INDIA GDP GROWTH RATE

The Gross Domestic Product (GDP) in India expanded 6.9 percent in the third quarter of 2011 over the previous quarter. Historically, from 2000 until 2011, India's average quarterly GDP Growth was 7.45 percent reaching an historical high of 11.80 percent in December of 2003 and a record low of 1.60 percent in December of 2002. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Services are the major source of economic growth, accounting for more than half of India's output with less than one third of its labor force. The economy has posted an average growth rate of more than 7% in the decade since 1997, reducing poverty by about 10 percentage points.

INDIA CURRENT ACCOUNT India reported a current account deficit equivalent to 16.9 Billion USD in the third quarter of 2011. India is leading exporter of gems and jewelry, textiles, engineering goods, chemicals, leather manufactures and services. India is poor in oil resources and is currently heavily dependent on coal and foreign oil imports for its energy needs. Other imported products are: machinery, gems, fertilizers and chemicals. Main trading partners are European Union, The United States, China and UAE .

INDIA IMPORTS India imports were worth 37753 Million USD in December of 2011. India is poor in oil resources and is currently heavily dependent on coal and foreign oil imports for its energy needs. Other imported products are: machinery, gems, fertilizers and chemicals. Main import partners are European Union, Saudi Arabia and United States.

INDIA EXPORTS
India exports were worth 25016 Million USD in December of 2011. Exports amount to 22% of Indias GDP. Gems and jewelry constitute the single largest export item, accounting for 16 percent of exports. India is also leading exporter of textile goods, engineering goods, chemicals, leather manufactures and services. Indias main export partners are European Union, United States, United Arab Emirates and China.

INDIA INTEREST RATE

The benchmark interest rate (reverse repo) in India was last reported at 7.5 percent. In India, interest rate decisions are taken by the Reserve Bank of India's Central Board of Directors. The official interest rate is the benchmark repurchase rate. From 2000 until 2010, India's average interest rate was 5.82 percent reaching an historical high of 14.50 percent in August of 2000 and a record low of 3.25 percent in April of 2009.

USD:INR - INDIAN RUPEE EXCHANGE RATE

The Indian Rupee exchange rate appreciated 3.93 percent against the US Dollar during the last month. During the last 12 months, the Indian Rupee exchange rate depreciated 7.67 percent against the US Dollar. Historically, from 1973 until 2012 the USDINR exchange averaged 30.44 reaching an historical high of 53.72 in December of 2011 and a record low of 7.19 in March of 1973. The Indian Rupee spot exchange rate specifies how much one currency, the USD, is currently worth in terms of the other, the INR. While the Indian Rupee spot exchange rate is quoted and exchanged in the same day, the Indian Rupee forward rate is quoted today but for delivery and payment on a specific future date.

INDIA GOVERNMENT BUDGET

India reported a government budget deficit equivalent to 5.10 percent of the Gross Domestic Product (GDP) in the fiscal year ending March 2011. Government Budget is an itemized accounting of the payments received by government (taxes and other fees) and the payments made by government (purchases and transfer payments). A budget deficit occurs when an government spends more money than it takes in. The opposite of a budget deficit is a budget surplus.

INDIA BUSINESS CONFIDENCE

In India, business confidence declined to 125.4 in October of 2011 from 145.2 in July of 2011. In India, the NCAER (National Council of Applied Economic Research) - MasterCard Worldwide Index of Business Confidence measures the level of optimism that people who run companies have about the performance of the economy and how they feel about their organizations prospects. Survey incorporates four indicators: overall economic conditions six months from now, financial position of firms six months from now, investment climate and capacity utilisation level. Data is collected through personal interviews and questionnaires sent to a diverse range of businesses across various regions in India.

