Chapter II: Developments in Commercial Banking (Part 2 of 4) - ಆರ್ಬಿಐ - Reserve Bank of India
Chapter II: Developments in Commercial Banking
(Part 2 of 4)
2.8 An examination of the fortnightly data available through the special returns reveals that there has been a deceleration in the banks’ subscription of money and capital market instruments and issued by the non-financial commercial sector during 1999-2000 after a sharp increase during 1998-99 (Table II.7). After recording an increase of Rs.13,907 crore during 1997-98 and Rs.15,941 crore during 1998-99, such investments decelerated to Rs.12,983 crore during 1999-2000. Similarly, banks’ investments in instruments of FIs and mutual funds decelerated to Rs.3,648 crore during 1999-2000 from Rs.8,904 crore in 1998-99. Consequently, after recording a sustained increase during 1996-97 to 1998-99, the share of non-SLR investments in the deployment of funds by scheduled commercial banks declined to 9.3 per cent during 1999-2000 from 15.3 per cent during 1998-99.
2.9 The Reserve Bank has circulated draft guidelines for banks’ investments in non-SLR securities in June 2000 to ensure that such non-SLR investments are made on sound prudential considerations, with more transparency and guarding against potential risks. To ensure financial system stability and viability of the banking system, the Reserve Bank has also stipulated a market risk weight of 2.5 per cent in addition to the 100 per cent credit risk weight on non-SLR securities, effective March 31, 2001. The details of the draft guidelines on Non-SLR investments of banks are discussed in Chapter I.
Sectoral Deployment of Bank Credit
2.10 The gross bank credit of SCBs increased by 17.2 per cent (Rs.58,806 crore) in 1999-2000 as compared with an increase of 13.9 per cent (Rs.41,729 crore) in 1998-99. The sharp increase in bank credit resulted from 52.8 per cent increase in food credit (accounting for 6.4 per cent of gross bank credit as on March 24, 2000) and a 15.4 per cent increase in non-food gross bank credit (accounting for 93.6 per cent of gross bank credit as on the same date). This increase was brought about primarily by increases in credit to medium and large industry, the wholesale sector and other sectors (constituting the non-priority sector). Credit to priority sector increased by 15.0 per cent, which was marginally lower than 15.2 per cent in the previous year. Within the priority sector, credit to agriculture and small-scale industry showed a rise of 12.0 per cent and 8.9 per cent, respectively while credit to other priority sectors accelerated. Among the non-priority sectors, credit to medium and large industry, wholesale trade and other sectors increased by 12.9 per cent, 20.4 per cent and 19.8 per cent, respectively. An examination of the shares of different components of credit to other sectors in non-food gross bank credit shows that while the share of housing loans, consumer durables, advances against fixed deposits and other non-priority sector personal loans in non-food gross bank credit showed an increasing trend over the last three years, that of real estate loans remained sluggish (Table II.8).
Export Credit
2.11 In order to facilitate exports, the Reserve Bank provides refinance to banks for extending credit to exports. During 1999-2000, export credit refinance limits of SCBs increased from Rs.7,269 crore in March 1999 to Rs.10,579 crore in March 2000, due to the rise in aggregate export credit of SCBs from Rs.36,827 crore in March 1999 to Rs.40,460 crore in March 2000. The average utilisation of export credit refinance availed of by SCBs ranged between 37.2 per cent and 95.7 per cent during March 1999 to March 2000. Banks are required to lend a minimum 12 per cent of advances as export credit. During 2000-2001, the export credit refinance limit has further increased by 17.9 per cent to Rs.12,468 crore in July 2000 (Appendix Table II.1).
