Chapter II: Developments in Commercial Banking (Part 2 of 4)

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ପ୍ରକାଶିତ ତାରିଖ ନଭେମ୍ବର 15, 2000

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Chapter II: Developments in Commercial Banking
(Part 2 of 4)

Table II.6: Important Banking Indicators-Scheduled Commercial Banks: 1998-99 and 1999-2000
(Amount in Rs. crore)

Item			Outstanding as on						Variations during		Variations during
									Financial year		April - Sept.
			March 27,	March 26,	March 24,	Sept. 24,	Sept. 22,		1998-99	1999-2000	1999-2000	2000-2001*

			1998	1999	2000	1999		2000 *

1			2	3	4	5		6	7	8	9	10

									(3-2)	(4-3)	(5-3)	(6-4)
1.	Total Demand and
	Time Liabilities @		6,78,730	8,20,443	9,48,358	8,77,376	10,06,933		141,713	127,915	56,933	58,575
2.	Aggregate Deposits (a+b)		5,98,485	7,14,025	8,13,344	7,65,704	8,72,947		115,540	99,319	51,679	59,603
									(19.3)	(13.9)	(7.2)	(7.3)
	(a)	Demand Deposits	1,02,513	1,17,423	1,27,366	1,12,978	1,26,638		14,910	9,943	-4,445	-728
									(14.5)	(8.5)	-(3.8)	-(0.6)
	(b)	Time Deposits	4,95,972	5,96,602	6,85,978	6,52,726	7,46,309		100,630	89,376	56,124	60,331
									(20.3)	(15.0)	(9.4)	(8.8)
2a	Certificates of Deposit		14,296	3,717	1,227	3,296		N.A.	-10,579	-2,490	-421	-
									-(74.0)	-(67.0)	-(11.3)	-
2b	Aggregate Deposits (excl.		5,84,189	7,10,308	8,12,117	7,62,408		N.A.	126,119	101,809	52,100	-
	Certificates of Deposit)								(21.6)	(14.3)	(7.3)	-
3.	Borrowings from RBI		395	2,894	6,491	4,204		5,292	2,499	3,597	1,310	-1,199
									(632.7)	(124.3)	(45.3)	-(18.5)
4.	Liability to Banks		32,287	45,204	53,838	48,238		53,303	12,917	8,634	3,034	-535
									(40.0)	(19.1)	(6.7)	-(1.0)
5.	Bank Credit (a+b)		3,24,079	3,68,837	4,35,958	3,80,657	4,66,826		44,758	67,121	11,820	30,868
									(13.8)	(18.2)	(3.2)	(7.1)
	a.	Food Credit	12,485	16,816	25,691	20,532		32,090	4,331	8,875	3,716	6,399
									(34.7)	(52.8)	(22.1)	(24.9)
	b.	Non-food credit	3,11,594	3,52,021	4,10,267	3,60,125	4,34,736		40,427	58,246	8,104	24,469
									(13.0)	(16.5)	(2.3)	(6.0)
	c.	Non-food credit excluding	3,08,902	3,47,373	-	-		-	38,471	-	-	-
		petroleum credit							(12.5)	-	-	-
6.	Investments (a+b)		2,18,705	2,54,594	3,08,944	2,90,033	3,33,382		35,889	54,350	35,439	24,438
									(16.4)	(21.3)	(13.9)	(7.9)
	a.	Govt. Securities	1,86,957	2,23,217	2,78,456	2,58,983	3,02,390		36,260	55,239	35,766	23,934
									(19.4)	(24.7)	(16.0)	(8.6)
	b.	Other Approved Sec.	31,748	31,377	30,488	31,050		30,992	-371	-889	-327	504
									-(1.2)	-(2.8)	-(1.0)	(1.7)
7.	Cash Balances (a+b)		61,306	67,910	62,749	69,951		68,474	6,604	-5,161	2,041	5,725
									(10.8)	-(7.6)	(3.0)	(9.1)
	a.	Cash in hand	3,608	4,362	5,330	4,586		5,305	754	968	224	-25
									(20.9)	(22.2)	(5.1)	-(0.5)
	b.	Balances with RBI	57,698	63,548	57,419	65,365		63,169	5,850	-6,129	1,817	5,750
									(10.1)	-(9.6)	(2.9)	(10.0)
	Memorandum Items :
A	Credit-Deposit (CD) Ratio		54.1	51.7	53.6	49.7		53.5
B	Non-food credit (excl. Petr.
	credit) / Deposit Ratio		51.6	48.6	-	-		-
C	Incremental CD Ratio		49.2	38.7	67.6	22.9	**	51.8 **
D	Cash Balance-Deposit Ratio		10.2	9.5	7.7	9.1		7.8
E	Investment/Deposit Ratio		36.5	35.7	38.0	37.9		38.2
F	Investment+Credit/Deposit Ratio		90.7	87.3	91.6	87.6		91.7

