COMPETITION COMMISSION OF INDIA

NEW DELHI

SYNOPSIS FOR INTERNSHIP ON

[Growth of Banking Companies And Interface with Competition law ]

In Addition to the Filled-up Application for Internship at CCI, New Delhi

DURATION OF INTERNSHIP

[1st June to 30th June ]

SUBMITTED BY

[UTKARSH MISHRA]
[B. com II.B (HONS)]
[Dr shakuntala Mishra notional rehabilitation university faculty of law]
[Utkarshmishra710@gmail.com]
Academic Session: 2016-17
 RESEARCH PROPOSAL

a) Title of the Internship: topic

The title for the internship at Competition Commission of India is “Growth of Banking
Companies interface with Competition Law.” This title deals with relationship between banking
Companies and Competition law in India.

b) Hypothesis:

This paper analyzes competition, growth, and performance in the banking industry. First, we
analyze the relationship between market structure and the performance of the banking industry.
Furthermore, we test hypotheses on whether size matters for individual banks' profit
performance.

c) Research Problem:

In many countries, banks, in part as a response to the weakened performance, have sought for
increases in the scale of their operations, sometimes on the basis of merger and acquisitions,
sometimes on the basis of their own strengths. This has resulted in an overall increase in the
concentration ratios in the banking industry in those countries, hence competition might have
weakened.

d.) Research Methodology:

The research Methodology used in this study is empirical in nature. All the data and information
provided in this study is collected from various internet sources.

e.) Research Questions:

1. What is the role of Competition Law in Banking Companies?

2. How the does Competition Law controls the Anti-Competitive agreements in Banks?
3. How Banking System Works in India?
4. How are Anti-Competitive Agreements framed in banks?
LITERATURE REVIEW

1. B.R. Nanda, Indian Banking and its Fraud, Surendra Pub, 2011
In the present day, Global Scenario Banking System has acquired new dimensions.
Banking did spread in India. Today, the banking system has entered into competitive
markets in areas covering resource mobilization, human resource development, customer
services and credit management as well. Banking Fraud is posing threat to Indian
economy. Fraud is any dishonest act and behavior by which one person gains or intends
to gain advantage over another person.
2. Indian Institute of Banking and Finance, Know your Banking-I : Basics of Banking,
Taxmann, 2010.
The book provides a comprehensive coverage of the principles of banking and other
important aspects of banking in India. The book is a part of the courseware designed for
Direct Selling Agents/Direct Marketing Agents keen to make a career in the field. Since
the book is basic in nature and requires no prior knowledge of banking it should be useful
and of interest to those who are keen to know about the working o banks with special
reference to India. This book is the first in the "Know Your Banking" series being
launched by IIBF."
INTRODUCTION

India is one of the top 10 economies in the world, where the banking sector has tremendous
potential to grow. The last decade saw customers embracing ATM, internet and mobile banking.
India‘s banking sector is currently valued at Rs. 81 trillion (US$ 1.31 trillion). It has the potential
to become the fifth largest banking industry in the world by 2020 and the third largest by 2025,
according to an industry report. The face of Indian banking has changed over the years. Banks
are now reaching out to the masses with technology to facilitate greater ease of communication,
and transactions are carried out through the Internet and mobile devices. A bank is a financial
institution that provides banking and other financial services to their customers. A bank is
generally understood as an institution which provides fundamental banking services such as
accepting deposits and providing loans. There are also nonbanking institutions that provide
certain banking services without meeting the legal definition of a bank. Banks are a subset of the
financial services industry. A banking system also referred as a system provided by the bank
which offers cash management services for customers, reporting the transactions of their
accounts and portfolios, throughout the day. The banking system in India should not only be
hassle free but it should be able to meet the 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. The Banks are the main participants of the financial
system in India. The Banking sector offers several facilities and opportunities to their customers.
All the banks safeguards the money and valuables and provide loans, credit, and payment
services, such as checking accounts, money orders, and cashier‘s cheques. The banks also offer
investment and insurance products. As a variety of models for cooperation and integration
among finance industries have emerged, some of the traditional distinctions between banks,
insurance companies, and securities firms have diminished. In spite of these changes, banks
continue to maintain and perform their primary role—accepting deposits and lending funds from
these deposits. Before the establishment of banks, the financial activities were handled by money
lenders and individuals. At that time the interest rates were very high. Again there were no
security of public savings and no uniformity regarding loans. So as to overcome such problems
the organized banking sector was established, which was fully regulated by the government. The
organized banking sector works within the financial system to provide loans, accept deposits and
provide other services to their customers.
DRAFT TABLE OF CONTENTS

I. Introduction..............................................................................................................
II. Indian Banking Sector—An Overview.....................................................................
III. Objective---------------------------------------------------------------------------------------
IV. Role of competition law in banking companies ------------------------------------------
V. challenges and opportunities-----------------------------------------------------------------
VI. Intense Competition---------------------------------------------------------------------------
VII. Competition and profitability----------------------------------------------------------------
VIII. Case laws---------------------------------------------------------------------------------------
IX. Bibliography-----------------------------------------------------------------------------------
EXPLANATION TO TABLE OF CONTENTS

