives. The long term cooperative (717 in number as on end-March

20083) structure has the State Cooperative Agriculture and Rural Development Banks

(SCARDBs) (20 in number as on end-March 20083) at the apex level followed by the

Primary Cooperative Agriculture and Rural Development Banks (PCARDBs) (697 in number

2 Source: Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks: September, 2009, RBI.

3 Source: Report on Trend and Progress of Banking in India 2008-09.

4 Source: Report on Trend and Progress of Banking in India 2008-09.

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as on end-March 20083) at the district or block level. This is also referred to as federal

structure of the long term credit cooperatives.

The Non-Banking Financial Institutions (NBFIs) are providing medium to long-term finance

to different sectors of the economy and they play an important role by complementing banks

in providing a wide range of financial services. NBFIs are more heterogeneous group,

functionally as well as in terms of size and nature of activities. The major intermediaries that

are included in the NBFI group are Development Finance Institutions (DFIs), insurance

companies, non-banking financial companies (NBFCs), primary dealers (PDs) and capital

market intermediaries such as mutual funds. Based on the major activities undertaken by FIs,

they are classified into three broad categories.

� First, there exists the term-lending institution - EXIM Bank, whose main activity is

direct lending by way of term loans and investments.

� Second, there are refinance institutions such as National Bank for Agriculture and

Rural Development (NABARD), Small Industries Development Bank of India

(SIDBI) and National Housing Bank (NHB), which mainly extend refinance to banks

as well as NBFIs.

� In the third category, there are investment institutions such as Life Insurance

Corporation of India (LIC), which deploy their assets largely in marketable securities.

State/regional level institutions are a distinct group and comprise State Financial

Corporations (SFCs), State Industrial and Development Corporations (SIDCs) and North

Eastern Development Finance Corporation Ltd. (NEDFi). Some of these FIs have been

notified as Public Financial Institutions by the Government of India under Section 4A of the

Companies Act, 1956. As on March 31, 2009, there were four FIs viz., EXIM Bank,

NABARD, NHB and SIDBI which were under full-fledged regulation and supervision of the

Reserve Bank. Industrial Investment Bank of India (IIBI), a financial institution with its

headquarters at Kolkata is in the process of voluntary winding up in view of its very poor

financial position.

A Non-Banking Financial Company (NBFC) is a company registered under the Companies

Act, 1956 and is engaged in the business of loans and advances, acquisition of

Shares/stock/bonds/debentures/securities issued by Government or local authority or other

securities of like marketable nature, leasing, hire-purchase, insurance business, chit business

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but does not include any institution whose principal business is that of agriculture activity,

industrial activity, sale/purchase/construction of immovable property. A non-banking

institution which is a company and which has its principal business of receiving deposits

under any scheme or arrangement or any other manner, or lending in any manner is also a

non-banking financial company (Residuary non-banking company). NBFCs are doing

functions akin to that of banks; however there are a few differences which are as follows:

� An NBFC cannot accept demand deposits;

� An NBFC is not a part of the payment and settlement system and as such an NBFC

cannot issue cheques drawn on itself; and

� Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is

not available for NBFC depositors like banks.

Non-Banking Financial Companies (NBFCs) broadly fall into three categories, viz., (i)

NBFCs accepting deposits from the public; (ii) NBFCs not accepting/holding public deposits;

and (iii) core investment companies (i.e., those acquiring shares / securities of their group /

holding / subsidiary companies to the extent of not less than 90 per cent of total assets and

which do not accept public deposit). Originally, NBFCs registered with RBI were classified

as: 1) Equipment leasing company; 2) Hire-purchase company; 3) Loan company; 4)

Investment company. However, with effect from December 6, 2006 the above NBFCs

registered with RBI have been reclassified as: 1) Asset Finance Company (AFC) 2)

Investment Company (IC) 3) Loan Company (LC).

Section II

2. Resources Mobilised by Indian Financial Sector

In any economy, the financial sector plays a major role in the mobilization and allocation of

savings. Banks, Financial Institutions, instruments and markets which constitute the financial

sector act as a conduit for the transfer of financial resources from net savers to net borrowers,

i.e. from those who spend less than they earn to those who earn less than they spend. The

financial sector performs its basic function through a number of ways by liability- asset

transformation (i.e., accepting deposits as a liability and converting them into assets such as

loans), size transformation (i.e., providing large loans on the basis of numerous small

deposits); maturity transformation (i.e., offering savers alternative forms of deposits

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according to their liquidity preferences while providing borrowers with loans of desired

maturities); and risk transformation (i.e.; distributing risks through diversification which

substantially reduces risks for savers which would prevail while lending directly in the

absence of financial intermediation). How efficiently these transformation are performed by

financial sector will depends upon several factors of which mobilization of deposits (demand

deposit, saving bank deposit and term deposit), borrowings, capital, reserve & surplus etc.

are of importance. However, deposits are the major resource mobiliser in India. Of the total

resources mobilized by the Indian financial sector, deposits constitute 89 % of total resources

mobilised by the Indian Financial Sector. Aggregate deposits of Indian Financial Sector is

Rs. 54,86,514/- crore as on March 2009 which is 103 % of GDP at Market Prices. It is

observed that of the total deposits mobilized by the Indian Financial sector, deposits

mobilsed by SCBs constitute 80% of total deposits in India in the year 2009 followed by Post

Office deposits (10 %), Rural Cooperative Banks deposits (4 %), Urban Cooperative Banks

deposits (3 %) and Regional Rural Banks deposits (2 %), Financial Institutions deposits (1

%) and share of NBFC constitutes less than half percentage in the total deposits refer Chart –

1) with certain degree of overlapping.

Chart -1

Share of deposits, mobilised in Indian Financial Sector - 2009

2%

3%

4%

0%1%

10%

80%

SCBs

RRBs

UCBs

RCBs

NBFC

FI

small savingPost Office

Deposits

(Source: DBIE: RBI's Data Warehouse, Report on Trend and Progress of Banking in India)

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2.1 Trends of Deposits Mobilised by the Indian Financial Sector

This section deals with the trends of deposits for SCBs, RRBs, UCBs, Scheduled UCBs,

Non- Scheduled UCBs, RCBs, StCBs, DCCBs, PACBs, SCARDBs, PCARDBs, FIs and

NBFIs during 2005 to 2009.

2.1.1 Scheduled Commercial Banks: Trends exhibited by deposits of SCBs have been rising

during the last 5 years i.e. 2005 - 09 (Graph 1). However, growth rate of aggregate deposits

of SCBs decelerated to 22.4 % as at end March 2009 from 23.1 % as at end March 2008 and

that of 24.6 % in the previous year (i.e. end March 2007) Table 1. .

Graph -1

Trends of Deposits of

SCBs during 2005 to 2009

18375592164679

2696980

3320061

4063203

0

1000000

2000000

3000000

4000000

5000000

2005 2006 2007 2008 2009

Year

Rs.

Cro

re

SCBsc

(Source: DBIE:RBI's Data Warehouse)

Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks: September,

2009, RBI highlights that annual growth rate of aggregate deposits of rural population

showed increasing trend whereas deposits generated by semi-urban branches were stagnant

and for urban and metropolitan it showed decreasing trend in September 2009 quarter (Table

4).

