Banking

Banking
Annual review November 2004
Contents
Summary
Part A: Core business to drive profitability
The net profitability margin Executive summary 1
(NPM) of banks will rise from Business 9
1.36 per cent in end-March Interest rate outlook and yields 37
2003 to 1.45 per cent by March Profit and loss account 49
2006, despite a continuing Profitability 57
decline in spreads, on account
of the cost-control measures Part B: State of the industry
they have adopted. The Overview 61
business of the industry is Business 67
expected to grow by 14.2 per Spreads & net profitability margin 89
cent CAGR between 2003-04 Profit and loss account 99
and 2005-06, led by continued Other income 103
growth in retail finance, recovery Operating expenses 109
in commercial credit and growth Important ratios 121
in agricultural credit. Asset
quality will also improve, with Part C: Industry statistics
net NPAs expected to touch 2.54 Industry structure 123
per cent by 2005-06. Interest Financial system in India 129
rates have started to harden Industry performance (tables) 137
during 2004-05, which will Industry performance (graphs) 161
dramatically reduce un-booked Player profiles 173
profits from the investment
portfolio.
Part D: Annexure 289
Contact details
Analyst: Yatin Gupte Head of Research: Rajnish Rastogi Client Servicing
(ygupte@crisinfac.com) (rrastogi@crisinfac.com) (clientservicing@crisinfac.com),
022-56913561
Opinion
Sections
Executive summary 1
- Net profitability margin expected to rise 1
- Business to grow by 14.2 per cent CAGR in 2003-04 to 2005-06 2
- Asset quality of banks to improve 4
- Interest rates to harden from 2004-05 6
- Unbooked profits on investments to reduce dramatically 7
- Key ratios: Return on assets to be under pressure due to slow
growth in fee-based income 7
- Challenges faced by banks in an increasing interest rate scenario 8
1.0 Business 9
- Business of scheduled commercial banks to grow at 14.2 per cent 9
- Sources of funds: Deposits 10
- Borrowings to grow at 7.1 per cent CAGR 16
- Equity capital & reserve and surplus 17
- Capital adequacy ratio 19
- Advances 20
- With the improvement of credit offtake, credit deposit ratio to
touch 62% by 2005-06 29
- Increasing credit deposit ratio to slow down the growth rate
of investments 29
- Asset quality 30
- Cash in hand and balances with RBI grew at a CAGR of 4.1
per cent from 1997-98 to 2002-03 35
2.0 Interest rate outlook and yields 37
- Interest rates to harden in 2004-05 37
- Yields and cost of scheduled commercial banks 41
- Yield on investments 43
3.0 Profit and loss account 49
- Interest earned 49
- Interest expended 50
- Fee-based income: Core and non-core 51
- Profit on sale of investments 52
- Operating expenses to grow 8.8 per cent 54
- Provision & contingencies 55
4.0 Profitability 57
- Net profitability margin highly susceptible to changes in
operating expenses 57
- Other key ratios 58
Continued...
CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

i
...continued
Boxes
1.0 Business
01 Alternative investment products 15
02 Movement & stock of foodgrains at FCI 22
03 Impact on the spreads of interest rate reduction on FCI credit 23
04 Corporate Debt Restructuring Mechanism (CDR) 32
05 Sector-wise NPA of scheduled commercial banks 33
06 Recent guidelines issued by RBI pertaining to CRR 36
2.0 Interest rate outlook and yields

01 Fiscal deficit 39
3.0 Profit and loss account

01 Prudential norm on classification of investment portfolio of banks 53
4.0 Profitability
01 Net profitability margin 58
Figures
Executive summary
01 Business of scheduled commercial banks 2
02 Non-food credit 3
03 Asset quality 4
04 Non-performing assets 5
05 Average yield on G-Sec 7
1.0 Business
01 Proportion of different sources of funds of SCBs 10
02 Interest rate on deposits vs growth in term deposits 12
03 Ownership of savings deposits 13
04 Ownership of deposits within the household sector - 2002 13
05 Growth in saving deposits 13
06 Ownership of current deposits with SCB 14
07 Ownership of deposits within the household sector - 2002 14
08 Growth in borrowings 16
09 Growth in borrowings (excluding ICICI Bank) 16
10 CRAR of top six banks 19
11 Food credit 20
12 Agricultural credit 24
13 Retail credit 25
14 Operating rates 27
15 Credit deposit ratio 29
16 Investment-deposit ratio 30
continued...

ii
...continued
Figures
17 Asset quality 30
18 Incremental NPA provision 34
19 Comparison of CRR with proportion of cash in hand with T&DL 35

01 Average WPI-All commodities 40
02 Weekly WPI inflation 40
03 Yield on advance portfolio vis-a-vis benchmark 3-year G-Sec 42
04 Yield on investment portfolio vis-a-vis benchmark 5-year G-sec yield 44
05 Yield on deposits portfolio vis-a-vis benchmark 2-year G-Sec yield 16
4.0 Profitability
01 Spreads & NPM 58
Tables
Executive summary
01 Net profitability margin (NPM) 1
02 Key ratios 7
1.0 Business
01 Business of scheduled commercial banks in India 9
02 Sources of funds of scheduled commercial banks 10
03 Deposits of scheduled commercial banks from 1999-00 to 2005-06 11
04 Share of deposits 11
05 Proportion of different categories of deposits in the incremental deposits 11
06 Growth of deposits 11
07 Share of different investment alternatives in incremental investible funds 15
08 Equity and reserve surplus 17
09 Distributions of scheduled commercial banks by CRAR 18
10 Assets of the scheduled commercial banks 20
11 Food and non-food credit of scheduled commercial banks 20
12 Movement - food grains by FCI (provisional) 22
13 Stock in Central pool as on 30/06/2004 22
14 Impact on yield on advances 23
15 Non-food credit growth 24
16 Projected investments 27
17 NPAs of scheduled commercial banks 31
18 Progress under CDR Scheme 33
19 Sector-wise composition of NPAs of public sector banks (1999-2003) 33
20 Impact of CRR rate reduction on yields 36
continued...

iii
...continued
Tables
01 Average yields of government securities 37
02 Projected interest rates of government securities 37
03 Fiscal deficit and market borrowing 38
04 Tax revenues and industrial growth 39
05 Yields & costs of scheduled commercial banks 41
06 Maturity profile of loans and advances of scheduled commercial banks 42
07 Maturity profile of investments of scheduled commercial banks 43
08 Maturity profile of term deposits of scheduled commercial banks 45
09 Maturity profile of borrowings of scheduled commercial banks 47
10 Average cost of borrowings of scheduled commercial banks 47

01 Profit and loss account 49
02 Interest on borrowings of scheduled commercial banks 50
03 Non-interest income - break-up 51
04 SCBs: Unbooked appreciation 52
05 Employee cost of scheduled commercial banks 54
06 Provisions and contingencies of scheduled commercial banks 55
4.0 Profitability
01 Net profitability margin (NPM) 57
02 Key ratios 58
03 Projected profit and loss account of the scheduled commercial banks 59
04 Projected balance sheet of all scheduled commercial banks 60

iv
1.0
Business
Business of scheduled commercial banks to grow at 14.2 per cent
Business of scheduled commercial banks in India Table 1

(Rs billion) 1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 F 2005-06 F CAGR CAGR 1
CAGR
2000-03 2000-03 2003-06
Deposits 9,325 10,935 12,472 14,045 15,688 17,658 19,929 14.6 13.7 12.4
Advances 4,559 5,407 6,635 7,599 8,703 10,372 12,300 18.6 16.0 17.4
Business 13,884 16,343 19,107 21,644 24,392 28,030 32,229 16.0 14.5 14.2
E: Estimated F: Forecasted
1
Excluding ICICI Bank
Source: RBI and CRIS INFAC estimates
In the banking industry, business is defined as the sum of the deposits and advances as on
a particular date.
CRIS INFAC estimates that the business of scheduled commercial banks will grow from Rs 21,644
billion in 2002-03 to Rs 32,229 billion by 2005-06 at a CAGR of 14.2 per cent, led by continued
growth in retail finance, gradual recovery in commercial credit, pick-up in agriculture credit and
growth in deposits.
During 2003-04 to 2005-06, their advances will grow by 17.4 per cent on the back of growth
in retail finance, and commercial and agriculture credit. Deposits are expected to grow by 12.4
per cent CAGR.
From 2000-01 to 2002-03, the business of the scheduled commercial banks grew by 16.0 per
cent (14.5 per cent) CAGR.
The 14.5 per cent CAGR growth in business was mainly driven by a 16 per cent CAGR growth
in advances (excluding ICICI Bank). Due to the slowdown in industrial growth, many corporates
restructured themselves to survive; hence, credit offtake was low. With reduced avenues for investment
of surplus funds, banks turned to retail financing. The retail finance portfolio grew by around
27 per cent during the same period.
Due to the merger of ICICI Ltd with ICICI Bank on March 30, 2002, all the growth figures
for scheduled commercial banks (SCBs) for the period 1999-00 to 2002-03 are distorted. Hence,
for a better comparison, we have calculated the growth figures excluding ICICI Bank, which
are indicated in brackets throughout this Annual Review.

9
Sources of funds: Deposits
Overview
The main sources of funds for the banking sector are deposits and borrowings. In addition, internal
accruals and funds raised through equity form part of the funds available to banks for meeting
their funding requirements. CRIS INFAC expects no significant change in the funding pattern
during 2003-04 to 2005-06
Sources of funds of scheduled commercial banks Table 2

(Rs billion) 1999-2000 2000-01 2001-02 2002-03 2003-04 F 2004-05 F 2005-06 F
Capital 205.60 211.44 236.16 236.46 246.46 250.46 254.46
Reserves and surplus 446.75 500.19 645.70 781.80 950.80 1,111.03 1,309.71
Deposits 9,324.68 10,935.27 12,472.39 14,044.90 15,688.27 17,657.65 19,928.76
Borrowings 491.15 594.85 1,117.05 912.19 945.09 1,023.06 1,121.96
Total 10,468.18 12,241.75 14,471.30 15,975.35 17,830.62 20,042.20 22,614.90
Source: RBI & CRIS INFAC
Proportion of different sources of funds of SCBs Figure 1

2002-03
(per cent) 1997-98 (per cent)
Reserves and Reserves and
surplus Capital surplus Capital
5 3 5 1
Borrowings Borrowings
4 6
Deposits Deposits
88 88
Source: CRIS INFAC
Deposits expected to grow at a CAGR of 12.4 per cent

Deposits consist of demand deposits (current account deposits), savings deposits and term deposits.
CRIS INFAC expects the deposits of all scheduled banks to grow from a level of Rs 14,045
billion as of March 2003 to Rs 19,929 billion as of March 2006 at a CAGR of 12.4 per cent.
This will be driven by a growth of 8.5 per cent, 16.2 per cent and 11.7 per cent in demand
deposits, savings deposits and term deposits, respectively.
Time and demand deposits of all scheduled commercial banks have been growing a CAGR of
14.6 per cent (13.7 per cent) during 2000-01 to 2002-03, driven primarily by the growth in
term deposits and savings deposits, which grew by a CAGR of 13.8 per cent and 16.7 per
cent (excluding ICICI Bank), respectively.

10
Deposits of scheduled commercial banks from 1999-00 to 2005-06 Table 3
(Rs billion) 1999-2000 2000-01 2001-02 2002-03 2003-04 E 2004-05 F 2005-06 F CAGR CAGR CAGR
1
2000-2003 2000-03 2003-2006

(per cent) (per cent) (per cent)
Demand deposits 1,308.6 1,414.7 1,550.3 1,668.1 1,739.0 1,821.6 1,880.8 8.4 8.1 4.1
Savings bank deposits 2,012.9 2,335.5 2,734.2 3,228.0 3,760.6 4,362.3 5,060.3 17.1 16.7 16.2
Term deposits 6,003.3 7,185.1 8,187.9 9,148.8 10,188.7 11,473.7 12,987.7 15.1 13.8 12.4
Deposits 9,324.7 10,935.3 12,472.4 14,044.9 15,688.3 17,657.7 19,928.8 14.6 13.7 12.4
E: Estimate; F: Forecast
1
Source: RBI and CRIS INFAC Research
The proportion of term deposits in the total deposit mix has increased from 64 per cent in
1991-92 to around 66 per cent in 2002-03.
Share of deposits Table 4

(per cent) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 E 2004-05 F 2005-06 F
Demand deposits 14 14 14 13 12 12 11 10 9
Savings bank deposits 22 21 22 21 22 23 24 25 25
Term deposits 64 65 64 66 66 65 65 65 65
Deposits 6,663 7,978 9,325 10,935 12,472 14,045 15,688 17,658 19,929
On an incremental deposit basis, the proportion of term deposits dropped from 70 per cent
in 1998-99 to 61 per cent in 2002-03 due to falling interest rates. In the next 3 years, the
proportion of term deposits is likely to go up, albeit at a slow rate, due to the expected
rise in the interest rates and the introduction of technology-driven products.
Proportion of different categories of deposits in the incremental deposits Table 5

(per cent) 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 F 2004-05 F 2005-06 F
Demand deposits 11.01 14.81 6.59 8.83 7.49 4.31 4.19 2.61
Savings bank deposits 19.48 23.74 20.03 25.94 31.40 32.41 30.55 30.73
Term deposits 69.51 61.45 73.38 65.23 61.11 63.28 65.25 66.66
Total 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
Source: CRIS INFAC
Growth of deposits Table 6

(Per cent) 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 F 2004-05 F 2005-06 F
Demand deposits 15.01 17.98 8.11 9.59 7.60 4.25 4.75 3.25
Savings bank deposits 17.83 18.88 16.03 17.07 18.06 16.50 16.00 16.00
Term deposits 21.45 15.99 19.69 13.96 11.74 11.37 12.61 13.19
Source: RBI and CRIS INFAC

11
Increase in interest rates to spur term deposits growth
CRIS INFAC is of the view that term deposits will grow at a 12.4 per cent CAGR during 2003-
04 to 2005-06, from Rs 9,148.8 billion as of March 2003 to Rs 12,737.9 billion as of March
2006 on the back of the expected increase in the interest rate of term deposits.
From 2000-2003, term deposits recorded a growth of 15.1 per cent (13.8 per cent) CAGR on
account of their perceived safety, in comparison to other investment instruments like equity and
mutual funds.
Term deposits have shown a strong correlation with the interest rates of deposits, with the
coefficient of correlation at 0.82. For the purpose of our study, we have considered the interest
rates offered on deposits with a 3-5 year tenure. CRIS INFAC believes that the interest rate
offered on term deposits (3-5 year tenure) will rise from 5.25 per cent in 2003-04 to 6.15
per cent in 2004-05 (an increase of 90 bps) and go up further by 35 bps to 6.50 per cent
in 2005-06. This will result in term deposits growing at 11.37 per cent, 12.61 per cent and
13.19 per cent in 2003-04, 2004-05 and 2005-06, respectively.
Growth in term deposits moves in line with interest rate movement
Interest rate on deposits vs growth in term deposits Figure 2

(per cent)
(per cent)
13.0 25.0
12.0
20.0
11.0
10.0
15.0
9.0
10.0
8.0
7.0
5.0
6.0
5.0 -
1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04E 2004-05P 2005-06P
Interest rates on deposits (3-5 years maturity) growth in term deposits (%)
The regression equation y = 1.89 x - 0.44.
Where, y = growth rate of term deposits, x = interest rate on deposits (3 - 5 years maturity).
Savings deposits to grow at 16.2 per cent from 2003-04 to 2005-06

CRIS INFAC estimates that savings deposits will grow at a CAGR of 16.2 per cent from Rs
3,228 billion as of end-March 2002 to Rs 5,060 billion as of March 2006.
Savings deposits accounted for nearly 23 per cent of the total deposit base of scheduled commercial
banks in India as on March 31, 2003.

12
Ownership of savings deposits Ownership of deposits within the household
Figure 3 sector -2002 Figure 4
(per cent) Corporate (per cent)

Foreign sector
5 1 Trusts
Govt. Associations
6 Clubs etc.
1
Proprietary and
Partnership
1
Individuals Religious
90 Institutions
1
Others(not
elsewhere
classified)
Household 5
88
Source: RBI and CRIS INFAC Research Source: RBI and CRIS INFAC Research
As on the last reporting Friday of March 2002, nearly 88 per cent of the total savings deposits
of scheduled commercial banks were owned by the household sector. Of these around 90 per
cent were owned by individuals. About 79 per cent of the savings deposits are owned by
individuals and are, hence, considered as a stable source of funds.
Growth in saving deposits Figure 5

(per cent)
21.00
17.00
13.00
9.00
5.00
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 P 2004-05 P 2005-06 P
Source: CRIS INFAC Research
During 2000-01 to 2003-04, savings deposits registered a CAGR of 17.1 per cent (16.7 per
cent). The year-on-year growth in savings deposits has remained more or less stable at 16-
17 per cent. This is primarily because Indians are generally inclined to save more, and growth
in savings deposits is not very much driven by interest rate movement.
Given the stable nature of these deposits and the ‘save more' mindset of the Indian public,
CRIS INFAC expects the growth in savings deposits to be stable at 16.0-16.5 per cent CAGR
during 2003-04 to 2005-06.

13
Technology-driven products to taper growth in demand deposits
CRIS INFAC estimates that demand deposits (current account) will grow at a CAGR of 4.1 per
cent from Rs 1,668 billion as of March 2003 to Rs 1,881 billion by end-March 2006, due to
the introduction of newer, technology-driven products/facilities.
Firms maintain demand deposits to meet their day-to-day cash requirements. With the advent
of new technology-driven products such as electronic fund transfers, Real Time Gross Settlements
(RTGS) and Cash Management Systems (CMS), the clearing cycle has shortened. RTGS and CMS
allow quick transfer of funds to and from any part of the country. This will encourage corporates/
firms to reduce their balances in demand deposits, and probably slow down their growth. Further,
customer-friendly products that are introduced by banks with the aid of technology (swipe-in
and swipe-out) will divert some portion of demand deposits towards fixed deposits.
During 2000-01 to 2003-04, demand deposits have grown by a CAGR of 8.4 per cent (8.1
per cent) from Rs 1,308.6 billion as of March 2000 to Rs 1,668.1 billion as of March 2003.
Demand deposits are the most volatile component of the deposits that banks have, and their
year-on-year growth has shown an uneven trend over a 10-year period. During the last few
years, a declining trend has been observed on account of the downturn in the industry.
Ownership of current deposits with SCB Ownership of deposits within the household
Figure 6 sector - 2002 Figure 7
(per cent) (per cent) Others

Educational
Financial 8
Institutions
Sector
3
16
Traders
33
Household
Corporate Proprietary and
47
sector Partnership
16 33
Foreign
3 Other
Trusts
Associations individuals
Clubs etc. 20
Govt.
18 3
As on the last reporting Friday of March 2002, the corporate and the financial sectors together
owned 32 per cent of the current deposits of scheduled commercial banks. Further, 47 per
cent of the total current deposits were owned by the household sector, of which around 66
per cent were owned by traders and partnership firms together. Thus, close to 63 per cent
of the demand deposits are owned by the business class, and are hence treated as the most
volatile component of deposits.

14
Alternative investment products Box 1
Overview
Besides term deposits, investors have the option of investing in insurance, small savings schemes, mutual funds and the
like. While the share of small savings schemes in total investments has remained more or less stable, the share of
insurance and mutual funds in the total pie is increasing. This has led to a drop in the share of the bank liability product
(term deposits + savings deposits) from 68 per cent in 1998-99 to 57 per cent in 2002-03. But, going forward, we expect
it to increase marginally to 58 per cent by 2005-06. The following table indicates the share of various investment alternatives
in the incremental inflows of investible money in the economy.
Share of different investment alternatives in incremental investible funds Table 7

Year Life Share in Term Share in Savings Share in Small Share in M utual Share in
insurance the deposits the Deposits the Savings the funds the
premium incremental incremental incremental Schemes incremental incremental
money money money money money
supply (%) supply (%) supply (%) supply (%) supply (%)
1998-99 22,806 13 91,419 53 25,626 15 28,541 17 2,695 2
1999-00 27,462 14 82,738 42 31,964 16 32,214 16 22,117 11
2000-01 34,898 15 118,186 50 32,262 14 37,577 16 11,135 5
2001-02 50,094 21 100,274 42 39,870 17 37,769 16 8,024 3
2002-03 55,738 22 96,092 38 49,381 19 40,602 16 13,480 5
2003-04 F 60,755 22 96,062 35 53,262 19 49,534 18 16,850 6
2004-05 F 65,676 20 121,313 38 60,170 19 59,441 18 15,165 5
2005-06 F 70,463 19 141,532 39 69,797 19 71,329 19 12,890 4
F: Forecast
Source: CRIS INFAC Estimates
Insurance sector
The life insurance sector, which was earlier a monopoly of the Life Insurance Corporation of India (LIC), was opened up
to the private sector in 1999-2000. From 1996-97 to 2002-03, the total insurance premium increased by a CAGR of 22.8
per cent from Rs 162 billion to Rs 557.3 billion in 2002-03.
However, during 2000-01 to 2001-02, the removal of assured returns schemes across insurance products of the Life
Insurance Corporation of India has resulted in their becoming less attractive to investors. Since LIC still accounts for a
significant portion of the life insurance market, the drop in its growth will result in a marginal decline in the growth rate of
insurance premiums. CRIS INFAC expects insurance premiums to grow at a CAGR of 8.04 per cent from 2002-03 to 2005-
06.
Mutual funds as an investment channel

The performance of the mutual fund industry is dependent on the performance of the capital markets; hence, money would
flow in the mutual funds during a boom, but would flow back to the banks during a downturn.
Growth in small savings scheme to remain constant

In the last 3 years, the interest rates on small savings schemes has come down by around 400 basis points. Despite this,
the average post-tax returns on these schemes are higher than the post-tax returns on term and other deposits. But the
higher lock-in period (of 6-7 years) of these schemes has mitigated their attractiveness, particularly since interest rates
are expected to increase in the short to medium term. Consequently, CRIS INFAC expects small savings schemes to grow
at a CAGR of around 7.5 per cent from 2003-04 to 2005-06.

15
Borrowings to grow at 7.1 per cent CAGR
CRIS INFAC estimates the borrowings of scheduled commercial banks to grow at a CAGR of
7.1 per cent from Rs 912 billion as of March 2003 to Rs 1,122 billion by end-March 2006,
led by a strong growth in advances.
During 2000-01 to 2002-03, borrowings of scheduled commercial banks grew by 22.9 per cent
(5.4 per cent) CAGR.
Growth in borrowings Figure 8 Growth in borrowings (excluding ICICI Bank) Figure 9

(per cent) (per cent)
100.0 25.0
87.8
20.2
80.0 20.0
15.0
11.2
60.0
10.0
9.0
8.0
10.0
6.9
40.0
21.1
-8.9
5.0
11.8
20.0
9.7
3.6
8.3
-18.3
0.0
1999-2000
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
0.0
1999-2000
2000-01
2001-02
2002-03
2003-04 F
2004-05 F
2005-06 F
-5.0
-20.0
-10.0
-40.0
-15.0
In 2002-03, the borrowings of scheduled commercial banks recorded a negative growth rate of
18 per cent, primarily on account of:
ICICI Bank replacing its high cost borrowings (of the erstwhile ICICI Limited) with term and savings
account deposits.
Excess liquidity prevailing in the system and lesser opportunity to invest the available funds.
Banks taking advantage of reduced interest rates to prune their high-cost debt portfolio.
CRIS INFAC estimates a marginal growth in borrowings in 2003-04. The liquidity position was
comfortable throughout 2003-04, hence the demand for borrowings is expected to be low. Further,
we also expect ICICI Bank to continue replacing its high cost borrowings with low cost deposits,
but at a slower pace. However, as the demand for credit gradually increases, the demand for
borrowings would increase, which will push up the growth in borrowings to 9 per cent in 2004-
05 and 10 per cent in 2005-06

16
Equity capital & reserve and surplus
Equity and reserve surplus Table 8

(Rs billion) 1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 F 2005-06 F CAGR CAGR
1999-00 - 2003-04 -
2002-03 2005-06
New equity raised 205.6 211.4 236.2 236.5 246.5 250.5 254.5 4.8 2.5
Reserve & surplus 446.8 500.2 645.7 781.8 950.8 1100.7 1276.2 20.5 17.7
E: Estimates, F: Forecast
Source: RBI & CRIS INFAC estimates
Another source of funds for the banking sector is the equity capital. In the last 10 years, the
total equity capital raised by banks has gone up, although it is not the main source of funds
for banks. With stricter capital adequacy norms and the growing loan book size, banks will need
to infuse more capital to maintain a healthy capital adequacy ratio. Many of the public sector
banks have reduced the government stake by raising equity from the market. In 2002-03, the
total amount raised by public sector banks through equity was approximately Rs 7.7 billion. In
2003-04, public sector banks are estimated to raise nearly Rs 6.0 billion. Hence, in order to
maintain a healthy capital adequacy ratio, going forward, banks will embark on infusing more
equity capital. CRIS INFAC estimates equity capital to grow at CAGR of 2.5 per cent in the
next year.
The retained earnings of banks have grown at a CAGR of 20.5 per cent from 1999-00 to 2002-
03. This was primarily on account of the over 31.2 per cent CAGR growth in net profits in
the same period. CRIS INFAC expects profits after tax to grow at a CAGR of 10.3 per cent
during 2003-04 to 2005-06 and the dividend payout ratio to be at 18.5 per cent. We also
expect addition to the reserves through an increase in share premium, which is expected to
grow in line with the projected growth in the equity capital. CRIS INFAC expects retained earnings
to grow at a CAGR of 18.8 per cent in the next 3 years, based on the above factors.

17
18
Distributions of scheduled commercial banks by CRAR Table 9
State Bank Group Nationalised banks Old private sector banks New private sector banks Foreign banks Total
2001-02 2002-03 2001-02 2002-03 2001-02 2002-03 2001-02 2002-03 2001-02 2002-03 2001-02 2002-03
Below 4 per cent 1 0 0 2 1 2
Between 4-9 per cent 1 0 1 0 2 0
Between 9-10 per cent 2 1 2 2 1 1 2 0 7 4
Above 10 per cent 8 8 15 18 19 19 6 6 33 36 81 87
Source: Trends and Progress of Banking in India, 2002-03

Capital adequacy ratio
Capital to risk-weighted assets ratio (CRAR)
As of March 2003, all scheduled commercial banks, except two banks, had their CRAR above
the stipulated norms. Between March 2002 and March 2003, we see a marked improvement
in the nationalised banks, with all banks having capital adequacy above the stipulated norm of
9 per cent. This can be attributed to the increase in profitability and the fresh capital raised
by many banks. With the likely implementation of new Capital Accord (Basel II), many banks,
especially those having a global presence, have been holding capital in excess of the stipulated
norm.
CRAR of top six banks Figure 10

(per cent)
16.0
13.9
13.9
13.5
13.5
14.0
13.4
13.1
13.0
12.8
12.8
12.7
12.2
12.0
12.0
11.7
11.6
11.4
12.0
11.3
11.1
11.1
11.1
10.7
10.7
10.4
10.2
10.0
8.0
Bank Of Baroda Bank Of India H D F C Bank Ltd. ICICI Bank Ltd Punjab National State Bank Of
Bank India
Mar-01 Mar-02 Mar-03 Mar-04
Source: CRIS INFAC Research
From the sample of six banks listed above, we see that the capital adequacy ratio of all banks,
except ICICI Bank, has improved. The capital adequacy ratio of PSBs has shown a significant
improvement in comparison to that of the new private sector banks. This is on account of
the aggressive lending strategy of new private sector banks in comparison to the aggressive
capital raising strategy of the public sector banks.
CRIS INFAC expects advances to grow faster than deposits. With the expected increase in credit
demand, banks will prefer to increase their loan portfolio instead of investments. This will result
in banks shifting their focus from investments towards advances. This shift from the risk free
assets to risky assets and the impending implementation of the new Basel accord, which is
expected to increase the risk weights of the assets, would require banks to raise capital to
maintain CAR above the stipulated norm.

19
Advances
Assets of the scheduled commercial banks Table 10

Assets 1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 P 2005-06 P CAGR CAGR
2000-03 2001-04
cash and balances with RBI 869 863 899 891 943 998 1056 0.9 5.8
Balances with bank and money call
961 1246 1385 900 976 1121 1289 -2.2 12.7
and short notice
Investments 4216 5007 5975 7100 7934 8484 9150 19.0 8.8
Advances 4559 5407 6635 7599 8703 10372 12300 18.6 17.4
Fixed assets 155 163 202 203 205 207 210 9.3 1.1
Other assets 765 759 827 890 897 905 914 5.2 0.9
Total assets 11525 13446 15923 17585 19658 22087 24919 15.1 12.2
P: Projected
Source: RBI and CRIS INFAC Estimates
Advances to grow at CAGR of 17.4 per cent from 2003-04 to 2005-06

Advances are divided into food and non-food credit. Non-food credit is further divided into agricultural
credit, retail credit and other commercial credit.
Food and non-food credit of scheduled commercial banks Table 11

(Rs billion) 1999-2000 2000-01 2001-02 2002-03 2003-04E 2004-05P 2005-06P CAGR CAGR
(2000-03) (2003-06)
Food credit 257 400 540 495 365 427 459 24.42% -2.45%
Non-food credit 4300 5007 6095 7105 8338 9945 11841 18.22% 18.56%
Food credit to show a negative CAGR of 2.5 per cent
Food credit Figure 11

(Rs billion)
600
500
400
300
200
100
0
1999-2000 2000-01 2001-02 2002-03 2003-04E 2004-05P 2005-06P

20
Food credit includes banks' credit to the Food Corporation of India (FCI) for procuring foodgrains
from the market, at the minimum support prices, to be distributed through the public distribution
system.
CRIS INFAC believes food credit will show a negative CAGR of 2.45 per cent during 2003-
04 to 2005-06. In sharp contrast to the accelerated growth witnessed in 2001-02, food credit
declined steeply by 26.2 per cent in 2003-04 after declining by 8.3 per cent in 2002-03. The
steep decline in food credit was on account of lower procurement and higher offtake of food
grains from the public distribution system.
The government has emphasised the need to improve the functioning of the public distribution
system. This, coupled with the drop in the stock levels of FCI due to higher offtake of foodgrains
through the public distribution system in earlier years, should increase the FCI's procurement
in 2004-05. However, its procurement is likely to be influenced by the availability of storage
capacity at its various godowns. FCI has over 23 million tonnes (owned & hired) of storage
capacity in over 1,700 godowns all over India.
Higher procurement will lead to increased credit. However, recently, the Central government permitted
FCI to raise money from the market to the tune of Rs 50 billion. Though banks can subscribe
to these bonds, they will have to compete with other market players, which will reduce their
food credit exposure.
During the last quarter of 2003-04, banks had reduced the interest rate charged on the food
credit by about 150 bps from a level of 10.95 per cent, which will have an impact of about
6.23 basis points (annualised) on the yield on advances. Further, if FCI decides to raise Rs
50 billion of its requirement from the market, the yield on advances would face a further impact
of 2.28 basis points (annualised).
CRIS INFAC expects food credit to grow at a rate of 17 per cent in 2004-05 but taper to
7 per cent in subsequent years.

21
Movement & stock of foodgrains at FCI Box 2
Movement - food grains by FCI (provisional) Table 12

(million tonnes) Foodgrains Sugar Total
1996-1997 23.6 1.2 24.8
1997-1998 19.1 1.1 20.2
1998-1999 19.1 1.1 20.2
1999-2000 22.1 0.7 22.8
2000-2001 16.2 0.3 16.5
2001-2002 20.5 0.3 20.8
2002-2003 24.8 0.2 25
2003-2004 29.9 0.8 29.98
2004-2005 10.6 Upto July'04 0.3 10.63
Source: Food Corporation of India
The total foodgrain stocks in the Central grain pool were estimated at around 29.9 million tonnes in the beginning of July.
This comprised 19.15 million tonnes of wheat and 10.76 million tonnes of rice. The stock in the central pool as on June 30,
2004, is above the buffer stock norms
Stock in Central pool as on 30/06/2004 Table 13

(million tonnes / With FCI With state govt. / Grand total
Prov.) agencies
Rice 8.92 1.85 10.76
Wheat 7.17 11.97 19.15
Total 16.09 13.82 29.91
Buffer stock norms
(million tonnes) 1st Jul 1st Oct 1st Jan 1st Apr
Rice 10.0 6.5 8.4 11.8
Wheat 14.3 11.6 8.4 4.0
Total 24.3 18.1 16.8 15.08
Source: FCI website
A food ministry sponsored study has concluded that the foodgrain requirement of the public distribution system and
welfare schemes can be met with lower grain procurement and stockholding than at present

22
Impact on the spreads of interest rate reduction on FCI credit Box 3
The total outstanding food credit as in March 2003 was Rs 495 billion, which amounted to 9 per cent of the outstanding
loans and advances of public sector banks as on March 31, 2003. Banks were earning a yield 10.95 per cent on their FCI
exposure till December 2003-quarter end.
The rate of 10.95 per cent is based on the prime lending rate (PLR) of five large public sector banks: State Bank of India,
Punjab National Bank, Canara Bank, Bank of Baroda and Bank of India. During 2001-02 to 2002-03, the range of decline
of the average PLR of these public sector banks at 125 bps (12 to 10.75 per cent) has been much lower than the decline
on the 10-year Government of India (GOI) securities, which has fallen by around 400 bps (April 2001 to March 2003)
During the last quarter of 2003-04, banks agreed to reduce their lending rate to FCI by 150 bps to 9.45 per cent.
Recently, the Centre allowed FCI to borrow up to Rs 50 billion from the bond market, which would reduce the banks’
exposure to FCI, as they would compete with other players in the open market. Till date, FCI has not raised any loans from
the market.
We have tried to calculate the impact of these significant developments on the yield on advances
Impact on yield on advances Table 14

(Rs million) Current Refinancing Total Impact
Average food credit exposure (2004-05) 396,177
Maximum refinance available 50,000
Total advances (average) 9,537,673 9,537,673 9,537,673
Original interest rate 10.95% 10.95%

Reduced interest rate 9.45% 9.45%
2-year GOI security yield rate 5.10%
Original interest income on FCI exposure 43,381 43,381

Revised interest income on FCI exposure 37,439 4,725 35,264
Interest rate on G-Sec 2,550
Loss of revenue (5,943) (2,175) (8,118)

Expected reduction in the yields (in bps) (6.23) (2.28) (8.51)
Source: CRIS INFAC estimates
The impact of the reduction in the interest rate works out to 6.23 basis (annualised). If FCI were to access the bond
market, banks can subscribe to these bonds, but would earn a low yield, because we believe the pricing of the paper would
be at par with GOI paper of a similar duration., as the market borrowings would be backed with a GOI guarantee.
Assuming an average G-Sec yield of 5.10 per cent during 2004-05 for 2-year paper, the impact on the spreads of banks
is estimated to be 2.28 basis points (annualised).
We have not factored in these developments in our projections. The total impact of the above-mentioned developments on
the yield on carry business and spreads is estimated at around 8.5 basis points.

23
Continued growth in the retail credit, coupled with the expected recovery in commercial credit, to drive growth in non-
food credit
Non-food credit growth Table 15

(Rs billion) 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 F 2005-06 F CAGR CAGR
2000-03 2003-06
Agri credit 371 433 504 591 711 854 1,025 1,281 1,601 19 23
Retail credit 348 408 516 659 825 1,051 1,582 2,136 2,670 27 36
Other credit 2,494 2,791 3,279 3,757 4,559 5,200 5,731 6,528 7,570 17 13
Total non-food 3,212 3,633 4,300 5,007 6,095 7,105 8,338 9,945 11,841 18 19
E: Estimates, F: Forecasted
CAGR is in per cent
Non-Food credit constitutes about 96 per cent of the total advances.
CRIS INFAC estimates that non-food credit will grow at a CAGR of 18.6 per cent during 2003-
04 to 2005-06, driven by the continued growth in retail finance and the expected pick-up in
agricultural and industrial credit.
During 2000-01 to 2003-04, non-food credit recorded a CAGR of 18.2 per cent, primarily due
to increased demand for retail credit, which grew at a CAGR of 27 per cent during the same
period.
Government's directive to push agriculture credit growth
Agricultural credit Figure 12

(Rs billion)
1800
1601
1600
1400 1281
1200
1025
1000
854
800 711
591
600 504
433
400
200
0
1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04P 2004-05P 2005-06P

24
Along with the direct finance to farmers, lending to allied farming activities (public and private),
subscription to bonds issued by NABARD (national bank for Agricultural and Rural Development),
loans to co-operative marketing societies, loans to co-operative banks of producers, etc are all
classified as agriculture credit. Agriculture lending is classified as priority sector lending. Every
scheduled commercial bank is expected to ensure that priority sector advance constitute 40 per
cent of net bank credit (in case of foreign banks, the priority sector advance ratio is 3.2 per
cent), which further has a sub-limit of 18 per cent towards agriculture credit.
CRIS INFAC expects agriculture credit to grow from Rs 854 billion (March 2003 end) to Rs
1,601 billion (March 2006 end) at a CAGR of 23.31 per cent, driven by the government's emphasis
on improving credit delivery to the agriculture sector.
During 1999-2000 to 2002-03, agriculture credit recorded a CAGR of 19.2 per cent from Rs
504.3 billion as of end-March 2000 to Rs 853.8 billion as of end-March 2003. The growth in
agriculture credit has been steady, due to low penetration of agricultural credit in the rural areas
and uneven agriculture output over the years.
The government has laid emphasis on improving the credit delivery to the agriculture sector
and thus improving agriculture production in the country. The Ministry of Finance has advised
all banks to increase their agriculture credit by 30 per cent over the next 3 years, from 2004-
05 to 2007-08. Further, several measures have been initiated, like increasing the credit limit
of the kisan credit card scheme, special agricultural credit plans, etc. The Reserve Bank of India
has directed banks to restructure / reschedule the overdue agriculture loans, waive margin money
requirement for agricultural loans up to Rs 50,000, etc.
Agriculture credit had been growing between 17-18 per cent during the last few years. Several
banks have started restructuring their operations to meet the targeted agricultural growth. Banks
have set up strategic business unit to cater to the agriculture credit demand. However, we feel
the projected growth rate of 30 per cent to be optimistic. CRIS INFAC expects the growth
in agricultural advances to be around 23 per cent CAGR during the 2002-03 to 2005-06.
Continued growth in housing finance to drive retail credit
Retail credit Figure 13

(Rs billion)
3000
2670
2500
2136
2000
1582
1500
1051
1000 825
659
516
500 408
0
1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04P 2004-05P 2005-06P

25
CRIS INFAC estimates the net outstanding retail finance portfolio of the banks to grow at a
CAGR of 36 per cent during the period 2003-04 to 2005-06, from Rs 1,051 billion as of end-
March 2003 to Rs 2,670 billion as of end-March 2006, driven by continued growth in housing,
commercial vehicles and car finance.
The projected growth in the outstanding retail finance in the next 3 years would be mainly
driven by the following factors.
Continued growth expected in housing finance, and cars and commercial vehicles finance.
Increasing market share of banks vis-à-vis NBFCs in the retail finance pie.
Increasing tenures of the loans.
During 2000-01 to 2002-03, the retail finance portfolio of banks has grown at a CAGR of 27
per cent from Rs 516.4 billion to Rs 1,051.4 billion. This steady growth in retail finance portfolio
was mainly on account of the following factors:
Focus of large public and private sector banks on disbursements to the household sector for housing
loans, commercial vehicles, cars and two wheelers
Increasing penetration of banks vis-à-vis NBFCs.
Lower interest rates, contributing to increase in demand, and rising tenure of car, housing and commercial
vehicle portfolio.
We expect outstanding housing finance, which constitutes almost 52 per cent of the total retail
finance, to grow at a CAGR of 40 per cent, while the outstanding car finance and commercial
vehicle finance will grow at a CAGR of 35 per cent each, during 2003-04 to 2005-06. Car
finance constitutes nearly 24 per cent of the retail finance portfolio.
Banks, with their low cost funds advantage, will continue to dominate the retail finance market
and CRIS INFAC expects banks to increase their market share in the retail finance market.
Other commercial credit to grow at 13.3 per cent CAGR, driven by gradual pick-up in industrial credit
Other commercial credit consists of the credit availed by large, medium and small-scale industries
covering various sectors.
CRIS INFAC estimates other commercial credit segment to grow from Rs 5,199.5 billion as of
end-March 2003 to Rs 7,570.0 billion as at March 2006 at a CAGR of 13.3 per cent, led by
the gradual upturn in the investment cycle in the manufacturing sector and a sustained growth
in the service sector.
Upturn in the investment cycle to boost credit from the manufacturing sector
The manufacturing sector has not seen any major capacities being set up in the last 3 years.
Consequently, many industries are reaching nearly full capacity utilisation levels. The present capacities
are not sufficient to meet the expected growth in demand in various industries, which has increased
the operating rates. Hence we expect capacity additions across all manufacturing sectors, which
in turn would increase the demand for credit.

26
Operating rates Figure 14
100 105
95
100
90
95
85
90
80
85
75
70 80
65 75
60 70
55 65
50 60
1998-99 2000-01 2002-03 2004-05 2006-07 1998-99 2000-01 2002-03 2004-05 2006-07
Steel Aluminium Paper Cement Petrochemicals Fibres Refining
Note
The operating rates projected for the period 2003-04 to 2007-08 are without considering any capacity built up.
Source: CRIS INFAC
Projected investments Table 16

(Rs billion) 1998-03 2003-08
Steel 50.00 60.00
Aluminium 19.25 98.00
Paper 32.00 80.00
Cement 63.00 120.00
Petrochemicals 20.00 60.00
MMF and FI 7.00 91.50
Refining & Marketing 187.64 622.00
Oil & Gas 397.50 807.50
Total 776.39 1,939.00
Source: CRIS INFAC
A CRIS INFAC industry study has identified eight industries, which are listed above, where significant
capital expenditure is projected. During 1998-99 to 2002-03, these sectors have made investment
to the tune of Rs 776.39 billion. During the next 5-year period, these eight industries are projected
to make investment to the tune of Rs 1,939 billion, which is 2.5 times the investments made
by these industries in the last 5 years. Based on our study, these eight sectors account for
almost 67 per cent of the total manufacturing sector (based on the capital expenditure), which
gives a total capital expenditure requirement for the entire manufacturing sector of Rs 2,908.5
billion. Out of a capital expenditure of Rs 2,908.50 billion, almost Rs 349 billion would have
taken place in 2003-04, while Rs 494 billion will occur in 2004-05 and Rs 756 billion in 2005-
06.
We estimate a total debt requirement of Rs 803.4 billion, to fund the capex requirement of
the first 3 years (2003-04 to 2005-06). Of this, banks are expected to fund to the tune of
Rs 281.2 billion, in the form of term loan.

27
Short-term credit requirement for the manufacturing sector
CRIS INFAC expects banks' short-term loan to the manufacturing industry to increase by Rs 541
billion during 2003-04 to 2005-06, driven by a 13.5 per cent growth in the topline of the
manufacturing sector during the said period.
CRIS INFAC, based on its study, expects the net sales of the manufacturing sector to grow
at CAGR of 13.5 per cent between 2003-04 and 2005-06. Increase in sales would result in
higher working capital requirement. But, due to better working capital management by corporates,
we expect a marginal drop in the working capital requirements of the industry.
The ratio of working capital gap to net sales has been showing an increasing trend. We believe
this was due to companies changing their debt mix more towards short term to take advantage
for the falling interest rates. But as the interest rates harden, firms would resort to long-term
loans to lock their exposure at lower interest rates.
Telecom, hotel industry to drive credit growth in service sector

In 2002-03, the services sector accounted for around 51 per cent of the total GDP (at constant
prices at factor cost). GDP in the service sector had clocked impressive growth rates of over
9 per cent during 1997-98 to 1999-2000. The services sector has grown at a steady pace,
though there have been fluctuations in the growth in agricultural and industrial production. Crisil
Centre of Economic Research (CCER) expects the services sector GDP to record a year on
year growth of 8.4 per cent and 7.5 per cent in 2004-05 and 2005-06, respectively.
Telecom, and hotel & tourism sectors constitute 45-50 per cent of the entire service sector
in terms of bank finance (both short term and long term). As per our telecom industry study,
the external funding requirement for the industry is almost Rs 414 billion during 2003-04 to
2005-06, of which, it is estimated that banks will fund Rs 145 billion in the form of term
loans and working capital.
As per CRIS INFAC's hotel industry study, we expect capital expenditure of Rs 31.20 billion
during 2003-04 to 2007-08. Our analysis indicate that almost 80 per cent of the investment
in the hotel industry is expected to place in the first 3 years (2003-04 to 2005-06). Analysing
the funding pattern in the hotel industry, we expect banks to fund Rs 8.39 billion. With the
expected revival of the hotel industry, and in view of new capacities, we expect the working
capital requirement of the industry to grow from an average 23 per cent of sales to 26 per
cent of sales over the 3-year period (2003-04 to 2005-06). The incremental net disbursement
of working capital in the sector for 2003-05 to 2005-06 is estimated at Rs 19.37 billion.
As mentioned earlier, hotel & tourism and telecom industry represent almost 45-50 per cent
of the entire service sector. Hence, based on our estimate the incremental gross funding of
banks to the service sector in next 3 years (2003-04 to 2005-06) is Rs 407 billion.
Other sectors (including SSI credit)

Based on our study, other industry represents approximately 25-30 per cent of the total small
medium and large industry. CRIS INFAC estimates the gross disbursement to this sector during
2003-04 to 2005-06 to be Rs 822 billion.

28
With the improvement of credit offtake, credit deposit ratio to touch 62% by 2005-06
Credit deposit ratio Figure 15

(per cent)
65
62
60
59
55 55
54
53
50
50
49
49
48
45
40
1998 1999 2000 2001 2002 2003 2004 E 2005 P 2006 P
Source: CRIS INFAC
With industrial recession, and the resultant low demand for credit, the credit-deposit ratio had
been as low as 48 per cent in 1999, but with the gradual recovery in the commercial credit
and continued growth in the retail credit, we estimate total advance to grow at 17.4 per cent
CAGR during 2003-04 to 2005-06. During the same period, total deposits will increase by 12.4
per cent. This would push up the credit deposit ratio to 62 per cent by end-March 2006,
tightening the liquidity of the banking system.
Increasing credit deposit ratio to slow down the growth rate of investments
CRIS INFAC estimates the investments portfolio of banks to grow at CAGR of 8.8 per cent
during 2003-04 to 2005-06.
With low credit offtake, banks had no avenues to deploy funds. Hence they parked them in
investments, both SLR and Non-SLR, or were holding on cash. The investment to deposit ratio
grew from 42 per cent in 1998 to 51 per cent in 2003 and is estimated to have been 50.5
per cent in 2004.
Going forward, with the expected increase in demand for commercial credit, banks would prefer
lending to the industrial sector than invest in government securities, as the former yields higher
returns. Further, to meet the demand for commercial credit, banks would prune their investment
portfolio.
With the estimated slow down in investments, the investment-deposit ratio is expected to taper
to 46 per cent by March 2006.

29
Investment-deposit ratio Figure 16
(per cent)
55
51
51
50
48
48
46 46
45
45
43
42
40
35
30
1998 1999 2000 2001 2002 2003 2004 E 2005 P 2006 P
Source: CRIS INFAC
Asset quality
Asset quality Figure 17
100
95
90
(per cent)
85
80
75
1999 2000 2001 2002 2003 2004 E 2005 P 2006 P
Standard Sub-standard assets Doubtful assets Loss assets
Source: RBI and CRIS INFAC estimate
The share of standard assets to increase

With better credit management, restructuring of loan portfolios and higher provisions/write off,
the share of standard assets has increased from 85.3 per cent in 1998-99 to 91.2 per cent
in 2002-03; it is expected to grow further to 94.2 per cent by 2005-06. The share of sub-
standard and doubtful assets has shrunk from 5.0 per cent and 7.8 per cent, respectively, in
1998-99 to 2.6 per cent and 5.1 per cent, respectively, in 2002-03; it is expected to drop
further to 1.5 per cent and 3.3 per cent, respectively, by 2005-06.

30
Net NPA expected to be around 2.5 per cent
NPAs of scheduled commercial banks Table 17

Basis 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 P 2005-06 P
Gross NPA Rs in Billion 587.22 608.4 639.63 709.53 687.80 677.21 698.61 728.09
Net NPA Rs in Billion 280.20 300.73 324.61 355.46 327.64 274.17 273.32 309.59
Gross NPA per cent 14.70 12.79 11.45 10.42 8.84 7.66 6.62 5.82
Net NPA per cent 7.63 6.77 6.17 5.50 4.42 3.20 2.66 2.54
Provision for NPA Rs in Billion 307.49 318.81 361.68 383.95 377.16
Provision cover per cent 43.34 46.35 53.41 54.96 51.80
P: Projected
CRIS INFAC estimates that by March 2006 the gross NPA will come down to 5.82 per cent
as against as 8.84 per cent as of March 2003, while net NPA will drop to 2.54 per cent from
4.42 per cent during the same period.
At the gross level, the gross NPAs, which stood at Rs 687.80 billion as on March 31, 2003,
are expected to have fallen to Rs 669.15 billion as on March 31, 2004, but would rise thereafter
to Rs 710.56 billion as in March 2006, with the growth in advances.
CRIS INFAC estimates that gross NPAs will fall further to 5.84 per cent by end-March 2006.
The prime drivers are expected to be:
Credit administration: Improved credit management, by improving the process of credit appraisals,
providing extensive training staff members undertaking appraisals, putting in place an effective system
of post disbursement monitoring of accounts.
Risk management: Increased focus on the improving risk management, with the aid of information
technology.
Improving corporate performance: Since March 2003, the corporate sector performance has improved
significantly, and we expect it to continue improving its profitability in the current industrial upturn,
which will help improve the risk profile of loans given to the industrial sector.
Legal remedies: Banks would continue to take recourse to legal remedies such as DRT and SARFEASI, to
pressurise defaulters to clear the overdues.
The gross NPA of the scheduled commercial banks have fallen from 12.8 per cent as of end-
March 2000 to 8.8 per cent as of end-March 2003, while net NPAs had fallen from 6.8 per
cent to 4.4 per cent during the same period. The primary drivers for the improvement are:
Higher provisions: The falling interest rate and corresponding increase in profit on sale of investments
provided banks enough room to increase their provisioning / write off of bad loans while maintaining
profit growth.
Regulatory measures: Regulators introduced various measures, such as One Time Settlement Scheme(OTS),
Corporate Debt Restructuring (CDR) etc, which allowed banks to restructure the bad loans or settle the
bad loans at a discount. It also prevented potential NPAs from becoming NPAs.
Legal reforms: Reforms in the legal systems, in the form of strengthening the Debt Recovery Tribunal
(DRT) and enactment of the Securities and Reconstruction of Financial Assets and Enforcement of Security
Interest (SARFAESI) Act, 2002, enabling banks to pressurise the defaulters to clear the overdues, and thus
clean their balance sheet.
Best practices: Banks started adopting best practices, and building strong credit risk management to
improve their loan portfolio
31
Corporate Debt Restructuring Mechanism (CDR) Box 4
Objective:
The objective of CDR is to ensure a timely and transparent mechanism for restructuring the corporate debts of viable
entities, outside the purview of BIFR, DRTs and other legal proceedings, for all concerned.
Structure:
CDR will have a three-tier structure consisting of:
(a) (a) CDR Standing Forum and its core group - CDR standing forum is a self empowered body, which lays
down policies and guidelines, guides and monitors the progress of corporate debt restructuring. A CDR core
group is carved out of the CDR standing forum to assist the standing forum in convening meetings and taking
decision relating to policy, on behalf of the standing forum. The core group will consists of chief executives of IDBI,
ICICI Bank, SBI, Bank of Baroda, Bank of India, Punjab National Bank, Indian Banks Association and a representative
of the Reserve Bank of India.
(b) CDR Empowered Group - The individual cases of corporate debt restructuring shall be decided by the CDR
Empowered Group, consisting of ED level representatives of IDBI, ICICI Bank and SBI as standing members, in
addition to ED level representatives of financial institutions and banks who have an exposure to the concerned
company. The level of representations of banks/ financial institutions on the CDR Empowered Group should be at
a sufficiently senior level to ensure that concerned banks/ FI abide by the necessary commitments including
sacrifices, made towards debt restructuring.
After the Empowered Group decides that restructuring of the company is prima-facie feasible and the enterprise
is potentially viable in terms of the policies and guidelines evolved by the standing forum, the detailed restructuring
package will be worked out by the CDR cell in conjunction will the lead institution. The empowered group has to
examine the viability and rehabilitation potential of the company and approve the restructuring package within a
specified time frame of 90 days or at best 180 days.
The decision of the CDR Empowered group shall be final. If restructuring is not found viable, the creditors would
then be free to take necessary steps for immediate recovery of dues and / or liquidation or winding up of the
company, collectively or individually.
(c) The CDR cell: The CDR Standing Forum and the CDR Empowered Group will be assisted by the CDR cell in all
their functions. The CDR cell will make the initial scrutiny of the proposal received from borrowers/ lenders. If the
rehabilitation is prima facie feasible, the CDR cell will proceed to prepare a detailed rehabilitation plan with the help
of lenders and experts, if necessary.
The salient features of the revised CDR scheme are as follows:

It will cover only multiple banking accounts/ syndication / consortium accounts with outstanding exposure of Rs 20
crore and above. It will not apply to accounts involving only one financial institutions or one bank.
It will be a voluntary system based on Debtor-Credit Agreement (DCA) and Inter-Creditor Agreement (ICA).
The scheme will be applicable only to standard and sub-standard accounts.
There would be no requirement of the account/ company being sick, NPA or being in default for a specified period
before reference to the CDR Group.
Request of any corporate indulging in wilful default or misfeasance will not be considered for restructuring under CDR.
Reference to CDR could be triggered by (a) any or more of the secured creditors who have a minimum 20 per cent
share in either working capital or term finance, or (b) by the concerned corporate, if supported by a bank or financial
institution having stake as in (a) above.
Lenders who do not wish to commit additional financing or wish to sell their existing stake will be provided with the exit
options.
‘Stand-still' agreement binding for 90 days or 180 days by debtors and creditors respectively, under which both sides
commit themselves not to take recourse to any legal action during the 'stand-still period'.
If 75 per cent of the secured creditors by value, agree to a debt restructuring package, the same would be binding on
the remaining secured creditors.
Continued...

32
...continued
As on June 30, 2003, out of 57,915 cases (involving Rs 822.66 billion) filed by banks to the DRTs, 22,163 cases (involving
Rs 196.33 billion) have been adjudicated and the amount recovered so far stood at Rs 57.87 billion.
Progress under CDR Scheme Table 18

(Rs billion) No. of Cases Amount Involved
Cases refererred to CDR forum 71 537.36
Final schemes approved 41 386.38
Rejected 18 72.52
Pending 12 78.46
Source: Report on Trends and Progress of Banking India, 2002-03
Sector-wise NPA of scheduled commercial banks Box 5
While the gross NPA (as a percentage of advances) is falling in all the sectors, it is highest under the priority sector, with
a drop of almost 10 percentage points. The NPAs under the public sector are the lowest, essentially due to the government
backing. The NPAs are the highest under the priority sector because of the industries and sectors to which advance are
given. Priority sector is more of directed lending, which puts pressure on the banks to meet the required target, which
leads to some lapse in the credit assessment of the proposal. But, over the years, banks have improved their systems
and, also with the restructuring of bad loans, NPAs are witnessing a declining trend.
Sector-wise composition of NPAs of public sector banks (1999-2003) Table 19

(Rs billion) Priority sector Public sector Non-priority sector
Advances NPA per cent Advances NPA per cent Advances NPA per cent
1999 937 226 24.12 395 15 3.8 1642 276 16.8
2000 1082 237 21.92 465 11 2.3 1974 285 14.5
2001 1270 242 19.02 710 17 2.4 2166 273 12.6
2002 1476 252 17.04 914 9 1.0 2416 284 11.8
2003 1763 249 14.15 924 11 1.2 2807 268 9.5
0.47 0.02 0.51
Source: Trends & progress of Banking in India 2002-03 and statistical tables
'Provision for NPA' charge to P&L expected to decrease

With the expected fall in the profit on sale of investments, banks would have less leeway
to make provisions for NPAs. We expect banks to have made the highest provisions during
2003-04, with the increase in the interest rates. Hence, the provision for NPA would have increased
to Rs 178 billion in 2003-04.
Since banks would have already made additional provisions in the previous years, the incremental
provision are expected to be relatively smaller. Moreover, we expect banks to further strengthen
their credit management, leading to an up gradation in the existing NPAs. This would lead to
a reduction in the provision requirements for provision for NPAs' due to write back of the excess
provisions made in the earlier years. These factors would reduce the provision for NPA charged
to the P&L, from Rs 178 billion in FY 2004, to Rs 159 billion for 2004-05 and Rs 135 billion
for 2005-06.

33
Incremental NPA provision Figure 18
(Rs billion)
200
178
160
159
135
132
120
80
40
0
2003 2004 P 2005 P 2006 P
We do not expect the growth in agricultural credit to affect the NPA loans (declared/book)
of the banks' assets, because of the following:
Agriculture credit accounts for only 12 per cent of the total advances.
Lenient norms for recognising NPA in the agriculture sector.
Restructuring of old agricultural loans, as per the RBI's recent directives.
Strategic business units (SBUs) set up by several banks, to cater to the agricultural credit demand. This
focus approach would also help in better monitoring of these advances.
Announcements made by banks to recruit agriculture specialist, for the agricultural credit division.
CRIS INFAC expects the actual NPAs on the books of banks to be higher than the declared
NPAs (book NPAs) on account of the following:
Aggressive agriculture credit disbursement policies

The aggressive agricultural credit disbursement policies pursed by banks under directives of RBI
and the government will result in the inherent risk of an increase in the agricultural advances
assets. Further, despite lenient NPA recognition norms historically, agricultural advances have higher
NPA levels vis-à-vis non-priority sector advances.
Unseasoned housing finance portfolio

As per CRIS INFAC estimates, housing finance accounts for more than 50 per cent of the retail
credit. Banks have aggressively pursued housing finance during the last 3 years (2000-01 to
2003-04), as a result of which the housing loan book size has more than quadrupled during
this time of declining interest rates. The housing portfolio has not yet seasoned and has not
been stress tested during a hardening interest rate environment. Therefore, the current NPA levels
of this sector are expected to be understated.

34
Cash in hand and balances with RBI grew at a CAGR of 4.1 per cent from 1997-98 to 2002-
03
The cash and bank balances with the banks consist primarily of cash with branches, cash in
ATMs and the remaining cash balances with the RBI for maintaining the CRR ratio. Given the
view that banks are substantially stronger than they were in the early nineties, coupled with
a view that CRR was not longer an effective tool in controlling inflation and credit offtake,
the RBI decided to bring down the CRR levels on a deferred manner in 1997-98. Since then
the CRR levels have come down from a high of 11 per cent in 1998-99 to the present level
of 5 per cent, after touching a low of 4.5 per cent. Further, CRR was also required to strengthen
the bank against large withdrawals that result in the bank not been in a position to pay its
obligation.
The RBI has raised the CRR levels from 4.5 per cent to 5.0 per cent in two stages. The
hike in the CRR would increase the cash and bank balance. But, the RBI initiated measure
is more from keeping the inflation under check, and as the inflation pressure subsides, the CRR
would be reduced. The RBI has retained its medium term objective of gradually lowering the
CRR to 3 per cent. The CRR reduction is part of the RBI's endeavour to make available more
resources with bank to lend. CRIS INFAC expects the cash in hand and balances with the RBI
to growth at a small rate of 5.8 per cent, as per the historical trend.
Comparison of CRR with proportion of cash in hand with T&DL Figure 19

(per cent)
11.00
10.00
9.00
8.00
7.00
6.00
5.00
4.00
1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06
Cash in hand and balance with RBI as a percentage of T &DL CRR ratio

35
Recent guidelines issued by RBI pertaining to CRR Box 6
The Reserve Bank of India has recently increased CRR of schedule commercial banks, by 50 basis points of their net
demand and time liabilities, in two stages, effective from fortnight beginning from September 18, 2004 and October 2, 2004
to 4.75 per cent and 5.0 per cent respectively.
Further, with effect from the fortnight beginning September 18, 2004, banks will be paid interest at the rate of 3.5 per cent
per annum on their eligible cash balances maintained with RBI under CRR requirement as against the current practice of
payment of interest at the Bank rate (6.0 per cent per annum).
Impact of CRR rate reduction on yields Table 20

(Rs million) 2005 with CRR 2005 without
impact CRR impact
D&T liabilities 18,680,707 18,680,707
Average funds deployed in carry 19,480,370 19,480,370
CRR requirement 5.00% 4.50%
Interest rate 3.50% 6.00%

Interest income 12,360 15,891
Contirbution to yield on avg funds deployed
6.7 8.7
(in bps)
Loss of revenue 3,531

Impact on yield (in basis points) 1.9
Source: CRIS INFAC
With the reduction in the rate of interest offered on the CRR deposits, we expect the banks to take an additional hit of 2
basis points (annualised) on their spreads.

36
2.0
Interest rate outlook and yields
Average yields of government securities Table 1

(per cent) Tenure
I year 3 year 5 year 10 year
1999-00 10.29 10.62 10.88 11.41
2000-01 9.88 10.07 10.33 10.96
2001-02 7.24 7.48 7.74 8.69
2002-03 5.98 6.19 6.43 6.91
2003-04 4.63 4.80 4.93 5.31
2004-05 P 4.92 5.32 5.61 6.10
2005-06 P 5.56 6.07 6.52 7.25
P: Projected
Source: Crisil Centre for Economic Research, CRIS INFAC
Projected interest rates of government securities Table 2

(per cent) Tenure
I year 3 year 5 year 10 year
March 31, 2003 5.88 6.42 6.35 6.47
March 31, 2004 4.29 4.59 4.78 5.17
March 31, 2005 P 5.40 5.93 6.36 7.00
March 31, 2006 P 5.75 6.20 6.67 7.50
P: Projected
Source: RBI, Crisil Centre for Economic Research, CRIS INFAC
Interest rates to harden in 2004-05

According to estimates by the CRISIL Centre for Economic Research (CCER) and CRIS INFAC,
the benchmark 10-year yield on government securities is estimated to rise by 183 basis points
(bps) during 2004-05 to 7.00 per cent by March 2005 from 5.17 per cent as of end-March
2004. The benchmark yield is expected to go up further by 50 bps during 2005-06 to touch
7.50 per cent by March 2006.
Rising inflation and the gradual increase in credit demand has led to a hardening of interest
rates. Banks have started moving to the short end of the curve with the rise in interest rates.
As per CCER estimates, interest rates for corporate are expected to go up by an additional
40-50 bps over the corresponding G-Sec yield.
In general, the movement of interest rates depends on:

Growth in money supply
Growth in credit offtake
International interest rate.
Expected rate of inflation
Fiscal deficit, and the resultant borrowing programme of the government

37
Tightening money supply
The year-on-year growth in money supply (M3) was higher at 16 per cent in 2003-04, compared
to 15 per cent in 2002-03. In its credit policy for 2004-05, the Reserve Bank of India (RBI)
has projected the expansion of money supply at 14 per cent. CRIS INFAC estimates the credit
deposit ratio to go up to 62 per cent as on March 31, 2006.
With the changing rupee-dollar parity and the increase in forward premiums, foreign currency
borrowings are likely to become costlier, which will slow down the growth in external commercial
borrowings. The inflows from non-resident Indians (NRIs) and foreign institutional investors (FIIs)
are also likely to be affected, with the expected recovery in the US economy and the corresponding
increase in the interest rate.
Recently, the RBI increased the limit of borrowings under the Market Stabilisation Scheme (MSS)
from Rs 600 billion to Rs 800 billion; thus, an additional liquidity of Rs 200 billion would be
absorbed from the banking system. Moreover, the 50 bps increase in the CRR limit in two
stages is estimated to absorb another Rs 80 billion from the system.
These factors are expected to put pressure on the liquidity in the system.
Credit growth
As explained in the previous chapter, non-food credit is estimated to grow at 18.56 per cent
during 2003-04 to 2005-06, with the credit deposit ratio likely to touch 62 per cent by end-
March 2006.
International interest rates

The US Federal Department has increased the Fed Rate thrice in a span of three months, each
time by 25 bps, to 1.75 per cent, indicating a revival of the US economy, and giving a direction
to the interest rates. US short-term rates are expected to rise by another 100 bps over the
next 12 months. This would lead to a further rise in the domestic interest rate. (The short-
term interest rates in India show a strong correlation with the short-term interest rates in the
US.)
Fiscal deficit
Fiscal deficit and market borrowing Table 3

2001-02 2002-03 2003-04 2004-05 2004-05
Basis Actuals Actuals RE BE CCER Est
Fiscal deficit Rs in billion 1409.55 1450.73 1321.03 1374.07 1574.07
Budgeted market borrowings Rs in billion 773.5253 958.59 1071.94 903.65 1040
Actual market borrowings Rs in billion 926.3 1120.48 879.94
As a percentage of GDP per cent 6.2 5.9 4.8 4.4 5.0
Source: Budget Documents

38
The Central government's fiscal deficit is funded mainly through its market borrowings. Hence,
with the increase in the fiscal deficit, the market borrowings would go up, leading to pressure
on the interest rate. CCER estimates that the fiscal deficit will touch 5 per cent of GDP as
against the budget estimates of 4.4 per cent, due to shortfall in the budgeted tax collections.
With the expected increase in the fiscal deficit, CCER estimates the government's market borrowings
to rise by Rs 136.35 billion, which will push the interest rate up.
Fiscal deficit Box 1
The budget assumes a nominal GDP growth of 12.7 per cent for 2004-05. Assuming an inflation of 5.0-5.5 per cent, this
translates into a high real growth of about 7.2-7.7 per cent. As per CCER's assessment, sustaining such a high growth
over a strong base of 8.2 per cent growth in the previous year is unlikely. CCER expect real GDP growth of only 6.0-6.5
per cent even if the monsoons are normal.
The central government has assumed a growth of 24.6 per cent in its gross tax revenues in 2004-05, over a high growth
of 17.9 per cent in 2003-04. This translates into an increase in the tax/GDP ratio to 10.2 per cent in 2004-05 from 9.2 per
cent in 2003-04. According to CCER, this projected growth in revenues is optimistic.
The table below documents the expected shortfall in gross tax revenues under alternate assumptions of industrial growth.
The estimates of gross tax revenues have been computed using the ratio of tax collections to nominal industrial GDP
observed during 2003-04.
Tax revenues and industrial growth Table 4

Industrial Industrial Nominal 2004-05BE
growth inflation industrial Gross tax Gross tax Expected
growth revenue revenue shortfall
(per cent) (per cent) (per cent) (EST) (BE)
6.5 5.5 12.0 285,612 317,733 32,121
7.0 5.7 12.7 287,397 317,733 30,336
8.0 6.0 14.0 290,712 317,733 27,021
9.0 6.0 15.0 293,262 317,733 24,471
Note
1) Rs in crores
Sources: CRISIL Simulations
If the tax/industrial GDP ratio of 2003-04 is assumed to hold in the current fiscal, we get a significant revenue shortfall,
ranging from Rs 244.71 billion to Rs 303.36 billion. This is likely to be an overestimate of the shortfall because of some
changes in the tax regime and imposition of new taxes. Even if we optimistically assume the benefits from new taxes and
efficiency improvement in tax collections at Rs 100 billion, we end up with a shortfall of about Rs 200 billion under a realistic
assumption for industrial growth. The Budget is thus relying upon the recovery of large arrears in direct and indirect taxes
to meet the revenue targets. This expected revenue shortfall would increase the fiscal deficit to 5 per cent of the GDP from
a projected 4.4 per cent of the GDP.
For more details, please refer our Budget document.

