IndusInd Bank to pick up 3-5% stake in Aviva Life

Private sector lender IndusInd Bank is set to pick up three-five per cent stake in private sector life insurer Aviva Life Insurance. According to sources privy to the development, as part of the deal, apart from offering shares, Aviva Life would also pay an advance commission, taking the total valuation of the deal to around Rs 1,000 crore.

“The final modalities are being worked out. IndusInd Bank would have a board meeting later this week, after which the deal would be announced,” a source said.

The private sector lender is already a corporate agent for Aviva Life, a joint venture between fast-moving consumer goods major Dabur Group and UK’s Aviva, with the latter holding 26 per cent stake.

Earlier this year, Axis Bank had picked up a stake of four per cent in Max New York Life, in a deal valued at around Rs 75 crore. According to recent reports, Syndicate Bank is expected to pick up six per cent stake in Birla Sun Life Insurance Company. As a part of the deal, Birla Sun Life has offered to pay Rs 600 crore as advance commission to the public sector lender.

The Dabur Group has been looking to dilute a part of its holding in Aviva Life Insurance. The insurer was also among the three companies short-listed by Punjab National Bank for its insurance joint venture. However, in July, the Delhi-based bank entered into an agreement with Metlife to buy 30 per cent stake in Metlife India.

Aviva Life was also in talks with public sector lender Syndicate Bank, which had floated a request for proposal for a joint venture in the life insurance segment in April.

Aviva Life started its operations in 2002 and promoters of the company had infused Rs 2,004 crore till March 2011. The company had declared a profit of Rs 29 crore in 2010-11. During the April-December period of the current financial year, Aviva Life collected premiums worth Rs 466.14 crore through new policies, a marginal fall compared with Rs 469.30 crore collected in the corresponding period a year ago.

Under the bancassurance model, banks offer their branch networks as low-cost distribution channels to insurance companies. Last month, the Insurance Regulatory and Development Authority (Irda) brought out draft guidelines on bancassurance. These advocated opening up of the bancassurance channel and accordingly, Irda had divided the country into three zones

Source: Business Standard

IndusInd Bank Q3 net profit up 34%

Mumbai: Private sector lender IndusInd Bank posted 34 per cent increase in net profit at Rs 205.9 crore for the third quarter ended December 31.

The bank had reported a net profit of Rs 153.8 crore in the corresponding quarter last fiscal, IndusInd Bank said in a filing with the BSE.

The total income of the lender also increased to Rs 1,654.8 crore during the quarter from Rs 1,110.8 crore over the year-ago period.

The bank's Net Interest Income (NII) stood at Rs 430.65 crore against Rs 363 crore in the same period previous year, registering a growth of 19 per cent.

For the first nine months of 2011-12, the bank reported 43 per cent rise in net profit at Rs 579.23 crore compared to Rs 405.56 crore in the same period a year ago.

The bank had a total income of Rs 4,579.9 crore in the first nine months compared to Rs 3,072.5 crore in the previous financial year.

IndusInd Bank is among the few private sectors banks to raise savings bank deposit rate in October after the central bank deregulated SB deposit rates.

It has raised its savings account interest rate up to six percent along with raising rates on its non-resident external accounts to 9.25 percent for deposits up to Rs one crore.

"After raising interest rates in our deposit accounts, we have witnessed a rise of around 22 percent in volume terms over the second quarter. Our new customer acquisition is around 50,000 per month in the post-hike period," Sobti said.

The private sector lender also reported an increase in asset quality in the third quarter with fall in non-performing assets (NPAs).

"While our gross NPA fell to 1.02 percent from 1.21 a year earlier, the net NPA decreased to 0.29 percent from 0.36 percent an year ago period," he said, adding the provisioning coverage ratio stood at 72 percent by the end of the third quarter.

During the first nine months period, its advances grew 30 percent to Rs 32,426 crore and deposits rose 32 percent to Rs 40,558 crore.

The bank has a capital adequacy ratio of over 15 percent at the end of the third quarter.

Source: Financial Express

Punjab National Bank raises NRE deposit rates to 9.25 per cent

MUMBAI: The second largest public sector lender Punjab National Bank today increased the interest rates on NRE term deposits ranging one to five year period to 9.25 percent. The rates will be effective from January 1, the bank said in a filing to the BSE.

Last week, many other banks HDFC Bank, Yes Bank, Federal Bank, Allahabad Bank and Dhanlaxmi Bank among others had steeply increased the interest rates on select maturities of NRE deposits.

