Research and Analysis on the Indian Banking Industry Finance Essay

The Indian banking industry currently termed as strong, having weathered the global economic slowdown and showing good numbers with strong support flowing in from the Reserve Bank of India (RBI) measures. A report "Opportunities in Indian Banking Sector", by market research company, RNCOS, forecasts that the Indian banking sector will grow at a healthy compound annual growth rate (CAGR) of around 23.3 per cent till 2011. Banking, financial services and insurance (BFSI), together account for 38 per cent of India's outsourcing industry (worth US$ 47.8 billion in 2007). According to a report by McKinsey and NASSCOM, India has the potential to process 30 per cent of the banking transactions in the US by the year 2010. Outsourcing by the BFSI to India is expected to grow at an annual rate of 30-35 per cent. According to a study by Dun & Bradstreet (an international research body)-"India's Top Banks 2008"-there has been a significant growth in the banking infrastructure. Taking into account all banks in India, there are overall 56,640 branches or offices, 893,356 employees and 27,088 ATMs. Public sector banks made up a large chunk of the infrastructure, with 87.7 per cent of all offices, 82 per cent of staff and 60.3 per cent of all ATMs. According to the RBI, Indian financial markets have generally remained orderly during 2008-09. In view of the tight liquidity conditions in the domestic money markets in September 2008, the Reserve Bank announced a series of measures beginning September 16, 2008. Thus, the average call rate which was at 10.52 per cent declined to 7.57 per cent in November 2008 under the impact of these measures.

2. INDUSTRY PROFILE

2.1 Definition Bank may be defined as a financial institution which is engaged in the business of keeping money for savings and checking accounts or for exchange or for issuing loans and credit etc. A set of services intended for private customers and characterized by a higher quality than the services offered to retail customers. Based on the notion of tailor-made services, it aims to offer advice on investment, inheritance plans and provide active support for general transactions and the resolution of asset-related problems. The essential function of a bank is to provide services related to the storing of deposits and the extending of credit. Basic function may include Credit collection, Issuer of banking notes, Depositor of money and lending loans.

2.2 Segments Banks in India can be categorized into non-scheduled banks and scheduled banks. Scheduled banks constitute of commercial banks and co-operative banks. There are about 67,000 branches of Scheduled banks spread across India. During the first phase of financial reforms, there was a nationalization of 14 major banks in 1969. This crucial step led to a shift from Class banking to Mass banking. Since then the growth of the banking industry in India has been a continuous process As far as the present scenario is concerned the banking industry is in a transition phase. The Public Sector Banks (PSBs), which are the foundation of the Indian Banking system account for more than 78 per cent of total banking industry assets. Unfortunately they are burdened with excessive Non Performing assets (NPAs), massive manpower and lack of modern technology. On the other hand the Private Sector Banks in India are witnessing immense progress. They are leaders in Internet banking, mobile banking, phone banking, ATMs. On the other hand the Public Sector Banks are still facing the problem of unhappy employees. There has been a decrease of 20 percent in the employee strength of the private sector in the wake of the Voluntary Retirement Schemes (VRS). As far as foreign banks are concerned they are likely to succeed in India. Indusland Bank was the first private bank to be set up in India. IDBI, ING Vyasa Bank, SBI Commercial and International Bank Ltd, Dhanalakshmi Bank Ltd, Karur Vysya Bank Ltd, Bank of Rajasthan Ltd etc are some Private Sector Banks. Banks from the Public Sector include Punjab National bank, Vijaya Bank, UCO Bank, Oriental Bank, Allahabad Bank, Andhra Bank etc. ANZ Grindlays Bank, ABN-AMRO Bank, American Express Bank Ltd, Citibank etc are some foreign banks operating in India.

