Manual on Financial and Banking Statistics - RBI · Manual on Financial and Banking Statistics 2. BANKING STATISTICS The banking system in India comprises ... RBI fortnightly return

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Manual on Financial and Banking Statistics

2. BANKING STATISTICS

The banking system in India comprisescommercial and cooperative banks, of which theformer accounts for more than 90 per cent ofbanking system’s assets. Besides a few foreignand Indian private banks, the commercial bankscomprise nationalized banks (majority equityholding is with the Government), the State Bankof India (SBI) (majority equity holding being withthe Reserve Bank of India) and the associatebanks of SBI (majority holding being with StateBank of India). These banks, along with regionalrural banks, constitute the public sector (state-owned) banking system in India. A diagrammaticstructure of Indian banking, includingcooperatives, is presented in Figure 2.1. Bankingstatistics in India is predominantly compiled anddisseminated by the Reserve Bank of India (RBI)and National Bank for Agriculture and RuralDevelopment (NABARD). As the data collectionmechanism and the dissemination standardsthereof vary for commercial and cooperativebanks, this chapter presents relevant detailsseparately for commercial banks and cooperativebanks. However, there is some overlappinginformation which is collected both fromcommercial and cooperative banks. AccordinglySection 2.1 covers information on commercialbanks, while that of cooperative banks ispresented in Section 2.2.

2.1. Banking Statistics on CommercialBanks

As a part of central banking activities and theoverall economic perspective of the bankingsystem of the country, RBI collects a vastamount of information on the banking systemthrough various statutory and control (non-statutory) returns. Control returns cover variousaspects of banking information like spatialdistribution of deposits and credit, internationalbanking, priority sectors, etc. Each aspect isagain defined by its own separate statisticalsystem. Against this background, the informationbased on statutory returns and those of controlor special returns are presented separately.

2.1.1. Statistics based on Statutory Returns

The data received through various statutoryreturns in RBI are mainly used for monetarypolicy formulation and regulatory prescriptions.However, the information based on a few returnsis only disseminated to the public. Among them,statistics filed statutorily by banks on tworeturns/reports are most significant, viz., FormA/B and annual reports of banks (balance sheetand profit and loss account). These are discussedbelow.

2.1.1.1. Business of all Scheduled Banksin India

One of the most important statistics based onstatutory Form A/B returns, which aredisseminated by RBI (RBI Bulletin), are labelledunder the title “Business of all Scheduled Banksin India”. Each Scheduled Bank (commercial andcooperative bank) is required to furnish to theRBI fortnightly return showing major items ofits assets and liabilities in India as at the closeof business on reporting Friday, as per Section42(2) of RBI Act, 1934. Scheduled Banks arealso required to furnish a special returncorresponding to the last Friday of every monthif it is not a reporting Friday. This return issubmitted in the prescribed form viz., Form-Afor Scheduled Commercial Banks and Form-Bfor Scheduled Cooperative Banks. Provisionaldata are to be submitted within 7 days of thereference date and final data within 21 days.The format of Form ‘A’ was revised based onthe recommendation of the Working Group onMoney Supply: Analytics and Methodology ofCompilation (Chairman: Dr. Y. V. Reddy) inOctober 1998. In an attempt to fill the data gapsemerged due to the liberalisation andderegulation in the financial sector, theScheduled Commercial banks have been advisedas a sequel to the recommendations of the ReddyCommittee to report the returns under Section42(2) in a revised format with effect from 9th

October 1998. The revised format includesMemorandum to Form ‘A’ (paid-up capital,reserves, etc.), Annexure ‘A’ (details of foreign

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Banking Statistics

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currency liabilities and assets) and Annexure ‘B’(details of investments in non-SLR securities).

The provisional Section 42(2) data are releasedby RBI through weekly press communiqué andare also published in the Weekly StatisticalSupplement to RBI Bulletin (WSS). The final dataof Section 42(2) return are published in theReserve Bank of India Bulletin, every month, intwo tables, viz., i) All Scheduled Banks-Businessin India and ii) All Scheduled Commercial Banks-Business in India.

2.1.1.1.2. Measurement Needs of the Data

Section 42(2) data are primarily collected formonitoring the compliance of statutory cashreserve ratio (CRR) by Scheduled Banksoperating in India and also for money supplycompilation. In addition, these data are also usedfor monitoring overall banking business in India,including the trends of important indicators likeaggregate deposits, bank credit, investments, etc.These data are published in the two statutorypublications of RBI viz., (i) RBI Annual Reportand (ii) Report on Trend and Progress of Bankingin India.

2.1.1.1.3. Concepts, Definitions andClassifications

As per Section 42(2) of the RBI Act, 1934, everyscheduled bank is required to submit to theReserve Bank of India a return showing (i) theamount of its demand and time liabilities andthe amount of its borrowings from banks inIndia, classifying them into demand and timeliabilities, (ii) the total amount of legal tendernotes and coins held by it in India, (iii) thebalances held by it at other banks in currentaccount and the money at call and short noticein India, (iv) the investments (at book value) inCentral and State Government securitiesincluding Treasury Bills and Treasury depositreceipts, (v) the amount of advances in India,(vi) the inland bills purchased and discountedin India and foreign bills purchased anddiscounted, at the close of business on eachalternate Friday, and every such return shall besent not later than seven days after the date towhich it relates.

Effectively, Form ‘A’ & Form ‘B’ do not differ exceptfor one item viz., ‘Demand and Time Liabilities’under ‘Liabilities to the Banking System’, forwhich, the break-up into demand liabilities andtime liabilities are given separately in the case ofCooperative Banks (i.e., in Form ‘B’).

Definitions / classification of Liabilities to the‘Banking System’ as well as Liabilities to othersin India are given in the following paragraphs.

I. Liabilities to the Banking System in India

a) Demand and time deposits from banks

b) Borrowings from banks (includes inter-bank borrowings and inter-bankdeposits at call or short notice notexceeding 14 days).

c) Other demand and time liabilities

II. Liabilities to Others in India

a) Aggregate deposits (other than frombanks)

i) Demand

ii) Time

b) Borrowings (borrowings represent totalborrowings from outside the ‘BankingSystem’. Money at call and short noticeobtained from LIC, UTI etc. areincluded where as borrowings fromRBI, NABARD, EXIM Bank etc. areexcluded from this item.).

c) Other demand and time liabilities

Demand Deposits comprise:

(i) Current deposits

(ii) Demand liabilities portion of savings bankdeposits

(iii) Margins held against letter of credit/guarantees

(iv) Balances in overdue fixed deposits

(v) Cash certificates

(vi) Cumulative/Recurring deposits

(vii) Outstanding telegraphic and mailtransfers

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Banking Statistics

(viii) Demand drafts

(ix) Unclaimed deposits

(x) Credit balances in the cash creditaccounts

(xi) Deposits held as security for advanceswhich are payable on demand

Time Deposits comprise:

(i) Fixed deposits

(ii) Cash certificates

(iii) Cumulative and recurring deposits

(iv) Time liabilities portion of savings bankaccount

(v) Staff security deposits

(vi) Margins held against letters of credit ifnot payable on demand

(vii) Fixed deposits held as security foradvances

(viii) Money repayable at notice exceeding 14days or more received from LIC, UTI, etc.

Other Demand and Time Liabilities comprise:

(i) Interest accrued on deposits

(ii) Bills payable

(iii) Unpaid dividends

(iv) Suspense account balances representingamounts due to other banks or public

(v) Participation certificates issued to otherfinancial institutions other than banks

(vi) Any amount due to the ‘Banking System’which are not in the nature of depositsor borrowings. (Such liabilities may arisedue to items such as (a) collection of billson behalf of other banks (b) interest dueto other banks and so on. Whenever ithas not been possible to segregate theliabilities to the ‘Banking System’ fromthe total of ‘Other demand and timeliabilities’, the entire ‘Other demand andtime liabilities’ are treated as liability to‘Others’).

III. Assets with the ‘Banking System’

Assets with the banking system comprise thefollowing:

a. Balances with the ‘Banking System’ inCurrent Account

b. Balances with Other Banks in OtherAccounts

c. Money at Call and Short Notice: Thisrepresents funds made available to the‘Banking System’ by way of loans ordeposits repayable at call or short notice of14 days or less.

d. Advances to Banks, i.e., Due from Banks:This represents the loans other than ‘Moneyat call and short notice’ made available tothe ‘Banking System’. ParticipationCertificates purchased is also included here.

e. Other Assets: Any other amounts due fromthe ‘Banking System’, which cannot beclassified under any of the above threeitems. For example, in the case of inter-bank remittance facilities scheme, as ondate, the total amount held by a bank withother banks (in transit or other accounts)are shown here as such sums cannot beconstrued as ‘balances’ or ‘call money’ or‘advances’.

IV. Cash in India (i. e., Cash in hand)

Cash in hand represents notes and coins heldby the bank as till money. Currencies of foreigncountries are not included here.

V. Investments in India

Investments indicate the total investments in (A)Government securities and (B) Other approvedsecurities.

A. Investments in Government Securities:

(i) Central and State Governmentsecurities including treasury bills

(ii) Treasury deposit receipts

(iii) Treasury savings deposit certificates

(iv) Postal obligations such as nationalplan certificates, national savingscertificates, etc.

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(v) Government Securities deposited byforeign scheduled banks underSec.11(2) of BR Act, 1949

B. Investments in Other Approved Securities:

(i) Securities of State associated bodiessuch as Electricity Board, HousingBoard and Corporation Bonds.

(ii) Debentures of Land DevelopmentBanks

(iii) Units of UTI

(iv) Shares of RRBs, etc., which are treatedas approved securities under Sec.5 (a)of BR Act, 1949.

VI. Bank Credit in India (excluding inter-bank advances)

Bank credit in India is the total of three itemsviz. (A) Loans, cash-credits and overdrafts, (B)Inland bills – purchased and discounted and (C)Foreign bills – purchased and discounted. Bills(inland and foreign) rediscounted with the RBI,IDBI and other financial institutions are notincluded under this head.

a) Loans, cash-credits and overdrafts

(i) Demand loans

(ii) Term loans

(iii) Cash-credits

(iv) Overdrafts

(v) Packing credit, etc., granted toconstituents (other than banks)

(vi) Any other type of credit facilities otherthan by way of bills purchased anddiscounted

b) Inland Bills – Purchased and Discounted

Inland bill drawn and payable in India includingdemand draft and cheques purchased. Separatebreak-up is presented for bills purchased anddiscounted.

c) Foreign Bills –Purchased and Discounted

Foreign bills covers all export and import billspurchased and discounted in India as also

cheques, demand drafts drawn in foreigncurrencies and paid by banks’ office in India.Separate break-up is provided for bills purchasedand discounted.

In addition to the core return, some of theadditional important items are reported. Theseinclude: (a) net demand and time liabilities forthe purpose of Sec.42(1) of the RBI Act, 1934 =Net Liabilities to the Banking System + Liabilitiesto Others in India i.e., (I-III) + II, if (I-III) is aplus figure or II only, if (I-III) is minus figure,(b) Amount of minimum deposit required to bekept with the RBI under the Act and (c) theliabilities under Savings Bank Account - furtherclassified separately as the demand liabilities andtime liabilities.

Besides these items, Form ‘A’ consists ofMemorandum, Annexure A, and Annexure B.Reporting of these additional data wasimplemented with effect from 9th October, 1998as per the recommendation of Working Groupon Money Supply: Analytics and Methodology ofCompilation, 1998.

VII. Memorandum reports data on:

a. Paid-up capital,

b. Reserves (free as well as statutoryreserves) as per the last balance sheetand continue to report the same everyfortnight until the release of auditedbalance sheet of the following year)

c. Time deposits giving the time liabilitiesportion of the saving bank account (brokeninto short term and long term)

d. Certificates of deposits.

e. Net Demand and Time Liabilities

f. Amount of deposits required to bemaintained as per current rate of CRR

g. Any other liability on which CRR isrequired to be maintained under Section42(2) and 42(1A) of the Reserve Bank ofIndia Act, 1934.

h. Total CRR required to be maintained underSection 42(2) and 42(1A) of the ReserveBank of India Act, 1934.

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Banking Statistics

Annexure A to Form A gives details on theliabilities and assets in foreign currencyoutstanding at book value and revaluation valuealong with interest, as indicated below:

Liabilities:

Liabilities to others in India

I. Non-Resident Deposits

I.1 Non-Resident External Rupee Account(NRE)

I.2 Non-Resident Non-Repatriable RupeeAccount (NRNR)

I.3 Foreign Currency Non-Resident BanksScheme [FCNR(B)] (I.3.1+I.3.2)

I.3.1 Short-term

I.3.2 Long- term

I.4 Others

II. Other Deposits/Schemes

II.1 Exchange Earner’s Foreign CurrencyAccounts

II.2 Resident Foreign Currency Accounts

II.3 ESCROW1 Accounts by IndianExporters

II.4 Foreign Credit Line for Pre-shipmentCredit account and OverseasRediscounting of Bills

II.5 Credit Balances in ACU (US dollar)Account

II.6 Others

III. Foreign Currency Liabilities to the BankingSystem in India

III.1 Inter-bank Foreign Currency Deposits

III.2 Inter-bank Foreign CurrencyBorrowings

IV. Overseas Borrowings include total ofoverdrawal in all NOSTRO2 accounts

and should not be netted for creditbalance in other NOSTRO accounts. Italso includes any other borrowingsfrom foreign market or Head Office (incase of foreign banks).

Assets:

V. Assets with the banking system in India

V.1 Foreign currency lending

V.2 Others

VI. Assets with others in India

VI.1 Bank Credit in India in ForeignCurrency

VI.2 Others

VII. Overseas Foreign Currency Assets: Theseinclude balances held abroad, i.e., (i) cashcomponent of Nostro account, debitbalances in ACU (US dollar) account andcredit balances in the commercial banksof ACU countries, (ii) short term foreigndeposits and investments in eligiblesecurities, (iii) foreign money marketinstruments including Treasury Bills and(iv) foreign shares and bonds.

The liabilities in foreign currencies under variousschemes are re-valued at FEDAI indicative rates.As regards interest, banks report accured interestin respect of all liabilities.

VIII. External Liabilities to Others subject todifferential / zero CRR prescription(I+II)

IX. External Liabilities fully subject to CRRprescription (IV)

X. Net Inter-Bank Liabilities(I-III of Form A)

XI. Any other liabilities coming within thepurview of zero prescription

XII. Liabilities subject to zero CRRprescription (VIII+X+XI)

Annexure B to Form A reports the following attheir book value and also at their revaluationvalue:

1 ESCROW account: A trust account held in the borrower’sname to pay obligations such as taxes, insurance, etc.

2 NOSTRO account: An account one bank holds with abank in a foreign country, usually in the currency ofthat foreign country.

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Investment in Approved Securities includeinvestments in Government securities brokeninto short term (of contractual maturity of oneyear or less) and long term (contractual maturityof more than a year).

Investments in non-approved securities includecommercial paper, units of UTI and other mutualfunds, shares and bonds/debentures.

Banks are required to revalue their investmentin approved securities on quarterly basis. Asregards to the revaluation of investments in non-approved securities, the same is reported as andwhen the banks revalue their investments as perthe current practice/instructions.

2.1.1.1.4. Sources and Systems

Data from Scheduled commercial banks arecollected in Form-A from all the banks belongingto different bank groups, viz., (a) State Bank ofIndia and its Associates, (b) Nationalised banks,(c) Other Scheduled Commercial Banks, (e)Foreign Banks and (f) Regional Rural Banks.Data from Scheduled cooperative banks arecollected in Form-B format from all banksbelonging to the two categories, viz., (a)Scheduled State cooperatives and (b) ScheduledUrban cooperatives.

Scheduled Commercial Banks (other than RRBs),submit the Form ‘A’ return through OnlineReturn Filing System. Data for Regional RuralBanks are received by the Rural Planning andCredit Department (RPCD) of the RBI. Data withrespect to scheduled state cooperative banks andscheduled urban cooperative banks are receivedin Final Form ‘B’ by RPCD and Urban BanksDepartment (UBD) of RBI, respectively. Thesedata are merged with the other data pertainingto commercial banks and the consolidatedstatements for all scheduled banks are generatedby DESACS of RBI.

2.1.1.1.5. Ensuring Quality Standards

Before the finalisation of these data, the followingdata checks are done:

(i) An error report for each bank isgenerated for a particular fortnightwherein all the items in the return having

either more than 20% variation or morethan Rs. 5 crore difference from itsprevious reporting fortnight level are listedin the case of RRBs and State CooperativeBanks. This list is checked with hardcopy Form A returns and errors inpunching, if found are rectified.

(ii) In the case of commercial banks, an errorreport for each bank is generated for aparticular fortnight wherein all the itemsin the return having either more than20% variation or more than Rs.50 croredifference from its previous reportingfortnight level are listed. If required, thebanks concerned are contacted forclarifications and corrections are made.

(iii) These returns are also duly checked forstatistical consistency by generating 3-sigma / 5-sigma reports.

(iv) Finally, the bank-group level aggregatesare checked with provisional data.

2.1.1.2. Annual Reports of ScheduledCommercial Banks

The present structure of reporting of data itemsin annual reports of scheduled commercial banksis as per the recommendation of GhoshCommittee Report (1985) on annual accounts ofbanks, effective from 1992-93. Basic items areinitially classified into various blocks (called‘schedules’) and data are reported statutorily,under Section 27 of Banking Regulation Act,1949. Detailed bank-wise data based on annualreports are published in ‘Statistical TablesRelating to Banks in India’. Individual definitionsof each item in the schedules of Balance Sheetand Profit & Loss Account of commercial banksare given in the Annex 2.1. Table-wise majorcontents of this publication is presented in Annex2.2. Definitions/concepts of some of theimportant ratios based on annual reportinformation published in ‘Statistical TablesRelating to Banks in India’ are as follows:

a) (i) Cash in cash-deposit ratio includescash in hand and balances with RBI.

(ii) Investments in investment-deposit ratiorepresent total investments includinginvestments in non-approved securities.

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Banking Statistics

(iii) Net interest margin is defined as thetotal interest earned less total interestpaid.

(iv) Intermediation cost is defined as totaloperating expenses.

(v) Wage bills is defined as payments toand provisions for employees.

(vi) Operating profit is defined as totalearnings less total expenses, excludingprovisions and contingencies; and

(vii) Burden is defined as the total non-interest expenses less total non-interestincome.

b) Items like capital, reserves, deposits,borrowings, advances, investments andassets / liabilities used to compute variousfinancial earnings / expenses ratios areaverages for the two relevant years.

c) (i) Cash-deposit ratio = (Cash in hand +Balances with RBI) / Deposits.

(ii) Ratio of secured advances to totaladvances = (Advances secured bytangible assets + Advances covered bybank or Govt. guarantees) /Advances.

(iii) Ratio of interest income to total assets=Interest earned / Total assets.

(iv) Ratio of net interest margin to totalassets = (Interest earned - Interestpaid) / Total assets.

(v) Ratio of non-interest income to totalassets = Other income / Total assets.

(vi) Ratio of intermediation cost to totalassets = Operating expenses / Totalassets.

(vii) Ratio of wage bill to intermediationcosts (Operating Expenses) = Wagebills/ Operating Expenses.

(viii) Ratio of wage bill to total expenses =Wage bills / Total expenses.