INDIA GDP PER CAPITA

The GDP per capita in India was last reported at 823 US dollars in December of 2010, according to the World Bank. Previously, the GDP per capita in India standed at 766 US dollars in December of 2009. The GDP per capita in India is obtained by dividing the countrys gross domestic product, adjusted by inflation, by the total population. Historically, from 1960 until 2010, India's average GDP Per Capita was 335.05 dollars reaching an historical high of 822.76 dollars in December of 2010 and a record low of 180.86 dollars in December of 1960.

INDIA UNEMPLOYMENT RATE

The unemployment rate in India was last reported at 9.4 percent in 2009/10 fiscal year. From 1983 until 2000, India's Unemployment Rate averaged 7.20 percent reaching an historical high of 8.30 percent in December of 1983 and a record low of 5.99 percent in December of 1994. The labour force is defined as the number of people employed plus the number unemployed but seeking work. The non labour force includes those who are not looking for work, those who are institutionalized and those serving.

INFRASTRUCTURE INDUSTRY
INTRODUCTION:
The real estate sector in India assumed greater prominence with the liberalisation of the economy, as the consequent increase in business opportunities and labour migration led to rising demand for commercial and housing space. At present, the real estate and construction sectors are playing a crucial role in the overall development of Indias core infrastructure. The real estate industrys growth is linked to developments in the retail, hospitality and entertainment(hotels, resorts, cinema theatres) industries, economic services (hospitals, schools) and information technology (IT)-enabled services (like call centres) etc and vice versa. The Indian real estate sector has traditionally been dominated by a number of small regional players with relatively low levels of expertise and/or financial resources. Historically, the sector has not benefited from institutional capital; instead,it has traditionally tapped high net-worth individuals and other informal sources of financing, which has led to low levels of transparency. This scenario underwent a change with in line with the sectors growth, and as of today, the real estate industrys dynamics reflect consumers expectations of higher quality with Indias increasing integration with the global economy.

1. RESIDENTIAL REAL ESTATE

Residential real estate industry has witnessed stupendous growth in the past few years owing to the following reasons: Continuous growth in population Migration towards urban areas Ample job opportunities in service sectors Growing income levels Rise in nuclear families Easy availability of finance Demand for houses increased considerably whilst supply of houses could not keep pace with demand thereby leading to a steep rise in residential capital values especially in urban areas.

Broadly, residential real estate industry can be divided into four growth phases, as can be seen in the chart below:

Housing growth trajectory Phases

Phase I (2001-2005) was an initial growth phase with stabilising residential real estate prices following the global recovery post the dot com bust and 9/11 terrorist attacks in New York. At the same time, there was steady growth in Indian economic activity, noteworthy recovery in IT/ITES industry, growing urbanisation and a rising trend towards nuclear families. Phase II (2006-2008) was a high growth phase where high demand for residential real estate led to doubling of housing prices. Demand rapidly increased due to Indias growing population, accentuated urbanisation, rising disposable incomes, rapidly growing middle class and youth population, low interest rates, fiscal incentives on interest and principal payments for housing loans and heightened customer expectations. Phase III (2009-2010) witnessed substantial slowdown and part recovery in demand because of the global economic downturn, which led to a decline in affordability and tight liquidity. The retreat of various real estate investors, accompanied by slowdown in the capital markets, has resulted in oversupply and falling prices. Phase IV (2011-2014) is expected to remain a consolidation phase after slowdown. Demand is expected to remain strong with capital values witnessing modest rise. This period is expected to witness substantial supply of housing especially in urban areas.In spite of the stupendous growth witnessed in the past 10 years, substantial housing shortage is still prevalent in India.According

to CRISIL Research, housing shortage in India is estimated at 78.7 million units at the end of Phase II. The overall housing shortage in India is likely to decline to 75.5 million units by the end of Phase IV.

