Transforming Indian Banking

• Steps Taken for Clean Banking

• New Initiative

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Transforming Indian Banking
Responsible & Responsive Banking

Clean Credit

Leveraging Honesty

Excluding Defaulters
• New Credit culture for new India

Appointments at arms
length, on merit

No interference in
commercial decisions
PATRONAGE

PHONE BANKING
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Legislative/ Administrative action Action against offenders Action by Banks

Measures taken for clean banking

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 MAIN REASON WHY ASSETS REFORMS INTRODUCED
TURNED INTO NPAs For CLEAN BANKING

1 Phone banking No interference in commercial

decisions

2 Layered entry operations 2.96 lakh shell companies struck off

3 Consortium with 30-31 members Consortium number limited to 7 to 9

4 Cash flow not ring fenced Ring fencing of cash flows ensured

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Funds released even when Strict enforcement of sanction
sanction conditions not complied conditions before release

6 Inadequate monitoring Specialised Monitoring for loans >Rs.250cr.

Wilful default/ fraud not

7 Now mandatory for loans > Rs. 50 cr.
necessarily seen on NPAs

Resolution through IBC- Connected

8 Restructuring of stressed assets party debarred
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Reforms Introduced for Clean Banking
9 Strict enforcement of conditions of loan sanctions

10 Stressed Asset Vertical in Banks

11 Transparent Recognition of NPAs

Upfront Provisioning for losses on NPAs: Rs. 5.88 Lakh Cr. provisioned
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in 4 years

13 EASE – an agenda for reform at PSBs

14 Expensive AT 1 Bonds recalled

15 Rationalisation of overseas operations

16 Effective management of operational risks including technology risks

17 Passport details of borrowers for loans > Rs. 50 Cr.

Reforms Introduced for Clean Banking
18 Continuing transparency in appointments – results on the day of interview

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Customer Comfort - Digitisation of banking outreach, increasing use of
Technology/Fintech

20 Udyamimitra portal as one stop portal for Mudra and other MSME loans

TReDS operationalised for MSMEs – All PSBs registered, over 142

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corporates as buyers

22 National Financial Reporting Authority – Auditors’ Regulator initiated

23 Negotiable Instruments Act amended

24 Ban on Unregulated Deposits Bill introduced in Parliament

25 Fugitive Economic Offenders Act

Report Card on Reforms by March 2019 – IBA has started the ranking
process through independent external agency
 Gains Visible
Stock of NPAs no longer Higher margin of safety:
rising, reduction by Increase in Provision
~Rs.21,000 Cr. in Q1 FY’19 Coverage Ratio to 63.7%
(Jun’18)

PSB share in CASA up Robust Credit Growth:

from 32.95% (Mar15) 13.5% - (YoY-Aug18)
to ~38% (June18)

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 Gains visible
Cash Recovery: Highest
MSME Credit Growth: ever in Q1FY 2019
Four quarters:
YoY (June18) Rs. 74,562 Cr.
< 10 Lakhs 26.7%
10 to 50 Lakhs 21.4% Rs. 36,551 Cr.
49% of FY'2017-18
50 to 1 Cr. 16.9%

10.49% (July ’18)

FY 2017-18 Q1 2019 8

Fastest growing economy Sixth largest economy

of the world - 8.2% Q1- FY19 of the world
 Consolidation-
Achieving Scale and Realising Synergy
-5 Associate Banks merged into SBI
-Merger resulted in
• Scale and synergy in operations
• Optimal utilization of Human Resources
• No Retrenchment of Employees
• Better career prospects for Associate Bank Employees
• Improved Treasury Management
• Improved Monitoring of High Value Assets
-Takeover of IDBI Bank by LIC with management control
is in process
-Rationalisation of 56 RRBs into 38 under consultation

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 Consolidation-
Achieving Scale and Realising Synergy
• The amalgamated bank would be the
third largest bank in India
• Strong competitive bank with
economies of scale
• Synergies for network, low-cost
deposits and subsidiaries
• Positioned for substantial rise in-
• customer base
• market reach
• operational efficiency
• Wider bouquet of products
& services for customers
• Employees interests to be protected
• Brand equity to be preserved
• All three banks on Finacle CBS
Platform
• Capital support will be ensured 10
 Healthy Ratios of Amalgamated Bank
(as per June 2018 results)

Bank of Vijaya Dena Amalgamated

Parameters
Baroda Bank Bank Bank

Total Business (in crore Rs.) 10,29,811 2,79,674 1,72,937 14,82,422

Gross Advances (in crore Rs.) 4,48,327 1,22,348 69,917 6,40,592

Deposits (in crore Rs.) 5,81,484 1,57,326 1,03,020 8,41,830

CASA Ratio 35.52% 24.91% 39.80% 34.06%

Branches (Domestic) 5,502 2,129 1,858 9,489

Return on Assets (annualised) 0.29% 0.32% -2.43% -0.02%

CET-I capital ratio 9.27% 10.35% 8.15% 9.32%

CRAR capital ratio 12.13% 13.91% 10.60% 12.25%

Net NPA ratio 5.40% 4.10% 11.04% 5.71%

Employees 56,361 15,874 13,440 85,675

Thanks

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