3. MARKET DYNAMICS

3.1 Market Overview The banking sector is a very important sector of the Indian economy. The sector has made a marked improvement in the liberalization period. There has been extraordinary progress in the financial health of the commercial banks with respect to capital adequacy, profitability, asset quality and risk management. Deregulation has opened new doors for banks to increase revenues by entering into investment banking, insurance, credit cards, depository services, mortgage, securitization, etc. The major participants of the Indian financial system are the commercial banks, the financial institutions (FIs), encompassing term-lending institutions, investment institutions, specialized financial institutions and the state-level development banks, Non-Bank Financial Companies (NBFCs) and other market intermediaries such as the stock brokers and money-lenders. The commercial banks and certain variants of NBFCs are among the oldest of the market participants. The FIs, on the other hand, are relatively new entities in the financial market place. The challenges faced by the sector would be gaining profitability, reinforcing technology, maintaining global standards, corporate governance, sharpening skills, risk management and, the most important of all, to establish 'Customer Intimacy'. The insurance business is one of the most rapidly growing areas in the financial sector. Growth in Banking sectors HDFC Bank and Axis Bank continue to remain as leaders of the private sector banks. Both the banks have maintained the advances growth and NIM. SBI, Punjab National Bank, Bank of India and Union Bank are expected to lead among PSU Banks. Public sector banks (PSBs) on January 12, 2009 also decided to lower interest rates on bulk deposits and to offer a maximum rate of 7.5 per cent for one-year maturity. According to the latest RBI data, growth in broad money (M3), year-on-year (y-o-y), was 19.6 per cent (US$ 151.04 billion) on January 2, 2009 lower than 22.6 per cent (US$ 141.82 billion) a year ago. Aggregate deposits of banks, year-on-year, expanded 20.2 per cent (US$ 133.08 billion) on January 2, 2009 as compared with 24.0 per cent (US$ 127.49 billion) a year ago. The growth in bank credit continued to remain high. Non-food credit by scheduled commercial banks (SCBs) was 23.9 per cent (US$ 102.78 billion), year-on-year, as on January 2, 2009 from 22.0 per cent (US$ 77.79 billion) a year ago. Scheduled commercial banks' credit to the commercial sector expanded by 27.0 per cent (year-on-year) as on November 21, 2008, as compared with 23.1 per cent a year ago. Non-food credit of scheduled commercial banks expanded by 26.9 per cent, year-on-year, as on November 21, 2008, higher than 23.7 per cent a year ago. Net banking capital amounted to US$ 4.8 billion in April-September 2008 as compared with US$ 5.7 billion in April-September 2007. Lending by banks also rose more than 76 per cent to Rs 2,80,000 crore (US$ 57.26 billion) during April-November 2008-09 from the same period a year ago. ( Source- RBI Website )

3.3 Trend Analysis ( Source- CMI Data Base- Prowess )

3.3.1 Declining NPA Ratio: The net NPA ratio of Indian banks stood at 1 % in March 2008 as compared to 7 % in March 2000. Indeed, the recent global financial crisis is expected to have only a limited impact on Indian banks. Indian banking system is robust given the high Capital Adequacy Ratio, low NPAs, about 30% of the balance sheet in the form of government securities and cash, and low level of leveraging.

3.3.2 Increasing Number of Mergers There has been an increase in numbers of mergers as mergers and acquisition route is providing a quick step to acquire competitive size and offering banks an opportunity to share markets and reduce cost of product development and delivery. Consolidation in the banking sector is inevitable Mergers of smaller, newer banks would be much easier than the PSU banks, due to legal and social constraints. India is now moving in the direction of fewer but larger mega banks. While merging banks should keep in mind the inherent strengths and weaknesses of a taken over bank. Fundamental features like Portfolio, NPA levels, capital adequacy, technology levels, staff issues should be closely considered when planning for a merger.

3.3.3 Declines in Non Performing Assets (NPA) The gross NPAs of the scheduled commercial banks, which were as high as 15.7 per cent at end-March 1997, declined significantly to 2.4 per cent as at end-March 2008. The net NPAs of these banks during the same period declined from 8.1 per cent to 1.08 per cent. These figures too compare favorably with the international trends and have been driven by the improvements in loan loss provisioning by the banks as also by the improved recovery climate enabled by the legislative environment.

