RBI Bulletin for January 2011

The Reserve Bank of India today released its January 2011 Bulletin (www.rbi.org.in/scripts/BS_ViewBulletin.aspx) . The Bulletin carries four special articles: (i) Investment Portfolio of Scheduled Commercial Banks: March 2009; (ii) Composition and Ownership Pattern of Deposits with Scheduled Commercial Banks:  March 2009, (iii) International Banking Statistics of India: March 2010 and (iv) Performance of Private Corporate Business Sector during First Half of 2010-11.

(i) Investment Portfolio of Scheduled Commercial Banks, as on March 31, 2009

The article covers investments in central and state government securities, approved securities other than government securities, other domestic securities and investments, foreign securities and other foreign investments. Analysis of investments based on bank-groups, is in terms of instruments, maturity, interest rate (coupon) and states. The article also highlights comparative position of banks’ portfolio in 2009 with that of 2008.

Main Findings

• During 2008-09, the total investments of scheduled commercial banks (SCBs) increased by 22.8 per cent as compared with 23.7 per cent in 2007-08.

• Nationalised banks accounted for the largest share of the investments of SCBs, though with a moderate decline during 2008-09 by 1.3 percentage points to 44.1 per cent.

• The maturity profile of the government securities held by  SCBs  showed that holdings of  SCBs in the medium-term maturity buckets was a little more than one-third for each of the maturity brackets - 2010-15 (35.6 per cent) and 2015-20 (35.8 per cent), followed by very short-term holdings of within one year residual maturity  (16.9 per cent).

• Across different bank groups, foreign banks reported a large part (41.0 per cent) of their holdings with residual maturity of less than one year, as against 16.9 per cent for all the SCBs.

• During 2008-09, central government securities with the coupon rate of ‘6 per cent to 10 per cent’ held by the SCBs increased from 69.6 per cent to 75.8 per cent.

(ii) Composition and Ownership Pattern of Deposits with Scheduled Commercial Banks, as on March 31, 2009 

The article presents data on ownership of deposits as collected from a sample of branches of Scheduled Commercial Banks, under the reporting system of the annual Basic Statistical Return (BSR)-4. BSR-4 captures data on outstanding deposits as on March 31, according to type of deposits accounts (viz., Current, Savings and Term deposits) and classified by broad institutional sectors, (viz., ‘Household’, ‘Government’, ‘Private Corporate (Non-Financial)’, ‘Financial’ and ‘Foreign’ sectors) of the economy. The ownership pattern of estimated deposits is analysed according to the Population groups, States/Union Territories and Bank groups. The article also provides comparative position of composition and ownership pattern of bank deposits as in March 2008.

Main Findings

• Current, savings and term deposits accounted for 12.0 per cent, 23.3 per cent and 64.7 per cent, respectively, in the total deposits reported by the banks in March 2009. The share of current deposits in total deposits, as on March 31, 2009, registered 1.5 percentage points decline over the position a year ago. While the share of savings deposits remained by and large the same in both the years, term deposits increased by 1.9 percentage points.

• ‘Household’ sector, with 58.3 per cent share in total deposits, was the largest holder of outstanding deposits as on March 31, 2009; its share was 58.1 per cent in 2008. By end-March 2009, the share of ‘Private Corporate (Non-Financial)’ in total deposits recorded a rise, while ‘Financial’ and ‘Foreign’ sectors depicted a decline compared to the previous year.

• Term deposits contributed 73.5 per cent to incremental deposits during 2008-09 (63.1 per cent during 2007-08), while current deposits accounted for a reduced accretion at 5.2 per cent (18.3 per cent in 2007-08).

• The share of current deposits in total deposits recorded an increase in case of ‘Private Corporate (Non-Financial)’ and ‘Household’ sectors while it registered a decline in case of ‘Financial’ sector. On the other hand, the relative share of term deposits in total deposits increased in the case of ‘Private Corporate (Non-Financial)’ and ‘Household’ sectors, and declined in the case of ‘Government’, ‘Financial’ and ‘Foreign’ sectors.