2.1.2 Post Office Deposits: Post office deposit mobilizes resources in the form of

small deposits and its trend is placed below in Graph 2. During 2005-06 its growth

rate was 15 % which declined recently and in 2008-09 growth rate (Y-o-Y) basis

becomes -2 %. Small Savings have experienced a decline during the financial year

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2007-08 and 2008-09 as commercial banks offer higher interest rates on the deposits

to lure investors, according to the Association of Chambers Eco Pulse Study (AEP).

Investment in the mutual funds also rose significantly since 2006-07 which might lead

to diversion of resources from small investors.

Graph -2

Trends of small saving Post Office Deposit

457732

527611564372

509411 498813.654

0

100000

200000

300000

400000

500000

600000

2005 2006 2007 2008 2009

Year

Rs. C

rore

Small saving Post Off ice Deposit

(Source: DBIE: RBI's Data Warehouse)

2.1.3 Deposits of Rural Cooperative Banks: Cooperatives occupy an important position in the

Indian financial system. Cooperatives were the first formal institution to be conceived and

developed to purvey credit to rural India. Thus far, cooperatives have been a key instrument

of financial inclusion in reaching out to the last mile in rural areas. Heterogeneity is one of

important feature of cooperative credit institution in India. Rural cooperatives structure is

bifurcated into short-term and long-term structure. The short-term cooperative structure is a

three tier structure having State Cooperative Banks (StCBs) at the apex level followed by

District Central Cooperative Banks (DCCBs) at the intermediate district level followed by

Primary Agricultural Credit Societies (PACS) at the village level. This structure is often

referred to as federal structure of the short-term credit cooperatives. The unitary structure is

mainly observed in the North-eastern region, wherein the StCBs provide credit directly to

PACS instead of any district level intermediary. The long-term cooperative structure has the

State Cooperative Agriculture and Rural Development Banks (SCARDBs) at the apex level

followed by the Primary Cooperative Agriculture and Rural Development Banks

(PCARDBs) at the district or block level. This is often referred to as the federal structure of

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long-term credit cooperatives. There is also a unitary structure under which the SCARDBs

channel credit through their own branches.

Deposits of RCBs have shown a rising trend during 2005-08 (Graph -3). However, annual

growth rate of aggregated deposit of RCBs during 2005-08 are found to be 5 %, 9 % and 8.8

% respectively (Table 1). There is a lag in compiling of RCBs data which needs to be

addressed for it to be useful for any policy purpose. As can be seen from Table 1, deposits

growth of RCBs is approx one third of deposits growth of SCBs in the year 2007-08.

Graph - 3

Trends of Deposits of RCBs during 2005 to 2008

146321 153516167519

182384

0

50000

100000

150000

200000

2005 2006 2007 2008

Year

Rs

. C

rore

Deposits of RCBs

(Source: Report on Trend and Progress of Banking in India)

2.1.3.1 Deposits of StCBs: Deposits of StCBs has been showing moderately rising trend

during 2005 -08 (Graph – 4). Growth rates (Y-o-Y) of deposit variable for StCBs during

2005 to 2008 are 2.5 %, 7% and 9 % respectively (Table 1).

Graph -4

Trends of Deposits of StCBs during 2005 to 2008

44316 4540548560

52973

0

10000

20000

30000

40000

50000

60000

2005 2006 2007 2008

Year

Rs. C

rore

Deposit of StCBs


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2.1.3.2 Deposits of DCCBs: Deposits of DCCBs has been showing moderately rising trend

during 2005 -08 (Graph – 5). Growth rates (Y-o-Y) of deposit variable for DCCBs during

2005 to 2008 are 7 %, 8 % and 9 % respectively (Table 1). Among the RCBs, deposits share

of DCCBs is minimum as can be seen from chart -2.

Graph -5

Trends of Deposits of DCCBs during 2005 to 2008

8209887532

94529102986

0

20000

40000

60000

80000

100000

120000

2005 2006 2007 2008

Year

Rs.

Cro

re

Deposit of DCCBs

(Sou

rce: Report on Trend and Progress of Banking in India)

Chart -2

Share of Deposits, mobilised by segments of RCBs - 2008

52973, 29%

102986, 57%

25449, 14%

645, 0%

331, 0%

Deposit of StCBs

Deposit of DCCBs

Deposit of PACBs

Deposit of SCARDBs

Deposit of PCARDBs


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2.1.3.3 Deposits of PACBs: Deposits of PACBs has been showing moderately rising trend

during 2005 -08 (Graph – 6). Growth rates (Y-o-Y) of deposit variable for PACBs during

2005 to 2008 are 3 %, 20 % and 9 % respectively (Table 1).

Graph -6

Trends of Deposits of PACBs during 2005 to 2008

18976 19561

2348425449

0

5000

10000

15000

20000

25000

30000

2005 2006 2007 2008

Year

Rs.

Cro

re

Deposit of PACBs


2.1.3.4 Deposits of SCARDBs: Deposits of SCARDBs have been little bit erratic trend

during 2005 -08 (Graph – 7). Growth rates (Y-o-Y) of deposit variable for SCARDBs during

2005 to 2008 are 11 %, -5 % and 6 % respectively (Table 1).

Graph -7

Trends of Deposits of SCARDBs during 2005 to 2008

566636 605

645

0

100

200

300

400

500

600

700

2005 2006 2007 2008

Year

Rs. C

rore

Deposit of SCARDBs


2.1.3.5 Deposits of PCARDBs: Deposits of PCARDBs have been falling since 2005 -08

(Graph – 8). Growth rates (Y-o-Y) of deposit variable for PCARDBs during 2005 to 2008 are

5 %, -10 % and -3 % respectively (Table 1).

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Graph -8

Trends of Deposits of PCARDBs during 2005 to 2008

365 382341 331

0

100

200

300

400

500

2005 2006 2007 2008

Year

Rs.

Cro

re

Deposit of PCARDBs


2.1.4 Urban Cooperative Banks: Urban Cooperative Banks (UCBs) have posted high growth

in deposits of 15.2 % during the year 2007-08 unlike their rural counterparts. However, it is

still lower than the growth rate of deposits observed in SCBs in the respective years (Table 1).

Trends exhibited by deposit variable of UCBs have been rising during last 5 years which is

reflected in the Graph -9. Growth rates (Y-o-Y) of deposit variable for UCBs during 2005 to

2009 are 9 %, 6 %, 15 % and 13 % respectively (Table 1).

Graph -9

Trends of Deposits of UCBs in last 5 years

105021114060 121391

139871

158733

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

2005 2006 2007 2008 2009

Year

Rs. Cro

re

Deposits of UCBs


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Growth rate for deposits of UCBs shows little moderation in 2009 with 13.5 % compared

with the year 2008 figure of 15.6%. However deposit growth rate for UCBs were rising in

2006, 2007 and 2008.

Deposits of Scheduled UCBs and Non- Scheduled UCBs have seen expansion during period

of 2005 to 2009 and trends are observed in the Graph -10 and Graph – 11. Annual growth

rates (Y-o-Y) of deposit variable for Scheduled UCBs during 2005 to 2009 are 10 %, 13 %,

15 % and 15 % respectively (Table 1). Growth rates (Y-o-Y) of deposit variable for Non-

Scheduled UCBs during 2005 to 2009 are 7 %, 2 %, 15 % and 12 % respectively (Table 1).

