Sunday, February 6, 2011

Mint Article:The decade in banking

Last week I read an article in mint, so thought of sharing some interesting facts... Click here for full article...

  • The Indian banking system could remain insulated from the global credit crunch and its impact in the wake of the fall of US investment bank Lehman Brothers Holdings Inc. on the strength of its high capital-to-assets ratio and low bad assets.
  • The collective net profit of the industry was Rs7,100 crore in 2001. By 2010, it had risen eight times to Rs57,109 crore.
  • Bad assets, as a percentage of loans, were 6.83% in 2001. This has come down to 1%.
  • The net worth of the industry—capital plus reserves—during this period has risen from Rs57,146 crore to Rs3.56 trillion.
  • The ratio of operating cost to total assets has come down from 2.68% to 1.87% and return on assets rose from 0.57% to 1.05% between 2001 and 2010, highlighting the industry’s efficiency.
  • In 1991, the year India moved ahead with a process that it had begun in the mid-1980s and embraced economic liberalization, the loan outstanding in the industry was Rs1.24 trillion, about 24% of the nation’s gross domestic product (GDP). By 2000, it rose to Rs4.6 trillion, but as a percentage of GDP still remained about 25.75%. In the last decade, the loan book grew to Rs32.4 trillion, a little over 55% of India’s GDP.
  • The overall number of branches has gone up from 61,724 in 1991 to 67,061 in 2000 and 81,802 in 2009 (the latest data available), but the average population serviced by one bank branch has dropped only marginally, from 15,000 in 1991 to 14,000 currently.
  • In 1991, there were 35,134 rural branches, accounting for close to 57% of the total national branch network. In 2000, this number dropped to 32,673 and 48.7% of the branch network. By 2009, it dropped further to 31,549 and 38.6%. During this time, branches in metros rose from 6,191 to 8,957, and finally, to 14,761 (from 10% to 13.4% to 18%).
  • In 1991, there were a little over 100 million deposit accounts in rural India— 31% of the total. By 2000, their number rose to about 126 million, but the market share slipped marginally to 30%. In 2009, the number rose to about 199 million, but as a percentage of total number of accounts, it remained the same—30%—as the overall number of deposit accounts rose from 355 million in 1991 to 662 million in 2009. The share of metros (in terms of accounts), however, rose from 19% in 1991 to 20% in 2000 and 23% in 2009.
  • In 1991, there were about 32 million loan accounts in rural India—52% of total accounts. By 2000, this dropped to 25 million and 46%. In 2009, the number rose to 34 million, but as a percentage of total number of accounts it slipped further to 31%. In these two decades, the share of metros rose from 6% to 33%. In terms of money raised through these accounts, rural India’s share slipped from 21% in 1991 to 13% in 2000 and 11% in 2009, while share of metros rose from 40% to 56% and 60%, respectively.

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