vision 2020 banking & finance
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VISION 2020 IN BANKING AND FINANCE Presenters:
Seemoli , Pardha , Anant & Preeti
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Mergers & Acquisitions
• More BRIC nation companies will be on the acquiring side
• The highest volume of M&A transactions in 2020 will be seen in ‘Energy & Utilities’ sector
• Standardization of accounting policies worldwide facilitate M&A
• Indian banks may buy stakes in banks abroad
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GlobalizationUpsurge of remote
banking
Adoption of global standards
Walk-in-loans & credit rating for each customer
Technology would be the key to
competitiveness
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Financial Inclusion
• AADHAR will cover the entire population by 2020
• Urbanization & Predicted literacy rate close to 80%
• 600 million new customers' accounts
• Rural areas to be covered by ATMs
• More households investing in shares , debentures , mutual funds
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Commodity Markets
2005-06 2006-07 2007-08 2008-09 2009-10 2010-110
20
40
60
80
100
120
Commodities Turnover
turnover Rs. Trillion
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• FIs & banks will be permitted to invest in the
commodities markets.
• Bill to grant additional authority to the FMC has been
pending enactment for several years now – it will be
passed
• It is a Futures market , by 2020 options will be
introduced
• Commodities markets to overtake capital markets
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FDIs & FIIs• FII inflows US$ 13 billion into Indian stocks till September 2012
• FDI inflow Rs. 734,240.48 Crores (162,305.99 US$ million)
• The Centre for Monitoring Indian Economy (CMIE) projects that FII inflows second half of FY13 at US$ 11.2 billion
• Major FIIs like JP Morgan, Morgan Stanley and Deutsche Bank are believed to drive the positive wave of foreign investments
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PRIVATE EQUITY
Rs
Rs
Rs
Rs
Rs
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Structure of Global GDP(in current US $ Trillion)2000 2011 2016 2020 2025
World GDP 32.2 68.7 90.5 110.5 140.5
Advanced Economies 25.7(79.7%)
44.4(64.6%)
53.3(58.9%)
61.1(55.3%)
71.7(51.1%)
Developing and Emerging 6.5(20.3%)
24.3(35.4%)
37.2(41.1%)
49.4(44.7%)
68.8(48.9%)
of which India 0.5(1.5%)
1.9(2.8%)
3.6(4.0%)
5.8(5.2%)
10.0(7.1%)
Industry 11th Plan(in %)
12th Plan(9.0%)(in %)
12th Plan(9.5%)(in %)
Agriculture, Forestry & Fishing
3.2 4.0 4.2
Construction 7.8 10.0 11.0
Financing, Insurance, Real Estate &Business services
10.7 10.0 10.5
Total GDP 8.2 9.0 9.5
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Broad Macro-Economic Parameters - Previous Plan and Targets for Twelfth Plan•The labor force in India is expected to increase by 32 per cent over the next 20 years•The Interest rates may be decreased (to 8%) in order to encourage growth
11th Plan 12th Plan (Target 9.0%)
12th Plan (Target 9.5%)
1 Investment Rate 36.4 38.7 41.4
2 Fixed Investment 30.9 33.5 35.5
3 Savings Rate 34.0 36.2 38.9
4 Current Account Balance -2.4 -2.5 -2.5
5 WPI Inflation Rate 6.0 4.5-5.0 5.0-5.5
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Regulatory Systems in the Indian Financial Market
• Maintain the current conservative system of regulation
• Indian banks should conservatively trade in derivative
market, not be influenced by US,UK banks
• Should resolve problems such as increasing population,
high unemployment rate
• Should not let the debt level rise as much as US, Europe
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Microfinance
• Financial education
• Product range, informed by understanding client
needs
• Credit bureaus
• Client protection
• More loans available for rural india
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Fiscal and Monetary policy
• FDI
• Investments
• Flexible Defence expenditure
• Short term loans
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Financial Inclusion in the banking sector
The HR challenge : Re-skilling, attracting and retaining
Automation implicationsChallenges
Mortgages to cross Rs 40 trillion by 2020
The number of branches to grow 2X,ATMs 5X
Investment banking to grow ten fold.
Infrastructure financing : Rs 20 trillion on bank books
Wealth management : 10X growth
Opportunities
Banking Regulations
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CAPITAL ACCOUNT 2020• Planning Commission envisages Foreign Direct
Investments (FDI) to contribute 35% (21% now) to
gross capital formation.
• FII inflows to get stronger in the second half of this
fiscal.
• Plan panel sets $100 billion target for pharma sector.
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Cabinet approval of FDI cap hike to
49%
IRDA support:
Secure Rs 40,000 crore
Exit opportunity to promoters
India 2020:
Among top three life insurance
markets
Converge
Innovate
PenetrateInsurance in India in 2020
Insurance in India in 2020
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Immediate employment potential: 10 million
30 percent mandatory procurement preferably from MSMEs
Infrastructure development: rural development
Technical expertise and better quality
F
ID
Retail
What it has in store for India?
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Indian Pension market in
2020• Pension sector reforms (PFRDA Bill) : Favored by FICCI,
ASSOCHAM and CII.
• Easing rules for pension and insurance funds could help secure
$1 trillion in investment up to 2017.
• FDI could raise share of pension fund assets to GDP from the
current 5% to close to 17%, meeting capital needs.
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Land Reforms and Land Acquisition And Rehabilitation Resettlements Bill
• Infrastructure development for GDP target of 5.5
trillion USD by 2020.: incentive to infrastructure
financing
• Bigger share of the rewards of urbanization and
industrialization to landowners.
• Balance between social and economic uses of land
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References• Faster, Sustainable and More Inclusive Growth (Oct 11)• Report of the Committee on India Vision 2020 (2002)�• Report of The Committee on Angel Investment & Early�• Stage Venture Capital June 2012• http://www.dnb.co.in/India2020economyoutlook/
Macro_Economic_Outlook2020.asp• www.perjacobsson.org/external/np/seminars/eng/.../
fiscal/.../heller.pdf• www.business-standard.com/india/...regulationfinancial-
system/416450• www.articles.economictimes.indiatimes.com• www.mpra.ub.uni-muenchen.de/4438/1/
MPRA_paper_4438.pdf• http://socialenterprise.georgetown.edu/events-and-media/
2011-3/the-future-of-microfinance-opportunities-challenges-for-financial-inclusion
Thank you !