Industry-wise Deployment of Credit
2.12 The share of industrial credit in net bank credit declined from 52.7 per cent in 1998-99 to 50.3 per cent in 1999-2000. Credit increased by more than 20 per cent in the case of 9 industries out of the 26 categories of industries. The increase in credit was the highest at 62.6 per cent for the petroleum industry. The decline in credit was witnessed in the case of only two industries viz., mining and ‘tobacco and tobacco products’as against declines reported in respect of as many as 7 industries in 1998-99. An analysis of industry-wise incremental deployment of gross bank credit indicates that during 1999-2000, chemicals, dyes, paints etc., received the maximum incremental share of 16.6 per cent, followed by petroleum (16.3 per cent), all engineering (7.4 per cent), infrastructure industries (6.1 per cent), gems and jewellery (6.1 per cent), cotton textiles (5.9 per cent) and food processing industries (5.8 per cent) (Table II.9).
Bank Credit to Sick/Weak Industries
2.13 The number of sick/weak industrial units financed by the SCBs increased substantially from 2,24,012 as at end-March 1998 to 3,09,013 as at end March 1999. The bank credit to sick industries showed an increase of 24.1 per cent from Rs.15,682 crore as at end-March 1998 to Rs.19,464 crore as at end-March 1999. The outstanding bank credit to sick/weak industries as a proportion of bank credit to industrial sector increased from 9.7 per cent in 1997-98 to 10.9 per cent in 1998-99 (Appendix Table II.2).
Credit-Deposit Ratio
2.14 As per BSR data, the credit-deposit ratio of SCBs as on March 31, 2000 (as per sanctions) stood at 57.1 per cent as against 54.8 per cent at end-March 1999. The rise in credit-deposit ratio reflected improvement in activity as well as pick-up in credit demand. The region-wise distribution of the C-D ratio indicates that with the exception of northern and western regions, the remaining four regions witnessed a decline in the C-D ratio during the year 1999-2000. As on March 31, 2000 the C-D ratio was the highest at 88.0 per cent in the case of Tamil Nadu followed by that of Maharashtra (83.8 per cent) (Appendix Table II.3)
Lending to Sensitive Sectors
2.15 The exposure of scheduled commercial banks to sensitive sectors is limited in India as compared with that in other emerging market economies. As at the end of March 2000, the total amount extended to the sensitive sectors viz., capital market, real estate and commodities by SCBs was Rs.19,669.0 crore constituting 4.4 per cent of total advances. An analysis of the lending pattern of different bank groups to sensitive sectors indicate that new private sector banks disbursed a maximum share of 16.0 per cent of total advances or Rs.3,550.8 crore to the sensitive sectors with capital market’s share in its loans to the sensitive sectors being around 62.0 per cent. Old private sector banks disbursed 8.1 per cent of their total advances to the sensitive sectors with the share of real estate in total advances to the sensitive sector being 43.4 per cent. Foreign banks extended 7.2 per cent of total advances to the sensitive sectors. Among the bank groups, the State Bank group had the lowest level of exposure to sensitive sectors amounting to Rs.1,794.7 crore or 1.4 per cent of its total advances (Table II.10).
Stock Prices of Indian Banks
2.16 During the year 1999-2000 three banks viz., Syndicate Bank, Centurion Bank Ltd. and Times Bank Ltd. raised equity capital amounting to Rs.193.75 crore through initial public offerings (IPOs) in the market. The number of banks listed on stock exchanges increased from 25 in 1998-99 to 29 in 1999-2000. As on March 31, 2000, the shares of 9 PSBs and 19 private sector banks were listed for secondary market trading on the National Stock Exchange (Table II.11). An examination of share prices of PSBs indicated that only two banks viz., the State Bank of Bikaner and Jaipur and the Oriental Bank of Commerce showed increases of 18.3 per cent and 17.0 per cent respectively, while the share prices of the remaining seven banks displayed a decline, with the Bank of India showing a maximum decline of 22.0 per cent (Table II.12). Among the private sector banks, the share prices of all the banks listed on the NSE showed an improvement with five banks showing an increase of above 100 per cent during 1999-2000. The increase in the share price of ICICI Banking Corporation Ltd. was spectacular at 874.6 per cent, followed by HDFC Bank Ltd. (269.8 per cent), Nedungadi Bank Ltd.(187.9 per cent), UTI Bank Ltd. (182.6 per cent) and Global Trust Bank Ltd (152.6 per cent). As a result, the turnover in shares of all banks increased by16.3 per cent to Rs.30,982 crore in 1999-2000 from Rs.26,647 crore in 1998-99. The share of top five banks in total turnover declined marginally to 95.5 per cent in 1999-2000 from 96.4 per cent in 1998-99 (Table II.13). The contribution of bank scrips to total turn over in NSE also declined to 3.7 per cent during 1999-2000 from 6.4 per cent in 1998-99 primarily due to sharp improvement in the overall turn over in the NSE.
