Chapter – III

Performance of Indian
Banking Sector
 CHAPTER – III
PERFORMANCE OF INDIAN BANKING SECTOR

3.1 INTRODUCTION:

Due to the improved contest in the banking Industry as a result of

globalisation, each banking sector now plays a significant role in the Indian
economic system. In fact, recent experimental evidence suggests that the banking
system should participate to financial growth more by getting better resource portion
effectiveness than by channelling resources from savers to investors.

Figure 3.1

Source: RBI Grade B Material, RBI Publication, 2018-2019

The position about the banking sector has increased as bad debts have
decreased over the past monetary year; excluding cash flow is controlled due to the
drop in money put up in the financial markets as well as tensions in the financial
sector non-banking (Economic Survey 2018 - 19).

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 Over these last years, monetary policy has taken a U-turn. The benchmark
policy rate has initially risen by 50 basis points (bps) together with then compact by
75 bps due to weakly-than-expected increase, a slowing of development, along with
softer worldwide financial circumstances, according to the research, which was
nominated in Parliament by Minister of Finance Nirmala Sitharaman. These banking
system’s administration have increased as non-performing asset (NPA) ratios have
decreased in addition to credit growth has stabilized. According to the research,
"monetary flows towards the economy were restrained due to a decline in the
quantity of equity capital raised from financial markets including pressure in the
Non-Banking Financial Companies sector." It has already resulted in the
improvement including resolution of an important number of troubled assets and
noticeably enhanced business civilization.

However, the liquidity situation has inhabited consistently stretched since

September 2018. According to the research, each economy's liquidity situation
moved into the deficit zone on average in the previous two quarters of
2018-19 together with the first quarter of 2019-20. The position of public sector
banks (PSBs) improved during the period 2018-19, with the gross NPA ratio falling
from 11.5 percent to 10.1 percent intermediate to March 2018 as well as December
2018.

The primary goal of this chapter is to create a simple measurement of the

performance of the Indian banking sectors. It has been more than 29 years since the
beginning of India's economic reforms, and financial liberalization have been an
essential part of the equation. The current chapter describes the financial position
about Indian public along with private sector banks from 2016 to 2020, as well as
the effect of each public along with private sectors on the Indian banking sector.
From 2016 to 2020, a comparative study of various bank groups in terms of assets
and liabilities has been taken from the consolidated balance sheet of scheduled
commercial banks (SCBs).

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 3.2 PUBLIC SECTOR BANKS:
Table 3.2.1
Comparative Balance Sheet of Public Sector Banks for the year ending
March 31, 2016 also 2017.
Amount in Crore

S. Increase / Increase /
Item 2016 2017 Decrease Decrease
No (Amounts) (%)
1 Capital 19,200.00 24,300.00 5,100.00 26.56
2 Reserves and Surplus 515,300.00 554,400.00 39,100.00 7.59
Current Liabilities:
3 Deposits 7,486,200.00 8,079,300.00 593,100.00 7.92
4 Borrowings 790,700.00 721,900.00 (68,800.00) (8.70)
Other Liabilities and
5 356,700.00 355,800.00 (900.00) (0.25)
Provisions
Total Current Liabilities 8,633,600.00 9,157,000.00 523,400.00 6.06
Total Liabilities/Assets 9,168,100.00 9,735,600.00 567,500.00 6.19
Current Assets:
1 Cash and Balances with RBI 418,500.00 484,200.00 65,700.00 15.70
Balances with Banks and
2 Money at Call and Short 392,900.00 530,300.00 137,400.00 34.97
Notice
3 Investments 2,248,100.00 2,554,700.00 306,600.00 13.64
4 Loans and Advances 5,593,600.00 5,557,200.00 (36,400.00) (0.65)
Total Current Assets 8,653,100.00 9,126,400.00 473,300.00 5.47
5 Fixed Assets 84,000.00 120,000.00 36,000.00 42.86
6 Other Assets 431,000.00 489,200.00 58,200.00 13.50
Total Liabilities/Assets 9,168,100.00 9,735,600.00 567,500.00 6.19

Table exhibits that the comparative balance sheet of public sector banks reveals
that during the years 2016 to 2017, there was an increase in fixed assets of 36,000, or
42.86 percent, while capital increased by 26.56 percent and reserves and surpluses
increased by 7.59 percent. This represents an increase in fixed assets and equity share
capital, indicating that fixed assets were purchased, new share capital was issued, and
surplus profits were transferred to public sector banks' reserves and surpluses.

93
 Current assets have increased by Rs. 473,300.00, or 5.47 percent, indicating
that the banks have adopted a flexible credit policy, and as a result, investments have
increased by 13.64 percent. Furthermore, the current liability increased by 6.06
percent, indicating that the banks were unable to pay their liabilities within the time
frame specified. The public sector banks' overall financial position is satisfactory.

Table 3.2.2
Comparative Balance Sheet of Public Sector Banks for the year ending
March 31, 2017 also 2018.
Amount in Crore
Increase / Increase /
S.
Item 2017 2018 Decrease Decrease
No
(Amounts) (%)
1 Capital 24,300.00 33,154.00 8,854.00 36.44
2 Reserves and Surplus 554,400.00 555,840.00 1,440.00 0.26
Current Liabilities:
3 Deposits 8,079,300.00 8,262,322.00 183,022.00 2.27
4 Borrowings 721,900.00 847,034.00 125,134.00 17.33
Other Liabilities and
5
Provisions 355,800.00 336,551.00 (19,249.00) (5.41)
Total Current Liabilities 9,157,000.00 9,445,907.00 288,907.00 3.16
Total Liabilities/Assets 9,735,600.00 10,034,901.00 299,301.00 3.07
Current Assets:
Cash and Balances with
1
RBI 484,200.00 448,477.00 (35,723.00) (7.38)
Balances with Banks and
2 Money at Call and Short
Notice 530,300.00 392,213.00 (138,087.00) (26.04)
3 Investments 2,554,700.00 2,791,858.00 237,158.00 9.28
4 Loans and Advances 5,557,200.00 5,697,350.00 140,150.00 2.52
Total Current Assets 9,126,400.00 9,329,898.00 203,498.00 2.23
5 Fixed Assets 120,000.00 110,041.00 (9,959.00) (8.30)
6 Other Assets 489,200.00 594,962.00 105,762.00 21.62
Total Liabilities/Assets 9,735,600.00 10,034,901.00 299,301.00 3.07

Table exhibits that the comparative balance sheet of public sector banks shows
that from 2017 to 2018, there was a decrease in fixed assets of $9,959.00, or 8.30 percent,

94
 indicating a sale of fixed assets and an inflow of cash. This money is used to pay off bank
deposits. On the other hand, capital in public sector banks has increased by 36.44 percent,
while reserves and surpluses have increased by 0.26 percent. This represents an increase
in equity share capital, indicating that new share capital and surplus profits were
transferred to public sector bank reserves and surpluses during these years.

