The Theory Of Banking

Why are banks so special? Banks lie at the heart of the financial system in any economy. Banks serve the vital function of encouraging individuals and institutions to save and to channelize those savings to those individuals and institutions needing to invest in economic and other activities. This very process fuels the economy to grow by creating and expanding jobs and enhancing the living standards of the people. Banks perform the essential function of channeling funds from the savers (surplus economic units) to users (deficit economic units). In this though looking like a simple economic activity, banks are exposed to very many risks; the prime being the liquidity risk. Banks can broadly be said to perform some basic functions, viz.; (a) maturity transformation (b) risk transformation and (c) convenience denomination. Under maturity transformation, the financial institutions more often the banks convert the short-term liabilities into long-term assets. By converting the risk investments into relatively less risky ones they perform the risk transformation and by matching small deposits with the large loans and vice versa they perform the function of convenience denomination.
The primary advantages of financial intermediaries have been the cost advantage and market failure protection. The essential features of cost advantage being; reconciling the conflicting preferences of savers and users, risk aversion by spreading out and mitigating the risk, economies of scale by reducing the intermediation costs both for the savers and users and economies of scope by product innovation and output enhancement using the same inputs. Yet, the benefits of this maturity transformation of funds can be pooled conceding a greater proportion to be directed to long-term illiquid investments, and lesser proportion held back to meet the liquidity needs. Apart from providing liquidity risk sharing, financial intermediaries resolve inefficiencies due to asymmetric information, and proffer incentives by way of active monitoring. Further, a broadly accepted raison for financial intermediation is scale economics in transactions and logistics.
Accordingly, in essence we can make out the following frontiers of reasoning that aim at elucidating the role of financial intermediaries: (i) economies of scale in over-coming information costs/problems (ii) economies of scale in transaction costs (iii) Provision of financial claims with superior liquidity attributes with lower price risk (iv) maturity intermediation by bearing the risk of mismatch of maturities of assets and liabilities (v) transmission of monetary supply in the financial sys-tem (vi) allocation of credit to the needy sector of the economy (vii) provide opportunities for savers with wealth maximization portfolios (viii) and provision of payments and transfers related services (ix) denomination intermediation in order to facilitate different stakeholders in the financial system and (x) and aiding regulation of the financial system.

Conventional economic theory emphasized much on the real sector of the economy and ignored the significance of financial intermediation. In a world of 'Arrow-Debreu' (Arrow and Debreu, 1954), where the markets are perfect with information symmetry and absence of any other frictions, we can assume the non-requirement of financial intermediaries. However, in our real world scenarios, which are quite different from that imagined by Arrow and Debreu, we find the evidence of the increasing role of financial intermediaries more particularly the banks. Such evidence has been manifested in several ways, ranging from a significant correlation between the size of the financial system and the level of the country's economic development (King and Levine, 1993) to differences in the way the bank based financial systems and the market based financial systems1.By its very nature, banking is an endeavour to manage multiple and seemingly opposing needs. Banks while stand ready to provide liquidity on demand to their depositors through the checking accounts and to ex-tend credit as well as the much-needed liquidity to their borrowers through lines of credit. Banks largely financed with demand deposits is considered efficient model of financial intermediation in channeling financial resources from savers (investors) of uncertain consumption needs to obligors (borrowers) that are difficult to collect from (Figure-1.1). In essence, banks acquire skills to compel the obligors to repay and commit to use these skills on behalf of the savers by issuing demandable claims (Diamond and Rajan, 2001). Accordingly, banks play a central role in provision of funds to potentially long-term projects simultaneously allowing the savers to consume when needed.
One of the significant contributions that financial intermediaries make is their willingness to accept risky loans from borrowers, while issuing low-risk securities to their depositors and other funds providers. These service providers engage in risky arbitrage across the financial markets and sell risk-management services as well. Banking which is essentially a financial inter-mediation is seldom felt as less risky for the reason that more often banks make heavy use of short-term debt2. Whereas short-term debt holders can run away if they sense doubts about an institution, equity holders and long-term debt holders do not cut and run so easily. Diamond and Dybvig (1983) established almost three decades ago that this could create fragile institutions even in the absence of risk associated with the assets that a bank holds. However, Diamond and Dybvig's study probably knowingly missed out that, in fact, banks' assets are risky.
Primarily banks are such financial intermediaries, which offer services on both the sides of their balance sheet. Bryant (1980) observes that banks offer this intermediation to the depositors by providing the returns that they could not gain by trading their assets straightaway with borrowers. This denomination intermediation coupled with transformation of illiquid assets into liquid liabilities is a substantive function of the banks (Diamond and Dybvig, 1983, 1986). Banks offer ex ante protection to the risk-averse savers who are uncertain about the requirement of their future consumption requirements. In this backdrop, Bhattacharya et al., (1998) have shown that banks are providers of short-run consumption possibilities to the savers. In other words, banks enhance risk sharing and improve ex ante welfare by assuring better payoffs for short-term consumption and lesser payoffs for long-term consumption in contrast to a scenario where such intermediaries would be absent. Accordingly, this intermediation leads to expansion in liquidity and risk sharing for different agents in the economy (Diamond and Dybvig, 1986).
Furthermore, not only are banks' assets risky, but also banks are highly leveraged institutions which renders them heavily exposed to exorbitantly high debt-equity ratios. This insinuates that the distinction between illiquidity and solvency could be difficult in practice. It is in this construct, in which long-term assets are funded by volatile short-term deposits, makes the banks so risky. Nevertheless, many consider loans to banks as less risky. This would be like an idea in alchemy that risk free deposits could never be backed up by long-term risky investments in isolation. While the short-term creditors to these banks can ever run if they suspect to have doubts about a bank, on the contrary the equity holders and long-term creditors cannot cut and run so easily.

Evolution of Indian banking
For decades, banks in India have played an important role in shaping the financial system and thereby contributing for economic development. This vital role of the banks in India continues even today albeit the trends in banking delivery has undergone a sea change with the advancement in usage of information technology as well as design and delivery of customer service oriented products. Although there has been an extensive mention of existence of banking in India even during the days of Rig Veda, the comparable banking understandable in terms of modern banking can be traced to British rule in India during which agency houses carried on the banking business. The first bank in India ' The Hindustan Bank was established in 1779 and later the General Bank of India was started in 1786. Three more banks namely, the Bank of Bengal (1809), the Bank of Bombay (1840), and the Bank of Madras (1843) were formed and were popularly known as 'Presidency Banks'. Later in 1920, all the three presidency banks were amalgamated to form the Imperial Bank of India on 27th January 1921.
The passing of the Reserve Bank of India Act in 1934 and the consequent formation of Reserve Bank of India (RBI) in 1935 heralded a new era in the Indian banking evolution. Again, with the passing of the State Bank of India Act in 1955, the undertaking of the Imperial Bank of India was taken over by State Bank of India (SBI).
The Swadeshi movement gave a new dimension to the evolution of banking in India by giving a fillip to the formation of joint stock banking companies like; The Punjab National Bank Ltd., Bank of India Ltd., Canara Bank Ltd., Indian Bank Ltd., the Bank of Baroda Ltd., the Central Bank of India Ltd., etc. By 1941, there were around 41 Indian banking companies.
Post-Independence period in Indian banking witnessed the emergence of Reserve Bank of India as India's central banking authority after it was nationalized and taken over completely by the Government of India. In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) 'to regulate, control, and inspect the banks in India'. Further, the Indian government decided to nationalize the banks as they failed to heed to the government directions in enhancing credit to the priority sectors as directed by the government. Consequently, 14 largest commercial banks nationalized on July 19, 1969. Further, a second dose of nationalization of 6 more commercial banks followed in 1980. Nationalization of banks witnessed a rapid expansion of bank branch network in India. Again in 1976, under the Regional Rural Banks Act, several Regional Rural Banks46 (RRBs) were set up.