Graph -10

Trends of Deposits of Sch UCBs in last 5 years

4095045297

5117358871

67929

0

10000

20000

30000

40000

50000

60000

70000

80000

2005 2006 2007 2008 2009

Year

Rs

. C

rore

Deposits of Sch UCBs


Graph -11

Trends of Deposits of Non-Sch UCBs in last 5 years

6407168763 70218

8100090804

0

20000

40000

60000

80000

100000

2005 2006 2007 2008 2009

Year

Rs. C

rore

Deposits of Non Sch UCBs


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Overall, Non-scheduled UCBs generate higher deposits during last five years as compared

with Scheduled UCBs. This is partly on account of higher number of Non- Scheduled UCBs

as compared with Scheduled UCBs.

2.1.5 Regional Rural Banks: In a multi-agency approach for agricultural and rural credit in

India, RRBs have a special place. Being local level institutions, RRBs are ideally suited for

achieving financial inclusion. Trends exhibited by deposits of RRBs have been rising during

last 5 years and its trends are captured in the Graph -12. Growth rates (Y-o-Y) of deposit

variable for RRBs during 2005 to 2009 are 10 %, 27 %, 15 % and 20 % respectively (Table

1). In the year 2006-07, deposits growth rate was highest among the constituents of Indian

Financial Sector. It is also observed that annual growth rate of Agriculture and allied

activities of GDP at current price for 2006-07, 2007-08 and 2008-09 are 10 %, 14 % and 10

% respectively.

Graph -12

Trends of Deposits of RRBs during 2005 to 2009

5828664195

8162094412

113828

0

20000

40000

60000

80000

100000

120000

2005 2006 2007 2008 2009

Year

Rs.

Cro

re

Deposits of RRBs


2.1.6 Financial Institutions: Non-Banking Financial Institutions (NBFIs) play an important

role in the Indian financial system as they are providing complimentarity and

competitiveness to banks. The major intermediaries that are included in the NBFI group are

Development Finance Institutions (DFIs), insurance companies, nonbanking financial

companies (NBFCs), primary dealers (PDs) and capital market intermediaries such as mutual

funds. The NBFIs are providing medium to long-term finance to different sectors of the

economy. On account of intensification of the global financial crisis in September 2008,

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some impact was experienced in this sector, thereby creating liquidity constraints for NBFIs.

In response, the Reserve Bank introduced special fixed term rate Repo under liquidity

adjustment facility (LAF) to banks exclusively for the purpose of meeting the funding

requirements of Non-Banking Financial Companies (NBFCs).

There is a steep rise in deposits generated by FIs especially since March 2006. Combined

deposit variable of FIs registered sharp increases of 80.7 % during the year 2008-09. Growth

rates (Y-o-Y) of deposit variable for FIs during 2005 to 2009 are 8 %, 51 %, 65 % and 80 %

respectively (Table 1).

Graph -13

Trends of Deposits of FIs during 2005 to 2009

13355 14520

21998

36298

65591

0

10000

20000

30000

40000

50000

60000

70000

2005 2006 2007 2008 2009

Year

Rs. C

rore

Deposit of FI


2.1.7 NBFCs: Trends exhibited by deposit variable of NBFCs is showing rising trend till

2006-07 thereafter declining during 2007-08 and 2008-09 (Graph -14). Growth rates (Y-o-Y)

of deposit variable for NBFCs during 2005 to 2009 are 11 %, 08 %, -1 % and -12 %

respectively. Decline in public deposits of NBFCs was observed in the aftermath of global

financial crisis. NBFCs were required to resort to borrowing in a big way to meet their fund

requirements which depleted on account of fall in deposits with NBFCs

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Graph -14

Trends of Deposits of NBFC during 2005 to 2009

2052622842

24699 2440021548

0

5000

10000

15000

20000

25000

30000

2005 2006 2007 2008 2009

Year

Rs. C

rore

Deposits of NBFC


2.1.7.1 Finances of Deposit taking NBFCs

Borrowing is an important source of funds for the NBFCs, which showed increasing trend

over the period of 2005 to 2009 in the Graph -15. Growth rates (Y-o-Y) of deposit variable

for NBFC-D during 2005 to 2009 are 8 %, 30 %, 55 % and 9 % respectively.

Graph - 15

Trends in Borrowing of NBFC-D during 2005 to 2009

23044 24942

32452

5057755289

0

10000

20000

30000

40000

50000

60000

2005 2006 2007 2008 2009

Year

Rs. C

rore

Borrow ing of NBFC-D


Borrowings by NBFCs from banks and financial institutions and by way of bonds and

debentures and ‘other sources’ (which include miscellaneous factors including inter alia,

money borrowed from other companies, unsecured loans from directors/ promoters,

commercial paper, borrowings from mutual funds and any other type of funds which are not

17/47

treated as public deposits), increased sharply during 2007-08. This broadly reflected the

pattern of borrowings of asset finance companies. Significantly, the borrowing from

Government, which was nil during 2006-07, increased sharply to Rs.2,319 crore during

2007-08 largely due to inclusion of IFCI Ltd. and TFCI Ltd. in this category.

2.1.8 Resource mobilised by Mutual Funds: Mutual funds play a role of capital market

intermediaries. A Mutual Fund is a trust that pools the savings of a number of investors who

share a common financial goal. The money thus collected is then invested in capital market

instruments such as shares, debentures and other securities. The income earned through these

investments and the capital appreciation realised are shared by its unit holders in proportion

to the number of units owned by them. Thus a Mutual Fund is the most suitable investment

for the common man as it offers an opportunity to invest in a diversified, professionally

managed basket of securities at a relatively low cost.

2.1.8.1 Gross Resource mobilised by Mutual Funds: Gross resource mobilised by mutual

funds shows increasing trends during 2005 - 2009 (Graph –16). Growth rates (Y-o-Y) of

Gross resource mobilised variable for mutual funds during 2005 to 2009 are 30 %, 76 %, 130

% and 21 % respectively (Table 1). Steep rise in resource mobilization by mutual funds

during year 2006 -07 & 2007 – 08 coincided with the boom in the capital market. It is

noteworthy to add that resource mobilised by SCBs in India in the year 2007-08 (i.e. end

March 2008) with gross resource mobilization by Mutual funds of Rs. 44,64,377 crore as

compared with deposits of SCBs of Rs. 33,20,061 crore.

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Graph –16

Trends in Gross Resource Mobilisation by Mutual Funds during 2005 to 2009

839708 1098149

1938493

4464377

5426354

0

1000000

2000000

3000000

4000000

5000000

6000000

2005 2006 2007 2008 2009

Year

Rs. C

rore

Gross Resource Mobilisation of

Mutual Funds

(Source: SEBI Bulletin)

2.1.8.2 Redemptions by Mutual Funds: Redemptions by mutual funds also showed increasing

trends (Graph –17). Growth rates (Y-o-Y) of Redemptions for mutual funds during 2005 to

2009 are 25 %, 26 %, 133 % and 26 % respectively (Table 1A). Year 2007-08 resulted in

steep rise in redemption which showed increase in activities in the capital markets in India.

Graph –17

Trends of Redemption of Mutual Funds during 2005 to 2009

837508 1045370

1844508

4310575

5454650

0

1000000

2000000

3000000

4000000

5000000

6000000

2005 2006 2007 2008 2009

Year

Rs. C

rore

Redemption of Mutual Funds


Section III

Accepting deposits as a liability and converting them into assets such as loans, investments,

cash & balances with RBI etc. is one of fundamental function of the banks and other

19/47

constituents of the financial sector. Banks holds a portfolio of assets and, given the

characteristics and distribution of the liabilities, they attempt to structure of their portfolio of

assets in such a manner so as to yield the greatest return. Banks have four categories of assets,

viz., cash in hand and balances with the central bank, assets with the banking system,

investments in Government and other approved securities and loan and advances.