(ix) Ratio of wage bill to total income =Wage bills/ Total income.

(x) Ratio of burden to total assets =(Operating expenses - Other income) /Total assets.

(xi) Ratio of burden to interest income=(Operating expenses - Other income) /Interest income.

(xii) Ratio of operating profits to total assets= Operating profit / Total assets.

(xiii) Return on assets for a bank group isobtained as weighted average of returnof assets of individual banks in thegroup, weights being the proportion oftotal assets of the bank as percentageto total assets of all banks in thecorresponding bank group.

(xiv) Return on Equity = Net Profit / (Capital+ Reserves and Surplus).

(xv) Cost of Deposits = Interest Paid onDeposits / Deposits.

(xvi) Cost of Borrowings = Interest Paid onborrowing from RBI and others /Borrowings.

(xvii) Cost of Funds = Total Interest Paid ondeposits and borrowings/ (Deposits +Borrowings).

(xviii) Return on Advances = Interest Earnedon Advances / Advances.

(xix) Return on Investments = InterestEarned on Investments / Investments.

(xx) Return on Advances adjusted to costof funds = Return on advances – Costof funds.

(xxi) Return on Investment adjusted to Costof Funds = Return on investments –Cost of funds.


The balance sheet and profit and loss accountdata that are published in the ‘Statistical TablesRelating to Banks in India’ are sourced from theAnnual Reports of banks. Balance sheet andprofit & loss account is based on auditedinformation and thus quality of data isautomatically ensured. Statutory time limit forsubmission of data is 3 months from thereference date, i.e., June 30.

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In order to ensure quality standards, thefollowing steps are followed:

(i) Annual Reports are obtained from eachof the Scheduled Commercial bankincluding Regional Rural Banks.

(ii) Data entry of the required fields is doneand required calculations for the relevanttables are made.

(iii) If any discrepancies are observed, dataare again checked from the originalsource, i.e., the annual reports of banks.

(iv) Cross Checking of various tables are donefor consistency checks.

(v) Data are again compared with those ofthe previous year’s report.

2.1.2. Statistics based on Special Returns

2.1.2.1. Basic Statistical Return (BSR)System

The BSR system was introduced in December1972 following the recommendation of theCommittee on Banking Statistics adapting fromthe erstwhile data reporting system calledUniform Balance Book (UBB). The UniformBalance Book (UBB) system was designed toprovide a detailed and up-to-date picture of thesectoral and regional flow of bank credit andwas introduced in December 1968 in the contextof the setting up of the National Credit Council.It had twin objectives of ensuring a steady flowof information while minimising the reportingload on branches. The UBB proforma wasrequired to be submitted by every bank officeevery month and provided for the reporting ofaccount-wise information in regard to creditlimits sanctioned and advances outstandingaccording to the type of account, type ofborrower, occupation, purpose, security and rateof interest charged. This was consideredsufficiently comprehensive for policy andinformation purposes. However, the response andthe accuracy of the data obtained through theUBB system had proved to be quite inadequate.After few rounds of survey, it was noticed thatresponse from branches was very poor and alsothe quality of reporting had not been satisfactory.

Besides these difficulties, the UBB had not gonebeyond experimental stage.

Meanwhile with the nationalisation of majorIndian banks and the more definite shape givento the new policy of diversifying the pattern ofcredit, the demand for information on variousaspects of credit deployment was mounting. Amore determined effort at systematising thereporting of banking data to ensure theavailability of fairly comprehensive informationwith a minimum time lag had become necessary.Accordingly, the Reserve Bank of Indiaconstituted a ‘Committee on Banking Statistics’in April 1972 under the chairmanship of ShriA. Raman, Director, Credit Planning Cell, RBI,having members from various departments ofRBI and commercial banks to look into variousaspects of statistical reporting of data by banksand suggest appropriate steps.

The Committee submitted its report in August1972. The overall pattern of the statisticalreporting system envisaged by the committeewhich, taken together, was designated as BasicStatistical Returns (BSR) to provide a steady flowof the required data was as follows:

1. BSR 1 – Return on Advances – half-yearly –as on the last Friday of June and December– from all branches – in two parts – Part Afor accounts with limits over Rs.10,000 andPart B for accounts with limits of Rs.10,000and less.

2. BSR 2 – Return on Deposits - half-yearly –as on the last Friday of June and December– from all branches.

3. BSR 3 – Return on Advances against theSecurity of Selected Sensitive Commodities –monthly – as on last Friday of each month– from Head Offices.

4. BSR 4 – Return on Ownership of BankDeposits – once in two years – as on thelast Friday of March – from all branches(replacing present annual survey from headoffices).

5. BSR 5 – Return on Bank Investments –annual – as on the last day of March –from Head Offices (on the lines of Surveyof Bank Investments).

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Banking Statistics

In addition to this, it was recommended thatthe Survey of Debits to Deposits, which was doneannually, to be done once in three years.

RBI agreed with the recommendations of theCommittee and accordingly implementationactions followed:

1. A ‘Committee of Direction on BankingStatistics (CDBS)’ in RBI was constitutedin to have overall charge of the BasicStatistical Returns, with officials of differentdepartments of RBI and of various banksas its members.

2. UBB returns were discontinued from themonth of July 1972.

3. The BSR system was implemented fromDecember 1972 with BSR 1, 2 and 3.

4. The BSR 4 return was implemented fromMarch 1976, which was collected from allbranches. Ownership classifications werealso changed from March 1976 survey. BSR4 was collected on sample basis for 1978and 1980 and on census basis for 1982survey. From 1984 it was made biennialsample survey.

5. BSR 5 return commenced from March 1973.

6. The Survey on Debit to Deposits accountwhich was conducted till 1971-72 annually,was next conducted in 1974-75 on censusbasis and renamed as BSR 6 from 1985-86as biennial sample survey. The survey hasbeen made quinquennial from the year2000.

7. The BSR 7 return was originally introducedin August 1974 as a monthly return tocapture branch-wise information on grossbank credit and aggregate deposits. Theperiodicity of the return was changed toquarterly from the quarter ended March1984.

8. BSR-8 on portfolio management scheme ofbanks, obtained on fortnightly basis, wasintroduced in 1992. The return wasdiscontinued in 1999 followingrecommendation of CDBS.

2.1.2.1.1. Basic Statistical Returns 1 and 2

Basic Statistical Returns (BSR) 1 and 2 formsthe major part of the BSR system.Comprehensive data on deposits and credit ofscheduled commercial banks and the informationon number of employees of the banks arecollected presently through the annual statisticalsurveys, Basic Statistical Returns (BSR)-1 and2, with 31st March as the reference date, andare obtained from the offices of scheduledcommercial banks in India including RegionalRural Banks.

The surveys used to be conducted half-yearly,as on last Friday of June and December, from1972 till 1990. From the year 1990, the surveyshave been made annual with 31st March as thereference date. To provide guidance for filling inof BSR 1 and 2 returns, the Reserve Bankbrought out the first Handbook of Instructionsin September 1972. Consequent upon theimprovements in the BSR system, the Handbookwas revised from time to time. Following thedevelopments in banking scenario in the lastcouple of years and to have uniform codingsystem for occupation/activity classification inline with National Industrial Classification (NIC)1998, which itself is based on InternationalStandard Industrial Classification (1SIC) 1990,a few revisions were introduced with effect fromMarch 2002 survey. The latest edition, sixth inthe line, provides these amendments in thesystem. As suggested by the Government of Indiato adopt a uniform classification system in orderto keep the data comparable, nationally as wellas internationally, the Reserve Bank of India hadappointed an Informal Group on Coding Systemfor Banking Statistics to look into the feasibilityand adoptability of NIC 1998 for BSR and similarinformation systems in the banks. The newactivity coding system in BSR was based on therecommendation of the Informal Group.

BSR-1 relates to gross bank credit and comprisesterm loans, cash credit, overdrafts, billspurchased and discounted, bills re-discountedunder the New Bill Market Scheme and also duesfrom banks, whereas, the bank credit data,based on returns under Section 42(2) of the RBIAct, 1934, is exclusive of dues from banks and

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bills re-discounted under the New Bill MarketScheme. The BSR-1 return is divided into twoparts - Part A and Part B (termed as BSR-1Aand BSR-1B). The cutoff credit limit for anaccount for inclusion in BSR-1A was kept asRs. 10,000/- in 1972 at the time of itsintroduction. In the year 1984 the cutoff limitwas raised to Rs. 25,000/- and the cut-off creditlimit was raised to Rs.2 lakh for BSR-1A returnfor scheduled commercial banks other thanRegional Rural Banks from March 1999 survey.In the case of Regional Rural Banks, the cut offlimit for classifying accounts in BSR-1A has beenmade as Rs. 2 lakh from March 2002 onwards.In BSR-1A, information in respect of each of theborrowal account is collected on variouscharacteristics, such as place (district andpopulation group) of utilisation of credit, type ofaccount, type of organisation, occupationalcategory, nature of borrowal account, rate ofinterest, credit limit and amount outstanding.In BSR-1B, information in respect of accountswith individual credit limit upto Rs. 2 lakh(termed as small borrowal account) is obtainedin consolidated form for broad occupationalcategories. The BSR-1B Return has two separatecredit limit size groups, i.e., ‘up to Rs. 25,000’and ‘over Rs. 25,000 to Rs. 2 lakh’. Theinformation on small borrowal accounts areobtained in BSR-1B return from all scheduledcommercial banks (including regional ruralbanks).

In BSR-2, each bank office submits informationon deposits with their break-up into current,savings and term deposits. Information ondeposit accounts of females is given separately.Information of term deposits according todifferent maturity periods is also furnished inthis return. In addition, BSR-2 providesinformation on staff strength, classified accordingto gender and category (i.e. officers, clerical andsubordinates), in individual bank offices as onthe reference date of the returns. Depositsexclude inter-bank deposits. Current depositscomprise (i) deposits subject to withdrawal ondemand (other than savings deposits) or onnotice of less than 14 days, or term depositswith a maturity period of less than 7 days (ii)call deposits withdrawable not later than 14

days; (iii) unclaimed deposits; (iv) overdue fixeddeposits; (v) credit balance in cash credit andoverdraft accounts and (vi) contingencyunadjusted account if in the nature of deposits.Savings deposits are deposits accepted by banksunder their savings bank deposit rules. Termdeposits are deposits with a fixed maturity ofnot less than 7 days and above or subject tonotice of not less than 14 days. These wouldalso include (a) deposits payable after 14 daysnotice; (b) cash certificates; (c) cumulative orrecurring deposits; (d) Kuri & Chit deposits and(e) special deposits in the nature of termdeposits. Conceptually, the deposits data in BSR-2 and the aggregate deposits in Section 42(2)return are the same. However, the depositsexclude the proceeds of Resurgent India Bonds(RIBs) as well as India Millennium Deposits(IMDs). In BSR-2, bank branches also giveclassification of term deposits according to broadinterest rate ranges as well as size of deposits.The data on residual maturity of term deposits,introduced in March 2003, are collected throughPart-V of this return in respect of computerisedbranches of scheduled commercial banks, exceptregional rural banks.

2.1.2.1.1.1. Dissemination of data

The dissemination of information of BSR 1 & 2data is done through various publicationsbrought out by the Bank. The main publicationsare the various Volumes of ‘Banking Statistics –Basic Statistical Returns’, which was renamedas ‘Basic Statistical Returns of ScheduledCommercial Bank in India’ from Volume 29,March 2000. This publication is also availableon RBI website www.rbi.org.in from the year1996. The annual publication is also broughtout in the form of a CD-ROM since 2002presenting the data in the form of excel tables.A special publication on CD-ROM titled ‘BankingStatistics: Basic Statistical Returns 1 & 2,Volume 1 to 31: 1972 to 2002’ was brought out,which presents the three decades data, publishedin various volumes, at one place, in PDF format.This publication is also available on RBI website.The publication presents distribution of creditand deposits of scheduled commercial banks inIndia on various characteristics/ parameters.

29

Banking Statistics

The data on credit and deposits are publishedon aggregate basis on various characteristics.

1. Bank group-wise – SBI & its associates,Nationalised Banks, Foreign Banks,Regional Rural Banks, Other ScheduledCommercial Banks (Private Sector Banks)

� Nationalised banks, which include IDBILtd. from 2005.

2. Spatial Distribution – Region, State &District

� Data on Credit are presented as perplace of sanction and also as per placeof utilisation. The details are given inBSR Volumes.

� The BSR-1A return provides theidentification of the district andpopulation group of the place wherethe credit is utilised. However, in BSR-1B return, such information is notcollected. It is presumed that in respectof these accounts, the credit is utilisedat the same place where it issanctioned.

3. Population group – Rural, Semi-Urban,Urban, Metropolitan.

� Data on Credit are presented as perplace of sanction and also as per placeof utilisation.

4. Credit data are presented on variousparameters

� Occupation – Available for BSR 1A &BSR 1B. Credit data are presentedaccording to occupation of theborrower.

� Data are aggregated on sectorsand sub-sectors.

� Size of credit limit – Includes in bothBSR 1A & BSR 1B.

� Interest rate range – Based on BSR-1A data only, referred as ‘Loans andAdvances’, which excludes Bills.

� Types of account – Data are based onBSR-1A only. Data of loans against

Credit Cards are included in DemandLoans. Inland bills include both tradeand other bills.

� Organisation – Organisationalcategories of borrowing account holderis based on BSR-1A only.

� Data on Small Scale Industries arebased on both BSR 1A and BSR 1Breturns. This include

� ‘Artisans and Village & TinyIndustries’ comprising Artisans/Craftsman, Village/CottageIndustries and Tiny Industries

� Other small scale industries.

5. Distribution of deposits data are present onvarious characteristics

� Type of Deposits – Current, Savings,Term.

� Broad ownership pattern – Data arepublished against individuals (Male andFemale) and Others (excludes inter-banks).

� Original period of maturity.

� Percentage distribution of residualperiod of maturity.

� Percentage distribution of interest raterange.

� Percentage distribution of size ofdeposits.

6. Employment in banks – Total and Female(Officers, Clerks, Sub-ordinates).

The utility of BSR data is immense andmultifarious. The information is not only usedwithin RBI for the purpose of policy formulationsbut also used for answering various queriesraised by members of the parliament. The datais supplied to various Central governmentministries and departments such as CentralStatistical Organisation. State governments alsorequire the data for monitoring the progress andeconomic development of their states and state-level publications. The data is also usedextensively by individuals and institutions forresearch purposes.

30


2.1.2.1.1.2. Concepts, Definitions andClassifications

BSR-1: BSR-1 return relates to bank credit. Eachbranch/office of a bank is required to submitthis return to the Reserve Bank of India as on31st March every year. In case 31st March is aholiday, the figures relates to the immediatepreceding working day.

The bank credit reported in this return comprisesthe following items:

(a) loans, cash credits and overdrafts,

(b) inland bills purchased and discounted,

(c) foreign bills purchased and discounted.

The above items reported in BSR-1 take accountof

(a) Dues from banks which represent loans andadvances granted to banks (includingparticipations without risk sharing),

(b) Bills rediscounted with the financialinstitutions,

(c) Advances extended through Credit Cards,

(d) Bad debts (not written off) and protestedbills,

(e) Inter-bank participation with risk sharing.

However, Money at call and short notice is notincluded.

On comparison, the credit reported in BSR-1return comprises (i) credit including ‘dues frombanks’ within the meaning of fortnightly returnunder Section 42(2) of the Reserve Bank of IndiaAct, 1934 and (ii) bills rediscounted with thefinancial institutions.

The BSR1 has two parts, Part A of the return(BSR-1A) relates to accounts with individualcredit limits of over Rs.2,00,000. Particulars inrespect of each of these accounts are collectedseparately. In BSR 1A, the particulars of theaccount, viz., name of the party, account numbergiven for identification by the lending bank office,district and population group code of the placeof utilisation of credit, type of account,organisation, occupation, nature of the borrowalaccount, asset classification of the borrowal

account, rate of interest, credit limit and amountoutstanding are recorded separately for eachaccount with credit limit of over Rs.2,00,000.

In Part B of the BSR1 return (BSR-1B), account-wise information is not collected. It calls forconsolidated information on the occupation-wisetotals of accounts with individual credit limitsof Rs.2,00,000 and less. The information aregiven separately for loans with individual creditlimit of Rs. 25,000 or less and above Rs. 25,000to Rs. 2,00,000.

The cut-off point of Rs.2,00,000 for eachindividual account relates to the credit limit inforce as on the date of the return and not theamount outstanding in the account. In case nospecific credit limit is sanctioned, the amountoutstanding itself is to be treated as the creditlimit.

Reporting under BSR1 (Part A and Part B) isdone account-wise and not party-wise. The sizeof the credit limit of each account is the factorfor deciding whether it is to be individuallyreported in BSR-1A or consolidated with otheraccounts of the same occupational category inBSR-1 B.

a. Uniform branch code: The uniform branchcode allotted by the DESACS of RBI to eachbranch/office is used for uniqueidentification of a branch. At present, thebranch code consists of two parts, viz., PartI and Part II, and each part consists ofseven digits.

The attributes of an account, collected inBSR-1A return are as under:

b. Place of Utilisation of Credit: The informationon place of utilisation of credit is beingcollected under two heads viz., district andpopulation group.

(i) District: The district code indicates thedistrict where actual credit has beenor will be utilised by the borrower.

(i) Population Group: The code indicatesthe population group status of theplace of utilisation of credit. The

31

Banking Statistics

relevant codes are given in Annex 2.3(List ‘A’). Information given in thesecolumns is important for ascertainingthe State and district/populationgroup-wise flow of credit. The creditextended by a branch/office is notalways used in the same district/population group and State in whichthe branch office is located. In severalmajor urban and metropolitanbranches, a good part of the creditextended, is utilised elsewhere. Forexample, if a company having HeadOffice in Mumbai is granted anadvance for utilisation for its factorylocated in Pen (Raigad district inMaharashtra), the appropriate districtcode will be Raigad and as thepopulation of Pen is between 10,000and one lakh, the appropriatepopulation group code 2 for semi-urban area is used for the account.

It may not always be possible to indicatethe district and population group wherecertain advances are utilised, for instance,advances granted to a GovernmentCorporation (e.g. Food Corporation of India)or statutory bodies (e.g. Electricity Boards)or a privately owned company, theoperations of which extend to more thanone district, population group or state. Insuch cases, the codes of the district andpopulation group where the major portionof the advances is utilised, is recorded. Incase it is difficult to identify those aspects,the information of the place where thebranches are located, is used.

c. Type of Account: The code numbers allottedto the various types of accounts are givenin Annex 2.3 (List ‘B’). All accounts in thebooks of a branch/office are classified underone type or the other appropriately. In case,a party is given borrowing facilities underdifferent types of accounts, each account isseparately listed. Such accounts are notcombined. Pre-shipment finance under anytype of facility, viz., cash credit, overdraftand demand loans are classified as Packing

Credit. Advances by way of rediscountingof bills of other party are reported as ‘Billsdiscounted’ with appropriate occupationcategory.

d. Type of Organisation: The code numberrelevant to the type of organisation of theborrower is also recorded. Annex 2.3 (List‘C’) contains the code numbers allotted todifferent types of organisations. Organisationcode consists of two digits. The list itselfprovides a brief explanation for eachcategory of organisation. Some furtherexplanations are given below :

Government companies are defined underSection 617 of the Indian Companies Act,1956, as companies in which not less than51 per cent of the paid-up capital is heldby the Central or a State Government eithersingly or jointly.

