This website uses cookies to ensure you have the best experience. Learn more

A Stochastic Approach To Indian Banking Sector : Technical Analysis Of Private Sector Banks

5458 words - 22 pages

A Stochastic Approach to Indian Banking Sector : Technical Analysis of Private Sector Banks
Dr. Rahul Rajan
Abhilasha Srivastava
Abstract
The objective of this paper is to present a method for estimating the cost efficiency of Indian banks in order to study the degree of technical and cost performance of the Indian banking sector and to analyze how the banking sector has been affected by technical efficiency and cost efficiency. Initially, the evolution in the technical front in the banks between 2005 to 2012 is measured. For this analysis purpose a sample of 101 Indian banks including 28 public ,29 private and 44 foreign banks operating in India is taken for the period 2005-2012. For ...view middle of the document...

These features are reflected in the structure, size, and diversity of the country’s banking and financial sector.

The banking sector in India had another good year during 2011, with growth being propelled by factors such as good economic growth, favourable demographics and low penetration, according to a report titled ‘Indian banks are likely to ride an economic growth wave’, by research firm Standard & Poor’s.
* The country’s economy grew by 8.5 per cent in the last fiscal and the government expects the growth impetus to continue this year as well
* More than 50 per cent of India’s population is under the age of 30 years, which is a major target group for banks
* Penetration of banking services in the country remains low. The government has set targets to provide banking facilities to all areas with a population of over 2,000.
The banking sector in India is well capitalised, with capital ratios being above the global average. The average tier-1 Capital Adequacy Ratio (CAR) of the Indian banking industry is above 10 per cent compared to the Basel III norm of 8.5 per cent including the contingency buffer. Moreover, the Reserve Bank of India, in its Financial Stability Report (FSR) has also asserted that the sector remains well capitalised with both core capital adequacy and leverage ratios at comfortable level.
Efficient internal capital generation, fairly active capital markets, and strong support from the government ensured good capitalisation for most banks. The overall CAR reached 14 per cent as on March 31, 2011. High levels of public deposits also ensured a comfortable liquidity profile
The total assets size of the banking industry rose by more than five times between March 2000 and March 2010 - from US$ 250 billion to more than US$ 1.3 trillion - a Compound Annual Growth Rate (CAGR) of 18 per cent compared to the average GDP growth of 7.2 per cent during the same period.
During the last five years, while the annual rate of credit growth was 23 per cent, profitability was maintained at around 15 per cent. While the Indian banking sector is characterised by the presence of a large number of players, top 10 banks accounted for a significant 57 per cent share of the total credit as on March 31, 2011.
Nationalised banks accounted for 52.2 per cent of the aggregate deposits, with State Bank of India (SBI) and its Associates accounting for 22.1 per cent. The share of new private sector banks, foreign banks, old private sector banks, and regional rural banks in aggregate deposits was 13.3 per cent, 4.8 per cent, 4.6 per cent and 3.0 per cent, respectively, according to RBI’s Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks, December 2010.

Literature Review
The seminal work comes from Ferrier and Lovell (1990). They apply parametric SFA and
non-parametric DEA on a sample of 575 US banks to estimate cost efficiency. Their results suggest both similarities and differences between the approaches....

Other Papers Like A Stochastic Approach To Indian Banking Sector : Technical Analysis Of Private Sector Banks

Financial Sector Banking Essay

3545 words - 15 pages . An immediate priority should be to announce the removal of all impediments for private banks xx REPUBLIC OF IRAQ FINANCIAL SECTOR REVIEW in doing business with the government and state owned enterprises. Given some concerns over the strength of private banks, some elements, such as the size of letters of credits, could be phased in over a period of two years (but preannounced) to permit enhancement of the effectiveness of banking

Banking Sector Overview Essay

2987 words - 12 pages economic slowdown, banks seem to facilitate the businesses through rescheduling/ restructuring of loans; the Textile sector being the major beneficiary. Latest banking industry numbers show an effort to keep balance sheets clear of NPLs by recognizing and providing for NPLs on criteria that are more stringent. This approach might look costly in the meantime but in the long run it ll definitely benefit banks by providing a cushion to withstand losses

Private and Public Sector

4529 words - 19 pages been a rapid growth in more complex forms of private involvement. In many cases the public sector or remain the immediate final purchaser of the services but no longer own or operate the assets necessary for the provision of the service. Such arrangements tend to be referred to as public-private partnerships (Grout, 2002: 134). DEFINTIONS AND CHARACTERISTICS Before we start analysing in detail the public and the private sector, it is

Public Sector vs. Private

588 words - 3 pages The public and private sectors are heading in opposite directions in labor-management relations. Private sector employers and unions are collaborating in an effort to meet the requirements of today's business realities; While recent government cutbacks have damaged the relationship between the public sector and its unions. Unions remain an important political factor (especially within the Democratic Party), both through mobilization of