• The share of term deposits in total deposits of metropolitan areas stood at 72.4 per cent as on March 31, 2009 – higher compared to 69.8 per cent in 2008. Savings deposits accounted for 43.5 per cent and 39.8 per cent share in total deposits of rural and semi-urban areas, while their share remained unchanged at 14.8 per cent in metropolitan areas.

(iii) International Banking Statistics of India: March 2010

The article presents an analysis of international liabilities and assets of banks in India), for the quarter ended March 2010. The data are classified under Locational Banking Statistics (LBS) and consolidated international/foreign claims under Consolidated Banking Statistics (CBS), and have been collected as per the reporting system of the Bank for International Settlements (BIS). 

Main Findings

• The international liabilities (in Rupees) of banks in India, at end-March 2010 grew by 17.0 per cent over the position a year ago and by 1.1 per cent over the previous quarter.

• The investment in the ADRs/ GDRs and equities of the banking sector by non-residents registered a substantial growth over the position a year ago.

• For the quarter, the overall increase in the international liabilities is due to the increase towards the USA, UAE, France and Bahrain.

• The share of the international liabilities towards the non-bank sector was higher at 75.6 per cent compared to 71.8 per cent a year ago.

• At end-March 2010, the international assets (in Rupees) of banks in India registered a growth of 7.4 per cent over the position a year ago and at 9.2 per cent over the previous quarter.

• The overall increase in the ‘Loans and Deposits’ component contributed to the growth of the international assets on annual as well as quarterly basis. However, the NOSTRO balances of the banks registered a decline over the previous year.

• For the quarter, the share of the non-bank sector in the international assets increased to 66.2 per cent from 60.2 per cent for the previous year.

• At end-March 2010, the international assets denominated in Pound Sterling and US Dollar, the share towards non-bank sector increased substantially over the previous year.

• The annual growth in consolidated international claims (in Rupees) of banks based on country of immediate risk, at end-March 2010, was 3.7 per cent compared to 32.6 per cent registered a year ago.

• Consolidated international claims of Indian banks on immediate risk basis, at end-March 2010, continued to be of short-term nature (less than one year) and accounted for 62.1 per cent of total claims compared to 62.4 per cent a year ago.

(iv) Performance of the Private Corporate Business Sector during the first half of 2010-11

            The article analyses the performance of Private Corporate Business Sector during First Half of 2010-11 based on abridged results of 2576 non-government non-financial listed companies and provides, inter alia, a brief analysis by size and industry.

Main Findings:

• The performance of non-government non-financial listed companies that broadly represent the private corporate sector bounced back to pre-crisis level and registered 21.5 per cent sales growth in H1: 2010-11 from the previous year’s relatively flat sales growth of (-) 0.6 per cent.

• Net profits, however, recorded lower growth mainly on account of higher input prices, rise in interest outflow and lower support from non-core other income. As a result, the profitability margins also contracted at the operating, gross and net profit level.

• Interest payments formed 2.8 per cent of sales and 20.2 per cent of gross profits. An analysis of companies with value of sales as the size differentiator revealed that companies with sales of more than ` 1000 crore dominated the overall corporate performance.

• It is also observed that sales size influenced growth and profitability – larger the size, higher was the sales growth as also the gross profit margin.

• In terms of the sectoral breakdown, companies in manufacturing and IT sector recorded robust sales growth. However, IT companies registered only a 5.9 per cent net profit growth.

• On the other hand, performance of companies in services sector was subdued in H1: 2010-11. A higher provision towards depreciation by companies in manufacturing and services sector indicates commissioning of investments in fixed assets.

• Industry-wise analysis revealed that sales growth was broad-based, except for cement and wholesale and retail trade industry.

• Profit performance of various industries was, however, mixed. While textiles, chemical fertilizers and pesticides, iron and steel, real estate and trading industries posted impressive growth in profits, cement, electrical machinery and other services industries registered lower profits as compared to H1: 2009-10.

Alpana Killawala
Chief General Manager

Press Release : 2010-2011/991