Quantitatively, lending and investments are the most important earning assets of the banks.

This section deals with the trends of loans & advances and investments for SCBs, RRBs,

UCBs, Scheduled UCBs, Non- Scheduled UCBs, RCBs, StCBs, DCCBs, PACBs, SCARDBs,

PCARDBs, FIs and NBFC-Ds.

3.1 Trends of Loan and Advances

Loans and advances comprises of i.) Bills purchased and discounted ii.) Cash credit,

overdraft etc. iii.) Term loans. As loans and advances is very important portfolio of the

balance sheet of the bank therefore, trend of SCBs, RRBs, UCBs, Scheduled UCBs, Non-

Scheduled UCBs, RCBs, StCBs, DCCBs, PACBs, SCARDBs, PCARDBs, FIs and NBFC-Ds

are captured for the period of 2005 to 2009.

3.1.1 Loans and advances of SCBs: It shows increasing trend for SCBs during 2005 to 2009

(Graph -18). However, growth rates of loans and advances of SCBs , which was 33.2 % in

the end –March 2005 was 33.2 % and it came down to 21.2 % on end-March 2009 (Table 2).

Graph -18

Trends of Loans & Advances of SCBs during 2005 to 2009

1150836

1516711

1981236

2476936

3000906

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Loans & Advances of SCBs


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Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks: September,

2009, RBI highlights that annual growth rate of gross bank credit of rural and semi-urban

population showed increasing trend in the September 2009 quarter. However, urban and

metropolitan population showed decreasing trend during the same period (Table 5).

3.1.2 Loans and advances of RCBs: Loans and advances portfolio of Rural Cooperative

Banks (RCBs), State Cooperative Banks (StCBs), District Central Cooperative Banks

(DCCBs), Primary Agricultural Credit Societies (PACS), State Cooperative Agriculture and

Rural Development Banks (SCARDBs) and Primary Cooperative Agriculture and Rural

Development Banks ( PCARDBs) constitute more than half of the total assets. Loans and

advances of all rural cooperative have shown rising trend during 2005 -08 (Graph -19) and

Growth rates (Y-o-Y) of aggregated loan & advances of rural cooperative during 2005 to

2008 are 6 %, 12 %, and 3 % respectively (Table 2). There is a lag in compiling of RCBs

data which needs to be addressed for it to be useful for any policy purpose. As can be seen

from Table 2, loans & advances growth of RCBs is approx one eighth of loans & advances

growth of SCBs in the year 2007-08.

Graph -19

Trends of Loans & Advances of RCBs during 2005 to 2008

189407201118

225770 233014

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2005 2006 2007 2008

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Loans & Advances of RCBs


3.1.2.1 Loans and advances of StCBs: As loans and advances constitutes more than half of

the assets of StCBs and major part of it goes towards the lower tier institution in short term

credit structure and it has shown a rising trend during 2005 -08 (Graph – 20). Growth rates

(Y-o-Y) of loan & advances of StCBs during 2005 -08 are 6 %, 19 %, and 2 % respectively

21/47

(Table 2). Hence, declining of Loans and advances of StCBs means lessening of the flow of

the resources to lower institutions.

Graph – 20

Trends of Loans & Advances of StCBs during 2005 to 2008

3734639684

47354 48228

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Loans & Advances of StCBs


3.1.2.2 Loans and advances of DCCBs: Loans and advances constitutes the most important

form of assets for DCCBs and it has shown rising trend during 2005 -08 (Graph – 21). The

share of loans and advances worked out to 56.4 per cent at end-March 2008 of its total asset.

Growth rates (Y-o-Y) of loan & advances of DCCBs during 2005 to 2008 are 8 %, 12 %, and

2 % respectively (Table 2). Among the RCBs, loans & advances share of DCCBs is highest

as can be seen from chart -3.

Graph -21

Trends of Loans & Advances of DCCBs during 2005 to 2008

7309179202

8903891374

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70000

80000

90000

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2005 2006 2007 2008

Y ear

Loans & Advances of DCCBs


22/47

Chart -3

Share of loans & advances of segments of RCBs - 2008

48228, 21%

91374, 39%

65666, 28%

18217, 8%9529, 4%

Loans & Advances of StCBs

Loans & Advances of DCCBs

Loans & Advances of PACS

Loans & Advances of SCARDBs

Loans & Advances of PCARDBs


3.1.2.3 Loans and advances of Primary Agricultural Credit Societies (PACS): PACS form the

third and lowest tier in the short-term credit cooperative structure that operates directly at the

grassroots i.e. in villages. Loans and advances has shown rising trend during 2005 to 2008

(Graph -22). Growth rates (Y-o-Y) of loan & advances of PACS during 2005 to 2008 are 59

%, 13 %, and 12 % respectively (Table 2).

Graph -22

Trends of Loans & Advances of PACS during 2004 to 2008

32481

51779

58620

65666

0

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2005 2006 2007 2008

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Loans & Advances of PACS


3.1.2.4 Loans and advances of SCARDBs: Loans and advances portfolio constitutes about

three fourths of the total assets of SCARDBs and it is showing rising trend till 2006-07

23/47

thereafter declined during 2007-08 (Graph 23). Growth rates (Y-o-Y) of loan & advances of

SCARDBs during 2005 to 2008 are 2 %, 5 %, and -2 % respectively (Table 2).

Graph -23

Trends of Loans & Advances of SCARDBs during 2005 to 2008

17422 1771318644 18217

0

2000

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2005 2006 2007 2008

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. C

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Loans & Advances of SCARDBs


3.1.2.5 Loans and advances of PCARDBs: Trends exhibited by loans and advances of

PCARDBs is showing rising trend till 2005-06 thereafter it has shown declining trend during

2006-08 (Graph -24). Growth rates (Y-o-Y) of loan & advances of PCARDBs during 2005 to

2008 are 1 %, -5 %, and -21 % respectively (Table 2). Among the RCBs, loans & advances

share of PCARDBs is lowest as can be seen from Chart -3.

Graph -24

Trends of Loans & Advances of PCARDBs during 2005 to 2008

12622 1274012114

9529

0

2000

4000

6000

8000

10000

12000

14000

2005 2006 2007 2008

Y ear

Loans & Advances of PCARDBs


3.1.3 Loans and advances of UCBs: Loans and advances portfolio comprises of roughly 50

% of their total assets of UCBs. It has shown rising trends during 2005 to 2009 (Graph -25)

24/47

and it posted annual growth rates (Y-o-Y) of during 2005 to 2009 are 7 %, 11 %, 13 % and 8

% respectively (Table 2). Urban Cooperative Banks (UCBs) have posted high growth in

loans and advances of 13 % during the year 2007-08 unlike their rural counterparts. However,

it is still lower than the growth rate of loans and advances observed in SCBs in the respective

years (Table 1).