Statutory corporations, owned by theCentral Government or by a StateGovernment, as well as companies whichare subsidiaries of Government companiesare also to be treated as Governmentcompanies. If a company is owned by theCentral and State Government jointly on50:50 basis, it is treated as a StateGovernment undertaking for the purpose ofthis return. Loans sanctioned to a StateGovernment or its departments, e.g. for foodprocurement operations, is coded as ‘StateGovernment’ (code 12).

However, advances to Co-operativeMarketing Federations for food procurementoperations as also for other purposes arecoded as ‘Co-operatives’ (code 20). All typesof co-operative institutions are givenorganisation code 20. The activities of theco-operative institutions are not relevant.Thus, organisation code 20 includes co-operative marketing and other federations,co-operative housing societies, co-operativeretail stores, etc. Even where the co-operative institution is sponsored by aGovernment body, the correct organisationcode is 20 and not 14. The activity of theco-operative (farming, processing, marketing,

32


trading, housing, etc.) are given in aseparate column.

Public and Private Limited companies areclassified as Private Corporate Sector (code31 & 32) and other private sector entitiessuch as Partnerships, Propriety concerns,Joint families, Self-Help Groups, NGOsAssociations, Clubs, Trusts and Groups,etc., are taken as Private Sector - Others(codes 33, 34 and 35). Non-profitinstitutions serving business and privatelyfunded quasi-corporate institutions areclassified as private corporate sector. Loansgranted to individuals, singly or jointly withone or more persons are assigned the codenumber 41 (Individuals - Male) or 42(Individuals - Female) depending on thegender of the sole/first account holder.

e. Nature of borrowal account: The nature ofborrowal account is recorded against eachindividual account. Codes relating to natureof borrowal account are given in Annex 2.3(List ‘D’). Tiny industries are classified withvillage and cottage industries. For loansgiven to industry, the nature of borrowalaccount can be 1 or 2 or 3 and for all otherloans it is 3.

f. Asset Classification of borrowal account:Information on asset classification of eachaccount with credit limit of over Rs.2,00,000is reported as per asset classification codeassigned to a borrowal account for reportingto DBOD/DBS of the Reserve Bank of India.The relevant codes are given in Annex 2.3(List ‘E’). The accounts are classified as‘Standard’, ‘Sub-standard’, ‘Doubtful’ or‘Loss’ Assets. The changes in guidelines asprescribed from time to time by the ReserveBank of India, is taken into account whilereporting under this column. Theinformation on asset classification iscaptured for internal consistency and thisdata is not disseminated.

g. Activity/Occupation: Information given inthis column brings out the sector-wise flowof credit. Annex 2.3 (List ‘F’) summarises 5digit code numbers for different types ofoccupation or activities. The details arepresented in Annex 2.4. The code number

appropriate to the occupation or activity ofthe borrower for each account is indicatedin this column. If the borrower is engagedin more than one type of activity and ifseparate limits/sub-limits are sanctioned bythe bank for different activities, the creditlimit and outstanding amount aresegregated for each activity and reportedseparately. For example, if a companyengaged in the manufacture of cottontextiles and chemicals is granted creditlimits by the bank, the credit limits andamount outstanding are reported separatelyfor the two units, if separate credit limitsare sanctioned. If, however, separate limitsare not sanctioned, the major activity of theborrower is taken as the basis forclassification. In a majority of cases, theoccupation code can be determined on thebasis of the activity of the borrower.However, in the case of consumption andpersonal loans such as housing loans, loansfor education, etc., activity of the borrowermay not by itself determine the occupationcode. For Example, in the case of personalloans (codes 94003, 94004, 94006, 94007,94008 and 94009), housing loans (codes94001 and 94002), loans for education (code94005), etc. It is, however, not proper todetermine the occupation code on the basisof the activity of the borrower. In suchcases, purpose for which the credit isextended (whether for education, housingor consumption) is the guideline fordetermining the correct occupation code.

h. Rate of Interest:

The rate of interest (per cent per annum)charged to an account is reported, up to twodecimals, and is exclusive of interest tax.

i) Where slab rates of interest are chargedon advances, the rate corresponding tothe largest portion of the advances shouldbe recorded. If two rates are charged, therate applicable to the major portion ofamount outstanding should be reported.

ii) In the case of Inland and Foreign BillsPurchased/Discounted, the rate ofinterest column is not filled in.

33

Banking Statistics

i. Credit Limit: The sanctioned credit limit inforce as on the date of the return is treatedas the credit limit. Any additional limitsgranted temporarily for short periods at thediscretion of agents/managers and othercompetent authorities are included if theyare in force at the time of reporting. The‘drawing limit’ which is linked to the value ofstocks hypothecated or pledged and themargin prescribed is taken as credit limit.

In recording credit limits in respect of termloans, it shows only the operative limit, i.e.the limit sanctioned minus the principalamount repaid. For example, a company hasbeen sanctioned a term-loan of Rs.25 lakh,for installation of some plant, which is to berepaid in ten equal half-yearly installments.Suppose, the company has repaid Rs.5 lakh(i.e., 2 half-yearly instalments of Rs.2.5 lakheach). Hence, under this column, only theoperative credit-limit, i.e., Rs.20 lakh will beshown and not Rs.25 lakh. If the operativelimit of an account is reduced to Rs.2,00,000or less, it will be reported in a consolidatedmanner in BSR-1B.

In the case of other loans, which have notbeen fully drawn, the sanctioned limit isindicated. The credit limit is not adjustedfor the unpaid or overdue instalments. If aborrower is sanctioned a composite creditlimit against more than one account, thelimit is split up in proportion to theoutstanding amounts and shown againstthe respective accounts. Where no specificcredit limit is sanctioned, the amountoutstanding is treated as the credit limit.

j. Amount Outstanding: The actual amountoutstanding (debit) in each account as atthe close of business on the reporting date,rounded off to the nearest thousands ofrupees is reported. If the account is havinga credit balance, the amount outstandingreported is Nil. The actual amount of creditbalance is not reported.

The information on accounts aggregated ondifferent characteristics, collected in BSR-1B return is as under:

In BSR-1B return, information in respectof accounts with credit limits of Rs.2,00,000and less is collected in a consolidated form.These accounts are further classified intotwo credit limit size-groups viz., ‘Rs.25,000and less’ and ‘Over Rs.25,000 and uptoRs. 2 lakh’. Accounts are grouped accordingto the occupational categories specified inthe format. The number of accounts, creditlimits and amount outstanding are totaledup for each of these occupational categoriesand given separately for the two credit limitsize-groups. Each occupation in BSR-1B isreferred as a item code. The item codenumbers in the format of BSR-1B forclassifying various occupational categorieshave been allotted 2-digit codes. A tablegiven in the Handbook* provides therelationship between BSR-1A occupationcodes (5-digit) and for BSR-1B item codes.

Asset classification of borrowal accountsreported in BSR-1B are consolidated for alloccupation categories and recorded againstitem codes 81 to 84, separately for eachsize-group, viz., ‘Rs. 25,000 and less’ and‘Over Rs.25,000 and upto Rs.2 lakh’. Theinformation on asset classification iscaptured for internal consistency and thisdata is not disseminated.

Information on Gender classification inrespect of borrowal accounts of Individualsreported in BSR-1B are consolidated againstitem codes 86 and 87, separately for eachsize-group.The information on genderclassification is not reported uniformly byall the branches and as such only thepercentage distribution is disseminated.

Basic Statistical Return (BSR) 2 – Type ofDeposit Accounts

This return relates to deposits. Branches/Officesof all Scheduled Commercial Banks in Indiafurnish information on number of employees,number of accounts and amount outstandingaccording to type of deposits and classificationof term deposits according to maturity, broadinterest rate ranges and size of deposits as on

* Handbook of Instructions on BSR 1 & 2 March, 2002.

34


31st March every year. All Administrative Offices,Regional and Zonal Offices and Branches/Offices without any deposits such as TrainingColleges, Lead Bank Offices, Service Branches,etc. furnish employment details in this return,even though they do not have deposits.

a. Employment details

All permanent and temporary full-time staff onthe rolls of the branch/office as on the date ofthe return are included. This relates to the actualstrength of the branch and not the sanctionedstrength. Part-time and casual employees areexcluded. The category wise staff position iscollected in the block on employment details.Category-wise number of female employees isalso reported against item code 101.

b. Part - l: Classification of Depositsaccording to Type

Through this part of the return information fromeach office is obtained on the deposits classifiedaccording to their type, viz., current, savings andterm deposits. The additional information ongender of account holder is also collected in thispart of the return. The information on differenttypes of deposits is collected under two broadownership categories, i.e. 1) Individuals and 2)Others. Individuals include Hindu UndividedFamilies. The data on categories such as Non-resident individuals, Farmers, Businessmen,Traders, Professionals and Self-employedpersons, Wage and salary earners, etc. arereported under this category. In case of jointaccounts under individual, the gender of the firstaccount holder is the deciding factor forclassifying the account under ‘Female’ category.The inter-bank deposits are excluded from totaldeposits. Three types of deposit accounts aredefined as follows:

(1) The scope of deposits reported in this part ofthe return is same as deposits reported in thefortnightly return submitted under section42(2) of the Reserve Bank of India Act, 1934.Interest accrued and payable on depositsshould be treated as ‘Other liabilities’ andshould not be included in BSR-2.

(2) Savings deposit shall mean a form ofdemand deposit which is a deposit account

whether designated as “Savings Account”,“Savings Bank Account”, “Savings DepositAccount” or other account by whatevername called which is subject to therestrictions as to the number of withdrawalsas also the amounts of withdrawalspermitted by the bank under their savingsaccount rules during any specified periodand would include special savings deposits.

(3) Term deposit shall mean a deposit receivedby the bank for a fixed period and which iswithdrawable only after the expiry of thesaid fixed period. At present, the termdeposits are deposits with a fixed maturityof not less than a specified period (whichis amended from time to time) or subjectto notice of not less than a specified period(which is amended from time to time). Theywould also include (a) deposits includinginter-bank deposits payable after 14 days’notice, (b) cash certificates, (c) cumulative,recurring, annuity or reinvestment deposits,(d) Kuri* and chit deposits, (e) certificatesof deposits, (f) non-resident deposits in thenature of term deposits, and (g) any otherspecial deposits in the nature of termdeposits. Interest accrued and payable onthese deposits are treated as ‘Otherliabilities’ and therefore not included in thispart of return.

(4) Current Account shall mean a form ofdemand deposit wherefrom withdrawals areallowed any number of times dependingupon the balance in the account or upto aparticular agreed amount and shall also bedeemed to include other deposit accountswhich are neither Savings Deposit nor TermDeposit; At present the Current accountscomprise (a) deposits subject to withdrawalon demand (other than savings deposits) orwith a maturity period of less than aspecified period (which is amended fromtime to time), or on notice of less than aspecified period (which is amended from

* Kuri or chit means a transaction by which foreman entersinto an agreement with number of subscribers. Everysubscriber shall subscribe a certain sum of money forcertain period. Each subscriber in his turn shall beentitled to a prized amount.

35

Banking Statistics

time to time), (b) call deposits withdrawablenot later than a specified period (which isamended from time to time), (c) unclaimeddeposits, (d) overdue fixed deposits, (e) creditbalance in cash credit and overdraftaccounts and (f) contingency unadjustedaccounts if in the nature of deposits. Itmust be noted that deposits from banks,UTI, LIC, etc., at call or short notice notexceeding 14 days are treated as borrowingsand are not included in this return.

(5) Staff security deposits, margin deposits andstaff provident fund deposits should beclassified under current or fixed depositsdepending upon payment of interest onsuch deposits.

c. Part - ll: Classification of Term Depositsaccording to Maturity

Information on outstanding amount of termdeposits as on the date of the return, classifiedaccording to the original period of maturity forwhich deposits have been placed with the branchby depositors is collected in this part.

d. Part - lll : Classification of Term Depositsaccording to Interest Rate Range

In Part III, outstanding amounts of term depositsare classified according to interest rate for whichdeposits have been placed with the branch bydepositors and outstanding as on the referenceperiod. These deposits are grouped under thedifferent interest rate ranges.

e. Part - lV: Classification of Term Depositsaccording to Size

In Part IV, outstanding amounts of term depositsare classified according to size of deposits whichhave been placed with the branch by depositorsand outstanding as on the reference period.These deposits are grouped under the differentsizes as per original deposit amount.

f. Part - V: Classification of Term Depositsaccording to Residual Maturity (ExcludingRRBs)

Information on outstanding amount of termdeposits as on the date of the return, classified

according to the residual period of maturity iscollected in this part.

2.1.2.1.1.3. Sources and Systems

The data on BSR 1 & 2 returns, as survey isdone on a census basis, are collected from eachbranch/office of the scheduled commercial banksin India. The Banking Statistics Division of theDepartment of Statistical Analysis and ComputerServices, Reserve Bank of India, is the nodaloffice for collection, compilation anddissemination of BSR 1and 2 data. Data aresubmitted in soft form by most of the banks,except some regional rural banks. Some banks,specially a few public sector banks and a fewnew private sector banks, have implementedintegrated software for their MIS, through whichthe BSR 1&2 data are generated directly. Thedata are received from banks in the followingmode: Paper Return (mostly from regional ruralbanks), Floppies/CDs and Emails. With moreand more banks computerising their branchesand implementing the integrated software andincreasing use of Internet, the data are beingreceived through email.

2.1.2.1.2 Basic Statistical Return – 4:Survey of Ownership of Deposits

The Basic Statistical Return (BSR)-4: Survey ofOwnership of Deposits of Scheduled CommercialBanks as on March 31, is an annual return,under the BSR system obtained from a sampleof branches, selected scientifically for the yearunder reference. The BSR-4 intends to capturecomposition and ownership pattern of deposits,with the objective of building up estimates onthe composition and ownership pattern ofdeposits at different levels of aggregation. Till1972, the annual Survey of Ownership ofDeposits was conducted to get data from HeadOffices of banks. It was replaced by BSR 4 returnfrom March 1976, which was received from allbranches. Ownership classifications were alsochanged from March 1976 survey. BSR 4 wascollected on sample basis for 1978 and 1980and on census basis for 1982. From 1984, itwas made biennial sample survey. The surveyhas been made annual from 1990.

36


2.1.2.1.2.1 Measurement needs of the area

The estimates arrived at through this survey arean important source of information on thechanges in profile and structural shifts incomposition and ownership pattern of depositswith Scheduled Commercial Banks (SCBs). Theyare utilized in the compilation of NationalAccounts Statistics (NAS), the Flow of FundsAccounts of the Indian Economy, Financialsaving of the Household sector, etc. Major usersof the survey results are the CSO, RBI,commercial banks and others, e.g., researchersand others.

An article presenting salient features of theresults of the BSR-4 survey is publishedannually in the RBI Bulletin. Various otherpublications also present data based on theresults of the BSR-4 survey.

2.1.2.1.2.2. Concepts, Definition andClassifications

Sampling Design Used for the March 2005 survey:A stratified sampling design was used forselection of branches of banks for this survey.Based on State/Union Territory, populationgroup of the centre where bank branch waslocated, and bank group, all branches of thescheduled commercial banks (SCBs) in thecountry were classified into 379 basic strata. Thepopulation groups are (i) rural; (ii) semi-urban;(iii) urban; and the metropolitan group, furthersub-divided into two groups (iv) four majormetropolitan centers (viz., Mumbai, Delhi,Chennai and Kolkata) and (v) the othermetropolitan centers. Five bank groups, viz., (i)State Bank of India and its Associates; (ii)Nationalised Banks; (iii) Regional Rural Banks;(iv) Other Indian Scheduled Commercial Banksand (v) Foreign Banks, were considered for thepurpose. If branches in a basic stratumnumbered 7 or less, all branches were selectedwith certainty in such strata. As an exception,all 9 branches operating in Lakshadweep Islandswere included in the sample to provide adequaterepresentation to this union territory. In theremaining basic strata, each stratum was furtherstratified into 2 or 3 sub-strata taking into

account the range in total deposits of thebranches in the strata and number of depositaccounts. For this purpose, threshold valueswere determined for each basic-stratum takinginto account above two characteristics.

In such basic strata, Size Class Strata (SCS) wereformed as per descending order of deposits. Thebranches having aggregate deposits greater thanthreshold value-I were included under SCS-I. TheSCS-II covered branches having aggregatedeposits between threshold value-I and thresholdvalue-II and the SCS-III included all thosebranches having aggregate deposits up to thethreshold-value-II. Thus, 912 Size Class Strata(ultimate strata) were formed.

The branches under SCS-I were included in thesample with certainty. In SCS-II and SCS-III ofeach basic stratum, sample branches wereselected by circular systematic sampling afterarranging the branches within the SCS indescending order of their aggregate deposits,subject to selecting a minimum of 2 branchesfrom each SCS. The sample size in the case ofSCS-II varied from about 20 to 50 per cent ofbranches (depending upon the total size of SCS).If the number of units (branches) exceeded 200,15 per cent of branches were drawn as samplingunits. In the case of SCS-III, 10 per cent samplewas selected.

Based on the above procedure, 9,933 brancheswere selected for the survey for March 2005. Inall, 2,292 bank branches were selected withcertainty. Out of the remaining 63,778 bankbranches, 7,641 branches were selected usingabove sampling design from sub-strata SCS IIand SCS III.

The deposits are classified into Current deposits,Savings deposits and Term deposits-Certificatesof Deposits (CDs) and Other Term Deposits, whilethe major economic sectors according to whichownership is to be classified are Governmentsector, Private corporate sector, Financial sector,Household sector and Foreign sector. Detaileddefinitions, as provided in the Guidelinesattached with the BSR-4 return, March 2005 are:

37

Banking Statistics

Current deposits comprise: (a) deposits subjectto withdrawal on demand (other than savingsdeposits) or with a maturity period of less than15 days (7 days in case of Rs. 15 lakh & above),(b) call deposits withdrawable not later than 14days; (c) unclaimed deposits; (d) overdue termdeposits; (e) credit balance in cash credit andoverdraft accounts and (f) contingencyunadjusted accounts, if in the nature of deposits.The inter-bank deposits at call or short noticenot exceeding 14 days are treated as inter-bankborrowings and not included in this return.However, inter-bank deposits in current accountare included. Savings deposits are depositsaccepted by banks under their savings banksdeposits rules and include deposits under SpecialSavings Schemes. Term deposits are depositswith a fixed maturity of not less than 15 days

(7 days in the case of Rs. 15 lakh & above), orsubject to notice of not less than 15 days (7days in the case of Rs. 15 lakh & above). Theyalso include (a) deposits including inter-bankdeposits payable after 14 days notice, (b) cashcertificates, (c) cumulative or recurring deposits,(d) kuri and chit deposits and (e) special depositsand certificates of deposits (CDs). Interestaccrued but not paid on these deposits is treatedas other liabilities and therefore not included inthis return. Certificates of Deposits (CDs) figuresare separately under term deposits. Any depositstreated as ‘other demand and time liabilities’ forthe purpose of fortnightly/ special return underSection 42 (2) are not reported in this return.