Notes: 1. * Provisional. @ Excluding borrowings from RBI/IDBI/NABARD. ** Over end March. NA - Not Available. 2. Figures in brackets are percentage variations. 3. Constituent items may not add up to the totals due to rounding off.

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.

Table II.7: Scheduled Commercial Banks' Investments in Non-SLR Securities Issued by the Non-financial Commercial Sector
(Rs. Crore)

	Outstanding as on	March 27, 1998	March 26, 1999	March 24, 2000
1.	Commercial Paper	2,443	4,006	5,066
2.	Bonds/Debentures/Preference
	Shares Issued by	28,545	42,033	53,501
	a) PSUs	18,767	24,174	30,586
	b) Private Corporate Sector	9,778	17,859	22,915
3.	Equity Shares *	1,472	2,342	2,841
4.	Loans to Corporates against shares	44	64	20
	Total	32,505	48,446	61,429

Notes: 1. * Issued by PSUs and private corporate sector. 2. Constituent figures may not add up to totals due to rounding off of figures.

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).

Table II.8: Sectoral Deployment of Gross Bank Credit by Major Sectors
(Amount in Rs. crore)

Sectors				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	1998-99	1999-2000*
									(3-2)	(4-3)	(5-3)	(6-4)

1				2	3	4	5	6	7	8	9	10

I.	Gross Bank Credit (1+2)			3,00,283	3,42,012	4,00,818	3,38,654	4,21,479	41,729	58,806	-3,358	20,661

	1.	Public Food Procurement
		Credit		12,485	16,816	25,691	22,221	33,182	4,331	8,875	5,405	7,491

	2.	Non-Food Gross Bank Credit		2,87,798	3,25,196	3,75,127	3,16,433	3,88,297	37,398	49,931	-8,763	13,170
		(A+B+C+D)							[100.0]	[100.0]	[100.0]	[100.0]

	A.	Priority Sectors		99,507	1,14,611	1,31,827	1,13,933	1,35,923	15,104	17,216	-678	4,096
									(40.4)	(34.5)	(7.7)	(31.1)

		(i)	Agriculture	34,869	39,634	44,381	38,393	45,425	4,765	4,747	-1,241	1,044
									(12.7)	(9.5)	(14.2)	(7.9)

		(ii)	Small Scale Industries	43,508	48,483	52,814	47,166	52,889	4,975	4,331	-1,317	75
									(13.3)	(8.7)	(15.0)	(0.6)

		(iii)	Other Priority Sectors	21,130	26,494	34,632	28,374	37,609	5,364	8,138	1,880	2,977
									(14.3)	(16.3)	-(21.5)	(22.6)

	B.	Industry (Medium & Large)		1,17,530	1,30,516	1,47,319	1,23,983	1,52,759	12,986	16,803	-6,533	5,440
									(34.7)	(33.7)	(74.6)	(41.3)

	C.	Wholesale Trade (other than		13,217	13,965	16,818	13,966	17,724	748	2,853	1	906
		food	procurement)						(2.0)	(5.7)	(0.0)	(6.9)

	D.	Other Sectors		57,544	66,104	79,163	64,551	81,891	8,560	13,059	-1,553	2,728
		of which :							(22.9)	(26.2)	(17.7)	(20.7)

		(i)	Housing	9,057	11,404	14,100	11,764	14,261	2,347	2,696	360	161
									(6.3)	(5.4)	-(4.1)	(1.2)