However, housing shortage in urban areas will continue to rise owing to migration towards urban areas and increasing trend of nuclear families. Housing shortage in urban areas is estimated at 19.3 million units at the end of 2008, up from 15.1 million units at the start of 2005. Housing shortage in urban areas is likely to touch a walloping 21.7 million units by the end of 2014. Rural areas, on the other hand, will witness a reduction in housing shortage due to migration and conversion of kutcha houses into pucca houses. The governments continuous focus on improving the housing situation, especially for population below poverty line, under schemes like Indira Awaas Yojna, Rajeev Gandhi Aawaas Yojna, Two Million Housing Programme, is expected to reduce housing shortage in rural areas. Rural housing shortage is expected to decline to 53.8 million units by 2013-14 from 59.4 million units at the end of 2008.

Recent industry trends

Despite strong fundamentals backing the residential real estate, the segment is highly influenced by economic cycles. Owing to global meltdown, the residential real estate market in India too witnessed an astounding fall in demand and capital values, between first half of 2008 and first half of 2009. However, the sector experienced a pickup in demand during the second half of 2009 across major cities mainly attributed to improvement in economy. Residential projects across cities saw several new mid-income housing projects being launched by developers to attract potential buyers. Demand for houses mounted as the global economy improved bringing back financial confidence to the home buyers along with low interest rates. End-users, who had put their purchasing plans on hold due to the fall in affordability levels and job-related uncertainties, started booking houses. Improvement in demand also brought back the construction activity to back on track. CRISIL Research expects around 668 million square feet of residential supply to be constructed between 2009-11 in top 10 cities (Mumbai, NCR, Bengaluru, Chennai, Kolkata, Ahmedabad, Kochi, Chandigarh, Pune and Hyderabad). These top 10 cities account for around 15-20 per cent of overall supply in urban India.

Outlook
Going forward, strong underlying demand would continue to aid an improvement in absorption levels in major cities. Average residential capital values which declined by 18-20 per cent in March 2009 from the highs witnessed during the first half of 2008, remained more or less stable between March and November 2009 in most of the places. Mumbai led the recovery and witnessed an 11 per cent spurt in residential capital values between March-November 2009. According to CRISIL Research, capital values are further expected to witness a modest increase backed by better job security owing to higher growth in the economy in 2010 and 2011. Absorption levels are also expected to remain strong during the economic recovery.

2. COMMERCIAL REAL ESTATE

The commercial office space in India has evolved significantly in the past 10 years due to change in business environment. The growth of commercial real estate has been driven largely by service sectors, especially IT-ITeS. Previously commercial properties were concentrated towards CBD (Central Business District) areas in large cities. However, with the emergence of IT-ITeS, which had huge office space requirement, commercial development started moving towards city suburbs. It resulted in multifold development of city outskirts and suburbs like Gurgaon near New Delhi, Bandra and Malad in Mumbai, and the Electronic city in Bangaluru. In addition, over the last 10 years, locations such as Bengaluru, Gurgaon, Hyderabad, Chennai, Kolkata and Pune have established themselves as emerging destinations for commercial development, which are competing with traditional business destinations such as Mumbai and Delhi. Tax sops on the profits of IT-ITeS companies also led to stupendous development of IT Parks and SEZs. Demand for office space is directly linked to addition in number of employees, which in turn is dependent on economic growth. When economy slows down, companies hold their expansion plans leading to lower demand for office space. The demand for commercial real estate was on an upswing between 2005 and early 2008, driven by exceptionally high employee additions in the IT/ITeS sector. The strong demand from domestic IT/ITeS companies and captives of large global players was a result of increased business, primarily from the US and European markets. A healthy domestic economy coupled with aggressive corporate expansion plans led to strong demand from sectors such as Banking, Financial Services and Insurance (BFSI) and media and entertainment. Furthermore, limited supply of quality office space led to a sharp increase in lease rentals for commercial office space in most micro-markets, with an average increase of 108 per cent between 2005 and early 2008, according to CRISIL Research. CRISIL Research has estimated supply of office space at around 172 million square feet in 10 major cities (Mumbai, NCR, Bangaluru, Kolkata, Chennai, Hyderabad, Pune, Ahmedabad, Chandigarh and Kochi) during 2009-11. Expected demand during the same period is 70 million square feet Supply in the top 10 cities account for approximately 70-75 per cent of total office space supply in the country.