39
Average inflation in 2004-05 seen in 6.0-6.5 per cent range
The expected increase in inflation results in an increase in interest rates. This is because lenders
demand compensation for the fact that the future interest and principal they receive will not
be worth as much as the money they lend, in terms of the goods and services it would purchase.
CCER estimates that average inflation will be about 6.0-6.5 per cent in 2004-05. Surging international
crude oil prices, the rainfall deficiency in some parts of the country and rising metal prices
will all exert upward pressure on inflation. Basic metals, alloys and metal products remained
the major contributor to the overall manufacturing inflation during the first quarter of 2004-05.
High domestic and international coal prices and higher iron ore prices have put an additional
upward pressure on steel prices (which is a major constituent of basic metals group).
But global commodity prices are expected to soften. In addition, the government has reduced
the excise and customs duties on commodities like oil, metals and sugar, which will result in
lower prices. Moreover, the base effect will come to play from September onwards, softening
the rate of inflation to some extent.
Average WPI-All commodities Figure 1 Weekly WPI inflation Figure 2

7.0 10.00
9.00
8.00
6.0
7.00
6.00
5.0
5.00
4.00
4.0 3.00
2.00
1.00
3.0
0.00
06/01/2001
06/04/2001
06/07/2001
06/10/2001
06/01/2002
06/04/2002
06/07/2002
06/10/2002
06/01/2003
06/04/2003
06/07/2003
06/10/2003
06/01/2004
06/04/2004
06/07/2004
2.0
2001-02 2002-03 2003-04 2004-05 E 2005-06 E
Source: CCER Source: CCER
In 2003-04, average inflation was high at around 5.5 per cent, compared to 3.4 per cent in
2002-03 and 3.6 per cent in 2001-02. This was largely due to the rising inflationary trends
in the second half of the financial year, largely due to rising manufacturing sector prices.
Taking all these factors into consideration, CCER has forecast the average inflation for 2004-
05 to be in the range of 6.0-6.5 per cent and nearly 5.0-5.5 per cent in 2005-06.
For more details on inflation, please refer to CRISIL's EcoView of August 2004.

40
Yields and cost of scheduled commercial banks
Yields & costs of scheduled commercial banks Table 5

(Per cent) 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 F 2005-06 F
Yield on advances (i) 12.30 11.71 11.46 10.19 9.93 9.37 9.32 9.69
Yield on investments (ii) 12.05 11.85 11.28 10.75 9.80 8.49 8.07 7.85
Yield on AFCB (iii) 11.15 10.77 10.61 9.88 9.52 8.78 8.47 8.56
Cost of deposits (iv) 8.03 7.68 7.35 7.14 6.46 5.82 5.59 5.76
Cost of borrowings (v) 11.59 11.73 12.32 8.53 11.13 9.80 9.58 9.83
Interest Cost on FB (vi) 7.96 7.68 7.41 7.06 6.63 5.91 5.67 5.84
Spreads (iii - vi) 3.19 3.10 3.19 2.82 2.89 2.87 2.80 2.72
AFCB: Average Funds in Carry Business
FB: Funds Borrowed
Source: CRIS INFAC estimates
Spreads
Spreads are defined as the difference between the yield on carry business and the cost of
borrowings. (The yield on carry business is the ratio of the total interest earned to the average
funds deployed in the carry business. Carry business is the total funds deployed, excluding investments
in shares, subsidiaries and others.) Generally, in an increasing interest rate regime, both yields
and costs go up; conversely, in a declining interest rate scenario, both yields and costs go down.
However, in a declining interest rate regime, the rate of decline in yields is faster than the
rate of decline in costs. The converse is also true in a rising interest rate regime.
We expect the interest rates to go up from 2004-05. The yield on carry business is mainly
driven by the yield on investments and the yield on advances. Going forward, we expect the
yield on investments to fall, despite an increase in the rate of interest, as securities are still
being re-priced from historically higher interest rates to the relatively lower rates that are prevalent
now. This is putting pressure on the yield on carry business and, in turn, on spreads. The
spreads of the scheduled commercial banks have fallen from 3.19 per cent in 1998-99 to 2.89
per cent in 2002-03. They are expected to fall by an additional 0.17 percentage points to
reach a level of 2.72 per cent in 2005-06.
As has been explained in earlier sections, the developments pertaining to FCI would reduce
the spreads for 2004-05 by 8.5 basis points (annualised) from an estimated 2.80 per cent to
2.72 per cent and the reduction of the interest rate offered on CRR deposits will further reduce
the spreads by 2 bps (annualised) from 2.72 per cent to 2.70 per cent. We have not factored
these developments in our projections. Hence, the combined effected of these developments
is estimated to around 10 bps.
Yield on carry business:

The yield on carry business dropped to 9.52 per cent in March 2003 from 11.15 per cent
in March 1999. As noted earlier, the yield on carry business is mainly influenced by the yield
on advances and yield on investments. The continuous drop in the yield on carry business during
this period was on account of the drop in both the yield on advances and yield on investments.
CRIS INFAC expects the yield on carry business to drop sharply to 8.47 per cent in March
2005, but rise again to 8.56 per cent in March 2006. However, the rise will not be in line
with the increase in interest rates because the yield on investments will continue to fall.
41
Yield on advances
40 per cent of loans and advances are of short-term duration:
Maturity profile of loans and advances of scheduled commercial banks Table 6

(Per cent) Years
<1 between 1 & 3 Between 3 & 5 Above 5
2000 40.5 38.1 11.7 9.7

2001 41.6 38.4 7.4 12.6
2002 42.9 31.8 11.2 14.1
2003 40.8 33.4 11.1 14.7
2004 P 40.8 33.4 11.1 14.7
Banks have predominantly been providers of working capital finance to the industry, which is
reviewed and renewed every year and hence classified in the 'less-than-1-year' maturity bucket.
This is indicated by a steady percentage of advances, approximately 40 per cent, being classified
in the 'less-than-1-year' maturity bucket. With the merger of ICICI Ltd with ICICI Bank, the
advances classified under the 'above-5-year' maturity bucket have increased from 9.7 per cent
in 1999-00 to 14.1 per cent in 2001-02. Moreover, banks have started focusing on retail finance,
which has also influenced the increase in the share of advances classified under various buckets
above 1 year. The retail finance loans are generally in the nature of term loans, which have
tenures of more than 3 years.
Yield on advance portfolio vis-a-vis benchmark 3-year G-Sec Figure 3

(per cent)
14.0
12.3
11.7
12.0
11.5
11.4 10.2
10.0 10.6
10.1 9.9
9.4 9.3 9.7
8.0
7.5
6.2 6.1
6.0
4.8
5.3
4.0
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 P 2005-06 P
yield on advance portfolio benchmark 3-year G-sec yields
E: Expected; P: Projected
Source: CRIS INFAC

42
The above graph compares the relationship between the average yield earned by the banks
on their advance portfolio vis-à-vis the movement of the yield on the 3-year government securities.
Based on the average duration of the loans and advances portfolio of scheduled commercial
banks, we feel that the 3-year G-Sec paper is representative of the general interest rate scenario.
Over the period 1999-2000 to 2002-2003, the yield on advances had fallen continuously with
the general fall in the interest rates. Yield on advances dropped from 11.7 per cent in 1999-
00 to 9.9 per cent in 2002-03, while the yield on the 3-year benchmark G-Sec dropped from
10.6 per cent in 1999-00 to 6.2 per cent in 2002-03. As per our study of the maturity profile
of loans and advances, it is estimated that in any particular year, that year's disbursements accounted
for about 48-50 per cent of the outstanding loans and advance portfolio. This indicated that
every year approximately 50-52 per cent of the bank's loan yielded a higher rate of interest
than the interest rates prevailing in that year. Further, the banks had not reduced their lending
rate in line with drop in the interest rates. These factors led to a slower drop in the yield
on advances vis-à-vis costs.
With the continuing slide of the interest rate during 2003-04, we estimate the yield on advances
to have declined to 9.4 per cent. The 3-year G-Sec yield is estimated to have dropped to
its lowest level of 4.8 per cent in 2003-04. With the hardening of interest rates during 2004-
05, banks are expected to start hiking the interest rate on the incremental advances, both fixed
and floating, which would help in increasing the yields on advances. But, we expect the yield
on advances to drop marginally to its lowest level of 9.3 per cent in 2004-05 before rising
to 9.7 per cent in 2005-06, in spite of the increase in the interest rate, because part of the
portfolio earning a higher yield (contracted at higher rates compared to prevailing rates) is getting
re-priced at a comparatively lower rate of interest. However, in the subsequent years, as more
advances get re-priced at higher interest rates, the yield on advances will go up.
Yield on investments
Maturity profile of investments
Maturity profile of investments of scheduled commercial banks Table 7

Per cent Years
2002 17.0 16.9 17.3 51.1
2003 17.0 15.9 14.3 52.0
2004 P 18.1 15.0 13.8 53.1
The above table indicates that almost two-thirds of the investment portfolio is more than 3
years.

43
Yield on Investments
Yield on investment portfolio vis-a-vis benchmark 5-year G-sec yield Fig 4

(per cent)
14.0
12.0 11.8
12.0 11.3
10.7
11.7 9.8
10.9 10.3
10.0
8.5
8.1
8.0 7.8
7.7 6.4
6.5
6.0
4.9
5.6
4.0
2.0
0.0
1999 2000 2001 2002 2003 2004 E 2005 P 2006 P
yield on investment portfolio benchmark 5-year G-sec yields
Source: CRIS INFAC
The above graph compares the relationship between the average yield earned by the banks
on their investment portfolio vis-à-vis the movement of the yield on the 5-year government
securities. Based on the average duration of the loans and advances portfolio of scheduled commercial
banks, we feel that the 5-year G-Sec paper is representative of the general interest rate scenario.
Assuming the maturity profile of investments to remain the same, CRIS INFAC estimates the
yield on investments to have fallen sharply to 8.5 per cent during 2003-04 from 9.8 per cent
in 2002-2003. However, in the subsequent years, the decline would be marginal in comparison
to the fall in 2004-05, as the incremental investments would get invested at higher yields.
As per the maturity profile of investments as in March 2003, approximately 30 per cent of
the outstanding investments portfolio is getting re-priced every year at the prevailing interest
rates.
Till the mid-1990s, interest rates were very high and stable. But then the interest rate started
falling. However, as only 30 per cent of the outstanding investments are re-priced every year,
only incremental investments are at new rates, hence the impact of falling interest rates would
come with a lag effect. The average yield of the benchmark 10-year G-Sec, which was quoting
12.04 per cent in 1997-98, fell to 5.31 per cent in 2002-03.
The interest rates have started to rise from such low levels. But the securities are still being
re-priced from higher interest rates to comparatively lower interest rates, hence the yield would
continue to fall. However, the net yield, although it will continue to decline, will drop less
significantly in 2005-06, due to a combination of factors: the reduction in the percentage of
securities being re-priced at comparatively lower rates, and some short end securities being re
priced at higher interest rate. Hence, the yield will continue to fall until a substantial portion
of the old investments is re-priced at higher rates. Beyond that, the yield will start increasing
if the interest rates continue to rise.
44
However, with rising interest rates, banks will try to reduce the duration of the investment portfolio
by moving to the short end of the curve to avoid losses driven by higher interest rates.
Interest cost
The average interest cost of the scheduled commercial banks dropped to 6.63 per cent in March
2003 from 7.96 per cent in March 1999. The drop in the interest cost has been on account
of the drop in both the cost of deposits and the cost of borrowings. CRIS INFAC estimates
that interest cost will fall to 5.84 per cent in March 2006, after touching a low of 5.67 per
cent in March 2005. The drop in the interest cost will be less than that on the yield on carry
business, primarily because of slower drop in the cost of deposits.
Cost of deposits
Maturity profile of term deposits
Maturity profile of term deposits of scheduled commercial banks Table 8

Per cent Years
<1 between 1 & 2 Between 2 & 3 Between 3 & 5 Above 5
1998-99 27.1 22.5 15.8 22.7 11.8
1999-00 28.9 22.6 15.6 22.1 10.8
2000-01 31.1 22.3 14.9 20.9 10.7
2001-02 34.8 22.7 13.7 19.0 9.8
2002-03 36.2 22.3 13.5 18.7 9.4
2003-04 P 36.2 22.3 13.5 18.7 9.2
The maturity profile of term deposits is likely to remain stable, with around 36 per cent of
the portfolio expected to mature every year.
With interest rates moving southwards, banks had reduced the interest rates offered on term
deposits and also reduced the spreads between the interest rate offered on the long tenure
and short tenure deposits, which led to an increase in the share of deposits classified under
up to 2-year maturity bucket.
Going forward, in spite of the expected jump in the interest rate, banks will desist from making
an immediate upward revision in the interest rate in the near future. But as the liquidity pressure
mounts, they will start increasing the spread between the long tenure and short tenure deposit
rates, which is likely to have impact on term deposits and, thereby, on its maturity profile.

45
Yield on deposits portfolio vis-a-vis benchmark 2-year G-Sec yield
Average cost of deposits
Yield on deposits portfolio vis-a-vis benchmark 2-year G-Sec yield Figure 5

(per cent)
12.0
11.2
11.0 10.5
10.0
10.0
9.0
8.0
8.0 7.7
7.4
7.0 7.4 6.5
7.1
5.8 5.8
6.0 5.6
6.1
5.8
5.0
5.1
4.7
4.0
1999 2000 2001 2002 2003 2004 E 2005 P 2006 P
Yield on deposits portfolio Benchmark 2-year G-sec yield
Source: CRIS INFAC
The above graph compares the relationship between the average interest cost the banks pay
on their deposits portfolio vis-à-vis the movement of the yield on the 2-year government securities.
Based on the average duration of the deposits portfolio of the scheduled commercial banks,
we feel the 2-year G-Sec paper is representative of the general interest rate scenario.
Term deposits constitute around 65 per cent of total deposits. Further, as per the maturity profile
of term deposits as on March 31, 2003, approximately 42 per cent of the outstanding deposits
were re-priced. We do not expect any material change in the maturity pattern during 2003-
04 to 2005-06. Only 30 per cent of the term deposits outstanding as on March 31, 2003 are
maturing after 3 years and, hence, would get re-priced then, by when interest rates will already
be high; the remaining 70 per cent would have re-priced much earlier.
The yield on deposits had been falling consistently in line with the decline in the interest rates,
but the drop is not as steep as that observed in government securities, indicating that deposits
are generally showing a low elasticity to interest rates. The average cost of deposits had dropped
from 8.0 per cent in 1998-99 to 6.5 per cent in 2002-03, while the yield on the 2-year benchmark
G-Sec dropped from 11.2 per cent in 1998-99 to 6.5 per cent in 2002-03. We expect the
average cost of deposits to fall further to 5.8 per cent in 2003-04, as compared to 6.5 per
cent in 2002-03. The benefit of the drop in interest rate has been coming with a lag effect,
driven by the maturity profile of the deposits.
The other components of deposits, both savings account (interest rate on the same are administered)
and current account, are not very sensitive to the interest rate movement.
CRIS INFAC expects the cost of deposits to drop further in 2003-04 and 2004-05 to 5.8 per
cent and 5.6 per cent, respectively. It will then rise marginally to 5.8 per cent in 2005-06

46
due to the higher incremental pricing of the deposits. We expect the cost of deposits to rise
further with the hardening of interest rates, but the rise would not be very steep as the interest
rates are not expected to touch the historical highs prevailing in the late 1990s, and also because
the cost of deposits have low elasticity to interest rates.
Cost of borrowings
Maturity profile of borrowings
Maturity profile of borrowings of scheduled commercial banks Table 9

Per cent Years
2002 63.1 20.2 11.9 4.9
2003 71.7 20.2 11.9 4.9
2004 P 67.4 20.8 3.4 4.1
Most of the borrowings raised by the banks are for the purpose of tying up the short-term
liquidity mismatches and are, hence, generally of a short-term nature. The above table validates
this; almost 67-70 per cent of the borrowings of the scheduled commercial banks are classified
in the less than 1-year maturity bucket. Essentially, almost 70 per cent of the outstanding borrowings
of the bank are re-priced at the prevailing interest rate.
With such a maturity profile, the banks are likely to take a hit in a rising interest rate scenario.
But borrowings constitute only 5 to 6 per cent of the total liability, hence there will not be
any appreciable impact.
Keeping in view the main purpose for which borrowings are raised, CRIS INFAC expects the
same maturity profile to continue during 2003-04 to 2005-06.
Average cost of borrowings
Average cost of borrowings of scheduled commercial banks Table 10

(Per cent) 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 F 2005-06 F
Including ICICI Bank 11.6 11.7 12.3 8.5 11.1 9.8 9.6 9.8
Excluding ICICI Bank 11.5 11.6 12.3 11.8 9.8
E: Estimated; F: Forecast
Source: CRIS INFAC

47
With the liquidity overhang in the system, banks had reduced their borrowings. The drop in
the interest rates also helped banks to cut their cost of borrowings, which is evident with the
cost of borrowings (excluding ICICI) dropping to 9.8 per cent as in March 2003 from 12.3
per cent as in March 2001.
We expect the cost of borrowings to fall in sharply in 2003-04 (inclusive of ICICI Bank) to
9.8 per cent from 11.1 per cent in 2002-03, It is expected to drop further to 9.6 per cent
in 2004-05, but then go up to 9.8 per cent in 2005-06.
The impact of the rise in interest rates is seen to be faster in the case of borrowings.

48
3.0
Profit and loss account
Profit and loss account Table 1

(Rs billion) 2000 2001 2002 2003 2004 P 2005 P 2006 P CAGR CAGR 1
CAGR
(2000 - 2003) (2000-2003) (2003 - 2006)
Interest earned 1,034.4 1,195.7 1,321.7 1,458.8 1,507.6 1,650.5 1,895.0 12.1 9.9 9.1
Interest/discount on advances/bills 489.2 570.9 613.3 707.0 764.1 889.2 1,098.8 13.1 10.0 15.8
Income on investments 454.7 519.9 590.1 640.6 638.1 662.3 691.9 12.1 10.7 2.6
Other income 160.9 173.7 244.3 320.1 372.7 311.2 293.9 25.8 24.4 -2.8
Total income 1,195.3 1,369.4 1,565.9 1,778.9 1,880.4 1,961.7 2,188.9 14.2 12.1 7.2
Interest expended 718.8 811.2 908.5 969.2 955.5 1,026.0 1,187.3 10.5 7.7 7.0
Gross profit 476.5 558.2 657.5 809.7 924.9 935.7 1,001.6 19.3 7.3
Operating profit 190.1 204.8 305.9 413.2 487.4 462.2 491.6 29.5 6.0
Net profit 78.0 71.0 121.9 176.3 191.7 189.2 236.4 31.2 10.3
Net profit margins (per cent) 1.8 1.6 2.0 2.4 2.5 2.0 1.8
(incldg profit on sale of inv)
P: Projected
1
Source: RBI & CRIS INFAC Estimates
Interest earned
CRIS INFAC estimates the total interest income to grow at a CAGR of 9.1 per cent during
2003-04 to 2005-06, with interest on advances expected to grow at a CAGR of 15.8 per cent.
Between 2000-01 and 2002-03, the total interest income grew at a CAGR of 12.1 per cent
(9.9 per cent), primarily led by 13.1 per cent (10.0 per cent) CAGR in the interest on advances.
Interest on loans and advances

The interest income from loans & advances is expected to grow at a CAGR of 15.8 per cent
for the period 2003-04 to 2005-06, in comparison to 13.1 per cent (10.0 per cent) for the
period 2000-01 to 2002-03.
During the period 2000-01 to 2002-03, although advances grew by a CAGR of 18.6 per cent,
the interest income on advances grew at a much lower figure of 13.1 per cent CAGR. This
was due to general fall in the interest rates (yield on loans and advances dropped from 11.7
per cent in 1999-2000 to 9.9 per cent in 2002-03).
The 13.1 per cent growth during 2000-01 to 2002-03 was led by a strong growth in the outstanding
retail credit, which grew by around 28 per cent CAGR in the same period. During 2003-04
to 2005-06, advances are expected to grow by a CAGR of 17.4 per cent, while the interest
on the loans and advances is estimated to grow at 15.8 per cent CAGR. The yield on loans
and advances is expected to drop marginally from 9.9 per cent for 2002-03 to 9.7 per cent
for 2005-06.

49
Interest on investments
CRIS INFAC estimates investments to grow at a CAGR of 8.8 per cent during 2003-2006 while
the interest on investments is expected to grow only at a CAGR of 2.6 per cent. During the
same period, the yield on investments is expected to fall to 7.8 per cent by end-March 2006
from 9.8 per cent as of end-March 2003.
From 2000-01 to 2002-03, the interest on investment grew by 12.1 per cent (10.7 per cent),
though the investments recorded a growth of 19 per cent CAGR. This is due to general drop
in the interest rates. (The yield on investments dropped to 9.8 per cent by March 2003 from
11.8 per cent as of end-March 2000.)
Interest expended
Total interest expended is expected to grow at a CAGR of 7.2 per cent from 2003-04 to
2005-06, with interest on deposits expected to grow at 8.1 per cent, while the other interest
component is expected to show a negative growth rate of 2.3 per cent.
Interest on deposits
CRIS INFAC expects total time and demand deposits to grow at 12.4 per cent CAGR during
2003-04 to 2005-06, while the interest on deposits is seen growing by only 8.1 per cent CAGR
during the same period. The cost of deposits is expected to drop to 5.8 per cent by March
2006, from 6.5 per cent at March 2003.
During 2000-01 to 2002-03, the interest on deposits grew at a rate of 8.8 per cent, though
the deposits grew by 14.6 per cent. This is primarily due to the fall in the cost of deposits
in line with the prevailing soft interest rate scenario. The cost of deposits dropped from 7.7
per cent as of March 2000 to 6.5 per cent as of March 2003.
Interest on borrowings
Interest on borrowings of scheduled commercial banks Table 2

(Rs billion) 1998-99 1999-00 2000-01 2001-02 2002-03
Interest on total borrowings (All SCBs) 42.3 54.6 66.9 73.0 112.9
Interest on total borrowings (ICICI Bank) 0.5 0.9 1.1 1.7 54.6
Interest on total borrowings (All SCBs excluding ICICI Bank) 41.8 53.7 65.7 71.3 58.3
Source: RBI, Statistical tables relating to Banks in India
From 2000-01 to 2002-03, the interest on borrowings recorded a CAGR of 27.4 per cent, although
borrowings grew at a CAGR of 22.9 per cent. The cost of borrowings dropped from 11.7 per
cent as of March 2000 to 11.1 per cent as of March 2003.
The interest on borrowings is expected to show a negative growth of 2.3 per cent during 2003-
04 to 2005-06.

50
Fee-based income: Core and non-core
Drop in treasury profits to hit other income growth
Non-interest income - break-up Table 3

(Rs billion) 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
Commission, exchange and brokerage 66 75 83 89 93 107

Net profit (loss) on sale of investments 19 9 30 32 94 143
Others 38 45 48 53 57 71
Total non-interest income 123 129 161 174 244 320
(Rs billion) 2003-04 E 2004-05 F 2005-06 F CAGR CAGR

2000-03 2003-06
Commission, exchange and brokerage 127 138 149 9 12
Net profit (loss) on sale of investments 160 60 0 68 -100
Others 86 98 110 14 16
Total non-interest income 373 295 258 26 -7
Non-interest income is a source of incremental revenues for banks and helps in maintaining a
stable bottomline, as it is not sensitive to interest rates and is, hence, less volatile.
Banks generate fee-based income through the issuance of guarantees, letters of credit, drafts etc,
and by other income in the form of exchange profits, processing fees, income from demat activity,
income credit cards, and other routine banking business.
Banks have started acting as corporate agents of various mutual funds and insurance companies
by distributing their products through their branch networks. This gives them an opportunity to
earn other income in the form of commissions. Further, banks are also contemplating foraying
into activities such as advising clients on fund management and other value-added services. This
will give them an opportunity to generate fee-based income in the form of commission and
brokerage
Another component of other income is profit on sale of investments. But with interest rates
hardening, the profit from sale of investments will come down.
CRIS INFAC expects non-interest income (excluding profit on sale of investments) to grow at
CAGR of 13.0 per cent, driven by the greater thrust of banks on core fee-based income. The
drastic fall that is expected in profits on sale of investments will take its toll on total other
income, which is expected to a show a negative CAGR of 7 per cent during 2003-04 to 2005-
06.

51
Profit on sale of investments
52
Unbooked profit on investments to reduce dramatically
SCBs: Unbooked appreciation Table 4

Particulars Unit 1998-99 1999-2000 2000-01 2001-02 2002-03 E 2003-04 E 2004-05P 2005-06P
Op balance of investments Rs crore 189,893 230,687 285,777 350,593 410,362 532,533 653,244 715,479
Net addition/(deletion) (fixed rate bonds) Rs crore 40,794 55,090 64,816 59,769 122,171 120,711 31,117 11,202
Net addition/(deletion) (floating rate bonds) Rs crore 31,117 44,809
Closing balance of investments Rs crore 230,687 285,777 350,593 410,362 532,533 653,244 715,479 771,490
Duration of the investment portfolio Years 4-5 4-5 4-5 4-5 4-5 4-5 4-5 4-5
Opening duration matched average G-Sec yields Per cent 13.19 11.68 10.55 9.80 6.76 6.16 5.02 6.36
Closing duration matched average G-Sec yields (March 31) Per cent 11.68 10.55 9.80 6.76 6.16 5.02 6.36 6.67
Change in average G-Sec yields Basis points (150) (114) (75) (303) (60) (114) 134 31
Appreciation/(losses) on investments for the year Rs crore 11,687 10,909 8,880 45,421 10,925 26,528 (33,904) (8,619)
Income from sale of investments Rs crore 871 2,977 3,164 9,334 14,262 16,000 3,000 0
Appreciation/(losses) earned on the opening unbooked appreciation Rs crore 423 495 2,810 1,374 2,581 (3,499) (380)
Unbooked appreciation/(losses) at the end of the year Rs crore 10,816 19,170 25,381 64,278 62,315 75,425 35,022 26,023
E: Estimates; P: Projections
Notes
1) CRIS INFAC has assumed repricing of the entire investment portfolio to be in line with G-Sec's repricing
2) Unbooked appreciation could be marginally higher than our estimates
3) Assumed that the SCB's investment portfolio has consistently remained in 4-5 year duration bucket

In the last 3 years, interest rates fell by more than 550 basis points in a falling interest rates
scenario. This enabled scheduled commercial banks to book huge gains, estimated at around Rs.
390.96 billion in the last 3 years (2000-01 to 2003-04), on their investment portfolio.
As of March 2004, banks had unbooked profits of Rs 754.25 billion on their investment portfolio
of government securities (which stood at Rs 6,532.4 billion). In 2004-05, we expect banks to
book profits to the tune of 10 per cent of the unbooked profits. CRIS INFAC expects the
yield on 5 year G-sec to rise by 165 bps to 6.67 per cent by the end of March 2006 from
a level of 5.02 per cent as of March 2004. By this time, the investment book of SCBs is
expected to rise by Rs 1,182 billion to Rs 7,715 billion.
In recent times, the Reserve Bank of India (RBI) has been increasingly issuing floating rate
long dated securities as part of the government of India's (GOI) borrowing programme. Between
April 1, 2004 and September 10, 2004, the RBI raised Rs 540 billion through long dated GOI
securities, of which approximately Rs 220 billion, nearly 40 per cent of the total debt raised,
was through floating rate securities. Going forward, we expect this ratio to increase further. CRIS
INFAC estimates that 50 per cent of RBI's borrowing during the financial year 2004-05 will be
through floating rate government securities. This ratio is expected to rise further to 80 per cent
in 2005-06. The floating rate bonds are generally priced as a 1-year security, hence the movement
in the interest rate would have a lesser impact on the value of the security.
Consequently, we expect the unbooked profit of the investment portfolio to provide a cushion
of a further 83 basis points increase in interest rates, beyond the level prevailing by end of
March 2006 (6.67 per cent). Thus, banks' investment portfolio can sustain an interest rate rise
of 7.5 per cent on the 5 year G-Sec, which works out an increase of 248 basis points from
an interest rate of 5.02 per cent prevailing in March 2004.
Prudential norm on classification of investment portfolio of banks Box 1
A recent notification from the RBI regarding classification of the investment portfolio of banks allows the latter to exceed
the present limit of 25 per cent of total investments under the held-to-maturity (HTM) category provided the excess
comprises only of statutory liquid ratio (SLR) securities, and the total SLR securities held in the HTM category is not more
than 25 per cent of their demand and time liabilities (DTL).
Earlier, banks were allowed to shift SLR securities to the HTM category once in an accounting year. Under the new
notification, banks will be allowed to shift SLR securities to the HTM category one more time (in addition to the one already
allowed) any time during the current accounting year. Such shifting has to be done at the lower of the acquisition cost/ book
value/market value on the date of transfer. The bank should fully provide for the depreciation, if any, on such a transfer.
No fresh non-SLR securities are permitted to be included under the HTM category, while those already held as a part of
the HTM category will continue.
CRIS INFAC is of the view that this notification will help banks in reducing the negative impact of the rise in interest rates
on their investment portfolio and help them postponing booking losses against the valuation of the portfolio. This step
would have a positive impact on the bank's profit & loss account.

53
Operating expenses to grow 8.8 per cent
Wage cost to grow at 6.83 per cent
Employee cost of scheduled commercial banks Table 5

(Rs billion) Basis 1998 1999 2000 2001 2002 2003
Total staff Nos 1,023,971 1,017,490 1,006,631 926,518 901,288 n.a.
Total employee cost Nos 148 175 194 243 231 250
Total business (deposits + advances) Rs in billion 10,000 11,780 13,875 16,343 19,107 21,644
Employee cost as percentage of business per cent 1.5 1.5 1.4 1.5 1.2 1.2
Business per empoyee (Rs in million) Rs in million 9.8 11.6 13.8 17.6 21.2 -
Offices Nos 66,400 67,453 67,906 67,896 68,174 68,540
Business per office Rs in million 151 175 204 241 280 316
n.a.: Not available
Source: RBI, Statistical tables relating to Banks in India
Since 1998, the number of employees in scheduled commercial banks has fallen by 12 per
cent. During the same period, there has been a rapid improvement in the productivity in the
banking system. This is evident from the steep increase in the business per employee, which
stood at Rs 21.2 million in 2002 compared to Rs 9.8 million in 1998.
During 2000-01, 26 out of the 27 public sector banks (PSBs) had introduced voluntary retirement
schemes. RBI had permitted PSBs to amortise VRS-related expenditure over a period of 5 years.
As on March 31, 2003, the total cost of the scheme amounted to Rs 123 billion, and the
balance of unamortised amount was Rs 69.47 billion as on March 31, 2003, to be amortised
over 2-3 years.
From 2000-01 to 2003-04, staff costs grew by 8.89 per cent, but the staff cost net of VRS
recorded a CAGR of 5.5 per cent. During this period, the business of the scheduled commercial
banks grew at a CAGR of 16 per cent.
With greater automation, the productivity can improve further. CRIS INFAC expects the staff
cost to grow at a CAGR of 6.78 per cent from 2003-04 to 2005-06.
Other expenses to rise because of increased automation and marketing

CRIS INFAC estimates other expenses (excluding staff cost) to grow at a CAGR of 12 per cent
during 2003-04 to 2005-06, in comparison with a 16 per cent CAGR (2000-01 to 2002-03)
in the previous corresponding 3-year period.
Printing and stationery, advertisement, postage and depreciation are the main drivers of growth
in other expenses. Banks are aggressively advertising their products through various channels of
communication, which will increase its outgo on this head. Moreover, with increasing automation
in banking operations, and the usage of ATMs and Internet as channels for distribution of products,
the charge on account of depreciation and rent is also likely to go up.
Over the years, due to the pressure on spreads, banks had controlled costs by rationalising operations.
Additionally, they will have to focus on operating expenses in order to maintain their profitability.

54
Provision & contingencies
Provisions and contingencies of scheduled commercial banks Table 6

(Rs billion) 2002-03 2003-04 P 2004-05 P 2005-06 P
Provision for NPA 132 178 159 135
Provision for standard assets 3 3 4 5
Provision for tax 85 97 89 91
Other provisions 17 17 17 17
Total 237 296 270 248
Provision and contingencies can be broadly divided into three categories: Provision for NPA and
standard assets, provision for taxation, and other provisions.
In the past 3 years, banks have increased their provisioning for non-performing assets. Although
improving their loan portfolio was one of the key motives, the falling interest rate scenario
and the corresponding increase in profit on sale of investments were key factors that led to
this. CRIS INFAC estimates that banks will make higher provision for NPAs in 2003-04, but
the same will decline in the subsequent years. As the banks have already made additional provisions
in the earlier years, the incremental provisions come down in the subsequent years. Further,
we also expect an improvement in the asset quality due to the strengthening of the credit
management system in banks. This will further reduce the provision requirements with the reversal
of excess provisions.
As per norms, the banks have to make a provision of 0.25 per cent on standard assets. We
believe that the provision for standard assets will grow at 13.3 per cent per over the next
3 years, with the expected improvement in the asset quality and rising share of standard assets
in the total advances.

55
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4.0
Profitability
Net profitability margin highly susceptible to changes in operating expenses
Net profitability margin (NPM) Table 1

1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 F 2005-06 F
Interest yield on carry business (i) 11.15 10.77 10.61 9.88 9.52 8.78 8.47 8.56
Interest cost (ii) 7.96 7.68 7.41 7.06 6.63 5.91 5.67 5.84
Spreads ( iii = i - ii ) 3.19 3.10 3.19 2.82 2.89 2.87 2.80 2.72
Op. Expenses/average funds deployed (iv) 3.15 2.91 3.06 2.56 2.53 2.50 2.40 2.28
Core fee-based income/average funds deployed (v) 1.32 1.20 1.10 0.98 1.00 1.06 1.04 1.01
Net profitability margin (vi = iii - iv +v) 1.36 1.39 1.24 1.24 1.36 1.44 1.44 1.45
Other Income (vii) 0.22 0.44 0.40 0.80 1.04 1.06 0.45 0.15
Total profit margin (viii = vi + vii) 1.59 1.82 1.64 2.04 2.40 2.50 1.90 1.60
F: Forecast; E: Estimates
Note
Carry business: Funds deployed less investment in shares, investments in subsidiaries and other investments. Other income, includes
profit on sale of investments
Source: CRIS INFAC
Although spreads will decline, CRIS INFAC is of the opinion that the net profitability margins
(NPM) of scheduled commercial banks will go up from 1.36 per cent in March 2003 to 1.45
per cent by March 2006. Going forward, we expect banks to continue to rein in their costs
and bring the operating cost ratio (operating expenses/average funds deployed) down to 2.28
per cent by March 2006.
With spreads still under pressure, we expect banks to retain their focus on curbing operating
costs by streamlining and restructuring the operational processes, which will further reduce the
operating expense cost ratio to 2.28 per cent in 2005-06, from 2.53 per cent in 2003-04.
The net profitability margin of scheduled commercial banks has remained flat at 1.36 per cent
from 1998-99 to 2002-03, despite a decline in the contribution of core fee-based income (this
is actually a ratio - core fee-based income/average funds deployed) to the NPM from 97 per
cent in 1998-99 to 74 per cent in 2002-03. This has been due to the banks' focus on controlling
their operating expenses, which has led to a drop in the operating expense ratio from 3.15
per cent in 1998-99 to 2.53 per cent in 2002-03. As remarked earlier, we expect the NPM
to increase to 1.45 per cent in 2005-06, as banks continue their focus on controlling operating
costs, which will reduce the operating expense ratio to 2.28 per cent by 2005-06. However,
the stable core-fee based income ratio will restrict the rise in NPM to some extent. Fee-based
income is a high margin revenue stream and provides stability to the bottomline due to its
insensitivity to interest rate movement.
Although the share of core fee-based income in NPM shrank to 74 per cent in 2002-03, from
89 per cent in 2000-01, it still remains a major contributor. In future, we expect this declining
trend to continue, reducing the share of core-fee based income from 73 per cent in end-March
2004 to 69 per cent by end-March 2006. Although the share of core fee-based income is expected
to fall, it will still help banks to maintain a steady bottomline as it is insensitive to interest
rate changes and forms a large component of the NPM.

57
Net profitability margin Box 1
CRISIL uses the net profitability margin (NPM) to measure the profitability of a lending business. In CRISIL’s opinion, the
measure of profitability for a lending business should capture its ability to generate income by deploying borrowed funds.
While such a measure should capture the cost of operations and core non-fund income of the business, it should not be
influenced by the returns from the business funded by equity capital. In parametric definition, NPM is equivalent to the yield
on the fund-based business less the cost of borrowings plus non-fund (fee) income less operating expenses.
Spreads & NPM Figure 1

(per cent)
3.50
3.00
2.50
2.00
1.50
1.00
1999 2000 2001 2002 2003 2004 P 2005 P 2006 P
Spreads NPM Total profit margin
Source: CRIS INFAC
Total profit margin (including non-core fee-based income)

The major component of non-core fee-based income is profit on sale of investments. With profit
on sale of investments rising from 2001-02 to 2003-04, the total profit margin also began to
rise, but with the expected drop in the profit on sale of investments from 2004-05, the total
profit margin is seen declining to 1.01 per cent.
Other key ratios
Key ratios Table 2

(Per cent) 1999 2000 2001 2002 2003 2004 2005 2006
Return on assets 0.49 0.68 0.53 0.77 1.00 0.98 0.80 0.83
Cost-to-income ratio (with profit on sale of investment) 64.81 60.10 63.32 53.47 48.97 47.30 51.48 52.80
Cost-to-income ratio (w/o profit on sale of investment) 66.24 64.13 67.14 62.48 59.41 57.20 55.07 52.80
Source: CRIS INFAC

58
The return on assets ratio, which had reached 1 per cent for March 2003, is expected to fall
to 0.98 per cent for March 2004 and further to 0.80 per cent for March 2005. This drop can
be attributed to the fall in other income, including profit on sale of investments, which is expected
to fall with the hardening of interest rates. But the impact of the increase in interest rates
on the spreads would come with a lag effect, which would then pull up the return on assets
to 0.83 per cent by March 2006.
The ongoing thrust of banks on controlling costs will lead to a drop in the cost-to-income ratio
(without profit on sale of investments) during 2003-04 to 2005-06. The cost-to-income ratio (with
profit on sale of investment) is estimated to increase due to the expected fall in the treasury
profits.
Projected profit and loss account of the scheduled commercial banks Table 3
(Rs billion) 1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 P 2005-06 P
Interest earned 1,034 1,196 1,322 1,459 1,508 1,651 1,895
Interest/discount on advances/bills 489 571 613 707 764 889 1,099
Income on Investments 455 520 590 641 638 662 692
Other income 161 174 244 320 373 295 258
Commission exchange and brokerage 83 89 93 107 127 138 149
Net profit/ (loss) on sale of investments 30 32 94 143 160 60 0
Others 48 53 57 71 86 98 110
Total income 1,195 1,369 1,566 1,779 1,880 1,946 2,153
Interest expended 719 811 908 969 955 1,026 1,187
Interest on deposits 664 744 835 856 865 932 1,082
Other interest 55 67 73 113 91 94 105
Gross profit 477 558 657 810 925 920 966
Operating expenses 286 353 352 397 437 474 510
Operating profit 190 205 306 413 487 446 456
Provisions and contingencies 112 134 184 237 296 270 248
Provision for NPA n.a. n.a. n.a. 132 178 159 135
Provision for tax n.a. n.a. n.a. 85 97 89 91
Provision for standard assets n.a. n.a. n.a. 3 3 4 5
Other provisions n.a. n.a. n.a. 17 17 17 17
Net profit 78 71 122 176 192 177 208
n.a.: Not available, P: Projected

59
Projected balance sheet of all scheduled commercial banks Table 4
(Rs billion) 1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 P 2005-06 P
Liabilities
Capital 206 211 236 236 246 250 254
Reserve and surplus 447 500 646 782 951 1,101 1,276
Deposits 9,325 10,935 12,472 14,045 15,688 17,658 19,929
Demand deposits 1,309 1,415 1,550 1,668 1,818 1,973 2,131
Savings deposits 2,013 2,335 2,734 3,228 3,761 4,362 5,060
Term deposits 6,003 7,185 8,188 9,149 10,109 11,323 12,738
Borrowings 491 595 1,117 912 945 1,023 1,122
Other liabilities and provisions 1,057 1,204 1,452 1,608 1,828 2,055 2,337
Total liabilities 11,525 13,446 15,923 17,584 19,658 22,087 24,919
Assets
Cash and balances with RBI 869 863 899 891 943 998 1,056
Balances with bank and money call and 961 1,246 1,385 900 976 1,121 1,289
short notice
Investments 4,216 5,007 5,975 7,100 7,934 8,484 9,150
Advances 4,559 5,407 6,635 7,599 8,703 10,372 12,300
Fixed assets 155 163 202 203 205 207 210
Other assets 765 759 827 890 897 905 914
Total assets 11,525 13,446 15,923 17,585 19,658 22,087 24,919
P: Projected

60
State of the industry
Sections
1.0 Overview 61
- Spreads 61
- Net profitability margin (NPM) 62
- Outlook 63
- Business 64
- Investments 65
- Asset quality 66
- Overall assessment 67
2.0 Business 69
- Other scheduled commercial banks clocked the highest growth 69
- Advances 71
- Deposits 76
- Investments 79
- Non-performing assets 82
3.0 Spreads & net profitability margin 89
- Spreads 89
- Net profitability margin (NPM) 94
4.0 Profit and loss account 99
- Total interest income 99
- Interest expended 101
5.0 Other income 103
- Other income (excluding profit on sale of investment) as
per cent of total income 103
- Profit on sale of investment 106
6.0 Operating expenses 109
- Staff cost 109
- Other operating expenses (Operating expenses excluding staff cost) 113
- Cost-income ratio 115
7.0 Important ratios 121
- Credit-deposit ratio 122
Continued...

i
...continued
Figures
1.0 Overview
01 Net profitability margin 62
02 Group-wise business of banks 1998 to 2003 64
03 Group-wise SLR Securities to NTDL 65
2.0 Business
01 Group-wise business of banks 1998 to 2003 69
02 Share of bank groups 71
03 Advances of OSCBs 72
04 Advances of OSCBs (Ex ICICI Bank) 72
05 Advances of nationalised banks 72
06 Advances of SBI Group 73
07 Foreign banks - outstanding advances 74
08 Break-up of deposits - OSCBs 76
09 Total deposits - OSCBs 76
10 Deposits break-up - SBI & associates 77
11 Total deposits - SBI & associates 77
12 Break-up of deposits - Nationalised banks 78
13 Total deposits - Nationalised banks 78
14 Break-up of deposits - Foreign banks 78
15 Total deposits - Foreign banks 78
16 Statutory liquidity ratio - excluding gold 80
17 Group-wise SLR Securities to NTDL 80
6.0 Operating expenses

01 Group-wise share of employee cost in operating cost 109
02 SBI & associates: No of employees vs cost per employee 110
03 Nationalised banks: No of employees vs cost per employee 111
04 OSC banks: No of employees vs cost per employee 112
05 Foreign banks: No of employees vs cost per employee 113
06 SBI & associates: Cost-income ratio 116
07 Nationalised banks: Cost-income ratio 117
08 OSC banks: Cost-income ratio 118
09 Foreign banks: Cost-income ratio 119
7.0 Important ratios

01 Credit-deposit ratio 122
02 Investment-deposit ratio 122
continued...

ii
...continued
Tables
1.0 Overview
01 Spreads 61
2.0 Business
01 Advances to the priority sector by public sector banks 75
02 Advances to the priority sector by private sector banks 75
03 Advances to the priority sector by foreign banks 75
04 SBI & associates 83
05 Nationalised banks 84
06 Other SCBs 85
07 Other SCBs (net of ICICI Bank) 85
08 Foreign banks 86
3.0 Spreads & net profitability margin

01 Spreads: SBI and associates 89
02 Spreads: Nationalised banks 89
03 Spreads: Other scheduled commercial banks 90
04 Spreads: Foreign banks 90
05 NPM: Foreign banks 94
06 NPM: Nationalised banks 95
07 NPM: SBI and associates 96
08 NPM: Other scheduled commercial banks 97

01 OSC Banks: Interest income 99
02 SBI and associates: Total interest income 99
03 Nationalised banks: Interest income 100
04 Foreign banks: Interest income 100
05 OSC Banks: Interest expended 101
06 SBI and associates: Total interest expended 101
07 Nationalised banks: Interest expended 101
08 Foreign banks: Interest expended 102
5.0 Other income

01 Other income (ex treasury profits) as per cent of total income 103
02 Core fee income as per cent of other income 103
03 Core fee-based income 104
04 Share of profit on sale of investments in total income 106
05 Profit on sale of investments 106
continued...

iii
...continued
Tables
6.0 Operating expenses

01 Other operating expenses 113
7.0 Important ratios

01 SBI & associates 121
02 Nationalised banks 121
03 Other scheduled commercial banks 121
04 Foreign banks 121
1.0
Overview
Spreads
Spreads Table 1
1999 2000 2001 2002 2003
SBI and assoc 3.01 2.87 2.81 2.52 2.58
Nationalised banks 3.27 3.08 3.32 3.11 3.29
OSCBs 2.60 2.73 2.78 2.01 2.00
Foreign banks 3.74 4.08 4.03 3.30 3.35
Source: CRIS INFAC
During 1998-99 to 2002-03, only the spreads of nationalised banks improved (by 2 basis points);
spreads declined in all other categories. In 2002-03, foreign banks had the highest spreads, while
other scheduled commercial banks (OSCBs) had the lowest spreads.
The primary reason for the drop in the spreads was the faster decline in the yield on the
carry business vis-à-vis interest cost, due to the decline in interest rates. As indicated in the
earlier section, the yield on carry business is mainly influenced by the yield on advances and
the yield on investments.
Vis-à-vis other banks, public sector banks (nationalised banks and the SBI Group), because of
their historically higher exposure to long tenure securities, have seen a slower drop in the yield
on investments. Private sector banks (other scheduled commercial banks) and foreign banks have
comparatively lesser exposure to long tenure securities, which increases their re-pricing ratio.
Foreign banks recorded the highest drop in the yield on advances. These banks have a strong
presence in trade finance and foreign currency lending. Trade finance advances are generally
for the short term and hence get re-priced at a faster rate. The foreign currency loans also
get re-priced as they carry a floating rate of interest. These factors pulled down the yield on
advances for these banks at a faster rate. However, with hardening interest rates, the yield on
advances will also rise.
The decline in interest rates also resulted in a drop in the cost of deposits and, in turn, in
the interest cost. But, as explained in the earlier section, because of the low elasticity of cost
of deposits to interest rate movement, the drop in the cost of deposits was not steep. Foreign
banks recorded the highest drop in the cost of deposits on account of the increased proportion
of demand deposits in the low cost deposits (low cost deposits are made up of demand deposits
and savings deposits), lower reliance on deposits and funding support from their parent companies.
With the hardening of interest rates, we believe that the foreign banks' loans would get re-
priced at a faster rate, but the expected drop in the yield on the investments would restrict
the rise in the yield on carry business. But since they continue to have the lowest cost of
deposits, they will be able to maintain spreads.
The spreads of public sector banks are expected to be under pressure during 2003-04 to 2005-
06, as the continued drop in the yield on investments will restrict the rise in the yield on
61
carry business. Despite the hardening interest rates, their yield on investments will continue to
fall on account of higher exposure to long tenure securities. The securities would get re-priced
from historical higher yields to lower yields, which will lower the yield on investments. Hardening
interest rates will increase the cost of deposits (albeit at a steeper rate) and cost of borrowings.
The spreads of private sector banks are also expected to reduce during 2003-04 to 2005-06,
due to the expected fall in the yield on investments. The yield on advances is expected to
improve with the gradual increase in demand from commercial credit. As ICICI Bank continues
to replace its high cost borrowings with low cost deposits, the interest cost is expected to
reduce, which will restrict the drop in spreads.
Net profitability margin (NPM)
Net profitability margin Figure 1
3.5
3.0
2.5
2.0
1.5
1.0
0.5
1999 2000 2001 2002 2003
SBI & assoc Nat banks OSCBs Foreign banks All SCBs
Source: CRIS INFAC
All segments, except OSCBs, either improved their NPM or at least maintained it during 1998-
99 to 2002-03. In 2002-03, foreign banks had the highest NPM of 2.5 per cent, followed by
the public sector banks with a NPM of 2.4 per cent. OSCBs had the lowest NPM of 0.79 per
cent in 2002-03.
Despite the decline in spreads and a reduction in the contribution of core fee income to the
NPM (measured as a proportion of core fee income ratio to the NPM) there has been an improvement
in NPM. This has been on account of cost control measures adopted by the banks, especially
the public sector banks, which led to drop in the operating cost ratio (operating expenses as
a per cent of average funds deployed). Contrary to the industry trend, other scheduled commercial
banks witnessed a jump in the contribution of core fee income ratio to NPM.
Public sector banks had introduced voluntary retirement schemes (VRS), which helped them to
reduce manpower cost and increase productivity. This helped the segment in improving the operating
expense ratio. Foreign banks have the highest operating expense ratio amongst all the bank
groups because of their higher wage structure and investments in technology and infrastructure.
But high spreads and support from core fee income help them in sustaining high costs. Private

62
sector banks are expanding their operations, hence there was a marginal saving in their operating
expense ratio during 1997-98 to 2002-03.
Foreign banks had the highest core fee income ratio, on account of their strong presence in
trade finance, correspondent banking services, treasury management and cash management services.
This provides them with an opportunity to earn fee income without taking high exposure.
Public sector banks had one of the lowest core fee income ratios, because they were not quick
off the blocks in venturing into new business areas to generate fee income; besides, a high
average funds base led to a low core fee income ratio. Of the public sector banks, nationalised
banks had the lowest core fee income ratio during 2002-03.
Private banks (OSCBs), especially the new private sector banks, were amongst the first to foray
into new business areas like credit cards, depository services and third party distribution, which
helped them in generating fee income.
Outlook
CRIS INFAC is of the view that since spreads are under pressure all banks will have to concentrate
on controlling their operating expenses and find new ways of generating fee income.
Since manpower accounts for more than 70 per cent of the operating expense for the public
sector banks, they need to control their staff cost by either increasing productivity or controlling
cost. However, with public sector banks investing in technology and introducing new product
delivery platforms, their other operating expenses are estimated to rise. The operating expense
ratio may come under pressure in the short run, but it will fall as the benefits of investment
in technology begin to accrue. However, in the short run, the pressure on the operating expense
ratio will be reduced due to the expected demand for credit from the commercial sector. We
expect the core fee income ratio to continue to decline because of increased competition. CRIS
INFAC expects the NPM to be marginally under pressure in the next year, but improve afterwards,
with increasing spreads and savings in operating expenses.
Other scheduled commercial banks, especially the new private sector banks, are expanding their
operations and are in their growth stage. Hence their operating expenses will increase, and the
benefits of their investment will accrue, albeit only after a while. Till then the operating expense
ratio may either remain stable or increase marginally, which can put pressure on the NPM. The
core fee income ratio will continue to fall, but a slower pace, because of the increase in lending
to the commercial sector and also due to the forays into new business activities.
Foreign banks will continue have a high NPM on account of higher spreads and a high core
fee income ratio. But as competition intensifies in areas where they are strong, their spreads
and core fee income will reduce. Hence, we are of the view that foreign banks will have
to control their operating expenses.

63
Business
Group-wise business of banks 1998 to 2003 Figure 2

Rs/billion
8000
7000
6000
5000
4000
3000
2000
1000
0
SBI & ass Nat banks Other SCBs Foreign banks
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
Source: CRIS INFAC
The business of other scheduled commercial banks (OSCBs) grew at 22 per cent (16 per cent)
CAGR from 1999-00 to 2002-03, the highest amongst all the bank segments, driven by the
strong growth in advances. The growth in advances was mainly driven by the growth in the
retail credit. The business of the foreign banks grew by 12.7 per cent CAGR, which is lower
than the industry average and also the lowest amongst all the bank groups. Both advances and
deposits grew at a comparatively slower pace, in comparison to the peer groups.
For all bank groups, except for the SBI Group, business growth had been primarily driven by
the higher growth in advances. The deposits of the SBI Group grew at 15.1 per cent CAGR,
in comparison to a 13.6 per cent CAGR growth in advances.
The business of nationalised banks increased by 14.2 per cent CAGR during 1999-00 to 2002-
03, driven by a 17.3 per cent CAGR growth in advances. The growth in advances was driven
by the increase in commercial credit, which is contrary to what was witnessed in OSCBs.
The share of OSCBs in the business increased from 13 per cent in 1999-00 to 16 per cent
in 2002-03, due to their aggressive expansion strategy.
The low cost deposit ratio was the highest in public sector banks and the lowest in OSCBs.
However, during 1997-98 to 2002-03, the low cost deposit ratio went up for the private sector
banks, while it fell for public sector banks, especially the SBI Group. Foreign banks had the
highest proportion of demand deposits in the low cost deposits (no interest is paid on demand
deposits), which contributed towards the lower cost of deposits.

64
Investments
Group-wise SLR Securities to NTDL Figure 3

50.0
45.0
40.0
35.0
30.0
25.0
20.0
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
SBI & associates Natonalised banks Other SCBs
Other SCBs (ex ICICI Bank) Foreign banks SLR requirement
Source: CRIS INFAC
All bank groups increased their exposure to SLR securities, mainly during 2002-03, due to the
slowdown in credit offtake. While this high exposure helped almost all the groups in booking
healthy profits during a period of soft interest rates, it can lead to losses during a period of
hardening interest rates (due to the mark-to-market valuation of the investment portfolio).
The SBI Group continuously increased its exposure to SLR securities during 1998-99 to 2002-
03 and has the highest SLR ratio (government and approved securities as a percentage of net
time and demand liabilities). With the expect hardening of interest rates, the SBI Group will
suffer losses on account of the valuation of these securities (as the portfolio carries a higher
proportion of securities purchased during the last 2 years). However, on account of its high
exposure towards SLR securities, we believe that the portfolio will carry sufficient unbooked profits
to provide a cushion against rising interest rates. Nationalised banks, unlike the SBI Group, had
a stable SLR ratio during 1998-99 to 2001-02, but the ratio increased in 2002-03 (to take advantage
of the soft interest scenario and book high treasury gains). CRIS INFAC believes that the investment
portfolio of nationalised banks will have unbooked profits (although it may be far lower than
that of the SBI Group) to protect them against rising interest rates. Hence, of the two public
sector bank groups, nationalised banks will have higher losses from the valuation of the investment
portfolio and sale of investments.
Private sector banks and foreign banks maintained the SLR ratio in the range of 26-27 per cent
during 1998-99 to 2001-02, but increased their exposure during 2002-03, when the acquisition
cost of the securities was high (because of low interest rates). However, with the hardening
interest rates, the losses from the valuation of investments or sale of investments would be
high. Further, because of this group's comparatively low exposure to securities, especially high
tenure ones, we expect that unbooked profits in the investment portfolio will be only marginal,
which will not provide much resistance against increasing interest rates and is likely to result
in the booking of high treasury losses.

65
All bank groups will book treasury losses, but we expect these to be lower for the SBI Group
and higher for foreign banks. Banks, therefore, need to reduce their exposure to investment
by reducing the duration of the investment portfolio.
Asset quality
Based on our study of the gross and net NPA ratios of various bank groups, we found that
there was a marked improvement in the declared asset quality of the nationalised banks and
the SBI Group, while it was only marginally better for OSCBs and foreign banks.
The marked improvement in the case of public sector banks (nationalised and SBI Group) has
been primarily due to higher provisions and write-offs. These banks recorded a healthy growth
in the profit from sale of investments, which helped them in writing off bad loans and also
making excess/additional provisions towards NPAs. However, the improvement observed in the
case of SBI Group was more at the gross NPA level, whereas in the case of the other three
groups, the improvement was more at the net NPA level. This indicates that the SBI Group
improved its credit management to improve asset quality, while other bank groups increased
their provisioning cover.
A comparison of the share of gross NPA ratios and net NPA ratios of the various bank groups
to the industry average, during the period 1999-00 to 2002-03, revealed that the SBI Group
had increased its asset quality both at the gross level and the net level. There was a slight
deterioration in the asset quality of the nationalised banks at the gross level, but there was
an improvement at the net NPA level, due to higher provisioning cover. Foreign banks witnessed
a marginal deterioration in the asset quality at both gross and net levels, but more at the net
level due to the decrease in the provisioning cover.
In case of other scheduled commercial banks, excluding ICICI Bank, the asset quality worsened
at the gross level, but remained stable at the net NPA level on account of the higher NPA
provision. Aggressive lending polices adopted by the private sector banks led to a worsening
of the asset quality at the gross levels, but they were able to maintain the net NPA ratios
with higher provisions. Including ICICI Bank, the asset quality worsened at both levels; gross
and net.
Other scheduled commercial banks, especially the new private sector banks, are aggressively increasing
the loan book by compromising a little on the asset quality. But the group is making higher
provisions in maintaining a stable net NPA.
Nationalised banks and the SBI Group are concentrating more on improving the asset quality.
While nationalised banks are focussing on improvement at the net levels, the SBI Group is concentrating
on improvement at the gross levels. Both groups had reduced the provisioning covers.
The healthy growth in treasury profits helped banks in increasing their provision cover, but there
will not be much leeway in future to make higher provisions towards NPAs due to the expected
fall in treasury profits. Hence banks need to improve their credit management to improve their
asset quality

66
Overall assessment
Foreign banks
During 1999-00 to 2002-03, foreign banks held on to their share of the business and also maintained
the highest spreads. Greater spreads and a high core fee income ratio helped them in sustaining
high operating expenses. The high proportion of short-term assets and the low reliance on term
deposits will help these banks in improving spreads. They will continue to have a high core
fee income ratio, but are likely to face competition from other bank groups, who are increasing
their worldwide presence. Foreign banks have the lowest NPA ratios and, with their stringent
credit assessment norms, will continue to maintain them.
Other scheduled commercial banks

Since these banks, especially the new private sector banks, are expanding their operations operating
expenses will be high. But the benefits of these large investments will accrue to them in the
near future. The yield on carry business is likely to improve with the gradual increase in credit
demand from the commercial sector. However, the improvement could be restricted due to the
expected drop in the yield on investments. Because of the aggressive lending strategy adopted
by the new private sector banks, the asset quality may deteriorate, although the banks will
try to maintain the net NPA ratio. Private sector banks have to concentrate on their credit management
systems to improve the asset quality. OSCBs will continue to focus on retail finance. This, coupled
with increased credit to the commercial sector, will enable a healthy growth in advances.
Public sector banks (State Bank of India & associates, & nationalised banks)
These banks need to rein in their operating costs by controlling manpower costs and rationalising
operations. Investments in technology may result in surplus staff, which can affect productivity
(if the excess manpower is not utilised properly). The gradual increase in commercial sector
credit will enable a healthy growth in advances. Public sector banks need to reduce their exposure
to investments by focusing on the core activity of lending. Moreover, these banks have started
focusing on retail finance, which will contribute to the growth in advances, which will help in
improving the yield on carry business, and thus spreads. In addition, they need to strengthen
their interest rate risk management and credit risk management. We believe that the structure
of pricing of loans needs to be reviewed. We also expect the asset quality of the public sector
banks to improve on account of the expected improvement in credit management.
But PSBs need to improve and be aggressive in their communication and business strategies
to garner more customers, if they want to attain mass in the retail finance segment.

67
2.0
Business
Other scheduled commercial banks clocked the highest growth
Group-wise business of banks 1998 to 2003 Figure 1

(Rs/billion)
8000
7000
6000
5000
4000
3000
2000
1000
0
SBI & ass. Nat banks Other SCBs Foreign banks
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
Source: CRIS INFAC
The business of all scheduled commercial banks grew at 16 per cent (14.5 per cent) CAGR
from 1999-00 to 2002-03.
During the same period, the business of other scheduled commercial banks (OSCBs) grew at
22 per cent (16 per cent) CAGR, the highest amongst all the bank segments, driven by a
strong growth in advances. The business of foreign banks grew by 12.7 per cent CAGR, which
is lower than the industry average and is also the lowest amongst all the bank groups. Both
advances and deposits of foreign banks grew at a comparatively slower pace, in comparison
with the other groups.
For all the groups, except the SBI Group, business growth was primarily on the back of the
higher growth in advances. The deposits of the SBI Group grew at 15.1 per cent CAGR, in
comparison to a 13.6 per cent CAGR growth in advances.
Due to the merger of ICICI Ltd with ICICI Bank on March 30, 2002, the growth figures
for the scheduled commercial banks (SCBs) for the period under consideration are slightly
misleading. Hence, for a better comparison, we have also calculated the growth figures excluding
ICICI Bank, which are indicated in brackets.

69
Other scheduled commercial banks (OSCBs)
Business grew by 22 per cent (16 per cent) CAGR from Rs 1,694 billion (Rs 1,559 billion)
in March 2000 to Rs 3,446 billion (Rs 2,432 billion) as of March 2003, driven by a strong
growth of 35.2 per cent (17.5 per cent) CAGR in advances. Deposits grew at 22.1 per cent
(15.2 per cent) CAGR during 1999-00 to 2002-03.
While the share of advances in funds deployed has gone up from 44.4 per cent (45.3 per
cent) in 1998-99 to 50.7 per cent (47.8 per cent) in 2002-03, the share of investments increased
from 37.8 per cent (37.4 per cent) in 1998-99 to 39.2 per cent (40.3 per cent) in 2002-
03. The growth in advances was primarily driven by the focus on retail credit, especially by
new private sector banks.
State Bank of India & associates (SBI Group)

The business of the SBI Group grew at 14.6 per cent CAGR from Rs 3,853 billion in March
2000 to Rs 5,802 billion in March 2003, driven by a 15.1 per cent CAGR growth in deposits.
During the same period, advances grew at 13.6 per cent CAGR. The share of advances in
funds deployed declined from 46.2 per cent in 1998-99 to 40.64 per cent in 2002-03, while
the proportion of investments in the funds deployed increased from 34.4 per cent in 1998-
99 to about 48 per cent in 2002-03.
Nationalised banks
The business grew at a 14.2 per cent CAGR from Rs 7,041 billion in March 2000 to Rs 10,485
billion in March 2003, driven by a 17.3 per cent CAGR growth in advances. Deposits grew
at a slower rate of 12.7 per cent CAGR.
The share of advances in funds deployed increased from 42.4 per cent in 1998-99 to 48 per
cent in 2002-03, while the share of investment in funds deployed increased from 40.6 per cent
in 1998-99 to 43 per cent in 2002-03.
Foreign banks
Foreign banks clocked the lowest growth in business amongst various bank categories, at a CAGR
of 12.7 per cent during 1999-00 to 2002-03. The business grew from Rs 849 billion in March
2000 to Rs 1215 billion in March 2003, driven by 13.6 per cent CAGR growth in advances.
Deposits grew at a slower rate of 12.0 per cent CAGR.
The share of advances in the funds deployed increased from 42.6 per cent in 1998-99 to 50.2
per cent in 2002-03, while the share of investments in the funds deployed went up from 38.0
per cent in 1998-99 to 39.3 per cent in 2002-03.

70
Share of bank groups Figure 2
1999-2000 2002-03
(per cent)
Forgn Banks (per cent) Forgn Banks
6 6
Other SCB
13 SBI & Ass Other SCB SBI & Ass
29 16 28
Nat Bank Nat Bank

52 50
Source: CRIS INFAC
Though the share of nationalised banks in the total business of scheduled commercial banks
is reducing, it is still approximately 50 per cent. The share of other scheduled commercial banks
has increased from 13 per cent in 1999-00 to 16 per cent in 2002-03, due to the aggressive
growth strategy adopted by them.
Advances
Overview
OSCBs recorded the highest growth in advances amongst all the bank groups, while the foreign
banks, along with the SBI Group, recorded the lowest growth. For OSCBs, the high growth was
due to the focus on retail credit. The advances of OSCBs grew at 35.2 per cent (17.5 per
cent) CAGR during 1999-00 to 2002-03. The advances of nationalised banks also recorded a
healthy growth of 17.2 per cent CAGR, driven by the growth in commercial credit and agriculture
credit.
For foreign banks and nationalised banks, the growth of advances was lower than that of the
industry. Increased competition from new private sector banks, coupled with low credit demand
from the large corporates, slowed down the growth of advances of foreign banks.
For the SBI Group, the growth of advances was low on account of a less aggressive lending
strategy and greater competition.
A study of the composition of loans and advances indicates that the SBI Group and nationalised
banks have, over the years, been providers of working capital finance to the industry. Going
forward, with the increasing focus of these groups on retail credit, the proportion of term loans
in working capital is expected to rise further.

