banking group 3

7/23/2019 Banking Group 3

http://slidepdf.com/reader/full/banking-group-3 1/32

Name of Institution

DIFFERENTIATED BANKINGIN INDIA- IS INDIA REALLY

PREPARED

Prepared BY-

APURVA JHAKHUSBOO RAI

MOHIT BHARDWAJ

JASON RIBEIRO



Name of InstitutionINTRODUCTION

• New Prime Minister Narendra Modi is said to have a master plan of

sweeping reforms to revive the economy and return it to a high growth

trajectory.

• In a dynamic growth-oriented economy, the financial sector needs to

keep pace with the demands of the real sector.

• It is crucial that the financial system is flexile and competitive to

cope with multiple ojectives and demands made on it y various

constituents of the economy.

•

!he financial sector comes of age when it has diverse institutions,catering to different segments, ranging from retail to wholesale, micro-

finance to project finance, nurturing specific sectors and offering

speciali"ed services and tailor-made products to niche segments.

2



Name of Institution

• In India, banking indus!" is #$ %&s i%'&!an(#ann$) *#i(# '!&+id$s nan(ia) s$!+i($s

• On$ &. #$ k$" &b/$(i+$s &. bank nai&na)i0ai&n in13 and 145 *as & s'!$ad #$ banking #abi#!&ug# &'$ning b!an(#$s in #i#$!& un-bank$d a!$as

• T#$ '&s nai&na)i0ai&n d$(ad$s *in$ss$d !a'ids'!$ad &. bank b!an(#$s in #i#$!& un-bank$d a!$asand banking #as sin($ in(!$as$d in s(a)$ and(&%')$6i"

7



Name of Institution

8#a is di9$!$nia$dbanking:• Universal Banking Model *#$!$banks a!$ #&)ding (&%'ani$s #a&'$!a$ di9$!$n busin$ss$s )ik$ass$ %anag$%$n, insu!an($, ass$!$(&ns!u(i&n, s&(k b!&king, $(,#!&ug# subsidia!i$s, /&in +$nu!$s

and a<)ia$s

=



Name of InstitutionCommon features• F&! b&# (a$g&!i$s > Pa"%$ns Banks and S%a)) banks

?ini%u% 'aid-u' (a'ia) - Rs155 (!&!$P!&%&$!s@ iniia) (&n!ibui&n -=5 .&! +$ "$a!s

T#$ d!a. guid$)in$s #a+$ '!$s(!ib$d a i%$.!a%$ & b!ing d&*n#$ '!&%&$!s@ sak$ & =5 '$! ($n *i#in #!$$ "$a!s, 75 '$!($n *i#in 15 "$a!s and & 23 '$! ($n *i#in 12 "$a!s .!&% #$

da$ &. (&%%$n($%$n &. #$ bank• T#$ %ain '&in &. in$!$s #as b$$n &n *#& *&u)d b$ #$ !s &

sa! #$s$ banks A((&!ding & #$ d!a. guid$)in$s, $nii$s$)igib)$ & sa! Pa"%$ns Banks in()ud$-

N&n-bank '!$'aid ins!u%$n issu$!s

N&n-banking nan($ (&%'ani$s C&!'&!a$ busin$ss (&!!$s'&nd$ns

?&bi)$ $)$'#&n$ (&%'ani$s

Su'$!%a!k$ (#ains and (&-&'$!ai+$s

T#&s$ $)igib)$ & sa! S%a)) Banks in()ud$ indi+idua)s *i# $n"$a!s &. $6'$!i$n($ in banking and nan($ s&(i$i$s, NBFCs,



Name of Institution

NEED FOR ?ORE BANKS AND DIFFERENTIATED BANKS

• T#us #$ Finan(ia) In()usi&n $9&!s #!&ug# #$ $6ising s$ &.banks #a+$ b$$n (&ninu$d, #$ R$s$!+$ Bank is (&ns(i&us &. #$'&sii&n #a #$s$ %a" n& b$ ad$ua$ & s'$$d u' #$ '!&($ss

and a(#i$+$ #$ g&a)s $a!)"• T#$ (&n($' &. di9$!$nia$d banks *as !s dis(uss$d in 255

*#$n i *as .$) #a #$ i%$ *as n& "$ &''&!un$ .&! su(#banks

• T#$!$a.$!, #$ (&n($' *as &n($ again dis(uss$d in a Pa'$!

