Indian banks to have another good year in 2011-12: S&P
According to a report by research firm Standard & Poor’s favorable demographics, good economic growth and under-penetration is benefiting the growth of Indian banking sector and banks is the country during 2011-2012 are expected to have another good year. The major challenges for the sector are risk management practices and rising competition. During the last fiscal, earnings pressure on the banks eased while another boosted profitability of the sector is the introduction of a base lending rate – which established a floor lending rate.
S&P credit analyst Geeta Chugh said rising interest rates helped Indian banks. Over half of the country’s population is below the age of 30 years. They are a major target group for banks. The country grew by 8.5 per cent last fiscal while the government expects the growth momentum to continue this year as well. In March 2012, government has set targets to provide banking facilities to all habitations having a population of over 2,000.
In 2010-2011 The non-performing loan ratio of Indian banks was about 2.6 per cent. S&P said it expects the numbers to fall this year. During the last three fiscals, the government injected Rs 23,200 core into state-owned banks to support capitalization. Besides a number of private and cooperative sector players there are 26 state sector banks in India.