India opened up its banking sector in 1991-92 as a part of globalization of Indian economy. The financial sector reforms initiated by the government could bring in tectonic changes in the structure and functioning of the commercial banks. Indian Banking structure is broadly made up of Scheduled and unscheduled banks. Scheduled banks contribute to more than 95 percent of the banking in India. Scheduled commercial banks include 26 public sector banks (State Bank of India and its five associates, 19 nationalized banks and IDBI Bank Ltd.), new private sector banks, 14 old private sector banks and 36 foreign banks. The number of SCBs increased to 83 in 2010-11 from 81 in 2009-10.
As mentioned earlier, RRBs are also scheduled commercial banks with a specific focus and agenda unlike the commercial banks whose operations are unlimited. RRBs are sponsored by commercial banks along with the Central Government and the concerned State Governments. As at the end of March 2011, there were, 82 RRBs functioning in the country (reduced from 196 in early 2000s on account of restructuring and amalgamation of existing RRBs to improve their financial soundness).
There were 9741cooperatives in the country as at the end of March 2011 amongst which the Urban Cooperative Banks (UCBs) were 1645 and rural cooperatives were 95765. Amongst the UCBs only 53 were scheduled and the remaining 1592 were unscheduled ones. In addition, amongst the rural cooperatives, long-term cooperatives49 constituted 717 and the short-term cooperatives were 95048. While the cooperative banks have a long history of their own, due to various reasons such as; Lack of recognition of cooperatives as economic institutions, structural diversity across states, design issues, board and management interface and accountability and politicization of cooperatives and control/interference by government, etc., they have been constrained in attaining their expected performance.
Development Banks are generally termed as all India financial institutions. As at end-March 2011, there were five financial institutions (FIs) under the regulation of the Reserve Bank viz., EXIM Bank, NABARD, NHB, SIDBI and IIBI. Of these, four FIs (EXIM Bank, NABARD, NHB and SIDBI) are under full-fledged regulation and supervision of the Reserve Bank of India.

Basel Accords II&III

The first concrete evidences of global coordination in banking regulation were felt towards the end of 1974, when the G-10 countries (now it is G-2012 group of nations) took initiative to form the Basel Committee on Banking Supervision (BCBS), under the auspices of the Bank for International Settlements (BIS), comprising of Central Bank Governors from the participating countries. This was prompted by the Herstatt accident, which triggered the cause for essential global coordination in international settlements.

The Basel Committee on Banking Supervision provides a forum for regular cooperation on banking supervisory matters. Its objective is to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide. It seeks to do so by exchanging information on national supervisory issues, approaches, and techniques, with a view to promoting common understanding. At times, the Committee uses this common understanding to develop guidelines and supervisory standards in areas where they are considered desirable. In this regard, the Committee is best known for its international standards on capital adequacy; the Core Principles for Effective Banking Supervision; and the Concordat on cross-border banking supervision.

According to BCBS, International Convergence of Capital Measurement and Capital Standards, A Revised Framework21 Comprehensive Version introduced in 2006 (also known as Basel'II) is a revised version of the 1988 Basel'I document. This updated document seeks to improve risk calculation in capital measurement by introducing three prominent pillars,

The more generalist approach of Basel-I was found to be inadequate to regulate the banks effectively in the fast changing financial sector developments and transforming global economic scenario. Its exclusive focus on only credit risk was not enough as the banks were faced with other emerging risks such as market risk and operation risk. Further, one of the main criticisms against Basel-I was its inconsiderateness to the variations in risk (both between and within risk categories) was that it had the potential to increase the incentive for risk-taking behavior even in the absence of risk bearing capabilities. It is argued that attaching a risk weight of 100% to all commercial loans irrespective of the counterparty, let the banks to pursue higher-risk (in order to attain higher return) lending as this requires no more capital than less-risky lending but has greater upside income potential (Hogan & Sharpe, 1997a and 1997b and Gupta, 2003: 74). As such, there was a need to address this shortcoming by enabling the use of a much wider range of credit-risk weights, by allowing the use of varied approaches in determining risk weights and by raising the capital requirement to shield the banks from the risks they face.