The advances of OSCBs grew faster than the industry average of 16 per cent (excluding ICICI
Bank). Advances grew from Rs 557 billion (Rs 521 billion) in 1999-00 to Rs 1,377 billion (Rs
844 billion) in 2002-03. Due to the slowdown in industrial activity, the demand for credit from
the commercial sector was low. Hence all the banks directed their efforts towards retail credit.
OSCBs, especially the new private sector banks - ICICI Bank, HDFC Bank, UTI Bank etc -
were amongst the first to shift their focus towards retail finance. This helped them to post
a healthy growth in advances. Today ICICI Bank and HDFC Bank are the leaders in retail finance.
71
Advances of OSCBs Figure 3 Advances of OSCBs (Ex ICICI Bank) Figure 4
(Rs/crores)
(Rs/crores)
160,000 90,000
140,000 80,000
120,000 70,000
60,000
100,000
50,000
80,000
40,000
60,000
30,000
40,000
20,000
20,000
10,000
0
0
1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
Term loans Short term/working capital loans Term loans Short term/ working capital loans
Source: CRIS INFAC Source: CRIS INFAC
The term loan of OSCBs grew at 75 per cent (34 per cent) CAGR from Rs 164 billion (Rs
161 billion) in 1999-00 to Rs 882.03 billion (Rs 385 billion) in 2002-03 on account of the
enhanced focus on retail credit. Because of lower demand for credit from the commercial sector,
working capital finance grew at a slower rate of 8 per cent (8.4 per cent) CAGR between
1999-00 and 2002-03.
The share of term loans in total advances increased from 29 per cent (31 per cent) in 1999-
00 to 64 per cent (46 per cent) in 2002-03.
Nationalised banks
The advances of nationalised banks also grew faster than that of the industry. Advances grew
by 17.3 per cent CAGR from Rs 2,231 billion in 1999-00 to Rs 3,601 billion in 2002-03, on
the back of a steady growth in both commercial and agricultural credit. As per our retail finance
study, nationalised banks were slow to shift their focus towards retail finance in the initial years.
However, many nationalised banks have now announced plans to focus on the retail finance
portfolio.
Advances of nationalised banks Figure 5

(Rs/crores)
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
term loans short term/working capital loans
Source: CRIS INFAC

72
Term loans grew at a CAGR of 19.5 per cent, from Rs 830.1 billion as of end-March 2000
to 1,416.43 billion as of end-March 2003. Working capital loans grew from Rs 1,401 billion in
1999-00 to Rs 2,185 billion in 2002-03 at 16 per cent CAGR.
The share of term loans increased from about 37 per cent in 1999-00 to 39 per cent in 2002-
03. With the slowdown in industrial activity there was less demand for working capital loans,
which resulted in an increase in the share of term loans in total advances.
State Bank of India & associates

During 2000-01 to 2002-03, amongst the scheduled commercial banks, the SBI Group accounted
for the second largest portfolio of advances after nationalised banks.
In the same period, the SBI Group's advances grew from Rs 1,290 billion in 1999-00 to Rs
1,892 billion in 2002-03, at a CAGR of 13.6 per cent. This lower-than-industry growth in advances
was on account of the lower growth in commercial credit. The group is also facing competition
from the new private sector banks and nationalised banks. Although the group was not aggressive
in retail finance earlier, SBI has now announced plans to increase its focus on retail finance.
(SBI plans to have 60 branches totally dedicated towards retail lending.) These measures, coupled
with the expected recovery in the commercial credit, will help the group in posting a healthy
growth in advances.
Advances of SBI Group Figure 6

(Rs/crores)
200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
Term loans Short term/ working capital loans
Source: CRIS INFAC
Term loans of the group grew at 22 per cent CAGR from Rs 420 billion in 1999-00 to Rs
741 billion in 2002-03. The working capital loans grew at 11 per cent CAGR to Rs 1,151 billion
in 2002-03 from Rs 871 billion in 1999-00.
The share of term loans in total advances increased from 33 per cent in 1999-00 to 39 per
cent in 2002-03. The increase in the share of term loans has been in line with the industry.
The slow growth in working capital loans led to an increase in the share of term loans.

73
Foreign banks
The advances of foreign banks grew from Rs 356 billion in 1999-00 to Rs 522 billion in 2002-
03 at 13.6 per cent CAGR, one of the lowest amongst all categories. Foreign banks, due to
their limited reach, are not aggressive in retail finance. Further, most of the foreign banks prefer
lending only to select large corporates. Hence, due to the lower demand for credit on account
of general recession in the industrial activity, advances grew at a slower rate.
Foreign banks - outstanding advances Figure 7
(Rs/crores)
60,000
50,000
40,000
30,000
20,000
10,000
0
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
Term loans Short term/working capital loans
Source: CRIS INFAC
Among the scheduled commercial banks, foreign banks are the only group in which the term
loans have recorded a lower CAGR than the short term/working capital loans. Term loans grew
from Rs 173.9 billion in 1999-00 to Rs 249.7 billion in 2002-03 at a rate of 12.8 per cent
CAGR, while working capital finance grew from Rs 182 billion in 1999-00 to Rs 272 billion
in 2002-03 at rate of 14.3 per cent CAGR. Foreign banks, because of their worldwide network,
are strong in trade finance; especially export finance and cash management systems, where the
lending is of short duration. These activities drove the growth in working capital credit. The
low demand for corporate credit, coupled with the limited presence of foreign banks in retail
finance, restricted the growth in the term loans. Only a few of the foreign banks are aggressive
in retail finance.
In addition, foreign banks have a strong presence in foreign currency loans - FCNR (B) term
loans or ECBs - which are generally of 3-5 years tenure and are classified under term loans.
This contributes to a higher proportion of term loans in advances vis-à-vis that of public sector
banks. The lower growth in the term loans vis-à-vis working capital finance led to the a drop
in the share of term loans.

74
Priority sector advances
As per the directive of the Reserve Bank of India, all scheduled commercial banks, except foreign
banks; have to lend 40 per cent of the net bank credit to the priority sector, with more focus
on the weaker sections. Foreign banks operating in India are required to lend 32.0 per cent
of their net bank credit towards the priority sector.
Public sector banks (State Bank of India & associates, and nationalised banks)
The outstanding priority sector advances of PSBs increased by 18.6 per cent during 2002-03.
As on the last reporting Friday in March 2003, the priority sector lending constituted 42.5 per
cent of the net bank credit. Funding to agriculture and self-help groups helped the public sector
banks in achieving the target.
Advances to the priority sector by public sector banks Table 1

(as on the last reporting Firday) Basis Mar-00 Mar-01 Mar-02 Mar-03
Priority sector lending Rs in billion 1275 1491 1712 2031
As per cent of net bank credit per cent 40.3 43.7 43.1 42.5
Source: RBI

The total priority sector advances extended by private sector banks rose as a proportion of
net bank credit, with the priority sector growing by 43 per cent in 2002-03. During 2000-
01, OSCBs did not achieve the prescribed priority sector targets as some of the new private
sector banks had been allowed certain concessions for meeting priority sector norms. Housing
finance was classified as a priority sector with a limit of Rs 10 lakh (in the mid-term credit
policy 2004-05, this limit was raised to Rs 15 lakh); hence with the growth in housing finance,
the group witnessed a sudden rise in the priority sector ratio during 2002-03.
Advances to the priority sector by private sector banks Table 2

(as on the last reporting Firday) Basis Mar-01 Mar-02 Mar-03
Priority sector advance Rs in billion 216 257 367
As per cent of net bank credit per cent 36.7 40.9 44.4
Source: RBI
Foreign banks
Advances to the priority sector by foreign banks Table 3

(as on the last reporting Firday) Basis Mar-01 Mar-02 Mar-03
Priority sector advance Rs in billion 116 134 148
As per cent of net bank credit per cent 33.5 34 33.9
Source: RBI
As on the last reporting Friday of March 2003, priority sector lending constituted 33.9 per cent
of the net bank credit. Foreign banks have maintained the priority sector ratio at a level of
33.5-34 per cent.
All the bank groups had met their overall priority sector lending targets.

75
Deposits
Overview
Deposits with scheduled commercial banks are classified into three categories
Current deposits: Current deposits are those maintained by business class to meet the short-term
contingencies. No interest is payable on current deposits.
Savings deposits: Savings deposits are the deposits maintained by the households. RBI administers the
interest rate offered on these deposits.
Term deposits: These are also knows as fixed deposits or time deposits and are generally payable at the
end of a fixed period. Term deposits constituted 64-65 per cent of the total deposits during1997-98 to
2002-03.
Summary
OSCBs recorded the highest growth in deposits amongst all the bank groups. During 1999-00
to 2002-03, deposits grew at 22 per cent (15.2 per cent) CAGR, followed by the SBI Group,
whose deposits grew at 15.1 per cent CAGR. The 12 per cent CAGR growth in deposits of
foreign banks was the lowest amongst all the bank groups.
The strong growth in deposits of OSCBs was due to the aggressive growth strategies adopted
by the new private sector banks.
The SBI Group's extensive branch expansion enabled it to achieve a healthy growth in term
deposits. However, for foreign banks, their limited branch network acted as a hindrance in the
growth of deposits. Moreover, foreign banks also offered lower interest rates on term deposits.
Of the three categories of deposits, savings deposits recorded the highest growth in all the
bank groups. The growth was the highest for OSCBs on the back of a relatively lower base
and the aggressive marketing strategy they adopted.
Nationalised banks and the SBI Group have the highest low cost deposit ratios (the proportion
of demand deposits and savings deposits to total deposits) among all bank groups. As of March
2003, the low cost deposit ratio was nearly 37 per cent for the SBI Group, while it was approximately
36 per cent for nationalised banks. Though OSCBs have the lowest low cost deposit ratio, they
are giving tough competition to the nationalised banks and the SBI Group by increasing their
market share in low cost deposits. Among all the groups, foreign banks have the highest composition
of demand deposits in low cost deposits.
Break-up of deposits - OSCBs Figure 8 Total deposits - OSCBs Figure 9

100% (Rs/billion)
2500
90%
2000
80%
1500
70%
1000
60%
500
50%
1998 1999 2000 2001 2002 2003
0
Term deposits Savings deposits Demand deposits 1998 1999 2000 2001 2002 2003

76
OSCBs recorded the highest growth of 22.1 per cent (15.2 per cent) CAGR in total deposits
between 1999-00 and 2002-03, mainly due to the new private sector banks who are aggressively
expanding their operations. The share of deposits of OSCBs in the deposits of all scheduled
commercial banks went up between 1997-98 and 2002-03, while it fell for nationalised banks
and foreign banks. OSCBs, especially the new private sector banks, had started introducing technology-
driven customised products, which also helped in the impressive growth in deposits.
Low cost deposits (demand and saving deposits) constituted 24 per cent of the total deposits,
which is the lowest amongst all the scheduled commercial banks. OSCBs do not have a wide
network of branches that provide support in garnering more low cost deposits. Moreover, the
technology-driven customised products introduced by the new private sector banks allow customers
to switch between savings and term deposits.
State Bank of India and associates
Deposits break-up - SBI & associates Figure 10 Total deposits - SBI & associates Figure 11
100% (Rs/billion)
4500
90% 4000
3500
80% 3000
2500
70%
2000
1500
60%
1000
50% 500
1998 1999 2000 2001 2002 2003
0
The total deposits of the SBI Group grew from Rs 2,563 billion in 1999-00 to Rs 3,910 billion
in 2002-03 at a rate of 15.1 per cent, while the industry grew at a rate of 14.6 per cent
(13.7 per cent). The SBI Group's wide branch network helped it to achieve a healthy growth
in deposits. The India Millennium Deposit (IMD) also spurred the growth in deposits. SBI mobilised
deposits worth Rs 257 billion through the IMD scheme.
Low cost deposits constitute 37 per cent of the total deposits as of March 2003, which is the
highest amongst all scheduled commercial banks. The group's wide branch network helped it
in maintaining the low cost deposit ratio at a high level. However, the share of low cost deposits
in the total deposits fell from 42.6 per cent in 1997-98 to 37.0 per cent in 2002-03, due
to the increase in competition.

77
Nationalised banks
Break-up of deposits - Nationalised banks Figure 12 Total deposits - Nationalised banks Figure 13
100% (Rs/billion)
8000
90% 7000
6000
80%
5000
70% 4000
3000
60%
2000
50% 1000
1998 1999 2000 2001 2002 2003
0
The total deposits of nationalised banks grew at 12.7 per cent CAGR, which was lower than
that of the industry (all scheduled commercial banks). Total deposits grew from Rs 4,810 billion
in 1999-00 to Rs 6,884 billion in 2002-03 on account of the low interest rates offered by the
group on term deposits. Further, nationalised banks are facing stiff competition from the new
private sector banks, who have capitalised on their technological edge and better service and
increased their market share.
Low cost deposits constituted 36 per cent of the total deposits. The share of term deposits
had been stable at 36 per cent during 1999-00 to 2002-03. The term deposits of nationalised
banks grew at 12.5 per cent CAGR during 1999-00 to 2002-03, which is lower than the industry
average of 15.1 per cent (13.8 per cent).
Foreign banks
Break-up of deposits - Foreign banks Figure 14 Total deposits - Foreign banks Figure 15
100% (Rs/billion)
800
90% 700
600
80%
500
70% 400
300
60%
200
50% 100
1998 1999 2000 2001 2002 2003
0
Term deposits Saving deposits Demand deposits 1998 1999 2000 2001 2002 2003

78
The total deposits of foreign banks grew from Rs 493 billion in 1999-00 to Rs 693 billion
in 2002-03 at a CAGR of 12 per cent. Their limited branch network proved hindered the growth
of deposits.
The share of low cost deposits in total deposits increased from 31.5 per cent in 1999-00 to
33.8 per cent in 2002-03. Within low cost deposits, demand deposits have a higher share as
foreign banks generally prefer to cater to corporate clients who maintain current account deposits,
and also because they are strong in the cash management system. Generally foreign banks rely
less on deposits to meet their funding needs. The funding requirements are met through the
support of their parent organisations or by raising borrowings. Deposits constitute only about
70-75 per cent of the borrowed funds for foreign banks, while they constitute more than 95
per cent of the borrowed funds for public sector banks.
Savings deposits of foreign banks grew at 23 per cent CAGR from a lower deposit base of
Rs 49 billion in 1999-00 to Rs 90 billion in 2002-03. Foreign banks generally cater to high
net worth individuals (HNIs) and NRI deposits. Further, only very few banks - such as HSBC,
Standard Chartered Bank, Citibank and ABN Amro - are into the retail banking business. Many
banks had hived off their retail business are concentrating on the institutional business. But of
late, foreign banks (those who are active in the retail business) are also, with the aid of technology,
luring customers to maintain low cost deposits with them. Of late a few foreign banks have
started increasing their branch network, which is helping them in increasing their savings deposits.
The lower deposit base, especially term loans, and their focus on HNIs and NRIs help them
to keep the low cost deposit ratio at a very high level.
Investments
Under section 24 (b) of the Banking Regulation Act, 1949, every bank is required to maintain,
at the close of business every day, a minimum proportion of its net demand and time liabilities
(NDTL) as liquid assets in the form of cash and gold and un-encumbered approved securities.
The ratio of liquid assets to demand and time liabilities is known as Statutory Liquidity Ratio
(SLR). In 1997-98, the Reserve Bank of India fixed the SLR to be maintained on all the demand
and time liabilities, including inter-bank borrowings, at 25 per cent, which is applicable till date.
Banks hold a major portion of their investments in government securities and other approved
securities. The proportion of government securities, along with the approved securities, to the
net demand and time liabilities has been over 30 per cent during 1997-98 to 2002-03 for all
SCBs as a whole.

79
Statutory liquidity ratio - excluding gold Figure 16 Group-wise SLR Securities to NTDL Figure 17
(per cent ) (per cent)
40.00 50.0
45.0
35.00
40.0
35.0
30.00
30.0
25.00 25.0
20.0
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
20.00
1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 SBI & associates Natonalised banks
Other SCBs Other SCBs (ex ICICI Bank)
GSEC + Other approved SLR requirement Foreign banks SLR requirement
Public sector banks (nationalised banks and SBI Group) had been investing in SLR securities
well above the RBI stipulated norm, vis-à-vis other scheduled commercial banks and the foreign
banks. The SLR ratio (SLR securities to net time and demand liabilities) of OSCBs and foreign
banks has been marginally above the stipulated norm during 1997-98 to 2000-01, indicating that
they utilised their funds better. However, during 2002-03, with low demand for credit from the
commercial sector and excess liquidity in the system, banks in all the groups had increased
their exposure to the SLR securities.
This increased exposure helped many banks in booking huge treasury profits during the soft
interest rate scenario that prevailed then. But, with the hardening of interest rates, this high
exposure could impact their bottom line. Further, there will be a drop in the yield on investments
as the re-pricing would be from a historically higher interest rate to current lower yields. The
higher the exposure, the higher would be the loss on valuation of the investments.
Of the bank groups, the highest exposure to SLR investments was by the SBI Group (48 per
cent of NTDL) followed by nationalised banks (36 per cent of NTDL) in 2002-03. OSCBs had
the lowest exposure of 30 per cent of NTDL in 2002-03.
Though the SBI Group has the highest exposure to SLR securities (as a per cent of net demand
and time liabilities), we believe that the unbooked profit of the investment portfolio will offer
a sufficient cushion against losses arising from the increase in interest rates.
The investment portfolio of nationalised banks is also expected to have some cushion (on account
of their historically higher exposure towards SLR securities), although it will be significantly lower
than that of the SBI Group. Hence the impact would be more in the form of a drop in the
yield on investments.
Other scheduled commercial banks and foreign banks have a comparatively lower exposure to
SLR securities, which should lead to a comparatively lower loss from the valuation of investment
portfolio. However, we believe that their investment portfolio does not carry significant unbooked
profits to mitigate the impact of the interest rate rise and its resultant impact on the bottomline.
Further, we also expect the yield on investments to come down.

80
CRIS INFAC believes that the impact of increasing interest rates on the investment portfolio
will be the highest on foreign banks, followed by OSCBs and nationalised banks. The least impact
will be on the SBI Group.

This group's investment in SLR securities rose continuously to touch a high of 48 per cent
in 2002-03 from 34 per cent in 1997-98. The group recorded the highest growth rate in deposits
amongst all the scheduled commercial banks, which, coupled with the low credit offtake, forced
it to increase its exposure.
During the period of falling interest rates, the group was continuously increasing its exposure
to SLR securities. Such a high exposure would have led to an increase the acquisition cost of
investments (cost of acquisition of the securities is inversely related to yield on the security).,
In an increasing the interest rate scenario, such a high exposure will have a negative impact
on the profit and loss account, both in the form of treasury losses (losses from mark-to-market
valuation of the investment portfolio) and the drop in the yield on investments. We believe
the outstanding portfolio as of March 2003 would include a high proportion of securities purchased
during the last 3 years, whose cost of acquisition would have been high. Hence, in a hardening
interest the group is expected to book treasury losses on account of mark-to mark valuation
of securities.
But, as noted earlier, we believe that the portfolio will have sufficient unbooked profits to cushion
the impact of the interest rate rise and the drop in the yield on investments.
Nationalised banks
Nationalised banks maintained a stable exposure to SLR investments at 32-33 per cent of the
net time & demand deposits during 1997-98 to 2001-02. But with low demand for credit from
the commercial sectors during 2002-03, they increased the exposure to SLR securities to approximately
36 per cent.
During 2002-03, interest rates were very low and almost touched rock bottom in 2003-04. This
is likely to have increased the cost of acquisition of the investments. Further this would also
increase the proportion of these securities in the total outstanding investment portfolio. Hence,
with hardening of interest rates, nationalised banks are likely to face heavy losses on account
of mark-to-market valuations. Further, we also expect a drop in the yield on investments.
Nationalised banks, due to their historically high exposure to SLR securities, will have some cushion
to withstand the impact of the rise in the interest rates and be able to reduce the losses
from treasury operations, although this cushion will be lower than that of the SBI Group.
Foreign banks
The exposure of foreign banks in SLR securities was maintained at 27 per cent of the net
time and demand deposits during 1997-98 to 2000-01, but in 2001-02, the ratio dropped to
24 per cent. During 2002-03, with low credit offtake, foreign banks significantly increased its
exposure towards SLR securities. The proportion of SLR securities to net time and demand deposits
touched 34 per cent in 2002-03. As explained earlier, the interest rates being low during 2002-
03, the cost of acquisition of the investments is likely to be high. As the outstanding investment
portfolio would have high proportion of securities acquired recently, it will increase the overall
cost of the portfolio. With the hardening of interest rates, foreign banks are likely to see a
negative impact on their bottomline on account of the reduced yield on investments and also
suffer losses on account of valuation of the portfolio.

81
We believe that due to historically lower exposure of this group towards SLR securities, their
investment portfolio does not have sufficient unbooked profits to mitigate the effects of hardening
interest rates.

A trend similar to that of foreign banks is seen in other scheduled commercial banks, both
including and excluding ICICI Bank. OSCBs had kept a steady SLR of 25-27 per cent during
1997-98 to 2000-01, but it dropped to 25 per cent in 2001-02. In 2002-03, this increased to
30 per cent. This ratio was lowest amongst all bank groups, hence we believe that the impact
of hardening interest rates should be comparatively lower on this group vis-à-vis other bank
groups.
We expect the impact to be two fold: one by way of dropping the yield on investments
and second by way of losses on valuation of the investment portfolio. We believe the investment
portfolio of OSCBs will not have any cushion to bear the impact of the hardening of interest
rates, and that their bottomline will get impacted due to losses on account of investment portfolio.
Non-performing assets
The Indian banking industry had always been plagued with the problem of high levels of non
performing assets, which can be attributed to factors like archaic policies, industrial inefficiency,
lack of adequate legal recourse to the lenders, wilful defaulters etc.
Based on the study of the gross and net NPA ratios of various bank groups, we find that
there has been a marked improvement in the declared asset quality of the nationalised banks
and the SBI Group, while there has been only a marginal improvement in the case of OSCBs
and foreign banks.
The marked improvement seen in the case of public sector banks (nationalised and SBI Group)
was primarily due to higher provisions and write-offs. These banks accounted a healthy growth
in the profit from sale of investments, which helped them in writing off bad loans and also
making excess/additional provisions towards NPAs. Both the SBI Group and nationalised banks
recorded a growth of 73 per cent CAGR and 54.5 per cent CAGR, respectively, in the profits
from the sale of investments.
The improvement observed in the case of the SBI Group has been more at the gross NPA
level, whereas in the case of the other three groups, the improvement is more at the net
NPA level. During 1999-00 to 2002-03, the provision cover for the SBI Group reduced by more
than 100 bps, while it went up in the case of other bank groups. An improvement in the
gross NPA generally indicates an improvement in the bank's systems and procedures, whereas
an improvement in the net NPA indicates that the bank's balance sheet has the strength to
sustain higher provisions.
A comparison of the share of gross NPA ratios and net NPA ratio of the various groups to
the industry average, during 1999-00 to 2002-03, reveals that the SBI Group has increased its
asset quality both at the gross level and the net level. There has been a slight deterioration
in the asset quality of the nationalised banks at the gross level, but it has improved at the
net NPA level on account of higher provision cover. Foreign banks witnessed a marginal deterioration
in the asset quality at both gross and net levels, but more at the net level, on account of
the decrease in the provision cover.
In case of other scheduled commercial banks, excluding ICICI Bank, the asset quality at the
gross level worsened, but remained stable at the net NPA level, on account of higher NPA
provisions. Aggressive lending polices adopted by the private sector banks led to worsening of
82
the asset quality at the gross level, but, with higher provisions, they were able to maintain
the net NPA ratios. Including ICICI Bank, the asset quality has worsened at both levels, gross
and net.
Take away
Other scheduled commercial banks, especially the new private sector banks are aggressively increasing
the size of their loan book, by compromising a little on the asset quality. But the group is
making higher provisions in maintaining a stable net NPA.
Nationalised banks and SBI Group are concentrating more on improving the asset quality. While
nationalised banks are concentrating on an improvement in the net levels, the SBI Group is
concentrating on an improvement at the gross levels. They had reduced the provision cover.
SBI & associates Table 4

1999-00 2000-01 2001-02 2002-03 CAGR (per cent)
(1999-00 to 2002-03)
1
Gross NPAs (i) 19,773 20,593 19,451 17,044 -4.83
1
Net NPAs (ii) 8,752 9,450 8,968 7,796 -3.78
Gross NPA as % of gross advances (iii) 14.08 12.73 11.23 8.68
Net NPAas % of net advances (iv) 6.77 6.27 5.45 4.12
Provisioning cover % (v) 55.74 54.11 53.89 54.26
Share of SBI in gross NPAs of all SCBs (vi) 32.79 32.29 27.87 24.86
Share of SBI in net NPAs of all SCBs (vii) 29.80 29.76 24.99 22.99
Share of SBI in net advances of all SCBs (viii) 29.10 28.61 25.49 25.59
Share of SBI in gross advances of all SCBs (ix) 29.63 28.96 25.90 25.27
Ratio of SBI shares in gross NPA to gr adv ( vi/ ix) 1.11 1.12 1.08 0.98
Ratio of SBI shares in net NPA to net adv ( vii/ viii) 1.02 1.04 0.98 0.90
1
Rs in crores
The gross NPAs of the SBI Group declined from 14.08 per cent in 1999-2000 to 8.68 per
cent in 2002-03 because the write offs/recoveries in the last 4 years were higher than the
additions to gross NPAs, indicating an improvement in the NPA management systems over the
last few years.
In 2002-03, the additions to gross NPAs were Rs 5,791 crore while the deletion from gross
NPAs was Rs 8,198 crore.
Net NPAs declined in line with the drop in the gross advances. During 1999-00 to 2002-03,
the ratio of net NPAs to net advances declined from 6.77 per cent in 1999-2000 to 4.12 per
cent in 2002-03. During the same period, there was a drop in the NPA provision cover for
the group as a whole, from 55.7 per cent in 1999-00 to 54.3 per cent in 2002-03, indicating
a lower provision towards non-performing loans. This may be on account of the higher reversal
of provisions for NPA due to the write-off and restructuring of NPAs.
The share of SBI Group in gross advances of all scheduled commercial banks declined from
29.6 per cent in 1999-2000 to 25.3 per cent in 2002-03 while the share of gross NPAs has
also declined at a faster rate from 32.8 per cent in 1999-00 to about 24.9 per cent in 2002-
03. The ratio of share of gross NPAs of the SBI Group to all SCBs to the share of gross
advances reduced from 1.11 per cent in 1999-00 to 0.98 per cent in 2002-03.
83
The share of SBI Group in net advances of all scheduled commercial banks declined from 29.10
per cent in 1999-2000 to 25.59 per cent in 2002-03 while the share of net NPAs declined
from 29.8 per cent to about 23.0 per cent. The ratio of share of net NPAs of the SBI Group
to all SCBs to the share of net advances reduced from 1.02 per cent in 1999-00 to 0.90 per
cent in 2002-03.
The above ratios indicate improvement in the assets quality of the group, with more emphasis
on an improvement in gross NPAs.
Nationalised banks
Nationalised banks Table 5

1999-00 2000-01 2001-02 2002-03 CAGR (per cent)
(1999-00 to 2002-03)
1
Gross NPAs (i) 33,260 34,180 36,706 36,849 3.47
1
Net NPAs (ii) 17,048 17,993 19,298 17,799 1.45
Gross NPA as % of gross advances ( iii ) 13.91 12.16 11.01 9.72
Net NPAas % of net advances (iv ) 7.8 7.01 6.01 4.77
Provisioning cover % ( v ) 43.93 42.35 45.41 50.93
Share of nationalised banks in gross NPAs of all SCBs ( vi ) 55.15 53.60 52.59 53.74
Share of nationalised banks In net NPAs of all SCBs ( vii ) 58.04 56.66 53.77 52.50
Share of nationalised banks in net advances of all SCBs ( viii ) 50.30 50.27 48.95 48.72
Share of nationalised banks in gross advance ( ix) 50.45 50.32 49.86 48.79
Ratio of nat. bank shares in gross NPA to gr adv ( vi/ ix) 1.09 1.07 1.05 1.10
Ratio of nat. bank shares in net NPA to net adv ( vii/ viii) 1.15 1.13 1.10 1.08
1
Rs in crores
The ratios of gross NPAs to gross advances declined from 13.91 per cent in 1999-2000 to 9.72
per cent in 2002-03, on account of recovery and write-offs of sticky assets. During 1999-00
to 2002-03, the gross NPAs increased from Rs 33,260 crore in 1999-00 to Rs 36,849 crore in
2002-03.
The provisioning cover increased from 43.93 per cent in 1999-2000 to 50.93 per cent in 2002-
03, which led to a drop in the net NPA ratio to 4.77 per cent in 2002-03 from 7.8 per
cent in 1999-00. The huge profits from the sale of investment made by the nationalised banks,
especially in 2001-02 and 2002-03, enabled them to increase their provisioning cover.
The share of the nationalised banks in total gross advances of all scheduled commercial banks
has declined from 50.5 per cent in 1999-2000 to 48.8 per cent in 2002-03; however, the proportion
of gross NPAs of nationalised banks to gross NPAs of the all scheduled commercial banks declined
at a marginally slower rate from 55.2 per cent to 53.8 per cent. But this improvement is not
that significant when compared to the industry. The ratio of the nationalised banks' share of
gross NPA to the gross advances of all SCBs, has remained stable at 1.1 per cent between
1999-98 and 2002-03, indicating a stable reported asset quality of the group. The credit management
of the group needs to be improved to arrest the further rise in the NPAs.
But on comparing the group's performance with the industry on a net NPA level, we find that
the share of net advances of the nationalised banks has declined from 50.30 per cent in 1999-

84
00 to 48.72 per cent in 2002-03; however, the proportion of net NPAs of nationalised banks
to net NPAs of the all scheduled commercial banks declined drastically from 58.04 per cent
to 52.50 per cent on account of higher provisions/ write-offs of sticky assets. This improvement,
when compared to the industry, is marginal. The ratio of the nationalised banks' share of net
NPA to the net advances has declined from 1.15 per cent in 1999-00 to 1.08 per cent in
2002-03, indicating a marginal improvement in the reported net asset quality of the group. The
group had been making higher provision towards NPAs to improve the declared asset quality.
Other scheduled commercial banks (private banks)
Other SCBs Table 6

1999-00 2000-01 2001-02 2002-03 CAGR (per cent)
(1999-00 to 2002-03)
1
Gross NPAs (i) 4,638 5,897 11,210 11,787 36.46
1
Net NPAs (ii) 2,817 3,592 6,058 6,077 29.21
Net NPAas % of net advances ( iv ) 5.41 5.44 5.73 4.93
Share of other SCBs in gross NPAs of all SCBs (vi ) 7.69 9.25 16.06 17.19
Share of Other SCBs In net NPAs of all SCBs ( vii ) 9.59 11.31 16.88 17.93
Share of Other SCBs in net advances of all SCBs ( viii ) 12.57 12.95 18.03 18.63
Share of other SCBs in gross advances of all SCBs 11.98 12.61 17.39 18.77
Ratio of other SCBs shares in gross NPA to gr adv ( vi/ ix) 0.64 0.73 0.92 0.92
Ratio of other SCBs shares in net NPA to net adv ( vii/ viii) 0.76 0.87 0.94 0.96
1
Rs in crores
Other SCBs (net of ICICI Bank) Table 7

1999-00 2000-01 2001-02 2002-03 CAGR (per cent)
(1999-00 to 2002-03)
1
Gross NPAs (i) 4,544 5,488 6,197 6,760 14.16
1
Net NPAs (ii) 2,761 3,438 3,433 3,269 5.79
Gross NPA/Gross advances ( iii ) 8.28 8.51 8.51 7.71
Share of other SCBs in gross NPAs of all SCBs (vi ) 7.53 8.61 8.88 9.86
Share of other SCBs in net NPAs of all SCBs ( vii ) 9.40 10.83 9.56 9.64
Share of other SCBs In net advances of all SCBs ( viii ) 11.52 11.43 11.26 11.95
Share of other SCBs in gross advances (ix) 11.62 11.66 11.65 12.20
Ratio of other SCBs shares in gross NPA to gr adv ( vi/ ix) 0.65 0.74 0.76 0.81
Ratio of other SCBs shares in net NPA to net adv ( vii/ viii) 0.82 0.95 0.85 0.81
1
Rs in crores
The private banks have seen their gross NPAs grow at a CAGR of 36.46 per cent (14.16 per
cent) during 1999-2000 to 2002-03.The proportion of gross NPAs to gross advances declined
from 8.17 (8.28 per cent) per cent to 8.08 per cent (7.71 per cent) during 1999-00 and 2002-
03, which is a marginal improvement in comparison to that of the nationalised banks and the
SBI Group. A significant increase in the gross NPA level in 2001-02 and 2002-03 is due to
the merger of ICICI Ltd with ICICI Bank.

85
During 1999-00 and 2002-03, the net NPAs as a proportion of net advances declined from 5.41
per cent (5.3 per cent) to 4.9 per cent (3.9 per cent) as the banks increased their provisioning
cover from 39.26 per cent (39.23 per cent) in 1999-2000 to 48.44 per cent (51.64 per cent)
in 2002-03. Increased treasury profits helped banks in making a higher provision.
The marginal improvement witnessed in the gross NPAs, when compared to the industry performance,
reveal a different picture altogether. The proportion of gross advances of the private banks in
total net advances of all scheduled commercial banks increased from 12 per cent (11.6 per
cent) in 1999-00 to 18.8 per cent (12.2 per cent) on 2002-03, while the proportion of gross
NPAs of the private banks in the total net NPAs increased from 7.7 per cent (7.5 per cent)
to 17.2 per cent (9.9 per cent). The ratio of the shares of gross NPAs to gross advances increased
substantially from 0.64 in 1999-00 to 0.92 in 2002-03. The new private sector banks have been
aggressive in their lending and have hence seen an increase in the gross NPAs. The group's
share in the advances also went up substantially. Of all the bank groups, the private sector
banks' performance as regards NPAs has been miserable. The group needs to tighten credit management
policies to keep the NPAs under control.
The proportion of net advances of private banks in the total net advances of all scheduled
commercial banks increased from 12.57 per cent (11.52 per cent) in 1999-00 to 18.63 per
cent (11.95 per cent) in 2002-03, while the proportion of net NPAs of the private banks in
the total net NPAs increased from 9.59 per cent (9.40 per cent) to 17.93 (9.64) per cent.
The ratio of the share of net NPAs to the share of net advances has also increased 0.76 per
cent (0.82 per cent) in 1999-00 to 0.96 per cent (0.81 per cent) in 2002-03. In spite of
the significant increase in the proportion of gross NPAs, we do not see a similar rise in the
proportion of net NPA, which has been on account of higher provisions towards NPA. The group
has been resorting to higher provisions to maintain a stable net NPA. Excluding ICICI Bank,
the ratio of shares of net NPA to net advances has been stable between 1999-00 and 2002-
03.
Foreign banks
Foreign banks Table 8

1999-00 2000-01 2001-02 2002-03 CAGR (per cent)
(1999-00 to 2002-03)
1
Gross NPAs (i) 2,633 3,100 2,460 2,905 3.33
1
Net NPAs (ii) 757 723 827 929 7.06
Share of foreign banks in gross NPAs of all SCBs ( vi ) 4.37 4.86 3.52 4.24
Share of foreign banks in net NPAs of all SCBs ( vii ) 2.58 2.28 2.35 2.85
Share of foreign banks in net advances of all SCBs ( viii ) 8.03 8.18 7.53 7.06
Share of foreign banks in gross advances (ix ) 7.95 8.11 6.84 7.16
Ratio of foreign banks shares in gross NPA to gr adv ( vi/ ix) 0.55 0.60 0.52 0.59
Ratio of foreign banks share in net NPA to net adv ( vii/ viii) 0.32 0.28 0.31 0.40
1
Rs in crores

86
Foreign banks, due to their stringent risk management practices, have maintained the lowest
NPA levels among all the scheduled commercial banks. The proportion of gross NPAs to gross
advances declined from 6.99 per cent in 1999-2000 to 5.22 per cent in 2002-03, while the
proportion of net NPAs to net advances declined from 2.41 per cent to 1.76 per cent. However,
the drop in the net NPAs has not been in proportion with the drop in the gross NPAs on
account of lower provision cover. The provision cover had dropped from 71.25 per cent in
1999-00 to 68.02 per cent in 2002-03.
The share of foreign banks in gross advances of all scheduled commercial banks declined from
8.0 per cent in 1999-2000 to 7.2 per cent in 2002-03, and the share of net NPAs also declined
from 8.03 per cent in 1999-00 to 7.06 per cent in 2002-03. The share of gross NPAs in all
SCBs declined from 4.37 per cent in 1999-00 to 4.24 per cent with the decline in the share
of gross NPAs. However, the share of net NPAs increased from 2.58 per cent to 2.85 per
cent on account of lower provision cover. The drop in the share of gross NPAs in not in
line with the drop in the share of gross advances, indicating a decline in the incremental asset
quality.
The share of foreign banks in net advances of all scheduled commercial banks declined from
8.03 per cent in 1999-2000 to 7.06 per cent in 2002-03; the share of gross NPAs also declined
during this period. However the share of net NPAs grew from 2.58 per cent in 1999-00 to
2.85 per cent in 2002-03 on account of lower provisioning. The ratio of the group's share in
the net NPAs to the share of net advances increased to 0.40 per cent in 2002-03 from 0.32
per cent in 1999-00.
The performance of the group, when compared to the industry, indicates a decline in the asset
quality. The ratio of the share of gross NPA to gross advances increased from 0.55 per cent
in 1999-00 to 0.59 per cent in 2002-03, while the ratio of shares of net NPA to net advances
increased from 0.32 per cent in 1999-00 to 0.40 per cent in 2002-03.

87
3.0
Spreads & net profitability margin
Spreads
The spreads of all bank groups, except nationalised banks, dropped during 1998-99 to 2002-
03. In the case of nationalised banks, spreads improved by 2 basis points (bps) during the
same period. Other scheduled commercial banks (OSCBs) witnessed the steepest decline in spreads.
On an absolute level, foreign banks, with a spread of 3.35 per cent, were the leaders in 2002-
03, followed by nationalised banks with a spread of 3.29 per cent.
The primary reason for the drop in the spreads, across categories, was the sharper decline in
the yield on carry business in comparison to the interest cost. As interest rates declined, the
yield on advances and the yield on investments both fell faster than the cost of deposits, which
mounted pressure on spreads. Compared to other segments, the decline in the yield on investments
was higher in the case of OSCBs and foreign banks.
Spreads: SBI and associates Table 1

1999 2000 2001 2002 2003
Yield on carry business (I) 10.79 10.48 10.21 9.90 9.38
Yield on advances 11.32 10.89 10.75 9.72 9.04
Yield on investments 12.06 11.70 10.68 10.77 9.74
Interest cost (II) 7.78 7.61 7.39 7.39 6.80

Cost of deposits 8.11 7.90 7.58 7.57 7.02
Cost of borrowings 10.98 10.62 12.43 13.44 10.56
Spreads (II - I) 3.01 2.87 2.81 2.52 2.58

Source: CRIS INFAC
Spreads: Nationalised banks Table 2

1999 2000 2001 2002 2003
Interest cost (II) 7.66 7.61 7.30 7.08 6.33

Cost of deposits 7.64 7.51 7.17 6.95 6.21
Spreads (II - I) 3.27 3.08 3.32 3.11 3.29

Source: CRIS INFAC

89
Spreads: Other scheduled commercial banks Table 3
1999 2000 2001 2002 2003
Interest cost (II) 9.42 8.28 7.91 6.53 7.73

Cost of deposits 9.31 8.11 7.80 7.34 6.62
Spreads (II - I) 2.60 2.73 2.78 2.01 2.00

Source: CRIS INFAC
Spreads: Foreign banks Table 4

1999 2000 2001 2002 2003
Interest cost (II) 8.76 7.41 7.35 6.61 5.34

Cost of deposits 9.01 7.23 6.74 6.08 5.31
Spreads (II - I) 3.74 4.08 4.03 3.30 3.35

Source: CRIS INFAC
Foreign banks
Spreads
Foreign banks had the highest spreads in 1998-99, but they declined to 3.35 per cent in 2002-
03 due to the higher drop in the yield on carry business. Despite this, foreign banks had the
highest spreads among all bank groups.
Yield on carry business

The yield on carry business dropped by 381 bps from 12.50 per cent in 1998-99 to 8.69
per cent in 2002-03. This was primarily due to a 428 bps drop in the yield on advances
from 14.98 per cent in 1998-99 to 10.7 per cent in 2002-03, and a 394 bps drop in the
yield on investments from 12.20 per cent in 1998-99 to 8.26 per cent in 2002-03. The loan
books of foreign banks generally have a high proportion of short-term loans and advances, which
led to a faster drop in the yield on advances.
Moreover, foreign banks generally lend foreign currency loans and ECBs, which carry a floating
rate of interest. With the drop in the global interest rate, the yield on advances suffered. Further,
foreign banks also started facing competition from the new private sector banks, forcing them
to reduce the rate of interest. With the hardening of interest rates, the yield on advances is
expected to improve.
Foreign banks have very little exposure to long tenure securities, and the re-pricing of securities
they hold is faster than that of other bank groups, which resulted in a drop in the yield on
investments. But, in 2002-03, these banks increased their exposure to SLR securities, when the
90
acquisition cost of these securities was high. With the hardening of interest rates, this group
will suffer from the drop in the yield on investments and also the losses arising from the mark-
to-market valuation of the securities.
Interest cost
The interest cost dropped by 342 bps from 8.76 per cent in 1998-99 to 5.34 per cent in
2002-03, driven by a 370 bps drop in the cost of deposits, which fell from 9.01 per cent
in 1998-99 to 5.31 per cent in 2002-03.
Historically, the reliance of foreign banks on deposits has been lesser than that of the other
bank groups. The interest rates that they offer on deposits are also lower than that offered
by public sector banks. This, coupled with the increased share of low cost deposits, has helped
them to achieve the highest drop in the cost of deposits during 1998-99 and 2002-03. Although
the low cost deposit ratio of foreign banks is lesser than that of the public sector banks, the
proportion of demand deposits in low cost deposits is higher than that of the public sector
banks, which supported the drop in the cost of deposits.
Borrowings constitute 25-30 per cent of the borrowed funds of the foreign banks. Borrowings
are generally of short duration, hence the drop in the cost of borrowings has been in line
with the general drop in the interest rates. Moreover, foreign banks also get funding support
from their parent companies at a very low cost, and sometimes even free of cost.
Nationalised banks
Spreads
The spreads of nationalised banks increased marginally by 2 bps from 3.27 per cent in 1998-
99 to 3.29 per cent in 2002-03, driven by a 133 bps drop in the interest cost.
The yield on carry business dropped by 131 bps to 9.61 per cent in 2002-03, on account
of the slower drop in the yield on investments.

The yield on carry business fell from 10.93 per cent in 1998-99 to 9.61 per cent in 2002-
03. The yield on advances dropped by 237 bps from 12.2 per cent in 1998-99 to 9.82 per
cent in 2002-03, while the yield on investments slipped by just 153 bps from 11.72 per cent
in 1998-99 to 10.18 per cent in 2002-03.
The drop in the yield on advances was in line with the industry.
Across all categories, the lowest drop in the yield on investment was witnessed in case of nationalised
banks. This is due to the high exposure to long tenure securities, which lowered the re-pricing
ratio, and also because the group maintained a steady SLR.
Interest cost
The cost of deposits of nationalised banks dropped by 143 bps from 7.64 per cent in 1998-
99 to 6.21 per cent in 2002-03. Nationalised banks were quick to respond to the declining
interest rates by revising downwards the interest rate on term deposits. Nationalised banks have
one of the highest low cost deposit ratio of 36 per cent (next only to 37 per cent of the
SBI Group). This helped banks in this category in lowering the cost of deposits.

91
Spreads
The spreads of nationalised banks declined by 43 bps from 3.01 per cent in 1998-99 to 2.58
per cent in 2002-03. A faster decline was witnessed in both the yield on advances and the
yield on investments, which pulled down the yield on carry business. A slower decline in the
cost of deposits, vis-à-vis other bank groups, restricted the fall in the interest cost.
Yield on the carry business

The yield on carry business dropped by 141 bps from 10.8 per cent in 1998-99 to 9.4 per
cent in 2002-03. During the same period, the yield on the advances fell by 228 bps from
11.32 per cent to 9.04 per cent and the yield on investments slipped by 232 bps from 12.06
per cent in 9.74 per cent.
In 1998-99, this group enjoyed a higher yield on investments, compared to the nationalised
banks, but in 2002-03, the yield on investments fell below that of the nationalised banks. We
believe that this occurred due to the SBI Group's increasing exposure to SLR securities during
1998-99 to 2002-03, with the proportion of SLR securities to NTDL touching 46 per cent during
2002-03. With falling interest rates, every successive years' exposure to SLR securities was at
a higher acquisition cost, which pulled down the yield. Further, the group had also booked healthy
treasury profits by selling high-yield securities, which may have also contributed to the drop
in the yield.
In the case of the nationalised banks, the yield on investments was steady at 11.4-11.7 per
cent during 1998-99 to 2001-02, but dropped to 10.2 per cent in 2002-03 when the group
increased its exposure to SLR securities, with the SLR touching 36 per cent. Though nationalised
banks also booked healthy profits on investments, the growth in treasury profits was less than
that of the SBI Group.
The yield on investments is higher than the yield on advances, which may be on account of
the group's historically higher exposure to higher tenure government securities.
The SBI Group has also shown a trend similar to that witnessed in the nationalised banks, with
approximately 50 per cent of the loans and advances classified under 'more than 1 year' maturity
bucket, and approximately 70 per cent of the investments being classified under 'more than
1 year' maturity buckets.
The drop in the yield on advances has been in line with the industry. The 228 bps drop
in the yield on advances has been the lowest amongst all the bank groups. For the SBI Group,
the yield on advances in 2002-03 was lower than that of the nationalised banks, due to the
lower lending rates that it offered on advances.
Interest cost
The interest cost declined by 133 bps from 7.66 per cent in 1998-99 to 6.33 per cent in
2002-03, with the cost of deposits dropping from 7.64 per cent in 1998-99 to 6.21 per cent
in 2002-03.
For this group, the proportion of low cost deposits to total deposits dropped to 37 per cent
in 2002-03 from 43 per cent in 1997-98, but the ratio was still the highest amongst all the

92
scheduled commercial banks. A study of the composition of low cost deposits reveals that the
share of savings deposits in low cost deposits rose from 52 per cent in 1997-98 to 61 per
cent in 2002-03.
Further, the drop in the interest cost was restricted due to the higher interest obligation (on
account of Resurgent India Bonds and India Millennium Deposits). The outstanding deposits under
RIB/IMD stood at Rs 437.3 billion as on March 31, 2003, in the books of SBI. Excluding RIB/
IMD, the cost of deposits for SBI fell from 8.05 per cent in 1998-99 to 6.43 per cent in
2002-03.
Borrowings are generally raised to meet mismatches in short-term liquidity and are a very small
proportion of the banks' total borrowings. The change in the cost of borrowing has a minor
impact on the interest cost

Spreads
Spreads dropped by 60 bps from 2.60 per cent (2.57 per cent) in 1998-99 to 2.00 per cent
(2.60 per cent) in 2002-03. The steeper fall in the yield on investment dragged down the
yield on carry business, which in turn put pressure on the spreads. If we exclude ICICI Bank
from the OSCBs group, we observe a 3 bps increase in spreads, to 2.60 per cent in 2002-
03.

The yield on carry business declined by 229 bps (265 bps) from 12.02 per cent (12 per cent)
in 1998-99 to 9.73 per cent (9.36 per cent) in 2002-03, after touching the lowest level of
8.5 per cent (10.3 per cent) in 2001-02. This sudden drop was due to the merger of ICICI
with ICICI Bank.
The yield on advances dropped to 10.9 per cent (10.2 per cent) in 2002-03 from 13.6 per
cent (13.47 per cent) in 1997-98, while the yield on investments shrank to 9.0 per cent (9.38
per cent) in 2002-03 from 12.2 per cent (12.3 per cent) in 1997.98. The higher fall in the
yield on investments was due to the group's lower exposure to high coupon securities. Further,
based on a study of the maturity profile of a sample set of private sector banks, we find
that, for this group, the re-pricing of securities took place at a faster rate as compared to the
public sector banks. Securities maturing within 1 year were 38 per cent in case of the sample
private sector banks, while it was 10 per cent and 20 per cent in the case of a sample set
of nationalised banks and SBI group, respectively.
The drop in the yield on advances was due to the aggressive lending strategy adopted by
the group, especially the new private sector banks. Further, the drop has been in line with
the industry.
Interest cost
The interest cost increased from 9.42 per cent (9.43 per cent) in 1998-99 to 7.73 per cent
(6.76 per cent) in 2002-03, with cost of deposits dropping by 269 bps (262 bps) from 9.31
per cent (9.35 per cent) in 1998-99 to 6.62 per cent (6.73 per cent) in 2002-03.

93
There was a marginal improvement in the low cost deposit ratio from 22 per cent in 1997-
98 to 24 per cent in 2002-03. However, the proportion of savings in low cost deposits increased
from 47 per cent in 1997-98 to 53 per cent in 2002-03. The fall in the cost of deposits
has been in line with general drop in the interest rate.
Many OSCBs, especially the old private sector banks, offer a high rate of interest on term deposits,
as compared to the public sector banks (nationalised banks and SBI Group). The low cost of
deposits, 24 per cent in 2002-03, was the lowest amongst all bank groups. Moreover, the technology-
driven products introduced by many private sector banks (OSCBs) allow customers to switch
between term and savings accounts; this increases the liability of term deposits. These factors
contribute to the higher cost of deposits.
The cost of borrowings dropped from a high of 15.23 per cent (14.57 per cent) in 1999-
00 to 12.55 per cent (9.45 per cent) in 2002-03 after touching a low of 3.3 per cent (12.03
per cent) in 2001-02. This sudden spike was because of the merger of ICICI Ltd with ICICI
Bank. ICICI Ltd's high cost deposits were merged with the banking system, which led to a
sudden surge in the interest cost. With the ICICI Bank's focus on replacing its high cost borrowings
with low cost of deposits, there will be a drop in the cost of borrowings and a reduction
in the share of borrowings in total borrowings.
Net profitability margin (NPM)

All segments, except OSCBs, either improved their NPM or at least maintained it during 1998-
99 to 2002-03. In 2002-03, foreign banks had the highest NPM of 2.5 per cent, followed by
public sector banks with a NPM of 2.4 per cent.
Foreign banks
NPM: Foreign banks Table 5

1999 2000 2001 2002 2003
Spreads ( I ) 3.74 4.08 4.03 3.30 3.35
Operating expense as per cent of AFD (II) 4.05 3.58 3.70 3.45 3.15
Core-fee-income as per cent of AFD (III) 2.74 2.54 2.47 2.14 2.35
Net profitability margin (I - II + III) 2.43 3.04 2.81 1.99 2.55
AFD: Average funds deployed
Source: CRIS INFAC
The NPM improved marginally to 2.55 per cent in 2002-03, from 2.43 per cent in 1998-99,
despite the fall in the spreads. The operating expense ratio dropped by 90 bps to 3.1 per
cent in 2002-03 from 4.05 per cent in 1998-99. However, the entire benefit could not be passed
on to the NPM due to the drop in the core fee income ratio (also called core fee-based income
ratio, which is core fee income as a percentage of average funds deployed), which dropped
by 39 bps to reach 2.35 per cent by 2002-03 from 2.74 per cent in 1998-99.
In spite of the sharpest decline (in percentage points) in the operating expense ratio (operating
expense as a percentage of average funds deployed), foreign banks still continue to have a
very high operating expense ratio amongst all bank groups. The high operating cost is on account
of the heavy investments in infrastructure and technology, and staff cost.

94
Foreign banks, due to their worldwide network, are strong in providing banking services like
trade finance, custody and cash management services, due to which their fee-based income is
high. They are also strong in treasury operations and foreign exchange remittances, which aid
them in generating fee income in the nature of exchange gains.
Though the ratio had been declining, foreign banks continued to enjoy the highest core fee
income ratio amongst all the banking groups. Foreign banks lend foreign currency loans, and
the syndication charges/processing charges recovered are high. They are also strong in trade finance
and correspondent-banking services, where they earn fee-based income without taking exposure.
This leads to a high core fee income ratio. The ratio of core fee income ratio to NPM dropped
by 20 percentage points between 1998-99 and 2002-03, to 92 per cent in 2002-03, in line
with the industry trend, yet it was a major factor in keeping the NPM stable.
Greater spreads and high core fee based income help foreign banks in managing higher operating
expenses and, thus, have a high NPM. The foreign banks' NPM of 2.55 per cent in 2002-
03 was the highest amongst all scheduled commercial banks.
But as more private sector banks venture into areas where foreign banks are strong, competition
will increase, which will exert pressure on spreads and core fee income. Foreign banks will
thus need to control to their operating costs to have a stable NPM.
Nationalised banks
NPM: Nationalised banks Table 6

1999 2000 2001 2002 2003
Spreads ( I ) 3.27 3.08 3.32 3.11 3.29
Source: CRIS INFAC
Despite stable spreads, the NPM of nationalised banks improved by 22 bps (the highest amongst
all bank groups) to 1.42 per cent in 2002-03 from 1.20 per cent in 1998-99. This can be
attributed to the savings in operating expenses. The operating expense ratio dropped to 2.6
per cent in 2002-03 from 3.1 per cent in 1998-99, after touching a high of 3.15 per cent
in 2000-01. The sudden spike was on account of the voluntary retirement schemes (VRS) introduced
by nationalised banks. The savings in manpower could be seen through 2001-02 and 2002-03,
when the operating expenses ratio started declining to reach 2.62 per cent in 2002-03.
However, the drop in the core fee-based income ratio restricted the increase in the NPM to
1.4 per cent. The ratio of core fee-based income to the average funds deployed had declined
to 0.7 per cent in 2002-03 from 1.0 per cent in 1998-99, thereby reducing its contribution
to the NPM to 53 per cent in 2002-03 from 0.83 per cent in 1998-99.

95
Nationalised banks had the lowest core fee income ratio amongst all the SCBs. Further, the group's
share in fee-based income reduced by about 5 percentage points during 1998-99 and 2002-
03 to reach 34 per cent in 2002-03. Healthy spreads and control over operating costs helped
the NPM to improve.
Going forward, with the pressure on spreads as the yield on investments drop, the group needs
to concentrate on increasing its core fee-based income and control operating expenses to maintain
the growth in NPM. With staff cost accounting for more than 70 per cent of the operating
expenses, the group needs to utilise manpower efficiently and improve productivity.
To compete with the more aggressive private sector banks, the group will have to invest in
technology, which will also increase the operating expense ratio and render some staff as excess.
This can pull down the productivity.
NPM: SBI and associates Table 7

1999 2000 2001 2002 2003
Spreads ( I ) 3.01 2.87 2.81 2.52 2.58
Source: CRIS INFAC
The NPM declined by just 9 bps to 1.35 per cent in 2002-03 from 1.44 per cent in 1998-
99, despite the 43 bps decline in spreads and the fall in the contribution of core fee-based
income from more than 100 per cent (115 per cent) in 1998-99 to 82 per cent in 2002-
03. This has been on account the SBI Group's focus on controlling operating expenses. The
operating expense ratio declined by 89 bps from 3.23 per cent in 1998-99 to 2.34 per cent
in 2002-03. During 2000-01, the operating expense ratio increased to 3.13 per cent from 2.89
per cent in 1999-00, because of impact of voluntary retirement scheme introduced by the group.
The operating expense ratio of 2.34 per cent during 2002-03 is lower than that of the nationalised
banks.
The core fee income ratio declined by 55 bps from 1.66 per cent in 1998-99 to 1.11 per
cent in 2002-03, in line with the industry trend. Although the share of core fee income shrank
to 82 per cent in 2002-03, it still remains the major contributor to the NPM.
The core fee income ratio at 1.11 per cent is better than that of nationalised banks and other
scheduled commercial banks.
Staff cost accounts for than 70 per cent of the operating expense, hence, with increasing pressure
on the spreads, the group will have to control staff cost and improve productivity to maintain
a stable NPM. The group has planned investments in technology to compete effectively with
other players. This is likely to result in excess manpower, which need to be utilised effectively
so that overall productivity can be improved. Along with controlling operating costs, the SBI
Group also need to continue its focus on increasing core fee income, so that NPM is stable.

96
NPM: Other scheduled commercial banks Table 8

1999 2000 2001 2002 2003
Spreads ( I ) 2.60 2.73 2.78 2.01 2.00
Source: CRIS INFAC
With the drop in spreads, the NPM declined to 0.8 per cent (1.21 per cent) in 2002-03 from
1.4 per cent (1.26 per cent) in 1998-99. Further, the core fee income ratio declined by 20
bps (27 bps) from 1.24 per cent (1.22 per cent) in 1998-99 to 1.04 per cent (0.95 per cent)
in 2002-03. However, the drop was restricted due to the marginal savings in the operating expenses
ratio. The operating expenses ratio dropped to 2.25 per cent (2.33 per cent) in 2002-03 from
2.49 per cent (2.25 per cent) in 1998-99. But the operating expense ratio increased from 2.17
per cent (2.17 per cent) in 2000-01 to 2.25 per cent (2.33 per cent) in 2002-03 due to
the aggressive branch expansion undertaken by this group, especially the new private sector
banks - HDFC Bank, UTI Bank, ICICI Bank, IDBI Bank, Kotak Mahindra Bank etc. Many of
the private sector banks are still in the growth stage and expanding their reach (new private
sector banks), or are in the technology upgradation mode, the benefits of which are expected
to accrue to them in later years.
Contrary to the industry trend, the contribution of the core-fee income ratio to the NPM increased
from 0.91 per cent (0.97 per cent) in 1998-99 to 1.32 per cent (0.78 per cent) in 2002-
03. New private sector banks, especially ICICI Bank, have been pioneers in venturing into new
business segments, which has helped them in generating higher fee-based income. ICICI Bank
was among the first to venture into credit cards, providing depository services, third-party business
(acting as corporate agents for distribution of mutual fund and insurance products of the leading
mutual fund and insurance companies) and private banking services to their clients. Further, the
huge thrust on retail credit also helped in the generation of fee-based income, in the form
of processing fees.
Since most of the banks in this group are in a growth phase, we believe that it will take
some time for the operating expense ratio to stabilise. With spreads under pressure and operating
expense ratio expected to increase, the group needs to increase its focus on improving the
core fee income by venturing into new business areas.

97
4.0
Profit and loss account
Total interest income

OSC Banks: Interest income Table 1

Rs billion 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 CAGR (per cent)
(1997-98 to 2002-03)
Interest/discount on advances/bills 46.3 53.0 60.3 72.3 80.7 138.9 24.5

Income on Investments 28.5 38.4 50.0 63.1 73.9 92.1 26.5
Int on bal with RBI and other inter-bank 3.6 6.9 7.1 8.4 9.7 8.5 18.9
funds
Other interest income 0.4 1.7 1.3 1.1 1.2 4.4 58.7
Total interest income 78.8 100.0 118.7 145.0 165.5 243.8 25.3
Source: RBI & CRIS INFAC research
Other scheduled commercial banks (OSCBs) recorded the highest growth in total interest income
amongst all bank groups. The total interest income of OSCBs grew at a CAGR of 25.34 per
cent (14.51 per cent) between 1997-98 and 2002-03, driven by a 24.54 per cent (11.87 per
cent) CAGR growth in income from advances and 26.46 per cent (17.88 per cent) CAGR growth
in income from investments. Between 1998-99 and 2002-03, the yield on advances declined
by 264 (332) basis points, while the yield on investments declined by 325 (293) basis points.
Advances grew by 31.18 per cent (19.72 per cent ) CAGR while investments went up by
32.0 per cent (22.7 per cent ) CAGR between 1998-99 and 2002-03.
SBI and associates: Total interest income Table 2

(1997-98 to 2002-03)

funds
Other interest earned 11.5 20.1 17.6 21.8 16.1 14.5 4.6
During 1998-99 to 2002-03, the total interest income of the SBI Group grew at a CAGR of
14 per cent, with income from advances, income from investments, and income from RBI &
inter-bank funds growing at a CAGR of 8.6 per cent, 18.6 per cent and 34.3 per cent, respectively.
The low growth in income from advances was mainly on account of falling interest rates (the
yield on advances declined from 11.32 per cent to 9.04 per cent), coupled with poor credit
offtake.

99
Income on investments grew faster than income on advances, as the SBI Group substantially
increased its exposure towards SLR securities during 1997-98 to 2002-03. Further, we believe
that the SBI Group has a relatively high exposure to high coupon securities in its investment
portfolio.
Nationalised banks
Nationalised banks: Interest income Table 3

(1997-98 to 2002-03)

Others 4.0 7.9 4.8 4.6 4.4 9.2 18.4
Interest income grew at 11.87 per cent CAGR during 1997-98 to 2002-03, driven by a 12.5
per cent CAGR growth in income on investments. During the period under consideration advances
grew at a CAGR of 17.28 per cent, while investments grew by a CAGR of 15.86 per cent.
However, the interest on advances grew by only 12.1 per cent CAGR in comparison with a
12.5 per cent CAGR growth in the income on investments. This was primarily because, between
1998-99 and 2002-03, the decline in the yield on advances (237 basis points) was greater than
the fall in the yield on investments (153 basis points), which offset the growth in the advances
portfolio. The yield on advances is linked to the decline in the PLR (which dropped rapidly
during 1998-2003) while the yield on investments depends on the composition of securities in
the investment portfolio of the bank. Several nationalised banks carried high coupon securities
in their portfolio.
Foreign banks
Foreign banks: Interest income Table 4

(1997-98 to 2002-03)

Int on bal with RBI and other inter-bank 4.4 5.9 5.0 5.8 6.1 3.0 -7.5
funds
Other interest income 0.9 1.3 1.2 1.3 0.9 1.4 7.8
The total interest income of foreign banks grew at a CAGR of 5.74 per cent between 1997-
98 and 2002-03, the lowest growth rate among all categories. Income from advances grew at
a CAGR of 4.83 per cent and income from investments grew at a CAGR of 9.59 per cent.
Advances grew at a CAGR of 12.2 per cent during the same period while investments grew
at a CAGR of 17.3 per cent. Between 1998-99 and 2002-03, the yield on advances declined
by 428 basis points while the yield on investments fell by 394 basis points.

100
Interest expended
OSC Banks: Interest expended Table 5

(1997-98 to 2002-03)
Interest on deposits 55.1 72.6 81.2 97.6 112.3 124.5 17.7

Interest on RBI/inter-bank borrowings 1.9 2.9 4.2 4.3 5.0 4.7 19.8
Others 2.0 2.9 4.1 5.0 5.8 56.8 94.8
Total interest expended 59.0 78.4 89.6 106.9 123.1 186.0 25.8
The total interest expended grew at a CAGR of 25.8 per cent (12.93 per cent) between 1997-
98 and 2002-03. The interest on deposits and interest on RBI/interbank borrowings grew at a
CAGR of 17.70 per cent (13.26 per cent) and 19.80 per cent (9.75 per cent) respectively.
The steep growth in the ‘others' category was because ICICI Bank classified Rs 5,280 crore
of interest on borrowings of the erstwhile ICICI as other interest expense.
SBI and associates: Total interest expended Table 6

(1997-98 to 2002-03)

Interest on RBI/inter-bank borrowings 5.3 5.4 6.4 6.2 4.6 2.3 -15.7
Others 5.4 5.1 4.7 7.5 9.9 9.2 11.4
During 1997-98 and 2002-03, total interest expended grew at a CAGR of 14.37 per cent, driven
by a 15.21 per cent CAGR growth in interest on deposits. For SBI and associates, the cost
of deposits had been higher than the average cost of deposits for all scheduled commercial
banks due to the higher interest obligation (on account of Resurgent India Bonds and India
Millennium Deposits). With excess liquidity and low demand for credit the borrowings of the
bank group came down, which in turn led to a drop in the interest on RBI/ inter-bank borrowings.
Nationalised banks
Nationalised banks: Interest expended Table 7

(1997-98 to 2002-03)

Interest on RBI/inter-bank borrowings(a) 4.5 5.9 7.1 7.7 6.8 5.7 4.9
Others(b) 7.3 6.2 10.2 11.8 14.5 15.2 15.9

101
Between 1997-98 and 2002-03, total interest expended grew at a CAGR of 10.18 per cent,
with interest on deposits growing at a CAGR of 10.09 per cent. The slow growth in the interest
on deposits was on account of a fall in the interest rate offered on term deposits. The cost
of deposits dropped by approximately 140 basis points to 6.2 per cent in 2002-03, while total
deposits grew by 14 per cent CAGR during 1997-98 to 2002-03.
Foreign banks
Foreign banks: Interest expended Table 8

(1997-98 to 2002-03)

Interest on RBI/inter-bank borrowings(a) 7.2 9.6 12.4 17.1 20.7 13.5 13.6
Others(b) 1.7 1.7 2.5 4.1 2.3 1.6 -0.9
Between 1997-98 and 2002-03, the total interest expended grew at a CAGR of 3.7 per cent
while the interest on deposits grew at a CAGR of 1.3 per cent. However, during the same
period, the interest on RBI/ inter bank borrowings grew at a CAGR of 13.6 per cent as the
share of borrowings in the total liabilities went up from 15 per cent to 20 per cent.
While the domestic banks focus on mobilising deposits to meet their funding requirements, foreign
banks (on account of the restricted branch network) have a higher proportion of borrowings
in their total borrowed funds vis-à-vis their domestic peers. This higher proportion of borrowings
of foreign banks has resulted in an increase in their interest on borrowings.