Graph -25

Trends of Loans & Advances of UCBs during 2005 to 2009

6687471641

79733

9044497918

0

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40000

60000

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100000

120000

2005 2006 2007 2008 2009

Y ear

Loans & Advances of UCBs


3.1.3.1 Loans and advances of Scheduled UCBs: Loans and advances portfolio comprises of

roughly 50 % of their total assets of Scheduled UCBs. It has been showing rising trends

during 2005 to 2009 (Graph -26) and it posted annual growth rates (Y-o-Y) of during 2005 to


Graph -26

Trends of Loans & Advances of Sch UCBs during 2005 to 2009

2506127960

3280936147

42234

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2005 2006 2007 2008 2009

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Loans & Advances of Sch UCBs


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3.1.3.2 Loans and advances of Non- Scheduled UCBs: Loans and advances portfolio

comprises of roughly 50 % of their total assets of Non- Scheduled UCBs. It has been

showing moderately rising trends during 2005 to 2007, thereafter increased sharply for 2007-

08 and again moderated for 2008-09 (Graph -27). It posted annual growth rates (Y-o-Y) of

during 2005 to 2009 are 4 %, 7 %, 15 % and 2 % respectively (Table 2).

Graph -27

Trends of Loans & Advances of Non Sch UCBs during 2005 to 2009

41813 4368046924

54297 55684

0

10000

20000

30000

40000

50000

60000

2005 2006 2007 2008 2009

Ye a r

Loans & Advances of Non Sch UCBs


Overall, Non- Scheduled UCBs generate higher loans and advances during last five years as

compared with Scheduled UCBs. This is partly on account of higher number of Non-

Scheduled UCBs as compared with Scheduled UCBs as well as more mobilization of

deposits.

3.1.4 Loans and advances of RRBs: Loans and advances portfolio of RRBs has been

expanded during 2005 to 2009 (Graph -28) and it posted annual growth rates (Y-o-Y) of 21

%, 22 %, 21 % and 19 % during 2005 to 2009 respectively (Table 2). The share of priority

sector loans issued by RRBs was 84 % for 2008-09.

26/47

Graph -28

Trends of Loans & Advances of RRBs during 2005 to 2009

31803

38520

47326

57568

69030

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2005 2006 2007 2008 2009

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Loans & Advances of RRBs


3.1.5 Loans and advances of FIs: Loans and advances portfolio of FIs shows rising trends

during 2005 to 2009 (Graph -29) and it posted annual growth rates (Y-o-Y) of during 2005 to

2009 are 21 %, 12 %, 17 % and 21 % respectively(Table 2).

Graph -29

Trends of Loans & Advances of FIs during 2005 to 2009

91874

111441125194

147008

178595

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Loans & Advances of FIs


3.1.6 Loans and advances of NBFCs –D: Trends exhibited by loans and advances of

NBFCs –D (deposit taking) is showing declining trend till 2005-06 thereafter increasing

27/47

during 2006-09 (Graph -30). Annual growth rates (Y-o-Y) of loan & advances of NBFCs –D

during 2005 to 2009 are -16 %, 3 %, 70 % and 11 % respectively (Table 2).

Graph - 30

Trend in Loans & Advances of NBFCs-D during 2005 to 2009

12749

10686 11059

18823

21073

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Loans & Advances of NBFCs-D


3.1.6.1 Hire Purchase activities of NBFCs –D:Many NBFC-D companies are involved in

hire-purchase activities which are having origin of 30 years and they strengthened their

position in a short period of time. From only a handful of companies in the early 1980s,

numbers of NBFC companies have grown to around 12000. Their one of important role is to

provide hire-purchase activity which has shown increasing trends during 2005 to 09 in terms

of volumes (Graph -31). Growth rates (Y-o-Y) of hire-purchase activities of NBFCs –D

during 2005 to 2009 are 38 %, 31 %, 27 % and 6 % respectively (Table 2). However, during

2008-09 it shows moderation.

28/47

Graph -31

Trends in Hire Purchase Assets NBFCs-D during 2005 to 2009

14400

20008

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3352535647

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Hire Purchase Assets NBFCs-D


3.2 Trends in Investments

Banks investments are of three types, viz., Government securities, other approved securities

and non-approved securities. These three are broadly categorized as SLR investments

(Government securities and other approved securities) and non-SLR investments (comprising

CPs, shares, bonds and debentures issued by the corporate sector). Banks and other deposit

taking entities have to invest in government securities and other securities as per the

regulations under BR Act, 1949. It serves twin purpose of making availability of funds for

government and acting as a shocker against risks as gilt edge securities are assigned with

negligible risk.

3.2.1 Investments of SCBs: It has shown increasing trend for SCBs during 2005 to 2009

(Graph -32). Growth rate of investments by SCB banks decelerated to 23.1 % as at end

March 2009. But percentage of SLR securities increased during the year due to low risks and

low returns against the backdrop of prevailing uncertainties.

29/47

Graph -32

Trends of Investments of SCBs during 2005 to 2009

869737 866508950981

1177329

1449474

0

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rore

Investments of SCBs


3.2.2 Investments of RCBs: Investments of RCBs has shown increasing trend during 2005 to

2008 (Graph -33). Growth rates (Y-o-Y) of investment portfolio of RCBs during 2005 to

2008 are 8 %, 1.5 %, and 13 % respectively (Table 3). There is a lag in compiling of RCBs

data which needs to be addressed for it to be useful for any policy purpose. As can be seen

from Table 3, investments growth of RCBs is approx half of investments growth of SCBs in

the year 2007-08.

Graph -33

Trends of Investments of RCBs

6182866985 67886

76757

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Investments of RCBs


3.2.2.1 Investments of StCBs: Trends exhibited by investments of StCBs is showing rising

trend till 2005-06 thereafter declining trend during 2006-07 and subsequently again rising

trend during 2007-08 (Graph -34). It is observed that decline in loan and advance portfolio of

StCBs reflect as the respective increase of investment portfolio. Annual Growth rates (Y-o-Y)

30/47

of investment portfolio of StCBs during 2005 - 08 are 19 %, -12 %, and 20 % respectively

(Table 3).

Graph - 34

Trends of Investments of StCBs during 2005 to 2008

0

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2005 2006 2007 2008

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Investments of StCBs


3.2.2.2 Investments of DCCBs: Investment portfolio of DCCBs has shown increasing trend

during 2005 to 2008 (Graph -35). Growth rates (Y-o-Y) of investment portfolio of DCCBs

during 2005 to 2008 are 2 %, 12 %, and 8 % respectively (Table 3). Among the RCBs,

investments share of DCCBs is maximum as can be seen from Chart -4.

Graph -35

Trends of Investments of DCCBs during 2005 to 2008

35830 36628

4100644419

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Chart -4

Share of Invesments of segments of RCBs -2008

29060, 38%

44419, 58%

2526, 3%

752, 1%

Investments of StCBs

Investments of DCCBs

Investments of SCARDBs

Investments of PCARDBs


3.2.2.3 Investments of SCARDBs: Trends exhibited by investments of SCARDBs is showing

declining trend till 2005-06 thereafter rising trend till 2008-09 (Graph -36). Growth rates (Y-

o-Y) of investment portfolio of SCARDBs during 2005 - 08 are -1 %, 2 %, and 31 %

respectively (Table 3). It is noteworthy that over the recent past, there has been an increasing

share of investments in the total assets for SCARDBs. However, SCARDBs PCARDBs have

low share of investments vi-a-vis StCBs and DCCBs.

32/47

Graph -36

Trends of Investments of SCARDBs during 2005 to 2008

1905 1885 1916

2526

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Investments of SCARDBs


3.2.2.3 Investments of PCARDBs: Trends exhibited by investments of PCARDBs is showing

declining trend till 2005-06 thereafter increasing trend during 2006-07 and subsequently

again declining trend during 2007-08 (Graph 37). Growth rates (Y-o-Y) of investment

portfolio of PCARDBs during 2005 to 2008 are -3 %, 6 %, and -8 % respectively (Table 3).