HDFC Bank increased the interest rates on NRE deposits of Rs one crore and above with a maturity of one to two year to nine percent against 3.82 percent earlier. It has, however, left the NRO deposit rates unchanged.

The state-run Allahabad Bank has also raised its NRE deposits up to 7.5 percent. The Kolkata-based bank will now offer 7.5 percent for one to two years tenor (against 3.82 percent earlier), 7 percent on deposits of two to three years (from 3.51 percent), and 6.75 percent for those above three years (from 3.64 percent).

Also, the Kochi-based Federal Bank and Laxmivilas Bank have also increased its interest rates on NRE deposits for various slabs in order to attract non-resident deposits. Another private sector lender IndusInd Bank also increased pricing 9.25 percent among the state-run banks Dena Bank offers the highest pricing at 9.6 percent. Similarly, Yes Bank came out with a 15 month-and-15 days to 16-month NRE deposit offer, promising depositors 9.60 percent interest.

Source: EconomicTimes

RBI cuts currency open position for banks by up to 75%

MUMBAI: The Reserve Bank of India has cut banks' net open position limits in currency trading by as much as 75% for some, and at least by half for most of the top traders, in its attempt to end speculation on the rupee, said three people familiar with the matter.

After robbing bank boards off the powers to determine the overnight positions, it is monitoring day transactions where it is liberal in intra-day trading positions which banks are not keen, said those people who did not want to be identified.

"It is quite drastic," said one of the bankers who have been directed to reduce positions without disclosing how much his bank's position has been reduced to. "For some of us, it is almost as good as nothing at all," he said.

RBI on December 15 unleashed a series of measures to arrest the fall of the rupee, including taking powers from the board to determine the overnight position, the net overnight dollar position a bank can hold, to save the rupee from falling steeply. It also took off the flexibility to cancel or rebook the forward contracts.

Hedging based on past three-year average imports was cut to 25%, from 75% making them deliverable. The domestic currency which has fallen about 20% this year, recovered from its lows of 54.20 after these measures, but has since started sliding again. It ended at 52.87/88 on Tuesday.

While the central bank's move has halted the sharp slide in the currency value, it could dry up liquidity in the currency market and reduce the earnings of many banks that have been benefitting from rupee volatility.

"Opportunity has been curtailed," says Moses Harding, head of economic research and asset and liability committee at IndusInd Bank. "Banks running proprietary positions will obviously take a hit on their other income. To that extent, banks' trading income will come down. Also, inter bank-volumes will start thinning," he added.

But the hedging activities of the corporations may not be hurt since the central bank has said the overnight positions could be breached, if it is for a client. "We are trying to cope with the fresh restriction," said another banker. "The open positions for some large banks which was about Rs 100 crore has been slashed to about Rs 50 crore," said the treasury head of a private sector bank.

"But the central bank has clarified that a bank could exceed NOOPLs if it is on account of a particular customer transaction."

Source: EconomicTimes

Bank of Baroda selected as best public sector bank in India: Report

Bank of Baroda and Karur Vysya Bank have been selected as the best banks in the public and private sectors, respectively, at the national level for this year by a jury appointed by the State Forum of Bankers Clubs in Kerala.

The awards in the various categories would be presented at a function here on December 17, the State Forum of Bankers Club President L R R Warrier and General Secretary K U Balakrishnan told reporters here.

Minister of State for Consumer Affairs, Food and Public Distribution K V Thomas will present the forum's 'Businessman of the Year' award to NRI businessman B Ravi Pillai, the Managing Director of the Dubai-headquartered RP Group of companies.

Kerala Finance Minister K M Mani will present the best bank award in the public sector category to Bank of Baroda Managing Director and CEO M D Mallaya, while State Excise Minister K Babu will present the best bank award in the private sector of K Venkitaraman, the CEO and Managing Director of Karur Vysya Bank.

Justice V R Krishna Iyer will present the best bank award in the rural development category to V K Saigal, the Chairman of North Malabar Gramin bank, and the best bank award in the new generation banks category to IndusInd Bank Ltd Managing Director and CEO Romesh Sobti.

Corporation Bank and Indian Overseas Bank were adjudged the second and third best banks in the public sector and Lakshmi Vilas and City Union Bank in the private sector, respectively.

Among the new generation private banks, YES Bank and Axis Bank have been selected for the second and third slots.

About 27 parameters, including the banks' deposits, advances and NAP level were taken into consideration while selecting the best banks, Balakrishnan said.