102
5.0
Other income
Besides interest income, banks also earn fee income from services such as issuing letters of
credit, providing bank guarantees, bill collection, and cash management services, for which they
charge commission or brokerage, income in the form of draft charges and bank charges. These
sources of income together constitute the "other income" of a bank. Banks also earn income
by way of profits on the sale of their investments, which is also classified as other income.
Other income can be divided into two broad categories: core fee income, and other income.
Core fee income is the income generated from the banks' core activities such as mobilising
deposits, lending and other normal banking services. Income from other allied activities like credit
cards, depository services and third-party distribution are also classified under core fee income.
On the other hand, the profits on sale of investments, fixed assets and other miscellaneous
income are classified as other income. Since these are not regular sources of income, banks
need to concentrate on core fee income to maintain stable profitability.
Other income (excluding profit on sale of investment) as per cent of total income
Other income (ex treasury profits) as per cent of total income Table 1
(per cent) 1998 1999 2000 2001 2002 2003
SBI and assoc 14.0 14.1 12.9 11.8 11.2 10.9
Nationalised banks 9.7 9.5 9.0 8.5 7.9 7.8
OSCBs 10.6 10.8 10.4 10.0 8.6 10.2
Foreign banks 18.3 18.2 18.6 18.0 17.2 21.4
All SCBs 11.7 11.6 11.0 10.4 9.6 10.0
Source: CRIS INFAC
During 1997-98 to 2002-03, the share of other income (excluding profit on sale of investment)
in total income has decreased for all the categories, except foreign banks. To a certain extent,
this decline is the result of an increase in the total income on account of an increase in the
profit on sale of investments.
Core fee income as per cent of other income Table 2

(per cent) 1998 1999 2000 2001 2002 2003
SBI and associates 92.6 94.1 85.6 80.4 76.9 62.0
OSCBs 55.1 73.3 54.6 69.2 36.9 37.3
Foreign banks 82.0 93.6 85.2 82.7 64.6 78.8
All SCBs 78.3 85.6 73.2 73.2 54.8 48.9
Source: CRIS INFAC

103
Core fee-based income Table 3
(Rs in billion) 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 CAGR %
(1998-2003)
SBI and associates 33.9 39.7 41.3 43.1 46.3 49.6 7.9
Nationalised banks 36.8 41.3 44.3 47.3 48.9 52.8 7.5
OSCBs 8.6 10.6 12.5 14.5 15.7 27.0 25.6
Foreign banks 15.7 17.4 18.3 20.8 21.1 24.4 9.2
All SCBs 96.0 110.1 117.8 127.2 133.9 156.4 10.3
Source: CRIS INFAC
Foreign banks
Foreign banks have the highest proportion of other income (other income excluding the profit
on sale of investment) to the total income amongst all categories. The share of other income
in total income increased from 18.3 per cent in 1997-98 to 21.4 per cent in 2002-03. During
1997-98 to 2001-02, the proportion of other income (excluding profit on sale of investments)
in total income had been stable between 17 per cent and 18 per cent, but it jumped to
21.4 per cent in 2002-03, driven by an impressive 24 per cent growth in the profit from exchange
transactions. Moreover, interest income recorded a negative growth of 7.6 per cent during the
same period due to low credit offtake.
The core fee income of foreign banks grew at 9 per cent CAGR during 1997-98 to 2002-
03, driven by the 11 per cent CAGR growth in profit on exchange transactions. Foreign banks,
due to their global presence, are strong players in foreign exchange transactions and trade finance
transactions. Further, the syndication fee/processing fee on foreign currency lending, in which
they are strong, help foreign banks in increasing their fee-based income. However, restrictive
branch networks hampers their fee income in the form of commission and exchange income.

The share of other income (excluding profit on sale of investments) in total income has declined
from a high of 14 per cent in 1997-98 to 10.9 per cent in 2002-03, primarily due to the
increased profit on sale of investments. During 1997-98 to 2002-03, other income grew at 8.8
per cent CAGR, while total income grew at 14.5 per cent CAGR.
During 1997-98 to 2002-03, commission exchange and brokerage grew at 8.4 per cent CAGR,
while miscellaneous income went up from Rs 1.8 billion in 1997-98 to Rs 7.34 billion in 2002-
03, a growth of 31 per cent CAGR. The growth in commission exchange and brokerage is
on account the SBI Group's wide branch network.
The growth of the SBI Group's other income is lower than that of OSCBs on account of the
following factors.
Higher base effect
Its late entry into other areas that generate fee-based income

104
The proportion of other income to the total income declined marginally from 10.6 per cent
(10.5 per cent) in 1997-98 to 10.2 per cent (9.2 per cent) in 2002-03, due to the increase
in the profit on sale of investment. During 1997-98 to 2002-03, other income grew at 26 per
cent (13 per cent) CAGR, while the total income grew at 27 per cent (16 per cent) CAGR.
Other scheduled commercial banks recorded the highest growth in core fee income amongst
all the scheduled commercial banks. During 1997-98 to 2002-03, core fee income of OSCBs
grew by 25.6 per cent (13.8 per cent) CAGR, driven by a 30 per cent (18 per cent) CAGR
growth in commission, exchange and brokerage and a 32 per cent (10 per cent) CAGR growth
in other miscellaneous income.
This growth can be attributed to the following factors:

Increase in reach through branch expansion (especially new private sector banks).
Higher service charged in comparison to the public sector banks (nationalised and SBI Group)
The entry of new private sector banks into new areas that generate fee-based income, such as credit
cards, depository services, and third-party distributions.
Increased focus on retail finance, especially by new private sector banks, which aided in generating fee-
based income (in form of processing fees).
Low base effect.
We believe that the new private sector banks will continue to explore new avenues to increase
other income, which will enable them to diversify their revenue stream and also provide stability
to their bottomline.
Nationalised banks
The share of other income in the total income of nationalised banks dropped from 9.7 per
cent in 1997-98 to 7.8 per cent in 2002-03 due to higher growth in the profit on sale of
investments.
Other income (excluding profit on sale of investments) grew at 8 per cent CAGR during 1997-
98 to 2002-03, driven by an 8 per cent CAGR growth in commission, exchange and brokerage
and a 15 per cent CAGR growth in miscellaneous income.
During 1997-98 to 2002-03, total income grew at 13.2 per cent CAGR, with interest income
growing at 11.9 per cent CAGR.
In the case of nationalised banks, the trend that is observed is similar to that seen in the
SBI Group, i.e., growth was slower because nationalised banks were slow in foraying into different
areas to diversify their revenue stream.

105
Profit on sale of investment
Share of profit on sale of investments in total income Table 4

(per cent) 1998 1999 2000 2001 2002 2003
SBI and associates 0.7 0.3 1.3 1.8 2.3 5.5
OSCBs 6.0 1.8 5.7 2.7 11.9 12.7
Foreign banks 3.7 1.0 2.2 2.9 7.9 4.2
All SCBs 2.1 0.8 2.5 2.3 6.0 8.0
Source: CRIS INFAC
Profit on sale of investments Table 5

(Rs in billion) 1998 1999 2000 2001 2002 2003 CAGR
(per cent)
SBI and associates 1.7 0.9 4.5 7.0 10.2 26.7 72.6
OSCBs 5.6 2.1 8.1 4.4 24.9 40.0 48.0
Foreign banks 3.3 1.0 2.3 3.5 10.3 5.1 9.5
All SCBs 18.7 8.7 29.9 31.7 94.2 142.6 50.2
Source: CRIS INFAC
Profit on sale of investments increased substantially

The share of profit on sale of investments in the total income has increased for all categories.
The falling interest rate scenario has helped all groups to post a healthy growth in treasury
profits.
Nationalised banks
Nationalised banks had recorded the highest increase in the share of profit on sale of investments
in the total income; it went up from a mere 1.9 per cent in 1997-98 to 8.9 per cent in
2002-03. The high exposure of nationalised banks to high coupon securities gave them an opportunity
to book healthy profits during the soft interest rates scenario prevalent then.
Our study of the maturity profile of investments of a sample set of banks falling within this
group reveals that approximately 65 per cent of the securities are classified in 'over the 3-
year' maturity bucket. (In a hardening interest rate scenario, however, the profit on sale of investments
will come down).

The proportion of profit on sale of investments in the total income has gone up from 6.0
per cent (5.8 per cent) in 1997-98 to 12.7 per cent (12.1 per cent) in 2002-03. The OSCBs
have the highest share of profit on sale of investments in the other income amongst all groups.
Compared to public sector banks (SBI Group and nationalised banks), the share of interest income
in the total income is lower for the OSCBs, as they focused on increasing their fee-based income
by venturing into new business opportunities. Further, with the impressive growth in the profit
on sale of investments, its proportion in total income increased.

106
With the hardening of interest rates, as explained in the earlier chapters, banks in this group
are expected to book losses from the sale of investments, which will pull down the proportion
of profit on sale of investments in total income.
State Bank of India & Associates

The share of profit on sale of investments in the total income of the SBI Group had also
gone up impressively, rising from a mere 0.7 per cent in 1997-98 to 5.5 per cent in 2002-
03. The profit on sale of investments recorded a highest growth of 73 per cent CAGR during
1997-98 to 2002-03.
With their strong core business, the SBI Group had, over the years, relied less on other income
including profit on sale of investments. The soft interest rate scenario and the high exposure
to high coupon SLR helped the group to post a healthy growth in the profit on sale of investments
and thus increase the share of treasury profits in total income.
Foreign banks
Foreign banks had registered a marginal increase in the share of profit on sale of investments
in the total income during the period under review. The share rose from 3.7 per cent in 1997-
98 to 4.2 per cent in 2002-03.
Foreign banks recorded the lowest growth of 10 per cent CAGR in the profit on sale of investments
during 1997-98 to 2002-03. Since foreign banks had comparatively lesser exposure to high coupon
securities, the profit on sale of investments was less. Our study of the maturity profile of investment
as of March 31, 2003, of a sample set of foreign banks, reveals that 43 per cent of the securities
are classified in the 'up to 1 year' maturity bucket.
Lower profit on sale of investments led to a marginal growth in the share of profit on sale
of investments in total income. Also, the higher growth in other income (excluding profit on
sale of investments) in comparison to profit on sale of investments slowed down the increase
the share of profit on sale of investments in total income.
With the estimated loss on sale of investments, this share is expected to drop.

107
6.0
Operating expenses
The staff cost accounts for a major portion of the operating expense for all the bank groups,
particularly so in the case of public sector banks. Hence, all the players need to control their
manpower costs to control their operating expenses.
We have made an attempt to analyse the performance of the various categories in two areas:
staff cost, and other operating expenses (i.e., operating expenses excluding staff cost).
Staff cost
Group-wise share of employee cost in operating cost Figure 1

(per cent)
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
SBI & associates Natonalised banks Other SCBs Foreign banks All SCBs
Source: CRIS INFAC and RBI
State bank of India and associates

Highest proportion of staff cost in total operating expenses among all SCBs
Among all the scheduled commercial banks, the proportion of staff cost in total operating expenses
is highest for the SBI Group. Due to the high levels of recruitment in earlier years, the proportion
of staff cost to the operating expense is high for these banks. Further, banks in this group
spent very little on technology, and most of the work was carried out manually. Even today,
not all branches of SBI are computerised.
The proportion of staff cost in the total operating cost has, however, declined from about 75
per cent in 1997-98 to about 71 per cent in 2002-03, due to a reduction in the number of
employees from about 308,817 in 1997-98 to 282,923 in 2002-03, coupled with an increase
in the non-staff operating expenses (which grew at 14.1 per cent CAGR during the same period).
The reduction in the staff strength is on account of the voluntary retirement schemes (VRS)
launched by the group. The technology upgradation drive, along with the focus on computerisation
of all branches, had contributed to the growth in non-staff expenditure, along with expenses
on advertising and sales etc.

109
Between 1997-98 and 2002-03, the SBI Group recorded a CAGR of 9.67 per cent in its staff
cost while its cost per employee grew at a CAGR of 11.6 per cent. The group's cost per
employee of Rs 0.262 million is the lowest amongst all scheduled commercial banks. Among
the public sector banks, the SBI Group has in place a separate wage agreement. As of March
31, 2002, 25 per cent of the work force of this group constituted the management cadre, whereas
it was 29 per cent in the case of nationalised banks.
SBI & associates: No of employees vs cost per employee Figure 2
315,000 325,000
VRS
305,000 275,000
Cost per employee (Rs)

Number of employees
295,000 225,000
285,000 175,000
275,000 125,000
1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03
Number Of employees Cost per employee
Nationalised banks
The nationalised banks recorded a CAGR of 10.42 per cent in the staff cost between 1997-
98 and 2002-03. The number of employees declined from 570,595 in 1997-98 to 472,514 in
2002-03, leading to a higher growth in the cost per employee. However, the staff cost as a
percentage of total operating expenses reduced to 70.7 per cent for 2002-03 from 74 per cent
in 1999-00 on account of VRS schemes and improved efficiencies.
Akin to what was observed in the SBI Group, the legacy of heavy staff recruitment in the
earlier years in this group has contributed to the higher share of staff cost. Moreover, lesser
dependence on the technology and a wide branch network forced these banks to recruit more
staff.
Although, in 1997-98, the nationalised banks' cost per employee of Rs 0.139 million was lesser
than that of the SBI Group, in 2002-03 it was higher than that of the latter, at Rs 0.276
million. This is despite the sharper drop in the number of employees. The staff cost of nationalised
banks grew at 10.4 per cent CAGR during 1997-98 to 2002-03, possibly on account of the
difference in the wage agreement for the two groups and also due to higher proportion of
management staff in the total staff strength vis-à-vis the SBI group.

110
Nationalised banks: No of employees vs cost per employee Figure 3
600,000 325,000
550,000 275,000

Number of employees
VRS
500,000 225,000
450,000 175,000
400,000 125,000
1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03
Number of employees Cost per employee

The proportion of the staff cost in operating expenses declined sharply from about 49 per cent
(50 per cent) in 1997-98 to about 36 per cent (44 per cent) in 2002-03, largely due to the
focus of the private sector banks on automation, and advances in technology. For example, at
the end of 2003, ICICI Bank had 1,675 ATM machines and about 70 per cent of its customer-
induced transactions take place through electronic channels.
The staff cost grew at a CAGR of 19.90 per cent between 1997-98 and 2002-03 while the
cost per employee grew at a CAGR of 18.33 per cent from Rs 0.14 million in 1997-98 to
0.32 million in 2002-03. The private sector banks have been expanding aggressively and are
still growing, hence their staff strength has gone up from about 61,700 in 1997-98 to about
66,000 in 2002-03.
The cost of per employee for this group is higher than that of public sector banks, because
of the higher salary structure. But the staff cost accounts for just 36 per cent of the total
operating expense in comparison to 70-71 per cent observed in public sector banks. The branch
network of new private sector banks is not as large as that of public sector banks. In addition,
they have made massive investments in technology, which reduces their staff requirements. An
ATM is manned by just one person and performs numerous basic banking operations. OSCBs
make use of the DSA channel to source clients.
Since their inception, the operations of OSCBs, especially the new private sector banks, are heavily
technology-driven, hence the staff strength of these banks is not as high as that of public sector
banks.

111
OSC banks: No of employees vs cost per employee Figure 4
80,000 375,000
75,000 ICICI Merger

325,000

Number of employees
70,000
275,000
65,000
225,000
60,000
175,000
55,000
50,000 125,000
1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03
Foreign banks
Many multinational banks have set up their operations in India. Today there are about 38 foreign
banks operating in India. Foreign banks have seen the proportion of operating expenses in the
total expenses rise from about 24 per cent in 1997-98 to about 32 per cant in 2002-03.
Foreign banks have the lowest proportion of staff cost in total operating expenses among all scheduled commercial
banks
The proportion of staff costs in the operating expenses has remained stable at almost 32 per
cent during 1997-98 to 2002-03. This is much lower than the average for all scheduled commercial
banks as foreign banks spend huge amounts on non-staff expenses like technology, advertising,
sales and marketing, apart from the expenses on employees.
Between 1997-98 and 2001-02, the staff cost of foreign banks grew at 16 per cent CAGR
while the cost per employee grew at a CAGR of about 19 per cent (from Rs 0.4 million
in 1997-98 to Rs 0.8 million in 2001-02). The number of employees has declined from 15,354
in 1997-98 to 13,827 in 2001-02. During the same period, foreign banks recorded the highest
CAGR in the cost per employee among all the scheduled commercial banks, .
In terms of cost per employee, the wide gap between foreign banks and other bank groups
can be attributed to the following factors:
Higher wage structure, as compared to the other bank groups.
Drop in the staff strength.
High investments in technology and infrastructure, which helps in reducing human intervention in routine
banking operations.
Low branch network, which reduces the need for high staff strength.
Higher spreads and other income, which aid banks in sustaining high staff cost.

112
Foreign banks: No of employees vs cost per employee Figure 5
16,000 850,000
15,000
750,000

Number of employees
14,000
650,000
13,000
550,000
12,000
450,000
11,000
10,000 350,000
1997-98 1998-99 1999-2000 2000-01 2001-02
Other operating expenses (Operating expenses excluding staff cost)
Other operating expenses Table 1

(Rs billion) 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 CAGR
1998 to 2003
SBI Group 15.6 22.3 23.5 29.0 27.3 30.2 14.10
Other SCBs 8.8 11.1 12.9 17.7 22.7 37.6 33.72
Foreign banks 13.1 18.1 17.3 21.2 22.7 22.2 11.08
Source: RBI

During 1997-98 and 2002-03, the other scheduled commercial banks recorded a growth of 34
per cent (21 per cent) CAGR in other operating expenses, the highest amongst all bank groups.
In terms of expense heads, repairs and maintenance recorded the highest growth with a growth
of 51 per cent CAGR during 1997-98 to 2002-03. This may be on account of the renovations
carried out on the existing branch to meet client aspirations, and an increase in the maintenance
contracts entered into by the banks.
‘Depreciation', which constitutes a significant portion of operating expense, has grown at 35 per
cent (20 per cent) CAGR during the period under review. The proportion of depreciation in
the operating expenses has increased from 13.35 per cent to about 18 per cent during the
above period, on account of the greater investment in technology. As the private sector continues
to grow and expand its network the proportion of depreciation is expected to increase.
Along with depreciation, advertisement, printing & stationery and postage & telephone charges
have also recorded a substantial growth on account of the aggressive communication and promotion
strategy that players have adopted.

113
With the new private sector banks expanding their operations and the older private sector banks
upgrading their technology, we expect other operating expenses of this group to increase, especially
those relating to depreciation, advertisement and postage and telephone.
SBI & associates

As observed earlier, other operating expenses account for only 30 per cent of the total operating
expense, but, going forward, we expect that to increase as the banks in the group embark
on increasing their investments in technology to upgrade their branch networks.
The other operating expense ratio increased at 14 per cent CAGR during 1997-98 to 2002-
03, driven by a 25 per cent CAGR growth in depreciation, 17 per cent growth in the advertisement
and 7 per cent CAGR growth in printing and stationery.
Increased spending on technology led to a higher growth in depreciation charge. In 2002-03,

SBI alone had computerised about 41 per cent of its total branches, constituting about 82 per
cent of its business volumes
A comparison between the other operating expenses of SBI Group and OSCBs reveals that the
former are not aggressive in marketing and communications. To put the figures in perspective,
the total advertisement and publicity expense for the SBI Group in 2002-03 was Rs 0.42 billion
(a growth of 8 per cent CAGR), while it was Rs 1.36 billion for OSCBs. Similarly, postage,
telegram and telephone expenses for the SBI group in 2002-03 was Rs 0.81 billion, while it
was Rs 2.62 billion for OSCBs. This is probably because the OSCBs generally focus on retail
finance, while the SBI Group's focus was on wholesale lending.
With the SBI Group planning to focus on retail finance too, these expenses are expected to
increase further.
Nationalised banks
Nationalised banks, with the largest network of 33,942 offices, have the highest operating expenses
among the scheduled commercial banks. During 1997-98 to 2002-03, the number of offices of
nationalised banks as a proportion of offices of all scheduled commercial banks had remained
almost constant at 50 per cent, but the proportion of operating expenses of the nationalised
banks in operating expenses of all scheduled commercial banks has declined from about 51
per cent to about 47 per cent. The aggressive expansion by the new private sector banks
has resulted in a significant increase in the operating expenses for private banks, leading to
a decline in the nationalised banks' share in total operating expenses.
The other operating expense has increased at a CAGR of 11.9 per cent during 1997-98 to
2002-03, driven by a 20 per cent CAGR growth in depreciation, a 15 per cent CAGR growth
in auditors fees and a 14 per cent CAGR growth in advertisement and publicity.
The 20 per cent CAGR growth in depreciation is on account of the expenditure on technological
upgradation of offices and branch expansion. The number of offices went up from 33,263 in
1997-98 to 33,942 in 2002-03.

114
With nationalised banks starting to advertise their products through various media, their advertisement
expenses have increased, although they are still less than the amount spent by OSCBs. A very
similar trend is also seen in case of postage and telephone expenses. Nationalised banks had
also adopted a business model similar to that of the SBI Group.
With banks in this group increasing their focus on retail finance and also venturing into other
areas for diversifying their income, their other operating expenses are expected to increase.
Foreign banks
High proportion of selling cost/ professional fees
Other operating expenditure (total operating expenses less staff cost) grew at 11 per cent CAGR
between 1997-98 and 2002-03, driven by a 21 per cent CAGR growth in law charges, a 12
per cent CAGR growth in depreciation and a 10 per cent CAGR growth in repairs and maintenance.
Foreign banks recorded the lowest growth in the other operating expenses amongst all scheduled
commercial banks. CRIS INFAC believes that foreign banks are not in an aggressive expansion
mode, compared to OSCBs, and have the necessary technology in place. The operations of the
foreign banks have also stabilised. These factors could lead to a comparatively lower growth
in operating expenses.
Among all scheduled commercial bank groups, the proportion of other operating expenditure in
total operating expenses is the highest for this group, indicating a heavy investment in infrastructure.
Vis-à-vis other bank categories, depreciation, for banks in this group, has grown at a slower
pace as these banks already have a technology platform and continue to get support from their
parent organisations.
Foreign banks also invest heavily in advertising and postage and telephone to reach out to
the customers.
Cost-income ratio
State Bank of India and Associates
Marginal improvement in the operating efficiency
The cost income ratio for SBI and its associates declined from about 57 per cent in 1997-
98 to about 48 per cent in 2002-03. However, when we exclude the profit on sale of investments
from the net income and recalculate the cost income ratio, there was a decline of only about
2.8 percentage points.
There was a marginal improvement in the operating efficiency of the group during this period.

115
SBI & associates: Cost-income ratio Figure 6
(per cent)
70
65
60
55
50
45
40
1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03
Cost income ratio with profit on sale of investments Cost income ratio without profit on sale of investments
From the above graph, we observe that the cost-income ratio jumped in 2000-01 to 65.2 per
cent from 58.6 per cent in 1999-00 and again slipped to 52.1 per cent in 2001-02, primarily
on account of the VRS launched by the group in 2000-01. Further, the healthy growth in the
profit on sale of investment, coupled with savings in staff cost from VRS, helped bring down
the cost-income ratio.
Excluding profit on sale of investments, the cost-income ratio remained almost stable in 2002-
03, on account of slower growth in interest income and other income Low credit demand and
declining interest rates restricted the growth in interest income. Further, operating expenses also
went up mainly due to the growth in the staff cost (on account of higher contribution towards
retirement benefits) and higher depreciation charges.
Nationalised banks
Highest improvement in efficiencies, cost-income ratio declines by 800 basis points (excluding the profit on sale of
investments)
Nationalised banks recorded the maximum improvement in operating efficiencies among all scheduled
commercial banks between 1997-98 and 2002-03.
The cost-income ratio of the nationalised banks (including profit on sale of investments) declined
from about 67 per cent in 1997-98 to about 50 per in 2002-03. Apart from the improvement
in operating efficiency, the huge profits from the sale of investments contributed to this sharp
decline. The savings in staff cost has also helped the group to improve operating expenses.
However, the cost-income ratio, when calculated after excluding the profit on sale of investments,
declined from about 70 per cent in 1997-98 to about 62 per cent in 2002-03. With the expected
increase in productivity, this ratio is expected to decline further.

116
Nationalised banks: Cost-income ratio Figure 7
(per cent)
80
75
70
65
60
55
50
45
1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03
The above graph depicts a rise in the cost-income ratio in 2000-01 and then a sudden decline,
from a high of 68.2 per cent in 2000-01 to 50 per cent in 2002-03. The rise was due to
a charge arising due to VRS. Savings in staff cost, coupled with increased profit on sale of
investments, helped in achieving a decline in the cost-income ratio.
In 2002-03, however, despite the steep decline, the cost-income ratio, with and without profit
on sale of investments, was still higher than the SBI Group. This is on account of historically
higher operating costs and higher operational inefficiencies. Many branches of nationalised banks
were reporting losses. But a comparison of the improvement in the ratios of both these sectors
shows that nationalised banks recorded greater improvement, on account of higher efficiency and
cost-control initiatives.

Operating efficiencies decline during 1997-98 and 2002-03
The private sector banks expanded aggressively during the period under consideration and are
still on a growth path. Once this aggressive growth strategy slows down, the cost-income ratio
will improve significantly and investments in technology and networks will bring about substantial
savings.
The cost-income ratio (including the profit on sale of investments) of private sector banks recorded
a decline of 3.70 percentage points from 48.75 per cent in 1997-98 to 45.05 per cent in
2002-03. However, if the profit on sale of investments is excluded while calculating the cost-
income ratio, there was an increase in the cost-income ratio from about 58 per cent (58 per
cent) in 1997-98 to about 65 per cent (63 per cent) in 2002-03.

117
OSC banks: Cost-income ratio Figure 8
(per cent)
70
65
60
55
50
45
40
1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03
The cost-income ratio (without profit on sale of investment) of 65 per cent for the group for
the period 2002-03 is the highest amongst all the bank groups. As the new private sector banks
expanded their operations, the operating cost went up. This, coupled with the aggressive lending
methods adopted by the big players, increased the pressure on spreads of banks in this category.
With many banks still expanding their operations we expect this ratio to keep rising for the
next 2 years.
Foreign banks
Lower growth in net total income increases cost income ratio of most efficient bank group
Among all the scheduled commercial banks, foreign banks have the lowest cost-income ratio,
indicating high operating efficiencies.
Between 1997-98 and 2003-03, the net total income of foreign banks recorded a CAGR of 9.33
per cent, while the operating expenses posted a CAGR of 11.05 per cent.
Consequently, the cost-income ratio for foreign banks (including profit on sale of investments)
increased from 43.15 per cent in 1997-98 to 46.66 per cent in 2002-03. When the profit on
sale of investments is excluded, the cost-income ratio increases from about 46 per cent in 1997-
98 to about 50 per cent in 2002-03.
Foreign banks were able to maintain healthy spreads and, hence, have been able to sustain
a high operating cost. Further, their core-fee income ratio is also the highest amongst all bank
groups, which helps them to have the lowest cost-income ratio amongst all categories.
With foreign banks now aggressively competing with public sector and private banks, banks need
to maintain their low cost-income ratio by controlling costs, for a stable NPM.

118
Foreign banks: Cost-income ratio Figure 9
(per cent)
60
55
50
45
40
1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03
Highest operating and staff cost per office

The cost-income ratio (without profit on sale of investments) shot up to 57.7 per cent in 2001-
02 from 53 per cent in 2000-01. This was on account of slower growth in the net total income,
excluding profit on sale of investment. The interest income grew by 2.5 per cent, while the
interest expended grew by 5 per cent in 2001-02 over 2000-01.
However, during 2002-03, the cost-income ratio fell steeply because of the increase in other
income, coupled with lesser operating expenses, mainly driven by savings in staff expenses.

119
7.0
Important ratios
SBI & associates Table 1

Important ratios 1998-99 1999-2000 2000-01 2001-02
Return on assets (per cent) 0.93 0.47 0.72 0.52
Business per employees (Rs million) 10.64 12.58 16.10 18.15
Operating profit per employees (Rs in lakh) 1.51 1.91 2.00 3.07
Source: CRIS INFAC
Nationalised banks Table 2

Source: CRIS INFAC
Other scheduled commercial banks Table 3

Source: CRIS INFAC
Foreign banks Table 4

Source: CRIS INFAC
Foreign banks continue to have high productivity ratios, both in terms of business and operating
profits. The business per employee doubled between 1998-99 and 2001-02, and the operating
profit per employee also doubled. Foreign banks are way ahead of other players in terms of
productivity. This has been achieved by higher spreads and greater reliance on technology.
In terms of productivity ratios, the performance of other scheduled commercial banks (OSCBs)
has also been impressive. The business per employee has doubled, while the operating profit
per employee has almost tripled during the period under consideration. Productivity will improve
further due to the aggressive strategy being adopted by new private sector banks.
On the other hand, productivity growth has been lower in public sector banks because a high
staff base.

121
Credit-deposit ratio
Credit-deposit ratio Figure 1 Investment-deposit ratio Figure 2

80.0
65.0
75.0
60.0
70.0
65.0 55.0
60.0
50.0
55.0
50.0 45.0
45.0
40.0
40.0
35.0 35.0
1998 1999 2000 2001 2002 2003 1998 1999 2000 2001 2002 2003
SBI and Assoc Nationalised Banks SBI and Assoc Nationalised Banks
OSCB Foreign Banks OSCB Foreign Banks
All SCB All SCB
The movement in the credit-deposit ratio has been in line with the industry. The ratio has
gone up for all the bank groups, except the SBI Group, which has witnessed a drop. For
foreign banks, the credit-deposit ratio is high because of the low deposit base. The share of
borrowings in the total liabilities is higher for foreign banks in comparison with the other bank
groups.
Due to the low credit offtake, banks had parked their funds in investments, which drove the
growth in the investment-deposit ratio. For almost all banks, the growth in the investment-deposit
ratio has been steep in comparison to the rise in the credit-deposit ratio.

122
Industry statistics
Sections
1.0 Industry structure 123

2.0 Financial system in India 129
3.0 Industry performance (tables) 137
4.0 Industry performance (graphs) 161
5.0 Player profiles 173
Charts
1.0 Industry structure
01 Evolution: Indian banking 125
02 Banks and DFIs: Important activities 126
2.0 Financial system in India

01 Financial system in India: Overview 129
Figures
4.0 Industry performance
01 SCBs: Profits 161
02 SCBs: NIM 161
03 SCBs: Segment-wise NIM 162
04 Advances, IIP and imports: Growth 162
05 SCBs: Advances 162
06 IIP and credit: Growth 163
07 Advances: Average yields 163
08 Outstanding loans and advances: Break-up by interest rates 163
09 SCBs: Investments 164
10 PSU banks: Number of banks achieving CRAR 164
11 Gross NPAs and net NPAs 164
12 Investment and advances: Average yield 165
13 SCBs: Other income to total income 165
14 M3 and deposits 165
15 M3 and reserve money: Growth 166
16 Deposits: Demand, savings and time deposits (excl RRBs) 166
17 Incremental deposits: Break-up by deposit type (excl RRBs) 166
Continued...

i
...continued
Figures
18 Deposits: Growth (excl RRBs) 167

19 NRI deposits: Growth 167
20 Deposits: Average costs 167
21 Term deposits: Interest rates (March 2003) 168
22 Incremental credit-deposit ratio 168
23 Incremental borrowing-deposit ratio 168
24 SCBs: Operating costs 169
25 SCBs: Segment-wise operating costs as a percentage of average assets 169
26 Overheads as a percentage of operating income 169
27 Overheads as a percentage of average assets 170
28 Operating costs: India vis-à-vis other countries 170
29 SCBs (excl RRBs): Number of branches 170
30 SCBs: Number of employees 171
31 Investments: Average yields 171
32 BSE volumes and capital issues 171
Tables
1.0 Industry structure
01 Scheduled commercial banks: Progress since 1950 123
02 Financial markets: Total assets 124
03 Indian banking system: Key financials 124
04 Financial institutions: Financial performance 126
05 Financial institutions: Liabilities and assets 127
2.0 Financial system in India

01 Household sector savings in financial and physical assets 130
02 Proportion of gross household savings in financial assets 131
03 Banks and financial institutions: Financial assets 132
04 Indian financial system: Key financials 132
05 Capital markets: Resources mobilised 133
06 Mutual funds vis-à-vis bank deposits 134
07 Incremental mutual fund collections to bank deposits 134
08 Banks: Investments in shares 135
09 NBFCs: Total assets and deposits 135
10 NBFCs: Net owned funds vis-à-vis public deposits (excl RNBCs) 136
Continued...

ii
...continued
Tables
3.0 Industry performance

01 25 banks: Financials 137
02 Public sector banks: Priority sector advances 137
03 Banks: Capital adequacy ratio 138
04 Public sector banks: Capital adequacy ratio 140
05 Capital adequacy ratio: 2003-04 140
06 Scheduled commercial banks: Capital infusion (1991-92 to 2003-04) 140
07 Public sector banks: Recapitalisation support by the government 141
08 Public sector banks: Writing down of capital base 142
09 Public sector banks: Amounts returned to the government 142
10 Public sector banks: Public/rights issues 143
11 Old private sector banks: Public/rights issues 144
12 New private sector banks: Public issues 145
13 Public sector banks: Government ownership 145
14 Public sector banks: Net worth 146
15 Scheduled commercial banks: Net worth 146
16 NRI deposits (1991-2003) 146
17 Commercial banks: Branch network 147
18 Banks: Distribution of net NPAs as a percentage of net advances 147
19 Banks: Segment-wise incremental ratio of gross and net NPAs 148
20 Banks: Segment-wise incremental gross and net NPAs 149
21 Scheduled commerical banks: Gross and net NPAs 149
22 Public sector banks: Net NPAs as a percentage of net advances 150
23 Public sector banks: Classification of loan assets 150
24 New private sector banks: Key financial parameters (2003-04) 151
25 Old private sector banks: Key financial parameters (2003-04) 152
26 Select public sector banks: Key financial parameters (2003-04) 156
27 Scheduled commercial banks: Segment-wise financial performance (2003-04) 158
28 Scheduled commercial banks: Segment-wise financial ratios (2003-04) 159
29 Scheduled commercial banks: Segment-wise share (2003-04) 160
5.0 Player profiles

01 Financial comparison of key banks: 2003-04 173
02 State Bank of India 175
03 Bank of Baroda 180
04 Bank of India 185
05 Canara Bank 190
06 Punjab National Bank 195
07 Oriental Bank of Commerce 200
08 Dena Bank 205
09 Corporation Bank 210
continued...

iii
...continued
Tables
10 State Bank of Travancore 215
11 ICICI Bank 220
12 HDFC Bank 225
13 IndusInd Bank 230
14 Global Trust Bank 234
15 The Federal Bank Ltd 239
16 Bank of Rajasthan 244
17 Citibank 249
18 HongKong Bank 254
19 Standard Chartered Bank 259
20 State Bank of Bikaner & Jaipur 264
21 UTI Bank Ltd 269
22 The South Indian Bank Ltd 274
23 The Jammu & Kashmir Bank Ltd 279
24 The Karnataka Bank Ltd 284

iv
1.0
Industry structure
Scheduled commercial banks: Progress since 1950 Table 1

1951 1969 1984 1992 1996 1999 2000 2001 2002 2003
Number of commercial banks n.a. 89 n.a. 276 293 301 298 300 297 292
Total branches in India 4,151 8,262 45,332 60,570 64,937 67,157 67,868 67,937 68,195 68,561
- Rural - 1,833 25,372 35,269 32,982 32,859 32,852 32,585 32,503 32,406
- Semi-urban - 3,342 9,262 11,356 13,832 14,462 14,841 14,843 14,962 15,090
- Urban - 1,584 5,769 8,279 9,964 10,841 10,994 11,193 11,328 11,553
- Metropolitan - 1,503 4,929 5,666 8,159 8,995 9,181 9,316 9,402 9,512
Population per branch (in '000) 75 65 15 14 15 15 15 15 15 16
Deposits in India (Rs crore) 909 4,646 63,852 237,566 433,819 722,203 851,593 989,141 1,131,188 1,280,853
Deposits as a percentage of national income 9.0 15.5 37.9 49.5 46.1 50.3 53.5 56.0 49.3 51.8
Per capita deposits (Rs) 0 88 940 2,738 4,644 7,359 8,542 9,770 11,008 12,253
Deposits per branch (Rs crore) 0.2 0.6 1.4 3.9 6.7 10.8 12.5 14.6 16.6 18.7
Total bank credit (Rs crore) 727 3,599 43,058 131,520 254,015 368,837 454,069 529,271 609,053 729,214
Credit per branch (Rs crore) 0.2 0.4 0.9 2.2 3.9 5.5 6.7 7.8 8.9 10.6
Bank credit to priority sectors (Rs crore) - 504 14,834 47,318 80,831 126,309 155,779 182,255 205,606 n.a.
Share of priority sector advances in - 14.0 34.5 36.0 31.8 34.2 34.3 34.4 33.8 n.a.
gross credit
Credit-deposit ratio (per cent) 80.0 77.5 67.4 55.4 58.6 51.1 53.3 53.5 53.8 56.9
Investment-deposit ratio (per cent) - 29.3 36.3 38.0 38.0 35.3 36.6 37.1 38.7 42.7
Cash-deposit ratio (per cent) - 8.2 14.5 18.2 12.4 9.4 9.8 8.4 7.1 6.5
n.a.: Not available
Source: Statistical Tables Relating to Banks in India 2002-2003

123
Financial markets: Total assets Table 2
(Rs crore) 2002-03 2001-02 2000-01 1999-2000 1998-99 Share of Growth
assets1 (per cent)
All financial entities (A+B+C) 1 1,944,410 1,825,416 1,643,939 1,431,256 1,240,059 100 n.a.
All banks (excl co-operative banks) (A) 1,760,659 1,593,226 1,343,543 1,147,888 987,508 91 10.51
Commercial banks 1,698,916 1,536,424 1,294,974 1,105,464 950,718 87 10.58
State Bank Group 493,954 449,289 402,877 336,394 285,835 25 9.94
Nationalised banks 791,281 706,109 626,892 554,206 484,310 41 12.06
Old private banks 105,110 93,229 84,605 73,123 65,475 5 12.74
New private banks 192,170 174,477 78,776 58,931 38,531 10 10.14
Foreign banks in India 116,401 113,321 101,824 82,810 76,567 6 2.72
Regional rural banks 61,743 56,802 48,569 42,424 36,790 3 8.70
All India financial institutions (B) 183,751 173,900 246,518 232,043 205,502 9 5.66
1
NBFCs (C) - 58,290 53,878 51,324 47,049 n.a. n.a.
n.a.: Not available
1
NBFC data for 2002-03 is not available
Note
All India financial institutions include IDBI, IFCI, IIBI, IDFC, TFCI, Exim Bank, NABARD, NHB and SIDBI.
Source: CRIS INFAC
Indian banking system: Key financials Table 3

(Rs crore) Number Number Total Total Total Profit Spread Gross Gross NPA/ Year
of assets deposits income (per cent) NPA gross loans
branches and advances
Scheduled commercial 90 54,275 1,975,020 1,575,145 183,767 22,273 3.0 n.a. n.a. 2003-04
banks (excl RRBs)
Public sector banks 27 48,150 1,471,428 1,226,838 137,603 16,547 3.1 n.a. n.a. 2003-04
Nationalised banks 8 34,411 922,171 793,947 85,712 10,929 3.3 n.a. n.a. 2003-04
State Bank Group 19 13,739 549,257 432,891 51,891 5,618 2.8 n.a. n.a. 2003-04
OSCBs 30 5,903 367,276 268,550 33,154 3,484 2.5 n.a. n.a. 2003-04
Foreign banks in India 33 222 136,316 79,757 13,010 2,242 3.9 n.a. n.a. 2003-04
Regional rural banks n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 2003-04
Figures exclude data of co-operative banks.
Source: Trends and Progess of Banking in India

124
Evolution: Indian banking Chart 1
Period Event
The British Raj Commercial banks (entities with unlimited liability) established.
1800s Banks specialised in providing short-term credit for trade.
1896 The Presidency Act allowed the establishment of state partnered banks.
1921 Four large banks were merged to form the Imperial Bank of India (which later became State Bank of India).
1934 The Reserve Bank of India Act was passed.
1935 The RBI came into existence.
Post-Independence era The Indian banking system progressed in terms of functions and geographic coverage.
The proportion of industrial credit was higher than agricultural credit.
1949 The Banking Regulation Act 1949, gave RBI the powers to regulate, supervise and develop the banking
system.
After 1949 There was consolidation in the banking industry, and large commercial banks emerged through mergers
and amalgamations.
1955 The Imperial Bank of India was rescheduled as the State Bank of India.
1967 A scheme for social control on banks was introduced, in order to increase the availability of banking
facilities, and change the uneven distribution of lending by banks.
Jul 1969 14 major banks, each with deposits of over Rs 500 crore, were nationalised by the Ministry of Finance.
1974 Targets for priority sector lending were set.
1980 The government further nationalised six banks.
Aug 1991 The Narasimham Committee was formed, in order to re-examine the financial system.
1992-93 Income recognition and capital adequacy norms were introduced, and interest rates were rationalised.
Losses of public sector banks amounted to Rs 3,648 crore.
1993 Public sector banks accounted for 93 per cent of the total branches in India, 87 per cent of the total
deposits, and 89 per cent of the total loans.
1994 Private sector banks were permitted to commence operations. The interest rates on loans of over Rs
200,000 were deregulated, allowing banks to fix prime lending rates. Banks were allowed to issue capital,
up to 49 per cent of the equity, from the capital markets, by amending the Banking Companies (Acquisition
and Transfer of Undertakings) Act 1970/80.
1995-96 19 of the 27 scheduled commercial banks were able to achieve the stipulated capital adequacy ratio.
1997 Limited and conditional autonomy was provided to public sector banks.
1998 The committee on financial sector reforms (Narasimham Committee II) reviewed the progress of reforms,
and recommended a plan for the implementation of second generation reforms.
Norms for capital adequacy and a reduction in non-performing assets were evolved.
Interest rates on term deposits of over 15 days were deregulated.
1999 Guidelines on asset-liability management and risk management were issued.
2000 In the Union Budget, the government announced its intention to reduce its equity in public sector banks
to 33 per cent.
HDFC Bank acquired Times Bank; the first private sector merger in India.
2001 RBI issued licences to 2 new banks, Kotak Mahindra and Rabo Bank.
FDI limit in the banking sector increased to 51 per cent.
2002 Union Government allows the conversion of the branch operations of foreign banks into subsidiaries.
RBI approves the merger of ICICI and ICICI Bank, making it the second largest bank in India, in terms of
assets. Kotak Mahindra Finance, an NBFC, announces its intention to convert itself into a bank.
2003 Kotak Mahindra Bank commenced operations on March 24, 2003.
2004 HSBC acquired 20 per cent in UTI Bank.
FDI limit in private banks increased from 49 per cent to 74 per cent.
RBI placed moratorium on GTB's operations on 24th July 2004
RBI announced the merger of GTB with OBC on 26th July 2004
IDBI converted itself into a commercial bank from 1st October 2004.
Source: CRIS INFAC

125
Banks and DFIs: Important activities Chart 2
Commercial banking or Investment banking Other financial services
similar in nature
Banks Accepting chequable deposits Investments in securities Factoring
Granting loans and advances Underwriting of issues Hire-purchase
Loan syndication Leasing
Merchant banking
Credit cards
Dealing in gold
Mutual fund
Housing finance
DFIs Granting long-term loans and advances Underwriting and Commercial banking
Granting short-term loans and advances / subscribing directly to Housing finance
working capital finance shares / debentures of Credit rating
Accepting term deposits and corporate bodies Custodial services
issuing CDs on prescribed Brokerage
terms and conditions Investor services
Registrar’s services
Project consultancy
Debenture trusteeship
Note
The activities are performed either directly or through subsidiaries.
Source: RBI
Financial institutions: Financial performance Table 4

(Rs crore) 1998-99 1999-2000 2000-01 2001-02 2002-03 Change
(per cent)
Income 21,614 24,410 25,867 17,206 15,822 -8.0
Interest income 20,297 22,152 23,519 14,391 13,194 -8.3
Other income 1,317 2,258 2,348 2,815 2,628 -6.6
Expenditure 18,381 21,148 23,748 15,944 14,130 -11.4
Interest expended 15,675 18,245 19,567 13,284 11,825 -11.0
Provisions 308 687 1,579 1,501 947 -36.9
Other expenses 2,398 2,216 2,602 1,159 1,358 17.2
-Wage bill 294 362 476 404 391 -3.2
Net profit 3,233 3,263 2,119 1,262 1,692 34.1
Total assets 205,502 232,043 246,518 170,247 182,223 7.0
Ratios (per cent) 1
Net profit 1.6 1.4 0.9 0.7 0.9 -
Income 10.5 10.5 10.5 9.9 8.6 -
Interest income 9.9 9.6 9.5 8.3 7.2 -
Other income 0.6 1.0 1.0 1.6 1.4 -
Expenditure 8.9 9.1 9.6 8.3 7.2 -
Interest expended 7.6 7.9 7.9 7.6 6.4 -
Other expenses 1.2 1.0 1.1 0.7 0.7 -
Wages 0.1 0.2 0.2 0.2 0.2 -
Provisions and contigencies 0.2 0.3 0.6 0.9 0.5 -
Spread (net interest income) 2.3 1.7 1.6 0.6 0.7 -
1
Ratios calculated as a percentage of total assets
Notes
1) For 1998-99 to 2000-01, financial institutions comprise IDBI, ICICI, TFCI, EXIM Bank, NABARD, SIDBI, IDFC, IFCI, NHB and IIBI.
2) For 2001-02 and 2002-03, financial institutions comprise IDBI, TFCI, EXIM Bank, NABARD, SIDBI, IDFC, IFCI, NHB and IIBI.
Source: RBI's Report on Trend and Progress of Banking in India 2002-03

126
Financial institutions: Liabilities and assets Table 5
1998-99 1999-2000 2000-01 2001-02 2002-03 Change1
Rs crore Per cent Rs crore Per cent Rs crore Per cent Rs crore Per cent Rs crore Per cent (per cent)
Liabilities 205,502 100.0 232,045 100.0 246,523 100.0 173,900 100.0 183,751 100.0 5.7
Capital 7,698 3.7 8,731 3.8 7,866 3.2 6,811 3.9 6,784 3.7 -0.4
Reserves 20,519 10.0 36,619 15.8 39,147 15.9 16,836 9.7 18,259 9.9 8.5
Bonds and debentures 99,360 48.4 114,017 49.1 125,597 50.9 83,595 48.1 89,639 48.8 7.2
Deposits 10,581 5.1 13,350 5.8 17,821 7.2 15,088 8.7 20,144 11.0 33.5
Borrowings 41,305 20.1 41,413 17.8 37,715 15.3 24,400 14.0 21,862 11.9 -10.4
Other liabilities 26,040 12.7 17,914 7.7 18,376 7.5 27,170 15.6 27,063 14.7 -0.4
Assets 205,502 100.0 232,045 100.0 246,523 100.0 173,900 100.0 183,751 100.0 5.7
Cash and bank balance 11,338 5.5 8,311 3.6 8,880 3.6 5,628 3.2 8,014 4.4 42.4
Investment 22,969 11.2 28,676 12.4 29,662 12.0 21,671 12.5 21,760 11.8 0.4
Loans and advances 146,353 71.2 167,201 72.1 179,786 72.9 131,510 75.6 136,823 74.5 4.0

Bills discounted/rediscounted 2,387 1.2 4,008 1.7 3,641 1.5 2,987 1.7 1,606 0.9 -46.2
Fixed assets 8,291 4.0 7,355 3.2 8,174 3.3 3,226 1.9 2,988 1.6 -7.4
Other assets 14,164 6.9 16,493 7.1 16,380 6.6 8,878 5.1 12,560 6.8 41.5
1
2002-03 over 2001-02
Notes
1) For 1998-99 to 2000-01, financial institutions comprise IDBI, ICICI, TFCI, EXIM Bank, NABARD, SIDBI, IDFC, IFCI, NHB and IIBI.
2) For 2001-02 and 2002-03, financial institutions comprise IDBI, TFCI, EXIM Bank, NABARD, SIDBI, IDFC, IFCI, NHB and IIBI.
127
2.0
Financial system in India
Financial system in India: Overview Chart 1
Ministry of Finance
Reserve Bank of India Securities and Exchange Board of

(RBI) India (SEBI)

Pension funds, Non-banking finance Capital markets Mutual funds
Financial institutions Commercial banks
Provident funds companies (NBFCs)
Term-lending Sectoral institutions State level Stock exchange

institutions TFCI institutions Merchant bankers
IDFC EXIM SFCs Underwriters
IFCI PFC SIDC Stock brokers
IIBI NABARD FIIs
Retail investors
IDFC: Infrastructure Development Finance Corporation of India PFC: Power Finance Corporation
IFCI: Industrial Finance Corporation of India NABARD: National Agricultural Bank for Reconstruction & Development
IIBI: Industrial Investment Bank of India SFC: State Finance Corporation
TFCI: Tourism Finance Corp of India SIDC: State Industrial Development Corporation
EXIM: Export Import Bank of India FII: Foreign Institutional Investor
129
Source: CRIS INFAC
Household sector savings in financial and physical assets Table 1
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 P 2002-03 E
GDP at market prices 1,522,547 1,740,985 1,936,831 2,089,499 2,282,143 2,469,564
Gross domestic savings 352,178 374,659 468,681 495,986 535,185 597,697
Percentage of GDP 23.1 21.5 24.2 23.7 23.5 24.2
Household savings 268,437 326,802 404,401 458,215 519,040 559,258
- Financial assets (net) 146,777 180,346 205,743 222,721 254,304 254,407
- Physical assets 121,660 146,456 198,658 235,494 264,736 304,851
Private corporate sector 63,486 65,026 84,329 86,142 78,849 84,169
Public sector 20,255 -17,169 -20,049 -48,371 -62,704 -45,730
Percentage of GDP 1.3 -1.0 -1.0 -2.3 -2.7 -1.9
P: Provisional; E: Estimate
Source: Handbook of Statistics on the Indian Economy, 2002

130
Proportion of gross household savings in financial assets Table 2
(per cent) 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02P 2002-03P 2003-041
Currency 10.6 12.0 8.2 12.2 10.9 13.3 8.6 7.4 10.5 8.8 6.3 9.7 8.5 10.1
Deposits 33.3 28.9 42.5 42.6 45.5 42.5 48.1 46.6 38.8 36.3 41.0 39.4 41.5 42.9
With banks 27.2 21.3 33.6 27.9 35.3 26.3 25.7 37.8 33.7 30.8 32.5 35.3 36.3 40.5
With non-banking companies 2.2 3.3 7.5 10.6 7.9 10.6 16.4 3.9 3.8 1.7 2.9 2.6 1.6 0.2
With co-operative banks and 4.7 5.0 3.2 5.2 3.0 5.8 6.4 5.3 4.6 4.3 5.6 3.6 3.7 2.3
societies
Trade debt (net) -0.8 -0.6 -1.7 -1.1 -0.8 -0.2 -0.4 -0.4 -3.3 -0.4 0.1 -2.1 -0.1 -0.1
Shares and debentures 14.3 23.3 17.2 13.5 11.9 7.3 6.6 2.9 3.4 7.7 4.1 2.7 1.6 1.4
Private corporate business 4.1 6.0 8.4 7.5 8.0 6.6 3.6 1.3 1.5 3.4 3.1 1.5 0.8 0.7
Co-operative banks and 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.0 0.1 0.0 0.0
societies
Units of UTI 5.8 13.3 7.0 4.3 2.7 0.2 2.4 0.3 0.9 0.8 -0.4 -0.6 -0.5 -0.4

PSU bonds 0.8 0.8 0.1 0.5 0.1 0.1 0.1 0.1 0.0 0.1 0.1 0.0 0.0 0.0
Mutual funds (other than UTI) 3.3 3.1 1.6 1.2 1.1 0.3 0.3 1.1 0.8 3.4 1.3 1.8 1.3 1.1
Claims on government 13.5 7.2 4.9 6.3 9.1 7.7 7.4 12.9 13.6 12.3 15.7 17.9 18.6 17.7
Government securities 0.2 -0.4 0.0 0.4 0.1 0.4 0.4 1.6 0.7 0.9 1.7 5.8 4.3 4.0
Small savings 13.2 7.6 4.9 5.9 9.0 7.4 7.0 11.3 13.0 11.3 14.0 12.1 14.3 13.7
Insurance fund 9.5 10.3 8.8 8.7 7.8 11.2 10.2 11.3 11.3 12.1 13.6 14.2 15.5 14.9
Life insurance fund 8.5 9.4 8.0 8.0 7.2 10.4 9.5 10.6 10.6 11.2 12.9 13.5 14.8 14.5
Postal insurance 0.2 0.2 0.2 0.2 0.2 0.3 0.3 0.3 0.3 0.3 0.2 0.3 0.2 0.1
State insurance 0.7 0.7 0.6 0.5 0.5 0.5 0.4 0.4 0.5 0.6 0.5 0.4 0.5 0.3
Provident and pension fund 18.9 18.3 18.4 16.7 14.7 18.0 19.2 18.8 22.4 22.8 19.3 16.1 14.3 13.0
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
1
Preliminary
P: Provisional
Source: RBI Annual Report 2003-04
131
Banks and financial institutions: Financial assets Table 3
(Rs crore) As at the end of March
1990-91 1997-98 1998-99 1999-00 2000-01 P 2001-02 P 2002-03 P
I. Banks 2,32,786 6,54,406 7,61,326 8,88,781 10,50,276 12,69,034 14,44,993
Scheduled commercial banks 2,22,613 6,28,332 7,26,129 8,51,100 10,09,150 12,23,008 13,98,967
Non-scheduled commercial banks 77 - - - - - -
Total commercial banks 2,22,690 6,28,332 7,26,129 851,100 10,09,150 12,23,008 1398967
State co-operative banks 10,096 26,074 35,197 37,681 41,126 46,026 46,026
II. Financial institutions 1,27,975 4,00,418 4,60,758 522,079 5,75,346 5,54,393 567,296
1
Term-lending institutions (All-India) 57,372 1,74,980 2,05,817 2,22,790 2,40,530 1,70,247 182,223
2
State-level institutions 10,049 21,203 21,629 24,518 24,992 25,012 25,012
3
Investment institutions 58,566 1,97,321 2,27,023 2,67,817 3,01,870 350,538 350,538
4
Other institutions 1,988 6,914 6,289 6,954 7,954 8,596 9,523
Total 3,60,761 10,54,824 12,22,084 14,10,860 16,25,622 18,23,427 2,012,289
P: Provisional
1
Term-lending institutions include IDBI, NABARD, ICICI, IFCI, EXIM Bank, IIBI, NHB, IDFC, and SIDBI. From the end of March
2002 the data does not include ICICI, as it was merged with ICICI Bank.
2
Includes SFCs and SIDCs
3
Includes UTI, LIC, and GIC and its former subsidiaries
4
Includes DICGC and ECGC
Source: Trends and Progress of Banking in India, 2003
Indian financial system: Key financials Table 4

(Rs crore) Number Number Total Total Total Profit Spread Gross Gross NPA Year
of assets deposits income (per cent) NPA / loans and
branches advances
Scheduled commercial banks 90 54,275 1,975,020 1,575,145 183,767 22,273 3.05 n.a. n.a. 2003-04
Regional rural banks 196 14,777 63,614 48,346 5,931 524 3.10 n.a. n.a. 2002-03
Financial institutions 9 n.a. 183,751 20,144 15,882 1,693 0.70 n.a. n.a. 2002-03
NBFCs (excl RNBCs) 905 n.a. 39,832 5,933 5,357 -212 n.a. n.a. n.a. 2001-02
RNBCs 5 n.a. 18,458 12,889 n.a. n.a. n.a. n.a. n.a. 2001-02
n.a.: Not available
Source: Trends and Progress of Banking in India, 2003

132
Capital markets: Resources mobilised Table 5
(Rs crore) 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 P 2003-04 P
Primary capital markets (debt and equity) 30,375 32,650 29,520 37,738 63,407 77,660 74,199 70,568 68,826 62,425
Private placement n.a. 13,361 15,066 30,099 49,679 61,259 67,836 64,876 66,948 59,215
Public sector n.a. 9,290 12,573 20,896 32,681 41,856 44,731 36,256 41,871 44,349
Private sector n.a. 4,071 2,493 9,202 16,998 19,404 23,106 28,620 25,077 14,866
Prospectus and rights / IPO 27,305 16,998 11,060 4,657 9,365 7,704 6,362 5,692 1,878 3,210
Banks and FIs in the public sector 1,476 4,352 2,551 1,472 n.a. n.a. n.a.
Government companies 888 1,000 650 43 0 0 0 n.a. n.a. n.a.
Non-government public companies 26,417 15,998 10,410 3,138 5,013 5,153 4,890 5,692 1,878 3,210
- Equity shares 17,414 11,877 6,101 1,162 2,563 2,753 2,608 860 460 1,959
- Preference shares 131 150 75 4 60 0 142 0 0 0
- Debentures 8,871 3,970 4,233 1,972 2,391 2,401 2,140 4,832 1,418 1,251
PSU bonds 3,070 2,291 3,394 2,983 4,363 8,697 16,632 14,436 7,529 12,536

International capital markets 9,348 5,044 13,279 18,935 5,590 n.a. n.a. n.a. n.a. n.a.
Euro-issues 6,110 496 3,276 4,378 2,105 3,487 4,197 n.a. n.a. n.a.
GDR 5,027 496 1,625 4,330 2,105 n.a. n.a. n.a. n.a. n.a.
FCCB 1,083 0 1,651 48 0 n.a. n.a. n.a. n.a. n.a.
ECB 3,238 4,548 10,003 14,557 3,485 n.a. n.a. n.a. n.a. n.a.
Mutual funds 11,275 -5,833 -2,037 4,064 2,695 22,117 11,135 10,120 4,583 47,684
n.a.: Not available
P: Provisional
Source: Handbook of Statistics on Indian Economy
133
Mutual funds vis-à-vis bank deposits Table 6
(Rs crore) Net assets of Bank deposits Mutual funds to bank
mutual fund (excl RRBs) deposits (per cent)
1991-92 37,973 264,991 14.3
1992-93 47,734 299,602 15.9
1993-94 62,430 349,345 17.9
1994-95 72,967 403,403 18.1
1995-96 74,315 457,639 16.2
1996-97 70,197 537,557 13.1
1997-98 58,918 643,743 9.2
1998-99 70,624 766,814 9.2
1999-2000 103,453 896,728 11.5
2000-01 90,587 1,055,233 8.6
2001-02 100,594 1,205,930 8.3
1
2002-03 109,299 1,355,880 8.1
2003-04 139,616 1,575,140 8.9
1
Mutual funds: The 2002-03 figure includes Rs 29,835 crore assets under management
of the Specified Undertaking of the Unit Trust of India
Source: Report on Trend and Progress of Banking in India and AMFI
Incremental mutual fund collections to bank deposits Table 7

(Rs crore) Mutual fund Bank deposits Mutual fund/bank
deposits (per cent)
1992-93 13,021 34,611 37.6
1993-94 11,243 49,743 22.6
1994-95 11,275 54,058 20.9
1995-96 -5,833 54,236 -10.8
1996-97 -2,037 79,918 -2.5
1997-98 4,064 106,186 3.8
1998-99 2,695 123,071 2.2
1999-2000 22,117 129,914 17.0
2000-01 11,135 158,505 7.0
2001-02 10,120 150,697 6.7
2002-03 P 4,583 149,950 3.1
2003-04 P 47,684 219,260 21.7
P: Provisional
Note
Figures for mutual fund collections during the 1998-99 to 2000-01 period are provisional.
Source: Handbook of Statistics on Indian Economy

134
Banks: Investments in shares Table 8
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03
Investments in shares 3,565 4,741 6,128 4,840 6,194 6,774
Deposits 666,306 797,828 932,469 1,093,527 1,247,239 1,404,490
Per cent of deposits 0.5 0.6 0.7 0.4 0.5 0.5
Source: Statistical Tables Relating to Banks in India
NBFCs: Total assets and deposits Table 9

(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02
NBFCs of which NBFCs of which NBFCs of which NBFCs of which NBFCs of which
RNBCs RNBCs RNBCs RNBCs RNBCs
Number of reporting 1,420 9 1,547 11 1,005 9 981 7 910 5
companies
Total assets 34,790 10,718 47,049 11,081 51,324 11,317 53,878 16,244 58,290 18,458
Public deposits 13,572 10,249 20,429 10,644 19,342 11,004 18,084 11,625 18,822 12,889
Net owned funds 8,573 -1,085 9,118 -666 6,223 -443 4,943 -179 4,383 111
Note
Figures are as of end March.
Source: Report on Trend and Progress of Banking in India 2002-03

135
NBFCs: Net owned funds vis-à-vis public deposits (excl RNBCs) Table 10
(Rs crore) 1998-99 1999-2000
No of Net Public Public deposits No of Net Public Public deposits
reporting owned deposits as a multiple of reporting owned deposits as a multiple of
companies funds NOF companies funds NOF
Up to 0.25 736 38 650 17.1 205 -215 395 -1.8

0.25-0.5 319 70 116 1.6 360 116 194 1.7
0.5-5 332 443 1,068 2.4 314 502 363 0.7
5-10 55 336 265 0.8 43 294 202 0.7
10-50 64 1,285 2,107 1.6 46 1,060 2,773 2.6
50-100 11 787 1,271 1.6 9 628 878 1.4
100-500 18 3,946 4,287 1.1 19 4,280 3,533 0.8
Over 1,000 1 1,121 22 0.0 - - - -
Total 1,536 8,027 9,785 1.2 996 6,666 8,338 1.3
(Rs crore) 2000-01 2001-02

No of Net Public Public deposits No of Net Public Public deposits
reporting owned deposits as a multiple of reporting owned deposits as a multiple of
companies funds NOF companies funds NOF
Up to 0.25 225 -859 807 - 214 -1,351 1,120 -

0.25-0.5 346 116 188 1.6 300 103 128 1.2
0.5-5 305 498 692 1.4 298 477 361 0.8
5-10 34 224 94 0.4 30 204 80 0.4
10-50 37 775 777 1.0 38 798 718 0.9
50-100 12 804 924 1.1 11 798 846 1.1
100-500 14 3,063 2,299 0.8 14 3,243 2,680 0.8
Over 1,000 1 501 679 1.4 - - - -
Total 974 5,122 6,460 1.3 905 4,272 5,933 1.4
NOF: Net owned funds
Notes
1) Figures are as of end March.
2) In 1999-2000, there were no reporting companies with net owned funds over Rs 1,000 crore.
Source: Report on Trend and Progress of Banking in India 2002-03

136
3.0
Industry performance
25 banks: Financials Table 1

(Rs crore) 2003-04 2002-03 2003-04 2002-03 2003-04 2002-03 2003-041
2002-03
H1 H1 Q3 Q3 9M 9M
Income 64,234.3 58,957.9 30,934.5 30,172.9 95,168.7 89,130.8 123,579.7 121,470.0

Interest earned 50,164.4 49,167.0 25,169.8 24,732.1 75,334.2 73,899.1 97,536.7 99,617.4
Other income 14,069.9 9,790.9 5,764.7 5,440.7 19,834.6 15,231.7 26,043.0 21,852.5
Expenditure 56,562.9 53,434.2 25,259.2 25,219.5 81,822.1 78,653.7 108,523.4 109,624.6
Interest expended 32,249.1 33,923.0 15,426.0 16,828.6 47,675.1 50,751.6 60,678.1 67,424.2
Operating expenses 13,671.8 11,931.1 7,136.8 6,208.3 20,808.6 18,139.5 28,261.0 25,770.5
Provisions and contingencies 10,642.0 7,580.0 2,696.4 2,182.6 13,338.3 9,762.6 19,584.3 16,429.9
Operating profit 18,313.4 13,103.7 8,371.6 7,135.9 26,685.0 20,239.7 34,640.6 28,275.3
Net profit 7,671.4 5,523.7 5,675.2 4,953.3 13,346.6 10,477.1 15,056.3 11,845.4
Net interest spread 17,915.3 15,244.0 9,743.8 7,903.5 27,659.0 23,147.5 36,858.6 32,193.3
H1: First half; 9M: Nine months
1
Excludes Indusind Bank and Global Trust Bank
Note
These 25 banks comprise 70 per cent of the total deposits of scheduled commercial banks in India.
Source: Press releases
Public sector banks: Priority sector advances Table 2

(Rs crore) 1968-69 1997-98 1998-99 1999-2000
Rs crore Per cent Rs crore Per cent Rs crore Per cent Rs crore Per cent
Agriculture 162 5.4 34,305 15.7 40,078 16.3 45,296 14.3
Small-scale industry 257 8.5 38,109 17.5 42,674 17.3 46,045 14.6
Other priority sectors 22 0.7 18,881 8.7 24,448 9.9 30,816 9.7
Total priority sector 441 14.6 91,319 41.8 107,200 43.5 127,478 40.3
Net bank credit 3,016 100.0 218,219 100.0 246,203 100.0 316,427 100.0
(Rs crore) 2000-01 2001-02 2002-03 2003-04

Rs crore Per cent Rs crore Per cent Rs crore Per cent Rs crore Per cent
Agriculture 53,571 15.7 63,082 15.9 73,507 15.4 90,541 11.9
Small-scale industry 48,400 14.2 49,743 12.5 52,988 11.1 65,855 8.6
Other priority sectors 40,791 12.0 53,712 13.5 71,448 15.0 107,438 14.1
Total priority sector 149,116 43.7 171,185 43.1 203,095 42.5 263,834 34.5
Net bank credit 341,291 100.0 396,954 100.0 477,899 100.0 763,855 100.0
Note
The figures under the column 'Per cent' indicate the share in net bank credit.