Capital elements include Tier 1, Tier 2 and Tier 3 capital:
While Tier 1 capital includes (a) Paid-up share capital/ common stock and (b) Disclosed reserves, tier 2 capital includes (a) Undisclosed reserves (b) Asset revaluation reserves (c) General provisions/general loan-loss reserves (subject to provisions of paragraphs 42 and 43 of the document) (d) Hybrid (debt/equity) capital instruments and (e) Subordinated debt. At the discretion of their national authority, banks may also use a Tier 3 capital consisting of short-term subordinated debt as defined in the document for the sole purpose of meeting a proportion of the capital requirements for market risks.
Basel-II has introduced three possible approaches to the computation of the capital requirement for credit risk; the standardized (externally set) risk weights and two approaches that rely on internal ratings (the foundation internal ratings basis, FIRB, and the advanced internal ratings basis, AIRB).
The computation of capital requirement for credit risk begins by classifying a bank's assets into five categories viz, corporate, sovereign, bank, retail and equity, within which there are further sub-groups reflecting the different risk parameters for each asset-type. The capital requirement for each sub-group represents an effort to capture the average probability that a loan to each category of borrower would default, and the proportion of the loan that would be lost if default occurred.
Under the standardized approach, risk-weights are prescribed for each risk category, where the risk of each category is rated by the borrower's externally-determined credit-rating agencies23. The amount of the loans in each category is multiplied by the prescribed risk weight and the product is multiplied by 8 per cent to determine the minimum capital requirement. To illustrate, there are six credit-rating grades for corporate loans, where grade 1 covers loans rated AAA to AA' (on Standard and Poor's long-term scale), grade 2 covers A+ to A' and so on. The standard risk weights vary from 20 per cent to 150 per cent for these grades. Though this is the 'default' approach, and can be regarded as an extension of Basel-I, it signifies a considerable advance. The standardized approach requires an improvement in risk-management systems to generate the data to satisfy Basel-II's more granular risk categories.
Pillar 1 improves the computation of regulatory capital in three significant ways. First, it uses a more granular approach to credit-risk weights; second, it provides banks (subject to the regulator's approval) with a choice of methods for calculating risk weights for certain types of risk; and third, it incorporates operating risk into the capital requirement. The anatomy of Pillar-1 is illustrated in Figure-3.4, which exhibits the Basel-II innovations in bold type to differentiate them from those of Basel-I. Further, capital requirement estimations for operating risk are offered with three approaches viz, Basic indicator approach, Standardized approaches and advanced measurement approach.
Basel-II has introduced three possible approaches to the computation of the capital requirement for credit risk; the standardized (externally set) risk weights and two approaches that rely on internal ratings (the foundation internal ratings basis, FIRB, and the advanced internal ratings basis, AIRB).
The computation of capital requirement for credit risk begins by classifying a bank's assets into five categories viz, corporate, sovereign, bank, retail and equity, within which there are further sub-groups reflecting the different risk parameters for each asset-type. The capital requirement for each sub-group represents an effort to capture the average probability that a loan to each category of borrower would default, and the proportion of the loan that would be lost if default occurred.
Under the standardized approach, risk-weights are prescribed for each risk category, where the risk of each category is rated by the borrower's externally-determined credit-rating agencies23. The amount of the loans in each category is multiplied by the prescribed risk weight and the product is multiplied by 8 per cent to determine the minimum capital requirement. To illustrate, there are six credit-rating grades for corporate loans, where grade 1 covers loans rated AAA to AA' (on Standard and Poor's long-term scale), grade 2 covers A+ to A' and so on. The standard risk weights vary from 20 per cent to 150 per cent for these grades. Though this is the 'default' approach, and can be regarded as an extension of Basel-I, it signifies a considerable advance. The standardized approach requires an improvement in risk-management systems to generate the data to satisfy Basel-II's more granular risk categories.
Credit Risk Management under Basel-II
Minimum Capital Requirements under Basel'II require banks to hold a minimum amount of capital for each loan largely independent of the risk of this loan. Banks should, therefore, hold more capital for more risky credit exposures and less capital for less risky credit exposures. Basel'II has two different approaches to determine capital risk-weights: the external ratings-based approach (or Standardized Approach, SA) and the Internal Rating-Based approach (IRB). These risk-weights need to be multiplied by the 'exposure at default' (EAD) to obtain the risk-weighted exposures. Capital requirements are can be derived by dividing the risk-weights by 12.5. The credit risk constitutes of the risk of loss due to non-payment by an obligor (debtor) of a loan or other lines of credit.

Post crisis, the global initiatives to strengthen the financial regulatory system are driven by the leadership of G-20 under the auspices of Financial Stability Board (FSB) and the Basel Committee on Banking Supervision (BCBS) .Immediately after the crisis, the Basel Committee , in July 2009 came out with certain measures also called enhancement to Basel II to plug the loopholes in its capital rules ,which were exploited to arbitrage capital by parking certain banking book positions in the trading book which required less capital . The Basel committee published its Basel III rules in December 2010. Learning the lessons from the crisis, the objectives of Basel III have been to minimize the probability of recurrence of a crisis of such magnitude. Towards this end, the Basel III has set its objectives to improve the shock absorbing capacity of each and every individual bank as the first order of defense and in the worst case scenario, if it is inevitable that one or a few banks to fail . Basel III has measures to ensure that the banking system as a whole does not crumble and its spill-over impact on the real economy is minimized. Basel III has in effect, some micro prudential elements so that risk is contained in each individual institution and macro prudential overlay that will 'lean against the wind 'to take care of issues relating to the systemic crisis. The Basel III framework sets out higher and better quality capital, enhanced risk coverage, the introduction of a leverage ratio as a back-stop to the risk-based requirement, measures to promote the buildup of capital that can be drawn down in times of stress and the introduction of compliance to global liquidity standards

Implementation: From Basel II to Basel III

Under Basel III guidelines, total regulatory capital will consist of the sum of the following categories:
a. Common Equity Tier 1
b. Additional Tier 1
Furthermore, in addition to the minimum Common Equity Tier I capital of 5.5% of RWAs, banks are also required to maintain a capital conservation buffer (CCB) of 2.5% of RWAs in the form of common equity Tier I capital. Consequently, with full implementation of capital ratio and CCB the capital requirements are summarized in table here below:

According to RBI, the common equity component of Tier 1 capital will comprise of
(a) Common shares (paid-up equity capital) issued by the bank, which meet the criteria for classification as common shares for regulatory purposes
(b) Stock surplus (share premium) resulting from the issue of common shares.
(c) Statutory reserves.
(d) Capital reserves representing surplus arising out of sale proceeds of assets.
(e) Other disclosed free reserves, if any (f) Balance in Profit & Loss Account at the end of the previous financial year.
(g) While calculating capital adequacy at the consolidated level, common shares issued by consolidated subsidiaries of the bank and held by third parties (i.e. minority interest) which meet the criteria for inclusion in Common Equity Tier 1 capital.
(h) Less: Regulatory adjustments/ deductions applied in the calculation of Common Equity Tier 1 capital.

Additional Tier I capital according to RBI consists of the sum of the following elements:
(A) Perpetual non-cumulative preference shares (PNCPS), which comply with the regulatory requirements.
(B) Stock surplus (share premium) resulting from the issue of instruments included in Additional Tier 1 capital; (iii) Debt capital instruments eligible for inclusion in Additional Tier I capital, which comply with the regulatory requirements
(C) Any other type of instrument generally notified by the Reserve Bank from time to time for inclusion in Additional Tier 1 capital;
(D) While calculating capital adequacy at the consolidated level, Additional Tier 1 instruments issued by consolidated subsidiaries of the bank and held by third parties which meet the criteria for inclusion in Additional Tier 1 capital.
(E) Less: Regulatory adjustments/deductions applied in the calculation of Additional Tier 1 capital

