The Indian Banking Sector - Trends and Challenges
The Indian Banking sector is on the rise. It is one of the few sectors which have shown consistent growth for the past decade, during which the amount of deposits in India have increased by over 500%. Even after this magnitude of growth, financial inclusion in India is far below the international standards, indicating that there is still a long way to go. In other words, there is still plenty of growth to be seen. And grow it should, as even if all the banks in India consolidated, it would still be miniscule compared to the scale of Deutsche Bank and such.
With the huge potential for growth, there are investment opportunities to take advantage of. In this report, we have tried to bring forth the strengths and weaknesses of our banking system and how they may propel or hinder the future growth of the Indian banks.
Taking a long-term perspective of five to seven years, we sought to identify trends that will play a significant role in the growth of the sector in the future.
The report includes a section on the key ratios exclusive to the banking industry. This is important since we have kept the investor in mind while writing this report, and these ratios play an essential role in the financial analysis of the banks. There is only so much that can be interpreted from the documents released by the management, but we believe numbers tell a truer story.
Finally, we have set out to find the bank which fits in our framework better than the rest. We discuss the pros and cons of the other candidates and conclude the report by sharing an investment opportunity.