137
Banks: Capital adequacy ratio Table 3
138
(per cent) 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Tier I Tier II Total Tier I Tier II Total Tier I Tier II Total Tier I Tier II Total Tier I Tier II Total
Public sector banks
State Bank of India 11.6 12.2 14.6 12.5 8.3 3.2 11.5 8.6 4.2 12.8 9.2 4.1 13.4 8.8 4.7 13.5 8.3 5.2 13.5
State Bank of Patiala 9.5 11.3 13.2 12.5 10.8 1.8 12.6 10.7 1.7 12.4 10.0 2.6 12.6 10.4 3.2 13.6 9.9 3.7 13.6
State Bank of Hyderabad 9.9 10.8 10.8 10.7 9.3 1.6 10.9 9.6 2.7 12.3 9.5 4.2 13.7 9.8 5.0 14.8 8.4 5.9 14.3
State Bank of Travancore 9.4 8.2 11.5 10.3 7.5 3.6 11.1 7.7 4.1 11.8 7.8 4.8 12.5 6.8 4.5 11.3 6.2 5.1 11.4
State Bank of Bikaner & Jaipu 9.3 8.8 10.7 12.3 11.1 1.3 12.4 11.6 0.8 12.4 10.9 1.4 12.3 10.5 2.6 13.1 9.0 3.9 12.9
State Bank of Mysore 8.8 10.8 11.6 10.2 7.4 4.1 11.5 6.8 4.4 11.2 6.7 5.1 11.8 7.2 4.4 11.6 7.2 4.4 11.5
State Bank of Saurashtra 12.4 12.1 18.1 14.4 14.1 0.4 14.5 13.7 0.2 13.9 12.1 1.1 13.2 11.7 2.0 13.7 11.0 3.5 14.5
State Bank of Indore 8.8 9.3 9.8 12.4 8.6 2.7 11.3 9.1 3.6 12.7 8.2 4.6 12.8 9.4 3.7 13.1 8.3 4.1 12.4
Allahabad Bank 10.8 11.0 11.6 10.4 7.1 4.4 11.5 6.7 3.8 10.5 6.2 4.4 10.6 6.4 4.8 11.2 6.3 6.3 12.5
Andhra Bank 5.1 12.1 12.4 11.0 10.0 3.4 13.4 9.8 3.6 13.4 8.8 3.8 12.6 8.2 5.4 13.6 8.2 5.5 13.7
Bank of Baroda 11.2 11.8 12.1 13.3 8.9 3.2 12.1 8.5 4.3 12.8 7.6 3.8 11.3 8.1 4.6 12.7 8.5 5.4 13.9
Bank of India 8.4 10.3 9.1 10.6 6.9 3.7 10.6 7.6 4.6 12.2 6.4 4.3 10.7 7.6 4.5 12.0 7.5 5.5 13.0
Bank of Maharashtra 8.5 9.1 10.9 9.8 6.9 4.8 11.7 6.4 4.3 10.6 6.6 4.6 11.2 5.9 5.9 11.8 7.0 4.9 11.9
Canara Bank 10.4 10.2 9.5 11.0 7.8 1.9 9.6 7.3 2.5 9.8 8.1 3.8 11.9 7.9 4.7 12.5 7.8 7.8 15.6
Central Bank of India 2.6 9.4 10.4 11.9 6.7 4.5 11.2 5.7 4.3 10.0 5.2 4.4 9.6 5.7 4.9 10.5 6.2 6.2 12.4
Corporation Bank 11.3 11.3 16.9 13.2 12.7 0.1 12.8 13.0 0.3 13.3 16.8 1.1 17.9 17.3 1.2 18.5 16.5 3.6 20.1
Dena Bank 8.3 10.8 11.9 11.1 7.1 4.6 11.6 4.4 3.4 7.7 4.4 3.3 7.6 5.3 4.0 9.3 5.2 4.3 9.5
Indian Bank - ve -18.8 1.4 - ve - ve - - ve - ve - - ve 0.9 0.9 1.7 7.5 3.3 10.9 7.7 5.2 12.8
Indian Overseas Bank 6.0 10.1 9.3 10.2 5.2 4.0 9.2 5.8 4.4 10.2 6.2 4.7 10.8 5.8 5.5 11.3 6.7 5.8 12.5
Oriental Bank of Commerce 17.0 17.5 15.3 14.1 12.5 0.2 12.7 11.5 0.4 11.8 9.6 1.4 11.0 10.7 3.3 14.0 9.9 4.6 14.5
Punjab and Sind Bank 5.5 9.2 11.4 10.9 7.5 4.1 11.6 6.9 4.6 11.4 6.4 4.3 10.7 6.1 4.3 10.4 6.4 4.7 11.1
Punjab National Bank 8.2 9.2 8.8 10.8 6.7 3.6 10.3 6.8 3.4 10.2 6.3 4.4 10.7 7.1 4.9 12.0 7.0 6.1 13.1
Syndicate Bank 8.4 8.8 10.5 9.6 7.2 4.2 11.5 7.9 3.8 11.7 8.5 3.7 12.1 7.7 3.3 11.0 6.8 4.7 11.5
UCO Bank 7.8 3.2 9.1 9.6 6.6 2.6 9.2 5.4 3.7 9.1 4.9 4.8 9.6 5.2 4.9 10.0 6.1 5.8 11.9
Union Bank of India 9.5 10.5 10.9 10.1 6.7 4.8 11.4 6.2 4.7 10.9 6.2 4.9 11.1 6.9 5.6 12.4 6.5 5.9 12.3
United Bank of India 3.5 8.2 8.4 9.6 8.2 1.4 9.6 7.0 3.4 10.4 8.8 3.2 12.0 12.6 2.5 15.2 15.0 2.0 17.0
Vijaya Bank 0.0 11.5 10.3 10.0 6.0 4.6 10.6 8.0 3.5 11.5 8.9 3.4 12.3 7.4 5.2 12.7 8.4 5.7 14.1
Continued...

...continued
(per cent) 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Tier I Tier II Total Tier I Tier II Total Tier I Tier II Total Tier I Tier II Total Tier I Tier II Total
Old private sector banks
Bank of Rajasthan 11.1 10.1 5.5 0.8 5.1 0.6 5.7 8.9 1.7 10.6 10.0 2.1 12.1 8.9 2.4 11.3 8.35 2.83 11.18
Karur Vysya Bank 10.9 12.8 14.5 14.5 14.5 0.7 15.2 15.1 0.4 15.6 15.6 1.3 16.9 14.9 2.1 17.0 15.1 2.01 17.11
Federal Bank 8.4 9.2 9.4 10.3 7.7 3.6 11.3 7.7 2.6 10.3 7.0 3.7 10.6 6.7 4.6 11.2 6.26 5.22 11.48
Vysya Bank 11.9 14.2 12.5 10.6 8.2 4.0 12.2 8.4 3.6 12.1 8.0 3.6 11.6 6.6 3.2 9.8 n.a. n.a. n.a.
United Western Bank 10.7 10.2 9.9 11.6 8.6 3.4 11.9 6.6 3.0 9.6 7.0 2.8 9.8 6.4 3.8 10.2 5.33 4.8 10.13
New private sector banks
Centurion Bank 2.6 1.6 4.2 1.1 0.9 2.0 3.08 4.41 7.5
Global Trust Bank 9.4 10.2 10.3 12.0 9.9 3.8 13.7 8.8 3.9 12.7 7.4 3.8 11.2 0.0 0.0 0.0 0.0 0.0 0.0
HDFC Bank 23.5 13.5 13.9 11.9 9.6 2.6 12.2 8.7 2.4 11.1 10.8 3.1 13.9 9.5 1.6 11.1 8.03 3.63 11.7
ICICI Bank 17.5 13.0 13.5 11.1 17.4 2.2 19.6 10.4 1.2 11.6 7.5 4.0 11.4 7.1 4.1 11.1 6.09 4.27 10.4

IDBI Bank - - - - - - - - - - 6.4 3.2 9.6 6.0 3.6 9.6 5.84 4.54 10.4
Bank of Punjab 35.0 18.7 16.3 13.2 9.8 0.0 9.8 8.5 2.5 11.0 8.5 4.4 12.8 8.5 5.1 13.6 7.74 4.9 12.6
Kotak Mahindra Bank - - - - - - - - - - 30.5 0.0 30.5 25.7 0.3 26.0 14.64 0.61 15.3
UTI Bank - - - - - - - - - - 6.4 4.2 10.7 6.4 4.5 10.9 6.44 4.77 11.2
IndusInd Bank 18.2 12.9 17.9 15.2 12.1 1.2 13.2 12.6 2.4 15.0 10.5 2.1 12.5 10.1 2.1 12.1 8.91 3.84 12.8
Foreign banks
Citibank 10.1 9.5 8.6 10.0 7.0 3.6 10.6 7.9 3.3 11.2 8.4 2.7 11.0 8.4 2.9 11.3 8.79 2.32 11.11
Hongkong Bank 11.7 11.9 9.8 9.3 5.7 4.6 10.3 8.6 3.7 12.4 7.5 3.5 10.9 14.5 3.6 18.1 11.17 3.37 14.54
ANZ Grindlays Bank 9.5 9.0 9.1 9.0 6.0 5.0 10.9 6.9 5.6 12.5 6.5 6.5 13.1 n.a. n.a. n.a. n.a. n.a. n.a.
Standard Chartered Bank 13.8 8.6 9.3 8.3 6.0 3.5 9.5 6.7 2.9 9.6 6.9 2.4 9.3 6.8 3.8 10.6 7.11 3.76 10.87
Bank of America 8.7 8.4 9.0 9.3 12.4 0.5 12.9 12.5 0.5 13.0 13.5 7.6 21.1 13.7 7.4 21.1 15.68 7.24 22.92
Deutsche Bank 8.5 9.3 9.7 9.5 10.4 0.0 10.4 12.5 0.2 12.7 13.7 0.9 14.6 15.2 2.2 17.4 9.32 5.1 14.42
ABN Amro Bank 8.2 9.2 9.8 9.3 8.2 1.9 10.1 9.5 1.9 11.4 11.2 2.0 13.2 10.7 1.9 12.6 11.49 1.99 13.48
American Express Bank 9.0 10.4 9.9 9.3 9.9 0.2 10.1 9.4 0.2 9.6 10.3 0.4 10.7 10.5 0.4 10.9 10.34 0.4 10.74
n.a.: Not available
Source: IBA' Performance Highlights of Public, Private & Foreign Banks in India
139
Public sector banks: Capital adequacy ratio Table 4
Number of banks 0-4 4-8 8-10 Over 10 Total
per cent per cent per cent per cent
1993-94 11 8 4 4 27
1994-95 3 11 8 5 27
1995-96 5 3 13 6 27
1996-97 2 0 9 16 27
1997-98 1 0 7 19 27
1998-99 1 0 4 22 27
1 2
1999-2000 1 0 4 22 27
1 2
2000-01 1 1 2 23 27
1 2
2001-02 1 1 2 23 27
1 2
2002-03 0 1 1 25 27
2003-04 0 0 1 26 27
1
4-9 per cent
2
9-10 per cent
Capital adequacy ratio: 2003-04 Table 5

Number of banks Less than 4 4-9 9-10 Over 10 Total
per cent per cent per cent per cent
SBI - - - 1 1
SBI associates - - - 7 7
Nationalised banks 0 0 1 18 19
Old private sector banks n.a. n.a. n.a. n.a. n.a.
New private sector banks - 1 - 7 8
Foreign banks n.a. n.a. n.a. n.a. n.a.
Total 0 1 1 33 35
n.a. Not available
Scheduled commercial banks: Capital infusion (1991-92 to 2003-04) Table 6

(Rs crore)
1
Public sector banks - Recapitalisation support by government 22,516
Public sector banks - Public and right issues 9,428
Old private sector banks - Capital issues 1,043
New private sector banks - Capital issues 2,987
Total 35,974
1
Figures for 2002-03
Source: CRIS INFAC

140
Public sector banks: Recapitalisation support by the government Table 7
(Rs crore) Upto 1992-93 Jan 1994 Dec 1994 Feb 1995 Mar 1995 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 Total
Allahabad Bank 171 90 356 - 102 160 - - - - - - - 879
Andhra Bank 89 150 109 76 - - 165 - - - - - - 588
Bank of Baroda 163 400 - - - - - - - - - - - 563
Bank of India 455 635 848 - 348 - - - - - - - - 2,287
Bank of Maharashtra 182 150 240 95 - 80 - - - - - - - 746
Canara Bank 113 365 - - - - - 600 - - - - - 1,078
Central Bank of India 176 490 632 - - - 500 - - - - - - 1,798
Corporation Bank 65 45 - - - - - - - - - - - 110
Dena Bank 146 130 6 - 72 - - - - - - - - 354
Indian Bank 194 220 231 - 181 - - 1,750 100 - - 1,300 770 4,746
Indian Overseas Bank 357 705 259 - 133 - - - - - - - - 1,453
New Bank of India 183 - - - - - - - - - - - - 183

Oriental Bank of Commerce 77 50 - - - - - - - - - - - 127
Punjab and Sind Bank 206 160 116 - - 72 150 - - - - - - 704
Punjab National Bank 165 415 - - - - - - - - - - - 580
Syndicate Bank 149 680 279 - 89 172 - - - - - - - 1,368
Union Bank of India 132 200 - - - - - - - - - - - 332
United Bank of India 360 215 471 67 - 256 338 - 100 - - - - 1,808
United Commercial Bank 492 535 280 236 - 110 54 350 200 - - - - 2,257
Vijaya Bank 126 65 62 - - - 302 - - - - - - 555
Total 4,000 5,700 3,889 473 925 850 1,509 2,700 400 0 0 1,300 770 22,516
Source: CRIS INFAC
141
Public sector banks: Writing down of capital base Table 8
(Rs crore) 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03
Allahabad Bank - - 532 - - - - - -
Andhra Bank - - - - 243 - 48 - 50
Bank of India - 1,370 - - - - - - -
Bank of Maharashtra - - - - 418 - - - -
Canara Bank - - - 507 - - - - 277
Central Bank of India - - - - - - - 681 -
Dena Bank - 136 - - - - - - -
Indian Overseas Bank - - 1,000 - - - - - -
Punjab and Sind Bank - - - - 462 - - - -
Punjab National Bank 425 - - - - - - - -
Syndicate Bank - - - - 943 - - - -
UCO Bank - - - - - - - - 1,665
Union Bank - - - - - - - - 58
Vijaya Bank - - - - - 297 - - -
Total 425 1,506 1,532 507 2,067 297 48 681 2,050
Source: RBI's Report on Trend and Progress of Banking in India
Public sector banks: Amounts returned to the government Table 9

(Rs crore) 1996-97 1997-98 2000-01 2001-02 2002-03
Andhra Bank - - 48 - 50
Bank of Baroda 381 - - - -
Bank of India 93 - - 150 -
Canara Bank - - - - 278
Corporation Bank 30 - - - -
Punjab National Bank - 138 - - -
Vijaya Bank - - - 25 -
Union Bank - - - - 58
Total 504 138 48 175 386
Source: CRIS INFAC

142
Public sector banks: Public/rights issues Table 10
(Rs crore) Period Amount Issue price
Public issue
State Bank of India Dec 1993 2,212.2 90
Oriental Bank of Commerce Oct 1994 360.0 50
Dena Bank Dec 1996 180.0 20
1
State Bank of India Oct 1996 1,270.4 233
Bank of Baroda Dec 1996 850.0 75
Bank of India Feb 1997 675.0 35
Corporation Bank Oct 1997 304.0 70
State Bank of Bikaner and Jaipur Nov 1997 73.4 440
State Bank of Travancore Jan 1998 90.0 500
Syndicate Bank Oct 1999 125.0 10
Vijaya Bank Dec 2000 100.0 10
Andhra Bank Feb 2001 150.0 10
Indian Overseas Bank Feb 2001 111.2 10
Union Bank Of India Aug 2002 288.2 16
Allahabad Bank Oct 2002 100.0 10
Canara Bank Nov 2002 385.0 35
Indian Overseas Bank Sep 2003 240.0 24
Uco Bank Sep 2003 240.0 12
Vijaya Bank Oct 2003 240.0 24
Bank of Maharashtra Feb 2004 230.0 23
Rights issue
State Bank of India Dec 1990 130.0 260
State Bank of India Jan 1994 792.0 60
State Bank of Bikaner and Jaipur Feb 1996 62.4 400
State Bank of Indore Feb 1996 52.5 600
State Bank of Mysore Feb 1996 84.0 350
State Bank of Travancore Feb 1996 82.5 550
1
GDR issue
Source: RBI's Report on Trend and Progress of Banks in India

143
Old private sector banks: Public/rights issues Table 11
Public issue
Nedungadi Bank Jan 1992 1.4 10
United Western Bank Jan 1994 6.0 20
Federal Bank Mar 1994 31.9 90
Sangli Bank Dec 1994 37.5 100
Karnataka Bank Oct 1995 54.1 120
Dhanalaxmi Bank Mar 1996 41.4 50
Jammu & Kashmir Bank May 1998 70.3 38
City Union Bank Jun 1998 21.0 35
South Indian Bank Sep 1998 51.2 32
Rights issue
Karur Vysya Bank Nov 1991 3.0 60
Nedungadi Bank Jan 1992 1.0 10
Federal Bank Mar 1993 9.3 35
Bank of Rajasthan Jul 1994 10.0 20
Karnataka Bank Oct 1995 27.0 60
United Western Bank Oct 1995 71.6 40
Lakshmi Vilas Bank Nov 1995 20.0 35
Vysya Bank Jan 1996 46.3 35
Bank of Madura Feb 1996 33.0 70
Federal Bank Feb 1996 111.2 150
Nedungadi Bank Feb 1996 20.4 30
Lord Krishna Bank Feb 1998 25.5 17
Catholic Syrian Bank Dec 1998 15.7 32
Bank of Rajasthan Oct 1999 67.3 15
Bharat Overseas Bank 1999-2000 10.5 n.a.
Ganesh Bank of Kurundwad 1999-2000 0.5 n.a.
Nainital Bank 1999-2000 2.5 n.a.
Ratnakar Bank 1999-2000 5.9 n.a.
Sangli Bank 1999-2000 3.2 n.a.
1
Vysya Bank 2000-01 75.5 n.a.
Bank of Rajasthan 2000-01 35.8 10
Lord Krishna Bank 2001-02 36.0 12
Dhanalaxmi Bank 2001-02 27.5 15
Karnataka Bank 2002-03 33.6 25
Karur Vysya Bank 2002-03 36.0 60
1
Preference issue to foreign collaborators
n.a.: Not available
Source: CRIS INFAC

144
New private sector banks: Public issues Table 12
Bank of Punjab Mar 1995 95.0 10
Global Trust Bank Aug 1994 95.8 10
HDFC Bank Mar 1995 90.0 10
1
ICICI Bank Aug 1997 144.4 35
IndusInd Bank Nov 1997 180.0 45
UTI Bank Sep 1998 31.5 21
1
UTI Bank Sep 1998 42.0 21
IDBI Bank Feb 1999 72.0 18
Times Bank Jul 1999 35.0 10
Centurion Bank Sep 1999 33.8 10
Global Trust Bank 1999-2000 125.8 85
HDFC Bank 1999-2000 186.2 94
2
ICICI Bank Mar 2000 763.4 240
2
HDFC Bank Jul 2001 780.7 217
3
UTI Bank Sep 2001 157.6 34
4
IDBI Bank Sep 2003 154.2 22
1
Offer for sale by promoters
2
ADR issue
3
Private placement of shares
4
Rights issue
Source: CRIS INFAC
Public sector banks: Government ownership Table 13

(per cent) 1998-99 1999-2000 2000-01 2001-02 2002-03
Allahabad Bank 100 100 100 100 71
Andhra Bank 100 100 67 67 63
Bank of Baroda 66 66 66 66 66
Bank of India 77 77 77 69 69
Bank of Maharashtra 100 100 100 100 100
Canara Bank 100 100 100 100 73
Central Bank of India 100 100 100 100 100
Corporation Bank 68 68 68 57 57
Dena Bank 71 71 71 71 71
Indian Bank 100 100 100 100 100
Indian Overseas Bank 100 100 75 75 75
Oriental Bank of Commerce 67 67 67 67 67
Punjab and Sind Bank 100 100 100 100 100
Punjab National Bank 100 100 100 100 100
Syndicate Bank 100 74 74 74 74
Union Bank of India 100 100 100 100 61
United Bank of India 100 100 100 100 100
UCO Bank 100 100 100 100 100
Vijaya Bank 100 100 72 70 70
Note
In 2000-01 and 2001-02, government ownership was lowered in Andhra Bank, Indian Overseas Bank,
Vijaya Bank and and Punjab National Bank.
Source: IBA' Performance Highlights of Public Sector Banks in India

145
Public sector banks: Net worth Table 14
Rs lakh 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
Capital 3,925 4,499 10,259 14,689 14,132 13,870 16,071
Reserves and surplus 3,888 5,127 8,721 11,358 14,267 19,389 24,698
Total 7,813 9,626 18,980 26,047 28,399 33,259 40,769
Rs lakh 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Capital 14,405 14,234 14,547 15,013 14,175 14676
Reserves and surplus 27,447 31,819 35,358 42,276 51,407 64,549
Total 41,852 46,052 49,905 57,289 65,583 79,225
Scheduled commercial banks: Net worth Table 15

1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
Capital 4,053 4,673 10,548 15,225 16,261 16,873 19,363
Reserves and surplus 4,979 7,189 11,750 15,643 20,504 26,874 34,000
Total 9,032 11,862 22,298 30,868 36,765 43,747 53,363
1998-99 1999-2000 2000-01 2001-02 2002-03 2003-041

Capital 18,166 18435.2 19,095 20,949 21,594 22,322
Reserves and surplus 36,791 43451.87 48,647 62,555 76,274 94,246
Total 54,957 61887.07 67,741 83,504 97,868 116,568
1
excluding RRBs
NRI deposits (1991-2003) Table 16

($ million) 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
FCNR(A) 10,103 9,792 10,617 9,300 7,051 4,255 2,306 1 - - - - - -
FCNR(B) - - - 1,108 3,063 5,720 7,496 8,467 8,323 8,172 9,076 9,673 10,199 10,961
NR(E)RA 3,618 3,025 2,740 3,523 4,556 3,916 4,983 5,637 6,220 6,758 7,147 8,449 14,923 20,559
NR(NR)RD - - 621 1,754 2,486 3,542 5,604 6,262 6,758 6,754 6,849 7,052 3,407 1,746
FC(O)N - - - 12 10 13 4 2 - - - - - -
FC(B&O)D 265 732 1,037 533 - - - - - - - - - -
Total 13,986 13,549 15,015 16,230 17,166 17,446 20,393 20,369 21,301 21,684 23,072 25,174 28,529 33,266
Change - -437 1,466 1,215 936 280 2,947 -24 932 383 1,388 2,102 3,355 4,737
FC(B&O)D: Foreign currency (bank and other) deposits; FC(O)N: Foreign currency (ordinary) non-repatriable deposits; FCNR(A):
Foreign currency non-resident (accounts); FCNR(B): Foreign currency non-resident (banks); NR(E)RA: Non-resident (external)
rupee accounts; NR(NR)RD: Non-resident (non-repatriable) rupee deposits.
Note
Figures are as at the end of March.
Source: RBI Annual Report

146
Commercial banks: Branch network Table 17
(nos) 1969 1984 1991 1996 1997 1998 1999 2000 2001 2002 2003
Rural 1,860 25,372 35,187 33,000 32,918 32,857 32,791 32,649 32,631 32,434 32,386
Semi-urban 3,344 9,262 11,269 13,586 13,783 13,985 14,205 14,431 14,509 14,742 14,830
Urban 1,456 5,769 7,615 9,116 9,379 9,692 9,931 10,130 10,219 10,493 10,650
Metro 1,661 4,929 6,119 7,403 7,573 7,816 8,069 8,346 8,441 8,590 8,648
Total 8,321 45,332 60,190 63,105 63,653 64,350 64,996 65,556 65,800 66,259 66,514
Note
Figures are for June.
Banks: Distribution of net NPAs as a percentage of net advances Table 18

(nos) 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03
Public sector banks 27 27 27 27 27 27 27 27
Up to 10 per cent 19 17 17 18 22 22 24 25
Over 10 and up to 20 per cent 6 9 9 8 5 5 3 2
Over 20 per cent 2 1 1 1 0 0 0 0
Old private sector banks 25 25 25 25 24 23 22 21
Up to 10 per cent 22 22 21 17 18 16 17 19
Over 20 per cent 0 0 0 3 1 3 2 1
New private sector banks 9 9 9 9 8 8 8 9
Up to 10 per cent 9 9 9 9 8 8 8 8
Over 20 per cent 0 0 0 0 0 0 0 0
Foreign banks in India 31 39 42 41 42 42 40 36
Up to 10 per cent 30 36 34 27 31 31 26 28
Over 20 per cent 0 2 2 3 4 5 9 4
Total 92 100 103 102 101 100 97 93

147
Banks: Segment-wise incremental ratio of gross and net NPAs Table 19
148
(per cent) Incremental ratio of gross NPAs to Incremental ratio of net NPAs to
Gross advances Total assets Net advances Total assets
1999-2000 2000-01 2001-02 2002-03 1999-2000 2000-01 2001-02 2002-03 1999-2000 2000-01 2001-02 2002-03 1999-2000 2000-01 2001-02 2002-03
Scheduled 2.2 4.2 5.8 -2.2 1.1 1.8 3.0 -1.3 2.7 2.9 2.6 -2.9 1.3 1.3 1.3 -1.7
commercial banks
- Public sector banks 2.4 2.8 2.7 -3.5 1.1 1.3 1.4 -1.8 3.6 2.9 0.0 -4.4 1.6 1.3 0.0 -2.3
- Nationalised banks 0.6 2.2 5.0 0.3 0.3 1.3 3.4 0.1 4.8 2.7 0.9 -4.1 2.3 1.5 0.6 -2.1
- State Bank Group 5.3 3.8 -6.4 -11.0 2.2 1.2 -1.9 -5.6 1.6 3.2 -3.5 -4.8 0.7 1.0 -1.1 -2.6
- Old private sector banks 0.5 14.0 11.7 -3.9 0.4 5.3 5.8 -2.4 0.8 9.2 5.6 -3.8 0.8 3.3 2.8 -2.3
- New private sector banks 0.9 7.8 11.4 2.1 0.4 3.4 5.4 2.4 0.3 3.7 6.2 3.1 0.1 1.5 2.9 2.7
- Foreign banks in India 4.0 5.7 -7.3 2.9 4.1 2.4 -3.4 3.3 -0.2 -0.7 2.4 -0.1 -0.2 -0.3 1.2 -0.1

Banks: Segment-wise incremental gross and net NPAs Table 20
(Rs crore) Incremental gross NPAs Incremental net NPAs
1998-99 1999-2000 2000-01 2001-02 2002-03 1998-99 1999-2000 2000-01 2001-02 2002-03
Scheduled commercial banks 7,908 1,686 3,475 7,120 -2,147 4,260 2,053 2,394 3,093 -2,790
- Public sector banks 6,058 1,322 1,740 1,801 -2,387 2,979 1,976 1,781 -19 -2,995
- Nationalised banks 2,939 190 920 2,681 119 1,297 1,641 1,089 468 -1,822
- State Bank Group 3,119 1,132 819 -880 -2,506 1,683 335 693 -487 -1,173
- Old private sector banks 990 31 605 505 -283 760 61 377 243 -272
- New private sector banks 479 75 674 5,195 421 320 27 291 2,734 479
- Foreign banks in India 381 257 457 -380 103 200 -11 -55 135 -2
Scheduled commerical banks: Gross and net NPAs Table 21

(Rs crore) Gross Gross Change 1
Gross NPAs as a Net Net Change 1
Net NPAs as a
advances NPAs percentage of advances NPAs percentage of
gross advances net advances
1996-97 301,698 47,300 5,639 15.7 276,421 22,340 4,043 8.1
1997-98 352,696 50,815 3,515 14.4 325,522 23,761 1,421 7.3
1998-99 399,436 58,722 7,907 14.7 367,012 28,020 4,259 7.6
1999-2000 475,113 60,408 1,686 12.7 444,292 30,073 2,053 6.8
2000-01 558,766 63,741 3,333 11.4 526,328 32,461 2,388 6.2
2001-02 680,958 70,861 7,120 10.4 645,859 35,554 3,093 5.5
2002-03 778,043 68,714 -2,147 8.8 740,473 32,764 -2,790 4.4
1
Change in NPAs over the previous year

149
Public sector banks: Net NPAs as a percentage of net advances Table 22
(per cent) 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Allahabad Bank 16.0 14.8 15.1 12.5 12.2 11.2 11.1 7.1 2.4
Andhra Bank 3.3 4.1 2.9 4.3 3.5 3.0 2.5 1.8 0.9
Bank of Baroda 8.2 7.5 6.6 7.7 7.0 6.8 5.0 3.7 3.0
Bank of India 7.0 6.9 7.3 7.3 8.6 6.7 6.0 5.6 4.5
Bank of Maharashtra 9.4 9.7 8.7 8.7 7.0 7.4 5.8 4.8 2.5
Canara Bank 7.5 9.3 7.5 7.1 5.3 4.8 3.9 3.6 2.9
Central Bank of India 13.5 14.4 12.2 9.8 9.8 9.7 8.0 6.7 5.6
Corporation Bank 2.3 3.6 2.9 2.0 1.9 2.0 2.3 1.7 1.8
Dena Bank 7.3 9.4 8.3 7.7 13.8 18.3 16.3 11.8 9.4
Indian Bank 23.9 25.2 26.0 21.7 16.2 10.1 8.3 6.2 2.7
Indian Overseas Bank 8.6 7.6 6.3 7.3 7.7 7.0 6.3 5.2 2.9
Oriental Bank of Commerce 3.6 5.6 4.5 4.5 3.6 3.6 3.2 1.4 0.0
Punjab and Sind Bank 10.3 12.0 10.8 10.5 9.4 12.3 11.7 10.9 9.6
Punjab National Bank 12.7 10.4 9.6 9.0 8.5 6.7 5.3 3.9 1.0
State Bank of India 6.6 7.3 6.1 7.2 6.4 6.0 5.6 4.5 3.5
State Bank of Bikaner and Jaipur 6.1 8.0 7.1 10.5 10.1 7.8 5.0 4.1 1.2
State Bank of Hyderabad 9.9 11.4 10.9 8.8 7.3 7.8 5.0 3.3 0.7
State Bank of Indore 9.6 11.3 11.0 10.1 7.6 5.9 3.6 2.7 0.0
State Bank of Mysore 8.6 11.0 10.8 10.6 8.1 7.7 7.4 5.2 3.0
State Bank of Patiala 6.6 5.9 7.0 8.2 6.1 4.9 2.9 1.5 0.0
State Bank of Saurashtra 5.7 6.1 6.6 7.7 7.9 6.9 5.0 3.5 0.0
State Bank of Travancore 7.4 8.8 12.2 10.8 8.8 7.8 5.7 3.1 1.4
Syndicate Bank 8.4 7.5 5.8 3.9 3.2 4.1 4.6 4.3 2.6
UCO Bank 11.4 13.7 11.1 10.8 8.8 6.4 5.5 4.4 3.7
Union Bank of India 5.9 7.0 7.7 8.7 8.0 6.9 6.3 4.9 2.9
United Bank of India 23.3 19.2 14.1 14.7 12.9 10.5 7.9 5.5 3.8
Vijaya Bank 11.9 9.6 7.6 6.7 6.6 6.2 6.0 2.6 0.9
Public sector banks: Classification of loan assets Table 23

(percentage of advances) 1997 1998 1999 2000 2001 2002 2003 2003
Standard assets 82.2 84.0 84.1 86.0 87.6 88.9 90.6 92.2
Total NPAs 17.9 16.1 15.9 14.0 12.4 11.1 9.4 7.8
- Sub-standard assets 5.1 5.1 4.9 4.3 3.3 3.1 2.6 2.6
- Doubtful assets 10.7 9.1 9.0 8.0 7.6 6.6 5.6 4.3
- Loss assets 2.1 1.9 2.0 1.7 1.5 1.4 1.2 0.9
Total advances (Rs crore) 244,214 284,971 325,328 380,077 442,134 509,369 577,813 661,975
Note
The figures are as at end March.

150
New private sector banks: Key financial parameters (2003-04) Table 24
Unit ICICI HDFC UTI Bank IndusInd Centurion IDBI Bank Bank of Kotak
Bank Bank Bank Bank Punjab Mahindra
1
Branches nos 446 231 140 53 60 97 107 4
1
Number of employees nos 10617 4791 2338 941 945 1453 1158 545
Total income Rs crore 11959 3029 2127 1331 397 947 472 384
Operating profit Rs crore 2372 1008 686 445 12 285 103 127
Net profit Rs crore 1637 510 278 262 -105 132 37 79
Total assets Rs crore 125229 42307 24150 15086 3549 13002 4839 5817
Advances Rs crore 62096 17745 9363 7812 1556 7399 2353 2097
Investments Rs crore 42743 19257 7793 3972 1004 3914 1572 2883
Deposits Rs crore 68109 30409 20954 11200 3029 10048 4137 4459
Paid-up equity capital Rs crore 966 285 232 290 57 214 105 60
Net worth Rs crore 8011 2693 1138 800 62 618 244 606
Income/ average assets per cent 10.3 8.3 2.9 10.7 11.4 9.0 10.6 9.63
Interest earned / average assets per cent 7.7 7.0 7.3 7.9 9.6 7.0 7.7 7.2
Other income / average assets per cent 2.6 1.3 2.5 2.8 1.8 2.0 2.9 2.4
Expenditure / average assets per cent 8.3 5.6 6.6 7.1 11.1 6.3 8.1 6.5
Interest expended / average assets per cent 6.0 3.3 4.7 5.4 5.9 3.9 4.6 3.0
Operating expenses / average assets per cent 2.2 2.2 1.9 1.7 5.2 2.5 3.5 3.5
Provisions and contingencies / per cent 0.6 1.4 1.9 1.5 3.4 1.5 1.4 1.2
average assets
Operating profit / average assets per cent 1.9 2.4 2.8 4.8 0.1 3.2 1.9 4.4
Return on assets per cent 1.4 1.4 1.3 2.1 -3.0 1.3 0.8 2.0
Net interest margin per cent 1.6 3.7 2.6 2.5 3.7 3.2 3.1 4.3
Capital adequacy
CRAR- Total per cent 6.1 8.0 6.4 8.9 3.1 5.8 7.7 14.6
CRAR- Tier-I per cent 4.3 3.6 4.8 3.8 4.4 4.5 4.9 0.6
Asset quality
Net NPA Rs crore n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
Net NPAs / net advances per cent n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
Net NPA / net worth per cent n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
Productivity 1
Business per employee Rs lakhs 955.52 712.40 1032.70 1482.01 438.99 712.83 465.18 274.75
Profit per employee Rs lakhs 13.00 14.51 17.54 34.46 2.30 11.02 9.41 24.62
Deposits per branch Rs crore 108.0 96.9 121.2 162.2 47.2 62.2 33.5 64.2
Valuation
Book value Rs 130 95 49 36 1 29 23 102
Stock price Rs 217 304 93 30 12 37 24 284
Market capitalisation Rs crore 13395 8659 2158 658 654 795 248 1694
Price / book value times 1.67 3.22 1.90 0.82 10.62 1.29 1.02 2.79
Deposits / market capitalisation times 5.08 3.51 9.71 17.02 4.63 12.64 16.66 2.63
EPS Rs 26.56 17.89 12.02 11.90 -1.85 6.18 3.53 13.23
Current PE times 8.18 17.00 7.75 2.51 -6.22 6.00 6.71 21.51
n.a.: Not available
1
For the year 2002-03
Source: IBA's Performance Highlights of Private Sector Banks

151
Old private sector banks: Key financial parameters (2003-04) Table 25
Unit Jammu & ING Vysya Federal Karnataka United South Indian
Kashmir Bank Bank Bank Bank Western Bank Bank
1
Branches nos 454 371 420 360 231 391
1
Number of employees nos 7,112 4,969 6,217 4,320 3,275 3,550
Total income Rs crore 1,823 1,287 1,490 1,119 596 915
Operating profit Rs crore 628 262 437 330 133 242
Net profit Rs crore 406 59 136 133 31 84
Total assets Rs crore 21206 13198 15114 10577 7139 9254
Advances Rs crore 9285 7047 7701 4668 3744 4197
Investments Rs crore 8451 4085 5507 4879 2413 3962
Deposits Rs crore 18661 10478 13477 9407 6430 8280
Paid-up equity capital Rs crore 48 23 22 40 30 36
Net worth Rs crore 1,594 747 649 698 304 395
Income / average assets per cent 9.6 10.4 10.9 11.3 9.1 10.8
Interest earned / average assets per cent 8.0 7.5 8.7 8.6 7.1 8.1
Other income / average assets per cent 1.6 2.9 2.2 2.7 2.0 2.8
Expenditure / average assets per cent 6.3 8.3 7.7 8.0 7.1 8.0
Interest expended / average assets per cent 4.7 5.5 5.6 6.4 5.2 5.7
Operating expenses / average assets per cent 1.5 2.8 2.1 1.6 1.9 2.3
Provisions and contingencies / per cent 1.2 1.6 2.2 2.0 1.6 1.9
average assets
Operating profit / average assets per cent 3.3 2.1 3.2 3.3 2.0 2.9
Return on assets per cent 2.1 0.5 1.0 1.3 0.5 1.0
Net interest margin per cent 3.3 2.0 3.1 2.2 1.9 2.4
Capital adequacy
CRAR- Total per cent 13.0 6.1 6.3 10.5 5.3 5.8
CRAR- Tier-I per cent 3.9 4.9 5.2 2.6 4.8 5.5
Asset quality
Net NPA Rs crore n.a. n.a. n.a. n.a. n.a. n.a.
Net NPAs / net advances per cent n.a. n.a. n.a. n.a. n.a. n.a.
Net NPA / net worth per cent n.a. n.a. n.a. n.a. n.a. n.a.
Productivity1
Business per employee Rs lakhs 287.00 242.42 270.00 275.32 242.00 265.00
Profit per employee Rs lakhs 5.00 1.69 1.69 2.55 0.83 2.04
Deposits per branch Rs crore 32.3 24.8 26.1 23.0 23.3 17.5
Valuation
Book value Rs 329 277 293 173 94 110
Stock price Rs 296 363 201 92 29 61
Market capitalisation Rs crore 1,436 na 446 371 86 219
Price / book value times 0.9 1.3 0.7 0.5 0.3 0.6
Deposits / market capitalisation times 13 na 30 25 75 38
EPS Rs 83.8 25.4 61.5 32.9 10.4 23.6
Current PE times 3.5 14.3 3.3 2.8 2.8 2.6
Continued...

152
...continued
Unit Karur Vysya Bank of Development Tamilnad Catholic

Bank Rajasthan Credit Bank Mercantile Bank Syrian Bank
1
Branches nos 214 336 59 n.a. n.a.
1
Number of employees nos 2,833 4,207 1,327 n.a. n.a.
Total income Rs crore 722 680 441 606 476
Operating profit Rs crore 215 185 54 170 123
Net profit Rs crore 161 69 17 81 56
Total assets Rs crore 7107 8455 5393 5089 4307
Advances Rs crore 4023 2432 2440 2114 1898
Investments Rs crore 2173 4353 2084 2354 1819
Deposits Rs crore 5911 7406 4474 4404 3880
Paid-up equity capital Rs crore 18 108 39 28 11
Net worth Rs crore 712 329 290 224 194
Income / average assets per cent 10.9 9.3 9.0 12.3 11.7
Interest earned / average assets per cent 9.7 6.9 7.2 11.0 8.7
Other income / average assets per cent 1.1 2.4 1.8 1.4 2.9
Expenditure / average assets per cent 7.6 6.8 7.9 8.9 8.6
Interest expended / average assets per cent 5.3 4.3 5.2 6.6 5.8
Operating expenses / average assets per cent 2.4 2.5 2.7 2.3 2.9
Provisions and contingencies / per cent 0.8 1.6 0.7 1.8 1.6
average assets
Operating profit / average assets per cent 3.2 2.5 1.1 3.5 3.0
Return on assets per cent 2.4 0.9 0.4 1.6 1.4
Net interest margin per cent 4.5 2.6 2.0 4.4 3.0
Capital adequacy
CRAR- Total per cent 15.1 8.4 8.9 17.4 7.0
CRAR- Tier-I per cent 2.0 2.8 5.4 3.7 4.3
Asset quality
Net NPA Rs crore n.a. n.a. n.a. n.a. n.a.
Net NPAs / net advances per cent n.a. n.a. n.a. n.a. n.a.
Net NPA / net worth per cent n.a. n.a. n.a. n.a. n.a.
Productivity1
Business per employee Rs lakhs 288.00 164.64 463.00 270.83 164.94
Profit per employee Rs lakhs 4.41 1.63 2.60 2.88 1.57
Deposits per branch Rs crore 23.9 15.8 62.0 2.5 1.2
Valuation
Book value Rs 1,187 29 n.a. n.a. n.a.
Stock price Rs 283 30 n.a. n.a. n.a.
Market capitalisation Rs crore 170 321 n.a. n.a. n.a.
Price / book value times 0.2 1.0 n.a. n.a. n.a.
Deposits / market capitalisation times 35 23 n.a. n.a. n.a.
EPS Rs 268.4 6.4 n.a. n.a. n.a.
Current PE times 1.1 4.7 n.a. n.a. n.a.
continued...

153
...continued
Unit Lakshmi Bharat City Union Sangli Bank Dhanalakshmi

Vilas Bank Overseas Bank Bank Bank
1
Branches nos 216 80 123 184 159
1
Number of employees nos 1,983 1,029 1,408 2,026 1,305
average assets
Capital adequacy
Asset quality
Productivity1
Profit per employee Rs lakhs 1.72 2.77 2.37 0.59 1.15
Deposits per branch Rs crore 12.8 26.9 18.8 9.1 11.6
Valuation
Book value Rs n.a. n.a. 85 n.a. n.a.
Stock price Rs n.a. n.a. 58 n.a. n.a.
Market capitalisation Rs crore n.a. n.a. 138 n.a. n.a.
Price / book value times n.a. n.a. 0.7 n.a. n.a.
Deposits / market capitalisation times n.a. n.a. 21 n.a. n.a.
EPS Rs n.a. n.a. 23.8 n.a. n.a.
Current PE times n.a. n.a. 2.4 n.a. n.a.
continued...

154
...continued
Unit Lord Nainital Ratnakar SBI Ganesh Bank

Krishna Bank Bank Bank Commercial of Kurundwad
1
Branches nos n.a. 59 71 2 29
1
Number of employees nos n.a. 646 531 111 240
average assets
Capital adequacy
Asset quality
Productivity1
Profit per employee Rs lakhs 2.36 1.17 1.81 -7.71 1.39
Deposits per branch Rs crore 1.8 11.3 9.0 247.2 -
Valuation
Book value Rs n.a. n.a. n.a. n.a. n.a.
Stock price Rs n.a. n.a. n.a. n.a. n.a.
Market capitalisation Rs crore n.a. n.a. n.a. n.a. n.a.
Price / book value times n.a. n.a. n.a. n.a. n.a.
Deposits / market capitalisation times n.a. n.a. n.a. n.a. n.a.
EPS Rs n.a. n.a. n.a. n.a. n.a.
Current PE times n.a. n.a. n.a. n.a. n.a.
n.a.: Not available
1
Source: Performance Highlights of Private Sector Bank

155
Select public sector banks: Key financial parameters (2003-04) Table 26
Unit Andhra Bank of Canara Corporation
Bank Baroda Bank Bank
1
Branches nos 1,100 2,753 2,424 684
1
Number of employees nos 12,991 40,313 47,566 10,729
Total income Rs crore 2,799 7,359 9,080 2,718
Operating profit Rs crore 930 2,485 2,859 907
Net profit Rs crore 464 967 1,338 504
Total assets Rs crore 27,009 85,109 99,539 29,154
Advances Rs crore 12,885 35,601 47,639 13,890
Investments Rs crore 10,317 38,019 35,793 10,685
Deposits Rs crore 22,941 72,967 86,345 23,191
Paid-up equity capital Rs crore 400 295 410 143
Net worth Rs crore 1,453 5,131 5,252 2,769
Income / average assets per cent 11.2 9.7 10.0 9.8
Interest earned / average assets per cent 8.6 7.6 7.7 7.9
Other income / average assets per cent 2.6 2.1 2.3 1.9
Expenditure / average assets per cent 7.6 6.7 6.9 6.5
Interest expended / average assets per cent 5.1 4.4 4.8 4.5
Operating expenses / average assets per cent 2.5 2.2 2.1 2.1
Provisions and contingencies / average per cent 1.8 1.9 1.7 1.5
assets
Operating profit / average assets per cent 3.6 3.1 3.1 3.3
Return on assets per cent 1.8 1.2 1.5 1.8
Net interest margin per cent 3.5 3.2 3.0 3.5
Capital adequacy
CRAR- Total per cent 8.2 8.5 7.8 16.5
CRAR- Tier-I per cent 5.5 5.4 7.8 3.6
Asset quality
Net NPA Rs crore n.a. n.a. n.a. n.a.
Net NPAs / net advances per cent n.a. n.a. n.a. n.a.
Net NPA / net worth per cent n.a. n.a. n.a. n.a.
Productivity1
Business per employee Rs lakhs 250.75 252.50 236.65 314.60
Profit per employee Rs lakhs 5.81 4.26 4.20 6.29
Deposits per branch Rs crore 19.1 24.1 29.7 31.8
Valuation
Book value Rs 36 175 125 193
Stock price Rs 42 169 122 214
Market capitalisation Rs crore 1,693 4,960 4,988 3,076
Price / book value times 1.2 1.0 1.0 1.1
Deposits / market capitalisation times 14 15 17 8
EPS Rs 11.6 33.0 32.6 35.1
Current PE times 3.7 5.1 3.7 6.1
Continued...

156
...continued
Unit OBC Punjab Union Bank State Bank

National Bank of India of India
1
Branches nos 989 4,037 2,020 9081
1
Number of employees nos 13,507 58,981 25,706 208,998
Total income Rs crore 4,022 9,647 5,348 38,073
Operating profit Rs crore 1,533 3,121 1,483 7,775
Net profit Rs crore 686 1,109 712 3,105
Total assets Rs crore 41,007 102,332 58,317 407,815
Advances Rs crore 19,681 47,225 29,426 157,934
Investments Rs crore 16,794 42,125 22,442 185,676
Deposits Rs crore 35,674 87,916 50,559 318,619
Paid-up equity capital Rs crore 193 265 460 526
Net worth Rs crore 2,677 4,955 3,087 20,231
Income / average assets per cent 10.7 10.2 9.8 9.7
Interest earned / average assets per cent 8.8 8.3 8.3 7.8
Other income / average assets per cent 1.9 2.0 1.5 1.9
Expenditure / average assets per cent 6.6 6.9 7.1 7.3
Interest expended / average assets per cent 4.9 4.4 5.1 4.9
Operating expenses / average assets per cent 1.7 2.5 2.0 2.4
Provisions and contingencies / average per cent 2.3 2.1 1.4 1.5
assets
Operating profit / average assets per cent 4.1 3.3 2.7 2.0
Return on assets per cent 1.8 1.2 1.3 0.8
Net interest margin per cent 3.9 3.8 3.2 2.9
Capital adequacy
CRAR- Total per cent 9.9 7.0 6.5 8.3
CRAR- Tier-I per cent 4.6 6.1 5.9 5.2
Asset quality
Net NPA Rs crore n.a. n.a. n.a. n.a.
Net NPAs / net advances per cent n.a. n.a. n.a. n.a.
Net NPA / net worth per cent n.a. n.a. n.a. n.a.
Productivity1
Business per employee Rs lakhs 336.76 196.74 273.33 207.60
Profit per employee Rs lakhs 24.46 3.90 5.07 3.72
Deposits per branch Rs crore 30.1 18.8 22.2 32.6
Valuation
Book value Rs 139 175 57 384
Stock price Rs 208 204 44 468
Market capitalisation Rs crore 4,002 5,411 2,023 24,608
Price / book value times 1.5 1.2 0.8 1.2
Deposits / market capitalisation times 9 16 25 13
EPS Rs 35.6 41.8 15.5 59.0
Current PE times 5.8 4.9 2.8 7.9
n.a.: Not available
1
Source: Performance Highlights of Public Sector Bank

157
Scheduled commercial banks: Segment-wise financial performance (2003-04) Table 27
(Rs crore) Total (excl Public sector Nationalised State Bank Other Foreign
RRBs) banks banks Group Scheduled banks in
C i l I di
Banks (nos) 90 27 19 8 30 33
1
Branches 51,685 46,752 33,130 13,622 4,749 184
1
Number of employees 835,716 752,860 471,471 281,389 71,071 11,785
Income 183,767 137,603 85,712 51,891 33,154 13,010
Interest income 144,028 109,496 68,540 40,956 25542 8990
Other income 39,739 28,107 17,172 10,935 7,612 4020
Expenditure 161,494 121,056 74,783 46,273 29,670 10,768
Interest expended 87,567 65,766 40,370 25,396 17,529 4272
Provisions and contingencies 30,400 22,929 14,184 8,745 4,727 2744
Operating expenses 43,527 32,361 20,229 12,132 7,414 3752
-Wage bill 26,195 22,421 14,068 8,353 2,574 1200
Net profit 22,273 16,547 10,929 5,618 3,484 2,242
Operating profit 52,673 39,476 25,113 14,363 8,211 4,986
Spread 56,461 43,730 28,170 15,560 8,013 4,718
Total assets 1,975,023 1,471,429 922,171 549,258 367,278 136,316
Spread (percentage of total assets) 2.9 3.0 3.1 2.8 2.2 3.5
Operating expenses (percentage of total
2.2 2.2 2.2 2.2 2.0 2.8
assets)
Wage bill (percentage of total assets) 1.3 1.5 1.5 1.5 0.7 0.9
Profit (percentage of total assets) 1.1 1.1 1.2 1.0 0.9 1.6
Gross NPA n.a. n.a. n.a. n.a. n.a. n.a.
Net NPA n.a. n.a. n.a. n.a. n.a. n.a.
Gross NPAs / gross advances (per cent) n.a. n.a. n.a. n.a. n.a. n.a.
Gross NPAs / total assets (per cent) n.a. n.a. n.a. n.a. n.a. n.a.
Net NPAs / net advances (per cent) n.a. n.a. n.a. n.a. n.a. n.a.
Net NPAs / total assets (per cent) n.a. n.a. n.a. n.a. n.a. n.a.
Net NPA / net worth (per cent) n.a. n.a. n.a. n.a. n.a. n.a.
1
Asset per employee (Rs lakhs) 236.3 195.4 195.6 195.2 516.8 1156.7
1
Business per employee (Rs lakhs) 291.9 247.0 255.8 232.2 618.3 1,190.2
1
Income per employee (Rs lakhs) 22.0 18.3 18.2 18.4 46.6 110.4
1
Profit per employee (Rs lakhs) 2.7 2.2 2.3 2.0 4.9 19.0
1
Wages per employee (Rs lakhs) 0.0 3.0 3.0 3.0 3.6 10.2
1
Employee per branch (Nos) 16.2 16.1 14.2 20.7 15.0 64.0
1
Wage costs per branch (Rs lakhs) 0.0 48.0 42.5 61.3 54.2 652.2
NPA: Non-performing asset; n.a.: Not available
1
Source: RBI's Trend and Progress of Banking in India and Statistical Tables Relating to Banks in India

158
Scheduled commercial banks: Segment-wise financial ratios (2003-04) Table 28
(Rs crore) Total Public Nationalised State Other Foreign
sector banks Bank Scheduled banks in
banks Group Commercial India
Banks
Banks (nos) 90 27 19 8 30 33
Liabilities 1,975,023 1,471,429 922,171 549,258 367,278 136,316
Capital 22,323 14,676 13,640 1,036 3,002 4,645
Reserves and surplus 94,245 64,549 37,835 26,714 19,496 10,200
Deposits 1,575,145 1,226,838 793,947 432,891 268,550 79,757
Borrowings 96,491 30,736 13,921 16,815 40,366 25,389
Other liabilities and provisions 186,819 134,630 62,828 71,802 35,864 16,325
Assets 1,975,023 1,471,429 922,171 549,258 367,278 136,316
Cash and bank balances with RBI 113,244 84,242 58,080 26,162 21,725 7,277
Balances with banks and money at 82,226 57,449 30,115 27,334 15,116 9,661
call and short notice
Investments 802,066 625,678 377,903 247,775 134,802 41,586
Advances 864,143 632,740 412,224 220,516 170,896 60,507
Fixed assets 21,403 11,527 8,178 3,349 7,926 1,950
Other assets 91,941 59,793 35,671 24,122 16,813 15,335
Key ratios
Deposits/Total liabilities (per cent) 80 83 86 79 73 59
RONW (per cent) 19.1 20.9 21.2 20.2 15.5 15.1
ROA (per cent) 1.13 1.12 1.19 1.02 0.95 1.64
NPA: Non-performing asset; ROA: Return on assets; RONW: Return on net worth
Source: RBI's Trend and Progress of Banking in India

159
Scheduled commercial banks: Segment-wise share (2003-04) Table 29
(per cent) Number Number of Employees 1
Total Deposits Advances Investments
of banks branches1 assets
Scheduled commercial banks 90 51,685 833,261 1,975,020 1,575,145 864,143 802,066

Share of total (per cent)
Public sector banks 27 90.46 90.66 74.50 77.89 73.22 78.01
- Nationalised banks 19 64.10 56.71 46.69 50.40 47.70 47.12
- State Bank Group 8 26.36 33.95 27.81 27.48 25.52 30.89
Other Scheduled Commercial banks 30 9.19 7.90 18.60 17.05 19.78 16.81
Foreign banks in India 33 0.36 1.44 6.90 5.06 7.00 5.18
(per cent) Net Gross Net NPA Total Wage Net Operating Spread
worth NPA income bill profit profit
Scheduled commercial banks 116,558 n.a. n.a. 183,767 26,195 22,273 52,673 56,461
Share of total (per cent)
Public sector banks 67.96 n.a. n.a. 74.88 85.59 74.29 74.95 77.45
- Nationalised banks 44.16 n.a. n.a. 46.64 53.70 49.07 47.68 49.89
- State Bank Group 23.80 n.a. n.a. 28.24 31.89 25.22 27.27 27.56
Other Scheduled Commercial banks 19.30 n.a. n.a. 18.04 9.83 15.64 15.59 14.19
Foreign banks in India 12.74 n.a. n.a. 7.08 4.58 10.07 9.47 8.36
n.a.: Not available
1
Figures for the year 2002-03
Source: CRIS INFAC

160
4.0
Industry performance
SCBs: Profits Figure 1

(Rs crore)
60,000
50,000
40,000
30,000
20,000
10,000
-10,000
1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003-
92 93 94 95 96 97 98 99 2000 01 02 03 04
Net profit Operating profit Spread
Source: CRIS INFAC
SCBs: NIM Figure 2

(Rs crore)
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003-
92 93 94 95 96 97 98 99 2000 01 02 03 04
NIM (NII as a percentage of avg assets) Operating profit to avg assets

161
SCBs: Segment-wise NIM Figure 3
(per cent)
5
1
1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999- 2000-01 2001-02 2002-03 2003-04
2000
Private banks Foreign banks Public sector banks
Source: CRIS INFAC
Advances, IIP and imports: Growth Figure 4

(per cent)
30
25
20
15
10
0
1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999- 2000-01 2001-02 2002-03 2003-04
2000
-5
Advances IIP Imports
Source: Report on Trend and Progress of Banking in India & Statistical

Tables Relating to Banks in India
SCBs: Advances Figure 5
2003-04
2002-03
2001-02
2000-01
1999-2000
1998-99
1997-98
1996-97
1995-96
1994-95
1993-94
1992-93
1991-92
0% 20% 40% 60% 80% 100%
Bills purchases and discounted Term loans Cash credit, overdraft
Source: Report on Trend and Progress of Banking in India

162
IIP and credit: Growth Figure 6
(per cent)
30
25
20
15
10
0
Apr-95 Apr-96 Apr-97 Apr-98 Apr-99 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04
IIP Credit
Source: CSO, RBI’s Weekly Statistical Supplement
Advances: Average yields Figure 7

(per cent)
16
14
12
10
6
1992-93 1994-95 1996-97 1998-99 2000-01 2002-03
Outstanding loans and advances: Break-up by interest rates Figure 8

(per cent)
30
25
20
15
10
0
<6 6-9 10-11 12-13 14-<15 15- <16 16 - <17 17 - <18 18 - 19 20>
Source: Statistical Tables relating to Banks in India

163
SCBs: Investments Figure 9
(Rs crore)
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
1991-92 1993-94 1995-96 1997-98 1999-2000 2001-02 2003-04
Total investments Government securities in India
PSU banks: Number of banks achieving CRAR Figure 10

(nos)
30
25
20
15
10
0
1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999- 2000-01 2001-02 2002-03 2003-04
2000
Source: IBA’ Performance Highlights of Public, Private & Foreign Banks in India
Gross NPAs and net NPAs Figure 11

(per cent)
19
17
15
13
11
3
1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03
Gross NPAs to gross advances Net NPAs to net advances
Source: RBI

164
Investment and advances: Average yield Figure 12
(per cent)
18
16
14
12
10
6
1992-93 1994-95 1996-97 1998-99 2000-01 2002-03
Average yield of investments Average yield on advances
SCBs: Other income to total income Figure 13

(per cent)
22
20
18
16
14
12
10
1991-92 1993-94 1995-96 1997-98 1999-2000 2001-02 2003-04
Source: CRIS INFAC
M3 and deposits Figure 14

(Rs crore)
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
1991-92 1993-94 1995-96 1997-98 1999-2000 2001-02 2003-04
Total deposits M3
Source: CRIS INFAC

165
M3 and reserve money: Growth Figure 15
(per cent)
30
25
20
15
10
0
1991-92 1993-94 1995-96 1997-98 1999-2000 2001-02 2003-04
M3 growth Reserve money growth
Source: CRIS INFAC
Deposits: Demand, savings and time deposits (excl RRBs) Figure 16

(per cent)
70
60
50
40
30
20
10
0
1991-92 1993-94 1995-96 1997-98 1999-2000 2001-02 2003-04
Demand deposits Savings deposits Term deposits
Incremental deposits: Break-up by deposit type (excl RRBs) Figure 17

(per cent)
100
80
60
40
20
0
1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999- 2000-01 2001-02 2002-03 2003-04
2000
Demand deposits Savings deposits Term deposits

166
Deposits: Growth (excl RRBs) Figure 18
(per cent)
25
20
15
10
0
1992-93 1994-95 1996-97 1998-99 2000-01 2002-03
Demand deposits Savings bank deposits Term deposits
NRI deposits: Growth Figure 19

($ million)
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
-500
-1,000
-1,500
1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002-
92 93 94 95 96 97 98 99 2000 01 02 03
Source: RBI’s Handbook of Statistics on the Indian Economy
Deposits: Average costs Figure 20

(per cent)
10
4
1992-93 1994-95 1996-97 1998-99 2000-01 2002-03
Source: CRIS INFAC

167
Term deposits: Interest rates (March 2003) Figure 21
(per cent)
40
35
30
25
20
15
10
0
<6 6-8 8-9 9-10 10-11 11-12 12-13 > 13
Source: Basic statistical returns (RBI)
Incremental credit-deposit ratio Figure 22

(per cent)
100
80
60
40
20
0
1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Incremental borrowing-deposit ratio Figure 23
(per cent)
40
30
20
10
-10
-20
1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

168
SCBs: Operating costs Figure 24
(Rs crore)
50,000
40,000
30,000
20,000
10,000
0
1991-92 1993-94 1995-96 1997-98 1999-2000 2001-02 2003-04
Operating expenses Salaries
Source: CRIS INFAC
SCBs: Segment-wise operating costs as a percentage of

average assets Figure 25
(per cent)
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1992-93 1994-95 1996-97 1998-99 2000-01 2002-03
Private banks Foreign banks Public sector banks
Source: CRIS INFAC
Overheads as a percentage of operating income Figure 26

(per cent)
32
30
28
26
24
22
20
1991-92 1993-94 1995-96 1997-98 1999-2000 2001-02 2003-04
Overheads as a percentage of operating income Spreads as a percentage of operating income
Source: CRIS INFAC

169
Overheads as a percentage of average assets Figure 27
(per cent)
4.4
4.0
3.6
3.2
2.8
2.4
2.0
1991-92 1993-94 1995-96 1997-98 1999-2000 2001-02 2003-04
Overheads as a percentage of avg assets Spread as a percentage of avg assets
Source: CRIS INFAC
Operating costs: India vis-à-vis other countries Figure 28

(per cent)
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
India USA Germany UK France Italy Spain Canada Sweden Japan
SCBs (excl RRBs): Number of branches Figure 29

(nos)
53,000
52,000
51,000
50,000
49,000
48,000
47,000
46,000
45,000
1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002-
92 93 94 95 96 97 98 99 2000 01 02 03
Source: CRIS INFAC

170
SCBs: Number of employees Figure 30
(nos)
980,000
960,000
940,000
920,000
900,000
880,000
860,000
840,000
820,000
800,000
1991-92 1993-94 1995-96 1997-98 1999-2000 2001-02
Source: CRIS INFAC
Investments: Average yields Figure 31
(per cent)
14.0
13.0
12.0
11.0
10.0
9.0
1992-93 1994-95 1996-97 1998-99 2000-01
Average yield of investments Interest rate on Central govt securities
Source: Statistical Tables Relating to Banks in India and Handbook of

Statistics Relating to Indian Economy
BSE volumes and capital issues Figure 32

(Rs crore)
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
1991-92 1993-94 1995-96 1997-98 1999-2000 2001-02 2003-04
Turnover BSE Capital issues-equity
Source: RBI, CMIE

171
5.0
Player profiles
Financial comparison of key banks: 2003-04 Table 1

(per cent) Public sector banks
SBI BoB BOI Canara PNB OBC Dena
Bank Bank
Average assets (Rs crore) 407,815 85,109 80,577 99,539 102,332 41,007 10,081
Branches (nos) 9,093 2,730 2,562 2,469 4,022 1,013 1,130
Employees (nos) 207,039 39,803 42,977 47,796 58,839 13,602 10,957
1
Interest earned 7.5 7.2 7.2 7.0 7.6 8.0 17.2
1
Other income 1.9 2.0 2.2 2.1 1.8 1.8 6.1
1
Interest expended 4.7 4.2 4.5 4.3 4.1 4.5 11.3
1
Operating expenses 2.3 2.1 2.2 1.9 2.3 1.4 4.7
1
Provisions (excluding taxes) 1.1 1.1 1.0 1.2 1.3 0.9 3.6
1
Profit before taxes 0.9 1.1 1.3 1.3 1.1 6.3 2.6
1
Provision for taxes 0.4 0.7 0.5 0.3 0.6 1.1 1.2
Profit after taxes1 0.5 0.5 0.8 1.0 0.4 5.2 1.4
Gross NPA (Rs crore) 12,667 3,980 433 3,127 4,670 1,211 1,484
Net NPA (Rs crore) 5,442 1,761 1,234 1,378 449 0 884
Quality of assets
Net NPAs to advances 3.5 3.0 4.5 2.9 1.0 0.0 9.4
Capital adequacy 13.5 13.9 13.0 12.7 13.1 14.0 9.5
Profitability
Net Profitability Margin 1.2 1.9 1.8 1.5 1.9 2.6 1.0
Spreads 2.6 3.5 3.2 2.9 3.8 3.7 2.7
Average cost of deposits 5.9 4.8 4.6 5.2 4.8 5.5 6.1
Average yield on investments 8.8 8.6 8.0 9.0 9.7 10.3 9.5
Average yield on advances 7.6 8.3 7.5 8.7 8.9 9.0 9.2
Growth
Growth in advances 14.6 0.7 7.6 17.7 17.4 25.5 11.6
Growth in deposits 7.6 9.8 10.8 19.8 16.0 19.7 11.3
Growth in investments 7.7 26.0 11.2 17.5 23.8 13.6 14.5
Productivity
Employee per branch (nos) 23 15 17 19 15 13 10
Assets per branch (Rs crore) 44.8 31.2 31.5 40.3 25.4 40.5 8.9
Assets per employee (Rs crore) 2.0 2.1 1.9 2.1 1.7 3.0 0.9
Continued...