Recent trends
During the economic slowdown, demand for commercial real estate dropped sharply leading to sharp correction in lease rentals since the second half of 2008. Lease rentals have corrected in the range of 25-50 per cent during the first half of 2008. With demand slowing substantially, most of the urban cities are faced with a humungous oversupply of office space. Subdued demand and rentals has impacted the execution adversely in addition to cancellation of many projects.

Downturn in the commercial real estate market in India, which had commenced during the second half of 2008, continued during the second half of 2009. The sustained decline was largely the result of postponement of expansion plans by corporates, which adversely impacted demand for office space. IT/ITeS, which had been a major demand driver for the sector in the last 2 years, increased utilisation rates of existing commercial space by increasing the number of shifts. The resultant drop in demand for commercial office space led to correction of lease rentals in the range of 25-50 per cent since the peaks touched during the first half of 2008. According to CRISIL Research, in 2010, commercial office lease rentals are expected to decrease by an additional 3 per cent at most of the micro markets, in view of the considerable oversupply across cities and lack of adequate demand.

3. ORGANISED RETAIL REAL ESTATE

The retail industry in India has witnessed a slowdown in the past year after increasing at a CAGR of 28 per cent in the 2005-08 period. The industry is expected to increase at a CAGR of 14 per cent in the short term and 19 per cent over the next 5 years. Organised retail penetration has grown to about 5.6 per cent in 2009-10, which is further expected to increase to about 7.3 percent by 2012-13. In the past few years, Indias organised retail industry has posted high growth rates given improvement in key driving factors namely, lavish lifestyles, high disposable incomes and a propensity to spend. Indias retail market was mainly unorganised until early 2000.

Demandsupply situation
Keeping in step with growth in the organised retail market, the retail real estate market recorded an increase in demand. The supply of organised retail real estate, which was mainly concentrated in Tier I cities until a few years back, spread to Tier II and Tier III cities as well. Cashing in on the retail real estate market boom, developers in most cities announced new malls, which indicated a large amount of supply coming up in 2008. This, in turn, created an excess supply in the existent weak demand scenario, a resultant of the economic slowdown. The real estate sector was significantly hit with the downturn in late 2008. A sector that was riding high on the

economic boom until recently found itself grounded by the economic slump. In addition, the concentration of such developments rose given the supply of multiple malls in cities. This resulted in shrinking catchment areas and lower footfalls for the existing malls. The sudden downturn not only forced developers to postpone the launch of new projects but also delay those under construction. A number of plans went back to the drawing boards to avoid coming on-stream in this weak market. Going forward, organised retailing is expected to grow with revival in economy and a strong growth outlook; however, the planned supply in the retail real estate market is much higher than the demand.

Absorption to be lower than supply

The organised retail industry is expected to increase at 14 per cent CAGR over the short term whereas the total retail space available is expected to increase at a CAGR of 36 per cent from the current 60 mn square feet to 110 mn square feet by 2011. Hence, absorption is expected to be lower than the supply with the oversupply situation likely to continue in most of the cities.

Trends in lease rentals

In the 4-year period, 2005 to 2008, demand for retail space was higher than the supply, leading to an increase in lease rentals on account of increase in footfalls and penetration of organised retail. During the period, lease rentals increased by 95 per cent (average across 10 major cities). However, after 4 consecutive years of rising lease rentals, 2009 witnessed a sharp decline in lease rentals (average 45 per cent decline) given the economic slowdown. Post the crash of late 2008, the Indian retail real estate market retailers revaluated expansion plans and renegotiated with developers in an attempt to bring down lease rentals in malls. This impacted the development of new retail malls and most of the developers delayed their construction plans. Lease rentals declined at an average of 14 per cent in 2009 with the National Capital Region (NCR), specifically Noida and Greater Noida, witnessed the sharpest fall in retail lease rentals at

31 per cent. Concentration of malls in several areas of NCR gave rise to a skewed demandsupply scenario, leading to relatively high vacancy levels. CRISIL Research estimates the actual supply for 2009-2011 to be 50 mn square feet with the larger share of supply (about 27 per cent) expected to come up in Mumbai.