The coverage of the sectors classified in thisreturn is presented in Table 2.1.

Table 2.1: Coverage of the sector under BSR – 4 return

Major sector Sub-sectors Details/ illustrations

1 Government Central Government Central Govt. departments, departmentalsector undertakings, like Railways, P& T.

State Governments State Govt. departments, departmentalundertakings like, Road TransportUndertakings, etc.

Local Authorities Municipalities, Panchayti Raj institutions,Port Trusts

Quasi-Government Bodies Housing Boards, SEBs, ICAR, ICSSR.

Non-Departmental Public sector undertakings, STC, FCI,Commercial Undertakings State Warehousing Corporations

Others

2 Private Corporate Financial companiesSector

Housing Finance companies HDFC, Dewan Housing Finance, etc.

Auto finance companies Bajaj Auto Finance, Ashok LeylandFinance, etc.

38


Mutual Funds-private Kothari Pioneer, Apple Mutual Fund, etc.sector

Financial services Issue Management, Portfoliocompanies Management Companies, e.g.,

DSP Financial Consultants, etc.

Other financial Leasing companies, Hire-purchase, etc.companies

Non-Financial Non-Government companies, Companiescompanies managed (but not owned by Government)

engaged in Manufacturing, Trading, etc.,activities and registered under CompaniesAct 1956

Non-credit Co-operative Marketing, Housing, Industrial etc.,institutions co-operative societies

Others including Quasi- Non-Profit Institutions, Privately fundedCorporate Institutions educational institutions, e.g., CII, FICCI,like large educational etc.Institutions which arefunded privately

3 Financial sector Banks Indian Commercial Banks, Foreign Banks,Co-operative Banks and Credit societieslike PACS.

Other FIs.

Unit Trust of India

Mutual Funds Floated by FIS and commercial Banks.

Insurance Companies Includes both Life and Non-Life insurancecompanies.

Term Lending e.g., IFCI, SFCs, NHB.institutions

Provident Fund PF Commisssioners, TrusteesInstitutions of PFs., Staff PF of the Bank.

Others

4 Household sector Individuals - Includes HUFs and Joint Accounts of– Farmers; Individuals.– Businessmen, Traders,

Professionals and self-Employed;

– Wage and salary-earners-Shroffs, Money-lenders, etc.

– Others


39

Banking Statistics

Trusts, Associations, Clubs

Proprietary & partnershipconcerns

Educational Institutions

Religious Institutions

Others

5 Foreign sector Foreign consulates,Embassies, Trade missions,Information Services, etc.

Non-Residents Individuals and also overseas companies,firms, societies, OCBs, trusts, etc, ownedto the extent of atleast 60 per cent byNRIs or PIOs

Others Also includes non-resident banks.



The basic data for the survey flows from thebranches of scheduled commercial banks thatare selected in the sample for survey. The formatfor the BSR-4 return, together with guidelinesfor filling-in the same are provided to thereporting and controlling offices of the banks.The head/controlling offices of the banks submitthe returns (hard copy) along with data in softform to the respective regional office of DESACS,RBI. However, the banks or their branches thatcan directly extract the data from their systems,are provided file-structure so that they cansubmit the data without using our data-entrysoftware. Further, banks unable to use the data-entry software for certain reasons, are permittedto send data either in any acceptable form orsubmit only hard copies. The data so receivedare processed at DESACS, RBI, Mumbai, usingthe software developed in-house. The data areedited by putting them through rigorouscomputer programs to check their consistency,validity and integrity and wherever required,necessary corrections are carried out.

2.1.2.1.3. Basic Statistical Return – 5:Survey of Investments ofScheduled Commercial Banks

The Survey of Investments of ScheduledCommercial Banks, conducted through BSR 5,analyses the position of investments in India andabroad of Scheduled Commercial Banks(excluding Regional Rural Banks) as at the endof March annually. The investment portfoliocovers investments in securities issued byCentral and State Governments, private sectorcompanies, financial companies, banks, approvedfor the purpose of investments under the IndianTrusts Act, 1882; other domestic securities andinvestments; foreign securities and other foreigninvestments. Analysis of investments is doneaccording to bank groups, namely, State Bankof India and its Associates (SBI and itsAssociates), Nationalised Banks, Other IndianScheduled Commercial Banks (OSCBs) andForeign Banks in terms of instruments, maturity,interest rate (coupon) and states. BSR 5 returncommenced from March 1973 and replacedearlier survey on Bank Investments. Theproforma for reporting State-wise investmentswas also introduced in the revised survey.

40


2.1.2.1.3.1. Measurement needs of the area

The results of the survey capture the changesin the composition pattern of investments ofSCBs and thus provide valuable information onbanks investments according to type, maturityprofile, interest/ coupon rates and according tostates. Such information is useful to policy-makers, analysts, bankers and researchers.

An article presenting salient features of theresults of the BSR-5 survey is publishedannually in the RBI Bulletin. Various otherpublications also present data based on theresults of the BSR-5 survey.


The BSR-5 survey covers all the SCBs, excludingRRBs and Head offices of the banks submit thereturn. The exclusion of RRBs is due to their lowshare (about 2.8 per cent, as on end-March 2005)in total investments of all SCBs. The return seeksinformation on banks’ investments in Central andState Government securities; securities, otherthan Central and State Government securities,approved for the purpose of investments under theIndian Trusts Act, 1882; other domestic securities;foreign securities and other foreign investments. Inrespect of each category, the banks report theirinvestments in terms of face value, book value,and wherever applicable, market value and marketrate. Details of investments in shares, debenturesis called for separately for quoted and Non-quotedinstruments. A complete list of securities andother investments included in the survey isprovided in the return. This list is updatedannually. The concepts used for the surveybroadly refer to the Reserve Bank’s guidelines/instruction on Valuation, Classification andoperation of investments portfolios, as applicableto SCBs.


Head offices of scheduled commercial banks formthe basic source for the supply of data in BSR5. The format of the return, together withguidelines for filling-in the same are provided to

the head offices of the banks who submit thefilled-in returns to Central Office, DESACS, RBI.The head offices of the banks submit the paperreturns along with data in soft form. Softwaredeveloped for the purpose, is provided to thebanks for data entry. Further, the banks whichare unable to use the data-entry software forcertain reasons, are permitted to send data eitherin any acceptable form or submit only hardcopies. The banks also submit a copy of theirannual accounts/Balance sheet as on March 31.

Preliminary scrutiny of the returns is done withthe annual accounts as on March 31 so as toensure the two sets of data match, and afterreconciliation of the same, the data are processedat DESACS, RBI, Mumbai. Necessary referencesare made to banks to seek clarifications, beforedata processing. The data are edited by puttingthem through rigorous computer programs tocheck their consistency, validity and integrity andwherever required, necessary corrections arecarried out.

2.1.2.1.4. Basic Statistical Return – 6:Survey of Debits to DepositAccounts

The Basic Statistical Return (BSR)-6 which iscanvassed for the Survey of Debits to DepositAccounts with Scheduled Commercial Banks isa quinquinnial return under the BSR system.The return is submitted by the branches whichare selected in the sample for the year underreference. The BSR-6 intends to capture thevalue of debits to deposit accounts, with a viewto work out the rate of turnover of deposits,which is one of the important measures ofeconomic activity in the country as a whole. TheSurvey on Debit to Deposits account (form T-1)which was conducted till 1971-72 annually, wasnext conducted in 1974-75 on census basis andrenamed as BSR 6 return from 1985-86 asbiennial sample survey as per decision taken bythe Committee of Direction on Banking Statistics.Subsequently, the survey has been madequinquennial from the year 2000.The BSR-6survey covers the same branches as are selectedfor the BSR-4 survey for the year in which theBSR-6 survey is being conducted.

41

Banking Statistics


Debits to deposits accounts of banks representwithdrawals made by depositors either in theform of cheques or in cash. Comparison of thetotal of such withdrawals for a certain periodwith the average balances held by the depositorsin such accounts provides a measure of theextent to which depositors make use of the fundsin their bank accounts for making payments andthus are an important source of information.Major users of the survey results are theGovernment departments/Organisations, RBI,commercial banks and others, e.g., researchersand others. Information on cash debits (includingthose made through ATMs) is also being collectedin the survey for 2004-05 and is expected to bea useful source of data for policy purposes andresearchers.

An article presenting salient features of the resultsof the BSR-6 survey is published in the RBIBulletin. Various other publications also presentdata based on the results of the BSR-6 survey.


The data covered are quarterly outstandingbalances in Current and Savings Depositaccounts and approved limits in Cash Credit andOverdraft accounts and total debits (quarter-wise)and cash debits (quarter-wise) in above types ofaccounts. The Outstanding Balances/ approvedlimits are as on Last Friday of June, Septemberand December, and as on March 31 in case ofMarch quarter. Detailed definitions, are providedin the Guidelines attached with the BSR-6return. The definitions/concepts used in theBSR-6 for 2004-05 return are:

Inter-bank deposits / credit accounts of banks(whether commercial or co-operative, scheduledor non scheduled) are excluded entirely from thedata reported. Total debits (withdrawals) tocurrent deposit accounts, savings depositaccounts, cash credit accounts and overdraftaccounts during the quarters April-June, July-September, October-December and January -March are reported. Debits (withdrawals) madeby all means are covered. These cover debitsmade through cheques, in cash and also include

those made through ECS, ATMs, Internetbanking and other electronic banking channels.Debits through ATM are a subset of all debitsreported in Part on Total Debits. Savings andcurrent deposits include the amount of interestdue to the depositors. Current deposits includecredit balances in cash credit accounts, depositsrepayable at call or on notice of less than 15days, (7 days in case of deposits above Rs.15lakh), unclaimed deposits and fixed depositsmatured but not paid. Contingency andunadjusted accounts, if in the nature of deposits,are also included in current deposits. Margindeposits, staff provident fund and securitydeposits and interest due on these are excludedfrom the data furnished. Approved limits referto effective limits (drawing powers) in respect ofcash credits and overdrafts as on the last Fridayof the quarters April-June, July-September,October-December and as on 31st March forJanuary- March quarter even if such limits havenot been availed of. In the case of cleanoverdrafts, the full sanctioned limits are taken.As stated above, the sample branches areselected for the survey following the samesampling scheme described for BSR 4 wheneverthis survey is conducted.


The basic data for the survey flow from thebranches of scheduled commercial banks thatare selected in the sample for survey. The formatfor the BSR-6 return, together with guidelinesfor filling-in the same are provided to the selectedbranches through their head/controlling officesfor the particular year’s survey. The data to besubmitted through the return are extracted bythe branches from their system. The head/controlling offices of the banks submit the paperreturns along with data in soft form to theregional offices of DESACS, RBI. Softwaredeveloped, in FoxPro, for the purpose of dataentry, is provided to the banks. However, thesebanks or their branches, which can directlyextract the data from their systems, are providedfile-structure so that they can submit the datawithout using DESACS’s data-entry software.Further, certain banks which are unable to usethe data-entry software for certain reasons, are

42


permitted to send data either in any acceptableform or submit only hard copies. The data soreceived are processed at DESACS, RBI, Mumbaiusing the software developed in-house. The dataare edited by putting them through rigorouscomputer programs to check their consistency,validity and integrity.

2.1.2.1.5. Basic Statistical Return – 7:Quarterly Return on AggregateDeposits and Gross Bank Credit

The Reserve Bank of India was collectinginformation on aggregate deposits and grossbank credit of Scheduled Commercial Banks(including Regional Rural Banks) on monthlybasis through Basic Statistical Return (BSR) 7introduced in August 1974. The periodicity ofthe return was changed to quarterly from thequarter ended March 1984. These data onaggregate deposits and gross bank credit weredisseminated from the year 1981 through thepublication titled “Banking Statistics-MonthlyReturn on Aggregate Deposits and Gross BankCredit”. Subsequently, the data were publishedunder the title “Banking Statistics – QuarterlyHandout” from March 1984. The name of thepublication has further been changed to“Quarterly Statistics on Deposits and Credit ofScheduled Commercial Banks” from September2003. These publications provide the data ondeposits and credit, inter alia, according toStates/Districts/Centres/Population Groups/Bank Groups.


The information on the geographical distributionof aggregate deposits and gross bank creditbased on BSR 7 return serves as an importantinput to monetary policy and regionaldevelopment process. Besides, it serves as animportant input to analysis of banking potentialof different regions/centers. Reserve Bank,Commercial and Co-operative Banks andResearchers extensively use the BSR-7 data.These data are also an important input forpreparing material for replies to parliamentaryqueries and used by different committees set upby the government/RBI on various economicissues. The data are disseminated through

quarterly publication, which can also be accessedthrough Internet site of the Reserve Bank.


The BSR-7 return is a simple return whereinthe head/controlling offices of banks reportbranch/office-wise quarterly data on aggregatedeposits and gross bank credit as on thereference date, which is the last Friday in thecase of June, September and December quartersand March 31 in the case of March quarter. TheAggregate Deposits represent demand and timeliabilities of a bank (excluding inter-bankdeposits and India Millennium Deposits). TheGross Bank credit represents bank credit(excluding interbank advances) as per Form Areturn under Sec 42(2) of RBI Act, 1934, togetherwith outstanding amount of bills rediscountedwith Reserve Bank of India and FinancialInstitutions. A Centre is defined as the revenueunit classified and delineated by the respectiveState Government, i.e., a revenue village/city/town/municipality/municipal corporation, etc.,as the case may be, in which the branch issituated. The Population Group classification ofbanked Centres is based on 1991 Census. ThePopulation Groups are defined as under:

i) ‘Rural’ group includes centres withpopulation of less than 10,000,

ii) ‘Semi-urban’ group includes centres withpopulation of 10,000 and above but lessthan 1 lakh,

iii) ‘Urban’ group includes centres withpopulation of 1 lakh and above but lessthan 10 lakhs, and

iv) ‘Metropolitan’ group includes all centreswith population of 10 lakhs and above.


The basic data for the survey flow from thebranches/offices of scheduled commercial banks.The head/controlling offices of the banks arrangeto obtain data from their branches/offices andafter preliminary scrutiny submit the same toDESACS, RBI. For the purpose of data entry,software developed in FoxPro for the purpose, is

43

Banking Statistics

provided to the banks. However, some banks ortheir branches are allowed to extract the datafrom their systems, and are provided file-structure so that they can submit the datawithout using DESACS data-entry software.Further, if banks are unable to use the data-entry software for certain reasons, then they arepermitted to send data either in any acceptableform or submit hard copies.

The data so received are processed at DESACS,RBI, Mumbai using the software developed in-house. The data are edited by putting themthrough rigorous computer programs to checktheir consistency, validity and integrity andwherever required, queries are forwarded tobanks and after obtaining their replies, necessarycorrections are carried out.

2.1.2.1.6. Ensuring Quality Standards ofBSR data

On the processed data reported under BSR 1and BSR 2 returns, various code-validation andinter-consistency checks are performed such as(i) branch-wise totals are tallied with BSR-7 datato check large dimensional variations; (ii)checking large growth / decline as compared topast year data; (iii) examining outliers (out ofrange) – very large/ small values; (iv) locatelogical inconsistencies (a combination of codes/attributes appearing together); and (v) bank-wisetotals are tallied with Section 42(2) and banks’annual report data. The inconsistency reportsare sent back to the banks for gettingclarification/feed-back/ corrected/revised data.The final results are also checked with the othersources of data published by RBI.

To ensure receipt of good quality data obtainedin BSR returns, besides vigorous follow-up, work-shops and meetings are arranged periodically totrain the bank personnel and to impress uponthem the need to submit complete, accurate andtimely data. The workshops also dwell uponcommon errors/discrepancies observed in earliersurveys as also provide demonstration/hands-on sessions on data entry software. To ensurecorrect data entry, various validation andconsistency checks are in-built into the dataentry software. Cleaning of data is done in-house

and its consistency is cross-checked at differentlevels of aggregation with the data emanatingfrom other returns. Further, the preliminarytabulations are examined in the light of othermacro-economic developments to ensureconsistency in the survey results.

2.1.2.2. International Banking Statistics

Importance of maintenance and timelydissemination of quality and adequate data onexternal transactions have been felt necessaryby regulatory authorities, both national andinternational, for efficient functioning of theglobal financial system. This helps to identifyand analyze the undercurrents in theinternational financial markets. Thus, thedevelopment of appropriate data of high qualityand management thereof has to be a vitalfunction of all central bank authorities. The crisisin East Asia, in particular, brought into sharpfocus the need for collection of timely andcomprehensive data on international exposuresof banks and the size and structure ofinternational debt positions.

In India, with the growing liberalization of theexternal sector, close monitoring, on an ongoingbasis, of the cross-border flow of funds hasassumed critical importance. This calls forconcerted efforts to collect the data oninternational claims and liabilities of the bankingsector. At present, banks in India provide variousdetails of their operations in India as well asabroad to different departments in the RBI tomeet the specific requirement of the departmentsconcerned. While a lot of information flows todifferent departments of the RBI to cater to theirspecific needs, these are not adequate formeeting the international standards as well asfor participating in the International BankingStatistics (IBS) collected and published by theBank for International Settlements (BIS). The IBSsystem of the BIS mainly designs to collect/compile/provide information on banks’ external/international liabilities and assets vis-à-vis (a)non-residents in any currency and (b) residentsin foreign currency. Under the system, theinformation from scheduled commercial bankson disaggregated items such as, loans, deposits,investments, borrowings, other assets and other

44


liabilities with details into currency (domestic andforeign currencies), sector (banks, non-bankpublic and non-bank private) and country(individual countries, international institutionsand monetary authorities) is compiled atquarterly intervals.

For the above purpose, RBI constituted aWorking Group on International BankingStatistics to suggest, inter alia, a comprehensivereporting mechanism, to enable India’sparticipation in the IBS system of the BIS. Asper the recommendations of the Working Group,the requisite detailed data on international assetsand international liabilities of banks are beingcollected from banks on quarterly basis sinceDecember 1999. A Standing Monitoring Group(SMG) representing senior officers of the RBI andcommercial banks has been monitoring theimplementation of the recommendations of theWorking Group on International BankingStatistics. The SMG is an ongoing body andreconstituted once in two years.

Since March 2001 quarter, the consolidated dataof banks in India in the form of 23 statements(18 locational banking statistics (LBS) and 4 (5from March 2006) consolidated banking statistics(CBS)) are being supplied regularly to the BISon quarterly basis. The BIS started incorporatingIndia’s IBS data from December 2001 quarterand as a result, India became the third amongall developing countries in the world complyingwith the BIS requirements of compilation of IBS.While the BIS publishes (www.bis.org)consolidated data of all reporting countries, theRBI publishes consolidated data on IBS of Indiain the form of article in the RBI Bulletin(www.rbi.org.in). The BIS publishes consolidatedstatistics of all reporting countries regularly inthe “BIS Quarterly Review- International Bankingand Financial Market Developments” and “The BISConsolidated Banking Statistics”. Apart from theBIS, international organizations and centralbanks in other countries have been usingcountry specific detailed data for furtherinvestigations.