Current assets have increased by Rs. 2,03,498.00, or 2.23 percent, indicating

that the bank's working capital position is strong. However, investments have
increased by 9.28 percent. Furthermore, the current liability increased by 3.16
percent, indicating that the banks did not pay their liabilities within the time frame
specified. The public sector banks' overall financial positions are satisfactory.

Table 3.2.3
Comparative Balance Sheet of Public Sector Banks for the year ending
March 31, 2018 also 2019.
Amount in Crore
Increase / Increase /
S.
Item 2018 2019 Decrease Decrease
No
(Amounts) (%)
1 Capital 33,154.00 51,060.00 17,906.00 54.01
2 Reserves and Surplus 555,840.00 546,066.00 (9,774.00) (1.76)
Current Liabilities:
3 Deposits 8,262,322.00 8,486,215.00 223,893.00 2.71
4 Borrowings 847,034.00 761,612.00 (85,422.00) (10.08)
Other Liabilities and
5 336,551.00 317,985.00 (18,566.00) (5.52)
Provisions
Total Current Liabilities 9,445,907.00 9,565,812.00 119,905.00 1.27
Total Liabilities/Assets 10,034,901.00 10,162,938.00 128,037.00 1.28
Current Assets:
1 Cash and Balances with RBI 448,477.00 455,974.00 7,497.00 1.67
Balances with Banks and
2 Money at Call and Short 392,213.00 359,507.00 (32,706.00) (8.34)
Notice
3 Investments 2,791,858.00 2,702,386.00 (89,472.00) (3.20)
4 Loans and Advances 5,697,350.00 5,926,286.00 228,936.00 4.02
Total Current Assets 9,329,898.00 9,444,153.00 114,255.00 1.22
5 Fixed Assets 110,041.00 107,319.00 (2,722.00) (2.47)
6 Other Assets 94,962.00 611,466.00 16,504.00 2.77
Total Liabilities/Assets 10,034,901.00 10,162,938.00 128,037.00 1.28

95
 Table exhibits that the according to the comparative balance sheets of public
sector banks, there was a decrease in fixed assets of 2,722.00, or 2.47 percent, from
2018 to 2019, indicating the sale of fixed assets and the inflow of cash. This money
is used to pay off bank deposits. On the other hand, capital in public sector banks
has increased by 54.01 percent while reserves and surpluses have decreased by 1.76
percent. This represents an increase in equity share capital, indicating that the issue
of new share capital and reserves and surpluses have decreased, and the banks have
used reserves and surpluses to pay dividends to public sector bank shareholders.

Current assets have increased by Rs. 114,255.00, or 1.22 percent, indicating

that the banks' liquidity positions have been met. However, investments have been
reduced by 3.20 percent. Furthermore, the current liability increased by 1.27 percent,
indicating that the banks did not pay their liabilities within the time frame specified.
The public sector banks' overall financial position is satisfactory.

96
 Table 3.2.4
Comparative Balance Sheet of Public Sector Banks for the year ending
March 31, 2019 also 2020.

Amount in Crore
Increase / Increase /
S.No Item 2019 2020 Decrease Decrease
(Amounts) (%)
1 Capital 51,060.00 72,040.00 20,980.00 41.09
2 Reserves and Surplus 546,066.00 580,886.00 34,820.00 6.38
Current Liabilities:
3 Deposits 8,486,215.00 9,048,420.00 562,205.00 6.62
4 Borrowings 761,612.00 709,780.00 (51,832.00) (6.81)
Other Liabilities and
5
Provisions 318,274.00 371,893.00 53,619.00 16.85
Total Current
Liabilities 9,566,101.00 10,130,093.00 563,992.00 5.90
Total Liabilities/Assets 10,163,226.00 10,783,018.00 619,792.00 6.10
Current Assets:
Cash and Balances with
1
RBI 455,974.00 436,736.00 (19,238.00) (4.22)
Balances with Banks
2 and Money at Call and
Short Notice 393,270.00 466,615.00 73,345.00 18.65
3 Investments 2,702,033.00 2,940,636.00 238,603.00 8.83
4 Loans and Advances 5,892,667.00 6,158,112.00 265,445.00 4.50
Total Current Assets 9,443,944.00 10,002,099.00 558,155.00 5.91
5 Fixed Assets 107,318.00 106,507.00 (811.00) (0.76)
6 Other Assets 611,964.00 674,412.00 62,448.00 10.20
Total Liabilities/Assets 10,163,226.00 10,783,018.00 619,792.00 6.10

Table exhibits that the comparative balance sheets of public sector banks,
there was a decrease in fixed assets of 811.00, or 0.76 percent, from 2019 to 2020,
indicating the sale of fixed assets and the inflow of cash. This money is used to pay
off bank deposits. On the other hand, capital in public sector banks has increased by
41.09 percent, while reserves and surpluses have increased by 6.38 percent. This
represents an increase in equity share capital, indicating that the issue of new share
capital and reserves and surpluses have increased, indicating that the banks' surplus
profits have been transferred to public sector banks' reserves and surpluses.

97
 Current assets have increased by Rs. 558,155.00, or 5.91 percent, indicating
that the banks' liquidity positions have been met. However, investment has increased
by 8.83 percent. Furthermore, the current liability increased by 5.90 percent,
indicating that the banks did not pay their liabilities within the time frame specified.
The public sector banks' overall financial position is satisfactory.