173
...continued
(per cent) New private sector banks Old private sector banks Foreign banks
ICICI HDFC IndusInd South Federal Bank of Citibank HongKong Standard
Bank Bank Indian Bank Rajasthan Bank Chartered
Bank Bank
Average assets (Rs crore) 125,229 42,307 9,318 8,441 13,658 7,292 27,418 23,133 31,829
Branches (nos) 413 312 69 410 432 354 20 38 66
Employees (nos) 13,609 5,673 n.a. 3,534 6,363 n.a. n.a. n.a. n.a.
1
Interest earned 7.1 6.0 10.6 8.1 8.7 6.9 8.3 6.1 7.9
1
Other income 2.4 1.1 3.7 2.8 2.2 2.4 3.2 3.0 2.2
1
Interest expended 5.6 2.9 7.2 5.7 5.6 4.3 3.4 3.1 3.4
1
Operating expenses 2.1 1.9 2.3 2.3 2.1 2.5 3.7 2.7 2.4
1
Provisions (excluding taxes) 0.4 0.7 1.9 0.9 1.7 1.2 1.0 0.9 1.7
1
Profit before taxes 1.3 3.9 5.5 1.0 1.0 0.9 2.1 1.7 1.8
1
Provision for taxes 0.2 0.5 0.1 0.9 0.5 0.4 1.5 0.8 0.8
1
Profit after taxes 1.1 3.4 5.4 0.1 0.4 0.6 0.6 0.9 1.0
Gross NPA (Rs crore) 3,048 336 259 328 601 237 393 419 482
Net NPA (Rs crore) 2,037 28 212 190 223 73 214 68 84
Quality of assets
Net NPAs to advances 2.2 0.2 2.7 4.6 2.9 3.0 1.4 0.7 0.5
Capital adequacy 10.4 11.7 12.8 11.3 11.5 11.2 11.1 14.5 10.9
Profitability
Net Profitability Margin 0.43 3.12 1.45 0.32 1.60 3.81 4.15 2.42 4.66
Spreads 1.40 4.24 2.70 2.21 3.00 3.45 5.06 3.08 5.42
Average cost of deposits 5.20 3.93 5.05 6.15 5.92 4.86 4.16 3.45 3.77
Average yield on investments 6.22 8.10 8.00 8.88 8.68 8.04 7.75 6.58 6.77
Average yield on advances 10.53 7.52 10.59 9.17 10.26 8.48 9.93 8.40 10.47
Growth
Growth in advances 16.5 51.0 46.1 16.2 23.9 9.5 20.8 17.4 23.8
Growth in deposits 41.4 35.9 30.3 20.7 23.1 39.8 15.3 27.1 10.8
Growth in investments 20.5 43.8 56.7 32.1 21.0 64.7 -4.9 26.7 -1.4
Productivity
Employee per branch (nos) 33 18 n.a. 9 15 n.a. n.a. n.a. n.a.
Assets per branch (Rs crore) 303.2 135.6 135.0 20.6 31.6 20.6 1370.9 608.8 482.3
Assets per employee (Rs crore) 9.2 7.5 n.a. 2.4 2.1 n.a. n.a. n.a. n.a.
1
as per cent of average assets
n.a. - not available
Source: CRIS INFAC

174
State Bank of India Table 2
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 20002-03 2003-04
Liabilities
Capital 526 526 526 526 526 526 526 526
Reserves and surplus 7,450 9,082 9,876 11,621 12,935 14,698 16,677 19,705
Deposits 110,702 131,091 169,042 196,821 242,828 270,560 296,123 318,619
Borrowings 6,960 8,093 9,079 9,278 10,722 9,324 9,304 13,431
Other liabilities and provisions 30,835 30,880 33,986 43,259 48,632 53,120 53,246 55,534
Total 156,473 179,673 222,509 261,505 315,644 348,228 375,876 407,815
Assets
Cash and balances with RBI 10,847 13,415 17,392 18,903 18,496 21,873 12,738 19,041
Balances with bank and money at call 16,906 19,231 35,820 28,233 42,213 43,058 32,443 24,525
Investments 46,828 54,982 71,287 91,879 122,876 145,142 172,348 185,676
Advances 62,233 74,237 82,360 98,102 113,590 120,806 137,758 157,934
Fixed assets 1,171 1,506 2,194 2,478 2,593 2,415 2,389 2,645
Other assets 18,488 16,301 13,456 21,910 15,875 14,934 18,201 17,994
Total 156,473 179,673 222,509 261,505 315,644 348,228 375,877 407,815
Deposits
Demand 25,647 27,814 30,692 36,182 40,328 42,313 44,772 50,291
Savings 24,028 29,208 34,321 41,507 47,893 56,396 65,783 79,596
Term 61,026 74,070 104,029 119,132 154,607 171,851 185,568 188,732
Total 110,701 131,091 169,042 196,821 242,828 270,560 296,123 318,619
Deposits of branches in India 123548.7 160,255 187,639 234,896 262,549 288,866 309798.2
Deposits of branches abroad 7543 8,787 9,182 7,932 8,011 7,257 8820
Total 110,701 131,091 169,042 196,821 242,828 270,560 296,123 318,619
Borrowings
RBI 0 0 0 670 0 0 0 0
Other banks 0 0 0 0 0 0 0 0
Other institutions and agencies 883 837 1,076 1,670 2,537 2,153 1,572 1,365
Forex borrowings 6,077 7,256 8,003 6,938 8,185 7,170 7,732 12,066
Total 6,960 8,093 9,079 9,278 10,722 9,323 9,304 13,431
Other liabilities and provisions
Inter-office adjustments 0 0 555 0 0 4,722 3,685 5,823
Bills payable 8,403 8,755 10,796 10,563 13,598 13,875 14,036 15,665
Interest accrued 7,338 7,620 10,101 13,081 16,966 19,286 20,060 17,428
Others (including provisions) 15,093 14,505 12,533 19,615 18,068 15237 15,465 16,618
Total 30,834 30,880 33,986 43,259 48,632 53,120 53,246 55,534
Balance with RBI 10,354 12,906 16,894 18,345 17,628 20,820 11,602 17,756
Cash in hand 493 508 498 558 868 1,053 1,136 1,285
Advances
Bills purchases and discounted 6,656 7,933 7,741 9,235 12,840 11,555 12,405 14,859
Cash credit and overdraft 38,472 43,553 45,991 54,979 61,197 64,178 69,117 69,329
Term loans 17,105 22,750 28,627 33,888 39,553 45,073 56,237 73,746
Total 62,233 74,237 82,360 98,102 113,590 120,806 137,758 157,934
Secured 53,277 62,787 69,122 83,668 90,358 98,526 109,924 119,388
Government guarantee 7,805 9,097 8,169 8,494 8,703 6,307 9,185 11,937
Unsecured 1,151 2,353 5,068 5,940 14,530 15,974 18,650 26,608
Total 62,233 74,237 82,360 98,102 113,590 120,806 137,758 157,934
continued...

175
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 20002-03 2003-04
Priority sector 16,945 19,523 23,090 25,878 30,153 31,591 35,112 42,706
Public sector 10,064 12,088 13,465 9,490 20,271 21,990 24,783 25,875
Banks 225 785 470 361 442 185 86 2,277
Others 27,788 31,744 34,234 49,808 48,372 53,764 63,869 71,169
Total domestic advances 55,022 64,140 71,259 85,537 99,239 107,530 123,850 142,026
Advances outside India 7,211 10,097 11,101 12,564 14,351 13,276 13,909 15,907
Total 62,233 74,237 82,360 98,102 113,590 120,806 137,758 157,934
Investments
Investments outside India 1,115 2,221 2,690 3,200 3,961 4,669 4,462 3,992
Investments in India
- Government securities 33,973 39,025 51,568 67,747 96,127 117,029 143,727 157,738
- Other approved securities 7,472 7,158 6,464 5,914 5,705 5,220 4,527 4,194
- Shares 514 694 1,014 1,155 984 950 993 902
- Debentures 2,858 4,132 6,658 9,820 11,111 12794.04 16,166 15,875
- Subsidiaries 874 987 1,043 1,111 1,173 1,186 1,189 1,436
- Others 22 765 1,849 2,932 3,815 3,293 1,283 1,539
Total 45,713 52,761 68,596 88,679 118,916 140,473 167,886 181,684
Total investm ents 46,828 54,982 71,287 91,879 122,876 145,142 172,348 185,676
Movement in NPA
Gross NPA
Opening balance n.a. n.a. n.a. 14,065 15,246 15,875 15,486 13,506
Additions n.a. n.a. n.a. 3,681 4,352 4,170 4,889 5,721
Reductions n.a. n.a. n.a. 2,500 3,724 4,559 6,668 6,560
Closing balance n.a. n.a. n.a. 15,246 15,875 15,486 13,506 12,667
Net NPA-Closing balance n.a. n.a. n.a. 6,284 6,856 6,810 6,183 5,442
Profit and loss statement
Interest earned
Interest discount on advances and bills 8,137 7,829 8,581 9,554 11,143 11,063 11,229 11,267
Income on investments 5,521 6,392 7,585 9,506 11,230 14,272 15,258 15,716
Interest on balances with RBI 722 632 1,101 1,573 1,703 3,055 3,274 2,499
Others 570 1,027 1,840 1,567 1,927 1,420 1,327 978
Total 14,950 15,879 19,108 22,201 26,003 29,810 31,087 30,460
Other income
Commission exchange and brokerage 1,805 2,038 2,379 2,567 2,632 2,817 2,977 3,121
Profit on sale of investments 26 117 73 269 477 352 1,695 3,073
Loss on sale of investments 0 0 0 0 0 0 0 0
Profit on sale of fixed assets 0 0 0 0 0 15 0 0
Loss on revaluation of investments 0 0 -1 1 0 -19 -5 -1
Profit on forex transactions 699 505 569 329 304 408 464 503
Income from subsidiaries 40 50 62 65 77 103 137 161
Lease Income 0 0 0 0 0 267 221 172
Miscellaneous income 73 110 203 338 528 234 252 582
Total 2,643 2,820 3,285 3,569 4,018 4,174 5,740 7,612
Total income 17,593 18,699 22,392 25,770 30,021 33,985 36,827 38,073
continued...

176
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 20002-03 2003-04
Interest expended
Interest on deposits 8,301 9,586 12,197 14,397 16,643 19,554 20,174 18,123
Interest on RBI 482 481 474 557 521 364 195 161
Others 808 406 373 319 591 810 740 990
Total 9,591 10,473 13,044 15,273 17,756 20,729 21,109 19,274
Operating expenses
Salaries 3,323 3,558 4,140 4,478 6,012 5153 5689 6448
Others 1,281 1,163 1,756 1,818 2,287 1,633 1,760 2,099
Depreciation 0 0 0 0 0 425 494 698
Total 4,604 4,721 5,897 6,296 8,299 7,211 7,942 9,245
Provisions and contingencies 2,048 1,644 2,424 2,151 2,363 4,013 5,870 6,213
Total expenses including provisions 16,243 16,838 21,365 23,719 28,417 31,952 34,922 34,732
Profit for the year 1,350 1,861 1,027 2,051 1,604 2,032 1,905 3,341
Profits inclusive of provisions 3,398 3,505 3,451 4,202 3,967 6,045 7,775 9,553
Contingent liabilities
Claims against banks 209 247 324 331 245 391 451 764
Liability for partly paid investments 15 8 6 6 69 9 44 67
Liability for outstanding forex contracts 14,138 32,005 38,518 49,065 48,157 53,447 52,326 58,720
Guarantees
- In India 10,736 9,283 9,251 9,036 8,706 11,726 9,249 11,012
- Outside India 2,705 5,211 6,033 5,763 6,175 3,369 5,771 5,195
Acceptances and endorsements 11,742 10,830 9,786 12,942 12,895 12,591 15,868 21,119
Others 2,854 2,370 2,497 5,239 7,422 20,679 22,398 15,015
Total 42,399 59,954 66,415 82,383 83,669 102,213 106,106 111,892
Provisions and contingencies
Provison for doubtful debts 833 1,300 1,423 1,264 1,470 2,153 2,592 3694
Provision for wealth tax and interest tax 205 127 140 161 0 0 0 45
Provision for depreciation on investments 4 -964 15 -538 -116 198 420 508
Provision for income tax 925 1,001 383 979 971 1,603 2,149 1,566
Others 81 180 463 285 37 58 709 400
Total 2,048 1,644 2,423 2,151 2,363 4,013 5,870 6,213
Financial analysis
Growth in deposits (per cent)
Overall 15 18 29 16 23 11 9 8
Demand 14 8 10 18 11 11 5 6
Savings 13 22 18 21 15 18 17 21
Term 16 21 40 15 30 11 8 2
Share of deposits (per cent)
Demand 23 21 18 18 17 16 15 16
Savings 22 22 20 21 20 21 22 25
Term 55 57 62 61 64 64 63 59
continued...

177
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 20002-03 2003-04
Profitability (per cent)
Return on assets 0.9 1.1 0.5 0.8 0.6 0.6 0.5 0.9
Return on equity 20.1 21.2 10.3 18.2 12.5 14.2 11.8 17.8
Gearing (times) 18.6 17.7 20.4 20.5 22.4 21.9 20.8 19.2
Staff costs to operating expenses 72.2 75.4 70.2 71.1 72.4 71.5 71.6 69.7
Non-fund income to total income 15.0 15.1 14.7 13.9 13.4 12.3 15.6 20.0
Operating expenses to total income 26.2 25.2 26.3 24.4 27.6 21.2 21.6 24.3
Operating expenses to deposits 4.2 3.6 3.5 3.2 3.4 2.7 2.7 2.9
Earning per share (Rs) 25.7 35.4 19.5 39.0 30.5 38.6 36.2 63.5
Cost to income ratio 57.5 57.4 63.1 60.0 67.7 54.4 50.5 49.2
Cost to income ratio (w/o profit on invest) 57.7 58.2 63.6 61.5 70.4 55.9 56.6 58.8
Financial management (per cent)
Interest cost n.a. 7.64 7.74 7.53 7.34 7.39 6.88 5.78
Average cost of deposits 8.0 7.9 8.1 7.9 7.6 7.6 7.1 5.9
Average cost of borrowings 13.2 11.8 9.9 9.5 11.1 11.7 10.0 10.1
Yield on carry business n.a. 10.90 10.69 10.35 10.08 9.81 9.31 8.38
Average yield on investments 12.2 12.6 12.0 11.7 10.5 10.6 9.6 8.8
Average yield on advances 13.3 11.5 11.0 10.6 10.5 9.4 8.7 7.6
Spreads n.a. 3.25 2.95 2.82 2.74 2.41 2.42 2.61
Operating expenses to AFD n.a. 3.2 3.2 2.8 3.1 2.3 2.3 2.5
Core fee income to AFD n.a. 1.7 1.7 1.4 1.2 1.1 1.0 1.1
Net Profitability Margin n.a. 1.8 1.4 1.4 0.8 1.2 1.1 1.2
Deposits to borrowings (times) 10.6 16.1 17.5 19.9 22.0 25.6 30.4 27.0
Capital adequacy 12.2 14.6 12.5 11.5 12.8 13.4 13.5 13.5
Provisions as a percentage of profit before 60.3 46.9 70.2 51.2 59.6 66.4 75.5 65.0
provisions
Provisions as a percentage of networth 30.5 18.7 24.2 19.1 18.5 26.4 34.1 30.7
Liquidity (per cent)
Credit-deposit ratio 56 57 49 50 47 44.7 46.5 49.6
Incremental C/D ratio 17 59 21 57 34 26.0 66.3 89.7
Borrowings to total deposits 6 6 5 5 4 3 3 4
Cash-deposit ratio 0 0 0 0 0 0 0 0
Investment-deposit ratio 42 42 42 47 51 54 58 58
Incremental I/D ratio 21 40 43 74 67 80 106 59
Reserves as a percentage of net worth 93 95 95 96 96 97 97 97
Growth (per cent)
Advances 4 19 11 19 16 6 14 15
Deposits 15 18 29 16 23 11 9 8
Investments 7 17 30 29 34 18 19 8
Salaries cost n.a. 7 16 8 34 -14 10 13
Commission and fee 2 13 17 8 3 7 6 5
Interest income 15 6 20 16 17 15 4 -2
continued...

178
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 20002-03 2003-04
Others
Branches (nos) 8,888 8,925 8,982 9,043 9,078 9085 9081 9093
Advances per branch (Rs crore) 7.00 8.32 9.17 10.85 12.51 13.30 15.17 17.37
Operating expenses per branch (Rs crore) 0.52 0.53 0.66 0.70 0.91 0.79 0.87 1.02
Employees (nos) 236,204 239,649 237,504 233,433 212,649 209462 208998 207039
Income per employee (Rs crore) 0.07 0.08 0.09 0.11 0.14 0.16 0.18 0.18
Income/employee expenses (times) 5.29 5.26 5.41 5.76 4.99 6.60 6.47 5.90
Total income (per cent)
Interest 85 85 85 86 87 88 84 80
Forex 4 3 3 1 1 1 1 1
Commission and brokerage 10 11 11 10 9 8 8 8
Share of advances (per cent)
Priority 27 26 28 26 27 26 25 27
Public 16 16 16 10 18 18 18 16
Inter-bank 0 1 1 0 0 0 0 1
Others 45 43 42 51 43 45 46 45
Abroad 12 14 13 13 13 11 10 10
Bills 11 11 9 9 11 10 9 9
Cash credits 62 59 56 56 54 53 50 44
Term loans 27 31 35 35 35 37 41 47
Secured 86 85 84 85 80 82 80 76
Government guaranteed 13 12 10 9 8 5 7 8
Unsecured 3 3 3 4 4 13 14 17
Share of investments (per cent)
Government securities 73 71 72 74 78 81 83 85
Other approved securities 16 13 9 6 5 4 3 2
Shares and debentures 1 1 1 1 1 1 1 0
Debentures 6 8 9 11 9 9 9 9
Subsidiaries 2 2 1 1 1 1 1 1
Others 0 1 3 3 3 2 1 1
Gross NPAs (per cent) 16.0 14.1 n.a. 14.3 12.9 n.a. n.a. n.a.
Net NPAs (per cent) 7.3 6.1 7.2 6.4 6.0 5.6 4.5 3.5
n.a.: Not available
Source: CRIS INFAC

179
Bank of Baroda Table 3
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 254 293 294 294 294 294 294 295
Deposits 32,157 39,126 44,614 51,308 53,986 61,804 66,441 72,967
Borrowings 340 476 479 479 936 693 625 875
Total 37,640 45,842 52,232 58,605 63,322 70,910 76,425 85,109
Assets
Cash and balances with RBI 3,048 3,665 3,684 3,506 4,370 2581.068 3,466 3,057
Investments 10,927 13,359 15,905 18,557 19,857 23,833 30,179 38,019
Advances 16,532 19,803 21,092 24,393 27,421 33,663 35,348 35,601
Fixed assets 570 581 597 608 647 692 697 815
Other assets 1,880 1,712 2,619 2,571 2,961 3,774 3,383 3,407
Total 37,640 45,842 52,232 58,605 63,322 70,910 76,425 85,109
Deposits
Demand 4,190 4,689 5,243 5,525 5,625 6,328 6,039 6,772
Savings 6,423 7,802 9,107 10,842 12,185 14,047 16,419 19,780
Term 21,544 26,635 30,264 34,941 36,176 41,429 43,983 46,415
Total 32,157 39,126 44,614 51,308 53,986 61,804 66,441 72,967
Deposits of branches in India 27,995 33,536 38,904 44,957 47,869 54,532 59,402 64,346
Deposits of branches abroad 4,162 5,590 5,710 6,351 6,117 7,272 7,040 8,621
Total 32,157 39,126 44,614 51,308 53,986 61,804 66,441 72,967
Borrowings
RBI 0 0 0 0 0 140 0 0
Other banks 7 4 17 6 1 167 12 9
Other institutions and agencies 322 473 433 363 850 386 613 225
Forex borrowings 0 0 29 0 85 0 0 640
Total 329 476 479 479 936 693 625 875
Inter-office adjustments 0 0 0 0 0 0 0 308
Bonds/Debentures 500 1,100 1,099 1,200 1,200 1,200 1,500
Bills payable 885 873 872 782 702 1,004 1,256 1,032
Interest accrued 281 340 418 501 518 494 326 366
Others (including provisions) 1,989 2,363 2,951 2,411 3,824 1,887 2,189 2,929
Total 3,155 3,576 4,241 3,694 5,044 4,585 4,971 6,135
Balance with RBI 2,833 3,448 3,437 3,238 4,015 2,253 3,048 2,655
Cash in hand 215 217 248 268 355 328 402 418
Advances
Term loans 3,978 5,011 6,550 7,986 9,231 12,059 13,473 14,711
Total 16,532 19,803 21,092 24,393 27,421 33,663 35,348 35,601
Continued...

180
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Secured 13,653 17,052 19,031 22,660 23,920 28,326 29,113 28,501
Government guarantee 613 815 329 585 785 1,581 1,777 2,802
Unsecured 2,266 1,937 1,732 1,148 2,716 3,756 4,459 4,298
Total 16,532 19,803 21,092 24,393 27,421 33,663 35,348 35,601
Priority sector 4,921 5,739 6,057 6,592 6,660 7,677 9176.21 9,925
Public sector 1,582 2,689 2,785 2,670 3,400 5,785 5,160 3,577
Banks 18 20 9 84 398 503 530 466
Others 7,897 8,952 9,358 12,063 12,970 14,152 14,049 15,228
Total 14,418 17,401 18,209 21,409 23,429 28,116 28,914 29,197
Total 16,532 19,803 21,092 24,393 27,421 33,664 35,348 35,601
Investments
Investments outside India 511 610 908 1,172 1,395 1,946 1,802 1,963
- Shares 225 235 222 249 299 332 412 517
- Debentures 1,268 1,921 2,553 2,866 3,300 3,834 4,400 4510
- Subsidiaries/JV 102 152 174 187 155 215 236 255
- Others 134 321 611 1,275 1,450 1,582 520 2,007
Total 10,417 12,749 14,997 17,385 18,463 21,887 28,377 36,056
Total investments 10,928 13,359 15,905 18,556 19,857 23,833 30,179 38,019
Movement in NPA
Gross NPA
Opening balance n.a. n.a. n.a. 3,686 3,897 4186 4489 4168
Additions n.a. n.a. n.a. 829 1,124 1035 717 1078
Reductions n.a. n.a. n.a. 617 836 731 1039 1266
Closing balance n.a. n.a. n.a. 3,897 4,186 4489 4168 3980
Net NPA-Closing balance n.a. n.a. n.a. 1,686 1,851 1913 1700 1761
Interest earned
Interest/Discount on advances/bills 2,237 2,235 2,385 2,591 2,938 3,060 3,066 2,800
Interest on balances with RBI 324 408 558 493 613 429 230 197
Others 52 18 135 143 55 99 98 217
Total 3,762 4,171 4,821 5,220 5,757 5,956 6,098 6,146
Other income
Commission exchange and brokerage 244 235 247 280 298 305 344 344
Profit on sale of investments 14 71 33 86 102 415 631 1018
Loss on sale of investments 0 -2 0 0 0 0 0
Profit on sale of fixed assets 1 0 0 0 -13 1 0 1
Profit/Loss on revaluation of investments 0 0 0 0 62 0 0 0
Income from investments 4 5 3 4 1 5 6 11
Lease income 0 0 0 0 0 0 0 0
Total 459 543 578 641 755 993 1,262 1,720
Total income 4,221 4,714 5,400 5,862 6,512 6,949 7,359 7,866
continued...

181
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest expended
Interest on RBI/Inter bank 21 44 69 80 75 72 65 49
Others 157 118 100 175 163 156 154 162
Total 2,552 2,838 3,248 3,507 3,820 4,076 3,994 3,575
Operating expenses
Salaries 606 652 845 896 1,146 1,056 1,129 1,253
Others 254 383 321 354 385 416 431 477
Depreciation 32 35 41 52 77 91 89 76
Total 892 1,071 1,207 1,303 1,608 1,563 1,648 1,805
Provisions and contingencies 500 347 572 549 780 763 944 1,518
Profit for the year 277 459 421 503 323 546 773 967
Profits inclusive of provisions 777 806 945 1,052 1,085 1,309 1,717 2,485
Guarantees
- In India 2,317 2,857 2,337 2,126 2,007 3,261 2,060 2,156
- Outside India 1,022 785 848 1,199 1,443 1,425 1,202
Others 348 298 347 568 596 641 448 1,069
Total 10,187 13,118 13,215 13,304 19,720 14,916 24,419 30,318
Provison for NPAs/Stadard assets 298 323 361 342 509 482 464 968
Depreciation in values of investments 87 -245 15 -33 58 -14 1 -101
Provision for taxation 52 258 147 240 185 250 398 566
Other Provisions 63 12 49 0 27 45 81 86
Total 500 347 572 549 780 763 944 1,518
Financial analysis
Overall 13 22 14 15 5 14 8 10
Demand 12 12 12 5 2 12 -5 12
Savings 14 21 17 19 12 15 17 20
Term 13 24 14 15 4 15 6 6
Demand 13 12 12 11 10 10 9 9
Savings 20 20 20 21 23 23 25 27
Term 67 68 68 68 67 67 66 64
Domestic 87 86 87 88 89 88 89 88
Abroad 13 14 13 12 11 12 11 12
continued...

182
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Return on assets 0.8 1.1 0.9 0.9 0.5 0.8 1.0 1.2
Return on equity 14.9 19.7 15.2 16.4 9.8 15.2 18.8 20.3
Gearing (times) 17.9 16.2 17.0 17.1 17.9 17.5 16.4 15.6
Interest cost 7.68 7.51 7.12 7.06 6.84 6.06 4.99
Yield on carry business 10.91 10.79 10.48 10.57 10.03 9.26 8.45
Spreads 3.23 3.28 3.36 3.51 3.18 3.20 3.45
Operating expenses to AFD 2.72 2.61 2.50 2.79 2.48 2.38 2.36
Core fee income to AFD 1.07 1.01 0.92 0.90 0.79 0.80 0.79
provisions
Credit-deposit ratio 51 51 47 48 51 54 53 49
Incremental C/D ratio 14 47 23 49 113 80 36 4
Growth (per cent)
Advances 3 20 7 16 12 23 5 1
Deposits 13 22 14 15 5 14 8 10
Investments 14 22 19 17 7 20 27 26
Salaries cost 10 8 30 6 28 -8 7 11
Commission and fee -28 -4 5 13 6 3 13 0
Interest income 7 11 16 8 10 3 2 1
Others
Branches (nos) 2,493 2,522 2,573 2,652 2,669 2,679 2,753 2,730
Employees (nos) 45,759 45,935 46,187 47,054 46,360 38,899 40,313 39,803
continued...

183
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest 89 88 89 89 88 86 83 78
Forex 2 3 3 2 2 2 2 2
Priority 30 29 29 27 24 23 26 28
Public 10 14 13 11 12 17 15 10
Inter bank 0 0 0 0 1 1 1 1
Others 48 45 44 49 47 42 40 43
Abroad 13 12 14 12 15 16 18 18
Bills 8 7 6 6 6 6 7 7
Cash credit 68 68 62 61 61 58 55 52
Term loans 24 25 31 33 34 36 38 41
Secured 83 86 90 93 87 84 82 80
Government guarantee 4 4 2 2 3 5 5 8
Unsecured 14 10 8 5 10 11 13 12
Other approved 18 14 11 10 9 7 5 4
Shares 2 2 1 1 2 1 1 1
Debentures 12 14 16 15 17 16 15 12
Subsidiary 1 1 1 1 1 1 1 1
Others 1 3 4 7 8 7 2 6
Outside India 0.05 0.05 0.06 0.06 0.07 0.08 0.06 0.05
Gross NPAs (per cent) 17.2 14.6 16.0 14.7 14.1 n.a. n.a. n.a.
Net NPAs (per cent) 8.9 6.6 7.7 7.0 6.8 5.0 3.7 3.0
n.a.: Not available
Source: CRIS INFAC

184
Bank of India Table 4
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 597 638 638 638 638 488 488 488
Deposits 31,973 39,339 44,430 47,744 51,679 59,711 64,098 71,003
Borrowings 1,453 1,557 2,979 1,876 1,798 3,348 4,027 4,521
Total 37,946 46,338 53,923 56,065 59,567 69,806 76,294 84,860
Assets
Investments 10,671 13,030 15,282 16,666 18,225 22,084 24,435 27,163
Advances 18,337 22,021 24,327 25,231 31,823 38,311 42,633 45,856
Fixed assets 516 696 710 741 763 705 737 799
Other assets 1,946 3,813 2,760 4,534 2,331 2,102 1,492 2,485
Total 37,946 46,338 53,923 56,065 59,567 69,806 76,294 84,860
Deposits
Demand 5,385 5,094 5,976 6,093 5,896 7,194 5,350 5,839
Savings 6,155 7,303 8,516 9,916 11,165 12,885 15,000 18,062
Term 20,433 26,941 29,938 31,735 34,618 39,632 43,749 47,102
Total 31,973 39,339 44,430 47,744 51,679 59,711 64,098 71,003
Deposit of branches abroad 5,733 7,970 9,341 9,218 8,796 10,475 10,424 11,288
Total 31,973 39,339 44,430 47,744 51,679 59,711 64,098 71,003
Borrowings
RBI 0 235 586 766 505 235 0 0
Other banks 242 191 220 275 699 1,093 832 481
Other institutions and agencies 658 794 1,690 796 493 513 473 948
Forex borrowings 553 338 483 39 101 1,507 2,722 3,092
Total 1,453 1,558 2,979 1,876 1,798 3,348 4,027 4,521
Bills payable 720 1,147 838 902 933 854 866 835
Others(including provisions) 1,258 1,840 2,486 2,822 2,271 2,700 3,397 4,099
Total 2,581 3,127 4,107 3,934 3,404 3,902 4,628 5,326
Balance with RBI 2,040 2,932 3,437 3,028 3,665 3,438 3,131 3,977
Cash in hand 241 199 202 201 172 194 219 254
Advances
Term loans 3,528 6,543 9,275 10,011 12,879 15,683 14,891 17,967
Total 18,337 22,021 24,327 25,231 31,823 38,311 42,633 45,856
Continued...

185
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Secured 13,898 15,979 17,975 18,833 23,112 25,388 27,597 31,436
Government guarantee 2,604 2,257 2,051 2,930 4,327 6,063 6,187 6,048
Unsecured 1,835 3,784 4,301 3,468 4,384 6,860 8,849 8,372
Total 18,337 22,021 24,327 25,231 31,823 38,311 42,633 45,856
Priority sector 4,746 5,761 6,272 6,593 7,599 9,181 11,534 12,873
Public sector 1,192 2,195 2,228 2,589 3,390 4,661 4,812 5,505
Banks 44 104 1 6 7 6 234 6
Others 7,917 8,578 9,669 9,909 12,663 14,683 14,827 16,635
Total 13,899 16,637 18,171 19,098 23,660 28,531 31,407 35,019
Total 18,337 22,021 24,327 25,231 31,823 38,311 42,633 45,856
Investments
Investments outside India 1,518 2,205 2,707 2,816 3,338 5,337 6318.4 4,580
- Other approved securities 1,296 1,277 1,204 1,138 1,136 992 926 868
- Shares 299 267 289 173 231 182 179
- Debentures 770 1,205 1,517 1,517 1,401 1,668 1,845 2,783
- Subsidiaries 21 21 21 76 171 173 181 173
- Others 14 94 83 190 147 146 140 998
Total 9,153 10,825 4,181 13,850 14,887 16,747 18,116 22,583
Movement in NPA
Gross NPAs
Additions n.a. n.a. n.a. 1,304 911 1355 1226 1204
Interest earned
Interest/discount on advances/bills 2,234 2,461 2,627 2,750 3,129 3,293 3,563 3,309
Others 42 37 287 128 25 48 80 196
Total 3,513 3,936 4,591 4,737 5,317 5,609 5,928 5,796
Other income
Loss on sale of investments
Profit on sale of land, buildings 0 32 1 0 0 0 26 11
Loss on revaluation of investments
Income from subsidiaries 3 0 1 2 2 2 48 18
Lease income 0 0 0 0 0
Total 490 580 574 786 862 1,103 1,668 1,792
Total income 4,003 4,516 5,164 5,522 6,179 6,712 7,596 7,588
continued...

186
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest expended
Interest on RBI 140 182 280 310 344 316 326 316
Others 2 0 0 71 103 138 153 192
Total 2,373 2,651 3,181 3,443 3,663 3,769 3,892 3,594
Operating expenses
Salaries 714 770 924 999 1,339 1,087 1,126 1,172
Others 289 330 288 336 343 370 436 491
Depreciation 48 67 67 61 74 68.23 87 88
Total 1,051 1,167 1,279 1,396 1,744 1,531 1,649 1,752
Provisions and contingencies 219 333 504 510 520 903 1,179 1,234
Profit for the year 360 365 201 173 252 509 876 1,008
Profits inclusive of provisions 579 697 705 683 772 1,412 2,055 2,242
Guarantees
- In India 1,916 1,793 1,767 2,276 2,440 2,818 2,987 3,211
- Outside India 294 695 788 406 404 517 747 916
Others 1,298 1,500 2,553 3,401 4,984 7,254 10,228 15,877
Total 18,194 24,811 21,720 26,156 41,545 50,981 52,174 65,723
Provisions and Contingencies
Provison for NPAs 4 316 352 386 351 642 682 634
Depreciation in values of investments 98 -122 0 -43 67 0 25 42
Total 219 333 504 510 520 903 1,179 1,234
Financial analysis
Overall 16 23 13 7 8 16 7 11
Demand 29 -5 12 10 11 15 9 11
Savings 11 19 17 -1 -5 19 0 8
Term 15 32 13 7 8 16 7 11
Demand 17 13 13 13 11 12 8 8
Savings 19 19 24 26 26 26 28 30
Term 64 68 67 66 67 66 68 66
Domestic 82 80 79 81 83 82 84 84
Abroad 18 20 21 19 17 18 16 16
continued...

187
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Return on assets 1.0 0.9 0.4 0.3 0.4 0.8 1.2 1.3
Return on equity 22.5 17.1 8.5 7.0 9.7 18.4 27.5 26.7
Gearing (times) 18.6 19.0 21.4 21.3 21.2 23.5 20.5 20.2
Interest cost 6.96 7.05 6.97 6.98 6.37 5.86 4.95
Spreads 3.80 3.56 3.02 3.65 3.49 3.38 3.17
provisions
Credit deposit ratio 57 56 55 53 62 64 67 65
Cash deposit ratio 1 1 0 0 0 0 0 0
Growth (per cent)
Advances 18 20 10 4 26 20 11 8
Deposits 16 23 13 7 8 16 7 11
Investments 11 22 17 9 9 21 11 11
Salaries cost 9 8 20 8 34 -19 4 4
Interest income 22 12 17 3 12 5 6 -2
Others
Branches (number) 2,475 2,495 2,515 2,532 2,534 2548 2559 2562
Operating expenses/branch (Rs crore) 0.42 0.47 0.51 0.55 0.69 0.60 0.64 0.68
Employees (number) 53,295 52,518 53,047 52,428 44,052 43420 43141 42977
continued...

188
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest 88 87 89 86 86 84 78 76
forex 2 2 2 2 2 2 2 3
Priority 26 26 26 26 24 24 27 28
Public 7 10 9 10 11 12 11 12
Inter-bank 0 0 0 0 0 0 1 0
Others 43 39 40 39 40 38 35 36
Abroad 24 24 25 24 26 26 26 24
Bills 10 8 7 7 8 9 9 9
Cash credit 71 62 55 53 51 50 56 52
Term loans 19 30 38 40 40 41 35 39
Secured 76 73 74 75 73 66 65 69
Unsecured 10 17 18 14 14 18 21 18
Shares 0 2 4 2 1 1 1 1
Debentures 7 9 22 9 8 8 8 10
Subsidiary 0 0 0 0 1 1 1 1
Others 0 1 1 1 1 1 1 4
Outside India 14 17 39 17 18 24 26 17
Gross NPAs (per cent) 11.8 11.6 n.a. n.a. n.a. n.a. n.a. n.a.
Net NPAs (per cent) 6.9 7.3 7.3 8.6 6.7 6.7 5.4 4.5
n.a.: Not available
Source: CRIS INFAC

189
Canara Bank Table 5
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 485 578 578 578 578 578 410 410
Reserves and surplus 1,564 1,725 1,835 2,018 2,237 2894 3739 4842
Deposits 31,445 38,045 41,959 48,001 59,070 64030 72095 86345
Borrowings 459 498 1,382 1,324 1,466 267 94 755
Other liabilities and provisions 1,705 2,267 2,366 2,481 3,089 4366 5717 7188
Total 35,657 43,112 48,119 54,402 66,439 72,135 82,055 99,539
Assets
Investments 12,280 16,031 17,357 20,023 21,445 23,220 30,458 35,793
Advances 14,413 16,825 19,530 23,547 27,832 33,127 40,472 47,639
Fixed assets 419 430 550 560 650 659 660 680
Other assets 1,622 2,106 2,504 2,728 3,341 2,632 2,768 3,401
Total 35,657 43,112 48,120 54,402 66,439 72,135 82,055 99,539
Deposits
Demand 5,722 6,283 5,897 7,104 7,847 7,148 7,837 8,654
Savings 6,705 8,077 9,543 11,129 12,786 14,511 17,260 20,512
Term 19,018 23,686 26,518 29,768 38,436 42,370 46,998 57,179
Total 31,445 38,045 41,959 48,001 59,070 64,030 72,095 86,345
Deposits of branches abroad 877 1,064 1,064 1,285 1,407 1,544 1,277 1,968
Total 31,445 38,045 41,958 48,001 59,070 64,030 72,095 86,345
Borrowings
RBI 0 0 375 530 430 0 0 0
Other banks 0 0 0 0 0 0 5 297
Total 459 498 882 824 666 267 94 755
Unsecured redeemable bonds 0 0 500 500 800 1,250 1,750 2,000
Bills payable 958 1,269 1,025 999 1,328 1,116 1,607 1,540
Others (including provisions) 667 966 1,287 1,431 1,735 1,925 2,292 3,393
Total 1,705 2,267 2,866 2,981 3,889 4,366 5,717 7,188
Balance with RBI 3,985 3,781 3,797 3,516 3,473 7,364 5,133 6,287
Cash in hand 251 272 298 322 413 496 475 604
Advances
Term loans 3,740 4,443 5,777 7,885 8,730 10,290 13,431 19,243
Total 14,413 16,825 19,530 23,547 27,832 33,127 40,472 47,639
Continued...

190
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Secured 12,233 13,921 15,832 18,062 21,379 21826 32178 38654
Government guarantee 1,187 1,417 1,594 2,359 1,965 6311 2579 2366
Unsecured 993 1,487 2,104 2,127 4,487 4989 5715 6619
Total 14,413 16,825 19,530 22,547 27,832 33,127 40,472 47,639
Priority sector 5,267 6,006 6,271 6,807 8,069 9288 12170 16152
Public sector 1,344 1,721 2,911 4,702 6,205 7375 7592 7774
Banks 25 123 96 95 98 138 450 511
Others 7,586 8,655 9,795 11,511 12,997 15610 19694 22690
Total 14,222 16,505 19,071 23,115 27,369 32,411 39,906 47,127
Advances outside India 191 319 459 432 463 716 566 512
Total 14,413 16,825 19,530 23,547 27,832 33,127 40,472 47,639
Investments
Investments outside India 77 91 300 402 499 527 520 547
- Government securities 6,824 9,394 9,955 11,775 14,449 16572 23307 28133
- Other approved securities 1,827 1,809 1,683 1,627 1,549 1246 865 878
- Shares 133 204 246 256 200 236 221 236
- Debentures 2,636 3,600 3,978 4,940 4,390 4215 4975 4926
- Subsidiaries/JV 132 138 134 135 132 132 132 132
- Others 651 795 1,059 889 226 292 438 941
Total 12,203 15,940 17,056 19,621 20,946 22,693 29,938 35,246
Movement in NPA
Gross NPA
Additions n.a. n.a. n.a. 750 793 652 1228 1890
Net NPA-Closing balance n.a. n.a. n.a. 1,244 1,346 1,288 1,454 1,378
Interest earned
Interest/discount on advances/bills 1,972 2,015 2,283 2,488 2,920 3130 3591 3818
Income on investments 1,220 1,527 2,070 2,042 2,234 2497 2686 2994
Others 7 24 0 1 0 36 0 52
Total 3,414 3,824 4,657 4,852 5,618 6,371 6,692 7,007
Other income
Loss on sale of investments
Loss on revaluation of investments 0 0 0 0 0 0 0 0
Income from Investments 9 5 32 52 30 0 53 46
Lease Income
Total 455 608 663 836 918 1,429 1,478 2,073
Total income 3,869 4,432 5,319 5,687 6,536 7,799 8,170 9,080
continued...

191
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest expended
Interest on deposits 2,148 2,604 2,993 3,234 3,575 4350 4224 4121
Interest on RBI /inter bank 54 20 13 19 29 22 9 13
Others 76 124 124 162 132 178 191 189
Total 2,278 2,748 3,131 3,414 3,735 4,550 4,424 4,324
Operating expenses
Salaries 641 691 880 951 1,253 1123 1162 1273
Others 251 268 296 323 351 377 477 510
Depreciation 45 51 55 75 66 93 109 114
Total 937 1,010 1,231 1,350 1,670 1,593 1,748 1,897
Provisions and contingencies 507 469 732 687 846 915 978 1,521
Profit for the year 147 204 225 236 285 741 1,020 1,339
Profits inclusive of provisions 654 674 957 923 1,131 1,656 1,999 2,860
Liability for outstanding forex contracts 8,196 10,632 8,505 14,800 27,515 26895 39686 36109
Guarantees
- in India 3,401 3,394 3,645 4,145 4,425 5413 7019 9422
- outside India 22 21 10 40 34 59 76 81
Acceptances and endorsements 1,945 1,893 1,877 2,498 2,471 2954 3790 6198
Others 373 338 299 225 69 704 9 3
Total 14,091 16,477 14,820 22,438 35,202 36,024 51,177 52,441
Provision for NPAs 260 398 506 466 409 386 476 1239
Depreciation on investments -25 -90 0 0 8 13 18 18
Taxation 124 80 100 121 191 310 300 330
Contingencies 148 82 126 100 239 207 184 -66
Total 507 470 732 687 846 915 978 1,521
Financial analysis
Overall 20 21 10 14 23 8 13 20
Demand 20 10 -6 20 10 -9 10 10
Savings 16 20 18 17 15 13 19 19
Term 21 25 12 12 29 10 11 22
Demand 18 17 14 15 13 11 11 10
Savings 21 21 23 23 22 23 24 24
Term 60 62 63 62 65 66 65 66
Domestic 97 97 97 97 98 98 98 98
Abroad 3 3 3 3 2 2 2 2
continued...

192
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Return on assets 0.4 0.5 0.5 0.5 0.5 1.1 1.3 1.5
Return on equity 7.4 9.4 9.5 9.4 10.5 23.6 26.8 28.5
Gearing (times) 16.4 17.7 18.9 20.0 22.6 19.8 18.8 18.0
Interest cost - 7.56 7.48 7.29 6.74 7.20 6.36 5.32
Yield on carry business - 10.63 11.27 10.46 10.14 9.87 9.23 8.20
Spreads - 3.06 3.78 3.17 3.40 2.68 2.88 2.88
Operating expenses to AFD - 2.72 2.88 2.81 2.94 2.43 2.37 2.18
Core fee income to AFD - 1.14 1.12 1.11 1.00 0.93 0.87 0.78
Net Profitability Margin - 1.48 2.02 1.47 1.46 1.18 1.37 1.47
provisions
Incremental I/D ratio n.a. 57 34 44 13 36 90 37
Growth (per cent)
Advances 10 17 16 21 18 19 22 18
Deposits 20 21 10 14 23 8 13 20
Investments 15 31 8 15 7 8 31 18
Salaries cost n.a. 8 27 8 32 -10 4 10
Interest income 16 12 22 4 16 13 5 5
Others
Branches (nos) 2,262 2,312 2,379 2,397 2,405 2409 2424 2469
Employees (nos) 54,316 54,703 55,097 55,363 48,257 47796 47566 47796
continued...

193
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest 88 86 88 85 86 82 82 77
Forex 2 2 2 2 2 2 2 2
Priority 37 36 32 29 29 28 30 34
Public 9 10 15 20 22 22 19 16
Inter-bank 0 1 0 0 0 0 1 1
Others 53 51 50 49 47 47 49 48
Abroad 1 2 2 2 2 2 1 1
Bills 13 9 12 12 9 9 9 9
Cash credit 61 65 58 55 60 60 58 51
Term loans 26 26 30 33 31 31 33 40
Secured 85 83 81 80 77 66 80 81
Unsecured 7 9 11 9 16 15 14 14
Debentures 21 22 23 25 20 18 16 14
Subsidiary 1 1 1 1 1 1 0 0
Others 5 5 6 4 1 1 1 3
Outside India 1 1 2 2 2 2 2 2
Net NPAs (per cent) 9.3 7.5 7.1 5.3 4.8 3.9 3.6 2.9
n.a.: Not available
Source: CRIS INFAC

194
Punjab National Bank Table 6
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 351 212 212 212 212 377 265 265
Reserves and surplus 991 1,442 1,718 2,060 2,457 3,004 3,768 4,747
Deposits 30,806 35,174 40,777 47,483 56,131 64,123 75,813 87916
Borrowings 345 265 197 662 673 409 662 1289
Other liabilities and provisions 2,550 2,675 3,419 3,710 4,032 5,002 5,713 8114
Total 35,043 39,768 46,323 54,129 63,505 72,915 86,222 102,332
Assets
Cash and balances with RBI 3,655 4,900 5,016 5,477 5,366 5,102 6,569 6742
Balances with bank and money at call 961 561 824 753 704 1,297 1,509 2078
Investments 13,977 15,907 18,573 22,099 25,128 28,207 34,030 42125
Advances 14,068 16,043 19,047 22,572 28,029 34,369 40,228 47225
Fixed assets 586 595 617 681 724 796 885 900
Other assets 1,796 1,762 2,246 2,547 3,555 3,144 3,002 3261
Total 35,043 39,768 46,323 54,129 63,505 72,915 86,222 102,332
Deposits
Demand 3,270 3,772 4,846 5,437 6,311 6,758 9,888 9,900
Savings 9,435 11,564 13,679 15,875 18,530 21,664 25,648 30,423
Term 18,101 19,838 22,252 26,171 31,290 35,701 40,277 47,593
Total 30,806 35,174 40,777 47,483 56,131 64,123 75,814 87,916
Deposits of branches abroad 0 0 0 0 0 0 0 0
Total 30,806 35,174 40,777 47,483 56,131 64,123 75,814 87,916
Borrowings
RBI 0 0 0 513 300 269 0 4
Other banks 27 7 5 11 44 32 184 572
Total 345 265 197 662 673 409 662 1,289
Bills payable 838 878 632 706 745 866 948 1,396
Others (including provisions) 1,259 1,201 1,629 2,352 2,796 3,617 4,238 5,883
Total 2,549 2,676 3,419 3,710 4,032 5,002 5,713 8,114
Balance with RBI 3,359 4,590 4,678 5,049 4,920 4,371 5,940 6,043
Cash in hand 295 310 338 428 445 578 629 700
Advances
Term loans 3,795 4,833 6,734 7,983 9,872 13,431 16,448 22,609
Total 14,067 16,042 19,047 22,572 28,029 34,639 40,228 47,225
Continued...

195
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Secured 13,306 14,991 18,336 21,634 26,503 32,601 36,714 42,123
Unsecured 143 132 254 602 1,139 1,275 2,852 4,737
Total 14,067 16,042 19,047 22,572 28,029 34,369 40,228 47,225
Priority sector 4,380 5,275 6,595 8,323 10,857 13,441 16,034 20,735
Public sector 1,495 1,745 2,417 3,065 4,408 6,225 6,860 6,519
Banks 52 12 12 10 28 237 237 205
Others 8,140 9,010 10,023 11,173 12,736 14,466 17,097 19,766
Total 14,067 16,042 19,047 22,572 28,029 34,369 40,228 47,225
Total 14,067 16,042 19,047 22,572 28,029 34,369 40,228 47,225
Investments
- Shares 62 99 364 325 257 344 270 267
- Debentures 1,623 2,317 2,698 2,651 3,306 5,383 5,458 5,766
- Subsidiaries/JV 149 189 227 254 213 212 220 206
- Others 282 154 122 146 406 495 326 465
Total 13,976 15,906 18,564 22,090 25,120 28,197 34,021 42,116
Movement in NPA
Gross NPA
Interest earned
Interest/Discount on advances/bills 1,954 1,961 2,182 2,514 2,824 3,318 3,712 3,876
Others 6 46 108 52 146 99 296 110
Total 3,654 3,992 4,448 5,155 5,863 6,648 7,485 7,780
Other income
Profit on sale of investments 35 237 79 215 242 447 677 1,265
Loss on sale of investments 0 0 0 0 0 -9 -5 -29
Loss on revaluation of investments 0 0 0 0 -26 -58 -70 -118
Lease income 0 0 0 0 0 0 0 0
Total 469 637 545 728 778 978 1,250 1,867
Total income 4,123 4,629 4,993 5,882 6,642 7,625 8,735 9,647
continued...

196
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest expended
Interest on deposits 2,343 2,540 2,677 3,367 3,609 4122 4,163 3,926
Interest on RBI/inter bank 6 3 12 29 39 48 8 13
Others 90 156 106 142 176 183 191 215
Total 2,439 2,699 2,795 3,538 3,825 4,353 4,361 4,155
Operating expenses
Salaries 811 871 1,069 1,184 1,459 1,316 1,476 1,654
Others 224 222 267 297 338 398 469 535
Depreciation 29 35 40 43 75 85 129 181
Total 1,064 1,128 1,376 1,524 1,872 1,799 2,074 2,371
Provisions and contingencies 382 324 449 412 482 911 1,475 2,012
Liability for outstanding forex contracts 2,131 3,628 3,190 3,942 12,619 16431 16,364 19,543
Guarantees
- In India 1,784 2,133 2,075 1,947 2,119 2616 3,151 3,995
- Outside India 336 583 535 613 431 449 382 1,131
Acceptances and endorsements 1,594 1,634 1,692 1,978 2,441 2807 3,376 7,168
Others 96 131 130 155 13 21 102 140
Total 6,656 9,005 8,454 9,564 18,208 22,885 23,571 32,230
Depreciation in values of investments 0 -333 0 -8 20 -35 133 -31
Total 382 324 449 412 482 911 1,475 2,012
Financial analysis
Overall 14 14 16 16 18 14 18 16
Demand 5 15 28 12 16 7 46 0
Savings 14 23 18 16 17 17 18 19
Term 15 10 12 18 20 14 13 18
Demand 11 11 12 11 11 11 13 11
Savings 31 33 34 33 33 34 34 35
Term 59 56 55 55 56 56 53 54
Domestic 100 100 100 100 100 100 100 100
Abroad 0 0 0 0 0 0 0 0
continued...

197
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Return on assets 0.7 1.3 0.9 0.8 0.8 0.8 1.0 1.2
Return on equity 19.0 31.9 20.8 19.4 18.8 18.6 22.3 24.5
Gearing (times) 25.1 23.0 23.0 22.8 22.8 20.6 20.4 19.4
Interest cost n.a. 7.90 7.17 7.82 7.19 7.08 6.11 4.95
Spreads n.a. 3.65 3.99 3.27 3.62 3.45 3.91 3.76
provisions
Incremental credit deposit ratio 38 45 54 53 63 79 50 58
Incemental I/D ratio 55 44 48 53 35 39 50 67
Growth (per cent)
Advances 11 14 19 19 24 23 17 17
Deposits 14 14 16 16 18 14 18 16
Investments 17 14 17 19 14 12 21 24
Salaries cost 7 7 23 11 23 -10 12 12
Interest income 15 9 11 16 14 13 13 4
Others
Branches (nos) 3,765 3,793 3,822 3,853 3,879 3,857 4,037 4,022
Employees (nos) 67,616 66,599 65,705 64,733 58,309 57,859 58,981 58,839
continued...

198
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest 89 86 89 88 88 87 86 81
Forex 2 1 1 1 1 1 1 1
Commission, brokerage 6 6 7 6 6 6 5 6
Priority 31 33 35 37 39 39 40 44
Public 11 11 13 14 16 18 17 14
Inter bank 0 0 0 0 0 1 1 0
Others 58 56 53 49 45 42 42 42
Abroad 0 0 0 0 0 0 0 0
Bills 10 9 8 8 9 7 7 6
Cash credit 63 61 57 56 56 54 52 46
Term loans 27 30 35 35 35 39 41 48
Secured 95 93 96 96 95 95 91 89
Unsecured 1 1 1 3 4 4 7 10
Shares 0 1 2 1 1 1 1 1
Debentures 12 15 15 12 13 19 16 14
Subsidiary 1 1 1 1 1 1 1 0
Others 2 1 1 1 2 2 1 1
Net NPAs (per cent) 10.4 9.6 9.0 8.5 6.7 5.3 3.9 1.0
n.a.: Not available
Source: CRIS INFAC

199
Oriental Bank of Commerce Table 7
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 193 193 193 193 193 193 193 193
Reserves and surplus 749 889 1,039 1,236 1,356 1,427 1,917 2,484
Deposits 10,054 13,058 16,805 22,095 24,680 28,488 29,809 35,674
Borrowings 107 99 108 514 227 817 1,166 1,100
Other liabilities and provisions 456 542 640 504 616 1,311 914 1,556
Total 11,559 14,780 18,784 24,541 27,072 32,237 33,999 41,007
Assets
Balances with bank and money at call 635 322 370 358 621 981 628 967
Investments 4,388 5,957 7,839 11,560 12,298 13,698 14,781 16,794
Advances 4,886 6,318 7,708 9,326 11,076 14,158 15,677 19,681
Fixed assets 76 121 140 135 130 143 145 162
Other assets 472 482 705 888 918 906 872 770
Total 11,559 14,782 18,784 24,541 27,072 32,237 33,999 41,007
Deposits
Demand 1,217 1,379 1,537 1,884 2,070 2,307 2,744 3,113
Savings 1,935 2,418 2,981 3,657 4,249 4,848 5,762 7,074
Term 6,902 9,261 12,287 16,554 18,362 21,334 21,302 25,487
Total 10,054 13,058 16,805 22,095 24,680 28,488 29,809 35,674
Total 10,054 13,058 16,805 22,095 24,680 28,488 29,809 35,674
Borrowings
RBI 0 0 0 100 0 0 0 0
Other banks 3 2 0 3 0 1 0 0
Total 107 99 108 514 226 817 1,166 1,100
Bills payable 121 105 150 122 137 227 159 207
Others (including provisions) 128 150 181 226 288 896 534 1,092
Total 458 542 640 504 616 1,311 914 1,556
Balance with RBI 140 1,432 1,818 2,046 1,817 2,152 1,686 2,424
Cash in hand 961 148 205 229 212 199 210 210
Advances
Bills purchases and discounted 451 611 751 681 672 691 905 869
Term loans 1,453 1,806 2,319 3,097 3,690 5,921 7,032 10,678
Total 4,886 6,318 7,708 9,326 11,076 14,158 15,677 19,681
Continued...

200
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Secured 4,194 5,448 6,596 7,645 8,946 10,483 12,089 14,942
Government guarantee 593 787 963 1,305 1,533 2,207 1,929 1,563
Unsecured 99 83 148 375 597 1,468 1,660 3,175
Total 4,886 6,318 7,708 9,326 11,076 14,158 15,677 19,681
Priority sector 1,958 2,474 3,061 3,702 4,293 5,455 6,028 7,488
Public sector 244 325 336 536 661 879 1,471 3,241
Banks 24 31 29 0 25 30 3 1
Others 2,660 3,488 4,281 5,088 6,098 7,794 8,175 8,950
Total 4,886 6,318 7,708 9,326 11,076 14,158 15,677 19,681
Total 4,886 6,318 7,708 9,326 11,076 14,158 15,677 19,681
Investments
- Other approved securities 439 444 498 472 499 498 491 459
- Shares 21 127 176 252 159 143 133 124
- Debentures 1,124 2,323 2,990 4,069 3,904 4,183 3,732 3,546
- Subsidiaries/JV 0 0 0 0 0 0 0 0
- Others 44 98 105 204 374 322 267 214
Total 4,388 5,957 7,839 11,560 12,298 13,698 14,781 16,794
Movement in NPA
Gross NPA
Opening balance n.a. n.a. n.a. 498 528 586 952 1146
Closing balances n.a. n.a. n.a. 528 586 952 1146 1211
Net NPA-Closing balance n.a. n.a. n.a. 336 397 436 225 0
Interest earned
Interest/Discount on advances/bills 708 739 933 1,011 1,203 1,416 1,536 1,591
Income on investments 494 669 847 1,367 1,441 1,546 1,613 1,633
Others 13 7 23 2 21 6 68 5
Total 1,251 1,458 1,873 2,458 2,759 3,049 3,304 3,301
Other income
Loss on sale of investments 0 0 0 0 -4 -5 -20 -7
Loss on revaluation of investments 0 0 0 0 -10 -28 -26 -5
Lease income 0 0 0 0 0 0
Total 104 138 174 221 268 474 541 722
Total income 1,355 1,596 2,046 2,679 3,027 3,523 3,845 4,022
continued...

201
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest expended
Interest on deposits 782 939 1,270 1,718 1,937 2,030 2,032 1,786
Interest on RBI /inter bank 7 11 10 15 12 10 3 6
Others 12 9 9 12 20 29 55 53
Total 801 959 1,290 1,745 1,968 2,068 2,090 1,845
Operating expenses
Salaries 154 185 217 231 315 288 348 366
Others 87 98 127 155 168 162 152 177
Depreciation 12 17 26 42 41 39 42 50
Total 253 301 371 428 524 490 541 594
Provisions and contingencies 121 127 156 227 331 597 706 847
Profit for the year 180 210 230 279 203 2,437 2,598 2,581
Liability for outstanding forex contracts 253 562 537 599 594 1,020 1,015 2711
Guarantees
- In India 774 1,041 852 949 1,029 1,249 1,478 1844
- Outside India 7 25 20 24 28 48 64 76
Acceptances and endorsements 292 271 354 406 428 464 489 1746
Others 21 17 16 12 14 12 5 2
Total 1,420 2,017 1,963 2,189 2,352 2,990 3,331 6,525
Depreciation in values of investments 2 4 0 0 -30 16 -6 0
Total 120 127 156 227 331 597 706 847
Financial analysis
Overall 15 30 29 31 12 15 5 20
Demand 18 13 11 23 10 11 19 13
Savings 18 25 23 23 16 14 19 23
Term 14 34 33 35 11 16 0 20
Demand 12 11 9 9 8 8 9 9
Savings 19 19 18 17 17 17 19 20
Term 69 71 73 75 74 75 71 71
Domestic 100 100 100 100 100 100 100 100
Abroad 0 0 0 0 0 0 0 0
continued...

202
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Return on assets 1.6 1.6 1.4 1.3 0.8 8 8 7
Return on equity 20.4 20.8 19.9 20.9 13.6 154 139 108
Gearing (times) 11.3 12.7 14.3 16.2 16.5 19 15 14
Staff costs to operating expenses 61 62 58 54 60 59 64 62
Non-fund income to total income 8 9 8 8 9 13 14 18
Operating expenses to total income 19 19 18 16 17 14 14 15
Operating expenses to deposits 3 2 2 2 2 2 2 2
Interest cost n.a. 8.14 8.51 8.77 8.24 7.58 6.89 5.42
Average cost of borrowings n.a. 19.4 18.9 8.7 8.4 7.3 5.8 5.2
Average yield on investments 12.4 12.9 12.3 14.1 12.1 12 11 10
Average yield on advances 14.8 13.2 13.3 11.9 11.8 11 10 9
Spreads n.a. 3.57 3.34 3.30 3.12 3.27 3.55 3.71
provisions
Incemental I/D ratio n.a. 52 50 70 29 37 82 34
Growth (per cent)
Advances 5 29 22 21 19 28 11 26
Deposits 15 30 29 31 12 15 5 20
Investments 22 36 32 47 6 11 8 14
Salaries cost 9 20 17 7 36 -8 21 5
Interest income 22 17 28 31 12 11 8 0
Others
Branches (nos) 755 841 899 915 932 967 989 1013
Advances per branch (Rs crore) 6.47 7.51 8.57 10.19 11.88 15 16 19
Employees (nos) 13,580 14,238 14,447 14,398 13,588 13589 13507 13602
continued...

203
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest 92 91 92 92 91 87 86 82
Forex 2 2 2 1 1 1 1 1
Priority 40 39 40 40 39 39 38 38
Public 5 5 4 6 6 6 9 16
Inter bank 0 0 0 0 0 0 0 0
Others 54 55 56 55 55 55 52 45
Abroad 0 0 0 0 0 0 0 0
Bills 9 10 10 7 6 5 6 4
Cash credit 61 62 60 59 61 42 45 54
Term loans 30 29 30 33 33 42 45 54
Secured 86 86 86 82 81 74 77 76
Unsecured 2 1 2 4 5 10 11 16
Shares 0 2 2 2 1 1 1 1
Debentures 26 39 38 35 32 31 25 21
Subsidiary 0 0 0 0 0 0 0 0
Others 1 2 1 2 3 2 2 1
Net NPAs (per cent) 5.6 4.5 4.5 3.8 3.6 3.2 1.4 0.0
n.a.: Not available
Source: CRIS INFAC

204
Dena Bank Table 8
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 207 207 207 207 207 207 207 207
Reserves and surplus 296 339 489 620 574 770 792 848
Deposits 7,861 10,115 11,795 13,287 14,573 15,355 16,491 18,349
Borrowings 111 179 586 755 377 266 228 308
Total 9,714 12,264 14,843 16,851 17,909 18,842 20,162 22,160
Assets
Cash and balances with RBI 801 1,395 1,314 1,251 1,198 1,024 1,115 1,233
Balances with bank and money at call 353 478 487 318 1,033 509 337 218
Investments 3,719 4,601 5,646 6,915 6,816 7,648 8,500 9,736
Advances 4,043 5,147 6,396 7,118 7,002 7,523 8,436 9,412
Fixed assets 154 163 289 335 327 316 296 294
Other assets 644 480 710 914 1,533 1,823 1,478 1,266
Total 9,714 12,264 14,843 16,851 17,909 18,842 20,162 22,160
Deposits
Demand 1,120 1,101 1,219 1,599 1,633 1,682 1,699 1,941
Savings 2,170 2,483 2,910 3,350 3,951 4,362 4,854 5,680
Term 4,571 6,530 7,666 8,338 8,989 9,311 9,938 10,728
Total 7,861 10,115 11,795 13,287 14,573 15,355 16,491 18,349
Total 7,861 10,115 11,795 13,287 14,573 15,355 16,491 18,349
Borrowings
RBI 0 0 230 367 187 103 0 0
Other banks 3 0 169 50 0 0 0 0
Forex borrowings 0 0 0 0 0 96 216
Total 112 179 586 755 377 266 228 308
Bills payable 320 272 332 255 298 306 261 177
Interest accrued 501 552 735 931 1,054 1,013 1,064 997
Others (including provisions) 417 600 699 797 826 926 1,120 1,250
Total 1,238 1,424 1,766 1,983 2,177 2,245 2,444 2,447
Balance with RBI 723 1,310 1,222 1,140 1,095 1082 981 908
Cash in hand 78 85 92 111 102 151 134 116
Advances
Term loans 1,343 1,772 2,402 2,515 3,046 3,386 3,710 5,026
Total 4,044 5,147 6,395 7,118 7,002 7,523 8,436 9,412
Continued...

205
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Secured 3,157 4,324 5,282 5,981 5,915 7,079 7,342 8,188
Unsecured 300 65 164 185 188 281 633 697
Total 4,044 5,147 6,395 7,118 7,002 7,523 8,436 9,412
Priority sector 1,629 2,183 2,669 2,855 2,739 2,828 3,167 3,815
Public sector 306 460 496 743 852 1,360 1,408 1,497
Banks 4 12 2 28 49 0 0 0
Others 2,105 2,492 3,227 3,492 3,362 3,334 3,861 4,100
Total 4,044 5,147 6,395 7,118 7,002 7,523 8,436 9,412
Total Advances 4,044 5,147 6,395 7,118 7,002 7,523 8,436 9,412
Investments
- Shares 35 58 43 59 120 127 145 113
- Debentures 697 1,202 1,523 2,161 2,049 1,909 1,800 1,503
- Subsidiaries/JV 10 16 19 22 22 22 22 22
- Others 131 6 47 64 64 39 239 200
Total 3,719 4,601 5,646 6,906 6,816 7,648 8,500 9,736
Total Investments 3,719 4,601 5,646 6,906 6,816 7,648 8,500 9,736
Movement in NPA
Gross NPA
Net NPA-Closing balance n.a. n.a. n.a. 983 1,280 1,227 997 884
Interest earned
Interest/Discount on advances/bills 580 678 799 832 839 810 872 817
Income on investments 406 512 641 715 816 825 836 868
Others 1 3 8 8 22 15 18 6
Total 1,014 1,216 1,492 1,587 1,716 1,708 1,772 1,735
Other income
Loss on sale of investments -5 0 0 0 0 0 0 -2
Lease income 0 0 0 0 0 0 0 0
Total 111 184 153 212 199 353 437 617
Total income 1,125 1,400 1,645 1,799 1,916 2,062 2,209 2,353
continued...

206
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest expended
Interest on deposits 579 735 958 1,043 1,139 1,166 1,125 1,071
Interest on RBI /Inter-bank 14 3 10 29 28 21 3 3
Others 47 52 83 98 100 79 76 69
Total 640 790 1,051 1,169 1,267 1,266 1,204 1,143
Operating expenses
Salaries 212 245 276 293 434 323 366 339
Others 71 82 88 101 124 90 89 105
Depreciation 8 10 14 18 21 24 28 28
Total 291 337 378 411 580 437 483 472
Profit for the year 73 105 110 63 -266 35 142 258
Profits inclusive of provisions 194 274 216 219 68 359 522 738
Liability for outstanding forex contracts 408 480 715 1,369 3,014 573 1,180 3,548
Guarantees
- In India 725 740 808 619 783 1,052 1,035 1,188
- Outside India 0 0 0 0
Others 137 165 180 146 524 59 147 71
Total 1,986 2,223 2,501 2,986 4,933 2,259 3,151 5,840
Provision for depreciation in the value of inves 0 0 8 -38 41 5 9 0
Provision towards income tax 17 24 5 25 0 19 50 121
Others 36 4 1 3 3 -16 51 153
Total 121 169 106 156 334 324 380 480
Financial analysis
Overall 21 29 17 13 10 5 7 11
Demand 26 -2 11 31 2 3 1 14
Savings 14 14 17 15 18 10 11 17
Term 24 43 17 9 8 4 7 8
Demand 14 11 10 12 11 11 10 11
Savings 28 25 25 25 27 28 29 31
Term 58 65 65 63 62 61 60 58
Domestic 100 100 100 100 100 100 100 100
Abroad 0 0 0 0 0 0 0 0
continued...

207
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Return on assets 0.8 1.0 0.8 0.4 -1.5 0.2 0.7 1.2
Return on equity 18.7 20.0 17.8 8.3 -33.1 4.0 14.4 25.1
Gearing (times) 18.3 21.5 20.3 19.4 21.9 18.3 19.2 20.0
Earning per share (Rs) 3.5 5.1 5.3 3.0 -12.9 1.7 6.9 12.5
Interest cost n.a. 8.38 9.03 8.66 8.58 8.12 7.32 6.38
Spreads n.a. 3.62 2.78 2.22 2.39 2.44 2.96 2.69
Net Profitability Margin n.a. 1.38 0.76 0.25 -0.46 0.51 1.00 0.97
provisions
Incremental C/D ratio 46 49 74 48 -9 67 80 53
Incemental I/D ratio n.a. 39 62 85 -8 106 75 67
Growth (per cent)
Advances 19 27 24 11 -2 7 12 12
Deposits 21 29 17 13 10 5 7 11
Investments 35 24 23 22 -1 12 11 15
Salaries cost 14 15 13 6 48 -26 13 -7
Commission and fee -2 20 0 21 -2 -7 -1 6
Interest income 24 20 23 6 8 0 4 -2
Others
Branches (nos) 1,143 1,156 1,166 1,170 1,175 1,135 1,135 1,130
Employees (nos) 15,610 15,109 14,881 14,412 10,947 10,700 10,553 10,957
continued...