In order to improve upon the coverage of data,the BIS revised its guidelines for consolidated

banking statistics (CBS) by increasing thecoverage of products/instruments, namely,derivative contracts, guarantees, creditcommitments, etc., modifying its reportingformats and increasing the number of CBSstatements (from 4 to 5). The newly introducedCBS statement present - (i) the consolidatedinternational claims by country and sector ofultimate risk, and (ii) instrument wise (viz.,derivative contracts, guarantees, creditcommitments) outstanding amounts by countryof ultimate risk. There is only one return i.e.,IBS Return, in India for collating both kinds ofstatistics viz., LBS and CBS. In the light of therevised guidelines of the BIS and certainobservations recorded, for enhancement of thesystem, during the course of implementation ofthe IBS system of BIS in India, the Guide toIBS for banks in India and Indian banks’ officesabroad was revised/modified. The revised systemhas been implemented from the reporting quarterMarch 2005. The following are the majorrevisions/modifications.

i) The asset/liability codes have beenmodified to capture data on financialinstruments, viz., Derivatives, Letter ofCredits, guarantees and creditcommitments.

ii) The banks/branches had been reportingthe outstanding ‘amount/balance’ and‘accrued interest’ in rupee terms. Now,the outstanding amount/balance andaccrued interest are also reported interms of currency of the account.

iii) The sectoral classification has also beenmodified by reducing the number ofcategories to 8 [two for banks viz., BankOwn Office and Bank Other’s Office, onefor Official Monetary Authorities, one forGovernment, three for Non-bank and onefor cash collateral (applicable only forsector of ultimate risk)] as compared tothe earlier sector classification into 12categories (8 codes for banks based onvarious criteria viz., ownership, locationof head office and own/other bank’soffice, one code for official monetaryauthorities and three codes for non-

45

Banking Statistics

banks, viz., non-bank public sector, non-bank private sector and non-bank others).

iv) In comparison to the existing reportingof information on six currencies, viz., USDollar, Euro, Japanese Yen, Swiss Franc,Pound Sterling and Domestic Currency(Indian Rupee), and all other currenciesclubbed under residual category ‘OTH’,the revised system requires reporting, foritems other than derivatives, of thecurrency of account/transaction as ISOcurrency code. It would require reportingof information on 25 currencies includingIndian Rupee and remaining foreigncurrencies under residual currencycategory “OTH”. However, for reporting ofderivatives from branches to their RO/ZO/LHO/HO, the currency of settlementsof the derivative contracts are reportedas ISO currency code. A list of about 161currencies and their ISO codes areprovided in Annex-2.5. The currency ofsettlements, along with country of thecounter-party, are reported for thepurpose of netting, if applicable, at HeadOffice.

2.1.2.2.1. Measurement needs of the area

The IBS provides an understanding of the totalmagnitude of international assets and liabilitiesof the banking system and their composition,mainly in terms of sector (bank, non-bank),residual maturity, currency and country ofresidence. International assets / liabilities coverclaims/liabilities of reporting banks with/towardnon-residents in any currency and residents onlyin foreign currency.

The IBS data are primarily compiled to complywith the BIS requirement. The BIS releases(www.bis.org) international liabilities and assetsposition of banks of member countries on aquarterly basis through their publications viz., (i)Consolidated Banking Statistics and (ii) BISQuarterly Review: International Banking andFinancial Market Developments. The IBS datacompiled by the BIS are used by the central banksof member countries, international organizations

e.g., IMF, etc. The methodology of compilation ofLBS/CBS and explanation to various terms usedin IBS are provided in Annex 2.6.

2.1.2.2.2. Concepts, Definitions andClassifications

The definitions of various items used in IBS aregiven below:

Reporting Country: The term “reporting country”refers to the country, which compiles andprovides IBS data to the BIS. Here, India is thereporting country and any country other thanIndia is foreign country.

Local Currency and Non-Local Currency: Local ordomestic currency is the currency of the countrywhere the banking office is located. Thecurrencies other than domestic are termed asnon-local or foreign currencies. Here, in India,Indian Rupees (INR) is the local or domesticcurrency and all other currencies are foreigncurrencies.

International Assets and International Liabilities:Balances in the accounts of the ledgersmaintained with the branch, representing assetsplaced with (or claims on) and liabilities towards(i) non-residents in any currency (i.e., foreigncurrencies and domestic currency); and (ii)residents in foreign currencies are treated,respectively, as international assets andinternational liabilities.

Who are Treated as Non-Resident: For thepurpose of these statistics, non-resident means:

i) An individual permanently residentoutside India,

ii) An individual who has stayed or intendto stay outside India for a period asstipulated in the FERA guidelines orguidelines issued under FEMA,

iii) An individual normally resident outsideIndia who is temporarily resident in India,

iv) Student or an individual undergoingmedical treatment, who is a foreignnational, irrespective of the length of hisstay in India,

46


v) A company/firm/institution locatedoutside India,

vi) Diplomatic missions and personnel,irrespective of length of their stay inIndia.

Items of Information captured in IBS: Thebranches of banks in India report to their head/principal offices the following items relating tointernational assets/liabilities:

Country (Code) of Residence of the reportingbranch (“IN” for the branches in India),

Broad Category of Asset/Liability,

Type of Asset/Liability under Category,

Currency of Account/Transaction/Settlement as an ISO Currency Code,

Country of Borrower/Customer as an ISOCountry Code,

Sector of Borrower/Customer as a SectorCode,

Residual Maturity as a Maturity Code,

Country of Ultimate Risk as an ISO CountryCode,

Sector of Ultimate Risk as Sector Code,

Balance in terms of Currency of Account/Transaction (MTM value of derivatives interms of US Dollar, irrespective of currencyof settlement),

Accrued Interest in terms of Currency ofAccount/Transaction (this should be Zero/Nil if the accrued interest is already reflectedin the Balance Amount),

Balance in Accounts/MTM Value ofDerivatives in terms of Equivalent IndianRupee, and

Accrued Interest in terms of EquivalentIndian Rupee (this should be Zero/Nil if theaccrued interest is already reflected in theBalance Amount).

Country of Residence of the Reporting Branch:Country of residence of the reporting branch/office means the country where the reportingbranch is located. All reporting branches inIndia, including branches of foreign banks,should provide the value as “IN” (“IN” is the ISOcountry code for India). The ISO country codesare provided in Annex 2.7.

Classification of International Assets / Liabilities under various categories and type

A. INTERNATIONAL ASSETS

Asset Category Asset Type Description Type CodeCategory Code (ALCD) (TYPECD)

Loans to Non-residents 11

International Foreign Currency Loan to Residents 12

Loans and 11 Outstanding Export Bills 21

Deposits Foreign Currency in hand, Travelers Cheques, etc. 41

NOSTRO Balances and Placements Abroad 51

International Investment in Foreign Government Securities 11Holdings of 21

Investment in Other Debt Securities Abroad 12Debt Securities

International31

Investments in Equities Abroad 11

Other Assets Other International Assets 21

47

Banking Statistics

B. INTERNATIONAL LIABILITIES

Liability Category Liability Type Description Type CodeCategory Code (ALCD) (TYPECD)

FCNR (B) 11

Residents Foreign Currency (RFC) Deposits 12

Exchange Earners’ Foreign Currency (EEFC) A/Cs 13

Other FC deposits 14

Borrowings 41

International Balances in VOSTRO Accounts 51

Deposits and 51 Non-Resident External (NRE) Rupee Accounts 52

Loans Non-Resident Ordinary (NRO) Rupee Accounts 55

Embassy Accounts 57

Foreign Institutional Investors’ (FIIs) Accounts 58

ESCROW Accounts 59

Own Issues of International Bonds (IMDs of SBI, etc.,) 11

International 61 FRNs (Floating Rate Notes) 12

Debt Securities Other Own Issues, if any, of International Debt 13Instruments

International GDRs/ADRs (issued by the reporting banks) 11

Other Liabilities 71 Rupee Equities of banks held by NRIs/OCBs 12

Other international liabilities 13

C. DERIVATIVES, LETTER OF CREDITS, GUARANTEES AND CREDIT COMMITMENTS

Derivatives,

Letter of Credits, Derivatives 11

Guarantees and 81 Letter of Credits 21

Credit Guarantees 31

Commitments Credit Commitments 41

Currency of Account/Transaction/Settlement(Curcd): The banks/branches report, for itemsother than derivatives, the currency of account/transaction as ISO currency code provided below.For reporting of derivatives from branches totheir RO/ZO/LHO/HO, the currency ofsettlements of the derivative contracts arereported as ISO currency code as provided inAnnex 2.5. Although, the MTM values ofderivative contracts are reported in terms ofequivalent US Dollar and Indian Rupee, thecurrency of settlements, along with country ofthe counter parties, are reported for the purposeof netting at Head Office.

While recording rupee equivalent amount forforeign currency accounts/transactions, banksin India use notional exchange rates for variouscurrencies. The notional exchange rates varyfrom bank to bank and the differences betweenmarket rate and notional rate for certaincurrencies are very high. Accordingly, thecurrency of accounts/transactions along withamounts/balances/interests in terms of currencyof accounts/transactions (US dollar equivalentamounts/balances/interests in the case ofcurrency of account/transaction is “OTH”) andrupee equivalent amounts/balances/interests,calculated at notional rates, are reported in the

48


IBS. While rupee equivalent amounts calculatedat notional rates would help the banks to tallywith their ledgers, the foreign currency amountswould be converted into equivalent US Dollar atmarket rates uniformly for all banks at the RBIfor reporting to the BIS.

Country of Residence of Borrower/Customer(COUNCD): The country code of the country ofresidence of the person/entity (bank, corporate,individual, institution, etc.,) with whom bank hasassets or towards whom bank has liabilities isreported as ISO Country Code. In other words,the country of residence of borrower/customermeans the country of the person/entity in whosename the account is maintained in the books ofthe bank/branch. The resident country of theborrower/customer is also called as “Country ofImmediate Risk”. The country information isreported as per the ISO country code listed inAnnex 2.9.

Sector of Borrower/Customer (SECTCD): Thesector of borrower/ customer, with/towardswhom bank/branch has asset/liability, isreported as sector code provided below. Also, thesame set of codes is applicable for allocating“Sector of Guarantor (Ultimate Risk)” (S_U_CD).In addition to these codes, the code “35” is usedas sector of ultimate risk for “Cash Collateral”.

SectorCLASSIFICATION OF SECTOR Code

(SECTCD)

Bank - Own Branch/Office 11(i.e., Assets/Liabilities of reportingbanks with/towards their OWNbranch/office)

Bank - Branch/Office of Another 12Bank(i.e., Assets/Liabilities of reportingbanks with/towards branch/officeof ANOTHER bank. This includesassets/liabilities with/towards certainInternational Organizations). For theinternational organizations, thecountry code should be furnishedas ZZ and NOT as per the locationof country of the organization. Alist of international organizationsis provided in Annex-2.10.

Official Monetary Authorities 21(i.e., Assets/Liabilities of reportingbanks with/towards Central Banksof various countries, MultilateralDevelopment Banks, etc). A list ofofficial monetary authorities isprovided in Annex-2.9.

Bank for International 22Settlements (BIS), EuropeanCentral Bank (ECB)(i.e., Assets/Liabilities of reportingbanks with Bank for InternationalSettlements (BIS), EuropeanCentral Bank (ECB), etc).

Governments 25(i.e., Assets/Liabilities of reportingbanks with/towards Central, Stateor Local Governments, GovernmentDepartments)

Non-Bank – Public Sector 30Undertakings(i.e., Assets/Liabilities of reportingbanks with/towards companies/institutions other than banks inwhich share holding of state/central governments is at least 51per cent). This includes assets/liabilities with/towards certainInternational Organizations. For theinternational organizations, thecountry code should be furnishedas ZZ and NOT as per the locationof country of the organization.

Non-Bank – Private Sector 31(i.e., Assets/Liabilities of reportingbanks with/towards Joint Stock andPrivate/Public Limited Companies)

Non-Bank – Others 32(i.e., Assets/Liabilities of reportingbanks with/towards individuals,HUFs, etc.)

Cash Collateral 35(This could be furnished as Sector ofUltimate Risk, if the banks exposureis against the cash collateral)

Unallocated 40(In case of fixed assets, where thesector cannot be determined, thesector should be assigned to thisresidual category.)

SectorCLASSIFICATION OF SECTOR Code

(SECTCD)

49

Banking Statistics

Country of Ultimate Risk (C_U_CD): This isapplicable only for Asset items, Derivatives,Letters of Credit, Guarantees and CreditCommitments. The Country of Ultimate Risk isthe country in which the guarantor of a financialclaim resides (for individuals) and/or the countryin which the head office of the guarantor entity(bank, public/private organization, etc.,) islocated. The same set of ISO country codesshould be used for allocating Country of UltimateRisk Codes.

Sector of Ultimate Risk Code (S_U_CD): The Sectorof Ultimate Risk is defined as the sector of theguarantor of a financial claim. This is applicableonly for Asset items, Derivatives, Letters ofCredit, Guarantees and Credit Commitments.The same set of sector codes as provided shouldbe used for allocating Sector Codes of UltimateRisk.

Residual Maturity Code (MATCD): ResidualMaturity as on reporting date means theremaining maturity period, which is calculatedby taking the difference between the date ofmaturities of international assets/liabilities andreporting date of IBS data. Residual maturity ofasset/liability is reported as per the followingclassification:

Residual Maturity Classification ResidualMaturity

Code(MATCD)

Up to and inclusive of six months 1[Includes the accounts/transactions(saving/current deposits, etc.,)where amounts are received/paidon demand]

Over six months but up to and 2inclusive of one year

Over one year but up to and 3inclusive of two years

Over two years 4

Unallocated [In certain cases, like, 5investment in equity shares (in FC/abroad), participations, fixed assetsabroad, etc., residual maturitycannot be determined and theseshould be reported as unallocated.]

Outstanding Amount in Terms of Currency ofAccount (FC_BAL): The outstanding balance inthe account, in terms of currency of accountOR the marked to market (MTM) value ofderivative contracts in terms of US Dollar, as atthe end of reporting quarter are reported againstthis item.

Accrued Interest in Terms of Currency of Account(FC_INT): If the interest accrued up to the endof the reporting quarter is already debited/credited to the outstanding balance of theaccount, then ‘0’ (zero), otherwise, the accruedinterest is calculated in terms of currency ofaccount/transaction and reported separatelyunder this item.

Outstanding Amount in Terms of Indian Rupee(RS_BAL): The outstanding balance in theaccount (as it appears in the ledger in terms ofIndian Rupee) OR the marked to market (MTM)value of derivative contracts as at the end ofthe reporting quarter, in terms of Indian Rupee(INR) is reported against this item after roundingoff to Rupee.

Accrued Interest in Terms of Indian Rupee(RS_INT): If the interest accrued up to the endof the reporting quarter is already debited orcredited to the outstanding balance of theaccount then ‘0’ (zero), otherwise, accruedinterest amount, in terms of Indian Rupee (INR),is reported after rounding to Rupee.

Reporting Conventions:

All amounts under Assets and Liabilities, on-and off- balance sheet items, are reported withpositive sign EXCEPT credit balances in MIRRORNOSTRO Accounts, debit balances in VOSTROAccounts, loan/cash credit/over draft accountsand negative MTM values of Derivative contracts.

Reporting of Balance Amount in NOSTROAccounts: Balances in NOSTRO accounts arereported as per local books, i.e., as per mirrorbook of NOSTRO accounts. The Credit balancesare reported with –ve sign, which is clubbedunder Overseas Borrowings (i.e., Liabilities).

Reporting of Balance Amount in VOSTROAccounts: Debit balances in VOSTRO accounts

50


are reported with –ve sign, which are clubbedunder Lending to Non-Residents (i.e., Assets). Inthis case Country & Sector of Ultimate Risk Code(i.e., C_U_CD & S_U_CD) are furnished.

The system of International Banking Statistics(IBS) as pursued by the Bank for InternationalSettlements (BIS) is expected to reduce theinadequacies in data and data gaps in theinternational assets and liabilities of the banksin India. The IBS system of reporting comprisestwo sets of tabulations viz., Locational BankingStatistics (LBS) and Consolidated BankingStatistics (CBS). The features of LBS and CBSare summarized below:

Locational Banking Statistics (LBS): The locationalbanking statistics provide for the collection ofdata on the positions of all banking officeslocated within the reporting area. The ‘reportingarea’ is used to refer to the countries, whichsubmit IBS data to the BIS. Such offices reportexclusively on their own (unconsolidated)business, which thus include internationaltransactions with any of their own affiliates(branches, subsidiaries, joint ventures) locatedeither inside or outside the reporting area. Thebasic organizing principle underlying thereporting system is the residence of the bankingoffice. This conforms to balance of payments andexternal debt methodology. In addition, data onan ownership or nationality basis are alsocalculated by regrouping the residence-baseddata according to countries of origin.

The LBS comprises 18 statements, of which 8statements represent Instrument-wise (viz.,International Loans and Deposits, InternationalHoldings/Own Issues of Debt Securities andInternational other Assets/Liabilities)international assets and liabilities of the bankingsector by country and sector of borrower andcurrency, the 10 statements represent majorcurrency – wise international assets andliabilities of reporting banks according to theircountry of incorporation and sector of borrower.

Consolidated Banking Statistics (CBS): Theconsolidated banking statistics are designed toprovide comprehensive and consistent quarterlydata on banks’ financial claims, i.e., assets sideof balance sheet, on other countries on two

different bases. While the first set of statisticscollects data on an ultimate risk basis, i.e.,allocated to the country where the final risk lies,for assessing country credit risk exposures, thesecond set of statistics collects data on animmediate borrower basis, i.e., allocated to thecountry where the original risk lies, for providinga measure of country transfer risk. The datacover on and off- balance sheet claims reportedmainly by domestic banks, including theexposures of their foreign offices (i.e., subsidiariesand branches), and are collected on a worldwide-consolidated basis with inter-office positionsbeing netted out.

The CBS comprises 5 statements, of which 4statements represent country (on immediate riskbasis) and sector of borrower, and residualmaturity-wise international/foreign claimsaccording to the type of reporting banks (viz.,domestic banks, inside area banks [foreign banksincorporated in the countries submitting IBS tothe BIS), outside area banks (foreign banksincorporated in the countries NOT submittingIBS to the BIS)], the last statement representscountry (country of ultimate risk) and sector –wise foreign claims and the claims arising fromderivatives, guarantees and credit commitments.

Allocation and Reporting of Immediate/UltimateRisk: Reporting domestic banks provideinformation on the volume of their cross-borderfinancial claims, and the local claims of theirforeign offices in any currency, that has beenreallocated from the country of the immediateborrower to the country of ultimate risk as aresult of guarantees, collateral and those creditderivatives that are part of the banking books.The risk reallocation also includes that betweendifferent economic sectors (banks, public sectorand non-bank private sector) in the samecountry. The risk reallocation also covers loansto domestic borrowers, which are guaranteed byforeign entities and, therefore, represent inwardrisk transfers, which increase the exposure tothe country of the guarantor. Equally, foreignlending which is guaranteed by domestic entities(e.g., a domestic export credit agency) is reportedas an outward risk transfer, which reduces theexposure to the country of the foreign borrower.

51

Banking Statistics

If all outward and inward risk transfers were tobe reported, they would add up to the same total.However, because in the case of risk reallocationsfrom or to a reporting bank’s home country onlythe part relating to the foreign counter-partycountry is reported, inward and outward risktransfers may not necessarily add to the sametotal. Similarly, the issuer (or protection buyer)of credit-linked notes and other collateralizeddebt obligations and asset-backed securities onlyreport an outward risk transfer and no inwardrisk transfer because he is perceived to havereceived cash collateral which extinguishes theexposure to his original claim.