Source: EconomicTimes

IndusInd Bank may buy 3-5% in Aviva Life

Private sector lender IndusInd Bank is in talks with Aviva Life to acquire a minority stake in the company, said two people privy to the development. The Dabur Group, which holds 74 per cent stake in the life insurance company, would dilute three-five per cent stake if the deal works out.

"IndusInd Bank is interested in picking up a small stake in Aviva Life. Nothing has been finalised yet. The discussions are still on," said a source.

The sources, however, added the success of deal would depend on the final guidelines on bancassurance, which are expected to be released in the next two months. IndusInd Bank has a bancassurance tie-up with Aviva Life for selling the insurer's products through its branches.

Earlier this year, Axis Bank had acquired four per cent stake in Max New York Life for around Rs 75 crore.

While Aviva Life declined to comment for this story, IndusInd Bank said currently, it was not considering acquisition of stake in any insurance firm.

According to industry experts, many life insurers are looking to offer minority stake to banks to form long-term bancassurance partnerships. This also allows the domestic partner in the insurance firm to monetise a part of its investment. Under the bancassurance model, banks offer their branch network as a low-cost distribution channel for insurance companies to market their products.

Last week, a committee set up by the Insurance Regulatory and Development Authority had announced the draft guidelines on bancassurance. According to the guidelines, a bank could have a tie-up with a life insurer in one state. The current guidelines restrict banks from partnering more than one life insurer across the country for bancassurance businesses.

Aviva Life is a joint venture between fast-moving consumer goods major, the Dabur Group, and UK-based insurance company Aviva, which holds 26 per cent stake in the venture.

Source: Business Standard

IndusInd hopeful of posting 25-30% credit offtake this fiscal

Despite rise in interest rates and deteriorating macroeconomic environment, private sector lender IndusInd Bank has said it is hopeful of 25-30 per cent growth in advances in the current financial year.

“We are hopeful of posting 25-30 per cent growth in credit in this fiscal. Posting higher credit growth than the system will not be an issue for a mid-size bank like us,” IndusInd Bank Chief Operating Officer Mr Paul Abraham told PTI.

IndusInd posted a 29 per cent rise in its loan book to Rs 30,136 crore in the September quarter.

As per latest RBI data, non-food credit offtake from banks grew 18.5 per cent to over Rs 43.11 trillion in the 12 months to November 4 despite the higher interest rate. This is the first time since August that credit growth has fallen below the 19 per cent mark on a year-on-year basis.

Referring to the strain in the loan book, Abraham said the banking system as a whole is facing pressure from sectors like steel, power and textiles. “There is no perceptible pressure on mid-corporate and retail portfolio as of now. But, we are closely watching these accounts.”

During the July-September quarter, the private lender managed to maintain its asset quality. Its net non-performing asset (NPA) ratio was at 0.31 per cent, little changed from the previous quarter. Gross NPA ratio too almost remained unchanged at 1.09 per cent.

The Hinduja Group—promoted bank had earlier said it is following a cautious approach in extending new loans to firms that will be possibly impacted through currency fluctuations.

Abraham further said the bank is hopeful of logging in sound growth in deposits in the current fiscal.

IndusInd reported 45 per cent rise in net profit to Rs 193 crore from Rs 133 crore posted in the same period last year. Net interest income during the period rose 27 per cent to Rs 419 crore against Rs 330 crore a year ago.

Central bank prefers higher deposit and lower lending rates

Asks banks to settle for lower margins, boost efficiency.

The Reserve Bank of India has exhorted banks to improve the country’s savings growth rate by offering higher rates on deposits, even if it means bringing down the net interest margin (NIM).

“The NIM of the Indian banking system is higher than that in some of the other emerging markets, even after accounting for mandated social sector obligations such as priority sector lending and credit support for the government’s anti-poverty initiatives,” the central bank said in the Trend & Progress report on banking released here on Monday. NIM is broadly the difference between the interest earned and interest expenses.

The current term deposit rates are around 9.5 per cent for maturities between one and three years.

The RBI has also said lenders should give out loans at lower rates of interest to boost investment through efficient channelising of savings in the economy. According to the report released by the central bank, the average NIM for scheduled commercial banks on the whole increased to 3.69 per cent in 2010-11 from 3.29 per cent in 2009-10. “While a higher NIM contributes to profitability, it also implies a higher cost of financial intermediation in the economy, which is considered a sign of inefficiency,” the RBI explained.

