BEST BANKS IN INDIA

Sandipan Deb
Banking came to India 29 years after the Battle of Plassey, when The General Bank of India was set up. Twenty years later, in 1806, The Bank of Bengal was born in Calcutta, a bank that completed 200 years of successful operations last year. Except that, it is now called the State Bank of India. In 1865, nine years after the Sepoy Mutiny, appeared the first fully Indian-owned bank. It is now in its 152nd year, with no change in name on the way: Allahabad Bank.

In 1853, James Wilson founded The Chartered Bank, with its first branches in Bombay, Calcutta and Shanghai. It made its money financing trade in cotton from Bombay, indigo and tea from Calcutta, rice from Burma, sugar from Java, tobacco from Sumatra, hemp from Manila and silk from Yokohama. Today, after a friendly merger with The Standard Bank in 1969, it exists as Standard Chartered Bank, headquartered in London, with over 1,400 branches in over 50 countries.

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Indian banking hasn’t been doing too badly.

Today, 15 years after economic liberalisation began, we have a vibrant banking sector, powered by both improved-efficiency public sector banks and growth-hungry private ones. The number of instruments available, the number of services banks provide-to both retail and corporate customers, the levels of technology involved, would have been considered pure science fiction even 10 years ago. As India Inc has gained confidence and eyed more and more global deals, Indian banking has kept pace, with its advisory services, financial structuring expertise, negotiating skills; indeed, they have partnered India Inc in its global journey without missing a beat.

Along with information technology, banking is definitely one sector where we are ahead of China. China may have bigger banks, but the sector has too many skeletons in its closets, too many questionable loans on its books. There isn’t even a credible statistic of how many banks China has: the estimates range from 30,000 to 42,000. Together they hold $205 billion in non-performing loans, or 13% of all loans, according to the government’s own optimistic estimate (Private estimates range up to 40%).

This is a volume that celebrates all that is best and admirable in the Indian banking sector.

India’s Best Banks is a survey that The Financial Express conducts every year with Ernst & Young as knowledge partner. We like to believe that it is the best and most credible survey of its kind in the country. This survey eschews all qualitative and perceptual elements and focuses only on hard data to decide who the champions of the sector are. Five major criteria are used to compare performance of banks: Growth, Credit Quality, Strength and Soundness, Profitability and Efficiency/ Productivity. Each criterion is broken up into six sub-criteria. For instance, the sub-criteria selected-after careful thought-to measure Efficiency are Business per employee, Profit per employee, Spread/Total assets, Commission and Fees/Total Assets, Profit per branch, Operating expenses/Total Assets.

Every year, we also attempt to improve the methodology and rigour, and fine-tune the process to keep up with the times. For instance, today, with securitisation laws enacted, asset reconstruction companies established, higher regulatory provisioning policy in place, credit quality is less of a concern than it was some years ago. So this year, we have slightly reduced the weight for Credit Quality in the judging.

Along with our analysis of numbers, we present in this volume informed articles and interviews that should help our readers understand what is happening in the banking sector. We hope readers will find what we have here, useful.