Graph -37

Trends of Investments of PCARDBs during 2005 to 2008

804778

824

752

0

100

200

300

400

500

600

700

800

900

2005 2006 2007 2008

Y ear

Investments of PCARDBs


3.2.3 Investments of UCBs: Investments of UCBs has shown increasing trend during 2005 -

09 (Graph -38). Growth rates (Y-o-Y) of investment portfolio of UCBs during 2005 - 09 are

8 %, 1 %, 12 % and 13 % respectively (Table 3). It has been observed that investments are

the one of most important driving factor on the asset side during 2008-09. Further analysis of

investment portfolio of UCBs, Scheduled UCBs and Non-Scheduled UCBs shows SLR

33/47

investment was the most preferred investment portfolio which constitutes more than 90 % of

their total investment.

Graph -38

Trends of Investments of UCBs during 2005 to 2009

4687250395 50859

5691264171

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Investments of UCBs


3.2.3.1 Investments of Scheduled UCBs: Investments of Scheduled UCBs has shown rising

trend during 2005 -09 (Graph -39). Growth rates (Y-o-Y) of investment portfolio of

Scheduled UCBs during 2005 - 09 are 32 %, 1 %, 13 % and 13 % respectively (Table 3).

Graph -39

Trends of Investments of Sch UCBs during 2005 to 2009

17094

22593 22873

25776

29210

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2005 2006 2007 2008 2009

Y ear

Investments of Sch UCBs


3.2.3.2 Investments of Non- Scheduled UCBs: Investments of Non- Scheduled UCBs has

shown declining trend during 2005 -06 thereafter rising trend till 2008-09 (Graph -40).

Growth rates (Y-o-Y) of investment portfolio of Non- Scheduled UCBs during 2005 to 2009

are -6 %, 1 %, 11 % and 12 % respectively (Table 3).

34/47

Graph -40

Trends of Investments of Non-Sch UCBs during 2005 to 2009

2977827802 27985

31136

34961

0

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30000

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40000

2005 2006 2007 2008 2009

Y ear

Investments of Non-Sch UCBs


Overall, Non- Scheduled UCBs generate higher investment during last five years as

compared with Scheduled UCBs. This is partly on account of higher number of Non-

Scheduled UCBs as compared with Scheduled UCBs as well as more mobilization of

deposits.

3.2.4 Investments of RRBs: Investment of RRBs has shown increasing trend during 2005 to

2009 (Graph -41). Growth rates (Y-o-Y) of investment portfolio of RRBs during 2005 to


35/47

Graph -41

Trends of Investments of RRBs during 2005 to 2009

24532 2492526352

30166

34168

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Series1


3.2.5 Investments of FIs: Investments of FIs has shown declining trend till 2007 -08

thereafter it exhibit marginal increase during 2008-09 (Graph -42). Investments portfolio of

FIs shows decline since 2005 to 2007 as they liquidated their investment portfolio

significantly to accommodate the sharp increase the loan portfolio. Growth rates (Y-o-Y) of

investment portfolio of FIs during 2005 to 2009 are -23 %,-32 %, -4 % and 21 % respectively

(Table 3).

Graph -42

Trend of Investments of FIs during 2005 to 2009

0

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2005 2006 2007 2008 2009

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Investments of FIs


3.2.6 Investments of NBFC-Ds: Investment portfolio of consolidated balance sheet of

NBFC-Ds has shown increasing trends during 2005 to 2009 (Graph 43). However, approved

securities which comprises of SLR securities and unencumbered term deposits in SCBs

36/47

constitute bulk investment. Growth rates (Y-o-Y) of investment portfolio of NBFC-Ds during

2005 to 2009 are 9 %, 71 %, 51 % and 32 % respectively (Table 3).

Graph 43

Trends in Investments NBFCs-D during 2005 to 2009

3957 4326

7412

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14813

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Investments NBFCs-D


3.2.7 Investments by Mutual Funds: As a capital market intermediary, mutual funds invest

both in equity and debt instrument. During the last five years, there is an unprecedented

growth in mutual funds gross mobilization.

3.2.7.1 Net purchase/ sale in equity by Mutual Funds: Trend exhibited by it has shown

overall rising trends during 2005-06, thereafter it declined during 2006-07. It rose sharply

during 2007-08 and again declined significantly during 2009-09 (Graph – 44). Annual

growth rates (Y-o-Y) of it during 2005-09 are 3092 %, -36 %, 80 % and -57 % respectively

(Table 3).

37/47

Graph – 44

Trends of Net purchase/ sale in equity by Mutual Funds during 2005 to 2009

0

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6000

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18000

2005 2006 2007 2008 2009

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Net purchase/ sale in equity by

Mutual Funds


3.2.7.1 Net purchase/ sale in debt by Mutual Funds: It has shown rising trend during 2005-09

(Graph –45). Annual growth rates (Y-o-Y) of this portfolio of mutual funds during 2005 to


Graph –45

Trends of Net purchase/ sale in debt instrument by Mutual Funds during 2005 to 2009

16987

36801

52544

73789

81803

0

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50000

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70000

80000

90000

2005 2006 2007 2008 2009

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Net purchase/ sale in debt by

Mutual Funds


3.2.8 Investments by Life Insurance Corporation of India Ltd. (LIC): There exists huge scope

of investment in the insurance sector in India. India has an enormous middle-class that can

afford to buy life, health and disability and pension plan products. Further, insurance is one

of the most important tax saving instrument in the country. Insurance sector has been opened

38/47

up for competition from Indian private insurance companies with the enactment of Insurance

Regulatory and Development Authority Act, 1999 (IRDA Act). As per the provisions of

IRDA Act, 1999, Insurance Regulatory and Development Authority (IRDA) was established

on 19th April 2000 to protect the interests of holder of insurance policy and to regulate,

promote and ensure orderly growth of the insurance industry. IRDA Act 1999 paved the way

for the entry of private players into the insurance market, which was hitherto the exclusive

privilege of public sector insurance companies/ corporations. Under the new dispensation

Indian insurance companies in private sector were permitted to operate in India on the

fulfillment of certain prerequisites. A large number of public and private players are

competing today in both life and general insurance segments. The FDI cap/ Equity in the

insurance sector is 26 percent under the automatic route subject to licensing by the insurance

regulatory and development authority.

LIC invests in public, private, joint and co-opeartive sectors. Investment by LIC has shown

increasing trend (Graph –46) and annual growth rates (Y-o-Y) of it during 2005 -09 are 24 %,

7 %, 21 % and 20 % respectively (Table 3).

Graph –46

Trends in Investments by LIC during 2005 to 2009

393185

487227521735

635747

762892

0

100000

200000

300000

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500000

600000

700000

800000

900000

2005 2006 2007 2008 2009

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Investment by LIC


Section IV

This section highlights issues of data availability and data gaps for related areas of financial

sector. Two types of returns, viz., statutory and non-statutory returns are being submitted by

banks and NBFCs to RBI which comprises of several indicators of balance sheet and profit

and loss account for fortnightly, monthly, quarterly and yearly frequencies.

