Benchmarking Indian Banks: Size, Growth, Efficiency, and Risk Management

by Anshuman Jaswal, PhD, September 29, 2010
Operations/ Benchmarking
Asia-Pacific

Abstract

Since 1991, liberalization of the Indian banking sector has encouraged the country’s firms to become more efficient and competitive by international standards. Advances in both regulatory standards and rates of IT adoption have allowed banks to streamline their processes.

In a new report, Benchmarking Indian Banks: Size, Growth, Efficiency, and Risk Management, Celent compares the competitiveness and risk management capabilities of banks in India. Included in the report are 21 public sector banks, eight domestic private banks, and six foreign banks. Within Celent’s methodology, four basic factors are considered (size, growth, efficiency, and risk management), and a total of 18 parameters are analyzed.

Banks such as Axis Bank, Bank of Baroda, HDFC Bank, Union Bank, and Indian Bank perform well because they have high growth rates with a low ratio of Nonperforming Assets (NPAs) to Net Advance. Some banks that should work towards reducing the ratio of NPAs to Net Advance are Citibank, HSBC, ICICI Bank, and SBI.

“Public sector banks have hired much larger numbers of management graduates and are closing the performance gap with domestic and foreign private banks,” says Anshuman Jaswal, Celent Senior Analyst and author of the report. “For their part, private banks, especially the domestic ones, are also contributing to higher levels of financial inclusion in the country. Hence, on the basis of these findings, Celent believes that the banking sector is well poised for growth in the coming years.”

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

Introduction

7

Methodology

8

Market Participant Analysis

10

 

Size and Revenue

10

 

Growth

13

 

Efficiency

15

 

Risk Management

19

Ranking by Bank Ownership

24

 

Major Public Sector Banks

24

 

Major Domestic Private Sector Banks

24

 

Major Foreign Banks

25

Overall Rankings

26

Leveraging Celent’s Expertise

29

 

Support for Financial Institutions

29

 

Support for Vendors

29

Related Celent Research

30

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