(Amount in Rs. crore) |
||||||||||
|
||||||||||
Industry |
Outstanding as on |
Variations during |
||||||||
|
||||||||||
March 27, |
March 26, |
March 24, |
June 18, |
June 30, |
Financial year |
April - June |
||||
1998 |
1999 |
2000 |
1999 |
2000 |
1998-99 |
1999-2000 |
1998-2000 |
1999-2000* |
||
|
||||||||||
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
|
(3-2) |
(4-3) |
(5-3) |
(6-4) |
|||||||
|
||||||||||
Industry (Total of Small, |
||||||||||
Medium and Large Scale) |
1,61,038 |
1,78,999 |
2,00,133 |
1,71,149 |
2,05,648 |
17,961 |
21,134 |
-7,850 |
5,515 |
|
1. |
Coal |
801 |
1,114 |
1,126 |
1,032 |
1,227 |
313 |
12 |
-82 |
101 |
2. |
Mining |
975 |
1,360 |
1,240 |
1,349 |
1,318 |
385 |
-120 |
-11 |
78 |
3. |
Iron & Steel |
15,767 |
18,291 |
18,799 |
17,998 |
18,813 |
2,524 |
508 |
-293 |
14 |
4. |
Other Metals and Metal Products |
5,193 |
5,918 |
6,294 |
5,717 |
6,328 |
725 |
376 |
-201 |
34 |
5. |
All Engineering |
22,833 |
21,513 |
23,069 |
20,598 |
23,292 |
-1,320 |
1,556 |
-915 |
223 |
of which : Electronics |
4,472 |
4,872 |
5,133 |
4635 |
5309 |
400 |
261 |
-237 |
176 |
|
6. |
Electricity |
4,652 |
6,813 |
7,438 |
6,960 |
8,403 |
2,161 |
625 |
147 |
965 |
7. |
Cotton Textiles |
9,331 |
10,430 |
11,682 |
10,433 |
11,838 |
1,099 |
1,252 |
3 |
156 |
8. |
Jute Textiles |
1,089 |
844 |
894 |
820 |
741 |
-245 |
50 |
-24 |
-153 |
9. |
Other Textiles |
10,651 |
12,000 |
13,003 |
12,187 |
13,705 |
1,349 |
1,003 |
187 |
702 |
10. |
Sugar |
2,959 |
3,338 |
3,832 |
3,399 |
4,348 |
379 |
494 |
61 |
516 |
11. |
Tea |
1,028 |
825 |
1,034 |
775 |
954 |
-203 |
209 |
-50 |
-80 |
12. |
Food Processing |
4,134 |
4,750 |
5,986 |
4,746 |
6,370 |
616 |
1,236 |
-4 |
384 |
13. |
Vegetable Oils and vanaspati |
2,296 |
2,710 |
2,958 |
2,555 |
2,794 |
414 |
248 |
-155 |
-164 |
14. |
Tobacco and Tobbaco Products |
1,076 |
1,005 |
993 |
891 |
932 |
-71 |
-12 |
-114 |
-61 |
15. |
Paper and Paper Products |
2,742 |
2,938 |
3,143 |
2,902 |
3,083 |
196 |
205 |
-36 |
-60 |
16. |
Rubber and Rubber products |
2,534 |
2,014 |
2,063 |
1,818 |
2,041 |
-520 |
49 |
-196 |
-22 |
17. |
Chemicals, Dyes, Paints, etc. |
18,120 |
19,929 |
23,440 |
19,629 |
24,812 |
1,809 |
3,511 |
-300 |
1,372 |
of which : |
||||||||||
i) Fertilisers |
2,910 |
3,577 |
4,577 |
3,061 |
5,292 |
667 |
1,000 |
-516 |
715 |
|
ii) Petrochemicals |
2,956 |
4,748 |
6,185 |
4,499 |
6,806 |
1,792 |
1,437 |
-249 |
621 |
|
iii) Drugs & Pharmaceuticals |
5,219 |
5,323 |
5,693 |
5,415 |
5,535 |
104 |
370 |
92 |
-158 |
|
18. |
Cement |
2,502 |
2,746 |
3,624 |
2,846 |
3,835 |
244 |
878 |
100 |
211 |
19. |
Leather and Leather products |
2,478 |
2,542 |
2,664 |
2,446 |
2,527 |
64 |
122 |
