Financial Performance of Select Scheduled Commercial Banks in India - With Reference to Pre and Post Recession Period

Abstract

The Scheduled Commercial Banks perform a significant role in the fiscal markets. They play a very important role in the economy of a nation. The Recession that began in December 2007 impacted the revenues and profitability of businesses around the world. The Indian banking system is relatively insulated from the factors leading to the disorder in the global banking business. Even as several top financial institutions and banks with footprint across several countries have collapse under the harsh attack of a global financial disorder, Indian banks and institutions have come out relatively safe from the recession. Built on strong financial basics, strict vigil on risk appetite and firm financial strategy. Indian banks have proved between the most flexible and sound banking institutions in the world. Further, the recent fixed liquidity in the Indian market is also qualitatively different from the global liquidity failure, which was caused by a crisis of confidence in banks lending to each other. While the main causes of international pressures are less significant here, Indian banks do face increased challenges due to domestic features. The banking sector faces profitability pressures due to higher financial support expenditures, the market-to-market requirements on investment portfolios and asset worth pressures due to a slowing economy. CRISIL (Credit Rating Information Services of India Limited) views the physically powerful capitalization of Indian banks as a positive feature in the current environment. Indian banks global exposure is relatively with international assets at six per cent of the total assets. Even banks with international operations have less than eleven per cent of their total assets outside India. The market-to-market losses on this investment portfolio will accordingly have only a limited financial impact. Indian banks dependence on global funding is also low.