3.3 PRIVATE SECTOR BANKS:

Table 3.3.1
Comparative Balance Sheet of Private Sector Banks for the year ending
March 31, 2016 also 2017.
Amount in Crore
Increase / Increase /
S.No Item 2016 2017 Decrease Decrease
(Amounts) (%)
1 Capital 10,600.00 11,000.00 400.00 3.77
2 Reserves and Surplus 318,500.00 370,900.00 52,400.00 16.45
Current Liabilities:
3 Deposits 2,147,600.00 2,564,900.00 417,300.00 19.43
4 Borrowings 533,800.00 483,500.00 (50,300.00) (9.42)
Other Liabilities and
5
Provisions 136,200.00 171,200.00 35,000.00 25.70
Total Current Liabilities 2,817,600.00 3,219,600.00 402,000.00 14.27
Total Liabilities/Assets 3,146,700.00 3,601,500.00 454,800.00 14.45
Current Assets:
1 Cash and Balances with RBI 121,700.00 158,500.00 36,800.00 30.24
Balances with Banks and
2 Money at Call and Short
Notice 75,900.00 130,000.00 54,100.00 71.28
3 Investments 798,500.00 855,100.00 56,600.00 7.09
4 Loans and Advances 1,939,300.00 2,219,600.00 280,300.00 14.45
Total Current Assets 2,935,400.00 3,363,200.00 427,800.00 14.57
5 Fixed Assets 22,700.00 25,500.00 2,800.00 12.33
6 Other Assets 188,600.00 212,800.00 24,200.00 12.83
Total Liabilities/Assets 3,146,700.00 3,601,500.00 454,800.00 14.45

The table shows that the comparative balance sheet of private sector banks reveals
that during the years 2016 to 2017, there was an increase in fixed assets of 2,800, or 12.33
percent, while capital increased by 3.77 percent and reserves and surpluses increased by

98
 16.45 percent. This represents an increase in fixed assets and equity share capital,
indicating that fixed assets were purchased, new share capital was issued, and surplus
profits were transferred to private sector banks' reserves and surpluses.

Current assets have increased by Rs. 427,800.00, or 14.57 percent, indicating

that the bank has adopted a flexible credit policy. As a result, investments have
increased by 7.09 percent. Furthermore, the current liability increased by 14.27
percent, indicating that the banks were unable to pay their liabilities within the time
frame specified. The private sector banks' overall financial position is satisfactory.

Table 3.3.2
Comparative Balance Sheet of Private Sector Banks for the year ending
March 31, 2017 also 2018.
Amount in Crore

Increase / Increase /
S.N
Item 2017 2018 Decrease Decrease
o
(Amounts) (%)
1 Capital 11,000.00 11,592.00 592.00 5.38
2 Reserves and Surplus 370,900.00 431,966.00 61,066.00 16.46
Current Liabilities:
3 Deposits 2,564,900.00 3,013,688.00 448,788.00 17.50
4 Borrowings 483,500.00 688,188.00 204,688.00 42.33
Other Liabilities and
5
Provisions 171,200.00 153,488.00 (17,712.00) (10.35)
Total Current Liabilities 3,219,600.00 3,855,364.00 635,764.00 19.75
Total Liabilities/Assets 3,601,500.00 4,298,922.00 697,422.00 19.36
Current Assets:
1 Cash and Balances with RBI 158,500.00 240,318.00 81,818.00 51.62
Balances with Banks and
2 Money at Call and Short
Notice 130,000.00 126,056.00 (3,944.00) (3.03)
3 Investments 855,100.00 1,011,814.00 156,714.00 18.33
4 Loans and Advances 2,219,600.00 2,662,753.00 443,153.00 19.97
Total Current Assets 3,363,200.00 4,040,941.00 677,741.00 20.15
5 Fixed Assets 25,500.00 26,293.00 793.00 3.11
6 Other Assets 212,800.00 231,688.00 18,888.00 8.88
Total Liabilities/Assets 3,601,500.00 4,298,922.00 697,422.00 19.36

The table shows that the comparative balance sheet of private sector banks
shows that from 2017 to 2018, there was an increase in fixed assets of 793.00, or

99
 3.11 percent, indicating the purchase of fixed assets and outflow of cash. Private
sector banks' capital, on the contrary, has increased by 5.38 percent, while reserves
and surpluses have increased by 16.246 percent. This represents an increase in the
equity share capital, indicating that the new share capital and surplus profits have
been transferred to the Reserve & Surpluses of private sector banks.

Current assets have increased by Rs. 677,741.00, or 20.15 percent, indicating

that the bank's working capital position is strong. However, investments have
increased by 18.33 percent. Furthermore, the current liability increased by 19.75
percent, indicating that the banks were unable to pay their liabilities within the time
frame specified. The private sector banks' overall financial position is satisfactory.

Table 3.3.3
Comparative Balance Sheet of Private Sector Banks for the year ending
March 31, 2018 also 2019.
Amount in Crore
Increase / Increase /
S.
Item 2018 2019 Decrease Decrease
No (Amounts) (%)
1 Capital 11,592.00 21,344.00 9,752.00 84.13
2 Reserves and Surplus 431,966.00 527,665.00 95,699.00 22.15
Current Liabilities:
3 Deposits 3,013,688.00 3,770,013.00 756,325.00 25.10
4 Borrowings 688,188.00 775,324.00 87,136.00 12.66
Other Liabilities and
5
Provisions 153,488.00 203,591.00 50,103.00 32.64
Total Current Liabilities 3,855,364.00 4,748,928.00 893,564.00 23.18
Total Liabilities/Assets 4,298,922.00 5,297,937.00 999,015.00 23.24
Current Assets:
Cash and Balances with
1
RBI 240,318.00 206,654.00 (33,664.00) (14.01)
Balances with Banks and
2 Money at Call and Short
Notice 126,056.00 175,076.00 49,020.00 38.89
3 Investments 1,011,814.00 1,219,517.00 207,703.00 20.53
4 Loans and Advances 2,662,753.00 3,327,328.00 664,575.00 24.96
Total Current Assets 4,040,941.00 4,928,575.00 887,634.00 21.97
5 Fixed Assets 26,293.00 36,142.00 9,849.00 37.46
6 Other Assets 231,688.00 333,220.00 101,532.00 43.82
Total Liabilities/Assets 4,298,922.00 5,297,937.00 999,015.00 23.24

100
 Table exhibits that the comparative balance sheet of private sector banks shows
that from 2018 to 2019, there has been an increase in fixed assets of 9,849.00, or 37.46
percent, while capital has increased by 84.13 percent and reserves and surpluses have
increased by 22.15 percent. This represents an increase in fixed assets and equity share
capital, indicating that fixed assets were purchased, new share capital was issued, and
surplus profits were transferred to private sector banks' reserves and surpluses.