3.4 Key Drivers

3.4.1 Innovations The banking sector in India saw greater emphasis being placed on technology and innovation. Banks began to use technology to provide better quality of services at greater speed. Internet banking and mobile banking made it convenient for customers to do their banking from geographically diverse places. Banks also sharpened their focus on rural markets and introduced a variety of services geared to the special needs of their rural customers. Banking activities also transcended their traditional scope and new concepts like personal banking, retailing and banc assurance were introduced. The sector was also moving rapidly towards universal banking and electronic transactions, which were expected to change the way banking would be perceived in the future.

3.4.2 Improvements in the Regulatory Environment The regulatory environment in India is liberal in regard to the functioning of the foreign banks and whether the regulatory approach towards foreign participation in the Indian banking system is consistent with liberalized environment. Undoubtedly, the facts indicate that regulatory regime followed by the Reserve Bank in respect of foreign banks is non-discriminatory, and is, in fact, very liberal by global standards. Here are a few facts which bear out the contention. No restrictions have been placed on establishment of non-banking financial subsidiaries in India by the foreign banks or of their group companies.

4. PEST ANALYSIS

4.1 Political Factors

4.1.1 Regulations: Banking institution is flattering from compiling with the sets of regulations such as AMI( Anti- money laundering ), SOX (Sarbannes Oxley act ),etc. These regulations can pose challenges because of technological constraints and can impact on the profit banks are making. But from different prospective, one must comply with these regulations not only because they are mandatory but also because it will help in reputation building and customer and culture orientation. It is essential for global institution to comply with both the national as well as international regulations as it helps them establish ties with foreign countries as they view as reliable organizations. Technology makes it easier to comply with regulations. In case of the national banks, they are bound to have branches across India. Especially in case of bank with global presence, technology plays an important role as multiple regressions specific to the countries or region have to be complied with. A judiciously integrated solution system enables even a mammoth size financial institution to comply with regulation at ease. Banks need to adopt a holistic approach in order to comply with national, international, and regional regulations. Especially the bank has international presence then this become more necessary as they would have to fall in line for all three regulatory bodies.

4.1.2 High Capital Adequacy Ratio (CAR) for Implementation of Basel II: The Basel Capital Accord (Basel II) guidelines promulgated by the BIS to establish capital adequacy requirements and supervisory standards for banks to be implemented by 2007 and are structured by three pillars. The Basel II is designed to facilitate a more comprehensive, sophisticated and risk sensitive approach for banks to calculate regulatory capital. The proposals will enable banks to align regulatory requirements more closely with their internal risk measurement and to improve operational process. The Committee today consists of central bankers and supervisory regulators from 13 countries. Basel II attempts to accomplish protect the international financial system by setting up rigorous risk and capital management requirements designed to ensure that a bank holds capital reserves appropriate to the risk the bank exposes itself to through its lending and investment practices. In simple terms, the greater risk to which the bank is exposed, the greater the amount of capital the bank needs to hold to safeguard its solvency and overall economic stability. The basic purpose of this recommendation is to ensure that capital allocation is more risk sensitive, separating operational risk from credit risk and quantifying both, and attempting to align economic and regulatory capital more closely to reduce the scope for regulatory arbitrage. The 3-Pillar Approach of Basel II Minimum Capital Requirement (Addressing Credit Risk, Operatinal Risk & Market Risk)  Supervisory Review (Provides Framework for Systematic Risk, Liquidity Risk & Legal Risk) Market Discipline & Disclosure (To promote greater stability in the financial system)

4.2 Economic Factors The Indian banking system is relatively insulated from the factors leading to the turmoil in the global banking industry. According to rating agency CRISIL, the recent tight liquidity in the Indian market is qualitatively different from the global liquidity crunch, which has been caused by a crisis of confidence in banks lending to each other. RBI's recent initiatives, including the reduction in CRR by 150 basis points from 11 October 2008, cancellation of two auctions of government securities, and confidence-building communication, have already begun easing liquidity pressures. The strong capitalization of Indian banks, with an average Tier I capital adequacy ratio of above 8 per cent, is a positive feature in their credit risk profile. Indian banks do face challenges in the current Indian economic environment, marked by a slower gross domestic product growth, depressed capital market conditions, and relatively high interest rate regime. The profitability of Indian banks is expected to remain under pressure due to increased cost of borrowing, declining interest spreads, and lower fee income due to slowdown in retail lending.