The central bank also said savings bank deposits may no longer remain a cheap source of funds for banks.

“The upward revision in the savings bank deposit rate from 3.5 per cent to four per cent and deregulation of the interest rate on savings bank accounts may improve savings deposit mobilisation going forward. However, in a competitive environment, with the deregulation of interest rates, savings deposits will be no longer be less expensive as they were in the past,” the RBI said. Following the deregulation, four private sector banks, YES Bank, IndusInd Bank, Kotak Mahindra Bank and Ratnakar Bank, have raised the rate by 150-200 basis points. Public sector banks, which control more than 70 per cent of the deposit market, are yet to announce a hike in their savings bank interest rates.

The RBI noted savings bank mobilisation decelerated in 2010-11 and the shift of funds was towards term deposits, which offered attractive interest rates. While the growth in savings bank deposits was 21.8 per cent in 2010-11 as compared to 26.9 in the previous year, term deposit growth improved to 18.2 per cent from 12.9 per cent.

“An interesting development about the consolidated balance sheet of scheduled commercial banks in 2010-11 was the deceleration in the growth of savings bank deposits and demand deposits with a corresponding acceleration in the growth of term deposits. This could be due to the prevailing higher interest rate environment making term deposits more attractive as compared to demand and savings bank deposits,” the RBI said.

Source: Business Standard

Bank of Maharashtra not to raise savings bank rate

KOLKATA: Bank of Maharashtra said it is not going to raise savings bank rate immediately as it feels savings deposits are not interest sensitive.

Its chairman and managing director Anup Sankar Bhattacharya told ET: "I don't feel the urge to raise interest rate on savings deposit."

Reserve Bank of India has deregulated the savings bank rate last week which has prompted small private banks like IndusInd Bank, Kotak Mahindra Bank and Yes Bank to raise the rates. Earlier, the rate was fixed at 4%.

IndusInd Bank said it will offer 5.5% rate for balance up to Rs 1 lakh and 6% for over Rs lakh. Kotak Mahindra Bank and Yes Bank raised the rate 200 basis points to 6% for deposits over Rs 1 lakh.

Bhattacharya said the competition for savings deposit mobilisation will largely be limited in urban centres and his bank mobilises a bulk of its deposit from rural and semi-urban centres without much competition.

The Pune-based state-run bank has 1.20 lakh crore savings bank customers of whcih 1.14 lakh core have below Rs 1 lakh deposits.

Source: EconomicTimes

No savings bank rate hike for now, says SBI chief

The State Bank of India Chairman, Mr Pratip Chaudhuri, on Tuesday ruled out any immediate increase in its savings bank account rate, saying that the largest Indian bank is confident of the people’s continuing trust in the various facilities being provided to them by SBI.

“No major bank has increased the interest rates on deposits in SB accounts. Those who have done it are not big ones,” he told reporters after the annual conference of SBI’s Chief General Managers (CGMs) here, when asked whether SBI plans to increase the rates in the wake of deregulation of rates by the RBI in the second quarter monetary policy review last week.

Three private sector lenders — YES Bank, Kotak Mahindra Bank and IndusInd Bank — have increased the interest rates on SB deposits by up to 200 basis points over the last few days.

Replying to a question, Mr Chaudhuri said the Government is committed to infuse capital in SBI by March 2012 and take a decision on the kind of recapitalisation needed. “It is in the process in the Finance Ministry.”

The SBI chief said it was difficult to predict whether rate hikes would curb inflation. The RBI is targeting to bring it down to 7 per cent by March 2012. If that happens, the central bank could possibly halt any further hike, he added.

Asked about home loan tenures, he said since the average life of a new house is seen as 30 years, SBI is considering increasing tenure of home loans to up to 30 years.

He said there was no deceleration seen in the individual home loan accounts and, in particular, the demand was robust in the premium segment. But there is stress in some sectors of economy such as agriculture, textiles, engineering and SMEs. “Any slowdown in core industries is not good for favourable collection," he said.

IndusInd Bank hikes rates on savings a/c by 2% to 6%

Private sector lender IndusInd Bank has hiked interest rates on savings accounts by up to 200 basis points, offering clients a return of as much as 6% on their deposits.

Savings bank accounts with a balance of over Rs 1 lakh will earn interest of 6%, while others will be paid 5.5% interest, the bank said in a release.

The interest on savings bank accounts was earlier fixed at 4% before the RBI freed the rates.