(i) General Provisions and Loss Reserves: - According to RBI guidelines, the following are reckoned as general provisions and loss reserves:-
(a) Provisions or loan-loss reserves held against future, presently unidentified losses, which are freely available to meet losses, which subsequently materialize, will qualify for inclusion within Tier 2 capital. Accordingly, general provisions on standard assets, floating provisions65, provisions held for country exposures, investment reserve account, excess provisions which arise on account of sale of NPAs and 'countercyclical provisioning buffer'66 will qualify for inclusion in Tier 2 capital. However, these items together will be admitted as Tier 2 capital up to a maximum of 1.25% of the total credit risk-weighted assets under the standardized approach. Under Internal Ratings Based (IRB) approach, where the total expected loss amount is less than total eligible provisions, banks may recognize the difference as Tier 2 capital up to a maximum of 0.6 % of credit-risk weighted assets calculated under the IRB approach.
(b) Provisions attributed to identified deterioration of particular assets or loan liabilities, whether individual or grouped should be excluded. Accordingly, for example, specific provisions on NPAs, both at individual account or at portfolio level, provisions in lieu of diminution in the fair value of assets in the case of restructured advances, provisions against depreciation in the value of investments will be excluded.
(ii) Debt Capital Instruments issued by the banks;
(iii) Preference Share Capital Instruments [perpetual cumulative preference shares (PCPS)/redeemable non-cumulative preference shares (RNCPS)/redeemable cumulative preference shares (RCPS)] issued by the banks;
(iv) Stock surplus (share premium) resulting from the issue of instruments included in Tier 2 capital;
(v) While calculating capital adequacy at the consolidated level, Tier 2 capital instruments issued by consolidated subsidiaries of the bank and held by third parties, which meet the criteria for inclusion in Tier 2 capital;
(vi) Revaluation reserves at a discount of 55%.
(vii) Any other type of instrument generally notified by the RBI from time to time for inclusion in Tier 2 capital.
(viii) Less: Regulatory adjustments/deductions applied in the calculation of Tier 2 capital.
The proposed Basel III guidelines seek to enhance the minimum core capital (after stringent deductions) introduce a capital conservation buffer (with defined triggers) and prescribe a countercyclical buffer (to be built in times of excessive credit growth at the national level)


Basel III recommends supplementing the risk-based capital of Basel II with a bank leverage ratio. This leverage ratio is based on banks' total exposure and is expected to protect against their model risks and measurement errors. While the numerator of the leverage ratio consists of high quality capital, the denominator includes both the on-balance sheet and off-balance sheet assets. The aim of the leverage ratio is to limit the banks' leverage and discourage rapid deleveraging that may destabilize the overall economy. The overall economy can be destabilized by loss spiral. A loss spiral follows when leveraged investors' assets drop in value and hence their net worth declines drastically because of the effect of leverage.

Source :(Dr.V.V.Barthwal, 2013)

Basel III proposals recommend that high quality assets, total repurchase agreements, and securitizations be included in the calculation of exposure while disallowing netting. The committee has proposed a minimum Tier-1 leverage ratio of 3 percent in a July 26, 2010 statement.

BASE III made it necessary for banks to have capital conservation buffer. This buffer is considered as cushion to absorb shocks during period of economic stress. Banks can withdraw this buffer during period of stress. The banks are required to maintain buffer of 2.5% of risk weighted assets. Capital conservation buffer will be maintained in phased manner from 2016-2019 and value will range from 0.6%- 2.5%.These capital conservation rules are designed to avoid breach minimum capital requirement during period of crisis. Besides minimum capital requirement of 8% banks are required maintain capital conservation buffer of 2.5% of RWA in form of common equity to withstand future period of stress bringing total common equity of 7% of RWAs and total capital to RWAs to 10.5%.
As per research report of credit issue these norm will increase capital requirement of Indian banks by $20 billion to $30 billion (1 lakh crore to 1.5 lakh crore), since banks will need new additional capital to do same level of business, they may see sharp drop in ROA. Further, the incremental equity requirement in the Indian banking system may go to as high as Rs. 3.2 to 4 trillion over the next six years. According to ratings firm ICRA, the government's share in this could be Rs. 1.2 to 1.7 trillion. When banks with low core Tier-I shore up their capital to around 9% (required 8% and 1% cushion), their return on equity (ROE) could drop by 1% to 4%, which they could seek to compensate by raising their lending yields, increasing fee income, or rationalizing costs. Further incremental equity requirement of Indian banks may go to high as 3.2 to 6 trillion in six years. According to ICRA government share in this could be RS 1.2 to 1.7 trillion. When banks with low tier 1 shore up capital to 9% (required 8 % +1% cushion) their ROE will drop by 1% to 4%.
In case financial institution fails to meet fully combined buffer requirement i.e. (CET 1 capital required to meet requirements for capital conservation buffer extended by institution ' specific counter cycle buffer), distribution constraint on CET 1 capital is imposed.CET 1 capital includes:
' Payment of dividends
' Distribution of partly or fully paid shares bonus shares.
' A redemption or purchase by an institution of it owns shares or other specific instruments.

Basel III proposes the maintenance of capital buffers during the stable periods to absorb losses during the periods of stress. A capital buffer is a range of defined above the regulatory minimum capital requirement to insure against losses. Counter-cyclical capital buffers entail banks to hold capital greater than the regulatory minimum during the periods of stability to sufficiently maintain them during a sudden downward spiral. Regulators would enact constraints when capital levels fall within a range. For example a bank could maintain a capital buffer of 3 percent above the minimum capital requirement of 8 percent during the stable periods. Regulators would interfere when banks' capital ratio fell below 11 percent. Banks would then replenish capital by limiting dividends, share buybacks, and bonuses as bank's capital ratios approach the minimum regulatory requirement. Thus, the aim of the counter-cyclical buffers is to respond to excessive leverage and unwarranted lending during expansionary periods. Central Banks (Supervisors) can also release buffer during periods of stress to increase credit supply during economic downswings.

Source: Dr.V.V.Barthwal (implications of Basel III norms on Indian banks)