208
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest 90 87 91 88 90 83 80 74
Forex 2 1 2 1 1 1 1 1
Priority 40 42 42 40 39 38 38 41
Public 8 9 8 10 12 18 17 16
Inter-bank 0 0 0 0 1 0 0 0
Others 52 48 50 49 48 44 46 44
Abroad 0 0 0 0 0 0 0 0
Bills 12 11 9 9 8 7 8 7
Cash credit 55 54 54 56 49 48 48 39
Term loans 33 34 38 35 44 45 44 53
Secured 78 84 83 84 84 94 87 87
Unsecured 7 1 3 3 3 4 8 7
Shares 1 1 1 1 2 2 2 1
Debentures 19 26 27 31 30 25 21 15
Subsidiary 0 0 0 0 0 0 0 0
Others 4 0 1 1 1 1 3 2
Net NPAs (per cent) 9.4 8.3 7.7 13.5 18.4 16.3 11.8 9.4
n.a.: Not available
Source: CRIS INFAC

209
Corporation Bank Table 9
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 82 120 120 120 120 143 143 143
Reserves and surplus 318 729 855 1,025 1,228 1,903 2,227 2,625
Deposits 6,673 9,352 12,601 14,280 16,560 18,924 21,725 23191
Borrowings 271 70 198 296 595 1,424 803 934
Other liabilities and provisions 810 943 1,209 1,042 1,200 1,210 1,374 2,260
Total 8,154 11,214 14,983 16,762 19,703 23,604 26,272 29,154
Assets
Cash and balances with RBI 804 1,004 1,220 1,162 1,088 1,336 1,284 1,694
Balances with bank and money at call 601 1,156 1,228 1,120 2,097 2,010 1,145 1,142
Investments 3,287 4,154 5,511 5,962 6,860 8,056 10,670 10,685
Advances 3,015 4,303 6,286 7,777 8,666 10,987 12,029 13,890
Fixed assets 64 92 117 143 155 199 233 249
Other assets 383 505 622 597 837 1,015 911 1,493
Total 8,154 11,214 14,983 16,762 19,703 23,604 26,272 29,154
Deposits
Demand 1,472 1,443 1,647 1,910 2,137 2,314 2,922 3,559
Savings 1,096 1,316 1,600 1,958 2,247 2,609 3,276 4,324
Term 4,105 6,593 9,355 10,412 12,177 14,001 15,527 15,308
Total 6,673 9,352 12,601 14,280 16,560 18,924 21,725 23,191
Total 6,673 9,352 12,601 14,280 16,560 18,924 21,725 23,191
Borrowings
RBI 0 0 134 146 210 351 25 0
Other banks 233 0 0 0 130 510 170 7
Total 271 70 198 296 595 1,424 803 934
Bills payable 390 347 509 361 639 583 710 1,130
Total 810 943 1,209 1,042 1,200 1,210 1,374 2,260
Balance with RBI 741 936 1,124 1,065 980 1,215 1,130 1,449
Cash in hand 62 68 91 91 102 121 154 245
Advances
Bills purchases and discounted 279 547 441 455 594 610 811 1,098
Term loans 1,115 1,569 2,957 4,268 3,918 4,553 5,177 6,764
Total 3,015 4,303 6,286 7,777 8,666 10,987 12,029 13,890
Continued...

210
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Secured 2,281 3,196 4,606 5,733 7,145 7,221 9,895 11,549
Government guarantee 448 477 621 919 328 1,476 392 530
Unsecured 286 630 1,060 1,126 1,194 2,290 1,742 1,811
Total 3,015 4,303 6,286 7,777 8,666 10,987 12,029 13,890
Priority sector 952 1,257 1,873 2,257 2,869 3,052 3,970 4,979
Public sector 412 431 588 1,628 1,576 2,938 2,095 1,123
Banks 4 2 90 22 0 31 232 230
Others 1,647 2,613 3,736 3,870 4,221 4,967 5,731 7,557
Total 3,015 4,303 6,286 7,777 8,666 10,987 12,029 13,890
Total 3,015 4,303 6,286 7,777 8,666 10,987 12,029 13,890
Investments
- Shares 38 81 72 84 44 55 55 59
- Debentures 675 1,065 1,605 1,501 1,532 1,658 1,788 1,542
- Subsidiaries/JV 0 3 10 85 88 115 115 115
- Others 523 540 543 271 278 120 179 117
Total 3,287 4,154 5,511 5,962 6,860 8,057 10,670 10,685
Movement in NPA
Gross NPA
Opening balance n.a. n.a. n.a. n.a. 433 485 587 657
Additions n.a. n.a. n.a. n.a. 136 246 177 162
Reductions n.a. n.a. n.a. n.a. 85 143 107 227
Closing balance n.a. n.a. n.a. n.a. 485 587 657 722
Net NPA-Closing balance n.a. n.a. n.a. n.a. 171 253 198 250
Interest earned
Interest/Discount on advances/bills 403 427 608 806 934 997 1,020 991
Income on investments 366 522 634 689 744 824 965 1,094
Others 20 30 20 15 33 34 52 73
Total 829 1,028 1,356 1,604 1,805 1,946 2,103 2,201
Other income
Profit on sale of fixed assets 0 2 0 0 0 0 1
Lease income 0 0 0 0 0 0 0 0
Total 111 144 198 271 292 382 532 517
Total income 940 1,171 1,555 1,875 2,097 2,328 2,634 2,718
continued...

211
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest expended
Interest on deposits 493 623 961 1,116 1,184 1,285 1,270 1,190
Others 16 13 11 13 20 17 24 29
Total 511 639 978 1,146 1,223 1,320 1,310 1,237
Operating expenses
Salaries 114 129 165 177 200 214 256 284
Others 57 86 87 105 120 269 344 229
Depreciation 12 15 18 22 22 32 49 60
Total 183 230 271 304 341 515 648 574
Total expenses including provisions 815 1,005 1,363 1,643 1,835 2,150 2,395 2,214
Claims against the banks 13 36 49 45 50 50 39 44
Liability for outstanding forex contracts 1,261 2,100 1,654 2,066 3,832 2665 4485 4,267
Guarantees
- In India 365 564 813 831 994 0 0 1,548
- Outside India 7 13 21 34 23 0 0 62
Acceptances and endorsements 262 259 293 411 443 466 668 1,353
Others 20 14 20 10 23 27 18 46
Total 1,938 2,987 2,870 3,397 5,364 3,208 5,211 7,320
Provision for depreciation in the value of inves 2 3 0 8 29 23 42 12
Others 2 1 9 8 0 0 0
Total 120 136 114 193 270 315 437 403
Financial analysis
Overall 16 40 35 13 16 14 15 7
Demand 23 -2 14 16 12 8 26 22
Savings 20 20 22 22 15 16 26 32
Term 13 61 42 11 17 15 11 -1
Demand 22 15 13 13 13 12 13 15
Savings 16 14 13 14 14 14 15 19
Term 62 70 74 73 74 74 71 66
Domestic 100 100 100 100 100 100 100 100
Abroad 0 0 0 0 0 0 0 0
continued...

212
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Return on assets 1.7 1.7 1.5 1.5 1.4 0.8 1.0 1.8
Return on equity 34.4 26.7 21.1 21.9 21.0 10.5 10.8 19.6
Gearing (times) 19.4 12.2 14.4 13.6 13.6 10.5 10.1 9.5
Interest cost n.a. 7.47 8.48 8.12 7.47 6.82 5.93 5.10
Spreads n.a. 4.52 3.01 2.87 3.18 2.81 3.04 3.38
Provisions as a percentage of profit before 49.2 44.9 37.3 45.3 50.8 64 65 44
provisions
Growth (per cent)
Advances 23 43 46 24 11 27 9 15
Deposits 16 40 35 13 16 14 15 7
Investments 54 26 33 8 15 17 32 0
Salaries cost 21 13 28 7 13 7 20 11
Commission and fee 20 30 31 4 0 -5 -5 12
Interest income 24 24 32 18 12 8 8 5
Others
Branches (nos) 507 581 617 648 652 659 684 717
Advances per branch (Rs crore) 5.95 7.41 10.19 12.00 13.29 17 18 19
Employees (nos) 9,379 9,615 10,182 10,587 10,837 10801 10729 10734
continued...

213
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest 88 88 87 86 86 84 80 81
Forex 1 2 2 2 2 2 2 1
Priority 32 29 30 29 33 28 33 36
Public 14 10 9 21 18 27 17 8
Inter-bank 0 0 1 0 0 0 2 2
Others 55 61 59 50 49 45 48 54
Abroad 0 0 0 0 0 0 0 0
Bills 9 13 7 6 7 6 7 8
Cash credit 54 51 46 39 48 53 50 43
Term loans 37 36 47 55 45 41 43 49
Secured 76 74 73 74 82 66 82 83
Govt. guarantee 15 11 10 12 4 13 3 4
Unsecured 9 15 17 14 14 21 14 13
Debentures 21 26 29 25 22 21 17 14
Subsidiary 0 0 0 1 1 1 1 1
Others 16 13 10 5 4 1 2 1
Net NPAs (per cent) 3.6 2.9 2.0 1.9 2.0 2.31 1.65 1.8
n.a.: Not available
Source: CRIS INFAC

214
State Bank of Travancore Table 10
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 35 50 50 50 50 50 50 50
Deposits 6,464 7,468 8,650 10,183 11,573 13,460 15,926 19,721
Borrowings 92 126 140 61 38 64 48 271
Total 7,790 9,133 10,914 12,435 14,483 16,493 19,033 24,003
Assets
Cash and balances with RBI 777 642 631 566 705 994 829 958
Balances with bank and money at call 350 819 1,132 1,339 1,201 998 413 449
Investments 2,626 3,301 4,384 4,872 5,453 6,372 8,039 10,778
Advances 3,659 4,001 4,252 5,131 6,397 7,436 9,171 11,132
Fixed assets 44 47 45 52 67 69 72 106
Other assets 333 324 470 475 660 625 509 580
Total 7,790 9,133 10,914 12,435 14,483 16,493 19,033 24,003
Deposits
Demand 732 969 931 1,047 1,247 1,217 1,109 1,494
Savings 1,313 1,582 1,995 2,328 2,654 3,084 3,869 4,758
Term 4,419 4,917 5,725 6,808 7,671 9,158 10,948 13,470
Total 6,464 7,468 8,650 10,183 11,573 13,460 15,926 19,721
Total 6,464 7,468 8,650 10,183 11,573 13,460 15,926 19,721
Borrowings
RBI 0 0 0 16 8 40 0 0
Other banks 0 0 0 0 0 0 1 0
Total 92 126 140 61 46 64 48 271
Bills payable 304 334 376 355 179 410 384 401
Interest accrued 426 545 693 669 841 953 958 1,058
Total 1,026 1,187 1,742 1,757 2,357 2,360 2,336 3,086
Balance with RBI 746 609 597 531 663 936 790 919
Cash in hand 32 33 34 35 41 57 39 39
Advances
Bills purchases and discounted 242 358 428 406 691 506 856 1,279
Term loans 789 821 928 1,324 1,543 2,035 3,074 4,191
Total 3,659 4,001 4,252 5,131 6,397 7,436 9,171 11,132
Secured 3,270 3,510 3,639 4,139 4,985 4969 7238 8793
Unsecured 92 201 273 441 867 1311 1183 1484
Total 3,659 4,001 4,252 5,131 6,397 7,436 9,171 11,132
Continued...

215
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 20002-03 2003-04
Priority sector 1,209 1,302 1,409 1,705 2,016 2260 3081 4143
Public sector 538 618 677 962 1,313 1732 1248 1570
Banks 0 2 0 7 2 1 28 131
Others 1,777 2,078 1,965 2,457 2,648 3442 4813 5288
Total 3,525 4,001 4,051 5,131 5,978 7436 9171 11132
Total 3,659 4,001 4,051 5,131 5,978 7436 9171 11132
Investments
- Shares 183 231 370 30 36 34 36
- Debentures 143 158 200 336 348 288 358 419
- Others 59 114 70 79 45 48 40 24
Total 2,626 3,459 4,584 5,207 5,453 6,372 8,039 10,778
Movement in NPA
Gross NPA
Closing balance n.a. n.a. n.a. 811 758 718 635 662
Interest earned
Others 19 38 56 61 64 50 18 13
Total 909 982 1,019 1,160 1,315 1,454 1,584 1,740
Other income
Lease income 0 0 0 0 0 0 0 0
Total 124 149 153 195 194 230 300 470
Total income 1,033 1,130 1,172 1,354 1,509 1,684 1,885 2,210
continued...

216
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest expended
Interest on deposits 604 659 724 823 859 958 1002 996
Others 39 33 31 30 25 70 57 60
Total 661 714 781 878 920 1,029 1,062 1,057
Operating expenses
Salaries 167 152 173 221 277 245 269 317
Others 47 58 67 73 69 55 59 68
Depreciation 7 8 0 0 14 17 20 34
Total 221 217 240 294 359 317 348 419
Total expenses including provisions 993 1,067 1,129 1,288 1,412 1,412 1,412 1,412
Liability for outstanding forex contracts 395 476 798 1,941 2937 4,252 7,279 10,061
Guarantees
- In India 471 395 387 382 380 352 462 677
- Outside India 9 18 20 3 3 9 1 3
Others 150 151 231 214 261 133 316 112
Total 1,413 1,310 1,747 2,878 3,969 5,107 8,493 11,398
Provision for depreciation in the value of inves 15 -69 -6 -4 9 4 9 5
Others 0 33 -62 22 -8 7 14 46
Total 110 137 107 116 133 200 284 456
Financial analysis
Overall 19 16 16 18 14 16 18 24
Demand 38 32 -4 12 19 -2 -9 35
Savings 7 21 26 17 14 16 25 23
Term 21 11 16 19 13 19 20 23
Demand 11 13 11 10 11 9 7 8
Savings 20 21 23 23 23 23 24 24
Term 68 66 66 67 66 68 69 68
continued...

217
...continued
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Financial parameters
Return on assets 0.6 0.7 0.4 0.6 0.7 0.6 0.5 0.5
Return on equity 19.7 22.6 11.8 16.3 20.5 17.3 14.6 11.8
Gearing (times) 36.3 25.0 27.6 27.7 27.1 26.0 25.3 24.9
Interest cost n.a. 9.65 9.14 8.88 8.22 8.00 7.01 5.75
Spreads n.a. 2.76 1.84 1.88 2.25 1.89 2.29 2.61
Deposits to Borrowings(times) n.a. 64.02 60.54 93.35 219.25 246.10 261.51 111.75
Capital adequacy 8.2 11.5 n.a. 11.1 11.8 12.5 11.3 11.4
provisions
Incemental I/D ratio 67 92 32 42 49 68 72
Growth (per cent)
Advances 9 9 6 21 25 16 23 21
Deposits 19 16 16 18 14 16 18 24
Investments -22 -10 10 15 6 0 8 18
Salaries cost 22 -9 14 28 25 -12 10 18
Commission and fee 9 6 19 16 -5 -4 12 7
Interest income 19 8 4 14 13 11 9 10
Others
Branches (nos) 654 660 664 667 671 674 671 668
Employees (nos) 12,990 13,049 13,234 12,953 12,172 12137 12005 12007
continued...

218
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest 88 87 87 86 87 86 84 79
Forex 3 3 2 2 2 2 1 2
Priority 33 33 35 33 34 30 34 37
Public 15 15 17 19 22 23 14 14
Inter bank 0 0 0 0 0 0 0 1
Others 49 52 49 48 44 46 52 48
Abroad 4 0 0 0 0 0 0 0
Bills 7 9 10 8 11 7 9 11
Cash credit 72 71 68 66 65 66 57 51
Term loans 22 21 22 26 24 27 34 38
Secured 89 88 86 81 78 67 79 79
Govt. guarantee 8 7 8 11 9 16 8 8
Unsecured 3 5 6 9 14 18 13 13
Shares 0 5 5 7 1 1 0 0
Debentures 5 5 4 6 6 5 4 4
Subsidiary 0 0 0 0 0 0 0 0
Others 2 3 2 2 1 1 0 0
Net NPAs (per cent) 8.8 12.2 10.8 8.6 7.8 5.7 3.1 1.4
n.a.: Not available
Source: CRIS INFAC

219
ICICI Bank Table 11
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 150 165 165 197 220 963 963 966
Reserves and surplus 32 102 143 953 1,092 5,632 6,321 7,394
Deposits 1,348 2,629 6,073 9,866 16,378 32,085 48,169 68,109
Borrowings 93 192 200 491 1,033 49,219 34,302 30,740
Other liabilities and provisions 159 191 401 566 1,013 16,208 17,057 18,019
Total 1,782 3,279 6,982 12,073 19,737 104,106 106,812 125,229
Assets
Cash and balances with RBI 150 310 466 722 1,232 1,774 4,886 5,408
Balances with bank and money at call 223 563 1,172 2,693 2,362 11,012 1,603 3,062
Investments 435 1,023 2,861 4,417 8,187 35,891 35,463 42,743
Advances 798 1,128 2,110 3,657 7,031 47,035 53,279 62,096
Fixed assets 96 184 200 222 381 4,239 4,061 4,057
Other assets 79 72 172 361 543 4,155 7,521 7,863
Total 1,782 3,279 6,982 12,073 19,737 104,106 106,812 125,229
Deposits
Demand 316 363 577 1,587 2,622 2,736 3,689 7,260
Savings 50 104 227 533 1,881 2,497 3,793 8,372
Term 982 2,162 5,269 7,745 11,876 26,852 40,687 52,477
Total 1,348 2,629 6,073 9,866 16,378 32,085 48,169 68,109
Total 1,348 2,629 6,073 9,866 16,378 32,085 48,169 68,109
Borrowings
RBI 0 0 148 219 301 141 0 0
Other banks 80 29 42 192 398 2,688 2,447 1,657
Other institutions and agencies 13 163 10 81 325 39,114 25,964 21,309
Forex borrowings 0 0 0 0 9 7,276 5,892 7,774
Total 93 192 200 491 1,033 49,219 34,302 30,740
Bills payable 69 108 112 142 381 817 1,031 1,685
Interest accrued 6 18 23 34 56 2,290 1,619 1,356
Unsecured redeemable bonds 9,751 9,750 9,106
Others(including provisions) 85 66 97 390 577 3,349 4,658 5,872
Total 159 191 232 566 1,013 16,208 17,057 18,020
Balance with RBI 148 303 457 690 1,131 1529 4550 4961
Cash in hand 3 7 9 31 101 246 336 447
Advances
Bills purchased and discounted 76 141 455 701 1,087 1,654 438 1,231
Cash credit and overdraft 632 842 1,384 2,578 4,971 2,403 3,134 6,098
Term loans 89 145 272 378 974 42978 49,708 54,767
Total 798 1,128 2,110 3,657 7,031 47,035 53,279 62,096
Continued...

220
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Secured 771 1,057 1,825 2,806 4,947 44,604 50,068 56,801
Government guarantee 0 6 58 98 449 1,029 1,700 615
Unsecured 27 64 227 753 1,635 1,401 1,511 4,679
Total 798 1,128 2,110 3,657 7,031 47,035 53,279 62,096
Priority sector 219 329 478 497 1,185 1,986 8,938 14,531
Public sector 0 0 4 104 844 4,356 1,897 707
Banks 15 0 0 15 91 179 101 43
Others 564 799 1,628 3,040 4,912 40,451 42,289 45,751
Total 798 1,128 2,110 3,657 7,031 46,973 53,226 61,032
Advances outside India 0 0 0 0 0 62 54 1,064
Total 798 1,128 2,110 3,657 7,031 47,035 53,279 62,096
Investments
- Government securities 313 705 1,527 2,815 4,070 22,722 25,549 29,888
- Shares 10 47 138 161 125 1,909 1,642 1,684
- Debentures 69 217 667 1,137 3,070 6,436 5,690 5,549
- Subsidiaries/JV 0 0 0 0 0 607 781 1,104
- Others 42 55 529 304 872 4,134 1,758 4,127
Total 435 1,023 2,861 4,417 8,179 35,879 35,454 42,382
Total investments 435 1,023 2,861 4,417 8,187 35,891 35,462 42,743
Movement in NPA
Gross NPA
Additions -from Bank of Mathura n.a. n.a. n.a. 0 238 0 0 0
Net NPA-Closing balance n.a. n.a. 60 56 154 2720 3151 2037
Interest earned
Interest/Discount on advances/bills 134 143 226 348 571 772 6,016 6,074
Income on investments 55 81 208 410 556 1,234 2,910 2,432
Others 3 4 0 1 7 24 206 178
Total 195 260 544 853 1,242 2,152 9,368 8,894
Other income
Commission exchange and brokerage 15 25 37 67 140 230 792 1,072
Profit on sale of investments 11 35 12 101 19 306 492 1,221
Profit on sale of fixed assets 0 0 0 0 0 0 -7 0
Profit on revaluation of investments 2 1 0 0 14 -15 0 0
Lease income 0 0 0 0 0 0 0 0
Total 43 85 89 194 220 574 1,968 3,065
Total income 238 345 633 1,047 1,462 2,726 11,336 11,959
continued...

221
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest expended
Interest on deposits 97 162 372 581 725 1,389 2,480 3,023
Others 27 15 33 63 80 122 5,281 3,763
Total 129 187 426 667 838 1,559 7,944 7,015
Operating expenses
Salaries 6 12 18 36 52 147 403 546
Others 26 31 47 92 246 423 1,417 1,764
Depreciation 8 14 18 25 36 53 191 261
Total 40 58 83 153 334 623 2,012 2,571
Provisions and contingencies 28 50 61 121 129 287 1,365 735
Total expenses including provisions 198 295 569 941 1,301 2,468 11,321 10,322
Profits inclusive of provisions 68 101 125 227 290 545 1,380 2,373
Claims against banks 0 1 0 25 55 1,023 2,025 2,502
Guarantees
in India 186 265 463 756 1,346 9,352 10,635 12,029
outside India 0 0 0 0 0 0 0 0
Liability on account of outstanding derivative 0 0 0 0 0 0 0 0
Acceptances, endorsements 251 287 559 849 1,287 1,739 4,325 6,514
Currency swaps 0 0 0 766 871 2,041 2,901 4,448
Others 11 2 22 29 271 11,817 44,268 121,620
Total 1,496 2,907 5,014 9,780 12,711 41,488 89,438 202,942
Provision for depreciation 5 14 -5 13 -6 -16 309 -10
Provision towards income tax 17 23 34 33 65 121 -426 265
Other provisions 4 0 0 0 7 -93 160 96
Total 28 50 61 121 129 287 1,365 735
Financial analysis
Overall 85 95 131 62 66 96 50 41
Demand 69 15 59 175 65 65 35 97
Savings 168 109 119 135 253 33 52 121
Term 87 120 144 47 53 126 52 29
Demand 23 14 9 16 16 9 8 11
Savings 4 4 4 5 11 8 8 12
Term 73 82 87 79 73 84 84 77
continued...

222
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Return on assets 2.7 2.0 1.2 1.1 1.0 0.4 0.0 1.4
Return on net worth 23.7 22.4 22.2 14.4 13.1 6.5 0.2 20.9
Gearing (times) 8.8 11.3 21.6 9.5 14.0 14.8 13.7 14.0
Interest cost n.a. 8.4 9.1 7.9 5.9 3.1 9.6 7.6
Spreads n.a. 3.2 3.1 2.2 2.7 0.9 0.8 1.4
Net Profitability Margin n.a. 2.7 3.0 1.5 1.7 0.3 -0.2 0.43
provisions
Incemental I/D ratio 46 53 41 58 176 -3 37
Growth (per cent)
Advances 23 41 87 73 92 569 13 17
Deposits 85 95 131 62 66 96 50 41
Investments 66 135 180 54 85 338 -1 21
Salaries cost 38 99 48 100 42 185 174 35
Interest income 68 33 110 57 46 73 335 -5
Others
Branches (nos) 22 33 55 81 389 358 446 413
Employees (nos) 445 603 889 1,344 4,491 7,726 10,617 13,609
continued...

223
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest 82 75 86 81 85 79 83 74
Forex 4 5 5 2 3 1 1 2
Priority 27 29 23 14 17 4 17 23
Public 0 0 0 3 12 9 4 1
Inter bank 2 0 0 0 1 0 0 0
Others 71 71 77 83 70 86 79 74
Abroad 0 0 0 0 0 0 0 2
Bills 10 12 22 19 15 4 1 2
Cash credit 79 75 66 70 71 5 6 10
Term loans 11 13 13 10 14 91 93 88
Secured 97 94 87 77 70 95 94 91
Government guaranteed 0 1 3 3 6 2 3 1
Unsecured 3 6 11 21 23 3 3 8
Shares 2 5 5 4 2 5 5 4
Debentures 16 21 23 26 38 18 16 13
Subsidiary 0 0 0 0 0 2 2 3
Others 10 5 18 7 11 12 5 10
Net NPAs (per cent) 1.7 1.1 1.8 1.1 1.4 5.5 5.2 2.2
n.a.: Not available
Source: CRIS INFAC

224
HDFC Bank Table 12
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 200 200 200 257 254 281 282 285
Reserves and surplus 44 85 139 508 669 1,670 1,970 2,409
Deposits 1,279 2,192 2,915 8,428 11,658 17,654 22,376 30,409
Borrowings 199 55 448 1,579 1,433 1,823 2,085 2,308
Other liabilities and provisions 93 298 648 885 1,603 2,359 3,712 6,897
Total 1,815 2,830 4,350 11,656 15,617 23,787 30,424 42,307
Assets
Cash and balances with RBI 178 212 292 850 986 1,211 2,082 2,542
Balances with bank and money at call 85 329 248 768 1,625 2,247 1,087 1,116
Investments 730 1,121 1,904 5,748 7,145 12,004 13,388 19,257
Advances 575 842 1,401 3,362 4,637 6,814 11,755 17,745
Fixed assets 99 110 132 237 290 371 529 617
Other assets 148 215 375 691 934 1,140 1,583 1,031
Total 1,815 2,830 4,350 11,656 15,617 23,787 30,424 42,307
Deposits
Demand 409 673 982 2,780 2,856 4,220 4,951 8,835
Savings 69 177 347 1,125 1,903 2,957 4,663 7,804
Term 802 1,341 1,587 4,523 6,899 10,476 12,762 13,769
Total 1,279 2,192 2,915 8,428 11,658 17,654 22,376 30,409
Total 1,279 2,192 2,915 8,428 11,658 17,654 22,376 30,409
Borrowings
RBI 0 0 124 205 163 97 13 0
Other banks 115 0 98 765 407 920 1,407 1,556
Total 199 55 448 1,429 1,233 1,823 2,085 2,308
Bills payable 30 58 244 372 511 867 851 3,667
Others(including provisions) 52 103 220 482 796 1,075 2,172 2,813
Total 93 198 513 959 1,603 2,359 3,712 6,897
Balance with RBI 174 201 276 809 929 1098.32 1,915 2,288
Cash in hand 5 11 16 41 57 113 167 254
Advances
Bills purchased and discounted 44 275 295 571 716 1,325 2,623 3,194
Cash credit and overdraft 226 235 503 1,468 1,377 1,738 2,608 3,741
Term loans 305 332 603 1,323 2,544 3,751 6,524 10,810
Total 575 842 1,401 3,362 4,637 6,814 11,755 17,745
Continued...

225
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Secured 359 535 753 2,958 3,944 6186 9991 15277
Unsecured 129 229 525 205 683 577 1670 2351
Total 575 842 1,401 3,362 4,637 6,814 11,755 17,745
Priority sector 130 126 199 586 668 732 1,422 2,498
Public sector 73 7 26 12 505 911 852 335
Banks 0 121 108 169 447 188 22 11
Others 372 588 1,067 2,595 3,017 4,982 9,459 14,900
Total 575 842 1,401 3,362 4,637 6,814 11,755 17,745
Total 575 842 1,401 3,362 4,637 6,814 11,755 17,745
Investments
- Government securities 365 573 868 3,217 3,413 5,295 6,356 11,531
- Shares 0 22 147 257 197 145 108 107
- Debentures 310 482 859 1,866 2,578 4,268 4,167 4,045
- Others 46 45 31 396 944 2,283 2,743 3,566
Total 730 1,121 1,904 5,748 7,145 12,004 13,388 19,257
Total investments 730 1,121 1,904 5,748 7,145 12,004 13,388 19,257
Movement in NPA
Gross NPA
Additions due to amalgmation n.a. n.a. n.a. 62 0 0 0 0
Interest earned
Interest/Discount on advances/bills 92 118 143 267 493 624 777 1,109
Income on investments 62 104 182 367 636 864 1,113 1,322
Others 8 1 0 0 0 1 3 7
Total 162 241 376 680 1,259 1,703 2,014 2,549
Other income
Loss on sale of investments 0 0 0 0 -1 0 0 0
Profit on sale of fixed assets 0 0 0 0 0 -1 1 0
Loss on revaluation of investments 0 0 0 0 0 0 -2 -11
Lease income 0 0 0 0 0 0 0 0
Total 32 62 68 125 186 333 466 480
Total income 193 303 444 805 1,445 2,036 2,479 3,029
continued...

226
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest expended
Interest on deposits 71 104 176 287 639 916 1,063 1,038
Interest on RBI /inter-bank 16 32 40 65 95 133 103 144
Others 0 2 13 23 20 25 25 29
Total 87 138 229 374 754 1,074 1,192 1,211
Operating expenses
Salaries 10 15 22 49 78 109 152 204
Others 26 37 52 96 178 240 334 480
Depreciation 6 11 15 26 54 69 106 126
Total 42 63 89 171 310 418 592 810
Total expenses including provisions 153 240 362 685 1,235 1,739 2,106 2,519
Profits inclusive of provisions 64 103 126 260 382 545 695 1,008
Guarantees
- In India 507 1,024 1,056 1,593 1,741 1,695 1,425 1,642
outside Inida 0 0 0 0 0 0 0 0
Liability on account of outstanding derivative 182 423 445 980 2,952 5,303 18,605 38,940
Acceptances, endorsements 686 837 1,066 956 1,172 944 1,172 1,892
Currency Swaps
Others 190 156 380 245 468 399 535 100
Total 5,302 5,928 8,422 11,633 15,011 20,328 41,560 82,117
Provision for depreciation in the value of inves 2 1 1 6 13 19 50 93
Others 0 0 0 5 0 14 0 17
Total 23 39 44 139 172 247 323 498
Financial analysis
Overall 87 71 33 189 38 51 27 36
Demand 80 65 46 183 3 48 17 78
Savings 297 158 95 225 69 55 58 67
Term 82 67 18 185 53 52 22 8
Demand 32 31 34 33 24 24 22 29
Savings 5 8 12 13 16 17 21 26
Term 63 61 54 54 59 59 57 45
continued...

227
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Return on assets 2.9 2.7 2.3 1.5 1.5 1.5 1.4 1.4
Return on equity 17.4 23.9 26.4 21.7 24.9 20.7 17.7 20.6
Gearing (times) 6.4 8.9 11.8 14.2 15.9 11.2 12.5 14.7
Interest cost n.a. 7.22 7.75 5.41 6.38 6.36 5.22 3.93
Spreads n.a. 4.95 4.57 4.48 4.42 3.93 3.67 4.24
provisions
Growth (per cent)
Advances 56 46 66 140 38 47 73 51
Deposits 87 71 33 189 38 51 27 36
Investments 132 54 70 202 24 68 12 44
Salaries cost 118 46 49 120 61 40 39 34
Interest income 41 49 56 81 85 35 18 27
Others
Branches (nos) 15 33 57 111 131 171 231 312
Employees (nos) 514 660 984 1,992 2,751 3742 4,791 5,673
continued...

228
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest 84 80 85 84 87 84 81 84
Forex 3 4 3 3 3 2 2 2
Priority 23 15 14 17 14 11 12 14
Public 13 1 2 0 11 13 7 2
Inter bank 0 14 8 5 10 3 0 0
Others 65 70 76 77 65 73 80 84
Abroad 0 0 0 0 0 0 0 0
Bills 8 33 21 17 15 19 22 18
Cash credit 39 28 36 44 30 26 22 21
Term loans 53 39 43 39 55 55 56 61
Secured 62 64 54 88 85 91 85 86
Govt. guarantee 15 9 9 6 0 1 1 1
Unsecured 22 27 38 6 15 8 14 13
Shares 0 2 8 4 3 1 1 1
Debentures 42 43 45 32 36 36 31 21
Subsidiary 0 0 0 0 0 0 0 0
Others 6 4 2 7 13 19 20 19
Net NPAs (per cent) 0.0 1.4 1.3 0.8 0.3 0.5 0.4 0.2
n.a.: Not available
Source: CRIS INFAC

229
IndusInd Bank Table 13
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 120 158 159 159 159 159 219 290
Deposits 3,093 4,273 5,018 6,546 7,187 8400 8598 11200
Borrowings 68 63 405 551 412 859 237 2310
Other liabilities and provisions 121 177 215 366 509 383 464 775
Total 3,561 5,026 6,168 7,997 8,653 10205 9901 15086
Assets
Investments 1,055 1,696 2,095 2,732 2,494 2485 2535 3972
Advances 1,928 2,451 2,662 3,677 4,237 5574 5348 7812
Fixed assets 100 127 124 112 96 87 110 298
Other assets 103 165 344 383 477 566 757 751
Total 3,561 5,026 6,168 7,997 8,653 10205 9901 15086
Deposits
Demand 212 342 560 871 651 916 822 857
Savings 27 44 94 135 143 172 225 395
Term 2,855 3,887 4,364 5,541 6,393 7312 7551 9949
Total 3,093 4,273 5,018 6,546 7,187 8400 8598 11200
Deposits of branches in India 3,093 4,273 5,018 6,546 7,187 8400 8598 11200
Total 3,093 4,273 5,018 6,546 7,187 8400 8598 11200
Borrowings
RBI 0 0 263 271 160 209 0 0
Other banks 53 20 31 34 0 260 33 1458
Total 68 63 405 551 412 859 237 2310
Bills payable 37 48 48 81 81 68 157 72
Unsecured non-convertible redeemable 0 0 0 50 102 0 0 0
debentures
Others (including provisions) 37 63 99 153 250 245 258 638
Total 120 177 215 366 509 383 464 775
Balance with RBI 242 326 368 360 376 491 554 1311
Cash in hand 2 4 7 10 10 19 21 24
Advances
Bills purchased and discounted 102 311 457 562 897 1360 994 622
Cash credit and overdraft 1,661 1,810 1,732 2,351 2,465 3314 3063 3175
Term loans 164 330 473 764 874 900 1291 4015
Total 1,928 2,451 2,662 3,677 4,237 5574 5348 7812
Continued...

230
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Secured 1,682 2,137 2,251 3,196 3,321 4438 3711 6552
Unsecured 221 172 192 302 744 632 589 889
Total 1,928 2,451 2,662 3,677 4,237 5574 5348 7812
Priority sector 488 584 654 742 705 948 1000 2515
Public sector 20 25 27 164 640 930 764 869
Banks 25 0 68 167 463 463 932 437
Others 1,395 1,842 1,914 2,605 2,429 3233 2652 3991
Total 1,928 2,451 2,662 3,677 4,237 5574 5348 7812
Total 1,928 2,451 2,662 3,677 4,237 5574 5348 7812
Investments
- Government securities 725 1,264 1,497 2,088 1,827 1954 2020 3770
- Shares 9 17 22 8 3 9 11
- Debentures 272 382 533 569 605 482 415 164
- Others 41 14 21 26 29 19 65 0
Total 1,055 1,696 2,095 2,732 2,494 2485 2535 3972
Total investments 1,055 1,696 2,095 2,732 2,494 2485 2535 3972
Movement in NPA
Gross NPA
Interest earned
Interest/Discount on advances/ 302 343 352 325 372 428 467 697
Others 0 2 0 0 0 0 0 0
Total 409 551 594 637 729 710 743 986
Other income
Profit on sale of fixed assets 0 0 0 0 0 0 0 -6
Loss on revaluation of investments 0 0 0 8 0 0 0
Total 82 155 83 144 117 184 258 345
Total income 491 706 676 782 845 894 1001 1331
continued...

231
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interests expended
Others 69 43 34 25 36 48 37 76
Total 310 429 479 501 569 547 558 669
Operating expenses
Salaries 4 7 11 12 13 20 28 50
Others 39 52 55 57 62 54 64 130
Depreciation 13 17 21 22 28 21 25 37
Total 56 76 87 90 103 95 118 217
Total expenses including provisions 418 615 640 726 805 844 911 1069
Provisions for non-performing assets 7 9 25 92 111 162 230 161
Provision towards Income/Interest tax 30 35 10 6 15 27 5 9
Net Provision for depreciation on investments 14 23 -2 21 -2 8 0 -3
Others 0 42 41 16 8 4 0 16
Total 52 110 74 135 132 202 234 183
Financial analysis
Demand 7 8 11 13 9 11 10 8
Savings 1 1 2 2 2 2 3 4
Term 92 91 87 85 89 87 88 89
Return on assets 2.7 2.1 0.7 0.8 0.5 0.5 0.9 2.1
Return on equity 28.7 23.0 7.1 10.5 7.5 9.2 15.5 37.4
Gearing (times) 11.7 8.8 10.6 14.0 14.9 17.2 15.4 17.8
Interest cost n.a. 11.3 9.7 7.9 7.7 6.4 6.1 5.9
Spreads n.a. 2.4 1.7 1.8 1.7 1.6 1.9 2.7
provisions
continued...

232
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Cash-deposit ratio 0.07 0.09 0.15 0.15 0.14 0.23 0.24 0.21
Growth (per cent)
Advances n.a. 27 9 38 15 32 -4 46
Deposits n.a. 38 17 30 10 17 2 30
Investments n.a. 61 24 30 -9 0 2 57
Commission and fee n.a. 13 -1 -7 1 -20 -11 -10
Interest income n.a. 35 8 7 14 -3 5 33
Others
Branches (nos) 18 21 26 27 32 40 53 61
Employees (nos) 251 351 508 513 581 738 941 n.a.
Income per employee (Rs crore) 1.96 2.01 1.33 1.52 1.45 1.21 1.06 n.a.
Interest 83 78 88 82 86 79 74 74
Forex 2 1 2 1 2 2 1 1
Securities transaction 2 12 0 8 3 14 19 17
Priority 25 24 25 20 17 17 19 32
Public 1 1 1 4 15 17 14 11
Inter bank 1 0 3 5 11 8 17 6
Others 72 75 72 71 57 58 50 51
Abroad 0 0 0 0 0 0 0 0
Bills 5 13 17 15 21 24 19 8
Cash credit 86 74 65 64 58 59 57 41
Term loans 9 13 18 21 21 16 24 51
Shares 0 1 1 1 0 0 0 0
Debentures 26 23 25 21 24 19 16 4
Subsidiary 0 0 0 0 0 0 0 0
Others 4 1 1 1 1 1 3 0
Net NPAs (per cent) 2.1 4.0 7.2 6.0 5.3 6.6 4.3 2.7
n.a.: Not available
Source: CRIS INFAC

233
Global Trust Bank Table 14
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 104 104 104 121 121 121 121 121
Deposits 2,279 3,285 4,097 6,199 7,734 6,443 6,921 6,399
Borrowings 91 36 483 399 600 64 26 9
Total 2,652 3,781 5,200 7,531 9,472 7,308 7,666 7,203
Assets
Investments 662 1,215 1,962 2,926 3,865 2,900 2,499 2,118
Advances 1,462 1,756 2,118 3,211 4,100 3,033 3,276 2,246
Fixed assets 124 276 327 338 379 320 301 271
Other assets 124 141 213 318 393 443 786 1,491
Total 2,652 3,781 5,200 7,531 9,472 7,308 7,666 7,203
Deposits
Demand 174 214 380 845 624 653 753 969
Savings 23 47 124 294 407 480 549 717
Term 2,082 3,024 3,594 5,059 6,703 5310 5,619 4,713
Total 2,279 3,285 4,097 6,199 7,734 6,443 6,921 6,399
Borrowings
RBI 50 0 100 60 0 0 0 0
Other banks 0 0 185 75 192 0 0 0
Total 91 36 483 399 600 64 26 9
Bills payable 19 40 55 93 123 60 67 96
Total 98 218 330 406 550 406 451 528
Balance with RBI 249 301 466 505 644 436 638 559
Cash in hand 4 5 7 9 22 48 89 85
Advances
Cash credit and overdraft 819 911 1,051 1,817 2,151 1381 1,094 705
Term loans 180 424 557 799 1,313 1171 1,754 1,250
Total 1,462 1,756 2,118 3,211 4,100 3033 3,276 2,246
Secured 1,200 1,459 1,881 3,090 3,454 2629 2,742 2,023
Unsecured 78 71 71 17 627 396 440 205
Total 1,462 1,756 2,118 3,211 4,100 3,033 3,276 2,246
Continued...

234
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Priority sector 453 555 513 703 795 664 865 626
Public sector 18 29 0 10 36 7 15 0
Banks 0 0 4 0 49 0 0 6
Others 991 1,172 1,601 2,498 3,220 2361 2,397 1,614
Total 1,462 1,756 2,118 3,211 4,100 3033 3,276 2,246
Government securities 622 804 1,074 1,742 2,293 1896 1,886 1,544
Shares and debentures 31 388 870 1,155 1,544 996 607 569
Units of UTI (MF) 2 17 0 0 0 0 0 0
Subsidiaries/JV 0 0 0 0 0 0 0 0
Others 0 0 12 34 59 2 0 0
Total 662 1,215 1,962 2,937 3,902 2,900 2,499 2,118
Movement in NPA
Gross NPA
Opening balance n.a. n.a. n.a. n.a. 49 238 430 916
Additions n.a. n.a. n.a. n.a. 208 536 762 620
Reductions n.a. n.a. n.a. n.a. 19 344 277 219
Closing balance n.a. n.a. n.a. n.a. 238 430 916 1,317
Net NPA-Closing balance n.a. n.a. n.a. 28 154 280 n.a. n.a.
Interest earned
Interest/Discount on advances/ 285 269 292 380 490 396 321 243
bills 0 0
Others 1 1 3 6 9 0 1 6
Total 357 394 491 646 897 721 540 354
Other income
Commission exchange and 45 40 31 36 42 45 43 43
brokerage
Profit on sale of fixed asets 0 0 0 0 0 20 0 13
Loss on revaluation of investments 0 0 0 0 0 0 -1 1
Lease income 0 0 0 49 0 0 0 0
Total 90 127 146 233 164 229 191 161
Total income 447 521 638 879 1,062 950 731 515
continued...

235
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest expended
Interest on RBI /Inter bank 36 14 15 26 17 15 1 1
Others 3 6 15 38 46 42 36 53
Total 290 323 438 507 697 636 517 435
Operating expenses
Salaries 6 9 13 18 30 36 42 37
Others 28 35 44 64 88 83 90 87
Depreciation 20 27 38 42 46 51 45 35
Total 53 71 95 124 164 170 177 159
Total expenses including provisions 390 441 567 770 982 913 1,004 1,328
Profit for the year 57 80 71 109 80 36 -273 -812
Profits inclusive of provisions 104 127 105 248 200 144 36 -79
Provison for NPAs n.a. 20 8 93 81 159 118 440
Depreciation in values of investments n.a. 6 5 0 27 25 81 164
Provision for taxation n.a. 22 15 40 11 -75 0 25
Other Provisions n.a. 0 5 6 2 -1 111 104
Total n.a. 47 34 139 120 108 309 734
Financial analysis
Overall 72 44 25 51 25 -17 7 -8
Demand 17 23 78 123 -26 5 15 29
Savings 95 108 161 138 38 18 14 31
Term 79 45 19 41 32 -21 6 -16
Demand 8 7 9 14 8 10 11 15
Savings 1 1 3 5 5 7 8 11
Term 91 92 88 82 87 82 81 74
Financial parameters (per cent)
Return of assets 2.4 2.5 1.6 1.7 0.9 0.4 -3.6 -10.9
Return on equity 35.3 37.7 26.6 26.5 14.3 7.4 -82.4 -303.8
Gearing (times) 13.4 14.6 16.9 13.3 15.1 17.5 27.7 25.9
Earning per share (Rs) 5.5 7.7 6.8 9.0 6.6 3.0 -22.5 -66.9
continued...

236
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest cost 11.2 11.0 9.0 9.2 8.5 7.6 6.4
Spreads 2.4 1.3 2.3 2.4 1.0 0.6 -0.5
Net Profitability Margin 2.5 0.8 2.6 1.6 -0.2 -1.0 -1.9
Capital adequacy 10.2 10.3 12.0 13.7 12.7 11.21 0 0
Provisions as a percentage of profit before 44.7 36.9 32.2 56.2 60.1 74.8 848.4 -931.0
provisions
Cash-deposit ratio 0.19 0.16 0.18 0.15 0.28 0.75 1.28 1.34
Incremental I/D ratio 33 55 92 46 61 75 -84 73
Growth (per cent)
Advances 6 20 21 52 28 -26 8 -31
Deposits 72 44 25 51 25 -17 7 -8
Investments 90 84 61 49 32 -25 -14 -15
Commission and fee 12 -12 -21 16 16 8 -6 0
Interest income 109 10 25 32 39 -20 -25 -34
Others
Branches (nos) 22 40 63 74 79 84 87
Advances per branch (Rs crore) 66.48 43.90 33.63 43.39 51.89 36.10 37.66 #DIV/0!
Operating expenses per branch (Rs crore) 2.43 1.78 1.50 1.67 2.08 2.02 2.04 #DIV/0!
Employees (nos) 429 532 748 939 1,173 1,147 1,314
Income per employee (Rs crore) 1.04 0.98 0.85 0.94 0.90 0.83 0.56 #DIV/0!
Interest 80 76 77 74 85 76 74 69
Forex 4 4 3 2 2 1 2 4
Priority 31 32 24 22 19 22 26 28
Public 1 2 0 0 1 0 0 0
Inter bank 0 0 0 0 1 0 0 0
Others 68 67 76 78 79 78 73 72
continued...

237
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Bills 32 24 24 19 16 16 13 13
Cash credit 56 52 50 57 52 46 33 31
Term loans 12 24 26 25 32 39 54 56
Secured 82 83 89 96 84 87 84 90
Unsecured 5 4 3 1 15 13 13 9
Subsidiary
Others 0 0 1 1 2 0 0 0
Gross NPAs (per cent) 3.7 2.1 n.a n.a n.a n.a n.a n.a
Net NPAs (per cent) 2.4 1.4 2.2 0.9 3.8 9.2 19.8 28.0
n.a.: Not available
Source: CRIS INFAC

238
The Federal Bank Ltd Table 15
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 22 22 21 22 22 22 22 22
Deposits 4603 6,424 6,782 6,463 7,665 8,865 10947 13477
Borrowings 287 232 488 380 344 374 85 127
Total 5,462 7,311 8,074 7,603 8,820 10,145 12,202 15,114
Assets
Investments 1456 2,366 2,602 2,666 3,035 3,756 4552 5507
Advances 2999 3,921 4,228 4,036 4,854 5,189 6218 7701
Fixed assets 134 156 155 145 133 133 162 176
Other assets 241 216 370 247 320 388 362 439
Total 5,462 7,311 8,074 7,603 8,820 10,145 12,202 15,114
Deposits
Demand 265 328 432 437 654 674 588 700
Savings 584 663 847 1,000 1,146 1,342 1727 2412
Term 3754 5,434 5,503 5,026 5,866 6,850 8632 10365
Total 4,603 6,424 6,782 6,463 7,665 8,865 10,947 13,477
Deposits of branches in India 4603 6,424 6,782 6,463 7,665 8,865 10,947 13,477
Total 4,603 6,424 6,782 6,463 7,665 8,865 10,947 13,477
Borrowings
RBI 67 8 33 111 81 38 0 0
Other banks 75 55 161 0 0 120 0 0
Total 287 232 488 380 344 374 85 127
Bills payable 114 112 150 41 47 66 37 147
Total 241 281 481 398 396 456 640 862
Balance with RBI 294 365 389 330 198 384 522 604
Cash in hand 52 59 57 61 65 76 87 121
Advances
Bills purchases and discounted 954 1,404 1,297 673 857 860 963 1133
Cash credit and overdraft 1,456 1,741 1,932 2,144 2,462 2,624 2,842 3521
Term loans 590 776 999 1,218 1,535 1,705 2,412 3047
Total 2,999 3,921 4,228 4,036 4,854 5,189 6,218 7,701
Continued...

239
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Secured 2,317 2,474 2,857 3,286 3,791 4,168 4,988 6007
Government guarantee 295 1,114 915 622 694 709 732 837
Unsecured 387 333 456 128 369 312 498 857
Total 2,999 3,921 4,228 4,036 4,854 5,189 6,218 7,701
Priority sector 697 943 1,228 1430 1,565 1,657 1,952 2412
Public sector 57 95 175 160 146 303 226 220
Banks 287 100 0 0 1 5 0 0
Others 1,959 2,783 2,825 2,446 3,142 3,224 4,040 5068
Total 2,999 3,921 4,228 4,036 4,854 5,189 6,218 7,701
Total 2,999 3,921 4,228 4,036 4,854 5,189 6,218 7,701
Investments
- Government securities 986 1,535 1,732 1,776 1,883 2,625 3,456 4455
- Shares 125 140 126 112 82 83 88
- Debentures 362 602 626 662 977 991 926 851
- Subsidiaries/JV 15 15 15 15 1 1 1 1
- Others 18 12 15 21 2 2 35 82
Total 1,456 2,366 2,602 2,666 3,035 3,756 4,552 5,507
Movement in NPA
Gross NPA
Interest earned
Others 7 4 3 13 9 1 1 11
Total 588 702 859 882 919 1,042 1,111 1,192
Other income
Profit on sale of fixed assets 0 -1 0 0 0 0 0 0
Loss on revaluation of investments 0 0 0 0 2 -4 -8 -1
Lease income 0 0 0 0 0 0 0 0
Total 72 93 113 132 125 220 234 298
Total income 659 794 972 1,014 1,044 1,263 1,346 1,490
continued...

240
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest expended
Interest on RBI/inter bank 4 11 6 14 20 11 4 2
Others 13 17 24 59 48 51 39 46
Total 472 564 772 701 682 766 772 770
Operating expenses
Salaries 67 79 93 118 111 121 139 178
Others 26 40 39 42 46 52 63 81
Depreciation 19 19 20 18 18 18 19 24
Total 113 138 151 177 175 191 222 283
Total expenses including provisions 613 744 970 968 983 1,181 1,241 1,354
Liability for outstanding forex contracts 1494 2553 890 1,056 2,871 2650 3,906 4199
Guarantees 0
- In India 152 154 184 226 270 286 377 400
- Outside India 8 5 0 0 5 0 0 0
Liability on account of outstanding derivative 0 0 0 0 0 0 0 0
Currency Swaps
Others 19 27 34 41 33 24 17 9
Total 1,808 2,883 1,364 1,588 3,512 3,332 4,782 5,220
Depreciation in values of investments 2 2 -23 0 0 20 9 5
Total 28 42 47 89 126 223 246 300
Financial analysis
Overall 25 40 6 -5 19 16 23 23
Demand -8 23 32 1 50 3 -13 19
Savings 13 14 28 18 15 17 29 40
Term 30 45 1 -9 17 17 26 20
Demand 6 5 6 7 9 8 5 5
Savings 13 10 12 15 15 15 16 18
Term 82 85 81 78 77 77 79 77
continued...

241
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Financial Parameters
Return on assets 0.94 0.79 0.03 0.59 0.74 0.86 0.94 1.00
Return on equity 16.79 14.3 0.7 13.6 15.7 19.0 21.5 23.1
Gearing (times) 15.52 18.5 24.1 20.0 20.2 21.6 22.0 22.3
Interest cost n.a. 9.58 10.88 9.81 9.13 8.83 7.58 6.21
Spreads n.a. 2.65 1.26 2.42 2.88 2.89 2.96 3.00
provisions
Incemental I/D ratio 34 50 66 -20 31 60 38 38
Growth (per cent)
Advances 35 31 8 -5 20 7 20 24
Deposits 25 40 6 -5 19 16 23 23
Investments 27 62 10 2 14 24 21 21
Salaries cost 17 17 27 -6 9 15 28
Commission and fee 17 25 40 28 -6 -1 10 20
Interest income 39 19 23 3 4 13 7 7
Others
Branches (nos) 377 395 401 404 411 412 420 432
Employees (nos) 6,094 6,138 6,443 6,421 6,313 6,240 6,217 6363
continued...

242
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest 89 88 88 87 88 83 83 80
Forex 2 1 2 2 1 1 1 1
Priority 23 24 29 35 32 32 31 31
Public 2 2 4 4 3 6 4 3
Inter bank 10 3 0 0 0 0 0 0
Others 65 71 67 61 65 62 65 66
Abroad 0 0 0 0 0 0 0 0
Bills 32 36 31 17 18 17 15 15
Cash credit 49 44 46 53 51 51 46 46
Term loans 20 20 24 30 32 33 39 40
Secured 77 63 68 81 78 80 80 78
Unsecured 13 8 11 3 8 6 8 11
Shares 0 5 5 5 4 2 2 2
Debentures 25 25 24 25 32 26 20 15
Subsidiary 1 1 1 1 0 0 0 0
Others 1 0 1 1 0 0 1 1
Net NPAs (per cent) 4.9 5.3 7.5 8.6 10.1 8.6 5.0 2.9
n.a.: Not available
Source: CRIS INFAC

243
Bank of Rajasthan Table 16
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 18 18 18 63 100 100 106 108
Deposits 2,939 2,827 2,985 3,242 3,533 3960 5299 7406
Borrowings 31 40 28 26 18 30 17 176
Total 3,406 3,411 3,671 4,129 4,344 4803 6,130 8,455
Assets
Investments 1,110 1,089 1,090 1,245 1,569 1884 2643 4353
Advances 1,498 1,480 1,487 1,728 1,867 1956 2221 2432
Fixed assets 93 84 80 72 75 62 80 101
Other assets 111 204 403 437 128 183 179 194
Total 3,406 3,411 3,671 4,129 4,344 4803 6,130 8,455
Deposits
Demand 522 480 534 616 680 755 832 931
Savings 442 516 622 698 794 944 1079 1273
Term 1,975 1,831 1,829 1,928 2,059 2261 3388 5201
Total 2,939 2,827 2,985 3,242 3,533 3960 5299 7406
Borrowings
RBI 0 0 0 0 0 0 0 2879
Other banks 1 0 0 0 0 0 0 104
Total 31 40 28 26 18 30 17 3,027
Bills payable 47 46 55 54 66 50 61 56
Others(including provisions) 57 69 105 117 114 162 205 234
Total 248 354 471 605 615 580 528 544
Balance with RBI 345 267 304 305 373 309 315 236
Cash in hand 48 35 39 52 50 44 63 90
Advances
Cash credit and overdraft 856 884 801 994 1,059 1076 1048 1132
Term loans 478 438 509 544 582 700 951 1136
Total 1,498 1,480 1,487 1,728 1,867 1956 2221 2432
Secured 1,160 1,177 1,193 1,377 1,407 1508 1665 1939
Unsecured 154 127 113 122 101 167 256 166
Total 1,498 1,480 1,487 1,728 1,867 1956 2,221 2,432
Continued...

244
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Priority sector 551 490 532 506 517 560 496 782
Public sector 139 182 192 203 276 293 252 209
Banks 3 1 2 19 0 0 0 1
Others 805 808 762 1,000 1,073 1102 1474 1440
Total 1,498 1,480 1,487 1,728 1,867 1956 2,221 2,432
Shares 8 4 5 10 10 13 33
Debentures 166 112 122 163 282 336 370 327
Others 91 100 21 44 210 146 172 213
Total 1,110 1,089 1,090 1,245 1,569 1,884 2,643 4,353
Movement in NPA
Gross NPA
Net NPA-Closing balance n.a. n.a. n.a. 170 n.a. 173 151 73
Interest earned
Others 4 0 12 19 12 4 7 0
Total 365 350 350 400 442 453 473 503
Other income
Loss on sale of investments -1 0 0 0 0 0 0 0
Total 43 45 44 53 56 97 126 177
Total income 408 396 394 453 499 550 599 680
Interests expended
Others 2 0 0 0 2 3 3 3
Total 266 269 286 306 309 323 292 313
Operating expenses
Salaries 53 62 82 90 87 94 104 116
Others 23 24 26 26 33 40 46 53
Depreciation 13 12 12 12 12 11 9 12
Total 89 98 119 129 132 145 159 182
Total expenses including provisions 400 484 461 441 467 510 531 611
continued...

245
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Profit for the year 8 -88 -67 12 32 40 68 69
Profits inclusive of provisions 53 29 -11 18 58 81 149 185
Contingent Liabilities
Claims against the banks 6 5 12 62 78 0 0 0
Liability for outstanding forex contracts 165 250 192 189 92 266 141 316
Guarantees
- In India 116 171 135 169 92 101 170 181
- Outside India 0 0 0 0 0 0 0 0
Others 56 73 102 55 31 98 94 96
Total 505 626 563 579 376 586 544 690
Provision for Non-performing assets 33 94 55 8 22 22 31 22
Depreciation in value of investments 2 14 0 0 -1 3 0 0
Income-tax 9 7 0 -1 1 14 42 28
Others 0 1 2 -1 3 3 7 66
Total 45 117 56 6 25 41 80 116
Financial analysis
Overall 17 -4 6 9 9 12 34 40
Demand -10 -8 11 15 10 11 10 12
Savings 12 17 21 12 14 19 14 18
Term 29 -7 0 5 7 10 50 54
Demand 18 17 18 19 19 19 16 13
Savings 15 18 21 22 22 24 20 17
Term 67 65 61 59 58 57 64 70
Financial parameters (per cent)
Return on assets 0.2 -2.6 -1.9 0.3 0.8 0.9 1.3 0.9
Return on equity 4.3 -46.5 -35.5 5.4 14.8 19.6 26.4 22.5
Gearing (times) 17.2 16.9 18.6 15.1 23.3 19.6 20.5 24.7
Earning per share (Rs) 4.4 -49.0 -37.4 1.9 3.2 4.0 6.5 6.4
continued...

246
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest cost n.a. 9.08 9.57 9.58 8.91 8.45 6.20 3.95
Spreads n.a. 2.38 1.79 2.31 2.91 2.44 3.18 3.45
Net Profitability Margin n.a. 0.43 -0.96 -0.45 0.46 -0.15 0.81 1.40
Provisions as a percentage of profit before 84.9 404.8 -507.7 34.3 44.2 50.5 53.9 62.7
provisions
Growth (per cent)
Advances 10 -1 0 16 8 5 14 9
Deposits 17 -4 6 9 9 12 34 40
Investments 25 -2 0 14 26 20 40 65
Commission and fee -6 14 -14 16 4 -17 13 -2
Interest income 25 -4 0 14 11 2 4 6
Others
Branches (nos) 298 302 306 310 309 314 336 354
Employees (nos) 4,472 4,388 4,378 4,344 4,288 4282 4207 n.a.
Interest 90 89 89 88 89 82 79 74
Forex 1 1 1 1 1 1 3 3
Priority 37 33 36 29 28 29 22 32
Public 9 12 13 12 15 15 11 9
Inter-bank 0 0 0 1 0 0 0 0
Others 54 55 51 58 57 56 66 59
continued...

247
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Bills 11 11 12 11 12 9 10 7
Cash credit 57 60 54 57 57 55 47 47
Term loans 32 30 34 31 31 36 43 47
Secured 77 80 80 80 75 77 75 80
Unsecured 10 9 8 7 5 9 12 7
Shares 0 1 0 0 1 1 0 1
Debentures 15 10 11 13 18 18 14 8
Others 8 9 2 4 13 8 7 5
Net NPAs (per cent) 8.5 9.1 9.5 9.7 12.0 8.9 6.8 3.0
n.a.: Not available
Source: CRIS INFAC

248
Citibank Table 17
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 204 228 252 293 365 167 167 167
Reserves and surplus 868 984 879 991 1,244 1567 1960 2528
Deposits 7,204 7,551 9,437 10,203 14,052 15242 17743 20465
Borrowings 622 1,265 1,412 1,623 2,668 3022 3388 3503
Other liabilities and provisions 959 998 1,160 1,354 1,432 1497 1982 2933
Total 9,652 10,798 12,888 14,172 19,466 21,497 25,240 29,597
Assets
Balances with banks and call money 1,902 1,972 2,215 1,152 2,298 1517 2590 1711
Investments 2,329 2,557 3,774 4,230 5,603 6007 7036 6690
Advances 3,984 4,767 5,000 6,620 9,273 11385 12629 15259
Fixed assets 211 237 443 425 503 502 526 514
Other assets 741 791 793 998 867 923 1227 1927
Total 9,652 10,798 12,888 14,172 19,466 21,497 25,240 29,597
Deposits
Demand 1,462 1,262 1,890 2,343 2,858 3048 3626 5968
Savings 236 231 342 590 846 1605 2295 3478
Term 5,505 6,058 7,204 7,270 10,347 10589 11821 11020
Total 7,203 7,551 9,437 10,203 14,052 15242 17743 20465
Total 7,203 7,551 9,437 10,203 14,052 15242 17743 20465
Borrowings
RBI 177 141 644 521 812 274 0 0
Other banks 255 845 559 609 1,343 1853 1310 433
Total 621 1,265 1,412 1,623 2,668 3022 3388 3503
Bills payable 275 265 435 349 350 488 731 808
Total 958 998 1,160 1,354 1,112 1497 1982 2933
Balance with RBI 469 454 634 716 866 1099 1179 3433
Cash in hand 15 21 29 32 54 63 54 64
Advances
Bills purchases and discounted 196 200 264 645 1,032 1128 1110 1203
Cash credit and overdraft 581 712 1,543 1,673 2,086 2603 2860 3631
Term loans 3,208 3,855 3,192 4,302 6,155 7654 8659 10425
Total 3,985 4,767 5,000 6,620 9,273 11,385 12,629 15,259
Continued...

249
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Secured 2,180 2,778 2,472 3,021 4,395 5166 6045 8611
Unsecured 1,789 1,989 2,197 3,599 4,878 4006 4454 6634
Total 3,984 4,767 5,000 6,620 9,273 11385 12629 15259
Priority sector 529 544 760 1,240 1,926 2497 2684 3435
Public sector 27 8 8 44 146 418 94 102
Banks 0 0 0 0 91 0 47 121
Others 3,428 4,215 4,232 5,336 7,110 8471 9804 11601
Total 3,984 4,767 5,000 6,620 9,273 11,385 12,629 15,259
Total 3,984 4,767 5,000 6,620 9,273 11,385 12,629 15,259
Investments
- Shares 0 0 0 3 3 4 4 4
- Debentures 345 320 860 849 950 1172 1281 1363
- Others 138 94 79 74 46 0 72 19
Total 2,328 2,557 3,774 4,230 5,603 6,007 7,036 6,690
Movement in NPA
Gross NPA
Interest earned
Interest/Discount on advances/bills 729 786 823 911 1,124 1313 1361 1385
Others 13 2 10 12 3 0 10 3
Total 1,120 1,187 1,345 1,489 1,750 1910 1979 2280
Other income
Profit on sale of fixed assets -1 -1 -3 2 -2 0
Lease income 0 0 0 0 0 0 0 0
Total 353 420 526 388 522 803 756 887
Total income 1,473 1,607 1,871 1,877 2,272 2713 2735 3167
continued...

250
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest expended
Others 90 72 17 49 76 41 42 42
Total 661 713 907 846 979 1103 1030 924
Operating expenses
Salaries 73 78 101 106 139 163 189 252
Others 275 303 305 339 395 533 581 684
Depreciation 21 32 45 55 67 62 67 74
Total 369 414 452 500 601 757 837 1010
Profits inclusive of provisions 443 481 513 531 693 853 868 1,233
Liability for outstanding forex contracts 11,001 27,887 27,031 30,903 43,566 60858 69753 130413
Guarantees 0 0
- In India 471 476 536 573 884 1558 1753 2372
- Outside India 178 223 113 44 783 351 130 82
Acceptances and endorsements 938 1,168 1,344 1,063 1,357 996 1284 1251
Others 6 139 168 575 440 9957 15268 1249
Total 12,706 29,894 29,194 33,159 47,045 73,720 88,188 135,369
Provisions for non-performing assets 47 84 117 87 77 79 137 165
Provision towards Income/Interest tax 329 248 294 231 345 448 350 399
Net Provision for depreciation on investments 12 30 -16 -38 -14 0 0 1029
Others 0 0 0 0 0 0 -10 -9
Total 388 361 395 280 408 527 477 662
Financial analysis
Overall 6 5 25 8 38 8 16 15
Demand 70 -14 50 24 22 7 19 65
Savings 10 -2 48 72 43 90 43 52
Term -3 10 19 1 42 2 12 -7
Demand 20 17 20 23 20 20 20 29
Savings 3 3 4 6 6 11 13 17
Term 76 80 76 71 74 69 67 54
Return on assets 0.6 1.2 1.0 1.9 1.7 1.6 1.7 2.1
Return on equity 5.3 10.4 9.9 20.8 19.7 19.5 20.3 23.7
Gearing (times) 8.2 8.1 10.6 10.3 11.3 11.4 10.9 10.0
continued...

251
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Iinterest cost n.a. 8.30 8.91 7.21 6.69 6.16 5.07 3.96
Spreads n.a. 4.72 3.75 5.07 4.70 3.87 4.03 5.06
provisions
Growth (per cent)
Advances 15 20 5 32 40 23 11 21
Deposits 6 5 25 8 38 8 16 15
Investments 1 10 48 12 32 7 17 -5
Salaries cost 40 7 30 5 31 17 16 34
Commission and fee 27 8 8 -7 14 -2 19 15
Interest income 27 6 13 11 18 9 4 15
Others
Branches (nos) 6 7 8 11 15 18 20 20
Employees (nos) 1,479 1,537 1,537 1,308 1,476 1470 1614 n.a.
Interest 76 74 72 79 77 70 72 72
Forex 3 3 6 4 4 5 7 10
Priority 13 11 15 19 21 22 21 23
Public 1 0 0 1 2 4 1 1
Inter bank 86 88 85 81 77 74 78 76
Others 86 88 85 81 77 74 78 76
Abroad 0 0 0 0 0 0 0 0
continued...