Local Assets and Local Liabilities in LocalCurrency of Domestics Banks’ Foreign Affiliates:Head offices of banks in the reporting areaprovide data on the local assets and liabilitiesin local currency of their affiliates in othercountries on a gross basis. In the revised system,while the data on local liabilities in localcurrencies are reported on gross basis (i.e., onerecord only), the data on local assets in localcurrency are reported with details of country &sector of borrower, country & sector of guarantor,currency, residual maturity, etc. The consolidatedbanking statistics, though measures only claim,are a counterpart to borrowing countries’liabilities and, thus, can be aggregated toconstruct a measure of international debt owedto banks.

Derivative Contracts: Reporting domestic banksprovide consolidated data on the cross-borderfinancial claims (i.e., positive market values)resulting from derivative contracts of all theiroffices worldwide and the financial claims fromderivative contracts of their foreign offices vis-à-vis residents of the countries where the officesare located, independent of whether thederivative contracts are booked as off- or on-balance sheet items. The data are reported on aconsolidated and ultimate risk basis, i.e., inter-office positions are netted out and the positionsare allocated to the country where the final risklies.

The data cover in principle all derivativecontracts that are reported in the context of theBIS regular OTC derivatives statistics. The data

thus mainly comprise forwards, swaps andoptions relating to foreign exchange, interest rate,equity, commodity and credit derivativecontracts. However, credit derivatives, such ascredit default swaps and total return swaps, areonly to be reported under the item “Derivativecontracts” if they are held for trading by aprotection buying reporting bank. Creditderivatives, which are not held for trading, arereported as “Risk transfers” by the protectionbuyer and, all credit derivatives are reported as“Guarantees” by the protection seller.

Guarantees and Credit Commitments: Reportingdomestic banks provide data on guaranteesoutstanding vis-à-vis non-residents of all theiroffices worldwide and the exposures of theirforeign offices from guarantees vis-à-vis residentsof the countries where these offices are located.Similar data should also be provided separatelyfor credit commitments outstanding. Both typesof data are reported on a consolidated andultimate risk basis, i.e., inter-office positions arenetted out and - except when the exposure ismitigated by cash collateral or by exposure to aresident (i.e., home country) third party, in whichcase no foreign exposure is reported - thepositions should be allocated to the countrywhere the final risk lies.

Guarantees and credit commitments are reportedto the extent that they represent the unutilizedportions of both binding contractual obligationsand any other irrevocable commitments. Thesecover only those obligations which, if utilized,would be reported in total cross-border claimsand local claims of foreign offices in anycurrency. Performance bonds and other formsof guarantee are reported only if, in the event ofthe contingency occurring, the resulting claimwould have an impact on total cross-borderclaims and local claims of foreign offices in anycurrency. A more detailed definition ofguarantees and credit commitments and a non-exhaustive list of typical instruments that qualifyas guarantees and credit commitments areprovided below.

Guarantees: Guarantees are contingent liabilitiesarising from an irrevocable obligation to pay toa third party beneficiary when a client fails to

52


perform some contractual obligation. Theyinclude secured, bid and performance bonds,warranties and indemnities, confirmeddocumentary credits, irrevocable and standbyletters of credit, acceptances and endorsements.Guarantees also include the contingent liabilitiesof the protection seller of credit derivativecontracts.

Credit Commitments: Credit commitments arearrangements that irrevocably obligate aninstitution, at a client’s request, to extend creditin the form of loans, participation in loans, leasefinancing receivables, mortgages, overdrafts orother loan substitutes or commitments to extendcredit in the form of the purchase of loans,securities or other assets, such as backupfacilities including those under note issuancefacilities (NIFs) and revolving underwritingfacilities (RUFs).

Other Reporting Conventions

Netting of Assets: International assets andliabilities are, in principle, reported on grossbasis i.e., bank’s assets and liabilities vis-à-visthe same counter-party are reported separately,NOT netted one against the other. However, forreporting of derivatives, while branches submitcounter- party and contract-wise marked tomarket (MTM) values on gross basis to their HO/PO, the HO/PO of banks do netting for acounter-party where specific legally enforceablebilateral netting arrangement such as InternationalSwaps and Derivative Association (ISDA) masteragreement, etc., exists before summarizing thedata on derivatives.

Valuation: International claims in the form ofloans and receivables originated by the bank andnot held for trading as well as held to maturityinvestments be in principle valued at face valueor amortized cost price. Financial assets availablefor sale and held for trading are valued at marketor fair values. Contingent liabilities resulting fromguarantees and credit commitments are valuedat face value or the maximum possible exposure.The procedure for valuation and reporting ofderivatives is given in Annex 2.10.

Arrears of Interest and Principal: Until they arewritten off, interest in arrears on international

claims and principal in arrears (includingcapitalized interest) are reported/included in thedata on international assets/claims.

Provisions: Financial claims against whichprovisions have been made are normally reportedas foreign assets at their gross value. However,accounting rules may require in certain instancesthat these claims be reported on a net basis ifthere is an identified loss.

Write-Offs of Claims and Debt Forgiveness:Although an asset that has been written off maystill be a legally enforceable claim, it is excludedfrom the reporting.

Currency Conversion: The banks/branches report,for items other than derivatives, the outstandingamounts/balances and accrued interest in termsof currency of the account/transaction as wellas in equivalent rupee terms. The positions interms of currency of the account/transactionreported by banks are converted in terms of USDollar by the RBI at the exchange rate prevailingon the reporting date, for the purpose ofreporting to the BIS. For derivatives, noconversion is required as the banks/branchesreport the MTM values of derivative contracts interms of equivalent US Dollar as well as IndianRupee terms, irrespective of currency ofsettlement.


Source of Data: The required/relevant data itemsare available in the account ledgers of thebranch, under assets and liabilities, which arefurther divided into different ledgers. On the firstfolio of any account the information relating tothe account holder such as name, address,maturity date, etc., and nature of the accountis recorded. Besides, balance in the account asat any given date is also available in the balancecolumn.

The Reporting System: The Reporting Systemunder IBS involves branches, head/principaloffices (HOs/POs) of banks and the RBI. TheReporting System comprises:

Branches/Offices of Banks: The branches/officesof banks (Indian banks and Foreign banks)operating in India from the source which report

53

Banking Statistics

account-wise data on international assets,international liabilities and the claims arisingfrom derivatives, guarantees and creditcommitments; and provide summarized data tothe HOs/POs. The reporting branches/officesmay submit summarized data to their RO/ZO/LHO or directly to the HO/PO depending uponthe arrangements of the banks concerned. Also,foreign branches of Indian banks prepareaccount-wise data on international assets andclaims arising from derivatives, guarantees andcredit commitments and provide summarizeddata to the HOs/POs.

Head/Principal Office of Banks: The HO/POprocess and consolidate the data of branchesand forward bank level summarized data to theRBI,

Reserve Bank of India: The IBS data receivedfrom banks’ HO/PO are processed to arrive atthe consolidated positions for all reporting banksin India. Based on final consolidated IBS dataof all reporting banks in India, LBS and CBSstatements are generated and supplied to theBank for International Settlements (BIS).

For the purpose of securing bank level IBS datafrom banks in India, a senior level officer fromeach of the banks concerned, nominated by thebanks, is acting as Nodal Officer. The RBI(DESACS) conduct workshops on IBS for thebenefit of Nodal Officers at bank level. Banks inturn conduct regular training/workshops on IBSin their Staff Training Colleges. In order tofacilitate data preparation/compilation by banks/branches, windows based software has beenprovided to them. The banks submit bank levelconsolidated data, in a specified format (textfiles), to the RBI within one month from thereporting date. Data transmission is done inelectronic form only. The HO/PO of bankssubmit the data to the RBI through e-mail/floppy.

The IBS return is not statutory, however, it ismandatory. The return was introduced as perrecommendations of the working group on theBIS system of IBS in India. The working anddevelopment in compilation of the return isoverseen by a standing monitoring group (SMG)

on IBS, which comprises of senior officers ofselect banks and the RBI. The SMG isreconstituted, normally, once in two years.


The IBS data are collected/compiled as per theguidelines/recommendations of the BIS andhence, the data compilation is of internationalstandards. There is a standing monitoring group(SMG) to facilitate implementation of the BISsystem of IBS in India in an effective mannerand to consider necessary changes in the eventof further easing of foreign exchange controls.

Suitable facilities have been provided in thesoftware to generate certain reports to ensurethe coverage and correctness of data. The banksare advised to verify these reports and comparewith the data reported to the RBI under otherreturns. Also, suitable checks are provided inthe software to ensure the quality of data.Further, provision has been made in the softwareto record the reasons for large variations in datawith respect to the data reported in the previousquarters. At RBI level, while processing the datareceived from banks, the correctness/coverageof data are ensured by comparing the IBS datawith similar aggregate level data reported bybanks to the RBI under different set of return.

In order to train/educate bank/branch officialsworkshops/training programs are conductedregularly. Also, banks conduct workshops fortheir officials in their training establishments.

2.1.3 Branch Banking Statistics(Master Office File System)

The Reserve Bank of India collects data/information on different aspects of banks throughperiodical returns/ statements. For processingthese data, it is necessary to keep a uniqueidentity of the source of data. This is achievedthrough allotting suitable code number, namedas Uniform Code Numbers to all the bank offices.Evolving a code numbering system that couldbe uniformly used in all returns to be submittedby bank branches/offices was considered in latesixties by the RBI and put in place initially forcommercial banks in 1972. Similarly, allotmentof Uniform Code Numbers to all the cooperative

54


credit institutions and the state financialcorporations, which participated in the LeadBank Scheme, was attempted in 1982.

2.1.3.1. Measurement needs of the area

Comprehensive and updated list of branches ismaintained by RBI (DESACS) in the Master OfficeFile (MOF) constituting the frame of bankbranches for various Basic Statistical Return(BSR) surveys, other bank related surveys andvarious foreign exchange related returns receivedin DESACS. It may not be out of place tomention here that MOF is the only official andreliable source of branch-banking details ofcommercial banks in India.

Maintenance of up-to-date branch records in theMOF has assumed great significance for thefollowing multi-dimensional utility of branchbanking statistics:

i) Submission of branch-banking data tothe Ministry of Finance for replyingParliament questions.

ii) Submission of branch details to variousCentral and state governmentdepartments in connection with theirpublications, disbursement of pension,online reporting of tax payment data toIncome Tax Department pertaining to OnLine Tax Accounting System (OLTAS), etc.

iii) Submission of details of branches,handling foreign exchange business, withuniform code number to the Office of theCustoms and Central Excise, New Delhiin connection with clearance of exportconsignments by the respective customsauthorities.

iv) Submission of details of branches/officesof commercial banks and summarizeddata thereof to Department of BankingOperations and Development (DBOD) andRural Planning and Credit Department(RPCD) in connection with BranchLicencing Policy.

Besides some of the requirements listed above,other Central Office Departments of RBI otherthan DBOD and RPCD Offices make use of theuniform code numbers and the data compiled

based on MOF. Based on branch details ofcommercial banks available in the MOF, DESACSbrings out regularly two publications viz.,“BRANCH BANKING STATISTICS” (providingsummarized branch banking data on commercialbanks) and “DIRECTORY of COMMERCIAL BANKOFFICES in India” (providing list of branches/offices with locational and other details) in CD-ROM as well as through RBI website. These datain modified form are also published in otherpublications of the Bank.

2.1.3.2. Concepts, Definitions andClassifications

a. Master Office File (MOF)

The uniform codes along with other particularsof each and every branch/office of commercialand co-operative banks and financial institutionshandling foreign exchange and temporary offices,are maintained in the Department of StatisticalAnalysis and Computer Services (DESACS) in theform of Master Office File (MOF) in its computersystem.

b. Uniform Code Number (UCN)

UCN of branches/offices of banks comprises twoparts as Part - I code and Part - II code of 7digits each; two additional digits are assigned toPart – I code of temporary offices (NotAdministratively Independent Offices-NAIO).

Part-I code is defined as follows:

• for branches/offices/NAIOs of commercialbanks and other financial institutions:

first three digits from the left stand for bankcode;

next four digits stand for branch code.

In case of NAIOs last two digits stand forNAIO code.

• for branches/offices/NAIOs of state/districtcentral co-op. banks, state/central landdevelopment banks:

first four digits from the left stand for bankcode;

next three digits stand for branch code;

55

Banking Statistics

last two digits stand for NAIO code. (In caseof NAIOs).

• for branches/offices/NAIOs of other co-op.banks, salary earners’ banks, state financialcorporations and tours, travels, finance &leasing companies:

first five digits from the left stand for bankcode;

next two digits stand for branch code;

last two digits stand for NAIO code.

Part-II code, irrespective of the category of abank, is defined as follows:

first three digits from the left stand for districtcode;next three digits stand for centre code withinthe district;last single digit stands for population rangecode.

Relationship between population range code (lastdigit in the Part – II code) and population groupcode is shown below:

Last digitof Part II

of the Population Population Population

Uniform range Group GroupCode Code

Number(Populaiton

Rangecode)

1 Up to 4999Rural 1

2 5000 to 9999

3 10,000 to 19,999

4 20,000 to 49,999 Semi-Urban 2

5 50,000 to 99,999

6 1,00,000 to 1,99,999

7 2,00,000 to 4,99,999 Urban 3

8 5,00,000 to 9,99,999

9 10 lakhs and above Metropolitan 4

c. Uniform Code, BSR Code and AD CodeNumber

There is no difference between Uniform Code, BSRCode and AD Code Number. They are one andthe same.

d. Proformae - I & II

Detailed information on branches/offices ofbanks are regularly collected in the prescribedproformae, viz., Proforma-I and Proforma-II.Details of new branches/ offices opened inbanked/ unbanked centres such as date ofopening of branch/office, names and addressesof branch/ office, other locational details,population of centre, nature of business activitiespursued and a host of auxiliary information suchas AD category, currency chest details, statusof computerisation, etc., are reported throughProforma-I. The information of relocation/closure/ merger/ conversion of a bank branch/change of branch name/AD category/ change ofany auxiliary information is collected throughProforma-II. Specimen copy of Proformae-I & IIand explanatory note thereon is enclosed atAnnex 2.11.

e. Definition of a Centre with particularreference to location of a bank branch/office

A Centre refers to a revenue unit having definitesurveyed boundary, defined by a localadministration/state government and includessuch places as revenue village/town/city/municipality/municipal corporation/cantonmentboard, outgrowths to a city /municipality/municipal corporation, etc. In decennialpopulation census, same definition of centre isused by the Census Authority. Name of centrereported by banks in the Proforma is checkedagainst records available in the censusdocument.

f. Definition of a Banked Centre

A revenue center as defined above having at leasta branch/office of a commercial or co-operativebank or a temporary office, such as an extensioncounter or a satellite office or an off-site ATM ofa commercial or co-operative bank is called abanked center.

g. Population Group classification of BankedCentres used in RBI

Population groups of banked centres are definedas follows:

56


v) Non-scheduled Commercial Banks (LocalArea Banks)

j. Difference between Satellite Office andExtension Counter

Satellite Offices are normally located in remoteareas and carry out all normal functions of abranch but only on a limited number of days ina week. Whereas, Extension Counters are openin all working days but discharge only limitedfunctions of a branch such as opening of savingsaccount, acceptance of deposit, etc.

2.1.3.3. Sources and Systems

Basic data sources are commercial banks, co-operative banks and non-banking financialcompanies handling foreign exchange business,wherefrom branch banking details are obtainedin Proformae-I & II. Information relating tomerger and reorganization of centers/districts/states are received from gazette notificationsissued by state/central governments. Based onDecennial Census population data of centersreleased by the Office of the Registrar General,Government of India, updation of populationgroup classification of banked centers vis-à-visbank branches is carried out.

In respect of banks other than public sectorbanks, Proformae-I & II are submitted directlyby the head office of the banks, to whom Part-I& II Uniform are advised. In respect of publicsector banks, there is a two-tier arrangement.zonal/circle/local head offices report Proformae-I & II in respect of the branches/offices comingunder their jurisdiction to their head office, whoin turn submit consolidated proformae to us afterallotment of Part-I uniform code to the newlyopened branches/offices, to whom the Part-IIuniform code is advised.

For collection of branch banking data frombanks, recently data entry software (Visual Basic6.0 software has been used as the front endtool and MS Access as the back end) has beendeveloped and forwarded to banks. Master OfficeFile system, wherein all branch/office/NAIOsdetails are maintained, is based on OracleRDBMS system (Visual Basic software has beenused as the front end tool and Oracle 9i as the

i) Rural group includes centres withpopulation less than 10,000.

ii) Semi-urban group includes centres withpopulation 10,000 and above but less than1 lakh.

iii) Urban group includes centers withpopulation 1 lakh and above but less than10 lakh.

iv) Metropolitan group includes centres withpopulation of 10 lakh and above.

h. Population Group classification used byCensus Authority

Population group classification used in the Bankis different from the one used by the CensusAuthority. Population group classification usedby the Census Authority in the 2001 Census isas follows:

The following places are treated as urban:

1. All statutory towns i.e., all places with amunicipality, corporation, cantonment boardor notified town area committee, etc.

2. All other places which satisfy the followingcriteria:

– A minimum population of 5,000;

– At least 75% of the male workingpopulation engaged in non-agriculturalpursuits;

– A density of population of at least 400per sq. km. (1,000 per sq. mile).

All other places (revenue villages) havingdefinite surveyed boundaries were classifiedas rural.

i. Various Commercial Bank Groupscurrently in use

i) Public Sector Banks: (a) SBI ant its 7Associates, (b) 19 Nationalised Banks, (c)Other Public Sector Banks (IDBI Ltd.)

ii) Regional Rural Banks

iii) Foreign Banks

iv) Other Scheduled Commercial Banks(Private Banks): (a) Old Private SectorBanks and (b) New Private Sector Banks

57

Banking Statistics

back end one). In this system, Crystal Reports-11.0 has been used for generating the reports.The main feature of the system is to capturebranch-wise transactional records so that historyof any branch/office/NAIO can be viewed at anypoint of time in the future. Also, in the banklevel software, to cumulate all the records fromthe zonal/circle/local head offices, there is aprovision to import the zonal/circle/local headoffices level files at the HO level and they canbe exported as a single/cumulated format of allrecords, which can be later sent to RBI. Usingthe bank level data entry software, banks havestarted sending soft copy of Proformae- I & II,in magnetic medium/ by using Internet facility.

For branches/offices handling foreign exchangebusiness, Proformae are submitted on an on-going basis. Whereas, banks submit Proformaeon a quarterly basis, in respect of branches/offices not handling foreign exchange business.

2.1.3.4. Ensuring Quality Standards

To ensure receipt of good quality data frombanks, besides earmarking certain importantdata fields in Proformae-I & II as mandatory, alarge number of consistency checks have beenalso incorporated in the data entry software.Workshops are being conducted from time totime to impress upon bank representatives aboutsubmission of good quality data in time.Regulatory authorities in RBI, such asDepartment of Banking Operations andDevelopment, Foreign Exchange Department,Rural Planning and Credit Department, etc.,issue guidelines to banks from time to timeemphasizing the need to submit quality data within stipulated time.