-96 |
-137 |
20. |
Gems and Jewellery |
3,530 |
4,124 |
5,406 |
4,140 |
5,800 |
594 |
1,282 |
16 |
394 |
21. |
Construction |
2,646 |
2,569 |
2,736 |
2,333 |
2,596 |
-77 |
167 |
-236 |
-140 |
22. |
Petroleum |
6,155 |
5,516 |
8,969 |
3,898 |
8,025 |
-639 |
3,453 |
-1,618 |
-944 |
23. |
Automobiles including trucks |
2,870 |
3,128 |
4,028 |
3,525 |
4,458 |
258 |
900 |
397 |
430 |
24. |
Computer Software |
616 |
747 |
1,022 |
663 |
1,038 |
131 |
275 |
-84 |
16 |
25. |
Infrastructure |
3,163 |
5,945 |
7,243 |
6,137 |
8,636 |
2,782 |
1,298 |
192 |
1,393 |
of which : |
||||||||||
i) Power |
697 |
2,109 |
3,289 |
2,625 |
4,035 |
1,412 |
1,180 |
516 |
746 |
|
ii) Telecommunications |
2,045 |
2,273 |
1,992 |
1,946 |
2,516 |
228 |
-281 |
-327 |
524 |
|
iii) Roads and Ports |
421 |
1,563 |
1,962 |
1,566 |
2,085 |
1,142 |
399 |
3 |
123 |
|
26. |
Other Industries |
30,897 |
35,890 |
37,447 |
31,352 |
37,734 |
4,993 |
1,557 |
-4,538 |
287 |
Memorandum Item : |
||||||||||
Industrial Credit as proportion |
||||||||||
to Net Bank Credit |
54.2 |
52.7 |
50.3 |
50.9 |
49.0 |
|||||
|
||||||||||
Notes: 1. * Provisional. |
(Amount in Rs. crore) |
|||||
|
|||||
Bank-group |
Advances to |
Total |
|||
Capital Market |
Real Estate |
Commodities |
|||
|
|||||
1 |
2 |
3 |
4 |
5 |
|
|
|||||
Public Sector Banks |
746.97 |
4,686.97 |
5,386.02 |
10,819.96 |
|
(0.21) |
(1.33) |
(1.53) |
(3.07) |
||
Nationalised Banks |
673.77 |
4,009.63 |
4,341.82 |
9,025.22 |
|
(0.30) |
(1.80) |
(1.95) |
(4.05) |
||
State Bank Group |
73.20 |
677.34 |
1,044.20 |
1,794.74 |
|
(0.06) |
(0.52) |
(0.81) |
(1.39) |
||
All Private Sector Banks |
2,597.32 |
1,860.58 |
1,815.43 |
6,273.33 |
|
(4.66) |
(3.34) |
(3.26) |
(11.25) |
||
Old Private Sector Banks |
404.56 |
1,180.34 |
1,137.60 |
2,722.50 |
|
(1.20) |
(3.51) |
(3.39) |
(8.11) |
||
New Private Sector Banks |
2,192.76 |
680.24 |
677.83 |
3,550.83 |
|
(9.90) |
(3.07) |
(3.06) |
(16.03) |
||
Foreign Banks in India |
1,546.20 |
695.96 |
333.53 |
2,575.69 |
|
(4.34) |
(1.95) |
(0.94) |
(7.23) |
||
Scheduled Commercial Banks |
4,890.49 |
7,243.51 |
7,534.98 |
19,668.98 |
|
(1.10) |
(1.63) |
(1.70) |
(4.44) |
||
|
|||||
Note : Figures in brackets are percentage to Total Loans & Advances of the concerned Bank-group and for SCBs. |
2. Financial Performance of Scheduled Commercial Banks
2.17 The details of performance in terms of selected financial parameters of major bank groups in terms of operating profit, net profit, income, interest income, other income, expenditure, interest expended, operating expenses, wage bill, provisions and contingencies and spread in respect of SCBs and among major groups of banks are discussed below.