1. Introduction- Today in India the service sector is contributing half of the Indian GDP
and the banking is most popular service sector in India. The significant role of banking
industry is essential to speed up the social economic development. Banks plays an
important role in the economic development of developing countries. Economic
development involves investment in various sectors of the economy.
2. Indian Banking Sector—An Overview- The Indian banking system is characterized by
a large number of banks with mixed ownership.2 The commercial banking segment
comprises 27 public sector banks in which the Government has majority ownership, 40
private sector banks, and 33 foreign banks. Total bank assets constituted a little over 70
percent of GDP in 2003-04. Public sector banks had 75 percent of the assets of the
banking system in 2003-04, while private and foreign banks held 25 percent. In 1991, by
comparison, public sector banks’ share of the total assets of the banking system was a
little over 90 percent
3. Objective- The objective of this synopsis is to explain the changing banking scenario, to
analyze the impact of liberalization, privatization & globalization and to study the
challenges and opportunities of national and commercial banks in changing banking
scenario. In addition to this, an attempt is made to understand the significance of banks in
India.
4. Role of competition law in banking companies- this deals with the role of Competition
Law in Banking Companies.
5. Challenges and opportunities- The Indian banking sector continues to face some
structural challenges. We have a relatively large number of banks, some of which are
sub-optimal in size and scale of operations. On the regulatory front, alignment with
global developments in banking supervision is a focus area for both regulators and banks.
6. Intense Competition- The RBI and Government of India kept banking industry open for
the participants of private sector banks and foreign banks. The foreign banks were also
permitted to set up shop on India either as branches or as subsidiaries. Due to this
 lowered entry barriers many new players have entered the market such as private banks,
foreign banks, nonbanking finance companies, etc.
7. Competition and profitability- competition is everywhere in india and there is lots of
profitability in every sector and the theory of profit also says that ‘more risk more gain no
risk no gain’
CASE- LAW STUDIES:

1. Muthoot Mercantil Limited…………………………………………Informant

And

Indian Overseas Bank………………………………………….Opposite Party 1

Canara Bank And Other Banks……………………………….Opposite Parties.

2. M/s Metalrod Ltd……………………………………………….. Informant

Vs.
M/s Religare Finvest Ltd………………………………………..Opposite Parties
3. Mr.Mohammed Tariq Sultan……………………………………….Informant
Vs.
1. Hongkong& Shanghai Banking Corporation Ltd.
2. Standard Chartered Bank Ltd.
3. Citibank N.A
4. H.D.F.0 Bank Ltd.
5. ICICI Bank Ltd.
6. Royal Bank of Scotland N.V
7. Kotak Mahindra Bank Ltd.
8. Barclays Bank Plc.
9. Deutsche Bank A.G.
10.HDFC Ltd.
11.India Bulls Financial Services Ltd.
12. Fullerton India Credit Company Ltd.
13.Into Pacific Housing Finance Ltd.
14.The Indian Banks Association………………………………….Opposite Parties
EXPECTED RESEARCH RESULTS

The study estimated the model for two different bank groups — public sector and new private
and foreign banks. The results point to monopolistic behavior of banks across time periods and
across bank groups, with a more robust H statistic for the second sub-period and for private and
foreign banks. The unit price of funds turned out to be significant in all specifications with
positive coefficients. The unit price of labor turns out to be significant and positively related to
interest and total revenue for the whole sample in the first sub-period and specifically for public
sector banks

The analysis of market structure of the banking industry in the main industrialized economies
shows that there is a very weak association between bank profitability and bank concentration.
This suggests that, on a national level, bank concentration does not result in monopoly profits in
the banking sector. This aggregate, sectoral, analysis is complemented with an investigation of
the micro-economic behavior of a sample of 100 international banks.
PUBLICATIONS CORRESPONDING TO TITLE

1. Bhide, M.G., A. Prasad, and S. Ghosh, 2001, “Banking Sector Reforms: A Critical
Overview,” Economic and Political Weekly, Special Issue on Money, Banking, and
Finance (February), pp. 399-408.
2. Government of India, 1991, Report of the Committee on the Financial System
(Chairman: Shri M. Narasimham) (New Delhi).
3. Government of India, 1998, Report of the Committee on Banking Sector Reforms
(Chairman: Shri M. Narasimham) (New Delhi).
4. B.R. Nanda, Indian Banking and its Fraud, Surendra Pub, 2011
5. Indian Institute of Banking & Finance, Know Your Banking-I: Basics of Banking,
taxmann, 2010.
INDEX OF REFERENCES/ BIBLIOGRAPHY

1. Bhide, M.G., A. Prasad, and S. Ghosh, 2001, “Banking Sector Reforms: A Critical
Overview,” Economic and Political Weekly, Special Issue on Money, Banking, and
Finance (February), pp. 399-408.
2. Government of India, 1991, Report of the Committee on the Financial System
(Chairman: Shri M. Narasimham) (New Delhi).
3. Government of India, 1998, Report of the Committee on Banking Sector Reforms
(Chairman: Shri M. Narasimham) (New Delhi)
4. Indian Institute of Banking and Finance, Know your Banking-I : Basics of Banking,
Taxmann, 2010.
5. B.R. Nanda, Indian Banking and its Fraud, Surendra Pub, 2011