IndusInd Bank has also raised its lending rates by 25 basis points. The new rates will be effective from tomorrow.

The decision to raise interest rates comes within a week of the Reserve Bank hiking key policy rates and freeing the interest rates on savings bank accounts.

Earlier, Kotak Bank and YES Bank raised interest rates on savings deposits in their banks up to 6%. The lenders have also revised their lending rates upward by 25 basis points.

IndusInd Bank has a network of 350 branches. It also has representative offices in London and Dubai.

Source: Business Standard

Interest, other incomes boost IndusInd Bank net 45% in Q2

IndusInd Bank's net profit increased by 45 per cent to Rs 193 crore for the July-September quarter from Rs 133 crore in the corresponding quarter last year.

The increase in profit was on account of a healthy rise in both net interest income and other income.

The operating environment in the second quarter was challenging, which saw a prolonged inflation cycle, prolonged tight liquidity cycle and a prolonged heightened interest rate cycle. Despite this the bank has shown a strong performance, said Mr Romesh Sobti, Managing Director, IndusInd Bank.

Though there was a slight decline in margins, it was lesser than expected. Going ahead, pressure on margins would continue as there does not seem to be any easing on the interest rate front, he said.

Loan book

The private sector bank's loan book has a larger share of the higher yielding consumer finance loans, where the yields are more than 16 per cent. The share of consumer finance in the total advances increased to 47 per cent from 42 per cent in the year-ago period.

Within the commercial vehicle financing portfolio, the second-hand commercial vehicle segment, which is high yielding, is now 10 per cent of the total commercial vehicle book. The aim is to increase it to about 20 per cent within a period of three years, said Mr S.V. Parthasarathy, Head, Consumer Finance.

Half-yearly results

For the six-month period from June to September, IndusInd Bank posted a 48 per cent rise in net profit to Rs 373 crore (Rs 252 crore). Other income increased to Rs 455 crore, up 35 per cent (Rs 336 crore), and net interest income increased 29 per cent to Rs 809 crore (Rs 625 crore).

Shares of IndusInd Bank closed at Rs 267.4, down 0.93 per cent, from Rs 269.9, on the BSE, on Tuesday.

RBI's automated data reporting norms to create Rs 500-cr mkt for IT firms

The Reserve Bank of India’s decision to automate the process of filing regulatory reports appears to have opened a door of opportunities for technology firms. Industry players expect banks to invest over Rs 500 crore over the next one year to migrate to the new system of automated data flow. Mid-sized software companies are also sensing an opportunity to cross-sell their other banking software products along with the automated data flow solution.

For instance, iCreate Software, a Bangalore-based information technology firm, has already secured contracts from HDFC Bank, IndusInd Bank and Dhanlaxmi Bank within three months of launching their automated data flow solution Biz$core ADF. IndusInd Bank has decided to use iCreate’s enterprise business intelligence solution along with the automated data flow software. While the latter will help the bank in meeting compliance needs, the business intelligence solution will aid in managing information effectively for business requirements.

Vivek Subramanyam, chief executive officer of iCreate, stressed the need for a technology solution to remove manual intervention in regulatory reporting. “Automated reporting increases the level of confidence on data, and decision-making becomes more accurate,” he told Business Standard. “There are 150 to 250 types of regulatory reports that banks have submit to RBI at periodic intervals. We are completely focussed on this opportunity and are engaging with the entire banking fraternity to position our Biz$core ADF solution.”

He said the company’s automated data flow solution cost “single to early double digits” crore of rupees.

In August, Ramco Systems, a software firm in Chennai, launched an automated data flow solution to help banks adhere to RBI guidelines on submission of regulatory reports without manual intervention. “Our ADF solution,” says Kamesh Ramamoorthy, chief operating officer of the Chennai-bases software firm, “can be deployed on any database management system. It can go live within weeks.”

However, some banks are likely to rely on their in-house teams to develop this software instead of outsourcing it to a technology firm. According to a senior official of a Mumbai-based private sector bank, if the in-house technology team of a bank is strong, then developing the software makes more sense as the lender can customise the solution according to its requirements. Another option is that the bank will build the software on its own, but will seek assistance of a technology firm for integrating it with the main system.

But most banks are expected to use third-party software as they have to comply with RBI’s guidelines within a specified time period. “It is not their core operations,” says an industry expert. “Hence, they will choose products of software companies to meet the guidelines.”