Banking S!u(u!$ in India - T#$ 8a" F&!*a!d, b!&ug# &u b"#$ R$s$!+$ Bank in Augus 2517

• T#$ Pa'$! )&&k$d in& +a!i&us as'$(s &. #$ banking s!u(u!$,)i($nsing &. banks, banking %&d$)s and sugg$s$d a !ansii&n'a# .&! s&%$ banks

3



Name of Institution

• An&#$! iniiai+$ ak$n b" #$ R$s$!+$ Bank *as s$ing u'&. a C&%%i$$ #$ad$d b" S#!i Na(#ik$ ?&!, &nC&%'!$#$nsi+$ Finan(ia) S$!+i($s .&! S%a)) Busin$ss$s andL&*-In(&%$ H&us$#&)ds & )&&k in& #$ issu$s !$)aing &nan(ia) in()usi&n

• T#$ (&%%i$$ (a%$ u' *i# *& b!&ad d$signs .&! #$banking s"s$% in #$ (&un!" - #$ H&!i0&na))"Di9$!$nia$d Banking S"s$% HDBSJ and #$ $!i(a))"Di9$!$nia$d Banking S"s$% DBSJ bas$d &n #$.un(i&na) bui)ding b)&(ks &. 'a"%$ns, d$'&sis and (!$di



Name of InstitutionWhat are

dierentiatedbanks• Di9$!$nia$d banks a!$ disin( .!&% uni+$!sa)

banks as #$" .un(i&n in a ni(#$ s$g%$n T#$di9$!$niai&n (&u)d b$ &n a((&un &. (a'ia)!$ui!$%$n, s(&'$ &. a(i+ii$s &! a!$a &.

&'$!ai&ns• As su(#, #$" &9$! a )i%i$d !ang$ &. s$!+i($s

'!&du(s &! .un(i&n und$! a di9$!$n !$gu)a&!"dis'$nsai&n T#$ (&n($' is n& $ni!$)" n$* In

.a(, and in a s$ns$, #$ UCBs, #$ PACS, #$RRBs and LABs (&u)d b$ (&nsid$!$d asdi9$!$nia$d banks as #$" &'$!a$ in )&(a)i0$da!$as

4



Name of Institution

• In &u! (&un!" di+$!s$ &''&!unii$s in #$ banking s$(&! !$M$(ingsigni(an %a(!&-$(&n&%i( g!&*# '&$nia) (&u)d b$ ui)i0$d b"ni(#$ banking b" .a(i)iaing s'$(ia)i0ai&n #$!$b" $n#an(ing&'i%a) us$ &. !$s&u!($s

• Ea(# &. #$ ni(#$s #as #$ '&$nia) & b$ indi+idua))" )a!g$ & susain

signi(an ba)an($ s#$$s and s'$(ia)i0$d $nii$s (an ')a" a %a/&!!&)$ in a)) &. #$%

• Cu!!$n)", *#i)$ #$ banking s$(&! is $+&)+ing d$'$nding &n #$n$$ds &. #$ $(&n&%", i is .$) #a gi+$n a (#&i($, s&%$ banks andn&n-bank nan(ia) (&%'ani$s %a" (#&&s$ & &'$!a$ as as'$(ia)i0$d ni(#$ bank & d$!i+$ #$ &b+i&us ad+anag$s &. )&*$!

abs&)u$ (a'ia) !$ui!$%$ns, )&*$! (&s &. .unds and s'$(ia)i0ai&n• As a !$gu)a&!, #$ R$s$!+$ Bank .$) #a an $nab)ing $n+i!&n%$n

s#&u)d b$ '!&+id$d .&! ni(#$ banks a)s& & &'$!a$ and )$+$!ag$u'&n #$% & (&n!ibu$ & #$ &b/$(i+$ &. nan(ia) in()usi&n



Name of Institution

Advantages of dierentiated banks

• T#$!$ a!$ di+$!s$ &''&!unii$s in #$ bankingand nan(ia) )ands(a'$ !$M$(ing signi(an%a(!&-$(&n&%i( g!&*# '&$nia) in India

• $!" )a!g$ i(k$, )&ng $!% in.!as!u(u!$ )$nding!$ui!$s !isk %anag$%$n $6'$!is$ #a g&$sb$"&nd !adii&na) (!$di a''!aisa)s a banks

• $!" )&* i(k$ uns$(u!$d (!$di !$ui!$s !isk%anag$%$n %$#&d&)&g" and (&s (&n!&) #ais n& $as" in #$ busin$ss %&d$) &. (&n+$ni&na)banks