2.18 There was a marked improvement in the profits of scheduled commercial banks during 1999-2000 as compared with the performance in 1998-99. The net profit of SCBs rose by as much as 62.7 per cent and amounted to Rs.7,306.4 crore during 1999-2000 as compared with Rs.4,490.3 crore during 1998-99. The improvement in profit performance to a large extent was driven by the State Bank group. The share of the State Bank group in total net profits increased from 32.6 per cent in 1998-99 to 36.6 per cent in 1999-2000 and that of private sector banks from 15.8 per cent in 1998-99 to 16.8 per cent in 1999-2000 (Chart II.1). The share of foreign banks increased from 11.8 per cent in 1998-99 to 13.3 per cent in 1999-2000. As against this, the shares of nationalised banks declined from 39.8 per cent in 1998-99 to 33.4 per cent in 1999-2000. A comparative analysis of the profit performance (in terms of the ratio of operating profit as percentage to total assets) indicate that the State Bank group, SCBs and nationalised banks were below the median value of 1.79 per cent and the new private sector banks and foreign banks above the median (Chart II.2). In the case of net profit as percentage of total assets, (0.82 per cent median represented by the performance of the State Bank group), SCBs and nationalised banks were below the median value while old and new private sector banks and foreign banks remained above the median value (Chart II.3)
|
|
Sr. Name of the Bank |
Date of Commencement |
No. |
of Trading on NSE |
|
|
Public Sector Banks |
|
1 State Bank of India |
October 24, 1994 |
2 Oriental Bank of Commerce |
February 8, 1995 |
3 Dena Bank |
January 22, 1997 |
4 Bank of Baroda |
February 26, 1997 |
5 Bank of India |
May 7, 1997 |
6 Corporation Bank |
December 5, 1997 |
7 State Bank of Bikaner & Jaipur |
February 4, 1998 |
8 State Bank of Travancore |
March 3, 1998 |
9 Syndicate Bank |
December 27, 1999 |
Private Sector Banks |
|
1 Federal Bank Ltd. |
November 26, 1994 |
2 The Bank of Rajasthan Ltd. |
December 28, 1994 |
3 United Western Bank Ltd. |
February 8, 1995 |
4 Karur Vysya Bank Ltd. |
May 10, 1995 |
5 Lakshmi Vilas Bank Ltd. |
May 10, 1995 |
6 Vysya Bank Ltd. |
May 10, 1995 |
7 Bank of Madura Ltd. |
September 18, 1996 |
8 Nedungadi Bank Ltd. |
September 11, 1996 |
9 Bank of Punjab Ltd. |
June 14, 1995 |
10 HDFC Bank Ltd. |
June 14, 1995 |
11 Global Trust Bank Ltd. |
November 26, 1994 |
12 ICICI Banking Corporation Ltd. |
September 24, 1997 |
13 Indusind Bank Ltd. |
January 29, 1998 |
14 J & K Bank Ltd. |
August 3, 1998 |
15 City Union Bank Ltd. |
September 9, 1998 |
16 UTI Bank Ltd. |
December 3, 1998 |
17 The South Indian Bank Ltd. |
December 14, 1998 |
18 IDBI Bank Ltd. |
April 15, 1999 |
19 Times Bank Ltd.* |
September 17, 1999 |
20 Centurion Bank Ltd. |
December 8, 1999 |
|
|
