COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

Banking sector net up 44 pc to Rs 65b in 1997-98, reveals RBI report

The bottomline of the banking sector of the country grew by 44.3 per cent to nearly Rs 65 billion during the financial year 1997-98, according to the Reserve Bank of India's report on trend and progress of banking in India.

Reflecting the trend, the operating profits of commercial banks rose by 19.5 per cent to Rs 146.24 billion during the period. Operating profits of public sector banks grew by 15.5 per cent to Rs 102.64 billion. In case of foreign banks, operating profits rose marginally to Rs 25.44 billion from Rs 20.32 billion in 1996-97, while that of the private sector climbed to Rs 10.82 billion from Rs 8.40 billion the previous year.

As a proportion of total assets, net profits increased to 0.82 from 0.67 in 1996-97. Among the banking groups, net profit ratio (net profits / total assets ratio) improved in case of public sector banks but declined in case of foreign and private banks.

The net profit ratio of PSBs rose to 0.77 from 0.57 per cent in 1996-97. Among the PSBs, net profit of the SBI group increased to 1.06 in 1997-98 from 0.84 in 1996-97.

But, in case of foreign and private banks, the ratio is decelerated to 0.80 (0.91) and 0.96 (1.19) in 1997-98. The Reserve Bank of India has decided to bring down the ratio of government securities in the permanent category to 30 per cent for the year ending March 1999.

According to the RBI's report on trend and progress of banking in India (1997-98), the apex bank would endeavour to ensure that the banks increasingly mark-to-market (repricing of securities on the basis of their market value) their investments in government paper to the current category to facilitate valuing all the investments on fully mark-to-market basis.

The monetary and credit policy of April 1998 has pointed out the need to increase the ratio of current investments in approved securities progressively to 100 per cent in the next three years, in line with international norms.

The ratio of investments in permanent category was brought down to 40 per cent for the year ending March 1998. Also, new private banks are required to mark-to-market their entire investments in approved securities from end-March 1997.

UNI

Business news