15



Name of Institution

• In(!$as$ in (&%'$ii&n a%&ng banks (&u)d )&*$!(&ss &. !ansa(i&ns

• Ga's in S?E nan($ (an b$ ))$d *i# ass$ and(as# M&* bas$d )$nding, &'$!aing )$as$s, and.a(&!ing

• Issu$s &. (&nMi( &. in$!$s *#$n a bank'$!.&!%s %u)i')$ .un(i&ns *&u)d n& a!is$,*#$!$ di9$!$nia$d )i($ns$s a!$ issu$d

• Risk %anag$%$n s"s$%s and s!u(u!$ .&!!$gu)a&!" (&%')ian($ (&u)d b$ (us&%i0$da((&!ding & #$ banking "'$

11



Name of Institution

The Polic on!ierentiated Banks• A.$! a (a!$.u) ana)"sis &. #$ ad+anag$s &. and#$ (#a))$ng$s .!&% )i($nsing di9$!$nia$dbanks, *$ (a%$ & #$ (&n()usi&n #a in ba)an($,#$ ad+anag$s &u*$ig# #$ (#a))$ng$s, and #$

(#a))$ng$s (an b$ $9$(i+$)" %$ *i#a''!&'!ia$ a!!ang$%$ns

• T#$ R$s$!+$ Bank #as, a((&!ding)", d$(id$d &)i($ns$ di9$!$nia$d banks and guid$)in$s &n

)i($nsing &. s%a)) banks and 'a"%$ns banks#a+$ b$$n issu$d in N&+$%b$! 251=

12



Name of InstitutionDi9$!$nia$d

Banking 'a!n$!s#i'• #$I welcomed the move of the differentiated anking

partnership

• It was a first major tie up etween country largest moile

telephony player $harati %irtel and &otak Mahindra $ank for

a payments ank

• 'ost of telecos, including the state-run $(N), *odafone and

!elenor are interested in entering the differentiated anking

fray

• !he Payment $anks are aimed at encouraging savings and

help with the remittances, while the (mall +inance $anks will

e small-ticket lending in a smaller area of operation

17



Name of InstitutionOb/$(i+$s

• !he ojectives of licensing small finance banks are furthering financial inclusion y

provision of savings vehicles

• Supply of credit to small usiness units small and marginal farmers micro and small

industries and other unorgani"ed sector entities, through high technology-low cost

operations.

• !he ojectives of setting up of payments banks are to further financial inclusion y

providing -

a small savings accounts

payments / remittance services to migrant laor workforce, low income

households, small usinesses, other unorgani"ed sector entities and other users

1=



Name of InstitutionPromoters

• !he Small Finance Banks can e promoted y individuals who have at least

01 years of experience / expertise in financial or anking field

• !he promoters will have to e resident Indians or owned and controlled by

resident Indians.

• !he promoter2s minimum initial contriution to the paid-up e3uity capital of

such small finance ank shall at least e 41 per cent and gradually rought

down to 56 per cent within 05 years from the date of commencement of

usiness of the ank.

1



Name of InstitutionResponsibilities and permissible

activities

• T#$ "mall #inance Banks *i)) b$ s%a)) si0$d uni+$!sa) banks T#$"

#a+$ & nan($ '!i&!i" s$(&! & #$ $6$n &. &. #$i! NDTL *#i)$

=5 s#&u)d b$ as '$! sanda!d '!i&!i" s$(&! n&!%s, #$ &#$! 7 (an

b$ in an" &. #$ '!i&!i" s$(&! 5 &. #$i! (!$di '&!.&)i& *i)) #a+$ &

b$ &. i(k$ si0$ &. )$ss #an 2 )ak#

• T#$ Paments Banks (an und$!ak$ 'a"%$n and d$'&si s$!+i($s &n)"

T#$" (an a(($' d$'&sis .!&% a (us&%$! u'& 1 )ak# &n)" T#$" *i))