Indian Retail Sector Information

4252 words - 18 pages contribution is quite low even when compared to other developing Asian economies like China, Thailand, South Korea and Philippines, all of which have retail contributions close to 20-35%. These figures quite clearly reveal the relative underdevelopment of the Indian organized retail sector. Challenges faced by Organized Retail Sector in India The organized retail sector in India is still at a developmental stage, characterized by a very small number of

Indian Power Sector

388 words - 2 pages : The key aspects evaluated under each of the areas can be summed up as follows: State Government {text:list-item} {text:list-item} {text:list-item} {text:list-item} {text:list-item} {text:list-item} Regulatory Process {text:list-item} {text:list-item} {text:list-item} {text:list-item} (A negative marks of 5 is assigned to States which are yet to set up an SERC) Business Risk Analysis

Negative Impacts of Technology in Banking Sector

1857 words - 8 pages Negative impact of technology in banking sector Information Technology solutions have paved a way to a new world of internet, business networking and e-banking, budding as a solution to reduce costs, change the sophisticated economic affairs to more easier, speedy, efficient, and time saving method of transactions. Internet has emerged as a blessing for the present pace of life but at the same time also resulted in various threats to the

Imapact Of It In Banking Sector

1898 words - 8 pages are all done manually. The waiting time for bank services had led to frustration and dissatisfaction of quite a number of customer. Another big problem facing the banking sector today is fraud, which has established the banking sector to the point of lack of confidence from the average customer. Most banks do not put their customers in the prime place as they supposed to be. These is new keen completion and to compete means to apply the

Private Sector-Public Sector Cybersecurity Issues

1682 words - 7 pages habits, and offer relevant coupons based on predictive analysis (McAfee &Bryjolfsson, 2012). This saves the company about eight weeks, and presents the coupons to the client when they actually need them. Walmart, one of the biggest retail companies in the world, created @WalmartLabs in 2011 to incorporate meta-data to its services (Milian, 2014). Walmart reported a 20 percent increase in customers who went from browsing for a product to buying it

Effect of Fdi on Indian Insurance Sector

1828 words - 8 pages destination for investors around the globe after China. In general, India is a much liberalized in terms of FDI policies, as FDI has been recognised as one of the important drivers of economic growth of India (http://planningcommission.nic.in). Indian insurance sector has witnessed great potential for growth. FDI limit is 26% in Indian insurance company but government is considering increasing this limit to 49% which can be beneficial for creating

Banking Sector Reforms in India

1857 words - 8 pages BANKING SECTOR REFORMS IN INDIA . Introduction: Financial sector reforms introduced in the early 1990s as a part of the structural reforms have touched upon almost all aspects of banking operation. For a few decades preceding the onset of banking and financial sector reforms in India, banks operated in an environment that was heavily regulated and characterized by sufficient barriers to entry which protected them against too much

Related Essays

Indian Banking Sector Update Essay

5538 words - 23 pages -Nov-10 30-Sep-10 31-Oct-09 31-Jan-10 31-Dec-09 30-Jun-10 28-Feb-10 30-Apr-10 31-Oct-10 31-Jul-10 Bank Nifty Nifty (RHS) Repo Source: Bloomberg, ICICIdirect.com Research 1 Yr Gsec 3M CD 10 Yr Gsec The recent bribery for loans scam concern, mounting pension liabilities remain an overhang on the sector. We expect a reduction in valuation multiples of PSU banks, particularly midcap PSU banks. Their range of 1.5x-2x may shift to

Challenges Of Banking Sector Essay

3198 words - 13 pages PSBs have been losing business to the private sector banks in this segment. PSBs need to figure out the means to generate profitable business from this segment in the days to come. The Urge To Merge: In the recent past there has been a lot of talk about Indian Banks lacking in scale and size. The State Bank of India is the only bank from India to make it to the list of Top 100 banks, globally. Most of the PSBs are either looking to pick up a

Banking Sector Essay

716 words - 3 pages the twenty two banks was 19.73 per cent in the year 2007 .The average decreased to 17.07 per cent in the year 2008. The average capital adequacy ratio of the Islamic banks were 18.41 per cent in 2008. In terms of Wealth maximization in 2008, Dubai Islamic Bank occupied the top position .It was followed by First Gulf bank and Union National Bank .The analysis was based on the bank’s values in the respective listed exchanges (DFM and ADX) as on

Hrm Practice Of Banking Sector Essay

6219 words - 25 pages   Orienting and training new employees v  Managing wages and salaries (determining how to compensate employees) v  Providing incentives and benefits v  Appraising performance v  Communicating (interviewing, counseling, disciplining) v  Training and development v  Building employee commitment. Banking sector in Bangladesh:  A Bank is an organization that engages in the business of Banking. Banks are depository financial intermediaries linking