The main purpose of this chapter is to represent views of authors about the Basel II and Basel III norms. The following are the literature review by research scholars and many authors.
According to Dr. Swami the impact of the global financial crisis coupled with domestic policy paralysis have dented India's growth prospects much more than what had been predicted. The implementation of Basel III would considerably enhance the regulatory capital requirement of Indian banks apart from subjecting them to rigorous regulatory monitoring. Undoubtedly the increased capital requirements would result in the increase in the cost to banks as well as to borrowers. Given this context, this project has adequately assessed the impact of new capital requirements introduced under the Basel III framework on bank lending rates and loan growth and also estimated the extent of higher capital requirements for the Indian banks (Swamy, 2013). The main objective of Basel Committee on Banking Supervision (BCBS) has been to close gaps in international supervisory coverage in pursuit of two basic classic principals: that no foreign banking establishment should escape banking supervision and that supervision should be adequate.
According to Dr.V.V.Barthwal this paper especially examines the implications of Basel Accords on Indian Banks, with special reference to Basel' III Accord. It discusses salient features of Basel ' III Accords and its expected implication on Indian Banks. The paper depicts that effective implementation of Basel ' III will make Indian banks stronger, stable and sound so that they could deliver value to the real sector of economy. By far, the most important reform is that there should be a radical change in banks approach to risk management (Barthwal, 2013).According to M.Jain Indian's struggling banking sector will have low profitability as it seek to raise at least Rs. 5000 billion in extra capital to meet the new Basel III international banking standards.
According to R.Kant and S.C. Jain, the recent sub-prime crisis gave birth to Basel III, which also helps in the setting up of new two capital buffers of 2.5% each to increase the banks' equity power in their lending business (Rajiv Khosla, 2013). The Capital Conservation Buffer is simply a top up over and above the stipulated capital levels of 8%.On the other hand the discretionary Counter-Cyclical Buffer also aims to dampen the credit cycle in a booming economy to reduce the systemic risk and this article argues that the regulation of capital conservation buffer would be difficult once it gets depleted and on the other hand, the banks also find it attractive to boost up the credit growth in order to reduce the impact of additional capital requirements. There are also adverse impacts of discretionary buffers which would be upsetting growth plans of the industry. On the other hand, the release of discretionary buffers is only leverage enhancing enabling factor and is not by itself amount to increase in cash flows and liquidity for credit growth.
According to Prof N.L.Gupta and Dr.Meera Mehta the New Basel Capital Accord, also referred to as the Basel II, said that these norms helps to strengthen the soundness and stabilizes the banking system globally and it also reduces the competitive inequalities among banks (Prof N.L.Gupta, JUNE 2011). The primary objective of this new Accord was to make it more risk sensitive and also strengthens the banking systems in the periods of financial crisis. This paper also helps to examine the various aspects of Basel II guidelines and impact of this Basel II on Capital to Risk Asset ratio (CRAR); this also expected to capture the regulatory pressure on banks' lending power and ratio of Non-performing assets (NPAs) to total advances as measure for good financial health of banks. The study concludes that Basel II has led to significant positive changes in the risk structure of banks as their capital adequacy has improved. Due to this the NPAs for both Public sector as well as private sector banks has also declined. There is also exists a negative relationship between CAR and NPAs, which indicates that due to capital regulation, banks have to increase the CAR which led to the decrease in NPAs.
According to M.SARMA and Y.NIKAIDO, one particular prudential regulation i.e. the capital adequacy requirement in the banking sector. Capital adequacy is an indicator of the financial health of the banking system. It is measured by the capital to risk-weighted asset ratio (CRAR), 1 defined as the ratio of a bank's capital to its total risk-weighted assets. Financial regulators impose a capital adequacy norm into their banking and financial systems in order to absorb unforeseen losses due to risky investment (MANDIRA SARMA, Nov. 2, 2007) .Capital adequacy regime plays an important role in minimizing the cascading effects of banking and financial sector crises. According to R.Nitsure the Indian banking sector needs to look at Basel II as an opportunity to keep its own house in order. It is a framework important to improve the stability evolving banking industry, currently at a critical phase in its expansion. However, it is unfortunate that the current Basel proposals do not explicitly incorporate the mutual benefits of international diversification for advanced as well as developing countries. (NITSURE, (Mar. 19-2005) it is necessary that banks, banking supervisors and other market participants become more discriminating with regard to risks and better equipped to anticipate problems before they turn into crises [Fischer 2002]. As Basel II precisely tries to achieve this, it is perceived as a logical and appropriate successor to Basel I.
According to D. M. Nachane the bank capital ratios have become the main measure of good financial condition of banks with the help of concerted efforts by the authorities to achieve harmony in bank supervisory rules across countries (D. M. Nachane, 2001). This paper mainly focuses on the last two main factors that is examining bank responses towards capital requirement regulation and the costs associated with these responses to capital requirements .According to this article, the capital requirement of banks effects the bank behavior and it also effects the bank's internally generated goals. In fact the banks may respond to capital regulation in different ways and regulators need to consider what response they want to elicit while formulating new regulations. According to S. Ghosh and D M Nachane also cyclical effects of bank capital regulation have been an important issue of an extensive theoretical and empirical literature (Saibal Ghosh, 2013). First, observation suggests that state-owned banks tend to delay provisioning for impaired loans until it is too late. This study said that there is need for incentive policy to encourage banks to make good provisioning to take care of exigencies. Second, the analysis suggests the need for distinguishing between 'specific' and 'general' loan loss provisions made by banks. It is important that systems have a forward-looking focus, considering factors such as borrower repayment capacity and economic conditions, as well as ex post factors such as interest past due.
According to K. Satyanarayana he emphasized on the capital adequacy ratios of the bank. This paper helps to explain the capital adequacy position of all the public sector banks and 14 private sector banks. Both the apparent and real financial positions of these banks are brought out with the help of a few visible ratios. The author also estimates about the capital adequacy gap for each of the banks according to the time schedule prescribed by the RBI for 1994 and 1996 and analyses the possible opportunities available to these banks (Satyanarayana, 1994).Capital adequacy norms as per Basel accord 1988 has become one of the prudential regulatory instruments which is adopted by every regulatory and supervisory authorities of banking systems globally. According to this article, Public sector banks have apparently achieved the half way mark with a capital adequacy (tier I) ratio of 4.04 per cent as at the end of March 1992, one year ahead of the target set by RBI. According to R. Kant and S.C.Jain he argues that on the one side, the recoup of buffer of capital conservation would be tough once it gets finished and on the other, the banks would find it attractive which helps to boost up the credit growth in order to reduce the impact of additional capital requirements (Ravi Kant, VOL 7, APRIL 2013). The other adverse impacts of discretionary buffers would be upsetting growth plans of the banking sector, caution among investors and effect on the quality of the asset of the bank. On the contrary, the release of discretionary buffers is only leverage enhancing enabling factor and is not by itself has also increase in cash flows and liquidity for credit growth and it would not positively impact the banking profitability either.
According to C. P. Chandrasekhar, Consider, for example, the discussions that have been launched at Basel, on the set of undemocratically made norms for prudential regulation of banking that countries outside the decision- making club have been forced to adopt. Late last month Nout Wellink, chair- man of the Basel Committee, announced plans to formulate "a comprehensive strategy to address the fundamental weaknesses revealed by the financial market crisis related to the regulation, supervision and risk management of internationally-active banks". (Chandrasekhar, Dec. 13 - 19, 2008)) The committee chairman noted, "Ultimately, their goal is to ensure that the banking sector serves its traditional role as a shock absorber to the financial system, rather than an amplifier of risk between the financial sector and the real economy".
According to EPW Research Foundation (2007) the Basel II norms, which will covered all the banks till March 2009, had introduced tightly controlled and comprehensive coverage of risks that could mitigate against the financial inclusion (Foundation, (Mar. 17-23, 2007),). Basel II norms are relevant for multinational banks operating in overseas markets in impersonal ways without any relationship with the core activity of banks. On the other hand, domestic banks have to make standard provisioning to mitigate the market, credit and operational risk. In every situation, huge amounts of capital to be raised from the market at competitive rates of interest would have serious opportunity costs in the sense of diverting capital funds from manufacturing, infrastructures and other real sector activities. On the other handed, T.Rao and P.Ghosh also gave the compelling reasons for an objective and effective management of operational risk and a brief recall of the present method and regulation of Basel norms (Ghosh, 2008). Financial deregulation, globalization, growing technology dependence and other factors has witnessed an explosive growth of financial institutions but on the other hand it also leads to increase in the complexity of business and rise of risks associated with the reliability of technology and processes, data security and disaster recovery issues. The policy authorities are keen to banks adopting international best practices, worldwide measurement and quantification and are still a nascent subject for the authorities. In this study, the author highlighted the different methods of allocating capital and the importance of measure along with the management aspects for operational excellence of banks. A.Das he described the interrelationships between risk-taking and productivity in the state-owned banking system in India (Das A. , 2002).