2.1.4. Other Banking Statistics

Besides statistics based on statutory and specialreturns, RBI collects and compiles various otherbanking statistics relating to priority sectors,supervision and other areas of banking.Information based on these subjects are regularlydisseminated in various publications likeStatistical Tables Relating to Banks in India,Report on Trend and Progress of Banking, etc.

Some of the salient features of these statisticsare presented below.

2.1.4.1. Priority Sectors’ Statistics

At a meeting of the National Credit Council heldin July 1968, it was emphasized that commercialbanks should increase their involvement in thefinancing of priority sectors viz., agriculture andsmall- scale industries. The description of thepriority sectors was later formalized in 1972 onthe basis of the report submitted by the InformalStudy Group on Statistics relating to advancesto the priority sectors constituted by the ReserveBank in May 1971. On the basis of this report,the Reserve Bank prescribed a modified returnfor reporting priority sector advances and certainguidelines were issued in this connectionindicating the scope of the items to be includedunder various categories of priority sectors.Although initially there was no specific targetfixed in respect of priority sector lending, inNovember 1974, the banks were advised to raisethe share of these sectors in their aggregateadvances to the level of 33 1/3 per cent byMarch 1979.

At a meeting of the Union Finance Minister withthe Chief Executive Officers of Public Sectorbanks held in March 1980, it was agreed thatbanks should aim at raising the proportion oftheir advances to priority sectors to 40 percentby March 1985. Subsequently, on the basis ofthe recommendations of the Working Group onthe modalities of implementation of PrioritySector Lending and the Twenty Point EconomicProgramme by Banks, all commercial banks wereadvised to achieve the target of priority sectorlending, viz., agriculture, small-scale industries,small road & water transport operators, retailtrade, small business, etc., at 40 percent ofaggregate bank advances by 1985. Sub-targetswere also specified for lending to agriculture andweaker sections within the priority sector. Bankswere advised to ensure that direct financeextended to agriculture (including allied activities)reached a level of at least 15% of total bankcredit by March 1985 and at least 16% by March1987 and 17% of their total credit by March1989 and further raised to 18% by March 1990.In October 1993, banks were advised that with

58


a view to ensuring the focus of the banks onthe direct category of agricultural advances didnot get diluted, that agricultural lending underthe indirect category should not exceed one-fourth of the sub-target of 18 per cent, i.e., 4.5%of Net Bank Credit. At present, within the overallmain lending target of 40 per cent of net bankcredit, the scheduled commercial banks shouldensure that 18% of net bank credit goes toagricultural sector, 10 per cent of net bank creditto the ‘weaker sections’. However, this was notmade applicable to foreign banks operating inthe country in view of the fact that their coveragein rural and semi-urban areas was small. It wasfelt that their involvement in financing of prioritysectors like SSI, small transport operators, retailtrade, etc., could be increased to a much higherlevel than at present. In 1988, foreign banksoperating in India were advised that their prioritysector advances should be progressivelyincreased to the level of 15 per cent of their netoutstanding advances by the end of March 1992.With a view to reducing the disparity betweenthe domestic banks and foreign banks operatingin India in regard to priority sector obligations,foreign banks were advised in April 1993 thattheir minimum requirement for lending topriority sector by foreign banks was raised from15 per cent to 32 per cent of their net bankcredit to be achieved by March 1994. At thesame time, keeping in view that the foreignbanks have no rural branch net work, it wasdecided that with effect from July 01, 1993, thecomposition of priority sector advances in caseof foreign banks would be inclusive of exportcredit provided by them and the enhanced targetof 32% inclusive of export credit. Further, withinoverall target of 32%, the advances to SSI andexport sector should not be less than 10% eachof the net bank credit. However, the sub-targetprescribed for exports was enhanced to 12%subsequently. In the event of failure to attainthe stipulated targets and sub-targets, the foreignbanks are required to make good the shortfallin the achievement of the targets/sub-targets bydepositing for a period of three years, an amountequivalent to the shortfall with the SmallIndustries Development Bank of India (SIDBI) atrate of interest ranging from Bank Rate to BankRate minus 3 percentage points depending on

the percentage of shortfall in achievement ofpriority sector lending target/sub-targets as maybe decided by RBI from time to time. Domesticscheduled commercial banks having shortfall inlending to priority sector/agriculture areallocated amounts for contribution to the RuralInfrastructure Development Fund (RIDF)established with NABARD. Details regardingoperationalisation of the RIDF such as theamounts to be deposited by banks, interest rateson deposits, period of deposits, etc., are decidedevery year after announcement in the UnionBudget about setting up of RIDF. Thecontributions to be made by banks arecommunicated to the banks concernedseparately. Shortfall in lending to priority sector/agriculture is taken into account while makingallocations to banks under RIDF, the amountthat has to be deposited with NABARD at acertain rate of interest.

In order to align bank credit to the changingneeds of the society, the scope and definition ofpriority sector have been fine-tuned over timeby including new items as also by enhancingcredit limit of the constituent sub-sectors. Thecoverage of the priority sectors, the data, whichare published in its various publications by RBI,is described below.

1. Agriculture

1.1 Direct Finance to farmers for agriculturalpurposes viz.,

1.1.1. Short- term loans for raisingcrops, i.e., for crop loans. In addition,advances upto Rs.10 lakh to farmersagainst pledge/hypothecation ofagricultural produce (including warehousereceipts) for a period not exceeding 12months, where the farmers were given croploans for raising the produce, provided theborrowers draw credit from one bank

1.1.2 Medium and long term loansprovided directly to farmers for financingproduction and development needs,

(i) Purchase of agricultural implementsand machinery

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Banking Statistics

(a) Purchase of agricultural implements(iron ploughs, harrows, hose, landlevelers, bundfarmers, hand tools,sprayers, dusters, hay-press,sugarcane crushers, threshermachines, etc.)

(b) Purchase of farm machinery (viz.,tractors, trailers, power tillers,tractor accessories, etc.),

(c) purchase of trucks, jeeps, pick-upvans, bullock carts and othertransport equipments to assist thetransport of agricultural inputs andfarm products,

(d) transport of agricultural inputs andfarm products,

(e) purchase of plough animals, etc.

(ii) Development of irrigation potentialthrough

(a) construction of shallow and deeptube wells, tanks, etc., and purchaseof drilling units,

(b) constructing, deepening clearing ofsurface wells, boring of wells,electrification of wells, purchase ofoil engines and installation of electricmotor and pumps,

(c) purchase and installation of turbinepumps, construction of fieldchannels (open as well asunderground), etc.,

(d) construction of lift irrigation project,

(e) installation of sprinkler irrigationsystem,

(f) purchase of generator sets forenergisation of pumpsets used foragricultural purposes,

(iii) Reclamation and land developmentschemes - Bunding of farm lands,terracing, conversion of dry paddy landsinto wet irrigable paddy lands, wastelanddevelopment, development of farmdrainage, reclamation of soil lands andprevention of salinisation, reclamation ofravine lands, purchase of bulldozers, etc.

(iv) Construction of farm buildings andstructures, etc. - Bullock sheds,implement sheds, tractor and trucksheds, farm stores,

(v) Construction and running of storagefacilities - Construction and running ofwarehouses, godowns, silos and loansgranted to farmer for establishing coldstorages used for storing own produce,

(vi) Payment of irrigation charges, etc. -Charges for hired water from wells andtube wells, canal water charges,maintenance and upkeep of oil enginesand electric moors, payment of labourcharges, electricity charges, marketingcharges, service charges to CustomsService Units, payment of developmentcess, etc.

(vii) Other types of direct finance tofarmers –

a. Short-term loans

i. To traditional/non-traditionalplantations and horticulture

ii. For allied activities such asdairy, fishery, piggery, poultry,bee-keeping, etc.

b. Medium and long term loans

i. Development of loans to allplantations, horticulture,forestry and wasteland

ii. Development of loans for alliedactivities,

iii. Development of dairying andanimal husbandry in all itsaspects,

iv. Development of fisheries in allits aspects from fish catchingto stage of export, financing ofequipment necessary for deepsea fishing, rehabilitation oftanks (fresh water fishing), fishbreeding, etc.

v. Development of poultry piggery,etc. in all its aspects includingerection of poultry houses, pighouses, bee-keeping, etc.

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vi. Development and maintenanceof stud farms, sericultureincluding grainages etc.However, breeding of racehorses cannot be classifiedhere,

vii. Bio-gas plants,

viii. Financing of small andmarginal farmers for purchaseof land for agriculturalpurposes,

ix. Financing setting up ofAgriclinics and AgribusinessCentres by agriculturegraduates,

x. Investment by banks insecuritised assets whichrepresent direct advance toagriculture.

1.2: Indirect finance to agriculture

1.2.1 (i) Credit for financing thedistribution of fertilizers,pesticides, seeds, etc.,

(ii) loans up to Rs.40 lakh grantedfor financing distribution ofinputs for the allied activitiessuch as cattle feed, poultryfeed, etc.

1.2.2 (i) loans to Electricity Boards forreimbursing the expenditurealready incurred by them forproviding low tensionconnection from step-downpoint to individual farmers forenergizing their wells, loans topower distribution corpora-tions/companies emerging outof bifurcation/restructuring ofSEBs may also be classified asindirect finance to agricultureand (ii) loans to SEBs forSystems Improvement Schemeunder Special Project Agri-culture (SI-SPA),

1.2.3 Loans to farmers through PACS, FSSand LAMPS,

1.2.4 Deposits held by the banks in RuralInfrastructure Development Fund(RIDF) maintained with NABARD

1.2.5 Subscriptions to bonds issued byRural Electrification Corporation(REC) exclusively for financing pumpset energisation programme in ruraland semi-urban areas and also forfinancing System ImprovementProgramme (SI-SPA). However, theinvestments that may be made bybanks on or after April 1, 2005 inthe bonds issued by REC shall notbe eligible for classification underpriority sector lending and suchinvestments which have alreadybeen made by banks upto March 31,2005, would cease to be eligible forclassification under priority sectorlending with effect from April 1,2006.

1.2.6 Subscriptions to bonds issued byNABARD with the objective offinancing exclusively agriculture/allied activities. However, theinvestments made by banks in suchbonds issued by NABARD, shall notbe eligible for classification underpriority sector lending with effectfrom April 1, 2007.

1.2.7 Other types of indirect finance suchas (i) finance for hire-purchaseschemes for distribution ofagricultural machinery andimplements, (ii) loans forconstructions and running of storagefacilities (warehouse, market yards,godowns and silos) including coldstorage units designed to storeagriculture produce/products,irrespective of their location, (iii)advances to Customs Service Unitsmanaged by individuals, institutionsor organizations who maintain a fleetof tractors, bulldozers, well-boringequipment, threshers, combines etcand undertake work from farmers oncontact basis, (iv) loans toindividuals, institutions ororganizations who undertake

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Banking Statistics

spraying operations, (v) advances toState-sponsored Corporations foronward lending to weaker sections,(vi) loans to Non Banking FinancialCompanies(NBFCs) for on-lending toagriculture, investment by banks insecuritised assets which representdirect advances to agriculture, etc.

2. Small Scale Industries

2.1. Small and Ancillary Industries

Small-scale industrial units are those engagedin the manufacturing, processing or preservationof goods and whose investment in plant andmachinery (original cost) does not exceed Rs.1crore. These would, inter alia, include unitsengaged in mining or quarrying, servicing andrepairing of machinery. In the case of ancillaryunits, the investment in plant and machinery(original cost) should not exceed Rs.1 crore tobe classified under small-scale industry.

The investment limit of Rs.1 crore forclassification as SSI has been enhanced to Rs.5crore in respect of certain specified items underhosiery, hand tools, drugs & pharmaceuticalsand stationery items by the Government of India.

In order to ensure that credit is available to allsegments of the SSI sector, banks should ensurethat

(1) 40 per cent of the total credit to small scaleindustry goes to the cottage industries,khadi & village industries, artisans and tinyindustries with investment in plant andmachinery up to Rs.5 lakh

(2) 20 per cent of the total credit to small scaleindustry goes to SSI units with investmentin plant and machinery between Rs.5 lakhand Rs.25 lakh; and

(3) The remaining 40 per cent goes to other SSIunits with investment exceeding Rs.25 lakh

2.2 Tiny Enterprises

The status of ‘Tiny Enterprises’ may be given toall small scale units whose investment in plantand machinery is up to Rs.25 lakh, irrespectiveof the location of the unit.

2.3. Small Scale Service & BusinessEnterprises (SSSBEs)

Industry related service and business enterpriseswith investment upto Rs.10 lakh in fixed assets,excluding land and building will be given thebenefits of small scale sector. For computationof value of fixed assets, the original price paidby the original owner will be consideredirrespective of the price paid by subsequentowners.

2.4 Investment made by banks in securitisedassets representing direct lending to the SSIsector would be treated as their direct lendingto SSI sector under priority sector, provided itsatisfies the following conditions:

(1) The pooled assets represent direct loans toSSI sector which are reckoned underpriority sector ; and

(2) The securitized loans are originated bybanks/financial institutions

2.5 Indirect finance in the small-scale sectorwill include credit to :

(i) Agencies involved in assisting thedecentralized sector in the supply ofinputs and marketing of outputs ofartisans, village and cottageindustries,

(ii) Government sponsored Corporations/organizations providing funds to theweaker sections in the priority sector,

(iii) Advances to handloom co-operatives,

(iv) Term finance/loans in the form oflines of credit made available to StateIndustrial Development Corporation/State Financial Corporations forfinancing SSIs,

(v) Credit provided by banks to KVICunder the scheme for provision ofcredit to KVIC by consortium of banksfor on lending to viable Khadi andVillage Industrial Units, etc.

2.6 Industrial Estates - Loans for setting upindustrial estates.

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3. Small Road & Water TransportOperators (SRWTO)

Advances to small road and water transportoperators owning a fleet of vehicles not exceedingten vehicles, including the one proposed to befinanced.

Advances to NBFCs for on-lending to truckoperators and SRWTOs other than truck operatorssatisfying the eligibility criteria. Also, portfoliopurchases (purchases of hire purchasereceivables) from NBFCs made after 31 July 1998would also qualify for inclusion under prioritysector lending, provided the portfolio purchasesrelate to SRWTOs satisfying priority sector norms.

4. Retail Trade

Advances granted to (a) retail traders dealing inessential commodities (fair price shops) andconsumer co-operative stores, and (b) privateretail traders with credit limits not exceedingRs.10 lakh (Retail traders in fertilizers will formpart of indirect finance for agriculture and thoseto retail traders of mineral oils under smallbusiness).

5. Small Business

Small business would include individuals andfirms managing a business enterprise establishedmainly for the purpose of providing any serviceother than professional services whose originalcost price of the equipment used for the businessdoes not exceed Rs.20 lakh. Banks are free tofix individual limits for working capital dependingupon the requirements of different activities.

Advances for acquisition, construction,renovation of house boats and other touristaccommodation will be included here.Distribution of mineral oils shall be includedunder ‘small business’. Advances to judicialstamp vendors and lottery ticket agents may alsobe classified under this category.

6. Professional & Self-employed Persons

Included under this head are:

a. Loans to professional and self-employedpersons include loans for the purpose of

purchasing equipment, repairing orrenovating existing equipment and/oracquiring and repairing business premisesor for purchasing tools and/or for workingcapital requirements to medical practitionersincluding dentists, chartered accountants,cost accountants, practicing companysecretary, lawyers or solicitors, engineers,architects, surveyors, constructioncontractors or management consultants orto a person trained in any other art or craftwho holds either a degree or diploma fromany institutions established, aided, orrecognized by Government or to a personwho is considered by the bank astechnically qualified or skilled in the fieldin which he is employed.

b. Advances to accredited journalists andcameramen who are freelancers, i.e., notemployed by a particular newspaper/magazine for acquisition of equipment bysuch borrowers for their professional use.

c. Credit for the purpose of purchasingequipment, acquisition of premises (strictlyfor business) and tools to practicingcompany secretaries who are not in theregular employment of any employer.

d. Financial assistance for running ‘HealthCentre’ by an individual who is not a doctorbut has received some formal training aboutthe use of various instruments of physicalexercises.

e. Advances for setting up beauty parlourswhere the borrower holds qualification inthe particular profession and undertakes theactivity as the sole means of living/earninghis/her livelihood.

f. Only such professional and self-employedpersons whose borrowings (limits) do notexceed Rs.10 lakh of which not more thanRs.2 lakh should be for working capitalrequirements, should be covered under thiscategory. However, in the case ofprofessionally qualified medicalpractitioners, setting up of practice in semi-urban and rural areas, the borrowing limitsshould not exceed Rs.15 lakh with a sub-ceiling of Rs.3 lakh for working capital

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Banking Statistics

requirements. Advances granted forpurchase of one motor vehicle toprofessional and self-employed personsother than qualified medical practitionerswill not be included under priority sector.

g. Advances granted by banks to professionaland self-employed persons for acquiringpersonal computers for their professionaluse, may be classified in this category,provided the ceiling of total borrowings ofRs.10 lakh of which working capital shouldnot be more than Rs.2 lakh per borrower,is complied with in each case for the entirecredit inclusive of credit provided forpurchase of personal computer. However,home computers should not be treated onpar with personal computers and excludedfrom priority sector lending.

7. State sponsored organization forscheduled castes/scheduled tribes

Advances sanctioned to State SponsoredOrganisations for Scheduled Castes/ScheduledTribes for the specific purpose of purchase andsupply of inputs to and/or the marketing of theoutputs of the beneficiaries of theseorganizations.

8. Education

Educational loans should include only loans andadvances granted to individuals for educationalpurposes up to Rs.7.5 lakh for studies in Indiaand Rs.15 lakh for studies abroad and not thosegranted to institutions and will include alladvances granted by banks under specialschemes, if any introduced for the purpose.

9. Housing

Direct Finance

(i) Loans upto Rs.15 lakh in rural/semi-urbanareas, urban and metropolitan areas forconstruction of houses by individuals, withthe approval of the banks’ boards, excludingloans granted by banks to their ownemployees.

(ii) Loans given for repairs to the damagedhouses of individuals upto Rs.1 lakh in

rural and semi-urban areas and Rs.2 lakhin urban areas.

(iii) Loans granted by banks upto Rs.5 lakh toindividuals desirous of acquiring orconstructing new dwelling units and uptoRs.50,000/- for upgradation or majorrepairs to the existing units in rural areasunder Special Rural Housing Scheme ofNHB

(iv) Investment by banks in the mortgagedbacked securities, provided it satisfies thefollowing conditions

(a) The pooled assets are in respect ofdirect housing loans which satisfy thedefinition for inclusion under thepriority sector

(b) The securitised loans are originated bythe housing finance companies/banks;

Indirect Finance

(i) Assistance given to any governmentalagency for construction of houses or forslum clearance and rehabilitation of slumdwellers, subject to a ceiling of Rs.5 lakhof loan amount per housing unit,

(ii) Assistance given to a non-governmentalagency approved by the NHB for thepurpose of refinance for reconstruction ofhouses or for slum clearance andrehabilitation of slum dwellers, subject to aceiling of loan component of Rs.5 lakh perhousing unit,

(iii) All the investment in bonds issued by NHB/HUDCO exclusively for financing of housing,irrespective of the loan size per dwellingunit, will be reckoned for inclusion.However, the investments that may be madeby banks on or after April 1, 2005 in thebonds issued by NHB/HUDCO shall not beeligible for classification under prioritysector lending and such investments whichhave already been made/to be made bybanks upto March 31, 2005 would ceaseto be eligible for classification underpriority sector lending with effect from April1, 2006.