Current assets have increased by Rs. 887,634.00, or 21.97 percent, indicating

that the banks have adopted a flexible credit policy, as investments have increased
by 20.53 percent. Furthermore, current liabilities increased by 23.18 percent,
indicating that the banks were unable to pay their liabilities within the time frame
specified. The private sector banks' overall financial position is satisfactory.

Table 3.3.4
Comparative Balance Sheet of Private Sector Banks for the year ending
March 31, 2019 also 2020.
Amount in Crore
Private Sector Banks Increase / Increase /
S.No Item Decrease Decrease
2019 2020 (Amounts) (%)
1 Capital 21,344.00 26,866.00 5,522.00 25.87
2 Reserves and Surplus 527,665.00 582,425.00 54,760.00 10.38
Current Liabilities:
3 Deposits 3,770,013.00 4,159,044.00 389,031.00 10.32
4 Borrowings 775,324.00 827,575.00 52,251.00 6.74
5 Other Liabilities and Provisions 203,591.00 236,227.00 32,636.00 16.03
Total Current Liabilities 4,748,928.00 5,222,846.00 473,918.00 9.98
Total Liabilities/Assets 5,297,937.00 5,832,139.00 534,202.00 10.08
Current Assets:
1 Cash and Balances with RBI 206,654.00 272,616.00 65,962.00 31.92
Balances with Banks and Money
2
at Call and Short Notice 175,076.00 212,324.00 37,248.00 21.28
3 Investments 1,222,045.00 1,293,031.00 70,986.00 5.81
4 Loans and Advances 3,327,328.00 3,625,154.00 297,826.00 8.95
Total Current Assets 4,931,103.00 5,403,125.00 472,022.00 9.57
5 Fixed Assets 36,142.00 38,243.00 2,101.00 5.81
6 Other Assets 330,692.00 390,771.00 60,079.00 18.17
Total Liabilities/Assets 5,297,937.00 5,832,139.00 534,202.00 10.08

101
 Table exhibits that the comparative balance sheet of private sector banks
reveals that during the years 2019 to 2020, there was an increase in fixed assets of
2,101.00, or 5.81 percent, while capital increased by 25.87 percent and reserves and
surpluses increased by 10.28 percent. This represents an increase in fixed assets and
equity share capital, indicating that fixed assets were purchased, new share capital
was issued, and surplus profits were transferred to private sector banks' reserves and
surpluses.

Current assets have increased by Rs. 472,022.00, or 9.57 percent, indicating

that the banks have adopted a flexible credit policy, as investments have increased
by 5.81 percent. Furthermore, the current liability increased by 9.98 percent,
indicating that the banks were unable to pay their liabilities within the time frame
specified. The private sector banks' total financial soundness is satisfactory.

The comparative balance sheet demonstrates that the financial soundness

about public along with private sector banks is very satisfactory for each succeeding
year when compared to the previous years from 2016 – 2017 to 2019 – 2020.

3.4 TRENDS IN PERFORMANCE OF PUBLIC ALONG WITH PRIVATE

SECTOR BANKS WITH RELATED TO TOTAL ASSETS AND TOTAL
LIABILITIES:

102
 Table 3.4.1
Trends in Performance of Public Sector Banks with Reference towards Total Liabilities

Amount in Crore
Public Sector Banks Increasing /
S.No Items Decreasing %
2016 2017 2018 2019 2020
in 2020 over 2016
19,200.00 24,300.00 33,154.00 51,060.00 72,040.00
1 Capital
(0.21) (0.25) (0.33) (0.50) (0.67) 52,840.00 275.21
515,300.00 554,400.00 555,840.00 546,066.00 580,886.00
2 Reserves and Surplus
(5.62) (5.69) (5.54) (5.37) (5.39) 65,586.00 12.73
Current Liabilities:
7,486,200.00 8,079,300.00 8,262,322.00 8,486,215.00 9,048,420.00
3 Deposits
(81.65) (82.99) (82.34) (83.50) (83.91) 1,562,220.00 20.87
790,700.00 721,900.00 847,034.00 761,612.00 709,780.00
4 Borrowings
(8.62) (7.42) (8.44) (7.49) (6.58) (80,920.00) (10.23)
Other Liabilities and 356,700.00 355,800.00 336,551.00 317,985.00 371,893.00
5
Provisions (3.89) (3.65) (3.35) (3.13) (3.45) 15,193.00 4.26
8,633,600.00 9,157,000.00 9,445,907.00 9,565,812.00 10,130,093.00
Total Current Liabilities
(94.17) (94.06) (94.13) (94.12) (93.94) 1,496,493.00 17.33
9,168,100.00 9,735,600.00 10,034,901.00 10,162,938.00 10,783,018.00
Total Liabilities
(100.00) (100.00) (100.00) (100.00) (100.00) 1,614,918.00 17.61

103
 The table represents the trends in the performance of public sector banks in
reference to total liabilities from 2016 to 2020. The following is the trending
performance of total liabilities:

Capital: The amount of capital for public sector banks was Rs. 19,200.00 crores in
2010 and is expected to increase to Rs. 72,040.00 crores in 2020. It indicates a Rs.
52,840.00 crore absolute increase in 2020 over 2016. This absolute increase was to
the tune of 275.21 percent.

Reserves and Surplus: The amount of reserves and surplus for public sector banks
was Rs.515,300.00 crores in 2016, and it is expected to increase to Rs. 580,886.00
crores in 2020. In 2020, the reserves and surplus show an absolute increase of Rs.
65,586.00 crores over 2016. It has steadily increased in public sector banks. This
absolute increase amounted to 12.73 percent. This indicates that the banks have
adequate reserves and a surplus.

Deposits: Deposits are the most important component of the current liabilities side.
Deposits for public sector banks accounted for Rs. 7,486,200.00 crores in 2016 and
were increased to Rs. 9,048,420.00 crores in 2020, indicating a total increase of Rs.
1,562,220.00 crores in 2020 over 2016. This absolute increase amounted to 20.87
percent. This requires banks to keep deposits on hand.

Borrowings: Borrowings for public sector banks totaled Rs. 790,700.00 crores in
2015 and are expected to fall to Rs. 709,780.00 crores in 2020. It shows an absolute
decrease of Rs. – 80,920.00 crores in 2020 compared to 2016. This absolute
decrease amounted to -10.23 percent. This indicates that the banks have repaid the
public sector banks' borrowings.