39/47

4.1 SCBs submit section -42 data on fortnightly basis to RBI which comprises of provisional/

final Form 'A' and Form 'B' which comprise of asset and liability items of as per the

direction of Section– 42, of RBI Act 1934. SCBs also submit Form X data on monthly basis

as per the section 27 of Banking Regulation Act, 1949 which comprises assets & liabilities

items of balance sheet. Each bank also files annual returns called "Balance Sheet" which

contains balance sheet and profit & loss account items. Background work is going on to

introduce return on Sectoral deployment of Credit on fortnightly basis from 49 banks through

ORFS and XBRL which constitutes 95 % of credit outstanding. It will enhance data quality,

timeliness and provide valuable input for monetary policy. Details of sectoral items are

placed in Annex I. Banks also file returns related BSR 1A,BSR 1B, BSR 2, BSR 3, BSR 4,

BSR 5, BSR 6, BSR 7, Proforma-I, Proforma-II, and International Banking Statistics. BSR

1A return comprises of all borrowal accounts with credit limits over Rs.2 lakhs are to be

individually listed along with particulars of district and population group of the place of

utilisation, type of account, organisation, occupation, category of borrower, asset

classification, rate of interest, credit limit and amount outstanding in respect each loan or

advance. BSR 1B return elicit information about all borrowal accounts with credit limits of

Rs.2 lakhs and less are to be classified according to occupation and aggregate figures for

each occupation should be furnished in a consolidated from for each branch. BSR-2

comprises of category-wise number of staff, number of staff, number of accounts and amount

outstanding according to type of deposits and classification of all term deposits according to

original maturity, broad interest rate ranges, size of deposits and residual maturity. BSR 3

data are related to sensitive commodities' outstanding advances on monthly basis. BSR 4 data

is annual data and it is related to ownership pattern of deposits. BSR 5 data is also annual

data and related to Pattern of Investment of bank in Central and State Government Securities,

Other Trustee Securities, shares, etc.. BSR 6 data are quinque-nnial and related to survey of

Debits to Deposit Accounts. BSR 7 data are quarterly data and related to aggregate deposits

and gross bank Credit. International Banking Statistics, which is filed by banks on quarterly

basis, provides an understanding of the total magnitude of international assets and liabilities

of the banking system and their composition, mainly in terms of sector (bank, non-bank),

residual maturity, currency and country of residence. International assets / liabilities cover

claims /liabilities of reporting banks with/toward non-residents in any currency and residents

only in foreign currency.

40/47

Details of these returns are present in the Annex II. Presently BSR 1A, BSR 1B, BSR 2, BSR

4, BSR 5 are coming with a lag of around 1 year therefore, its timeliness would be ensured.

4.2 UCBs submit 53 returns (Annex III), statutory as well as non-statutory, of fortnightly,

monthly, quarterly and yearly frequencies to RBI. All these returns capture informations

related to balance sheets, profit & loss account, off-balance sheet exposure and prudential

supervisory variables. As per the requirements, few returns are made only for scheduled

UCBs and few are only for non-scheduled UCBs. Some returns have been submitted by both

scheduled UCBs as well as non-scheduled UCBs. However, The Reserve Bank prepared

Prudential Supervisory Reporting System in the form of Off-Site Surveillance (OSS) for the

UCBs to obtain relevant information on areas of prudential interest as well as to address the

management information needs and to strengthen the MIS capabilities within the UCBs. The

system was designed to monitor compliance and obtain information in areas of prudential

interest including information on balance sheet and off-balance sheet exposures, profits and

profitability, asset quality and sector/segment-wise concentration of advances.

A collateral objective of the reporting system was to sensitise managements of banks to

prudential concerns of the supervisory authority and thereby help in self-regulation. The OSS

reporting system was first introduced in April 2001 for the scheduled UCBs comprising 10

OSS returns. With a view to reducing the volume of data required to be reported by banks,

while increasing the breadth and depth of information obtained from them, the Reserve Bank

rationalised the OSS returns and reduced their number from ten to eight (one annual and

seven quarterly) returns for the scheduled UCBs with effect from March 2004. Further, this

set of eight returns introduced for scheduled UCBs were also made applicable to non-

scheduled UCBs with deposits of over Rs.100 crore from June 2004 and then to non-

scheduled UCBs having deposits between Rs.50 crore and Rs.100 crore and with branches in

more than one district from June 2006. For banks that had deposits between Rs.50 crore and

Rs.100 crore and whose branch network was limited to a single district, a simplified set of

five (four quarterly and one annual) returns (defined as Simplified OSS (SOSS)) was made

applicable from June 2006 onwards. From December 2008 onwards, SOSS was extended to

Tier I UCBs that had deposits below Rs.50 crore and OSS returns were made applicable to

Tier II UCBs with deposits below Rs.50 crore. As such, all UCBs are now covered under the

OSS system – a set of eight (OSS) returns to Tier II UCBs and a set of five returns (SOSS) to

Tier I UCBs.

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The Committee on Financial Sector Assessment (CFSA) undertook a comprehensive self-

assessment of the Indian financial system. The CFSA assessed the financial health of the

UCB sector and carried out stress tests on this sector, which highlighted the weak financial

health of this sector. On account of data limitations, the stress tests were carried out on 52

scheduled UCBs accounting for 43 per cent of the total assets at end-March 2007 of all

scheduled UCBs. As on December 2009, data for OSS returns are available only for 4

quarters and long time series data would be built in the coming future which would facilitate

usability of UCBs data and stress testing. Data for sectoral deployment of credit for UCBs

are presently not available with the RBI as it is needed for monetary policy. Hence returns

should be revised for capturing sectoral deployment data by UBD, RBI.

4.3 NBFCs have been submitting returns related to balance sheet items, income &

expenditure items, sources & uses of funds items, off-balance sheet items etc. to RBI on

monthly, quarterly, half-yearly and yearly frequencies. All returns and form are present in the

Annex IV and also available on http://rbi.org.in . Data for sectoral deployment of credit for

NBFCs are presently not available with the RBI as it is needed for monetary policy. Hence

returns should be revised for capturing sectoral deployment data by DNBS, RBI. Out of

12000 NBFCs only 600 have been submitting returns to RBI as their deposits are more than

100 crore. Hence, coverage of companies may be enhanced.

Flow of funds (FOF) accounts show the transactions in financial instruments among major

sectors of the economy. These accounts provide a broad framework for analysing issues

related to financial sector and its relationships with the real economy and thereby facilitate

insights into the role of the financial sector in the development process. The channeling of

resources from the surplus units to the deficit units was reflected in the flow of funds (FOF)

accounts of the Indian economy across the six sectors, viz., households, corporates,

government, banks, other financial institutions (OFIs) and the rest of the world sector.

Households, the consistent surplus sector, met to a large extent the deficits of the public and

private corporate sectors, and to a limited extent of the rest of the world sector. Funds were

provided to meet the requirements of the deficit sectors either directly (primary issues) or

through the financial intermediaries such as banks and OFIs (secondary issues). Keeping in

view the analytical uses of the FOF, the Reserve Bank of India has been compiling and

disseminating FOF accounts in a detailed form from time to time since December 1964. The

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latest detailed ‘flow of funds accounts’ for the Indian economy are available for the period

2000-01 to 2007-08, which were published in the Reserve Bank of India Bulletin, October

2009.