		(ii)	Consumer durables	2,527	3,090	3,855	3,269	4,995	563	765	179	1,140
									(1.5)	(1.5)	-(2.0)	(8.7)

		(iii)	Non-banking financial	6,227	6,082	7,178	5,565	7,014	-145	1,096	-517	-164
			companies						-(0.4)	(2.2)	(5.9)	-(1.2)

		(iv)	Loans to individuals	1,904	1,625	2,146	1,596	2,023	-279	521	-29	-123
									-(0.7)	(1.0)	(0.3)	-(0.9)

		(v)	Real Estate Loans	1,899	1,625	1,644	1,668	1,601	-274	19	43	-43
									-(0.7)	(0.0)	-(0.5)	-(0.3)

		(vi)	Other non-priority sector	10,133	12,289	15,409	12,166	14,820	2,156	3,120	-123	-589
			personal loans						(5.8)	(6.2)	(1.4)	-(4.5)

		(vii)	Advances against	11,815	15,106	18,876	16,405	19,282	3,291	3,770	1,299	406
			Fixed Deposits						(8.8)	(7.6)	-(14.8)	(3.1)

		(viii)	Tourism and tourism	822	612	900	694	1,088	-210	288	82	188
			related hotels							(0.6)	-(0.9)	(1.4)

II.	Export Credit (included under			33,947	35,891	39,118	34,443	38,628	1,944	3,227	-1,448	-490
	item I.2)

III.	Net Bank Credit ( including			2,97,265	3,39,477	3,98,205	3,36,273	4,19,447	42,212	58,728	-3,204	21,242
	inter-bank participation)

Notes: 1. * Provisional. 2. Data relate to 50 selected scheduled commercial banks which account for about 90-95 per cent of bank credit of all scheduled commercial banks. Gross bank credit data include bills rediscounted with RBI, IDBI, EXIM Bank, other approved financial institutions and inter- bank participations. Net bank credit data are exclusive of bills rediscounted with RBI, IDBI, EXIM Bank and other approved finanical institutions. 3. Figures in brackets are proportions to incremental non-food gross bank credit.

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.

Table II.9: Industry-wise Deployment of Gross Bank Credit
(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. 2. Data relate to selected scheduled commercial banks which account for about 90-95 per cent of bank credit of all scheduled commercial banks. 3. No sign is indicated for positive variations.

Table II.10: Lending to Sensitive Sectors - 1999-2000
(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)

Table II.11: Listed Banks on NSE

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.

Table II.12: Share Price Changes in Banks

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.

Table II.13: Turnover Details of Bank Shares
(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).

Table II.14: Bank Group-wise Operating Profit as percentage of Total Assets: 1995-96 to 1999-2000
(Per cent)

Bank Group	1995-96	1996-97	1997-98	1998-99	1999-2000

Scheduled Commercial Banks	1.69	1.82	1.84	1.45	1.66

Public Sector Banks	1.49	1.60	1.58	1.37	1.47

Nationalised Banks	1.14	1.26	1.33	1.22	1.30

State Bank of India &
its Associates	2.10	2.18	2.03	1.63	1.74

Old Private Sector Banks	2.10	1.89	1.97	1.21	1.84

New Private Sector Banks	2.77	2.98	2.86	1.78	2.11

Foreign Banks	3.35	3.62	3.91	2.32	3.24

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).

Table II.15: Bank Group-wise Net Profit as Percentage of Total Assets: 1995-96 to 1999-2000
(Per cent)

Bank Group	1995-96	1996-97	1997-98	1998-99	1999-2000

Scheduled Commercial Banks	0.16	0.67	0.82	0.47	0.66

Public Sector Banks	-0.07	0.57	0.77	0.42	0.57

Nationalised Banks	-0.36	0.41	0.62	0.37	0.44

State Bank of India &
its Associates	0.42	0.84	1.06	0.51	0.80

Old Private Sector Banks	1.06	0.91	0.81	0.48	0.84

New Private Sector Banks	1.85	1.73	1.55	1.03	0.97

Foreign Banks	1.58	1.19	0.97	0.69	1.17

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).