Other Liabilities and Provisions: The amount of other liabilities and provisions for
public sector banks was Rs. 356,700.00 crores in 2016 and increased to Rs.
371,893.00 crores in 2020, indicating a Rs. 15,193.00 crores absolute increase in
2020 over 2016. This absolute increase amounted to 4.26 percent.

104
 Table 3.4.2
Trends in Performance of Public Sector Banks with related to Total Assets
Amount in Crore

Public Sector Banks Increasing /

Decreasing
S.No Items %
in 2020 over
2016 2017 2018 2019 2020
2016
Current Assets:
418,500.00 484,200.00 448,477.00 455,974.00 436,736.00
1 Cash and Balances with RBI 4.36
(4.56) (4.97) (4.47) (4.49) (4.05) 18,236.00
Balances with Banks and 392,900.00 530,300.00 392,213.00 359,507.00 466,615.00
2 18.76
Money at Call and Short Notice (4.29) (5.45) (3.91) (3.54) (4.33) 73,715.00
2,248,100.00 2,554,700.00 2,791,858.00 2,702,386.00 2,940,636.00
3 Investments 30.81
(24.52) (26.24) (27.82) (26.59) (27.27) 692,536.00
5,593,600.00 5,557,200.00 5,697,350.00 5,926,286.00 6,158,112.00
4 Loans and Advances 10.09
(61.01) (57.08) (56.78) (58.31) (57.11) 564,512.00
8,653,100.00 9,126,400.00 9,329,898.00 9,444,153.00 10,002,099.00
Total Current Assets 15.59
(94.38) (93.74) (92.97) (92.93) (92.76) 1,348,999.00
84,000.00 120,000.00 110,041.00 107,319.00 106,507.00
5 Fixed Assets 26.79
(0.92) (1.23) (1.10) (1.06) (0.99) 22,507.00
431,000.00 489,200.00 594,962.00 611,466.00 674,412.00
6 Other Assets 56.48
(4.70) (5.02) (5.93) (6.02) (6.25) 243,412.00
9,168,100.00 9,735,600.00 10,034,901.00 10,162,938.00 10,783,018.00
Total Assets 17.61
(100.00) (100.00) (100.00) (100.00) (100.00) 1,614,918.00
Table exhibits that the trends in performance of public sector banks with reference to each total Assets from 2016 to 2020. The trending
performance of total assets as below:

105
Cash and balances with RBI: The amount of cash and balances with RBI for public
sector banks was Rs. 418,500.00 crores in 2016 and is expected to increase to Rs.
4367,36.00 crores in 2020. It indicates an increase in absolute terms of Rs. 18,236.00
crores in 2020 over 2016. This absolute increase amounted to 4.36 percent.

Balances with Banks and Money at Call and Short Notice: The amount of balances
with banks and money at call and short notice for public sector banks was Rs.
392,900.00 crores in 2016 and is expected to increase to Rs. 466,615.00 crores in 2020.
It shows an increase of Rs. 73,715.00 crores in 2020 over 2016. This absolute increase
amounted to 18.76 percent.

Investments: In the year 2010, public sector banks invested Rs. 2,248,100.00 crores,
which is expected to rise to Rs. 2,940,636.00 crores by 2020. It shows an increase of Rs.
692,536.00 crores in 2020 over 2016. This absolute increase amounted to 30.81 percent.
Investments are the second largest component on the asset side of the balance sheet. It is
done to account for the increase in credit expansion.

Loans and Advances: The amount of Loans and Advances for public sector banks was
Rs. 5,593,600.00 crores in 2016 and is expected to increase to Rs. 6,158,112.00 crores
in 2020. It indicates an increase in absolute increase of Rs. 564,512.00 crores in 2020
over 2016. This absolute increase amounted to 10.09 percent. Loans and advances are
the most important component about the balance sheet's asset side. It is enhancing the
credit environment and identifying non-performing assets.

Fixed Assets: The amount of fixed assets for public sector banks was Rs. 84,000.00
crores in 2016 and is expected to increase to Rs. 106,507.00 crores in 2020. It represents
an absolute increase of Rs. 22,507.00 crores in 2020 over 2016. This absolute increase
amounted to 26.79 percent.

Other Assets: The amount of other assets for public sector banks was Rs. 431,000.00
crores in 2016 and is expected to increase to Rs. 674,412.00 crores in 2020. It shows an
increase of Rs. 243,412.00 crores in 2020 over 2016. This absolute increase amounted
to 56.48 percent. Other Assets is the primary position of public sector banks.

106
 Table 3.4.3
Trends in Performance of Private Sector Banks with related to Total Liabilities

Amount in Crore

Private Sector Banks Increasing /

Decreasing
S.No Items %
in 2020
2016 2017 2018 2019 2020 over 2016
10,600.00 11,000.00 11,592.00 21,344.00 26,866.00
1 Capital 153.45
(0.34) (0.31) (0.27) (0.40) (0.46) 16,266.00
318,500.00 370,900.00 431,966.00 527,665.00 582,425.00
2 Reserves and Surplus 82.86
(10.12) (10.30) (10.05) (9.96) (9.99) 263,925.00
Current Liabilities:
2,147,600.00 2,564,900.00 3,013,688.00 3,770,013.00 4,159,044.00
3 Deposits 93.66
(68.25) (71.22) (70.10) (71.16) (71.31) 2,011,444.00
533,800.00 483,500.00 688,188.00 775,324.00 827,575.00
4 Borrowings 55.03
(16.69) (13.42) (16.01) (14.63) (14.19) 293,775.00
Other Liabilities and 136,200.00 171,200.00 153,488.00 203,591.00 236,227.00
5 73.44
Provisions (4.33) (4.75) (3.57) (3.84) (4.05) 100,027.00
Total Current 2,817,600.00 3,219,600.00 3,855,364.00 4,748,928.00 5,222,846.00
85.37
Liabilities (89.54) (89.40) (89.68) (89.64) (89.55) 2,405,246.00
3,146,700.00 3,601,500.00 4,298,922.00 5,297,937.00 5,832,139.00
Total Liabilities 2,685,439.00 85.34
(100.00) (100.00) (100.00) (100.00) (100.00)

107
The table depicts the performance trends of private sector banks in relation to total
liabilities from 2016 to 2020. The following is the trending performance of total
liabilities:

Capital: The amount of capital for private sector banks was Rs. 10,600.00 crores in
2016 and is expected to increase to Rs. 26,866.00 crores in 2020. It represents an
absolute increase of Rs. 16,266.00 crores in 2020 over 2016. This absolute increase
amounted to 153.45 percent.