Section V

Conclusion

Deposit is most important source of funds for Indian Financial sector and financial

institution among all players marked highest growth rate of deposit variable during 2005 to

2009. Deposits of Scheduled Commercial Banks growth rate has been consistent one by

showing 17 to 24 per cent during the 2005 to 2009. Growth rate of deposit variable for Urban

Cooperative Banks are consistent one during 2005 to 2009 which shows rising of confidence

level in the area. Placed below is table no. 1 of growth rates of the player of Indian Financial

Sector. Growth rates of deposit variable of NBFCs are declined during 2005 to 2009 which

shows changing pattern of the sources of funds for NBFCs.

Growth rate of Loans and advances of SCBs have declined from 31 % to 21 % during 2005

to 2009. However, growth rate of loan and advances RRBs, UCBs, Scheduled UCBs have

been consistent during 2005 to 2009. Growth rate of loan and advances of FIs shows

increasing trend. Details of growth rate for loan and advances are placed in table no. 2.

Growth rate of investment portfolio of SCBs has been increased to 23.11 % from -0.4 %

which shows banks preference to park their funds in the low risk and low return instrument.

It appears in table 3 that growth rate of investment increased during many years for many

variables which highlights high confidence of players for the G-sec market.

RBI has been having a long tradition of data dissemination related to Indian financial sector

through publication and internet. RBI has exclusively developed http://dbie.rbi.org.in web-

site for the dissemination of data to public which is also known as Database on Indian

Economy (DBIE): RBI's Data Warehouse. This web-site provides facility of generating

adhoc reports. It comprises of 411 Static Reports, 74 Data Query Templates (Subject-wise)

and 53 Data Query Templates (Frequency-wise) which are available to public through DBIE

internet site. List of all series available on Indian Financial Sector are given in Annex V.

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Further, RBI has also been disseminating data over UCBs and NBFCs through its statutory

publication viz. Reports on Trend and Progress of Banking in India. It has been endeavor of

RBI to enhance the coverage of financial sector data in DBIE: RBI's Data Warehouse by

incorporating more and more data series hitherto available in various publications of the

Bank.

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Table 1: Growth Rate of Deposits of various constituents of Indian Financial Sector

(Per cent)

Sr. No. Players of Indian

Financial sector

Year

2005-06 2006-07 2007-08 2008-09

1 SCBs 17.8 24.5 23.1 22.3

2 Small saving of Post

Office Deposit 15.2 6.9 -9.7 -2.0

3 RCBs 4.9 9.1 8.8

3.1 StCBs 2.4 6.9 9.0

3.2 DCCBs 6.6 7.9 8.9

3.3 PACS 3.0 20.0 8.3

3.4 SCARDBs 11.0 -5.1 6.2

3.5 PCARDBs 4.6 -10.7 -2.9

4 UCBs 8.6 6.4 15.2 13.4

4.1 Scheduled UCBs 10.6 12.9 15.0 15.3

4.2 Non- Scheduled

UCBs 7.3 2.1 15.3 12.1

5 RRBs 10.1 27.1 15.6 20.5

6 FIs 8.7 51.5 65.0 80.7

7 NBFCs 11.2 8.1 -1.2 -11.6

8 Mutual Funds

(Gross Resource

mobilised) 30.7 76.5 130.3 21.5 Source: DBIE: RBI's Data Warehouse, Report on Trend and Progress of Banking in India and SEBI Bulletin

Table 1A Growth Rate of Redemption of Mutual Funds

(Per cent)

Sr. No. Item Year

2005-06 2006-07 2007-08 2008-09

1 Redemption of

Mutual Funds 24.8 76.4 133.6 26.5 Source: SEBI Bulletin

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Table 2: Growth Rate of Loans & Advances of various constituents of Indian Financial

Sector

(Per cent)


Financial sector

Year

2005-06 2006-07 2007-08 2008-09

1 SCBs 31.8 30.6 25.0 21.1

2 RCBs 6.1 12.2 3.2

2.1 StCBs 6.2 19.3 1.8

2.2 DCCBs 8.3 12.4 2.6

2.3 PACS 59.4 13.2 12.0

2.4 SCARDBs 1.6 5.2 -2.2

2.5 PCARDBs 0.9 -4.9 -21.3

3 UCBs 7.1 11.2 13.4 8.2

3.1 Scheduled UCBs 11.5 17.3 10.1 16.8

3.2 Non- Scheduled

UCBs 4.4 7.4 15.7 2.5

4 RRBs 21.1 22.8 21.6 19.9

5 FIs 21.2 12.3 17.4 21.4

6 NBFCs -16.1 3.4 70.2 11.9

Source: DBIE: RBI's Data Warehouse and Report on Trend and Progress of Banking in India

46/47

Table 3: Growth Rate of Investments of various constituents of Indian Financial Sector

(Per cent)


Financial sector

Year

2005-06 2006-07 2007-08 2008-09

1 SCBs -0.3 9.7 23.8 23.1

2 RCBs 8.3 1.3 13.0

2.1 StCBs 18.9 -12.8 20.3

2.2 DCCBs 2.2 11.9 8.3

2.3 PACS

2.4 SCARDBs -1.0 1.6 31.8

2.5 PCARDBs -3.2 5.9 -8.7

3 UCBs 7.5 0.9 11.9 12.7

3.1 Scheduled UCBs 32.1 1.2 12.7 13.3

13.2 Non- Scheduled

UCBs -6.6 0.6 11.2 12.2

4 RRBs 1.6 5.7 14.4 13.2

5 FIs -23.4 -32.5 -4.8 21.8

6 NBFCs 9.3 71.3 51.2 32.1

7 Mutual Funds net

purchase/ sale in

equity and debt

instrument 193.1 20.5 46.2 -1.4

7.1 Mutual Funds net

purchase/ sale in

equity 3092.6 -36.6 79.9 -57.1

7.2 Mutual Funds net

purchase/ sale in

debt 116.6 42.7 40.4 10.8

8 Investments by

LIC 23.9 7.0 21.8 19.9

Source: DBIE: RBI's Data Warehouse, Report on Trend and Progress of Banking in India

and SEBI Bulletin

47/47

Table 4: Annual Growth Rates of Aggregate Deposit - Population Group*

(Per cent)

Annual Growth Rate

Time

Rural

Deposits

Semi-Urban

Deposits Urban Deposits

Metropolitan

Deposits

Sep-08 19.0 18.2 21.8 19.9

Dec-08 20.4 22.5 25.3 19.1

Mar-09 20.6 23.9 25.4 20.5

Jun-09 18.9 23.1 22.0 20.7

Sep-09 19.8 23.2 20.8 18.6 Source: Quarterly Statistics on Deposits & Credit of Scheduled Commercial Banks, Sep 2009.

Table 5: Annual Growth Rates of Gross Bank Credit - Population Group*

(Per cent)

Annual Growth Rate

Time

Rural Gross

Bank Credit

Semi-Urban

Gross Bank

Credit

Urban Gross

Bank Credit

Metropolitan Gross

Bank Credit

Sep-08 12.2 17.5 22.1 29.5

Dec-08 15.9 16.9 21.2 25.6

Mar-09 14.0 15.7 20.4 20.2

Jun-09 15.1 15.9 19.0 12.8

Sep-09 21.5 18.7 18.9 9.0 Source: Quarterly Statistics on Deposits & Credit of Scheduled Commercial Banks, Sep 2009.

Population Groups based on 2001 census

Population Group Population of all Centres

Rural Less than 10,000

Semi-Urban 10,000 and above but less than One lakh.

Urban One lakh and above but less than 10 lakh.

Metropolitan 10 lakh and above

balance sheet analysis of various constituents of indian ... in the area of... · balance sheet...

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