Note: * The scrip of Times Bank Ltd. was suspended from March 1, 2000 on account of its merger with HDFC Bank Ltd. |
|
Source : NSE, Mumbai. |
|
||||
Sr. |
Name of the Bank |
Closing Price |
Change in |
|
No. |
Share Price |
|||
|
||||
1998-99 |
1999-2000 |
|||
|
||||
Public Sector Banks |
||||
1 |
Bank of Baroda |
46.45 |
46.00 |
-0.97 |
2 |
Bank of India |
20.05 |
15.65 |
-21.95 |
3 |
Corporation Bank |
78.10 |
76.40 |
-2.18 |
4 |
Dena Bank |
12.10 |
11.30 |
-6.61 |
5 |
Oriental Bank of |
|||
Commerce |
31.50 |
36.85 |
16.98 |
|
6 |
State Bank of |
|||
Bikaner & Jaipur |
228.25 |
270.00 |
18.29 |
|
7 |
State Bank of India |
213.10 |
204.75 |
-3.92 |
8 |
State Bank of Travancore |
226.00 |
210.00 |
-7.08 |
9 |
Syndicate Bank |
- |
10.00 |
- |
Private Sector Banks |
||||
1 |
Bank of Madura Ltd. |
57.50 |
101.50 |
76.52 |
2 |
Bank of Punjab Ltd. |
11.15 |
14.20 |
27.35 |
3 |
Bank of Rajasthan Ltd. |
17.65 |
18.40 |
4.25 |
4 |
Centurion Bank Ltd. |
- |
17.90 |
- |
5 |
City Union Bank Ltd. |
15.80 |
19.15 |
21.20 |
6 |
Federal Bank Ltd. |
35.30 |
53.00 |
50.14 |
7 |
Global Trust Bank Ltd. |
32.60 |
82.35 |
152.61 |
8 |
HDFC Bank Ltd. |
69.55 |
257.20 |
269.81 |
9 |
ICICI Banking Coprn.Ltd. |
27.40 |
267.05 |
874.64 |
10 |
IDBI Bank Ltd. |
- |
29.55 |
- |
11 |
Indusind Bank Ltd. |
19.00 |
27.80 |
46.32 |
12 |
J & K Bank Ltd. |
28.00 |
36.15 |
29.11 |
13 |
Karur Vysya Bank Ltd. |
97.65 |
185.55 |
90.02 |
14 |
Laxmi Vilas Bank Ltd. |
33.80 |
38.50 |
13.91 |
15 |
Nedungadi Bank Ltd. |
37.65 |
108.40 |
187.92 |
16 |
The South Indian |
|||
Bank Ltd. |
16.60 |
17.50 |
5.42 |
|
17 |
United Western Bank Ltd. |
22.10 |
28.50 |
28..96 |
18 |
UTI Bank Ltd. |
14.05 |
39.70 |
182.56 |
19 |
Vysya Bank Ltd. |
107.00 |
125.30 |
17.10 |
|
||||
Source : NSE, Mumbai. |
(Rs. crore) |
||
|
||
Item |
Turnover |
|
|
||
1998-99 |
1999-2000 |
|
|
||
All Banks |
26,647 |
30,982 |
Top 5 Banks |
25,687 |
29,600 |
NSE Total (incl.bank shares) |
4,14,474 |
8,39,051 |
% all Banks to NSE Total |
6.43 |
3.69 |
% Top 5 Banks to All Banks |
96.40 |
95.54 |
|
||
Source: NSE, Mumbai. |
Operating Profit
2.19 The operating profits of SCBs increased by 33.4 per cent to Rs.18,423.4 crore in 1999-2000 from Rs.13,810.7 crore in 1998-99, while the operating profits of PSBs increased by 23.7 per cent to Rs.13,064.0 crore in 1999-2000 from Rs.10,560.8 crore in 1998-99. Among the bank groups, the new private sector banks showed the highest increase in operating profits at 81.8 per cent from Rs.684.3 crore in 1998-99 to Rs.1,243.8 crore in 1999-2000 followed by old private banks with an increase of 80.4 per cent from Rs. 792.2 crore in 1998-99 to Rs.1,428.9 crore in 1999-2000, and then by foreign banks showing an increase at 51.5 per cent from Rs.1,773.5 crore in 1998-99 to Rs.2,686.6 crore in 1999-2000. The operating profits of the State Bank group increased by 25.6 per cent from Rs.4,648.1 crore in 1998-99 to Rs.5,839.1 crore in 1999-2000 [Appendix Tables II.4(A) to (G)]. The relative position of PSBs in terms of operating and net profit as percentage of total assets in terms of the median, excluding three weak banks, are shown in (Chart II.4 and Chart II.5). The ratio of operating profits to total assets of all SCBs increased from 1.45 per cent in 1998-99 to 1.66 per cent in 1999-2000 (Chart II.6). There was an overall improvement in this ratio among all the bank groups during 1999- 2000. In the case of PSBs, the ratio increased from 1.37 per cent in 1998-99 to 1.47 per cent in 1999-2000. The State Bank group showed an increase from 1.63 per cent in 1998-99 to 1.74 per cent in 1999-2000. The ratio increased from 1.21 per cent to 1.84 per cent in respect of old private sector banks. The nationalised banks showed a marginal improvement from 1.22 per cent in 1998-99 to 1.30 per cent in 1999-2000. The increase in the ratio of operating profits to total assets was maximum in the case of foreign banks at 0.92 percentage point from 2.32 per cent in 1998-99 to 3.24 per cent in 1999-2000 (Table II.14).
Net Profit
2.20 The net profits of SCBs increased by 62.7 per cent to Rs.7,306.4 crore in 1999-2000 from Rs.4,490.3 crore in 1998-99. Among the bank groups, old private sector banks recorded the maximum percentage increase (110.3 per cent) in net profits from Rs.311.5 crore in 1998-99 to Rs.655.1 crore in 1999-2000 followed by the State Bank group (82.6 per cent) from Rs.1,465.7 crore in 1998-99 to Rs.2,676.9 crore in 1999-2000. The increase in net profit was minimum (36.3 per cent) in the case of 19 nationalised banks in 1999-2000. In line with the trends in the ratio of operating profits to total assets, there was a distinct improvement in the ratio of net profit to total assets among all the bank groups except in the case of new private sector banks which showed a decline [Appendix Tables II.4(A) to (G)]. The ratio of net profit to total assets of SCBs increased from 0.47 per cent in 1998-99 to 0.66 per cent in 1999-2000 (Chart II.7). In the case of PSBs, the ratio increased from 0.42 per cent in 1998-99 to 0.57 per cent in 1999-2000. The State Bank group showed an increase from 0.51 per cent in 1998-99 to 0.80 per cent in 1999-2000. The net profit ratio increased from 0.48 per cent in 1998-99 to 0.84 per cent in 1999-2000 in respect of old private sector banks. The nationalised banks showed a marginal improvement from 0.37 per cent in 1998-99 to 0.44 per cent in 1999-2000. The ratio of net profits to total assets recorded a maximum increase in the case of foreign banks at 0.48 percentage point from 0.69 per cent in 1998-99 to 1.17 per cent in 1999-2000 (Table II.15).
The increase in net profit was the outcome of a sharper rise in income than that in expenditure, mainly on account of a notable increase in ‘other income’ coupled with a subdued growth in operating expenses.