4.1 SCOPE OF STUDY: This study will help us in determining the financial performance of the banks under the norms of Basel II and to forecast the implications of Basel III on the financial position of the public and private sector banks.
' To study the performance of financial banks from 2009-13 under Basel II.
' To estimate and forecast the implications of Basel III.

4.3 COLLECTING OF THE DATA: Conducting any sort of research data is needed. So for our research, there was plenty of information and for this information collected, many books, journals, pamphlets, information about the banks were studied and taken into considerations. We had taken 5 public sector and 5 private sector banks. This study is based on secondary data available on various web sites, Research papers, newspapers, articles.
Sources of Secondary Data:
' Statistical tables related to banks in India.
' Trend and progress report of banking in India.
' Annual reports of commercial banks.
' Banking report on currency and finance.
' Banking statistics ' basic statistical returns.
The most important application is in data fitting. The best fit in the least-squares sense minimizes the sum of squared residuals, a residual being the difference between an observed value and the fitted value provided by a model. When the problem has substantial uncertainties in the independent variable (the 'x' variable), then simple regression and least squares methods have problems; in such cases, the methodology required for fitting errors-in-variables models may be considered instead of that for least squares.
4.4 RESEARCH PLAN: The research plan includes the following procedure:
4.4.1 SAMPLE SIZE: In our study we have taken five top public sector banks and top five private sector banks on the basis of market capitalization.
Public sector banks Private sector banks
State bank of India. HDFC bank
Bank of Baroda. ICICI bank
Punjab national bank Kodak Mahindra bank
Bank of India Axis bank
Canara bank Indusind bank

4.4.2 SELECTION CRITERIA OF SAMPLE: We have selected banks on basis of market capitalization value. Ranking of banks has been done on basis of market capitalization value of last five years. Top five banks have been chosen from public sector and private sector.
4.4.3RANKING BASED SELECTION: We ranked banks according to their market capitalization into top five public sector banks and top five private sector banks.
4.4.4 STUDY PERIOD: From 2009-2013, we took the values of the considered ratios of both private and public sector banks.
ESTIMATED VALUES: From period of 2014-2019 we calculated forecasted values for both public and private sector banks.
' Ratio analysis
' Least square method.
These two tools of forecasting were chosen for our study. Under ratio analysis we took profitability, solvency ratios into consideration.

Quantitative analysis of information contained in a company's financial statements. Ratio analysis is based on line items in financial statements like the balance sheet, income statement and cash flow statement; the ratios of one item or a combination of items - to another item or combination are then calculated. Ratio analysis is used to evaluate various aspects of a company's operating and financial performance such as its efficiency, liquidity, profitability and solvency.

Under ratio analysis we took profitability ratios and solvency ratios and on basis of these two ratios we try to see effect on these ratios after implementation of Basel III.
Under profitability ratios we took following ratios into consideration.
' Interest spread ratio
' Net profit margin
' Return on long term funds.
' Adjusted return on net worth
' Adjusted cash margin.
' Return on net worth.
Under Solvency ratio we took following ratios into consideration:-
' Capital adequacy ratio.
' Advances /loan funds
' Credit deposit ratio.
' Investment deposit ratio.
' Cash deposit ratio.
' Total debt /owner funds.
LEAST SQUARE METHOD: A statistical technique to determine the line of best fit for a model. The least squares method is specified by an equation with certain parameters to observed data. This method is extensively used in regression analysis and estimation.

It refers to a measure of profitability. It is calculated by finding the net profit as a percentage of the revenue
Formula = Net profit / revenues
Where, net profit =revenue 'cost

INTERPRETATION: From above data i.e. before Basel III net profit margin of both public and private sector banks increased ,but after implementation of Basel III this ratio for public sector banks starts decreasing( forecasted value) while in case of private sector banks it starts increasing as compared to public sector banks. The reason behind this is that PSU Banks are having lesser degree of anatomy as interference from GOVT for priority sector advances and all other loans. Private sector banks have gained because of their faster decision making. In PSU NPAs has affected the income origination indicating inefficiency of system in recovery.
PSU even with expansion will not be able to capitalize on the situation. It indicates that the efficiency of private sector banks over the growing efficiency of PSU. Private sector banks are driven by performance linked incentive with keep lead and this will help private banks have good provisioning and hence private in market valuation is over due course of period.

A unit investment trust's estimated return over the life of the portfolio, calculated according to formulas proposed by the Securities and Exchange Commission (SEC). The return is calculated as the annual percentage return based on the yields of all the underlying securities in the portfolio, but is weighted to account for each security's market value and maturity. The return is presented net of estimated fees and the maximum offering price, but does not account for delays in income distributions from the fund.

INTERPRETATION: Here in both public and private sector banks this ratio is falling indicating increase in borrowing cost and decreased return in context of NPAs which increase. Negative forecast for future (increase return) and (decrease cost) it will after the value of firm and it will have negative effect on the shareholders. Erosion of quality of assets leading to decrease income generation. If the momentum is continued then reduce the income generating quality asset than NPA will increase. Low reporting, corporate debt restricting have eroded the picture, hence situation will be adverse soon for all banks.

A method for valuing an insurance company using capital values, surplus values, and an estimated value for business on the company's books. You start with the estimated value for business and add unrealized capital gains, the capital surplus and the voluntary reserves.

INTERPRETATION: Reflecting the same trend RLTA, return on net worth will also affected mainly for PSU but the trend in private or somewhat stable as the return are increasing till 2012 and then stable. Early warning for PSU to modify the system as per data. Additional infusion by government in PSU will dilute the return. Decrease in early per share will trigger panic.
In private bank , the return through banking operation is good along with increasing value of company , hence marking as stagnant / slow growth, whereas, decrease in return followed by decrease in value is evident indicating that the decrease in profit is at higher rates . Decline in income is due to passive attitude towards third party products like mutual fund, insurance, D-mat etc.