The new guidelines on automated regulatory report filing were released after the central bank was alarmed by the trend of eroding profitability of state-run banks soon after the retirement of the chairman. The move is aimed at minimising the scope of errors and manipulation in reports that are submitted to RBI at periodic intervals by banks.

Source: Business Standard

StanChart, SBI vie for Barclays' card biz

Mumbai: Standard Chartered and SBI Card are competing to buy Barclays' India credit cards business, sources with direct knowledge of the matter said, as the British bank looks to reduce its exposure to unsecured lending in the country.

Barclays has about 200,000 card holders in India and the book value of the business is roughly 2 billion rupees ($42 million), the sources said on Tuesday, declining to be named as the information is not yet public.

Final bids for the Barclays credit cards business in India are expected early next month and the deal is likely to be closed in a month, they said, adding the deal value could be at a small premium to the book value.

Barclays put its India cards unit up for sale earlier this year as part of a restructuring of its business in the country.

We are reviewing options for cards, a business which requires scale and we may be able to achieve that scale under new ownership, a Barclays India spokesman told Reuters, without giving details.

UK-based rival Standard Chartered, which has about 1.2 million card holders in India, and SBI Card, a joint venture between the country's top lender State Bank of India and GE Capital, declined to comment.

Barclays, which is set to cut about 3,000 jobs globally this year to reduce costs, said in July it had cut headcount in India as a result of merging the client relationship teams of its commercial and investment banking units.

Barclays Capital, the investment banking unit of the bank, and the company's commercial banking division, are combining the teams that will focus on servicing large corporate clients in India.

As part of the restructuring, the bank has also decided to focus only on affluent clients for retail banking and exit the credit card business, which is termed as unsecured business as the lending is not backed by any collateral.

Barclays neither have the distribution network nor the volume for cards business in India because of which the appraisal and servicing becomes very difficult, said one of the sources.

Fewer than 18 million of India's 1.2 billion people use credit cards. In China, a country with a slightly higher population, more than 200 million credit cards were in use as of a year ago.

Indian consumers, on the whole, have not fully embraced the idea of using credit cards, preferring debit cards instead, with roughly 230 million in circulation.

In April, mid-sized IndusInd Bank bought the local card business of Deutsche Bank and said it expects the acquisition to boost net interest margin and profits.

Foreign banks lack the branch networks of local lenders like ICICI Bank and HDFC Bank , India's biggest card issuers, but tend to attract the most well-heeled customers in a country where incomes are rising fast as the economy grows.

London-based Standard Chartered, one of the biggest foreign banks in India, expects growth of 30-35 percent in new customers this year, Shyamal Saxena, head of retail banking products, had said in July. ($1=47.6 rupees).

Source: Financial Express

New generation banks build 14 per cent market share in deposits & loans

MUMBAI: Since RBI last licensed private banks over 10 years ago, new generation private lenders have built a market share of 14% in deposits and also loans, which is much higher than the combined share of close to 12% of foreign banks, old generation private banks and regional rural banks.

That is a reflection of the impact created by these banks, which forced state-run banks to shake off their slothful way of functioning and focus on customers and better service standards and product offerings. In 1993-94, RBI granted in-principle approvals for 10 entities to promote private banks.

They included two finance companies - 20th Century Finance and CRB Finance - the Times Group and Hindujas, financial sector professionals Ramesh Gelli; Darshanjit Singh and Harpreet Singh, besides the ones promoted by HDFC, erstwhile UTI and IDBI and later the development financial institution ICICI, which reverse merged with ICICI Bank.

Just before the licences were issued, CRB was caught in the centre of a scam and the in-principle approval was cancelled. Only five entities have survived since then - HDFC Bank, the UTI-promoted Axis Bank, IDBI Bank and the Hinduja-promoted IndusInd Bank.

During this period, Times Bank and Bank of Punjab were acquired by HDFC Bank while GTB, promoted by Ramesh Gelli, was acquired by Oriental Bank of Commerce.

Later in 2002, RBI licensed two more banks, Kotak Mahindra Bank and YES Bank, promoted by Rana Kapoor and others.

Over the past 15 years, new generation private banks have given government-run banks, which even now control 70% of the market in terms of deposits and advances, a run for their money by leveraging on technology.

Earlier in terms of product offerings and premium service, foreign banks were at the forefront. New generation private banks bridged that gap by providing efficient services at competitive rates, forcing foreign banks to change tack and PSU banks to embrace technology.

However, unlike last time, the challenge for new banks will be greater, given intense competition and focus on rural inclusion.

Source: EconomicTimes