#a+$ n& (!$di '&!.&)i& T#$" s#&u)d in+$s &. #$i! NDTL &n)" in

G&+$!n%$n s$(u!ii$s T#$" *i)) n& b$ sub/$( & '!i&!i" s$(&! n&!%s

T#$" (an '$!.&!% Banking C&!!$s'&nd$n .un(i&ns & &#$! banks

13



Name of InstitutionChallenges of designing thedierentiated banking

structure

• Given or o!"e#$ive o% %r$&erin' %inan#ia( in#()ion* i$ +a) re(a$ive(, ea), $o

de$erine +&a$ $,pe o% di%%eren$ia$ed !an.) $&a$ #an )!-)erve $&i) o!"e#$ive/

• I$ +a) ap(, #(ear $&a$ $&e Sa(( 0inan#e Ban.) and Pa,en$) Ban.) are )#&

en$i$ie)/ Ho+ever* de)i'nin' $&eir )$r#$re) +a) no$ $&a$ ea),/ We en#on$ered

)evera( #ope$in' op$ion)* di(ea) and #on%)ion/

• We re)o(ved $&e)e $&ro'& in$erna( de(i!era$ion) and e1$erna( #on)($a$ion)/ T&e

%eed!a#. $o or dra%$ 'ide(ine) +ere a()o va(a!(e in re)o(vin' )oe o% $&e)e

i))e)/ 2e$ e e1p(ain #er$ain .e, #&a((en'e) and &o+ did +e re)o(ve $&e/



Name of InstitutionLegal provisions for licensing of

dierentiated banks

• "ection $$ of the Banking %egulation Act& '()( '!&+id$s #a a

(&%'an" in$nding & (a!!" &n banking busin$ss %us &bain a )i($ns$

.!&% RBI $6($' su(# &. #$ banks 'ub)i( s$(&! banks and RRBsJ,

*#i(# a!$ $sab)is#$d und$! s'$(i( $na(%$ns E+$!" bank in India,i.e, d&%$si( and .&!$ign, a'a! .!&% banking busin$ss, (an (a!!" &u

a)) #$ a(i+ii$s '$!%i$d und$! S$(i&n 3 &. #$ Banking R$gu)ai&n

A( H&*$+$!, #$ A( a)s& '!&+id$s .&! R$s$!+$ Bank s'$(i."ing #$

$!%s and (&ndii&ns and &#$! !$ui!$%$ns, a)&ng *i# #$ )i($ns$s

8$ #a+$ & $%')&" #$s$ '!&+isi&ns .&! )i($nsing &. di9$!$nia$d

banks

14



Name of InstitutionViability of the models

Concentra

tion risk

Asset*iabilit

mismatches

Absence

of crosssubsidi+at

ion

Avenuesfor

incomegeneratio

n1



Name of InstitutionConcentration risk

25



Name of InstitutionConcentration risk

• Concentration risk, T#$

di9$!$nia$d banks *i)) b$ .!aug#

*i# (&n($n!ai&n !isk and a

d&*nu!n in a 'a!i(u)a! s$(&! &!

!$gi&n (an /$&'a!di0$ #$ &'$!ai&ns

&. a bank

21



Name of InstitutionAsset *iabilit

mismatches

22



Name of InstitutionAsset *iabilit

mismatches

27



Name of InstitutionAsset *iabilit mismatches

• Asset *iabilit mismatches, S$(&!-s'$(i(

banks !un #$ !isk &. ass$- )iabi)i"

%is%a(#$s Ass$ )iabi)i" %is%a(#$s *i)) b$'&sing a (#a))$ng$ & )iuidi" %anag$%$n

b" di9$!$nia$d banks I is #$!$.&!$,

i%'$!ai+$ & #a+$ s'$(i( ass$-)iabi)i"

%anag$%$n AL?J &&)s .&! su(# banks

2=



Name of InstitutionCross subsidi+ation

• Absence of cross subsidi+ation,Uni+$!sa) banks .un(i&n b" $ngagingin (!&ss-subsidi0ing )&ss %aking

busin$ss in &n$ s$g%$n *i#$a!nings .!&% an&#$! *#i(# *i)) n&b$ '&ssib)$ .&! s'$(ia)i0$d banks

#$!$b", i%'a(ing #$i! !$+$nu$s T#$ )&(a)i0$d &'$!ai&ns &! !$s!i(i&n&n #$ banks & $ngag$ in a

'a!i(u)a! a(i+i" (&u)d )$ad & n&n--2



Name of InstitutionCross subsidi+ation

23



Name of InstitutionAvenues for

incomegeneration• P!&+iding a+$nu$s .&! in(&%$g$n$!ai&n .&! #$ di9$!$nia$dbanks is a (#a))$ng$ T& b$gin *i#,

&#$! .$$-bas$d busin$ss )ik$dis!ibui&n &. insu!an($ and %uua).und '!&du(s, (!$di (a!d busin$ss,

!$%ian($s, 'a"%$n ands$)$%$n busin$ss, $( (&u)d b$'$!%i$d & aug%$n #$ !$+$nu$

s!$a%s2



Name of Institution

Challenges to regulation andsu-ervision

• Di9$!$nia$d banks *&u)d ak$ a*a" #$ )$+$) ')a"ing $)d *#i(#

is n&* a+ai)ab)$ & a)) banks uni.&!%)" *#$!$ #$ banks a!$

!$ui!$d & (&n!ibu$ & #$ '!i&!i" s$(&! &b)igai&ns and &#$!