INTERPRETATION: Adjusted cash margin initially is in favor of PSU but after 2010-2013 Private Banks are able to keep a gap in comparison to cash profit margin (after adjusting for provisions)
' Market value of private banks will appreciate along with market capitalization. Hence private banks will face lesser constraint in issuing additional capital as there market price will help them to have better pricing and demand in market . Projecting a comfortable scenario under Basel III
' Bank productivity of private sector bank is greater than public sector banks.
' Profit per perform of private sector banks is greater than public sector banks.
' Private Banks with more emphasis on profit center approach are successful in implementing performance driven culture.
' Consolidate remuneration versus scale based comparatively of PSU with huge element of post retirement provisioning with decrease in cash margin.
' Government facing fiscal deficit having negative effect on government controlled PSU banks may be required to pay increase in dividend under preserve, which may affect their reserve position even after having average profit may face difficult situation.

A measure of a corporation's profitability; ROE reveals how much profit a company generates with the money shareholders have invested. Also known as return on net worth (RONW). It is calculated as shown here:

INTERPRETATION: Effect of interference of Government is clearly evident from chart. Forecasted return in growing for private sector where as for PSU moving towards zero return slowly and leading to ultimate extinction if efficiency ratio is not brought through dynamic change over. PSU banks might have to be divested by Government holding, so as to bring efficiency bank. Few exceptions in PSU might be there but as a whole PSU sector is going down .It will adversely affect their market valuations.

The difference between the average yields a financial institution receives from loans and other interest-accruing activities and the average rate it pays on deposits and borrowings. The net interest rate spread is a key determinant of a financial institution's profitability (or lack thereof).

INTERPRETATION: The difference between the average yields a financial institution receives from loans and other interest-accruing activities and the average rate it pays on deposits and borrowings. The net interest rate spread is a key determinant of a financial institution's profitability (or lack thereof).
PSU dominance in Government business like temporary deposits at cheaper rate without any competition or loan exposure under Government plans have given the leverage of cheaper fund and loan at market rate hence margin is better than private.

Investment Deposit Ratio = total investment
Total deposits

INTERPRETATION: Treasury returns, positive market sentiments over last decade, increase in derivative products have lead to increase in returns, decrease in risk exposures. Private Banks having better expertise to handle innovative products. Technology experts have their cost too but it is justified seeing higher returns.
A commonly used statistic for assessing a bank's liquidity by dividing the banks total loans by its total deposits. This number also known as LTD ratio is expressed as a percentage. If the ratio is too low, bank may not be earning as much as they could be.
CDR = total advances
Total deposits

INTERPRETATION: Trend indicates that the loan segment in Private bank declined hence showing the shift towards investment and better treasury exposure , as loans are restricted to prime segment and priority sector advances only hence earning maximum and no compromise in credit standards . Market return reflects economic conditions. In globalised era, treasury management has given various options for investment and exposure.

Cash deposit ratio is with reference to a bank's. The ratio of average cash balance held against total deposits of a particular branch.
Cash deposit ratio = (cash in hand + balance with RBI)
Total deposits

INTERPRETATION: PSU are holding lower cash as compared to private players, it enable them to decrease cost (maximum return) through more investment. Both private and public sector banks are reducing their cash holding in branches. Daily cash volume is maximum in private banks, it cost a bit but it adds to customer loyalty as their demands are met on short notice. Excessive cash volume may leads to issues of CMS.
The aggressive attitude of private banks indicates as the declining trends of cash holding. Better CMS arrangement is a reason for this type of shift.

Total debt to owners fund is a measure of the relationship between the capital contributed by creditors and the capital contributed by shareholders. It also shows the extent to which shareholder's equity can fulfill a company's obligations to creditors in the event of a liquidation.
Total debt to owners fund = total debt
Total equity

INTERPRETATION: Debt in capital maximization is increasing in PSU in order to make up for the capital tier II under Basel III norms. Debt element of tier II to be replaced in Tier I capital under new guidelines of Basel II and Basel III.
Market capitalization of private bank is increasing as compared to better debt to owner's fund. In favor of private bank, higher valuation of shares is due to autonomy. Increase in debt leads to increase in fixed interest obligation, hence equity is insider fund more trusted. Private bank with low debt portion have more options to borrow from market.
In PSU book value is more than market value, hence having undervalued stock, in Private sector bank, market value is more than book value hence having overvalued stock. Correction will restructure the portions. NPA positive and its better management will define the new leaders in industry. Increase in NPA will lead to increase in provisioning, decrease in net profit will cause negative image. Near zero is good as if it states that to have a very small element of debt in capital maximization, hence states easier adaptability of private banks over PSU under the new basal norms on capital requirement. Tier I capital is increasing in proportion to tier II.

INTERPRETATION: Resistance of positive gap management in private shows cost ' revenue canter approach (efficiency).
Chart indicates efficiency of treasury management department of private banks is better than PSU.
Projected value states that even private banks will be able to cope up with changing scenario. Cost of funds increase, return of funds decrease stating a negative scenario from business. Expansion of balance sheet will require more capital along with pressure of profit. Increase in financial return will affect the exposure limits to various sectors which will further be affected by risk weight ages.


INTERPRETATION: Financial charge ratio is almost constant for PSU stating an era where PSU banks are on border line and can slip into financial risk.
Whereas, the margin of private sector bank has increased continuously .Anything above 1 is good .Reason for increase and decrease in financial charge coverage ratio is margin of private banks is greater than the margin of PSU which states better profit to cope up with adverse situation.
Trend reflects continued upward movement for private and downward for PSU states slow movement of PSU into debt zone.
This ratio states the implication on the liquidity position of the banks under Basel III.

' The study was conducted in short period of time.
' The study was confined with few banks i.e. five public sector banks and five private sector banks.
' The study was conducted ignoring other factors which have effect on profitability of banks such as quantitative easing, inflation and change in RBI norms.
' Non availability of data from single source.
' The study does not include majority of factors which have impact on profitability of banks only few ratios were taken in to consideration during study.
' Sample was considered a true representation of entire population.

' There is a decrease in the net profit margin in the public sector banks and increase in private sector banks because the government has lesser degree of priority but on the other hand, private sector has benefited from the implementation of the Basel III norms.
' There is also a negative impact on the return from the long term funds due to the increase in the borrowing cost of the banks.
' There is also decrease in the return on the net worth of the company for the public sector banks and the banks should modify the system as per the rules and regulations.
' On the other hand, it does not affect the return on net worth in private sector but there is decrease in income due to passive attitude towards the third party.
' According to the adjusted cash margin, the bank productivity of private sector is greater than the public sector banks and the private banks more emphasize on the profit while implementing the performance driven culture.
' The forecasted return is increased in private sector banks but the public sector banks are moving towards the zero return. There may be a few exceptions but there is adverse on the whole public sector.
' According to the investment deposit ratio due to positive market sentiments there is increase in investment in the derivative products ,which will lead to increase in returns as well as decrease in risk exposure.
' As the public sector banks has lower cash deposit ratio as compared to the private sector banks which will lead to decrease the cost of banks , Due to this banks are focusing on decrease in cash holdings in their branches
' Financial charge ratio is the constant for public sector bank and margin of private sector bank has increased continuously this trend reflects the upward movement in private and down sector units.
' There is indication of positive efficiency of treasury management department of private sector s as compared to the public sector banks.
' According to adjusted cash margin the productivity of private sector banks is greater than public a sector banks and this is due to fact that the private banks more emphasize on profit while implementing the performance driven culture.
' The forecasted return is increased in private sector banks but public sector banks are moving towards zero return. There may be few exceptions but there will be adverse on whole public sector.