Income
2.21 The income of SCBs recorded an increase of 15.3 per cent from Rs.1,00,062 crore in 1998-99 to Rs.1,15,386.0 crore in 1999-2000. The income of PSBs also showed an increase of around 15.3 per cent from Rs.78,850.4 crore in 1998-99 to Rs.90,900.4 crore in 1999-2000. There was a compositional shift in favour of non-interest income reflecting the increasing importance of non-fund based activities of the banking sector. Among the individual bank groups, new private sector banks recorded the highest proportional increase in income (30.9 per cent) from Rs.4,130.5 crore in 1998-99 to Rs.5,407.5 crore in 1999-2000, followed by old private sector banks (18.9 per cent) from Rs.7,362.1 crore in 1998-99 to Rs.8,749.9 crore in 1999-2000. The State Bank group recorded an increase of 15.9 per cent from Rs.29,349.4 crore in 1998-99 to Rs.34,014.6 crore in 1999-2000. The foreign banks registered the lowest increase (6.3 per cent) in income from Rs.9,719.0 crore in 1998-99 to Rs.10,328.2 crore in 1999-2000 [Appendix Tables II.4(A) to (G)]. The ratio of income to total assets of SCBs declined marginally from 10.52 per cent in 1998-99 to 10.39 per cent in 1999-2000. There was an overall decline in this ratio among bank groups during 1999-2000 excepting the nationalised banks and old private sector banks. In the case of PSBs the ratio declined marginally from 10.24 per cent in 1998-99 to 10.20 per cent in 1999-2000. The State Bank group showed a fall from 10.27 per cent in 1998-99 to 10.11 per cent in 1999-2000. The ratio increased from 11.24 per cent in 1998-99 to 11.26 per cent in 1999-2000 in respect of old private sector banks. The nationalised banks also showed an improvement from 10.22 per cent in 1998-99 to 10.26 per cent in 1999-2000. In the case of foreign banks, the ratio declined from 12.69 per cent in 1998-99 to 12.47 per cent in 1999-2000 (Table II.16).
Interest Income
2.22 The interest income of SCBs recorded an increase of around 14.0 per cent from Rs.87,312.0 crore in 1998-99 to Rs.99,506.9 crore in 1999-2000. Among the individual bank groups, new private sector banks showed the highest percentage increase (25.1 per cent) from 3,540.9 crore in 1998-99 to Rs.4,429.2 crore in 1999-2000 followed by the State Bank group(16.2 per cent) from Rs.25,126.2 crore in 1998-99 to Rs.29,186.7 crore in 1999-2000 while the foreign banks showed the lowest increase (4.0 per cent) from Rs.7,860.3 crore in 1998-99 to Rs.8,176.0 crore in 1999-2000 [Appendix Tables II.4(A) to (G)]. The ratio of interest income to total assets of SCBs declined from 9.18 per cent in 1998-99 to 8.96 per cent in 1999-2000. The ratio of interest income to total assets declined in respect of all bank groups during 1999-2000. In the case of PSBs, the ratio declined from 9.01 per cent in 1998-99 to 8.92 per cent in 1999-2000. The State Bank group registered a fall from 8.79 per cent in 1998-99 to 8.68 per cent in 1999-2000. The ratio declined from 9.92 per cent in 1998-99 to 9.58 per cent in 1999-2000 in respect of old private sector banks. The nationalised banks also showed a decline from 9.15 per cent in 1998-99 to 9.06 per cent in 1999-2000. In the case of foreign banks, the ratio declined from 10.27 per cent in 1998-99 to 9.87 per cent in 1999-2000 (Table II.17). The subdued growth in interest income when compared to the growth in assets could be attributed to some softening in the interest rates during the year.
Other Income
2.23 The other income mainly comprising ‘commission, exchange, brokerage’, profit on sale of investments, lease income and profit on exchange transactions of SCBs registered an increase of 24.5 per cent from Rs.12,750.0 crore in 1998-99 to Rs.15,879.1 crore in 1999-2000. Among the bank groups, the new private sector banks recorded the highest increase (65.9 per cent) from Rs.589.6 crore in 1998-99 to Rs.978.3 crore in 1999-2000 followed by old private sector banks (50.6 per cent) from Rs.868.7 crore in 1998-99 to Rs.1,308.0 crore in 1999-2000 (Table II.18).