Lease rentals to skid further by 6 per cent in 2010

The retail industry has seen a marginal recovery in the recent past due to the economic revival, better job prospects and higher disposable income given the sharp rise in equity markets. Going forward, CRISIL Research expects retailers to remain cautious about their expansion plans despite the industry showing signs of revival. In spite of rentals reducing to realistic levels in malls, retailers are tweaking the size of stores to ensure viability. Retailers are now eyeing prime high streets and mall spaces for expansion plans, considering rentals in these areas have corrected notably following reduced demand. Considering the large number of upcoming malls, we expect retail lease rentals to fall further in 2010 on an average by 6 per cent in view.

PREDICTION
The Reserve bank of India (RBI) admitted recently that the interest rate cycle had peaked and that further rate hikes may not be warranted. The current phase of monetary tightening ,which began in January 2010 with a 75 basis points hike in the CRR to 5.75% ,has seen the central bank increase the repo rate 13 times to the current 8.5%. The central bank is wary of the downside risks to its growth projection of 8% driven by a deceleration in investment and is a matter of serious concern. In fact , while retaining its inflation projection at 7% for March 2012 ,RBI announce its growth projection for 2011-12 in its third quarter review. Meanwhile the bond markets rallied with the central bank observing that there was no stress in the money market. The RBI governor said liquidity would be managed through Open Market Operations (OMO). The equity market has also welcomed the pause in interest rate tightening . All in all, it signals March to begin an easy tide for home buyers.

THE INDIAN BANKING SECTOR

Without a sound and effective banking system in India it cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors. For the past three decades India's banking system has several outstanding achievements to its credit. It is no longer confined to only metropolitans or cosmopolitans in India; in fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons of India's growth process. The government's regular policy for Indian bank since 1969 has paid rich dividends with the nationalization of 14 major private banks of India. Not long ago, an account holder had to wait for hours at the bank counters for getting a draft or for withdrawing his own money. Today, he has a choice. Gone are days when the most efficient bank transferred money from one branch to other in two days. Now it is simple as instant messaging or dial a pizza. Money has become the order of the day. Post Independence In 1948, the Reserve Bank of India, India's central banking authority, was nationalized, and it became an institution owned by the Government of India. In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India." The Banking Regulation Act also provided that no new bank or branch of an existing bank may be opened without a license from the RBI, and no two banks could have common directors. Liberalization The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. In the early 1990s the then Narsimha Rao government embarked on a policy of liberalization and gave licenses to a small number of private banks, which came to be known as New Generation techsavvy banks, which included banks such as Global Trust Bank (the first of such new generation banks to be set up) which later amalgamated with Oriental Bank of Commerce, UTI Bank (now re-named as Axis Bank), ICICI Bank and HDFC Bank.