Reserves and Surplus: The amount of reserves and surplus for private sector banks
was Rs.318,500.00 crores in 2016, and it is expected to increase to Rs. 582,425.00
crores in 2020. In 2020, the reserves and surplus show an absolute increase of Rs.
263,925.00 crores over 2016. It has steadily increased in private sector banks. This
absolute increase amounted to 82.86 percent. This indicates that the banks have
adequate reserves and a surplus.

Deposits: Deposits are the most important component of the current liabilities side.
Deposits for private sector banks accounted for Rs. 2,147,600.00 crores in 2016 and
increased to Rs. 4,159,044.00 crores in 2020, indicating a total increase of Rs.
2,011,444.00 crores in 2020 over 2016. This absolute increase amounted to 93.66
percent. This requires banks to keep deposits on hand.

Borrowings: Borrowings for private sector banks totaled Rs. 533,800.00 crores in
2016 and are expected to fall to Rs. 827,575.00 crores in 2020. It indicates an
absolute increase of Rs. 293,775.00 crores in 2020 over 2016. This absolute increase
amounted to 55.03 percent.

Other Liabilities and Provisions: In the year 2020, the amount of other liabilities
and provisions for private sector banks increased from Rs. 136,200.00 crores to Rs.
236,227.00 crores, indicating an absolute increase of Rs. 100,227.00 crores in 2020
over 2016. This absolute increase amounted to 73.44 percent.

108
 Table 3.4.4

Trends in Performance of Private Sector Banks with Related to Total Assets

Amount in Crore
Private Sector Banks Increasing /
Decreasing
S.No Item %
in 2020 over
2016 2017 2018 2019 2020
2016
Current Assets:
121,700.00 158,500.00 240,318.00 206,654.00 272,616.00
1 Cash and Balances with RBI 124.01
(3.87) (4.40) (5.59) (3.90) (4.67) 150,916.00
Balances with Banks and
75,900.00 130,000.00 126,056.00 175,076.00 212,324.00
2 Money at Call and Short 136,424.00 179.74
(2.41) (3.61) (3.87) (3.30) (3.64)
Notice
798,500.00 855,100.00 1,011,814.00 1,219,517.00 1,293,031.00
3 Investments 61.93
(25.38) (23.74) (23.54) (23.02) (22.17) 494,531.00
1,939,300.00 2,219,600.00 2,662,753.00 3,327,328.00 3,625,154.00
4 Loans and Advances 86.93
(61.63) (61.63) (61.94) (62.80) (62.16) 1,685,854.00
2,935,400.00 3,363,200.00 4,040,941.00 4,928,575.00 5,403,125.00
Total Current Assets 84.07
(93.29) (93.38) (94.00) (90.03) (92.64) 2,467,725.00
22,700.00 25,500.00 26,293.00 36,142.00 38,243.00
5 Fixed Assets 68.47
(0.72) (0.71) (0.61) (0.68) (0.66) 15,543.00
188,600.00 212,800.00 231,688.00 333,220.00 390,771.00
6 Other Assets 107.20
(5.99) (5.91) (5.39) (6.29) (6.70) 202,171.00
3,146,700.00 3,601,500.00 4,298,922.00 5,297,937.00 5,832,139.00
Total Assets 2,685,439.00 85.34
(100.00) (100.00) (100.00) (100.00) (100.00)

109
The table depicts the trends in private sector bank performance in terms of total
assets from 2016 to 2020. The following is the trending performance of total assets:

Cash and balances with the RBI: The amount of cash and balances with the RBI
for private sector banks was Rs. 121,700.00 crores in 2016 and is expected to
increase to Rs. 272,616.00 crores in 2020. It indicates a Rs. 150,916.00 crore
absolute increase in 2020 over 2016. This absolute increase amounted to 124.01
percent.

Balances with Banks and Money at Call and Short Notice: The amount of
Balances with Banks and Money at Call and Short Notice for private sector banks
was Rs. 75,900.00 crores in 2010 and is expected to increase to Rs. 212,324.00
crores in 2020. It shows an increase of Rs. 136,424.00 crores in 2020 over 2016.
This absolute increase amounted to 179.74 percent.

Investments: In the year 2010, private sector banks invested Rs. 798,500.00 crores,
which is set to boost of Rs. 1,293,031.00 crores by 2020. It represents an absolute
increase of Rs. 494,531.00 crores in 2020 over 2016. This absolute increase
amounted to 61.93 percent. Investments are the second largest component on the
asset side about the balance sheet. It is done to account for the increase in credit
expansion.

Loans and Advances: The amount of Loans and Advances for private sector banks
was Rs. 1,939,300.00 crores in 2016 and is expected to increase to Rs. 3,625,154.00
crores in 2020. It indicates an increase in absolute terms of Rs. 1,685,854.00 crores
in 2020 over 2016. This absolute increase amounted to 86.93 percent. Loans and
advances are the most important component about the balance sheet's asset side. It is
enhancing the credit environment and identifying non-performing assets.

Fixed Assets: The amount of Fixed Assets for private sector banks was Rs.
22,700.00 crores in 2016 and is expected to increase to Rs. 38,243.00 crores in 2020.
It indicates a Rs. 15,543.00 crore absolute increase in 2020 over 2016. This absolute
increase amounted to 68.47 percent.

110
Other Assets: The amount of other assets for private sector banks was Rs.
188,600.00 crores in 2016 and is projected to increase to Rs. 390,771.00 crores in
2020. It indicates a Rs. 202,171.00 crore absolute increase in 2020 over 2016. This
absolute increase amounted to 107.20 percent.

3.5. THE COMPARATIVE INCREASE AND DECREASE OF BALANCE

SHEET COMPONENTS FOR PUBLIC ALONG WITH PRIVATE SECTOR
BANKS.

