PRE-BUDGET WISHES OF INDIAN BANKING AND FINANCIAL SERVICES

CONTENTS:
Importance of the Banking and Financial Services Past Year Highlights Problems Expectations From Budget 2012-13

Importance of Banking and Financial Services

Credit availability The reason for the development of modern economies. Mopping up of the small savings at reasonable rates with several options Indian Economy sustained during the global crisis due robust capital structure

Contribution in Indian GDP 17% Market Capitalization Rs. 13000 Billion (Banking Sector)

Employment Opportunities

Industry Segments Banking Insurance NBFC Mutual Funds Financial Intermediaries

Total Employment in 000s 1100-1200 200-300 25-30 15-20 2500-3000

TOTAL

4000-5000

Expected to further generate about 1.5 Million jobs

http://www.nsdcindia.org/pdf/bfsi.pdf

Key Players
State Bank of India 18%
Punjab National Bank 6% Bank of Baroda 5%

ICICI Bank 5%
Bank of India 5% Canara Bank 5%

HDFC Bank 4%
IDBI Bank 4%

PAST YEARS HIGHLIGHTS

Recapitalizations to the tune of Rs 60 billion by Government of India in PSU banks. Interest rate subvention of 1% on housing loans upto Rs 1.5 million on property value of upto Rs 2.5 million Additional 1% interest subvention (cumulative 3%) for farmers who repaid their crop loans on time New banking licenses for few private players and NBFC Services provided by life insurance companies in the area of investment to be brought into tax net on the same lines as ULIPs.

PROBLEMS

The allocation of Rs. 60 billion to recapitalization fund for PSUs was found to be low. The banking licenses were believed to be relatively longer term plan having limited impact in the near-to-medium term. Nearly 40% of population dont have bank accounts and only 15% have borrowed from banks. The Nonperforming Asset Problem

Expectations from the Financial Institutions

MUTUAL FUNDS:
If DTC is introduced Investment will be reduced ELSS can become ineligible for deduction Huge set-back for the mutual fund industry as well as equity markets STT abolished or reduced to 50%

INSURANCE:
ULIPs Raising the cap on FDI Separate limit for life and health insurance premiums Service tax exemption on term and health insurance products Service tax exemption on preventive checkups

From the Banking Sector

Financial Inclusion Full provision for NPAs. Reduce the lock-in period on tax saving FDs to 3 years. Monetary Policy Outlook Check Outsourcing : Employees Viewpoint Flexible Collection Policies for PSUs Allow banks to raise money via tax-free infrastructure bonds Work on Banking Regulation Act for allocating new banking licenses Explicit mention on the amount of recapitalization funds available for PSU banks

BIBLIOGRAPHY

http://www.indiainfoline.com/Markets/News/Whats-in-the-Budget-for-the-Bankingsector/5094689369 http://economictimes.indiatimes.com/news/news-byindustry/banking/finance/banking/budget-2012-agenda-for-banking-sector-thisyear/articleshow/12003222.cms?curpg=2 http://www.moneycontrol.com/news/mf-experts/budget-expectations-steps-that-canbe-taken-formf-industry_675398.html http://economictimes.indiatimes.com/news/news-byindustry/banking/finance/banking/banks-seek-clarity-in-classification-of-restructuredloans/articleshow/12085703.cms http://economictimes.indiatimes.com/news/news-byindustry/banking/finance/banking/budget-2012-banks-want-lock-in-period-for-fds-upto-rs-1-lakh-reduced-to-3-years/articleshow/11755430.cms http://economictimes.indiatimes.com/news/economy/finance/budget-2012-rbi-mayreduce-crr-by-0-5-says-royal-bank-of-scotland/articleshow/12164036.cms http://www.moneycontrol.com/news/insurance/budget-expectations-four-things-thatinsurance-sector-wantsbudget_677625.html