India’s Rs 77 trillion (US$ 1.30 trillion)-banking industry is well at par with global standards and norms. Prudent practises and conventional framework adopted by the regulator, Reserve Bank of India (RBI), have insulated Indian banks from the global financial crisis.
The country has 87 scheduled commercial banks with deposits worth Rs.71.6 trillion (US$ 1.21 trillion) as on 31 May, 2013. Of this, 26 are public sector banks, which control over 70 per cent of India’s banking sector, 20 are private banks and 41 are foreign banks. Of the total, 41 banks are listed with a total market capitalisation of Rs.9.35 trillion (US$ 158.16 billion) as per the recent statistics.
India’s central bank is about to propose fundamental changes in the structure of Indian banking industry. The suggestions include consolidation of some large banks to create two-three global ones, setting up of smaller banks, separate licenses for specific banking operations instead of a single universal one, continuous licensing for new banks and conversion of some urban cooperative banks into full-fledged commercial banks.
Also, the RBI has, for the time being, relaxed the norm that stipulates non-banking finance companies (NBFCs) to have a minimum gap of six months between two non-convertible debentures (NCDs) issues. The move is aimed at streamlining the process of moving into a more robust asset-liability management framework in a non-disruptive manner.
Over the past few years, Indian banking system has majorly went revamp and modernisation. The new infrastructure adopted by the banking system is mainly comprised of information technology (IT) products and services.
Indian banking and securities companies will spend around US$ 422 billion on IT products and services in 2013. That will imply a 13 per cent rise from Rs 37,300 crore (US$ 6.31 billion) spent in 2012. IT services is the largest overall spending category at Rs 13,200 crore (US$ 2.23 billion) in 2013. This ensures that IT service providers lay a strong focus on the financial services sector, according to a study by research and analyst firm Gartner.
Exchange Rate Used: INR 1 = US$ 0.01692 as on July 24, 2013
References: Media Reports, Press releases, RBI Documents.