3.5.1 Capital:

The Comparative increase and decrease in the amount of capital of both for
the public along with private sector banks through each reference period was
presented in Table 3.5.1

Table 3.5.1

Capital (As % of Total Liabilities)

Years Private Sector Banks (%) Public Sector Banks (%)
2016 0.34 0.21
2017 0.31 0.25
2018 0.27 0.33
2019 0.40 0.50
2020 0.46 0.67

According to the table, the proportion of capital to total liabilities was

estimated to be 0.34 percent in the case of private sector banks in 2016, while it was
very low at 0.21 percent in the case about public sector banks. However, each trend
shows that these proportions of capital in public sector banks have been steadily
increasing, and it was higher at 0.67 percent in 2020.

Private sector banks' capital-to-total-liabilities ratio greater than before from

0.34 to 0.46 percent from 2016 to 2020, with the rate of increase being lower for
private sector banks than for public sector banks through the reference period.

111
3.5.2 Reserves and Surplus:

The Comparative increase and decrease in the amount of reserves and

surplus of both for the public along with private sector banks through the reference
period was presented in Table 3.5.2

Table 3.5.2

Reserves and Surplus (As % of Total Liabilities)

Years Private Sector Banks (%) Public Sector Banks (%)
2016 10.12 5.62
2017 10.30 5.69
2018 10.05 5.54
2019 9.96 5.37
2020 9.99 5.39

According to the table, the proportion of Reserves and Surplus to Total

Liabilities was estimated to be 10.12 percent in the case about private sector banks
in 2016, while it is very low at 5.62 percent in the case about public sector banks.
However, each trend shows that the proportion of reserves and surplus in private
along with public sector banks had been steadily decreasing, and it was 9.99 in
private sector banks in 2020.

The proportion of reserves and surplus to total liabilities for private sector
banks decreased from 10.12 percent to 09.99 percent from 2016 to 2020, with the
rate of decrease for public sector banks being moderately low when compare toward
private sector banks during each reference period.

3.5.3 Deposits:

The Comparative increase and decrease in the amount of Deposits of both for the
public along with private sector banks during the reference time period was
presented in Table 3.5.3

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 Table 3.5.3

Deposits (As % of Total Liabilities)

Years Private Sector Banks (%) Public Sector Banks (%)
2016 68.25 81.65
2017 71.22 82.99
2018 70.10 82.34
2019 71.16 83.50
2020 71.31 83.91

According to the table, the proportion of deposits to total liabilities was

estimated to be 68.25 percent in the case about private sector banks in 2016, while it
was very high at 81.65 percent in the case about public sector banks. However, the
trend shows that the proportion of deposits in public sector banks has been steadily
increasing, and it was higher at 83.91 percent in public sector banks in 2020.

The proportion of deposits to total liabilities for private sector banks

increased from 68.25 percent to 71.31 percent from 2016 to 2020, with the rate of
increase being lower for private sector banks than for public sector banks through
the reference time period.

3.5.4 Borrowings:
The Comparative increase and decrease in the amount of Borrowings of both
for the public along with private sector banks during the reference period was
presented in Table 3.5.4

Table 3.5.4

Borrowings (As % of Total Liabilities)

Years Private Sector Banks (%) Public Sector Banks (%)
2016 16.96 8.62
2017 13.42 7.42
2018 16.01 8.44
2019 14.63 7.49
2020 14.19 6.58

113
 According to the table, the proportion of Borrowings to Total Liabilities was
estimated to be 16.96 percent in the case of private sector banks in 2016, while it has
very low at 8.62 percent in the case of public sector banks. However, each trend
shows that the proportion of borrowings in public sector banks has been steadily
decreasing, and it was as low as 6.58 percent in 2020.

The proportion of borrowings to total liabilities for public sector banks

declined from 8.62 percent to 6.58 percent from 2016 to 2020, and the rate of
decrease were moderately low when compare to private sector banks during each
reference period.

3.5.5 Other Liabilities and Provisions:

The Comparative increase together with decrease in the amount of Other

Liabilities and Provisions of both for the public along with private sector banks
during the reference time was presented in Table 3.5.5

Table 3.5.5

Other Liabilities and Provisions (As % of Total Liabilities)

Years Private Sector Banks (%) Public Sector Banks (%)
2016 4.33 3.89
2017 4.75 3.65
2018 3.57 3.35
2019 3.84 3.13
2020 4.05 3.45

According to the table, the proportion of Other Liabilities and Provisions to

total liabilities was estimated to be 4.33 percent in the case about private sector
banks and 3.89 percent in the case about public sector banks in 2016. However, each
trend shows that the fraction about Other Liabilities and Provisions in public sector
banks have been decreasing steadily, reaching a low of 3.45 percent in 2020.

The proportion of other Liabilities and Provisions to total liabilities for

public sector banks reduced from 3.89 percent to 3.45 percent from 2016 to 2020,

114
with the rate of decrease being relatively low for public sector banks when opposed
to private sector banks during the reference time.

3.5.6 Cash and Balances with RBI:

The Comparative increase and decrease in the amount of Cash and Balances
with RBI of both for the public along with private sector banks during the reference
time was presented in Table 3.5.6

Table 3.5.6

Cash and Balances with RBI (As % of Total Assets)

Years Private Sector Banks (%) Public Sector Banks (%)
2016 3.87 4.56
2017 4.40 4.97
2018 5.59 4.47
2019 3.90 4.49
2020 4.67 4.05

According to the table, the proportion of Cash and Balances with RBI
towards total Assets was estimated in order to be 3.87 percent in the case of private
sector banks in 2016, while it ware very high at 4.56 percent in the case about public
sector banks. However, each trend shows that the proportion of cash and balances
with the RBI in private sector banks fluctuates continuously, peaking at 4.67 in 2020
for private sector banks.

The proportion of cash and balances with the RBI towards total assets for
private sector banks decreased from 3.87 to 4.67 percent from 2016 to 2020, and the
rate of decrease were comparatively low when distinguished to public sector banks
during the reference time.

3.5.7 Balances with Banks and Money at Call and Short Notice:

The Comparative increase as well as decrease in each amount about

Balances with Banks and Money at Call and Short Notice about both for the public
along with private sector banks during the reference time was presented in Table
3.5.7

115
 Table 3.5.7

Balances with Banks and Money at Call and Short Notice (As % of Total Assets)
Years Private Sector Banks (%) Public Sector Banks (%)
2016 2.41 4.29
2017 3.61 5.45
2018 2.93 3.91
2019 3.30 3.54
2020 3.64 4.33

According to the table, the proportion of Balances with Banks and Money at
Call and Short Notice to Total Assets was estimated to be 2.41 percent in the case
about private sector banks in 2016, while it has very high at 4.29 percent in the case
of public sector banks. However, the trend shows that the proportion of Balances
with Banks and Money at Call and Short Notice in private sector banks fluctuates
continuously, and it was lower at 4.33 percent in 2020.