RECENT DEVELOPMENT IN BANKING SECTOR A retrospect of the events clearly indicates that the Indian banking sector has come far away from the days of nationalization. The Narasimhan Committee laid the foundation for the reformation of the Indian banking sector. Constituted in 1991, the Committee submitted two reports, in 1992 and 1998, which laid significant thrust on enhancing the efficiency and viability of the banking sector. As the international standards became prevalent, banks had to unlearn their traditional operational methods of directed credit, directed investments and fixed interest rates, all of which led to deterioration in the quality of loan portfolios, inadequacy of capital and the erosion of profitability. The recent international consensus on preserving the soundness of the banking system has veered around certain core themes. These are: effective risk management systems, adequate capital provision, sound practices of supervision and regulation, transparency of operation, conducive public policy intervention and maintenance of macro economic stability in the economy. Until recently, the lack of competitiveness vis--vis global standards, low technological level in operations, over staffing, high NPAs and low levels of motivation had shackled the performance of the banking industry. However, the banking sector reforms have provided the necessary platform for the Indian banks to operate on the basis of operational flexibility and functional autonomy, thereby enhancing efficiency, productivity and profitability. The reforms also brought about structural changes in the financial sector and succeeded in easing external constraints on its operation, i.e. reduction in CRR and SLR reserves, capital adequacy norms, restructuring and recapitulating banks and enhancing the competitive element in the market through the entry of new banks. The reforms also include increase in the number of banks due to the entry of new private and foreign banks, increase in the transparency of the banks balance sheets through the introduction of prudential norms and increase in the role of the market forces due to the deregulated interest rates. These have significantly affected the operational environment of the Indian banking sector. To encourage speedy recovery of Non-performing assets, the Narasimhan committee laid directions to introduce Special Tribunals and also lead to the creation of an Asset Reconstruction Fund. For revival of weak banks, the Verma Committee recommendations have laid the foundation. Lastly, to maintain macroeconomic stability, RBI has introduced the Asset Liability Management System. The competitive environment created by financial sector reforms has nonetheless compelled the banks to gradually adopt modern technology to maintain their market share. Thus, the declaration of the Voluntary Retirement Scheme accounts for a positive development reducing the administrative costs of Public Sector banks. The developments, in general, have an emphasis on service and technology; for the first time that Indian public sector banks are being challenged by the foreign banks and private sector banks. Branch size has been reduced considerably by using technology thus saving man power.

The deregulation process has resulted in delivery of innovative financial products at competitive rates; this has been proved by the increasing divergence of banks in retail banking for their development and survival. In order to survive and maintain strong presence, mergers and acquisitions has been the most common development all around the world. In order to ensure healthy competition, giving customer the best of the services, the banking sector reforms have lead to the development of a diversifying portfolio in retail banking, and insurance, trend of mergers for better stability and also the concept of virtual banking.

SWOT ANALYSIS OF BANKING SECTOR STRENGTH Indian banks have compared favorably on growth, asset quality and profitability with other regional banks over the last few years. The banking index has grown at a compounded annual rate of over 51 per cent since April 2001 as compared to a 27per cent growth in the market index for the same period.

Policy makers have made some notable changes in policy and regulation to help strengthen the sector. These changes include strengthening prudential norms, enhancing the payments system and integrating regulations between commercial andco-operative banks.

Bank lending has been a significant driver of GDP growth and employment.

Extensive reach:

The vast networking & growing number of branches & ATMs. Indian banking system has reached even to the remote corners of the country.In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks incomparable economies in its region.

WEAKNESS Public Sector Banks need to fundamentally strengthen institutional skill levels especially in sales and marketing, service operations, risk management and the overall organisational performance ethic & strengthen human capital. banks also have the need to fundamentally strengthen skill levels.

segments and geographies. strictions on capital availability and deployment, lack of institutional support infrastructure, restrictive labour laws, weak corporate governance and ineffective regulations beyond Scheduled Commercial Banks (SCBs), unless industry utilities and service bureaus. Refusal to dilute stake in PSU banks: The government has refused to dilute its stake in PSU banks below 51% thus choking the headroom available to these banks for raining equity capital. Impediments in sectoral reforms: Opposition from Left and resultant cautious approach from the North Block in terms of approving merger of PSU banks may hamper their growth prospects in the medium term. OPPORTUNITY The market is seeing discontinuous growth driven by new products and services that include opportunities in credit cards, consumer finance and wealth management on the retail side, and in fee-based income and investment banking on the whole sale banking side. These require new skills in sales & marketing, credit and operations.

With increased interest in India, competition from foreign banks will only intensify.