4.3 Social Factors Banking industry has played a major role socially. It has led to increased savings from the society in various ways like Savings Bank account, Fixed Deposit Account etc. It has led to habit of saving among the mass plus offering the society an interest for its savings. Over the years the banks in this industry have been the key players in building the economy by the way of lending people and taking their savings for the country's well being.A

4.3.1 Increased Usage of Online Banking Advantages previously held by large financial institutions have shrunk considerably. The Internet has leveled the playing field and afforded open access to customers in the global marketplace. Internet banking is a cost-effective delivery channel for financial institutions. Consumers are embracing the many benefits of Internet banking. Access to one's accounts at anytime and from any location via the World Wide Web is a convenience unknown a short time ago. Thus, a bank's Internet presence transforms from 'brouchreware' status to 'Internet banking' status once the bank goes through a technology integration effort to enable the customer to access information about his or her specific account relationship. The six primary drivers of Internet banking includes, in order of primacy are: Improve customer access Facilitate the offering of more services Increase customer loyalty Attract new customers Provide services offered by competitors Reduce customer attrition

4.4 Technological Factors

4.4.1 IT Services Indian banking industry, today is in the midst of an IT revolution. A combination of regulatory and competitive reasons has led to increasing importance of total banking automation in the Indian Banking Industry. Information Technology has basically been used under two different avenues in Banking. One is Communication and Connectivity and other is Business Process Reengineering. Information technology enables sophisticated product development, better market infrastructure, implementation of reliable techniques for control of risks and helps the financial intermediaries to reach geographically distant and diversified markets. In view of this, technology has changed the contours of three major functions performed by banks, i.e., access to liquidity, transformation of assets and monitoring of risks. Further, Information technology and the communication networking systems have a crucial bearing on the efficiency of money, capital and foreign exchange markets. Banks as well as other financial entities entered the world of information technology and with Indian Financial Net (INFINET). INFINET, a wide area satellite based network (WAN) using VSAT (Very Small Aperture Terminals) technology, was jointly set up by the Reserve Bank and Institute for Development and Research in Banking Technology (IDRBT) in June 1999. The Indian Financial Network (INFINET) which initially comprised only the public sector banks was opened up for participation by other categories of members. The first set of applications that could benefit greatly from the use of technological advances in the computer and communications area relate to the Payment systems which form the lifeline of any banking activity. The process of reforms in payment and settlement systems has gained momentum with the implementation of projects such as NDS ((Negotiated Dealing System), CFMS (Centralized Funds Management System) for better funds management by banks and SFMS (Structured Financial Messaging Solution) for secure message transfer. This would result in funds transfers and funds-related message transfer to be routed electronically across banks using the medium of the INFINET. Negotiated dealing system (NDS), which has become operational since February 2002 and RTGS (Real Time Gross Settlement system) scheduled towards the end of 2003 are other major developments in the area. Internet has significantly influenced delivery channels of the banks. Internet has emerged as an important medium for delivery of banking products & services. Detailed guidelines of RBI for Internet Banking has prepared the necessary ground for growth of Internet Banking in India.