The proportion of Balances with Banks and Money at Call and Short Notice
to Total Assets for Private Sector Banks increased from 2.41 percent towards 3.64
percent from 2016 to 2020, with a lower rate of decrease for private sector banks
when compare to public sector banks during this reference time.

3.5.8 Investment:
The Comparative increase and decrease in the amount of Investment of both
for the public along with private sector banks during each reference time was
presented in Table 3.5.8

Table 3.5.8

Investments (As % of Total Assets)

Years Private Sector Banks (%) Public Sector Banks (%)
2016 25.38 24.52
2017 23.74 26.24
2018 23.54 27.82
2019 23.02 26.59
2020 22.17 27.27

116
 Table exhibits that the proportion of Investment to total Assets was estimated
was 25.38% in the case based on private sector banks, where as it has very low at
24.52% in the case based on public sector banks in 2016. However, this trend shows
that the fraction of Investment on public sector banks has increased continuously
and it was higher at 27.77% during the 2020 for public sector banks.

The proportion about Investment to total Assets for private sector banks
declined from 25.38 percent to 22.17 percent among 2016 and 2020, with the rate of
decrease comparatively low for private sector banks correlated towards public sector
banks throughout the reference time.

3.5.9 Loans and Advances:

The Comparative increase and decrease in the amount of Loans and
Advances of both for the public and private sector banks throughout each reference
time was presented in Table 3.4.9

Table 3.5.9

Loans and Advances (As % of Total Assets)

Private Sector Banks Public Sector Banks
Years
(%) (%)
2016 61.63 61.01
2017 61.63 57.08
2018 61.94 56.78
2019 62.80 58.31
2020 62.16 57.11

According to the table, the proportion of Loans and Advances to total Assets
was estimated to be 61.63 percent in the case about private sector banks in 2016,
while it has low at 61.01 percent in the case based on public sector banks. However,
each trend shows that this proportion of Loans along with Advances in public sector
banks was been steadily decreasing, as well as it was lower at 57.11 percent in 2020
for public sector banks.

The proportion based on Loans and Advances to total Assets used for private
sector banks increased from 61.63 percent to 22.16 percent from 2016 to 2020,

117
while the rate of decrease for public sector banks was comparatively small when
opposed to private sector banks during each reference period.

3.5.10 Fixed Assets:

The Comparative increase and decrease in the amount of Fixed Assets of

both for the public along with private sector banks through the reference time was
presented in Table 3.4.10

Table 3.5.10

Fixed Assets (As % of Total Assets)

Years Private Sector Banks (%) Public Sector Banks (%)
2016 0.72 0.92
2017 0.71 1.23
2018 0.61 1.10
2019 0.68 1.06
2020 0.66 0.99

According to the table, the proportion of Fixed Assets to Total Assets was
estimated to be 0.72 percent in the event of private sector banks in 2016, while it has
0.92 percent in the case of public sector banks. However, each trend shows that
these proportion of Fixed Assets in public sector banks has fluctuated continuously,
and it was higher at 0.99 percent in 2020.

The proportion of Fixed Assets to Total Assets for private sector banks
decreased from 0.72 percent to 0.66 percent from 2016 to 2020, while the rate of
increase for public sector banks has comparatively high when opposed to private
sector banks during each reference period.

3.5.11 Other Assets:

The Comparative increase and decrease in the amount of Other Assets of

both for the public and private sector banks throughout the reference time was
presented in Table 3.4.11

118
 Table 3.5.11

Other Assets (As % of Total Assets)

Years Private Sector Banks (%) Public Sector Banks (%)
2016 5.99 4.70
2017 5.91 5.02
2018 5.39 5.93
2019 6.29 6.02
2020 6.70 6.25

According to the table, the proportion of other Assets to total Assets was
estimated to be 5.99 percent in the event of private sector banks in 2016, while it has
4.70 percent in the case of public sector banks. The trend, however, shows that the
proportion of Other Assets in public sector banks has steadily increased, and it was
lower at 6.25 percent in 2020 for public sector banks.

The proportion about Other Assets to total Assets for private sector banks
increased from 5.99 percent to 6.70 percent between 2016 and 2020, with the rate of
increase being comparatively high for private sector banks when correlated to public
sector banks throughout the reference time.

The comparative increase as well as decrease of balance sheet components

demonstrates that the financial performance trend shows that each proportion based
on public sector banks has continuously increased on capital, deposits, and cash
along with balance with RBI, balances with banks as well as money at call in
addiction to short notices, investments, and fixed assets. On the other hand, private
sector banks' reserves and surpluses, borrowings, other liabilities and provisions,
loans and advances, and other assets have all steadily increased. However, when
compared to private sector banks, public sector banks performed superior during the
reference time period based on 2016 to 2020.

In the first half of 2019-20, the banking sector returned to profitability after a
two-year long break; in the meantime, recapitalization of public sector banks
strengthened their capital base, and the insolvency and bankruptcy code gained
traction in improving resolutions. Deposits in the banking sector have increased on

119
the liabilities side, while loans and advances have increased on the assets side. The
overall improvement in banking performance will continue in 2019-20. The banking
sector is gradually improving asset quality, strengthening its capital base, and
returning to profitability. Furthermore, in order to build resilience, they must
improve their valuation methodologies, credit monitoring, and risk management
strategies. PVBs have stepped into the void left by risk-averse PSBs in recent years.

The immediate influence of lockdowns on the financial soundness about the

Indian banking sector was mitigated by timely Reserve Bank policy actions. On the
liabilities side, the slowing of deposit growth contributed to the financial distress of
banks. Despite the COVID -19 pandemic, the recovery in 2020-21 has been driven
by investment and deposit growth. Because of the loan moratorium, these
improvements in soundness indicators will continue until September 2020.

In the aftermath of the pandemic, the Reserve Bank took prompt action to
relieve stress on bank balance sheets, corporate and household balance sheets. With
the moratorium coming to an end and the deadline for restructuring proposals
rapidly approaching, banks' financials are likely to be impacted in terms of asset
quality and future income.

120