*$).a!$ %$asu!$s &. #$ G&+$!n%$n I%')$%$ning su(#

&b)igai&ns *&u)d b$(&%$ di<(u) #!&ug# di9$!$nia$d banks

T#$!$.&!$, & $nsu!$ 'a!i(i'ai&n &. #$s$ banks in #$

d$+$)&'%$na) n$$ds &. #$ $(&n&%", a''!&'!ia$ %&di(ai&ns

%a" #a+$ & b$ s$ k$$'ing in +i$* #$ nau!$ &. #$ busin$ss

%&d$)

• F&! S%a)) Finan($ Banks )$+$) &. P!i&!i" S$(&! L$nding

!$ui!$%$n a , as #$ +$!" 'u!'&s$ is nan(ia) in()usi&n F&!

Pa"%$ns Banks, as #$" *i)) n& #a+$ )$nding a(i+ii$s, i *as24



Name of Institutioni$* O. a Bank

• Sa$ Bank &. India #as said #a #$ di9$!$nia$d banking%&d$) #as n& *&!k$d .&! #$ (&un!" in #$ 'as and i issi)) && '!$%au!$ & i%')$%$n i in India

• T#$ SBI !$'&! said #a $+$n &da" #$!$ a!$ %an" )a"$!sin Indias banking s!u(u!$ T#$!$ *$!$ 1 (&%%$!(ia)banks a #$ $nd &. ?a!(# *#i(# in()ud$d 23 'ub)i( s$(&!banks, 25 '!i+a$ s$(&! banks, =7 .&!$ign banks, 3= RRBsand = L&(a) A!$a Banks LABsJ

• A'a! .!&% #is, #$!$ a!$ a)s& &#$! )$nd$!s, )ik$ (&-&'$!ai+$ banks, in.!as!u(u!$ )$nd$!s su(# as IIFCL, &#$!

s'$(ia)i0$d )$nd$!s )ik$ EQI? Bank !ad$ nan($J, SIDBIs%a)) $n$!'!is$sJ and NABARD ag!i(u)u!$ and !u!a)a(i+ii$sJ, NBFCs and %i(!&-nan($ insiui&ns $(, a!$a)s& in #$ s"s$% I (&n()ud$s #a, #$ Indian banks andnan(ia) insiui&ns a!$ '!$s$n)" b$ing &'$!aing in a))

busin$ss +$!i(a)s S&, #$ di9$!$nia$d banks (&n($' is

2



Name of InstitutionRBI C&%%$n@s•

RBIs sa$%$n #a #&s$ *#& did n& ua)i." .&! a bank)i($n($ (an in .uu!$ a'')" .&! a di9$!$nia$d bank)i($n($ RBIs (&%%$n *as a 'a! &. #$ ann&un($%$n &.Band#an Finan(ia) S$!+i($ and IDFC as su(($ss.u)a'')i(ans .&! bank )i($n($s

75



Name of Institution

Issu$ !$)a$d &Di9$!$nia$d banking In

IndiaI *i)) #a+$ #$ i%'a( &n '!i&!i" s$(&! )$nding b"a))&*ing s&%$ )$nd$!s & .&(us &n ni(#$ s$g%$n I

a)s& Mags !isks in+&)+$d in a))&*ing ni(#$ ')a"$!sun)i%i$d a(($ss & *#&)$sa)$ .unds #!&ug# in$!-bank b&!!&*ing Fina))" i '&ins &u #a banks.un(i&n b" $ngaging in (!&ss-subsidi0ing )&ss

%aking busin$ss in &n$ s$g%$n *i# $a!nings .!&%an&#$! *#i(# *i)) n& b$ '&ssib)$ .&! s'$(ia)i0$d

banks

71



Name of Institution

THANK YOU

72

banking group 3

Documents