4.4.2 Mobile Banking M-Commerce - The Commerce of Convenience The leaders of telecom in India, Reliance and Airtel have taken the lead in offering m-commerce services. From bill payments to airline and railway ticketing to booking movie tickets and other random services, the services providers offer it all-Commerce in India is on a huge growth path and hybrid m-commerce service providers such as Pay mate now offering innovative services never heard of before. Mobile pays the bills PayMate allows mobile subscribers to make payments for merchant services using their cell phones. It is connected to merchants and banks to enable transactions. PayMate allows a transaction to be completed with a single SMS (one click) technology. ATM banking costs 80% while Internet and telebanking costs only 15% compared to normal banking transactions. Private sector Banks have pioneered internet banking, phone banking, anywhere banking, mobile banking, debit cards, Automatic Teller Machines (ATMs) and combined various other services and integrated them into the mainstream banking arena. Apart from the Mobile Banking, including of SMS Banking, Net Banking and ATMs are the major steps taken by the banks in India towards modernisation. With all these devices and systems, there is a complete freedom to experience.

5. MICHAEL PORTER'S FIVE FORCE ANALYSIS

5.1 Buyers Power

5.1.1 Specialized Products for Women and Students Single women are increasingly making up the second-largest group of home-buyers, though their size is still small compared with the number of mortgage loans availed by men. ABN Amro Bank and Citibank have designed special women's accounts that cater to the investment requirements of the female investor, offering benefits such as free consultancy and advice, reduced minimum balance, breaks in process fees and even lower interest rates on loans. There are students special accounts called youth power in ICICI, and the also help students with educational loans.

5.2 Supplier Power

5.2.1 Fragmented Mobile Payment Solutions Market The telecom story in India has been a huge success. A 100 million plus mobile users is a dream come true for marketers. If that's not all the number of users is growing by as much as 3 million a month. The numbers are hugely in favor of m-commerce. Mobile phone users in India outnumber credit and debit cards and internet users 2.5 to one.

5.3 Intensity of Competition

5.3.1 New Entrants Intensifying the Competition Foreign Banks in India always brought an explanation about the prompt services to customers. After the set up foreign banks in India, the banking sector in India also become competitive and accurative.Foreign banks are likely to succeed in their niche markets and be the innovators in terms of technology introduction in the domestic scenario which will increase the competition in the domestic banking industry. The outlook for the private sector banks indeed looks to be more promising vis-à-vis other banks. While their focused operations lower but more productive employee force etc will stand them good, possible acquisitions of PSU banks will definitely give them the much needed scale of operations and access to lower cost of funds.

5.4 Threat of New Entrants

5.4.1 Focus on Niche Segments Foreign banks are likely to succeed in their niche markets and be the innovators in terms of technology introduction in the domestic scenario. The outlook for the private sector banks indeed looks to be more promising vis-à-vis other banks. While their focused operations, lower but more productive employee force etc will stand them good, possible acquisitions of PSU banks will definitely give them the much needed scale of operations and access to lower cost of funds. These banks will continue to be the early technology adopters in the industry, thus increasing their efficiencies. Also, they have been amongst the first movers in the lucrative insurance segment. Already, banks such as ICICI Bank and HDFC Bank have forged alliances with Prudential Life and Standard Life respectively. This is one segment that is likely to witness a greater deal of action in the future. In the near term, the low interest rate scenario is likely to affect the spreads of majors. This is likely to result in a greater focus on better asset-liability management procedures. Consequently, only banks that strive hard to increase their share of fee-based revenues are likely to do better in the future.

5.4.2 Regulatory Reforms Limiting Foreign Presence Expansions through acquisitions offer limited prospects, however, as foreign investors still encounter restrictions when purchasing stakes in Indian banks. Investment by foreign institutional investors (FIIs) in PSBs are subject to an overall statutory limit of 20%. Foreign banks are permitted to acquire controlling stakes only in those banks that have been earmarked by the RBI for restructuring. There are also limits on portfolio investment in shares issued by private banks. FIIs are permitted to acquire up to 10% of the capital of a private sector bank, with an aggregate limit of 24% for all FIIs in any individual bank (which can be raised to 49% if a resolution is passed by the bank's board of directors followed by a special resolution of its general body). The aggregate foreign investment in existing private banks from all foreign sources (FDI, FIIs and nonresident Indians) cannot exceed 74% of the private bank's paid-up capital.