252
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Bills 5 4 5 10 11 10 9 8
Cash credit 15 15 31 25 22 23 23 24
Term loans 81 81 64 65 66 67 69 68
Secured 55 58 49 46 47 45 48 56
Govt. guarantee 0 0 7 0 0 19 17 0
Unsecured 45 42 44 54 53 35 35 43
Shares 0 0 0 0 0 0 0 0
Debentures 15 13 23 20 17 20 18 20
Subsidiary 0 0 0 0 0 0 0 0
Others 6 4 2 2 1 0 1 0
Net NPAs (per cent) 0.6 0.6 2.1 1.1 0.7 0.4 1.2 1.4
n.a.: Not available
Source: CRIS INFAC

253
HongKong Bank Table 18
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 0 715 715
Reserves and surplus 771 845 782 837 1,091 1231 1583 1738
Deposits 4,527 5,493 6,386 8,755 9,951 12341 12801 16270
Borrowings 16 398 1,118 1,934 3,238 3659 3172 2539
Other liabilities and provisions 479 682 913 1,140 1,314 1908 2639 4095
Total 5,792 7,418 9,199 12,666 15,594 19139 20910 25357
Assets
Balances with bank and money at call 437 780 1,301 1,584 1,708 2678 265 716
Investments 1,860 2,221 3,465 4,919 5,792 6274 8870 10395
Advances 2,219 2,808 2,795 4,302 6,246 7836 8202 9628
Fixed assets 401 410 466 502 499 554 512 439
Other assets 514 696 648 853 789 1169 2144 3447
Total 5,792 7,418 9,199 12,666 15,594 19,139 20,910 25,357
Deposits
Demand 1,143 1,167 1,255 1,616 1,639 1989 2100 4415
Savings 592 650 863 1,178 1,446 1781 2241 3107
Term 2,792 3,676 4,268 5,960 6,866 8571 8461 8747
Total 4,527 5,493 6,386 8,755 9,951 12,341 12,801 16,270
Total 4,527 5,493 6,386 8,755 9,951 12341 12801 16270
Borrowings
RBI 0 72 323 296 137 0 0 0
Other banks 10 224 656 1,117 2,713 3180 2874 1502
Total 16 398 1,118 1,932 3,238 3659 3172 2539
Bills payable 146 138 210 349 310 438 403 476
Total 479 682 913 1,140 1,298 1908 2639 4095
Balance with RBI 347 487 502 480 559 572 852 660
Cash in hand 14 15 23 25 46 56 66 71
Advances
Cash credit and overdraft 552 1,134 778 588 1,672 3223 3959 4753
Term loans 1,349 1,387 1,731 3,025 3,835 3434 3013 3919
Total 2,219 2,808 2,795 4,302 6,246 7,836 8,202 9,628
Continued...

254
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Secured 1,820 2,118 2,167 2,664 3,841 4945 5243 5962
Unsecured 212 514 304 1,153 1,644 1827 2107 3012
Total 2,219 2,808 2,795 4,302 6,246 7,836 8,202 9,628
Priority sector 537 581 683 776 1,253 1276 1305 1417
Public sector 1 0 0 0 233 274 30 0
Banks 0 0 0 0 0 73 6 5
Others 1,681 2,227 2,112 3,526 4,760 6212 6862 8206
Total 2,219 2,808 2,795 4,302 6,246 7,836 8,202 9,628
Total 2,219 2,808 2,795 4,302 6,246 7,836 8,202 9,628
Investments
Investments in India 0
- Shares 4 1 0 3 3 4 4 4
- Debentures 256 435 1,191 1,723 1,994 1734 1606 1470
- Others 251 59 104 246 159 5 38 23
Total 1,860 2,221 3,462 4,918 5,792 6,274 8,870 10,395
Movement in NPA
Gross NPA
Interest earned
Others 1 1 2 2 2 2 8 6
Total 597 630 763 993 1,320 1,499 1,480 1,414
Other income
Loss on sale of investments -1 0 0 0 0 0 0 0
Profit on sale of fixed assets 0 0 0 0 -1 0 3
Lease income 0 0 0 0 0 0 0 0
Total 141 202 191 256 396 478 482 705
Total income 738 832 954 1,248 1,716 1,978 1,962 2,119
continued...

255
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest expended
Others 1 0 0 17 26 26 27 30
Total 385 379 516 645 848 997 878 723
Operating expenses
Salaries 56 72 98 101 148 155 234 231
Others 84 105 134 165 217 286 313 334
Depreciation 22 24 26 32 49 62 67 59
Total 163 201 258 298 415 502 614 624
Total expenses including provisions 649 760 900 1,126 1,515 1,811 1,812 1,726
Claims against the banks
Currency Options
Single Currency Interest Rate swaps
Liability for outstanding forex contracts n.a. n.a. 27,571 30,050 41,511 60,190 93,434 131483
Guarantees
- In India n.a. n.a. 966 1,119 1,379 1,417 1,274 1521
- Outside India n.a. n.a. 195 82 75 186 521 961
Acceptances, endorsements n.a. n.a. 756 922 1,515 1,282 2,619 2957
Others n.a. n.a. 121 2,757 406 411 409 247
Total n.a. n.a. 29,609 34,930 44,886 63,486 98,256 137,169
Provison for bad and doubtful debts 15 44 43 32 15 0 0 0
Net Provision for depreciation on investments -20 8 0 4 0 0 0 46
Others 1 6 0 0 6 128 146 154
Total 101 135 84 151 252 312 319 378
Financial analysis
Overall 18 21 16 37 14 24 4 27
Demand 44 2 8 29 1 21 6 110
Savings 16 10 33 36 23 23 26 39
Term 10 32 16 40 15 25 -1 3
Demand 25 21 20 18 16 16 16 27
Savings 13 12 14 13 15 14 18 19
Term 62 67 67 68 69 69 66 54
Return on assets 1.2 1.1 0.6 1.1 1.4 1.0 0.8 1.7
Return on equity 12.3 9.0 6.6 15.1 20.8 14.3 8.5 16.6
Gearing (times) 6.5 7.8 10.8 14.1 13.3 14.5 8.1 9.3
continued...

256
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Interest cost 7.08 7.50 6.88 6.92 6.66 5.35 4.05
Spreads 4.51 3.22 3.55 3.56 2.84 2.96 3.08
provisions
Provisions as a percentage of networth 13 21 16 22 23 25 14 15
Incremental C/D ratio 11 61 -2 64 162 67 80 41
Growth (per cent)
Advances 3 27 0 54 45 25 5 17
Deposits 18 21 16 37 14 24 4 27
Investments -13 0 23 76 35 0 13 27
Salaries cost 6 28 35 3 47 4 52 -1
Interest income 12 6 21 30 33 14 -1 -4
Others
Branches (nos) 21 21 25 26 28 30 33 38
Operating expenses per branch (Rs crore) 8 10 10 11 15 17 19 16
Employees (nos) 2,357 2,512 2,723 2,780 3,023 3355 3339 n.a.
Interest 81 76 80 80 77 76 75 67
Forex 7 10 8 6 6 5 6 8
Priority 24 21 24 18 20 16 16 15
Public 0 0 0 0 4 3 0 0
Inter bank 0 0 0 0 0 1 0 0
Others 76 79 76 82 76 79 84 85
Abroad 0 0 0 0 0 0 0 0
continued...

257
...continued
(Rs crore) 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Bills 14 10 10 16 12 15 15 10
Cash credit 25 40 28 14 27 41 48 49
Term loans 61 49 62 70 61 44 37 41
Secured 82 75 78 62 61 63 64 62
Govt. guarantee 8 6 12 11 12 14 10 7
Unsecured 10 18 11 27 26 23 26 31
Shares 0 0 0 0 0 0 0 0
Debentures 14 20 34 35 34 28 18 14
Subsidiary 0 0 0 0 0 0 0 0
Others 13 3 3 5 3 0 0 0
Net NPAs (per cent) 1.8 2.0 0.9 1.0 1.0 2.3 1.0 0.7
n.a.: Not available
Source: CRIS INFAC

258
Standard Chartered Bank Table 19
(Rs crore) 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 0 0 0 374 515 515
Reserves and surplus 580 717 766 1,147 2,285 2,218
Deposits 5,352 5,006 5,088 7,244 18,003 19,949
Borrowings 1,616 2,597 5,601 9,312 4,834 6,124
Other liabilities and provisions 608 787 879 835 3,675 5,539
Total 8,156 9,107 12,334 18,911 29,312 34,345
Assets
Cash and balances with RBI 662 543 390 595 1,158 1,036
Balances with bank and money at call 231 132 289 616 212 620
Investments 2,720 3,140 5,401 7017 10,223 10,079
Advances 3,381 4,319 5,187 9,033 13,042 16,152
Fixed assets 266 208 173 166 574 438
Other assets 897 765 894 1,483 4,103 6,021
Total 8,157 9,107 12,334 18,911 29,312 34,345
Deposits
Demand 894 1,134 1,336 2024 3,692 5,125
Savings 563 559 570 709 2,935 3,819
Term 3,896 3,312 3,182 4511 11,376 11,005
Total 5,353 5,006 5,088 7,244 18,003 19,949
Deposits of branches in India 5,353 5,006 5,088 7,244 18,003 19,949
Deposits of branches abroad 0 0 0 0 0 0
Total 5,353 5,006 5,088 7,244 18,003 19,949
Borrowings
RBI 111 129 73 271 300 0
Other banks 1,264 2,013 4,748 8821 2,398 1,738
Other institutions and agencies 233 449 780 198 139 1,802
Forex borrowings 8 6 0 23 1,997 2,584
Total 1,616 2,597 5,601 9,312 4,834 6,124
Inter-office adjustments 0 0 0 0 0 0
Bills payable 47 34 40 1 268 354
Interest accrued 344 274 367 259 284 289
Others (including provisions) 217 479 278 575 3,124 4,895
Total 608 787 684 835 3,675 5,539
Balance with RBI 641 506 371 569 926 953
Cash in hand 21 37 19 26 232 83
Advances
Bills purchases and discounted 192 216 569 1290 725 993
Cash credit and overdraft 1,427 2,934 3,271 2448 4,315 7,800
Term loans 1,763 1,169 1,348 5295 8,002 7,359
Total 3,381 4,319 5,187 9,033 13,042 16,152
Continued...

259
...continued
(Rs crore) 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Secured 1,931 2,700 2,394 4573 7,773 10,315
Government guarantee 358 149 350 426 414 762
Unsecured 1,093 1,469 2,443 4033 4,855 5,075
Total 3,381 4,319 5,187 9,033 13,042 16,152
Priority sector 841 910 1,433 1839 2,767 3,976
Public sector 1 21 46 135 216 144
Banks 0 0 0 0 0 0
Others 2,539 3,387 3,708 7059 10,059 12,032
Total 3,381 4,319 5,187 9,033 13,042 16,152
Advances outside India 0 0 0 0 0 0
Total 3,381 4,319 5,187 9,033 13,042 16,152
Investments
Investments outside India 0 0 0 0 0 0
- Government securities 1,613 1,906 3,104 4045 6,548 6,998
- Other approved securities 44 44 43 6 26 26
- Shares 25 3 3 214 324 430
- Debentures 978 1,174 2,252 2737 3,325 2,625
- Subsidiaries/JV 0 0 0 0 0 0
- Others 61 14 0 15 0 0
Total 2,720 3,140 5,401 7,017 10,223 10,079
Total investments 2,720 3,140 5,401 7,017 10,223 10,079
Movement in NPA
Gross NPA
Opening balance n.a. 310 366 421 322 427
Additions n.a. 162 203 87 242 215
Reductions n.a. -106 -147 186 137 160
Closing balance n.a. 366 421 322 427 482
Net NPA-Closing balance n.a. 88 79 36 41 84
Interest earned
Interest/Discount on advances/bills 528 545 697 997 1461 1529
Income on investments 258 367 383 622 758 893
Interest on balances with RBI 53 42 42 24 27 28
Others 37 14 3 2 41 74
Total 876 967 1,126 1,645 2,287 2,523
Other income
Commission exchange and brokerage 143 167 181 272 349 371
Profit on sale of investments 6 9 21 118 30 64
Loss on sale of investments 0 0 0 0 0 0
Profit on sale of fixed assets 4 -4 0 0 2 6
Profit on revaluation of investments 0 0 0 0 0 0
Profit on forex transactions 57 56 75 110 174 224
Miscellaneous income 4 1 24 17 6 35
Total 215 229 301 517 561 699
Total income 1,091 1,196 1,426 2161 2848 3223
continued...

260
...continued
(Rs crore) 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Interest expended
Interest on deposits 501 419 353 359 840 715
Interest on RBI /Inter-bank 83 147 285 549 292 210
Others 0 11 27 25 21 146
Total 585 577 666 933 1153 1071
Operating expenses
Salaries 90 74 99 143 165 220
Others 172 232 229 292 380 497
Depreciation 10 23 45 15 34 58
Total 252 284 373 450 579 775
Provisions and contingencies 86 151 202 15 260 792
Total expenses including provisions 922 1,011 1,241 1,398 1,993 2,638
Profit for the year 169 185 185 763 855 585
Profits inclusive of provisions 255 336 387 778 1,115 1,377
Claims against the banks 9 9 9 0 0 0
Liability for partly paid investments 0 0 0 0 0 0
Single Currency Interest Rate swaps 0 890 4,814 0 0 0
Liability for outstanding forex contracts 17,759 22,477 47,098 59929 57629 93216
Guarantees
- In India 1,856 2,179 2,602 2638 3793 3286
- Outside India 0 0 0 1602 2040 2195
Acceptances, endorsements 626 664 492 1307 2921 1944
Others 62 91 97 24878 44291 86324
Total 20,312 26,311 55,112 90,353 110,674 186,964
Provisions for non-performing assets 89 125 -2 0 0 0
Provision towards Income/Interest tax 2 25 205 1 84 266
Net Provision for depreciation on investments -6 0 -1 0 5 207
Others 0 0 0 14 171 319
Total 85 151 202 15 260 792
Financial analysis
Overall n.a. -6 2 42 149 11
Demand n.a. 27 18 51 82 39
Savings n.a. -1 2 24 314 30
Term n.a. -15 -4 42 152 -3
Demand 17 23 26 28 21 26
Savings 11 11 11 10 16 19
Term 73 66 63 62 63 55
Return on assets n.a. 2.1 1.7 4.9 3.5 1.8
Return on equity n.a. 5.9 25.0 66.8 39.6 21.1
Gearing (times) 13.1 11.7 15.1 11.4 9.5 11.6
Staff costs to operating expenses 35.7 26.2 26.6 31.7 28.5 28.4
Non-fund income to total income 19.7 19.2 21.1 23.9 19.7 21.7
Operating expenses to total income 23.1 23.7 26.2 20.8 20.3 24.0
Operating expenses to deposits 15.6 10.9 6.7 4.8 12.0 12.7
Cost to income ratio 49.7 45.8 49.1 36.6 34.2 36.0
Cost to income ratio (w/o profit on invest) 50.3 46.4 50.4 40.5 34.8 37.1
continued...

261
...continued
(Rs crore) 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Interest cost n.a. 7.87 7.25 6.84 5.82 4.32
Average cost of deposits n.a. 8.1 7.0 5.8 6.7 3.8
Average cost of borrowings n.a. 7.5 7.6 7.7 4.4 6.5
Yield on carry business n.a. 12.87 11.62 11.6 11.1 9.7
Average yield on investments n.a. 10.4 9.2 8.6 11.1 6.8
Average yield on advances n.a. 14.1 14.7 14.0 13.2 10.5
Spreads n.a. 5.00 4.37 4.78 5.25 5.42
Operating expenses to AFD n.a. 3.75 3.85 3.15 2.76 2.95
Core fee income to AFD n.a. 2.95 2.76 2.74 2.51 2.33
Net Profitability Margin n.a. 4.20 3.28 4.37 4.99 4.80
Deposits to borrowings (times) n.a. 2.5 1.2 1 2 3
Capital adequacy 8.3 9.5 9.6 9 11 11
Provisions as a percentage of profit before 33.6 44.8 52.1 2 23 58
provisions
Provisions as a percentage of networth 1.4 2.6 3.4 0.2 1.3 3.6
Credit-deposit ratio 63 86 102 125 72 81
Incremental C/D ratio n.a. -271 1052 178 37 160
Borrowings to total deposits 38 30 16 9 76 90
Cash-deposit ratio 1 1 0 0 5 1
Investment-deposit ratio 63 86 102 125 72 81
Growth (per cent)
Advances n.a. 28 20 74 44 24
Deposits n.a. -6 2 42 149 11
Investments n.a. 15 72 -89 1559 -1
Salaries cost n.a. -17 34 44 16 33
Commission and fee n.a. 16 9 50 28 6
Interest income n.a. 10 16 46 39 10
Others
Branches (nos) 24 18 19 19 65 66
Advances per branch (Rs crore) 11.08 11.54 9.10 8.73 8.83 6.64
Operating expenses per branch (Rs crore) 10.48 15.75 19.65 23.67 8.91 11.74
Employees (nos) 2,666 1,623 1,654 2142 3673 n.a.
Income per employee (Rs crore) 0.41 0.74 0.86 1.01 0.78 n.a.
Income/employee expenses (times) 12.13 16.12 14.38 15.16 17.25 14.62
Interest 80 81 79 76 80 78
Forex 5 5 5 1 0 1
Commission, and brokerage 13 14 13 13 12 11
Priority 25 21 28 20 21 25
Public 0 0 1 1 2 1
Inter bank 75 78 71 78 77 74
Others 75 78 71 78 77 74
Abroad 0 0 0 0 0 0
continued...

262
...continued
(Rs crore) 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Bills 6 5 11 14 6 6
Cash credit 42 68 63 27 33 48
Term loans 52 27 26 59 61 46
Secured 57 63 46 51 60 64
Govt. guarantee 11 3 7 5 3 5
Unsecured 32 34 47 45 37 31
Government securities 59 61 57 58 64 69
Other approved securities 2 1 1 0 0 0
Shares 1 0 0 3 3 4
Debentures 36 37 42 39 33 26
Subsidiary 0 0 0 0 0 0
Others 2 0 0 0 0 0
Net NPAs (per cent) 3.2 2.0 1.5 0.4 0.3 0.5
n.a.: Not available
Source: CRIS INFAC

263
State Bank of Bikaner & Jaipur Table 20
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 50 50 50 50 50 50 50
Reserves and surplus 294 369 473 559 702 853 1,099
Deposits 6,525 7,741 9074 10,326 11,661 13,280 15,642
Borrowings 112 101 95 69 23 311 616
Other liabilities and provisions 1,542 1,967 2,777 2,883 3,116 3,495 2,850
Total 8,523 10,228 12,469 13,888 15,552 17,989 20,256
Assets
Cash and balances with RBI 767 1,262 1,248 1,341 908 879 1,261
Balances with bank and money at call 625 378 1,028 1,090 1,069 904 607
Investments 2,827 3,802 4,846 5,325 6,305 7,679 8,430
Advances 3,660 3,841 4,401 5,168 5,931 6,773 8,597
Fixed assets 46 95 92 90 91 102 113
Other assets 597 850 854 874 1,248 1,651 1,248
Total 8,523 10,228 12,469 13,888 15,552 17,989 20,256
Deposits
Demand 1,117 1,317 1,367 1,621 1,774 2,340 2,302
Savings 1,698 2,065 2,413 2,869 3,290 3,893 4,817
Term 3,711 4,359 5,294 5,836 6,597 7,047 8,524
Total 6,525 7,741 9,074 10,326 11,661 13,280 15,642
Deposits of branches in India 6,525 7,741 9,074 10,326 11,661 13,280 15,642
Deposits of branches abroad 0 0 0 0 0 0 0
Total 6,525 7,741 9,074 10,326 11,661 13,280 15,642
Borrowings
RBI 0 0 0 0 0 0 0
Other banks 1 2 4 1 1 0 0
Other institutions and agencies 13 10 9 7 5 2 1
Total 112 101 95 69 23 311 616
Inter-office adjustments 69 801 585 528 103 117 197
Bills payable 453 21 58 446 755 1,077 896
Interest accrued 520 640 846 887 883 978 935
Others (including provisions) 500 506 1,289 1,023 1,375 1,322 821
Total 1,542 1,967 2,777 2,883 3,116 3,495 2,850
Balance with RBI 745 1,235 1,219 1,306 860 834 45
Cash in hand 23 27 29 35 49 1,209 51
Advances
Bills purchases and discounted 304 240 290 442 451 663 797
Cash credit and overdraft 2,489 2,688 3,030 3,462 3,903 4,118 4,837
Term loans 867 914 1,082 1,263 1,578 1,992 2,963
Total 3,660 3,841 4,401 5,168 5,931 6,773 8,597
Secured 3,030 3,250 3,819 4,262 4,712 5,288 6,880
Government guarantee 426 447 415 679 829 922 859
Unsecured 205 144 167 226 390 563 857
Total 3,660 3,841 4,401 5,168 5,931 6,773 8,597
Continued...

264
...continued
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Priority sector 1,438 1,629 1,827 2,047 2,407 2,923 3,771
Public sector 472 547 607 917 1,095 1,114 968
Banks 3 5 6 4 8 6 3
Others 1,748 1,660 1,961 2,201 2,421 2,730 3,854
Total 3,660 3,841 4,401 5,168 5,931 6,773 8,597
Advances outside India 0 0 0 0 0 0 0
Total 3,660 3,841 4,401 5,168 5,931 6,773 8,597
Investments
Investments outside India 0 0 0 0 0 0 0
- Government securities 2,050 2,932 4,004 4,483 5,439 6,785 7,770
- Other approved securities 391 364 329 303 274 228 201
- Shares 56 20 20 12 25 26 25
- Debentures 330 413 410 466 519 505 390
- Subsidiaries/JV 1 1 1 1 1 1 1
- Others 0 71 81 60 47 43 135
Total 2,827 3,802 4,846 5,325 6,305 7,587 8,523
Total investments 2,827 3,802 4,846 5,325 6,305 7,587 8,523
Movement in NPA
Gross NPA
Opening balance n.a. n.a. 675 733 715 585 580
Additions n.a. n.a. 196 169 119 167 96
Reductions n.a. n.a. 98 228 218 172 192
Closing balance n.a. n.a. 773 715 616 580 484
Net NPA-Closing balance n.a. n.a. 453 410 342 282 107
Interest earned
Interest/Discount on advances/bills 457 460 482 549 605 653 691
Income on investments 331 420 522 580 647 716 824
Interest on balances with RBI 24 38 37 48 54 58 35
Others 38 45 75 89 51 11 24
Total 851 964 1,116 1,267 1,357 1,438 1,574
Other income
Profit on sale of investments 12 0 22 18 77 107 227
Loss on sale of investments 0 0 0 0 0 0 0
Profit on forex transactions 27 19 23 23 21 24 25
Income from investments 0 0 0 0 0 0 0
Lease income 0 3 8 7 7 6 6
Miscellaneous income 0 5 0 0 0 11 17
Total 163 164 220 239 301 340 491
Total income 1,013 1,127 1,336 1,506 1,658 1,778 2,065
continued...

265
...continued
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Interest expended
Interest on deposits 506 597 692 764 834 866 839
Interest on RBI/inter bank 3 6 12 10 5 1 7
Others 28 31 39 37 28 19 11
Total 537 634 742 811 867 887 857
Operating expenses
Salaries 215 251 266 328 289 320 361
Others 60 70 79 60 123 107 130
Depreciation 6 11 12 12 15 24 36
Total 281 332 356 400 427 450 527
Provisions and contingencies n.a. 109 166 163 226 238 380
Total expenses including provisions 818 1,075 1,264 1,374 1,520 1,575 1,764
Profit for the year 196 53 72 132 138 203 302
Profits inclusive of provisions 196 162 238 295 364 441 681
Claims against banks 10 15 11 11 21 21 21
Liability for partly paid investments 0 0 0 0 0 0 0
Liability for outstanding forex contracts 213 43 157 458 638 1,811 3,395
Guarantees
- In India 327 332 345 314 291 274 339
- Outside India 0 0 0 0 0 63 20
Acceptances and endorsements 439 378 386 369 353 399 517
Others 86 83 71 73 159 261 241
Total 1,075 851 970 1,226 1,462 2,829 4,533
Provison for NPAs n.a. 85 80 81 64 104 108
Depreciation in values of investments n.a. 0 0 5 13 -3 -4

Provision for taxation n.a. 23 73 71 172 124 199
Other Provisions n.a. 1 12 6 -22 12 77
Total n.a. 109 166 163 226 238 380
Financial analysis
Overall n.a. 19 17 14 13 14 18
Demand n.a. 18 4 19 9 32 -2
Savings n.a. 22 17 19 15 18 24
Term n.a. 17 21 10 13 7 21
Demand 17 17 15 16 15 18 15
Savings 26 27 27 28 28 29 31
Term 57 56 58 57 57 53 54
continued...

266
...continued
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Return on assets 5 1 1 1 1 1 2
Return on equity n.a. 14 15 23 20 25 29
Gearing (times) 24 23 23 22 20 19 17
Staff costs to operating expenses 76 76 75 82 68 71 68
Non-fund income to total income 16 15 16 16 18 19 24
Operating expenses to total income 28 29 27 27 26 25 25
Operating expenses to deposits 4 4 4 4 4 3 3
Earning per share (Rs) 39 11 14 26 28 41 60
Cost to income ratio 58.9 67.2 59.9 57.6 54.0 50.5 43.6
Cost to income ratio (w/o profit on invest) 60.4 67.2 62.2 59.2 59.8 57.4 53.7
Interest cost 15.14 8.47 8.69 8.08 7.45 6.54 5.39
Average cost of deposits n.a. 8.4 8.2 7.9 7.6 6.9 5.8
Average cost of borrowings n.a. 34.5 51.8 57.0 73.0 12.3 3.9
Average yield on investments n.a. 12.7 12.1 11.4 11.1 10.2 10.2
Average yield on advances n.a. 12.3 11.7 11.5 10.9 10.3 9.0
Spreads 6.61 2.86 2.14 2.36 2.61 2.95 3.63
Deposits to borrowings (times) n.a. 67.1 85.9 118.4 239.5 74.8 31.2
Provisions as a percentage of profit before n.a. 67.5 69.6 55.3 62.1 53.9 55.7
provisions
Provisions as a percentage of networth n.a. 26.1 31.7 26.7 30.1 26.3 33.1
Credit-deposit ratio 56.1 49.6 48.5 50.0 50.9 51.0 55.0
Incremental credit deposit ratio n.a. 14.8 42.0 61.3 57.2 52.0 77.2
Borrowings to total deposits 1.7 1.3 1.0 0.7 0.2 2.3 3.9
Cash-deposit ratio 0.3 0.3 0.3 0.3 0.4 9.1 0.3
Investment-deposit ratio 43.3 49.1 53.4 51.6 54.1 57.8 53.9
Incemental I/D ratio n.a. 80.2 78.3 38.3 73.4 84.9 31.8
Reserves as a percentage of net worth 85.5 88.1 90.4 91.8 93.4 94.5 95.6
Growth (per cent)
Advances n.a. 4.9 14.6 17.4 14.8 14.2 26.9
Deposits n.a. 18.6 17.2 13.8 12.9 13.9 17.8
Investments n.a. 34.5 27.5 9.9 18.4 21.8 9.8
Salaries cost n.a. 17.0 5.8 23.6 -11.9 10.6 12.8
Commission and fee n.a. 10.1 23.2 13.7 2.6 -1.6 12.1
Interest income n.a. 13.3 15.8 13.5 7.2 5.9 9.4
Others
Branches (nos) 767 780 787 792 792 793 801
Advances per branch (Rs crore) 4.77 4.92 5.59 6.53 7.49 8.54 10.73
Operating expenses per branch (Rs crore) 0.37 0.43 0.45 0.51 0.54 0.57 0.66
Employees (nos) 15,046 14,970 14,778 13,392 13293 13,209 13,054
Income per employee (Rs crore) 0.07 0.08 0.09 0.11 0.12 0.13 0.16
Income/employee expenses (times) 4.72 4.49 5.03 4.59 5.74 5.56 5.73
continued...

267
...continued
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Interest 84.0 85.5 83.5 84.1 81.9 80.9 76.2
Forex 2.7 1.7 1.7 1.5 1.3 1.3 1.2
Commission, brokerage 12.2 12.1 12.6 12.7 11.8 10.8 10.4
Priority 39.3 42.4 41.5 39.6 40.6 43.2 43.9
Public 12.9 14.2 13.8 17.7 18.5 16.4 11.3
Inter bank 0.1 0.1 0.1 0.1 0.1 0.1 0.0
Others 47.7 43.2 44.6 42.6 40.8 40.3 44.8
Abroad 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Bills 8.3 6.2 6.6 8.6 7.6 9.8 9.3
Cash credit 68.0 70.0 68.8 67.0 65.8 60.8 56.3
Term loans 23.7 23.8 24.6 24.4 26.6 29.4 34.5
Secured 82.8 84.6 86.8 82.5 79.4 78.1 80.0
Government guarantee 11.6 11.6 9.4 13.1 14.0 13.6 10.0
Unsecured 5.6 3.7 3.8 4.4 6.6 8.3 10.0
Government securities 72.5 77.1 82.6 84.2 86.3 89.4 91.2
Other approved securities 13.8 9.6 6.8 5.7 4.4 3.0 2.4
Shares 2.0 0.5 0.4 0.2 0.4 0.3 0.3
Debentures 11.7 10.9 8.5 8.8 8.2 6.7 4.6
Subsidiary 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Others 0.0 1.9 1.7 1.1 0.7 0.6 1.6
Net NPAs (per cent) 7.13 10.45 10.14 7.83 5.72 4.13 1.24
n.a.: Not available
Source: CRIS INFAC

268
UTI Bank Ltd Table 21
(Rs crore) 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 132 132 132 192 230 232
Reserves and surplus 74 108 170 423 689 906
Deposits 3,041 5,720 9,092 12,287 16,965 20954
Borrowings 521 531 1,146 1,246 719 528
Other liabilities and provisions 148 178 226 227 1,010 1530
Total 3,915 6,669 10,766 14,374 19,613 24,150
Assets
Cash and balances with RBI 338 401 881 1,123 1,600 3777
Balances with bank and money at call 158 492 331 628 1,970 1886
Investments 1,101 2,065 4,193 6,630 7,841 7793
Advances 2,170 3,507 4,821 5,352 7,180 9363
Fixed assets 69 85 234 260 306 435
Other assets 79 119 306 380 717 896
Total 3,915 6,669 10,766 14,375 19,613 24,150
Deposits
Demand 365 666 829 1,151 2,486 5,394
Savings 147 306 569 876 1423.24 2,585
Term 2,529 4,748 7,694 10,260 13,056 12,976
Total 3,041 5,720 9,092 12,287 16,965 20,954
Deposits of branches in India 3,041 5,720 9,092 12,287 16,965 20,954
Deposits of branches abroad 0 0 0 0 0 0
Total 3,041 5,720 9,092 12,287 16,965 20,954
Borrowings
RBI 43 80 72 51 0 0
Other banks 306 151 505 465 247 98
Other institutions and agencies 171 300 569 730 411 303
Forex borrowings 0 0 0 0 62 127
Total 521 531 1,146 1,246 719 528
Inter-office adjustments 9 3 0 1 0 0
Bills payable 50 64 93 102 233 439
Interest accrued 14 3 50 16 21 31
Others (including provisions) 90 112 133 124 777 1,092
Total 148 178 226 227 1,010 1,530
Balance with RBI 329 377 833 1,055 1,487 3,624
Cash in hand 9 24 68 48 113 153
Advances
Bills purchases and discounted 1,401 1,996 1,655 166 210 259
Cash credit and overdraft 586 1,154 2,113 2,597 3,061 3,120
Term loans 183 357 1,053 2,590 3,909 5,985
Total 2,170 3,507 4,821 5,352 7,180 9,363
Continued...

269
...continued
(Rs crore) 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Secured 936 1,624 3,024 4,226 6,317 8,239
Government guarantee 1,233 1,533 732 67 58 88
Unsecured 1 349 1,066 1,060 804 1,036
Total 2,170 3,507 4,821 5,352 7,180 9,363
Priority sector 235 303 348 868 1,639 2,456
Public sector 21 93 430 13 111 15
Banks 25 0 0 3 0 0
Others 1,890 3,111 4,043 4,468 5,429 6,892
Total 2,170 3,507 4,821 5,352 7,180 9,363
Advances outside India 0 0 0 0 0 0
Total 2,170 3,507 4,821 5,352 7,180 9,363
Investments
Investments outside India 0 0 0 0 0 0
- Government securities 771 1,368 2,427 3,649 4,648 5,056
- Other approved securities 0 0 0 0 0 0
- Shares 70 118 192 197 205 190
- Debentures 138 243 1026 1,805 2,960 2,539
- Subsidiaries/JV 0 0 0 0 0 0
- Others 122 336 548 979 27 8
Total 1,101 2,065 4,193 6,630 7,841 7,793
Total investments 1,101 2,065 4,193 6,630 7,841 7,793
Movement in NPA
Gross NPA
Opening balance n.a. 157 194 226 282 229
Additions n.a. 63 48 200 86 241
Reductions n.a. 27 16 143 139 195
Closing balance n.a. 194 226 282 229 275
Net NPA-Closing balance n.a. 165 181 185 162 112
Interest earned
Interest/Discount on advances/bills 237 297 474 540 736 768
Interest on balances with RBI 18 25 40 31 37 33
Others 2 5 2 7 116 147
Total 373 483 890 1,180 1,465 1,587
Other income
Commission exchange and brokerage 33 45 86 98 144 182
Profit on sale of investments 6 40 64 305 246 321
Loss on sale of investments 0 0 0 0 0 0
Profit on sale of fixed assets 0 0 0 -1 -2 -1
Loss on revaluation of investments 0 0 0 0 0 0
Profit on forex transactions 5 5 5 9 17 28
Income from investments 0 0 0 0 0 0
Miscellaneous income 2 2 2 1 1.46 9
Total 47 91 163 416 410 540
Total income 420 574 1,053 1,595 1,875 2,127
continued...

270
...continued
(Rs crore) 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Interest expended
Interest on deposits 262 340 704 857 1,057 934
Interest on RBI/inter bank 15 24 33 53 27 19
Others 24 29 54 70 59 68
Total 301 393 791 980 1,142 1,021
Operating expenses
Salaries 12 15 29 50 85 121
Others 29 39 79 119 189 236
Depreciation 10 11 22 37 49 62
Total 51 65 129 205 323 419
Provisions and contingencies 37 65 46 276 218 408
Total expenses including provisions 389 523 967 1,461 1,683 1,849
Profit for the year 31 51 86 134 192 278
Profits inclusive of provisions 68 116 133 410 410 686
Claims against banks 26 26 26 36 36 40
Liability for partly paid investments 0 0 0 0 0 0
Liability for outstanding forex contracts 1,758 3,409 4,821 5780 11,176 34,622
Guarantees
- In India 197 290 727 865 984 1,222
- Outside India 0 0 0 0 0 0
Liability on account of outstanding derivative
0 0 0 0 0 0
contracts
Acceptances and endorsements 387 267 484 528 872 1,535
Currency Swaps 0 0 0 0 0 0
Others 6 12 15 9 1 21
Total 2,375 4,005 6,073 7,219 13,068 37,440
Provison for NPAs 13 9 19 59 90 244
Depreciation in values of investments 4 2 -2 0 5 4
Provision for taxation 15 28 18 79 109 151
Other Provisions 18 35 30 197 13 9
Total 37 65 46 276 218 408
Financial analysis
Overall n.a. 88 59 35 38 24
Demand n.a. 82 25 39 116 117
Savings n.a. 108 86 54 63 82
Term n.a. 88 62 33 27 -1
Share of deposits (per cent) n.a.
Demand n.a. 12 9 9 15 26
Savings n.a. 5 6 7 8 12
Term n.a. 83 85 84 77 62
continued...

271
...continued
(Rs crore) 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Return on assets 1.6 1.0 1.0 1.1 1.1 1.3
Return on equity 30.1 22.9 31.8 29.3 25.1 27.1
Gearing (times) 18.0 26.8 34.7 22.4 20.3 20.2
Staff costs to operating expenses 23.6 23.6 22.1 24.1 26.4 28.9
Non-fund income to total income 11.1 15.9 15.5 26.1 21.9 25.4
Operating expenses to total income 12.2 11.4 12.2 12.9 17.2 19.7
Operating expenses to deposits 1.7 1.1 1.4 1.7 1.9 2.0
Earning per share (Rs) 4.2 4.7 5.1 3.2 2.8 3.1
Cost to income ratio 42.79 36.02 49.28 33.39 44.05 37.92
Cost to income ratio (w/o profit on invest) 45.24 46.10 65.20 66.29 66.33 53.43
Interest cost n.a. 7.92 9.51 8.18 7.24 5.13
Average cost of deposits 17.2 7.8 9.5 8.0 7.2 4.9
Average cost of borrowings 14.8 10.1 10.5 10.3 8.7 14.0
Yield on carry business n.a. 10.08 11.48 10.70 9.48 7.74
Average yield on investments 21.2 9.9 11.9 11.1 8.0 8.2
Average yield on advances 21.8 10.5 11.4 10.6 11.7 9.3
Spreads n.a. 2.17 1.97 2.52 2.23 2.62
Operating expenses to AFD n.a. 1.28 1.54 1.72 2.00 2.02
Core fee income to AFD n.a. 0.99 1.18 0.92 1.02 1.05
Net Profitability Margin n.a. 1.88 1.61 1.73 1.26 1.64
Deposits to borrowings (times) 5.8 8.3 8.8 8.9 14.9 30.4
Capital adequacy 11.6 11.4 9.0 10.7 10.9 11.2
Provisions as a percentage of profit before 54.5 56.2 35.0 67.3 53.1 59.4
provisions
Provisions as a percentage of networth 18.0 27.2 15.4 44.9 23.7 35.8
Credit-deposit ratio 71 61 53 44 42 45
Incremental credit deposit ratio n.a. 50 39 17 39 55
Borrowings to total deposits 17 9 13 10 4 3
Cash-deposit ratio 0 0 1 0 1 1
Investment-deposit ratio 36 36 46 54 46 37
Incemental I/D ratio n.a. 36 63 76 26 -1
Reserves as a percentage of net worth n.a. 45 56 69 75 80
Growth (per cent)
Advances n.a. 62 37 11 34 30
Deposits n.a. 88 59 35 38 24
Investments n.a. 88 103 58 18 -1
Salaries cost n.a. 28 85 74 72 42
Commission and fee n.a. 37 93 13 47 27
Interest income n.a. 29 84 33 24 8
Others
Branches (nos) 35 49 86 139 192 188
Advances per branch (Rs crore) 61.99 71.56 56.06 38.51 37.40 49.80
Operating expenses per branch (Rs crore) 1.46 1.33 1.50 1.48 1.68 2.23
Employees (nos) 521 739 1,185 1,721 2,338 3,447
Income per employee (Rs crore) 0.81 0.78 0.89 0.93 0.80 0.62
Income/employee expenses (times) 34.93 37.23 36.91 32.18 22.00 17.54
continued...

272
...continued
(Rs crore) 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Interest 89 84 85 74 78 75
Forex 1 1 0 1 1 1
Commission, brokerage 8 8 8 6 8 9
Priority 11 9 7 16 23 26
Public 1 3 9 0 2 0
Inter bank 1 0 0 0 0 0
Others 87 89 84 83 76 74
Abroad 0 0 0 0 0 0
Bills 65 57 34 3 3 3
Cash credit 27 33 44 49 43 33
Term loans 8 10 22 48 54 64
Secured 43 46 63 79 88 88
Government guarantee 57 44 15 1 1 1
Unsecured 0 10 22 20 11 11
Government securities 70 66 58 55 59 65
Other approved securities 0 0 0 0 0 0
Shares 6 6 5 3 3 2
Debentures 12 12 24 27 38 33
Subsidiary 0 0 0 0 0 0
Others 11 16 13 15 0 0
Net NPAs (per cent) 6.3 4.5 3.4 2.7 2.4 1.3
n.a.: Not available
Source: CRIS INFAC

273
The South Indian Bank Ltd Table 22
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 19 35 36 36 36 36 36
Reserves and surplus 93 128 151 183 239 285 359
Deposits 2,738 3,123 3,885 4,669 5,920 6,861 8280
Borrowings 30 108 96 64 61 95 79
Other liabilities and provisions 183 188 276 265 299 352 500
Total 3,064 3,582 4,444 5,216 6,555 7,629 9,254
Assets
Cash and balances with RBI 267 265 292 295 301 396 405
Balances with bank and money at call 199 305 227 282 620 384 401
Investments 1,006 1,200 1,749 1,998 2,181 2,999 3962
Advances 1,466 1,665 2,021 2,468 3,231 3,613 4197
Fixed assets 24 28 34 36 44 54 66
Other assets 101 120 121 137 179 182 223
Total 3,064 3,582 4,444 5,216 6,555 7,629 9,254
Deposits
Demand 169 193 238 227 291 328 398
Savings 371 483 613 718 831 988 1,339
Term 2,199 2,447 3,034 3,724 4,797 5,545 6,544
Total 2,738 3,123 3,885 4,669 5,920 6,861 8,280
Total 2,738 3,123 3,885 4,669 5,920 6,861 8,280
Borrowings
RBI 0 84 0 52 17 0 0
Other banks 0 0 0 5 2 81 4
Total 30 108 96 64 61 95 79
Bills payable 40 43 53 47 72 60 82
Others (including provisions) 97 101 167 166 178 245 375
Total 183 188 276 265 299 352 500
Balance with RBI 233 245 250 247 337 332
Cash in hand 32 47 45 54 59 73
Advances
Cash credit and overdraft 731 829 1,038 1,265 1,673 1,588 1,546
Term loans 559 651 790 947 1,203 1,632 2,142
Total 1,466 1,665 2,021 2,468 3,231 3,613 4,197
Continued...

274
...continued
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Secured 1,291 1,456 n.a. 2,132 2,557 2,763 3,308
Government guarantee 15 42 n.a. 88 264 229 300
Unsecured 159 166 n.a. 248 410 621 589
Total 1,466 1,665 n.a. 2,468 3,231 3,613 4,197
Priority sector 388 473 n.a. 734 919 1,004 1,291
Public sector 10 10 n.a. 77 414 292 464
Banks 0 0 n.a. 0 0 68 66
Others 1,067 1,182 n.a. 1,658 1,898 2,249 2,376
Total 1,466 1,665 n.a. 2,468 3,231 3,613 4,197
Total 1,466 1,665 2,021 2,468 3,231 3,613 4,197
Investments
- Government securities 654 824 1,391 1,668 1,866 2,614 3,580
- Shares 19 22 23 14 12 13 10
- Debentures 205 226 221 220 216 240 201
- Subsidiaries/JV 2 3 2.82 0 0 0 0
- Others 28 31 20 6 7 62 116
Total 1,006 1,200 1,749 1,998 2,181 2,999 3,962
Movement in NPA
Gross NPA
Opening balance n.a. n.a. n.a. n.a. 257 336 346
Additions n.a. n.a. n.a. n.a. 114 108 134
Reductions n.a. n.a. n.a. n.a. 35 982 152
Closing balance n.a. n.a. n.a. n.a. 336 346 328
Net NPA-Closing balance n.a. n.a. n.a. n.a. 213 216 190
Interest earned
Others 8 15 0 19 20 21 13
Total 339 400 469 540 615 657 680
Other income
Miscellaneous income 7 10 0 15 18 18.96 18
Total 26 37 75 73 139 180 235
Total income 365 437 543 613 754 838 915
continued...

275
...continued
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Interest expended
Interest on deposits 249 295 332 370 449.2 469 465
Others 11 13 13 16 8 11 14
Total 261 312 351 391 460 479 480
Operating expenses
Salaries 54 64 86 85 84 94 131
Others 17 23 23 27 32 41 52
Depreciation 2 3 3 3 4 7 10
Total 73 90 113 115 121 142 193
Total expenses including provisions 354 433 518 571 692 765 831
Liability for outstanding forex contracts 80 173 153 140 222 389 457
Guarantees
- In India 75 152 111 103 157 138 150
- Outside India 0 0 0 0 0 0 0
0 0 0 0 0 0 0
contracts
Currency Swaps 0 0 0 0 0 0 0
Others 0 0 23 0 0 1 1
Total 234 469 459 428 586 706 802
Provison for NPAs 9 27 25 39 52 94 108
Depreciation in values of investments 0 1 0 0 0 1 0
Provision for taxation 7 0 24 25 61 72 77
Other Provisions 4 3 5 1 -2 -23 -28
Total 19 31 54 65 110 144 158
Financial analysis
Overall n.a. 14 24 20 27 16 21
Demand n.a. 14 23 -5 29 13 21
Savings n.a. 30 27 17 16 19 35
Term n.a. 11 24 23 29 16 18
Demand 6 6 6 5 5 5 5
Savings 14 15 16 15 14 14 16
Term 80 78 78 80 81 81 79
continued...

276
...continued
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Return on assets n.a. 0.12 0.64 0.86 1.06 1.02 1.00
Return on equity n.a. 2.8 14.8 20.5 25.3 24.3 23.6
Gearing (times) 26.2 20.9 22.8 22.9 22.9 22.8 22.4
Staff costs to operating expenses 73.5 71.0 76.7 74.1 69.8 66.5 67.6
Non-fund income to total income 7.1 8.4 13.7 11.8 18.4 21.5 25.7
Operating expenses to total income 20.1 20.6 20.7 18.8 16.0 16.9 21.1
Operating expenses to deposits 2.7 2.9 2.9 2.5 2.0 2.1 2.3
Earning per share (Rs) 1.1 0.3 1.7 2.3 2.6 2.5 2.3
Interest cost n.a. 10.25 9.66 8.91 8.50 7.34 6.21
Yield on carry business n.a. 12.76 12.31 11.66 10.86 9.64 8.42
Spreads n.a. 2.51 2.65 2.75 2.36 2.31 2.21
Operating expenses to AFD n.a. 2.82 2.91 2.47 2.13 2.07 2.36
Core fee income to AFD n.a. 0.90 1.07 0.85 0.76 0.56 0.47
Net Profitability Margin n.a. 0.58 0.80 1.13 0.99 0.80 0.32
Provisions as a percentage of profit before 64.6 88.9 67.8 61.2 63.9 66.6 65.2
provisions
Provisions as a percentage of networth 17.1 19.1 29.1 30.0 40.2 44.9 39.9
Credit-deposit ratio 54 53 52 53 55 53 51
Incremental credit deposit ratio 52 47 57 61 41 41
Borrowings to total deposits 1 3 2 1 1 1 1
Cash-deposit ratio 0 1 1 1 1 1 1
Investment-deposit ratio 37 38 45 43 37 44 48
Incemental I/D ratio 50 72 32 15 87 68
Reserves as a percentage of net worth 83 78 81 84 87 89 91
Growth (per cent)
Advances n.a 14 21 22 31 12 16
Deposits n.a 14 24 20 27 16 21
Investments n.a 19 46 14 9 38 32
Salaries cost n.a 18 35 -1 -1 12 39
Commission and fee n.a 28 31 21 -1 -18 5
Interest income n.a 18 17 15 14 7 3
Others
Branches (nos) 354 361 n.a. 372 380 391 410
Advances per branch (Rs crore) 4.14 4.61 n.a. 6.64 8.50 9.24 10.24
Operating expenses per branch (Rs crore) 0.21 0.25 n.a. 0.31 0.32 0.36 0.47
Employees (nos) 3,770 3,785 n.a. 3,739 3,697 3,350 3,534
Income per employee (Rs crore) 0.10 0.12 n.a. 0.16 0.20 0.25 0.26
continued...

277
...continued
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Interest 93 92 86 88 82 78 74
Forex 1 2 2 1 1 1 1
Commission, brokerage 3 3 4 4 3 2 2
Priority 26 28 n.a. 30 28 28 31
Public 1 1 n.a. 3 13 8 11
Inter bank 0 0 n.a. 0 0 2 2
Others 73 71 n.a. 67 59 62 57
Abroad 0 0 0 0 0 0 0
Bills 12 11 10 10 11 11 12
Cash credit 50 50 51 51 52 44 37
Term loans 38 39 39 38 37 45 51
Secured 88 87 n.a. 86 79 76 79
Government guarantee 1 3 n.a. 4 8 6 7
Unsecured 11 10 n.a. 10 13 17 14
Government securities 65 69 80 83 86 87 90
Other approved securities 10 8 5 5 4 2 1
Shares 2 2 1 1 1 0 0
Debentures 20 19 13 11 10 8 5
Subsidiary 0 0 0 0 0 0 0
Others 3 3 1 0 0 2 3
Net NPAs (per cent) n.a. n.a. n.a. 7.1 6.6 6.0 4.6
n.a.: Not available
Source: CRIS INFAC

278
The Jammu & Kashmir Bank Ltd Table 23
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 30 48 48 48 48 48 48
Deposits 4,882 6,444 9,422 11,168 12,911 14,675 18661
Borrowings 12 209 21 177 185 216 297
Total 5,596 7,519 10,561 12,719 14,699 16,794 21,206
Assets
Cash and balances with RBI 883 773 1,402 1,088 1,016 721 1535
Investments 2,061 2,951 4,254 5,425 5,752 6,738 8451
Advances 2,158 2,951 3,518 4,763 6,424 8,011 9285
Fixed assets 38 63 107 131 167 172 196
Other assets 195 214 386 344 387 352 357
Total 4,712 7,519 10,561 12,719 14,699 16,794 21,206
Deposits
Demand 802 1143 1,821 1,566 2,037 2088 2176
Savings 1,042 1,216 1,596 1,873 2,359 2812 3471
Term 3,039 4,085 6,005 7,729 8,515 9775 13,014
Total 4,882 6,444 9,422 11,168 12,911 14,675 18,661
Total 4,882 6,444 9,422 11,168 12,911 14,675 18,661
Borrowings
RBI 0 0 0 0 0 0 0
Other banks 2 2 0 0 0 150 200
Total 12 209 21 177 185 216 297
Bills payable 184 189 237 194 216 186 236
Total 425 438 590 675 666 661 654
Balance with RBI 837 716 1,337 1,027 947 635 1,439
Cash in hand 46 57 65 60 69 85 96
Advances
Term loans 605 1,096 1,409 2,302 3,167 3,928 5,080
Total 2,158 2,951 3,518 4,763 6,424 8,011 9,285
Continued...

279
...continued
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Secured 1,125 1,701 1,954 3,202 4,351 5,680 6,306
Government guarantee 1,015 1,187 1,348 1,216 1,594 1,554 2,237
Unsecured 18 63 216 345 479 777 742
Total 2,158 2,951 3,518 4,763 6,424 8,011 9,285
Priority sector 356 610 812 1,179 1,317 1,506 1,966
Public sector 1,210 1,714 1424 1,717 2,233 2,327 2,955
Banks 1 34 2 3 240 311 200
Others 591 593 1,280 1,864 2,634 3,867 4,164
Total 2,158 2,951 3,518 4,763 6,424 8,011 9,285
Total 2,158 2,951 3,518 4,763 6,424 8,011 9,285
Investments
- Government securities 1,418 1,913 2,358 3,209 3,468 3,816 5,041
- Shares 11 24 128 108 95 82 78
- Debentures 391 702 1,286 1,761 1,877 2,388 2,696
- Subsidiaries/JV 6 6 10 10 10 10 10
- Others 58 56 238 64 161 309 509
Total 2,061 2,951 4,254 5,374 5,753 6,738 8,451
Movement in NPA
Gross NPA
Additions n.a. n.a. 67 80 70 87 143
Reductions n.a. n.a. 73 75 76 71 110
Net NPA-Closing balance n.a. 112 113 117 121 127 138
Interest earned
Others
Total 531 694 885 1,077 1,354 1,427 1,521
Other income
Commission exchange and brokerage 13 15 20 21.95 28 35 41
Total 58 43 105 81 257 287 302
Total income 588 737 990 1,157 1,611 1,715 1,823
continued...

280
...continued
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Interest expended
Others 0 0 0 3 10 10 10
Total 329 431 598 720 915 892 901
Operating expenses
Salaries 59 85 90 96 144 158 168
Others 35 41 59 52 66 72 88
Depreciation 4 8 11 17 24 30 37
Total 98 134 159 165 234 260 293
Total expenses including provisions 538 651 870 990 1,360 1,366 1,417
Liability for outstanding forex contracts 554 292 122 1,745 1324 1,880 2,856
Guarantees
- In India 14 28 33 188 316 364 304
- Outside India 2 3 0 10 12 8 4
Liability on account of outstanding derivative 0 0 0 0 0 0 0
Currency Swaps 0 0 0 0 0 0 0
Others 23 16 15 7 5 4 2
Total 600 355 187 2,266 1,949 2,747 4,017
Provison for NPAs 0 22 20.77 21.12 27.38 13 30
Depreciation in values of investments 7 5.13 13 0 6 13 0
Other Provisions 56 14 21 19 59 54 22
Total 111 86 112 105 210 214 222
Financial analysis
Overall n.a. 32 46 19 16 14 27
Demand n.a. 43 59 -14 30 2 4
Savings n.a. 17 31 17 26 19 23
Term n.a. 34 47 29 10 15 33
Demand 16 18 19 14 16 14 12
Savings 21 19 17 17 18 19 19
Term 62 63 64 69 66 67 70
continued...

281
...continued
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Return on assets n.a. 1.40 1.33 1.44 1.83 2.21 2.14
Return on equity n.a. 24.3 25.1 27.3 30.6 32.0 28.7
Gearing (times) 19.3 16.6 19.0 17.2 14.7 12.5 12.3
Interest cost n.a. 7.23 7.24 6.78 7.37 6.28 5.26
Spreads n.a. 4.77 3.26 3.11 3.07 3.31 3.21
provisions
Incremental credit deposit ratio 51 19 71 95 90 32
Cash-deposit ratio 1 1 1 1 1 1 1
Incemental I/D ratio 57 44 67 19 56 43
Growth (per cent)
Advances 37 19 35 35 25 16
Deposits 32 46 19 16 14 27
Investments 43 44 28 6 17 25
Salaries cost 45 6 7 50 10 6
Commission and fee 12 32 11 28 24 18
Interest income 31 28 22 26 5 7
Others
Branches (nos) 370 389 404 426 441 454 475
Employees (nos) 5,689 6,254 6,278 6,470 6,495 7,112 7,085
continued...

282
...continued
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Interest 90 94 89 93 84 83 83
Forex 1 1 0 0 0 0 0
Priority 17 21 56 25 21 19 21
Public 56 58 38 36 35 29 32
Inter bank 0 1 6 0 4 4 2
Others 27 20 36 39 41 48 45
Abroad 0 0 0 0 0 0 0
Bills 3 5 6 5 4 7 4
Cash credit 69 57 54 47 46 44 42
Term loans 28 37 40 48 49 49 55
Secured 52 58 56 67 68 71 68
Unsecured 1 2 6 7 7 10 8
Shares 1 1 3 2 2 1 1
Debentures 19 24 30 33 33 35 32
Others 3 2 6 1 3 5 6
Net NPAs (per cent) 4.6 3.8 3.2 2.5 1.9 1.6 1.5
n.a.: Not available
Source: CRIS INFAC

283
The Karnataka Bank Ltd Table 24
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
Liabilities
Capital 13 13 13 13 13 40 40
Deposits 3,408 4,382 5,174 6,076 7,001 8,292 9407
Borrowings 92 125 134 130 97 165 183
Total 3,860 4,869 5,742 6,677 7,763 9,265 10,577
Assets
Cash and balances with RBI 417 455 528 394 342 437 389
Investments 1,258 1,775 2,063 2,787 3,467 4,433 4879
Advances 1,818 2,047 2,451 2,828 3,418 3,900 4668
Fixed assets 65 74 72 77 74 79 93
Other assets 94 105 130 140 161 218 187
Total 3,860 4,869 5,742 6,677 7,763 9,265 10,577
Deposits
Demand 252 299 402 395 400 466 569
Savings 452 557 694 795 908 1070 1339
Term 2,705 3,527 4,078 4,886 5,693 6756 7,499
Total 3,408 4,382 5,174 6,076 7,001 8,292 9,407
Total 3,408 4,382 5,174 6,076 7,001 8,292 9,407
Borrowings
RBI 0 49 87 92 63 20 0
Other banks 0 0 0 0 0 1 0
Total 92 125 134 130 97 165 183
Bills payable 26 43 40 42 89 2 3
Total 131 100 122 121 223 224 288
Balance with RBI n.a. 410 41 346 296 393 393
Cash in hand n.a. 45 487 48 46 44 56
Advances
Term loans 385 449 580 694 793 1,133 1,554
Total 1,818 2,047 2,451 2,828 3,418 3,900 4,668
Continued...

284
...continued
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Secured 1,528 1,649 1,954 2,297 2,638 2,971 3,492
Unsecured 37 38 73 101 344 327 417
Total 1,818 2,047 2,451 2,828 3,418 3,900 4,668
Priority sector 694 781 916 953 1,195 1,501 1,910
Public sector 6 6 12 12 2 65 276
Banks 0 0 1 0 0 70 102
Others 1,118 1,259 1,523 1,862 2,221 2,263 2,379
Total 1,818 2,047 2,451 2,828 3,418 3,900 4,668
Total 1,818 2,047 2,451 2,828 3,418 3,900 4,668
Investments
- Government securities 946 1,149 1,326 2,162 2,815 3,368 2,970
- Shares 18 28 31 25 14 5 10
- Debentures 189 484 550 477 486 982 1,767
- Subsidiaries/JV 0 0 0 0 0 0 0
- Others 44 49 93 60 93 30 93
Total 1,258 1,775 2,063 2,787 3,467 4,433 4,879
Movement in NPA
Gross NPA
Additions n.a. n.a. 82 121 84 218 132
Reductions n.a. n.a. 28 228 317 54 72
Net NPA-Closing balance n.a. n.a. 140 196 201 286 231
Interest earned
Interest/Discount on advances/bils 257 272 302 302 347 400 417
Others 2 0 1 1 7 3 8
Total 430 491 578 578 654 811 848
Other income
Total 48 48 72 72 241 239 270
Total income 478 540 650 650 895 1,051 1,119
continued...

285
...continued
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Interest expended
Others 13 12 8 8 5 4 5
Total 292 375 464 464 502 657 635
Operating expenses
Salaries 61 64 75 72 89 89 94
Others 18 21 24 25 30 37 43
Depreciation 6 7 8 9 12 15 17
Total 84 92 106 105 131 141 154
Total expenses including provisions 420 497 592 609 723 941 986
Liability for outstanding forex contracts 1587 1,210 2,642 2,642 1421 881 1,163
Guarantees
- In India 84 117 158 158 104 193 248
- Outside India 0 0 0 0 0 0 0
contracts 0 0 0 0 0 0 0
Currency swaps 0 0 0 0 0 0 0
Others 13 30 35 35 63 124 145
Total 1,771 1,489 3,013 3,013 1,712 1,408 1,850
Provison for NPAs 20 17 23 23 37 81 128
Depreciation in values of investments -7 0 -18 0 38 0 0
Other Provisions 0 0 0 0 0 0 0
Total 44 30 23 40 91 143 197
Financial analysis
Overall n.a. 29 18 17 15 18 13
Demand n.a. 19 35 -2 1 16 22
Savings n.a. 23 25 15 14 18 25
Term n.a. 30 16 20 17 19 11
Demand 7 7 8 6 6 6 6
Savings 13 13 13 13 13 13 14
Term 79 80 79 80 81 81 80
continued...

286
...continued
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Return on assets 3.01 0.97 1.10 0.66 2.38 1.29 1.34
Return on equity 51.0 17.3 20.3 12.4 43.4 21.5 20.8
Gearing (times) 15.9 17.6 17.4 18.1 16.6 14.9 14.1
Interest cost n.a. 9.29 9.37 8.00 7.47 8.39 7.03
Spreads n.a. 2.62 2.15 1.80 2.01 1.53 1.84
Deposits to borrowings (times) 37.0 35.9 37.0 42.6 57.6 58.3 50.8
provisions
Incremental credit deposit ratio n.a. 23 51 42 64 37 69
Cash-deposit ratio n.a. 1 9 1 1 1 1
Incemental I/D ratio n.a. 53 36 80 73 75 40
Growth (per cent)
Advances n.a. 13 20 15 21 14 20
Deposits n.a. 29 18 17 15 18 13
Investments n.a. 41 16 35 24 28 10
Salaries cost n.a. 6 17 -5 24 0 5
Commission and fee n.a. 21 32 0 14 6 11
Interest income n.a. 14 18 0 13 24 5
Others
Branches (nos) 324 338 347 354 357 360 370
Employees (nos) 3,925 3,929 4,075 4,084 4,144 4,320 4,300
continued...

287
...continued
(Rs crore) 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04

Interest 90 91 89 89 73 77 76
Forex 2 2 2 2 1 1 1
Priority 38 38 37 34 35 38 41
Public 0 0 0 0 0 2 6
Inter bank 0 0 0 0 0 2 2
Others 61 62 62 66 65 58 51
Abroad 0 0 0 0 0 0 0
Bills 12 11 11 9 8 7 6
Cash credit 67 67 65 66 69 64 60
Term loans 21 22 24 25 23 29 33
Secured 84 81 80 81 77 76 75
Unsecured 2 2 3 4 10 8 9
Shares 1 2 1 1 0 0 0
Debentures 15 27 27 17 14 22 36
Others 4 3 5 2 3 1 2
Net NPAs (per cent) 3.1 5.0 5.7 5.7 6.9 7.4 5.0
n.a.: Not available
Source: CRIS INFAC

288
Annexure
Section
Glossary 289

i
Glossary
Interest cost: The ratio of total interest paid to average borrowed funds.
Borrowed funds: The total of deposits, borrowings and bills payable.
Yield on carry business: Defined as the total interest cost upon the average funds in carry
business.
Funds in carry business: Funds deployed less investment in shares, investments in subsidiaries
and joint ventures and other miscellaneous investments; invested within India and outside India.
Funds deployed: The funds deployed is defined as the total asset of the bank excluding fixed
assets and other assets.
Spreads: Spreads are defined as the difference between the yield on carry business less interest
cost.
Net profitability margin (NPM): NPM is defined as spreads add core fee income ratio less
operating expense ratio.
Relationship between the interest rate and spreads:

Generally, when interest rates are on the rise, both yields and costs go up; conversely, in a
declining interest rate scenario, both yields and costs go down. However, in a declining interest
rate regime, yields go down faster than costs do. The converse is true in a rising interest
rate regime.
Operating expense ratio: The ratio of total operating expense to the average funds deployed.
Core fee income ratio (or core fee-based income ratio): The ratio of the core fee income
to the average funds deployed.
Core fee income (or core fee-based income): Core fee income is total other income excluding
profit on sale of investments, sale of fixed assets and 50 per cent of the miscellaneous income.
Other income: Other income includes income from profit on sale of investments, profit on
sale of assets and half of the miscellaneous income.
Cost-income ratio: Cost-income ratio is the ratio of total operating expenses to the difference
of total income and interest expended.
Cost-income ratio (without profit on sale of investment): Cost-income ratio, when calculated
without considering profit of sale of investments in the net income.
Continued...

289
...continued
Net interest income (NII): The difference between the total interest income and total interest
expended.
Net interest margin (NIM): The ratio of net interest income to average total assets.
Business per employee: The ratio of business to number of employees as at end-March.
Operating profit per employee: The ratio of operating profit (i.e., profit before provisioning
and tax) to the total number of employees as at end-March.
Business: Business is defined as the summation of the advances and deposits for the bank.
Current deposits: Current deposits are those maintained by business class to meet the short-
term contingencies. No interest is payable on current deposits.
Savings deposits: Savings deposits are the deposits maintained by the households. RBI administers
the interest rate offered on these deposits.
Term deposits: These are also knows as fixed deposits or time deposits and are generally
payable at the end of a fixed period.
Low cost deposits: Demand deposits and saving deposits together form low cost deposits
Low cost deposit ratio: The ratio of low cost deposits to the total deposits is termed as
low cost deposit ratio.
Food credit: Food credit is the loan/advance given by the banks to the FCI for procurement
of food from the open market to be distributed through public distribution system
Non-food credit: Non-food credit is the total credit excluding food credit.
Capital adequacy ratio: is the ratio of total risk weighted assets of the bank to the eligible
capital. Minimum stipulated norm is 9 per cent.
Statutory liquidity ratio: Under section 24 (b) of the Banking Regulation Act, 1949, every
bank is required to maintain, at the close of business every day, a minimum proportion of
its net demand and time liabilities (NDTL) as liquid assets in the form of cash and gold and
un-encumbered approved securities. The ratio of liquid assets to demand and time liabilities is
known as Statutory Liquidity Ratio (SLR).
Gross NPAs: Total of the non-performing assets, before making any provisions.
Net NPAs: Non-performing assets net of provisions and amount collected from the NPAs and
kept in suspense.
continued...

290
...continued
Gross NPA ratio: The ratio of gross NPAs to gross advances
Net NPA ratio: The ratio of net NPAs to net advances.
Basis points: One basis point is one hundredth of a percent.
Return on assets: The ratio of profit after tax to average total assets (includes fixed assets
and other assets)
Credit-deposit ratio: The ratio of total net advances to total deposits.
Investment-deposit ratio: The ratio of total investments to total deposits.
Cost per employee: The ratio of total wage cost for the bank to total number of employees
as at end-March.

291

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Annual review November 2004

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

2.0 Interest rate outlook and yields

3.0 Profit and loss account

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

2.0 Interest rate outlook and yields

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

3.0 Profit and loss account

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Business of scheduled commercial banks to grow at 14.2 per cent

Business of scheduled commercial banks in India Table 1

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Sources of funds of scheduled commercial banks Table 2

Proportion of different sources of funds of SCBs Figure 1

Source: CRIS INFAC

Deposits expected to grow at a CAGR of 12.4 per cent

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

2000-2003 2000-03 2003-2006

Share of deposits Table 4

Proportion of different categories of deposits in the incremental deposits Table 5

Growth of deposits Table 6

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Growth in term deposits moves in line with interest rate movement

Interest rate on deposits vs growth in term deposits Figure 2

Source: RBI and CRIS INFAC

The regression equation y = 1.89 x - 0.44.

Savings deposits to grow at 16.2 per cent from 2003-04 to 2005-06

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

(per cent) Corporate (per cent)

Growth in saving deposits Figure 5

Source: CRIS INFAC Research

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

(per cent) (per cent) Others

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Share of different investment alternatives in incremental investible funds Table 7

Mutual funds as an investment channel

Growth in small savings scheme to remain constant

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Growth in borrowings Figure 8 Growth in borrowings (excluding ICICI Bank) Figure 9

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Equity and reserve surplus Table 8

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

CRAR of top six banks Figure 10

Mar-01 Mar-02 Mar-03 Mar-04

Source: CRIS INFAC Research

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Assets of the scheduled commercial banks Table 10

Advances to grow at CAGR of 17.4 per cent from 2003-04 to 2005-06

Food and non-food credit of scheduled commercial banks Table 11

Food credit to show a negative CAGR of 2.5 per cent

Food credit Figure 11

Source: RBI and CRIS INFAC Research

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Movement - food grains by FCI (provisional) Table 12

Stock in Central pool as on 30/06/2004 Table 13

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Impact on yield on advances Table 14

Original interest rate 10.95% 10.95%

Original interest income on FCI exposure 43,381 43,381

Loss of revenue (5,943) (2,175) (8,118)