Given the demographic shifts resulting from changes in age profile and household income, consumers will increasingly demand enhanced institutional capabilities and service levels from banks.

 New private banks could reach the next level of their growth in the Indian banking sector by continuing to innovate and develop differentiated business models to profitably serve segments like the rural/low income and affluent/HNI segments; actively adopting acquisitions as a means to grow and reaching the next level of performance in their service platforms. Attracting, developing and retaining more leadership capacity

Foreign banks committed to making a play in India will need to adopt alternative approaches to win the race for the customer and build a value-creating customer franchise in advance of regulations potentially opening up post 2009.

Reach in rural India for the private sector and foreign banks.

Liberalization of ECB norms: The government also liberalised the ECB norms to permit financial sector entities engaged in infrastructure funding to raise ECBs. This enabled banks and financial institutions, which were earlier not permitted to raise such funds, explore this route for raising cheaper funds in the overseas markets. Hybrid capital: In an attempt to relieve banks of their capital crunch, the RBI has allowed them to raise perpetual bonds and other hybrid capital securities to shore up their capital. If the new instruments find takers, it would help PSU banks, left with little headroom for raising equity.

THREATS Threat of stability of the system: failure of some weak banks has often threatened the stability of the system. Rise in inflation figures which would lead to increase in interest rates.

Increase in the number of foreign players would pose a threat to the Public Sector Bank as well as the private players.

BANKING STRUCTURE IN INDIA According to the RBI in March 2009, number of all Scheduled Commercial Banks(SCBs) was 171 of which, 86 were Regional Rural Banks and the number of Non-Scheduled Commercial Banks including Local Area Banks stood at 5. Taking into account all banks in India, there are overall 56,640 branches or offices, 893,356employees and 27,088 ATMs. Public sector banks made up a large chunk of the infrastructure, with 87.7 per cent of all offices, 82 per cent of staff and 60.3 per cent of all automated teller machines (ATMs

TYPES OF BANKS AND BANKING ACTIVITIES Scheduled And Non-Scheduled Banks In India the central banking authority is the Reserve Bank of India. It is also referred toas the Apex Bank. It functions under an act called The Reserve Bank of India Act, 1934. All the banks and other financial institutions operating in India come under themonitoring and control of RBI. RBI controls the banking sector in India through an Actcalled The Banking Regulations Act 1949. In the past, when there were very few banks,RBI used to include all the scheduled banks in its schedule. Now a day, when thenumber of banks has gone up substantially, RBI has to change the schedule every nowand then, hence irrespective of whether a bank finds its name in the schedule to the RBI Act or not, its schedule status can be found out from its banking license. A Bank that isnot a scheduled bank is referred to as non scheduled bank even in it is having bankinglicense.The difference lies in the type of banking activities that a bank can carry out in India. Inthe case of a scheduled bank, it is licensed by the RBI to carry on extensive bankingoperations including foreign exchange operations, whereas, a non-scheduled bank cancarry out only limited operations. There are a number of factors considered by RBI todeclare a bank as a scheduled bank, like the amount of share capital, type of bankingactivities that the bank is permitted to carry out etc. An example of difference between ascheduled and nonscheduled bank is dealing in Foreign Exchange.

Commercial and Co-operative Banks Commercial banks are by far the most widespread banking institutions in India. They provide major products and services in India. A commercial bank is run on commerciallines, for profits of the organization. A co-operative bank on the other hand is run for the benefit of a group of members of the co-operative body. A co-operative bank distributes only a very small portion of its profit as dividend, retaining a major portion of it in businessAt present, In India, the banks can be bifurcated into following categories

Public Sector Banks or Nationalized Banks, which are commercial and scheduled. Examples: State Bank of India, Bank of India etc. 1. Public Sector Banks, which are co-operative and non-scheduled: These are state owned banks like the Maharashtra State Co-operative Bank, Junnar Co-operative Society etc. 2. Private Sector Banks, which are commercial and scheduled These could beforeign banks, as well as Indian Banks.Examples: Foreign Banks- CITI Bank, Standard Chartered Bank etc.Indian Banks- Bank of Rajasthan Limited, VYSYA Bank Limited etc.