5.5 Threat of Substitute Products

5.5.1 Informal Financing in the Rural Sector Proxy Banking is an innovation in banking system that will simplify agricultural lending and also add to the increasing base of kisan credit cards. Proxy banking has become a subject of curiosity among the people living in rural areas include; more than sixty percent of rural households have no bank accounts as yet, whereas just twenty percent of the rural households can obtain credit from a formal source. Also, branch banking is not a feasible option in rural areas

6. COMPETITIVE LANDSCAPE

HDFC Bank and Axis Bank continue to remain as leaders of the private sector banks. Both the banks have maintained the advances growth and NIM. SBI, Punjab National Bank, Bank of India and Union Bank are expected to lead among PSU Banks. The competitive analysis of five banks i.e. SBI, ICICI Bank, HDFC Bank, Punjab National Bank (PNB) and ING Vysya Bank has been done.

6.1 Competitive Strategy ICICI Bank- It strategy of using a client-centric business model by instituting relationship groups to actively cross-sell the full range of the ICICI Group's products and services to its clients has yielded the desired results, as demonstrated by the robust growth in business volumes. ICICI also aggressively expanded its client base by leveraging its structuring skills, based on a customized approach HDFC Bank- Its objective is to build sound customer franchises across distinct businesses so as to be a preferred provider of banking services for target retail and wholesale customer segments, and to achieve a healthy growth in profitability, consistent with the Bank's risk appetite. The bank is committed to do this while ensuring the highest levels of ethical standards, professional integrity, corporate governance and regulatory compliance. Punjab National Bank- In order to achieve growth , PNB follows the strategy either to increase the existing fund size or launch new products. ING-VYSYA Bank- ING Vysya has adopted a two-fold strategy for growth - expansion of branch network and deepening its relationship with customers by offering new products - to increase its market share

6.2 Economic Activity: SBI- Incorporated in 1955, State Bank of India is a public sector bank providing banking, financial and leasing services. It is also involved in mutual fund and capital market activities through its subsidiaries. ICICI Bank- Engaged in banking services. It engages in a range of banking products and financial services to corporate and retail customers, investment banking, life and non-life insurance, venture capital, asset management and information technology. HDFC Bank- It offers a range of services such as corporate banking, treasury and capital market services, housing finance, advisory services and custodial services to FIIs, mutual funds and others. ING-VYSYA Bank- Incorporated in 1930. It offers various banking related services. It engages in corporate banking, retail banking, rural banking, commercial banking, treasury management and provides financial products.

6.3 Financial Analysis

6.3.1 Income Statement Analysis

PAT in Rs Cr. OPERATING INCOME in Rs Cr State Bank Of India 2478.42 18030.34 ICICI Bank Ltd. 1272.15 7836.08 HDFC Bank Ltd. 621.74 5407.89 ING Vysya Bank Ltd. 52.05 620.21 SBI had the highest net income of Rs 2478 Cr and has resulted in a drastic increase by 32.8% Operating Margin and Expenses by 29.2% in FY2008 as compared to the FY2007- SBI has registered significant improvements in its operating margins since 2003. Technology up gradation has enabled the bank to reduce inconsistencies. ICICI Bank, HDFC Bank and ING-VYSYA Bank has earned net profit of Rs 1272 Cr, Rs 621.74 Cr and Rs 52.05 Cr with a decrease of.957% and increase of 63.86% and 47.41% in their Operating margins respectively.

