Banks & Financial Institutions

Introduction

A bank is a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly by loaning or indirectly through capital markets. A bank links together customers that have capital deficits and customers with capital surpluses.

Due to their importance in the financial system and influence on national economies, banks are highly regulated in most countries.

Finance is the life blood of trade, commerce and industry. Now-a-days, banking sector acts as the backbone of modern business. Development of any country mainly depends upon the banking system.

Reasons for Outsourcing in a Manufacturing Industry

Key Statistics

  • India is one of the top 10 economies globally, with vast potential for the banking sector to grow.
  • In 2014, the country’s Rs 81 trillion (US$ 1.34 trillion) banking industry is set for a higher change.
  • Through the Financial Inclusion Plan (FY 10–13), banking connectivity in the country increased more than three-fold to 211,234 villages in 2013 from 67,694 at the beginning of the plan.
  • In 2012–13, Indian banks had 170 overseas branches (163 in 2011–12) while foreign banks had 316 branches in India (309 in 2011–12).
  • Total banking sector credit is expected to grow at a CAGR of 18.1 per cent (in terms of INR) to touch US$ 2.4 trillion by 2017.
  • The revenue of Indian banks increased four-fold from US$ 11.8 billion to US$ 46.9 billion during the period 2001–2010.
  • Indian Banking Industry currently employs 1,175,149, employees and has a total of 109,811 branches in India and 171 branches abroad and manages an aggregate deposit of 67504.54 billion (US$1.1 trillion) and bank credit of 52604.59 billion (US$890 billion).
  • The net profit of the banks operating in India was 1027.51 billion (US$17 billion) against a turnover of 9148.59 billion (US$150 billion) for the fiscal year 2012-13.
  • Employment Scenario

    Year Public Sector Banks Private Sector Banks
    No. of Employees Cost per Employee No. of Employees Cost per Employee
    1998 – 99 8.83 1.68 0.60 1.69
    2002 – 03 7.57 2.70 0.59 3.55
    2008 – 09 7.31 4.72 1.76 4.84
    2010 – 11 7.57 7.16 2.18 5.63

    * Data in Lacs

Future Prospects

  • According to an IBA-FICCI-BCG report titled ‘Being five star in productivity – road map for excellence in Indian banking’, India’s gross domestic product (GDP) growth will make the Indian banking industry the third largest in the world by 2025. According to the report, the domestic banking industry is set for an exponential growth in coming years with its assets size poised to touch USD 28,500 billion by the turn of the 2025 from the current asset size of USD 1,350 billion (2010)”.
  • India’s banking sector has the potential to become the fifth largest banking sector globally by 2020 and the third largest by 2025. The industry has witnessed discernable development, with deposits growing at a CAGR of 21.2 per cent (in terms of INR) in the period FY 06–13; in FY 13 total deposits stood at US$ 1,274.3 billion. (Source: IBEF)
  • Credit to housing sector grew at a compound annual growth rate (CAGR) of 11.1 per cent during the period FY 2008–13. Total banking sector credit is expected to grow at a CAGR of 18.1 per cent (in terms of INR) to touch US$ 2.4 trillion by 2017. (Source: IBEF)
  • The banking sector may create up to 20 lakh new jobs in the next 5-10 years, helped by issuance of new licences and efforts being made by the RBI and the Government to expand financial services into rural areas, according to experts. According to HR services major Randstad India, banking sector will generate 7-10 lakh jobs in the coming decade and the sector would be the among top job creators in 2014.