BANKING

Banking

All activities pertaining to

people’s need for money,

under various categories

(including receiving deposits and lending).

Today banking activities cover other areas connected with financial services too.

Types of Banking

• Retail Banking

• Commercial Banking

• Corporate Banking

• Investment Banking

• International Banking

• Universal Banking

Evolution of the Industry

• Flexible exchange rates

• Further trade liberalization in goods and services

• Increase in the level of FDI

• Trade liberalization in financial services

• Deregulation of financial markets, both in developed and in emerging countries

• Securitization

• Global financial stability

• Consolidation of financial institutions

Evolution of Industry

• Increased mergers and acquisitions

• The gradual integration of stock markets around the world

• Internalization of the securities markets

• An increase in the role of corporate governance in national and international investment strategies

• Regional integration (as experienced in Europe, Asia and America)

• The Asian currency crisis and the call for a New International Financial Architecture

• Coordination amongst the central banks through the BIS and financial globalization

Vibrant Indian Banking Sector

• Size of the banking sector which was Rs.5,984 bn in 1995 is expected to grow to over Rs. 40 trillion in 2010

• Growing competition is enabling various banks to increase market share. However, public sector banks continue to play a major role.

Banking Sector after reforms

• Widespread branch net-work, varied client base• Public confidence in PSBs • Risk averseness: limited exposure to risky sectors• Investment in retail branches has given PSBs a competitive advantage

(access to stable, low cost deposits) NOTE : the large staff strength, age profile, Government regulations

and slow pace of change in PSBs, could be a hindrance to dynamic growth in today’s fast paced world

Technology in Banking

• IT spend by banking and financial services industry in USA is 7% of the revenue, as against around 10% by Indian Banks.

• Shared ATM network (17000) reduces costs, increase reach.

• SBI: Branch networking (CBS), ATM network, Internet banking and other facilities introduced in shortest time frame (Hewlett Packard)

• Cheque truncation system to change the speed of banking transactions

• RTGS system running since 2004 and covers 15,000 branches

• Adoption of Technology to lead business transformation and cost advantage in the long term.

• Retail banking alone is expected to add approximately $200 billion in new revenues in Asia by 2010

• India's retail-banking market is expanding rapidly. The total annual revenues are expected to be more than double; to $20 billion by 2010, from about $6.4 billion today

• ATM usage in India rose six-fold from 1999 to 2004, and now about 50% of bank customers use teller machines.

• Customers in their 20s are twice as likely as those in other age groups, to use ATMs, whose availability has grown dramatically in the recent past.

Banking - Overview

Indian Banking Sector: An Overview

• 235 commercial banks in India (of which 133 RRBs) operate with about 60000 branches

• Nearly 70% of branches are in rural/semi-urban areas• Bulk of commercial bank finance is for short-term

working capital needs of industry, trade, agriculture & personal segment.

• Banks are driving the growth of the economy, by financing productive sectors• CD ratio increased to 72.5% against benchmark 60%.

Incremental CD Ratio of over 100% reflects the strong underlying credit momentum.

Key Learning Areas

1. Introduction to Money and Banking

2.      Banking Laws and Regulations

3.      Credit Management

4.      Treasury Management and International Banking

5.      Risk Management in Banks

6.     Accounting and Audit

7. Managing Banking Companies

Designation

• Accounts Executive/Accountants• Accounts Managers/Chartered Accountants• Financial Accountant• Financial Analyst• Branch Manager• Credit manager- Corporate Banking• Business Analyst• Software Developer/Systems Administrators

Tracing the Career pathTracing the Career path

Career path in Retail Banking

Retail Bankers are involved in customer interaction, front line sales, channel sales, development of asset / liabilities / card products, marketing of products or handling non-delivery channels for Banking products (like ATMs, Internet etc)

Industry

• Software Services

• Cement/Construction/Engg./Metal/Steel/Iron

• Telecom

• FMCG Goods

• Banking & Financial Services /Stock Broking

• Accounting Consultant / Taxation

• Insurance

Major Players

• Global– JP Morgan Chase – Bank of America– HSBC– Citigroup – Deutsche Bank – Goldman Sachs– Morgan Stanley– Merrill Lynch – BNP Paribas

• Indian– SBI

– ICICI

– PNB

– HDFC

– Bank of Baroda

– Corporation Bank

– IDBI

– UTI