6.3.2 Balance Sheet Analysis

HDFC Bank SBI ICICI Bank ING Vysya Bank PAT/Total income 12.15 10.25 7.41 11.52 Networth 8770.7 46820.2 1535.65 49032.66 Quick ratio 3.96 2.27 2.48 1.56 Current ratio 3.97 2.58 2.51 1.6 Debt equity ratio 1.03 1.85 1.22 1.49 Interest cover 1.37 1.21 1.21 1.33 No. of employees 14739 0 5852 179205 No. of branches 651 1262 446 10270 EPS on accounting year end 29.94 37.37 13.33 106.56 PAT/Total Income- There has been a constant increase in PAT/Total income in SBI Bank from 9.64 to 11.52 in last 5 years but HDFC and ICICI Banks show increase in 2005 and there a constant decrease in this ratio. ING-VYSYA Bank has a negative PAT/Total Income ratio of -3.17 in 2005 but it has recovered to 7.41 in 2008. Quick Ratio- There has been a constant increase in quick ratio in HDFC Bank, ICICI Bank, ING-VYSYA Bank in last 5 years but increase in SBI Bank as more inventories and even liabilities has increased. Current Ratio- There has been a constant increase in quick ratio in HDFC Bank and a fluctuation of increase-decrease in ICICI and ING-VYSYA Banks but has shown an increase in last 2 years. But this ratio has declined in SBI Bank from 1.73 to 1.60 last year. Debt Equity Ratio - ICICI Bank plans to finance its expansion plans over the next few years by raising capital through equity, and not debt and there is a constant decrease in this ratio from 4.86 to 1.85 where there has been a constant increase in SBI Bank from .85 to 1.49 since last 5 years. No. of Employees- There has been a cut in no. of employees in SBI banks from 207039 in 2004 to 179205 in 2008 but still it has the highest employees and a constant increase in no. of employees in rest banks but HDFC has a drastic increase in their numbers from 5673 to 37836 employees in last 5 years. No. of Branches- The no. of branches has increased in all the banks and the SBI has the highest of about 10270 branches Return on Equity - Despite the decline in returns on equity in 2004-05, SBI generated healthy returns on equity in 2008.

6.4 Stock Market Performance The five key player's stock price performance is as follows: ( Source- CMI Data Base- Prowess ) Till February 2009, SBI has highest stock price of Rs 1194 which is a public sector bank and HDFC's stock price is Rs 945.5 which is a private sector bank. ICICI Bank and PNB Bank has similar stock price performance as Rs 434 and Rs 409 respectively. ICICI Bank has slight higher stock price as compared to PNB Bank. ING-VYSYA Bank has least stock price as compared to all these banks of Rs 134.55. STOCK RATIOS

P/E P/B Yield EPS H D F C Bank Ltd. 19.29 3.05 0.9 49.02 I C I C I Bank Ltd. 11.61 0.98 2.53 37.41 I N G Vysya Bank Ltd. 7.56 0.88 1.11 17.79 State Bank Of India 9.46 1.37 1.8 126.24 HDFC Bank has highest price per earning (P/E) ratio and price per book value (P/B) ratio of 19.29 and 3.05 as compared to other banks. ICICI Bank has highest yield ratio of 2.53 and SBI has highest earning per share (EPS) of 126.24 which is quite higher as compared to other banks.

INDUSTRY OUTLOOK

The banking industry in India seems to be unaffected from the global financial crises which started from U.S in the last quarter of 2008. Despite the fallout and nationalization of banks across developed economies, banks in India seems to be on the strong fundamental base and seems to be well insulated from the financial turbulence emerging from the western economies. The Indian banking industry is well placed as compare to their banking industries western counterparts which are depending upon government bailout and stimulus packages. The strong economic growth in the past, low defaulter ratio, absence of complex financial products, regular intervention by central bank, proactive adjustment of monetary policy and so called close banking culture has favoured the banking industry in India in recent global financial turmoil. The report "Indian Banking Sector Forecast to 2012" contains comprehensive research and rational analysis on various segments, like assets size, income level and number of cardholders, in the Indian banking industry. It also analyzes the current performance and key market trends, and helps clients to understand various products available in the market and their future scope.

7. APPENDIX

7.1 International Conferences and Annual Meetings Global banking conference Retail bankers academy Conference on payment system in banks Emerging issues and opportunity conference for Indian banks First global conference on legal and accounting process outsourcing

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