' Due to fall in profitability of PSU after implementation of Basel III, besides phase implementation of Basel III till 2019, more steps are required to improve performance such as ratio of capital adequacy ratio, capital conservation buffer.
' Other obligations such as capital conservation buffer, counter cycle buffer should be set in such a manner that Banks may not face difficulty in implementation of Basel III.
' Government should take steps to improve interest of shareholders toward investment in public sector if investors were given enough confidence banks would be able to raise sufficient capital which will help banks to recover from shortage of capital due to Basel III requirement.
' One of recommendation which will improve situation of Indian banks after implementation of Basel III is that as Government knows that banks needs more capital infusion almost 60000-75000 crore which will put Government in position of fiscal deficit so it is recommended to dilute stake of Government up to 26%.
' Besides phase implementation of Basel III till 2019 time should also be extended for banks so that they may run their business in normal manner and shortage of capital may be avoided.

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Market cap. of top 10 PSB
Rank Name of bank 2009 2010 2011 2012 2013
1 SBI 8,67,881 11,04,691 17,55,747 15,21,919 14,89,304
2 BANK OF BARODA 94,528 1,60,279 3,26,161 3,36,502 3,16,998
3 PUNJAB NATIONAL BANK 1,36,525 2,22,444 3,48,649 3,36,636 2,83,129
4 BANK OF INDIA 1,43,899 1,80,662 2,45,916 2,18,036 1,92,565
5 CANARA BANK 1,22,385 78,925 1,23,000 2,63,364 2,25,266
6 IDBI 54,721 66,687 1,51,624 1,47,653 1,30,943
7 UNION BANK OF INDIA 69,201 1,11,884 1,84,040 1,41,764 1,30,697
8 CENTRAL BANK OF INDIA not found 5,625.05
9 UCO BANK 6720.74 5234.59 4195.91
10 ORIENTAL BANK OF COMMERCE 42,341 54,618 1,23,852 86,944 84,027

Market capitalization of private banks
Rank Name of bank 2009 2010 2011 2012 2013
1 HDFC 41170.4 88458.26 108998.7 122040.1 148498.4
2 ICICI 37027.03 106210.8 128163.2 102274.2 120586.4
3 KOTAK MAHINDRA 9780.73 26077.43 33663.45 40178.19 48619.19
4 AXIS BANK 2,24,022 3,27,175 57626.85 47348.59 60891.99
5 INDUSIND 1146.65 7004.33 12282.35 14997.72 21165.52
6 YES 1481.93 8656.49 10758.18 12965.32 15368.66
7 ING VYSYA BANK 3885.84 5342.77 8636.76
8 FEDERAL BANK 2361.92 4565.65 7164.45 7286.73 8220.29
9 JAMMU & KASHMIR BANK 1507 3292.28 4239.58 4447.31 5773.24
10 KARUR VYSYA BANK 4257.46 3997.49 4843.3

2009 9 4.194 2009 9 5.632
2010 10 4.094 2010 10 5.936
2011 11 1.676 2011 11 1.284
2012 12 1.58 2012 12 1.068
2013 13 0.76 2013 13

SLOPE -0.9382 SLOPE -1.8344

2014 14 -0.3538 2014 14 -2.9404
2015 15 -1.292 2015 15 -4.7748
2016 16 -2.2302 2016 16 -6.6092
2017 17 -3.1684 2017 17 -8.4436
2018 18 -4.1066 2018 18 -10.278
2019 19 -5.0448 2019 19 -12.1124

2009 9 20.196 2009 9 11.624
2010 10 18.486 2010 10 13.14
2011 11 18.628 2011 11 13.96
2012 12 17.142 2012 12 15.598
2013 13 14.038 2013 13 15.002

SLOPE -1.366 SLOPE 0.9214
2014 14 13.6 2014 14 16.629
2015 15 12.234 2015 15 17.5504
2016 16 10.868 2016 16 18.4718
2017 17 9.502 2017 17 19.3932
2018 18 8.136 2018 18 20.3146
2019 19 6.77 2019 19 21.236

2009 9 13.746 2009 9 11.556
2010 10 13.114 2010 10 15.754
2011 11 13.656 2011 11 17.482
2012 12 12.9 2012 12 16.134
2013 13 10.592 2013 13 16.212

SLOPE -0.6522 SLOPE 0.9692

2014 14 10.845 2014 14 18.3352
2015 15 10.1928 2015 15 19.3044
2016 16 9.5406 2016 16 20.2736
2017 17 8.8884 2017 17 21.2428
2018 18 8.2362 2018 18 22.212
2019 19 7.584 2019 19 23.1812

2009 9 20.19 2009 9 12.056
2010 10 18.484 2010 10 13.416
2011 11 18.624 2011 11 13.976
2012 12 17.14 2012 12 15.594
2013 13 14.038 2013 13 15.002

SLOPE -1.3648 SLOPE 0.807
2014 14 13.6008 2014 14 16.4298
2015 15 12.236 2015 15 17.2368
2016 16 10.8712 2016 16 18.0438
2017 17 9.5064 2017 17 18.8508
2018 18 8.1416 2018 18 19.6578
2019 19 6.7768 2019 19 20.4648


2009 9 122.55 2009 9 87.114
2010 10 114.74 2010 10 65.242
2011 11 106.432 2011 11 60.912
2012 12 106.206 2012 12 78.018
2013 13 103.352 2013 13 73.456

SLOPE -4.693 SLOPE -1.454
2014 14 96.577 2014 14 68.5864
2015 15 91.884 2015 15 67.1324
2016 16 87.191 2016 16 65.6784
2017 17 82.498 2017 17 64.2244
2018 18 77.805 2018 18 62.7704
2019 19 73.112 2019 19 61.3164

2009 9 12.83 2009 9 9.608
2010 10 12.206 2010 10 13.778
2011 11 12.834 2011 11 15.796
2012 12 12.2 2012 12 14.968
2013 13 9.936 2013 13 15.214

SLOPE -0.5794 SLOPE 1.2402

2014 14 10.263 2014 14 17.3628
2015 15 9.6836 2015 15 18.8336
2016 16 9.1042 2016 16 20.0738
2017 17 8.5248 2017 17 21.314
2018 18 7.9454 2018 18 22.5542
2019 19 7.366 2019 19 23.7944

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