3. Private Sector Banks, which are co-operative and scheduledThese are large co-operative sector banks but which are scheduled banks. Examples: Saraswat Co-operative Bank Limited, Cosmos Co-operative Bank Limited etc. 4. Private Sector Banks, which are co-operative and non-scheduled These are small co-operative banks but which are non-scheduled. Examples: Local co-operative banks which operate within a town or a city. Example: Mahesh Sahakari Bank Limited.

Regional Rural Banks. These are state owned. These banks have been established with a view to developing the rural economy by providing, for the purpose of development of agriculture, trade, commerce, industry and other productive activities in the rural areas, credit and other facilities, particularly to the small and marginal farmers, agricultural labourers and artisans and small entrepreneurs. Gramin Banks, that are also state owned. They operate at still smaller level than RRBs and serve at village level. Foreign banks, These banks have Head Office outside India and branch in India, Besides, the Reserve Bank of India (hereinafter referred to as RBI) acts as the central bank of the country. RBI is responsible for development and supervision of the constituents of the Indian financial system (which comprises banks and non-banking financial institutions) as well as for determining, in conjunction with the central Government, the monetary and credit policies. They are also controlled by RBI. Retail Banking Vs Wholesale Banking Whole sale banking typically involves a small number of very large customers such as big corporations and governments, whereas retail banking consists of a large number of small customers who consume personal banking and small business services. Wholesale banking is largely inter-bank; banks use the inter-bank markets to borrow from or lend to other banks/ large customers, to participate in large bond issues and to engage in syndicated lending. Retail banking is largely intra-bank; the bank itself makes many small loans. Most of the Indian public sector banks practice retail banking; they are slowly practicing the concept of wholesale banking. On the other hand, most of the well established foreign banks in India and the recent private sector banks practice wholesale banking alongside retail banking. As a result of this difference, the composition of income for a public sector bank is different. While a major portion of the income for large public sector banks is from lending operations, in the case of any private sector bank in India, the amount of non-operating income (other than interest income) is substantially higher. The composition of other income is commission on bills/ guarantees/ letters of credit, counseling fees, syndication fees, credit report fees, loan processing fees, correspondent bank charges etc. Global Banking Global Banking activities are an extension of various activities listed above into the international market. Global banking primarily consists of trade in international banking services and establishment of branches and subsidiaries in foreign countries.

Special kinds of Bank branches Most Banks in India have special kind of branches. This is done to reap benefits of specialization as activities done by these braches are quite complex and require specialized knowledge and attention. Types of some special branches are1. Foreign exchange branches2. NPA recovery branches3. Service branches dealing in Clearing house operations/Corporate banking and Industrial finance branches4. Personal banking branches5. Housing finance branch6. SSI branches7. Agricultural finance branches What are the sources of funds for banks in India? The banks in India generate their funds from two types of sources: Long-Term Sources: 1. Tier one and Tier two Capital in the form of equity/subordinate debts/debentures/preference shares.2. Internal accrual generated out of profits.3. Long-term fixed deposits generated from public and corporate clients, financial institutions, and mutual funds, etc.4. Long-term borrowings from financial institutions like NABARD/SIDBI.

Short-Term Sources: 1. Call money market, i.e., funds generated among inter banking transactions where there is online trading of money between bankers.2. Fixed deposits generated from public and corporate clients, FIs, and MFs, etc.3. Market-linked borrowings from RBI.4. Sale of liquid certificate deposits in the open market.5. Borrowing from RBI under Repo (Repurchase option).6. Short and medium-term fixed deposits generated from public and corporate clients, mutual funds, and financial institutions, etc.7. Floating in current and saving accounts.8. Short-term borrowings from FIs by way of rated papers placed, etc.