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10. Consumption Loans

Pure consumption loans granted to the weakersections of the community under theConsumption Credit Scheme should be includedin this item. These include:

i. Loans to NGOs/Self-Help Groups (SHGs)/Micro Credit,

ii. Loans provided by banks to NGOs/SHGsfor on-lending to SHG/members ofSHGs/discrete individuals or smallgroups which are in the process offorming into SHGs will be reckoned aspriority sector lending,

iii. Lending to SHGs is to be included as apart of bank’s lending to weaker sections,

iv. Micro credit provided by banks eitherdirectly or through any intermediaryshould be included under priority sector.

11. Food and Agro-based Processing Sector

The following items within the food and agro-based processing sector would be eligible forclassification as priority sector lending by banks:(i) Fruit and vegetable processing industry, (ii)Food grain milling industry, (iii) Dairy products,(iv) Processing of poultry and eggs, meatproducts, (v) Fish processing, (vi) Bread, oilseeds,meals (edible), breakfast foods, biscuits,confectionery (including cocoa processing andchocolate), malt extract, protein isolate, highprotein food, weaning food and extruded/otherready to eat food products, (vii) Aerated water/soft drinks and other processed foods, (viii)Special Packaging for food processing industriesand (ix) Technical assistance and advice to foodprocessing industry.

With regard to the size of the units within thissector, it is clarified that food and agro-basedprocessing units of small and medium size withinvestment in plant and machinery up to Rs.5crore would be included under priority sectorlending. While loans to units satisfying SSIdefinition may be shown under advances to SSI,loans to other units should be shown separatelyin the half-yearly statements on priority sectorlending.

12. Software Industry

Loans to software industry with credit limit upto Rs.1 crore from the banking industry to beincluded under this item.

13. Venture Capital

Investment in Venture Capital will be eligible forinclusion in priority sector, subject to thecondition that the venture capital funds/companies are registered with SEBI. However,fresh investments that may be made by bankson or after July 1, 2005 shall not be eligible forclassification under priority sector lending andthe investments which have already been madeby banks upto June 30, 2005 shall not beeligible for classification under priority sectorlending with effect from April 1, 2006.

14. Leasing and Hire purchase

Para-banking activities such as leasing and hirepurchase financing undertaken departmentallyby banks will be classified as priority sectoradvances, provided the ultimate beneficiarysatisfies the criteria laid down by RBI for treatingsuch advances as advances to priority sector

15. Loans to urban poor indebted to non-institutional lenders

Loans to distressed urban poor to prepay theirdebt to non-institutional lenders againstappropriate collateral or group security, subjectto the guidelines to be approved by their Boardsof Directors, would be eligible for classificationunder priority sector. Urban poor for thispurpose may include those families in the urbanareas who are below the poverty line.

16. Weaker Sections

In order to ensure that more under-privilegedsections in the priority sector are given properattention in the matter of allocation of credit, itshould be ensured that the advances to weakersections reach a level of 25 per cent of prioritysector advances or 10 per cent of net bankcredit. The weaker sections under priority sectorshall include the following:

(a) Small and marginal farmers with landholding of 5 acres and less and landlesslabours, tenant farmers and share croppers

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Banking Statistics

(b) Artisans, village and cottage industrieswhere individual credit limits do not exceedRs.50,000/-,

(c) Beneficiaries of Swarnjayanthi GramSwarojgar Yojana (SGSY),

(d) Scheduled Castes and Scheduled Tribes,

(e) Beneficiaries of Differential Rate of Interest(DRI) Scheme,

(f) Beneficiaries under Swarna Jayanti ShahariRojgar Yojana (SJSRY),

(g) Beneficiaries under the Scheme for Liberationand Rehabilitation of Scavangers (SLRS),

(h) Advances to Self Help Groups,

(i) Loans to distressed urban poor to prepaytheir debt to non-institutional lendersagainst appropriate collateral or groupsecurity, subject to the guidelines to beapproved by their Boards of Directors

17. Differential Rate of Interest Scheme

The scheme was introduced in 1972 and is beingimplemented by all Indian Scheduled CommercialBanks. The banks are required to lend under thescheme, at least 1% of their aggregate advances asat the end of the previous year. 2/3rd of the totalDRI advances must be routed through the banks’rural and semi urban branches.

i. Objective: To provide bank finance at aconcessional rate of interest of 4 % p.ato the weaker sections of the communityfor engaging in productive and gainfulactivities so that they could improve theireconomic conditions.

ii. Area of operations: The scheme is beingimplemented throughout the country.

iii. Target group/Eligibility criteria: Incomecriteria: The income ceiling for eligibilityis annual income of Rs. 7200/- per familyin urban or semi urban areas andRs. 6400/- per family in rural areas.

iv. Land holding criteria: Size of land holdingmust not exceed one acre of irrigated landand 2.5 acres of unirrigated land. Theland holding criteria is not applicable toSC/STs.

The important categories of borrowersunder the scheme are SC/STs and othersengaged on a very modest scale, inagriculture and / or allied agriculturalactivities, people who themselves collector do elementary processing of forestproducts, people physically engaged on amodest scale in the fields of cottage andrural industries and vocation, indigentstudents of merit etc.

v. Loan amount: The maximum assistanceper beneficiary has been fixed at Rs.6500/- for productive purposes. Inaddition to this, physically handicappedpersons can avail of assistance to theextent of Rs. 5000/- (maximum) perbeneficiary for acquiring aids, appliances,equipment, provided they are eligible forassistance under the scheme. Similarly,members of SC/ST s satisfying theincome criteria of the scheme can alsoavail of housing loan up to Rs. 5000/-per beneficiary over and above the loanof Rs. 6500/- available under the scheme.

vi. Margin money: No margin money hasbeen prescribed under the scheme.

vii. Capital subsidy/Interest: No capitalsubsidy is available. Rate of interest tobe charged on loans is 4 % p.a. Intereston current due is not to be compounded.

viii. Security: No collateral security/ thirdparty guarantee is required. Assetscreated out of the loan amount wouldonly be hypothecated to the banks.

ix. Repayment: Not exceeding five yearsincluding grace period of two years.

x. Reservation/Preference: The banks arerequired to ensure that at least 40% oftheir DRI advances flow to SC/STs.

2.1.4.2. Supervisory Statistics

As supervisor of the banking system, RBI collectsvoluminous data on several indicators ofperformance, health, soundness, management,etc., from the banks. These data are being calledin exercise of powers vested in RBI under Section27(2) of Banking Regulation Act, 1949. Most ofthese information are confidential in nature.

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However, RBI is disseminating some informationin the form of tables based on off-site supervisorydata reporting system in its annual publications,viz., Annual Report, Report on Trend and Progressof Banking in India and Statistical Tables Relatingto Banks in India. The source and coverage ofdata are generally provided in the footnotes to therespective tables. The supervisory returns arereceived from banks as encrypted emailattachments. Concepts, definitions and otherinformation pertaining to data provided in thetables (Annex 2.12) are given below:

2.1.4.2.1. Non-performing assets

Beginning April 1, 1992, banks in India switchedover to a system of recognition of income,classification of assets and provisioning for baddebts on a prudential basis which is objective,based on record of recovery and ensuringuniform and consistent application of norms.Prior to this, banks were classifying the advancesunder a Health-code system. Under the existingincome recognition, asset classification andprovisioning norms, banks assets are classifiedunder the following categories:

1. Standard Assets

2. Sub-standard assets

3. Doubtful assets and

4. Loss assets

Non-performing assets pertain to assets, otherthan standard assets. An asset, including aleased asset, becomes non-performing when itceases to generate income for the bank.

A non-performing asset (NPA) is a loan or anadvance where;

(i) interest and / or installment of principalremain overdue for a period of more than90 days in respect of a term loan,

(ii) the account remains ‘out of order’ in respectof an Overdraft / Cash Credit (OD / CC),

(iii) the bill remains overdue for a period ofmore than 90 days in the case of billspurchased and discounted,

(iv) a loan granted for short duration cropswill be treated as NPA, if the installment

of principal or interest thereon remainsoverdue for two crop seasons.

(v) a loan granted for long duration cropswill be treated as NPA, if the installmentof principal or interest thereon remainsoverdue for one crop season.

Banks are advised to classify an account as NPAonly if the interest charged during any quarteris not serviced fully within 90 days from theend of the quarter. For further information, onemay refer to Master Circular DBOD. No.BP.BC.11/21.04.048 /2005-06 dated July 1, 2005 onPrudential Norms on Income Recognition, AssetClassification and Provisioning pertaining toAdvances, available in RBI website(www.rbi.org.in). Loan assets of banks arebroadly classified as performing (standard) andnon-performing assets. Non-performing assetsare classified as sub-standard, doubtful and lossassets based on the period for which the assethas remained non-performing and therealisability of the dues.

2.1.4.2.1.1. Sub-standard Assets

A sub-standard asset is one, which is classifiedas NPA for a period not exceeding two years.With effect from 31 March 2001, a sub-standardasset is one, which remained NPA for a periodless than or equal to 18 months. In such cases,the current net worth of the borrower /guarantor or the current market value of thesecurity charged is not enough to ensurerecovery of the dues to the banks in full. In otherwords, such an asset will have well defined creditweaknesses that jeopardise the liquidation of thedebt and are characterised by the distinctpossibility that the banks will sustain some loss,if deficiencies are not corrected. With effect from31 March 2005, a sub-standard asset is one,which has remained NPA for a period less thanor equal to 12 months.

2.1.4.2.1.2. Doubtful Assets

A doubtful asset is one, which remained NPAfor a period exceeding two years. With effect from31 March 2001, an asset is to be classified asdoubtful, if it has remained NPA for a periodexceeding 18 months. A loan classified asdoubtful has all the weaknesses inherent in

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Banking Statistics

assets that were classified as sub-standard, withthe added characteristic that the weaknessesmake collection or liquidation in full, - on thebasis of currently known facts, conditions andvalues - highly questionable and improbable.With effect from March 31, 2005, an asset wouldbe classified as doubtful if it remained in thesub-standard category for 12 months.

2.1.4.2.1.3. Loss Assets

A loss asset is one where loss has been identifiedby the bank or internal or external auditors orthe RBI inspection but the amount has not beenwritten off wholly. In other words, such an assetis considered uncollectible and of such littlevalue that its continuance as a bankable assetis not warranted although there may be somesalvage or recovery value.

2.1.4.2.2. Provisioning Norms

RBI introduced the system of Asset classificationand provisioning in line with internationalpractice for the first time in 1993. The presentnorms, which are applicable as on March 2005,are presented below:

Asset Provisioning

1. Substandard

(a) Secured 10% of outstanding dues

(b) Unsecured 20% of outstanding dues

2. Doubtful

(a) Doubtful I 20% of realisable value(first 12 months for security +100% ofin doubtful the shortfall of security.category)

(b) Doubtful II 30% of realisable value(further 24 months for security +100% ofin doubtful the shortfall of securitycategory)

(c) Doubtful III 100% provisioning(over 48 months

in doubtful

category)

3. Loss Assets 100% provisioning

2.1.4.2.3. Investment Fluctuation Reserve

In terms of the RBI instructions June 12, 1997,the excess provision towards depreciation oninvestments should be transferred to CapitalReserve Account by way of appropriation in theProfit and Loss Account. It was decided that theexcess provision towards depreciation oninvestments should be appropriated to“Investment Fluctuation Reserve Account”instead of Capital Reserve Account and shouldbe shown as a separate item in Schedule 2 -“Reserves and Surpluses” under the head“Revenue and other Reserves” and will be eligiblefor inclusion in Tier II capital. The existingamount of excess provision towards depreciationon investments held under Capital ReserveAccount should stand transferred to “InvestmentFluctuation Reserve Account”. The amount heldin “Investment Fluctuation Reserve Account “could be utilised to meet, in future, thedepreciation requirement on investment insecurities. In terms of subsequent instructiondated March 30, 1999, banks were advised toappropriate the excess provision towardsdepreciation on investments to InvestmentFluctuation Reserve Account (IFR) instead ofCapital Reserve Account. Banks were permittedto utilise the amount held in IFR to meet, infuture, the depreciation requirement oninvestment in securities. In the context of thesubstantial decline in the yield on securities, theposition was reviewed in consultation with majorcommercial banks as under:

i. Banks should transfer maximum amountof the gains realised on sale of investmentin securities to the IFR.

ii. The objective should be to achieve IFR ofa minimum of 5 per cent of the portfolio,by transferring the gains realised on saleof investment, within a period of 5 years.Banks are, however, free to build uphigher percentage of IFR of upto 10 percent of the portfolio depending on the sizeand composition of their portfolio, withthe concurrence of their Board ofDirectors.

iii. Banks should ensure that the unrealisedgains on valuation of the investment

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portfolio are not taken to the incomeaccount or to the IFR.

iv. In modification of the earlier instructionsdated October 16, 2000, individual scripsheld under the ‘Available for Sale’category should be marked to market atleast at quarterly intervals.

v. The Investment Fluctuation Reserve,consisting of realised gains from sale ofinvestments, would be eligible forinclusion in Tier 2 capital as hitherto.

vi. Banks were advised to assess the impactof changes in interest rates on theirinvestment portfolio. In addition, bankswere advised therein to fix a definitetimeframe for moving over to VaR andDuration methods for measurement ofinterest rate risk and initiate appropriatesteps in this direction.

vii. Banks were also permitted to transferbalances from IFR to Profit and LossAccount to meet the depreciationrequirement on investment as a ‘belowthe line’ item would continue, as hitherto.

Further, with a view to ensuring smoothtransition to Basel II norms banks were advisedon June 24, 2004 to maintain capital charge formarket risk in a phased manner over a two yearperiod, as under:

i) In respect of securities included in theheld for trading (HFT) * category, opengold position limit, open foreign exchangeposition limit, trading positions inderivatives and derivatives entered intofor hedging trading book exposures byMarch 31, 2005, and

ii) In respect of securities included in theavailable for sale (AFS) * category byMarch 31, 2006.

With a view to encourage banks for earlycompliance with the guidelines for maintenance ofcapital charge for market risks, it has beendecided that banks which have maintained capitalof at least 9 per cent of the risk weighted assetsfor both credit risk and market risks for both HFT(items as indicated at (i) above) and AFS categorymay treat the balance in excess of 5 per cent ofsecurities included under HFT* and AFS*categories, in the IFR, as Tier I capital. Bankssatisfying the above criteria may transfer theamount in excess of the said 5 per cent in the IFRto Statutory Reserve. This transfer shall be madeas a ‘below the line’ item in the Profit and LossAppropriation Account. In another advice datedOctober 10, 2005, it was further decided thatbanks which have maintained capital of at least 9per cent of the risk weighted assets for both creditrisk and market risks for both HFT (items asindicated at (i) above) and AFS category as onMarch 31, 2006, would be permitted to treat theentire balance in the IFR as Tier I capital. For thispurpose, banks may transfer the balance in theInvestment Fluctuation Reserve ‘below the line’ inthe Profit and Loss Appropriation Account toStatutory Reserve, General Reserve or balance ofProfit & Loss Account.

In the event, provisions created on account ofdepreciation in the AFS or HFT categories arefound to be in excess of the required amount inany year, the excess should be credited to theProfit & Loss account and an equivalent amount(net of taxes, if any and net of transfer toStatutory Reserves as applicable to such excess

• Trading – Debt and equity securities that are boughtand sold principally for the purpose of selling them inthe near term are classified as trading securities andare reported in the financial statements at fair value.Changes in the fair value from period to period arereported as a component of net income.

• Available-for-sale – Debt and equity securities notclassified either as held-to-maturity or trading areconsidered available-for-sale and are reported at fairvalue. Changes in the fair value from period to periodare not reported as a component of net income but arecharged or credited directly to equity.

* Accounting standards require a Company to classify itsinvestment in debt (bonds) and equity (stocks) securitiesinto one of three categories when they are purchased:(1) held-to-maturity (HTM), (2) trading (HFT), or (3)available-for-sale (AFS). This classification is based onthe Company’s intended use of that security and theclassification dictates the accounting treatment.

Held to maturity – Debt securities that the company hasthe positive intent and ability to hold to maturity areclassified as held-to-maturity securities and are reportedat amortized cost. The impact of temporary fluctuationsin fair value of the debt securities is not reflected in theCompany’s financial statements. Since equity securitiesdo not have maturity date, they cannot be classified asheld-to-maturity.

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Banking Statistics

provision) should be appropriated to anInvestment Reserve Account in Schedule 2 -“Reserves & Surplus” under the head “Revenueand other Reserves” and would be eligible forinclusion under Tier II within the overall ceiling of1.25 per cent of total Risk Weighted Assetsprescribed for General Provisions / Loss Reserves.

2.1.4.2.4. Capital adequacy ratio

The Committee on Banking Regulations andSupervisory Practices (Basle Committee) had, inJuly 1988, released the agreed framework oninternational convergence of capital measure andcapital standards. The Committee adoptedweighted risk assets approach which assignsweights to both on and off Balance Sheetexposures of a bank according to their perceivedrisk, as the method of measuring capitaladequacy and set the minimum standard at 8per cent (of risk weighted assets) to be achievedby the end of 1992 (7.25 per cent by end - 1990).The Committee was keen that this accord oncapital adequacy measurement (herein afterreferred as the Basel I standards) should becomethe basis for a worldwide standard.

In India, various groups of banks were subjectedto different minimum capital requirements asprescribed in the Statutes under which they havebeen set up and operate. The foreign banksoperating in India were prescribed to hold foreignfunds deployed in Indian business equivalent to3.5 per cent of their deposits as at the end ofeach year. Further, there are prescriptionsregarding the maintenance of statutory reserves.In the context of the varying minimum capitalrequirements and taking into account theapproach of Basle Committee, it was decided tointroduce uniform prescriptions for capitaladequacy in April 1992.

The Basel I capital adequacy framework wasimplemented in phases with banks required toadhere to the following time table:

Minimum capital requirement

Foreign banks 8% of RWA by March 31,operating in India 1993

Indian banks with 8% of RWA by March 31,foreign branches 1993

All other banks 4% of RWA by March 31, 1993

8% of RWA by March 31, 1996

With effect from March 31, 2000, all scheduledcommercial banks are required to maintain aminimum CRAR of 9%.

2.1.4.2.5. Some Important Definitions

Capital funds: The Basle Committee has definedcapital in two tiers - Tier I and Tier II. Tier Icapital, otherwise known as core capital, providesthe most permanent and readily availablesupport to a bank against unexpected losses.Tier II capital contains elements that are lesspermanent in nature or are less readily available.Elements of Tier I capital and Tier II capital differwith respect to Indian banks and foreign banksoperating in India.

Risk adjusted assets and off-Balance Sheet items:Risk adjusted assets would mean weightedaggregate of funded and non-funded items. It isdefined as Balance Sheet assets and conversionfactors to off-Balance Sheet items, expressed asa weighted percentage of individual credit risk*.The value of each asset/item shall be multipliedby the relevant weights to produce risk adjustedvalues of assets and of off-Balance Sheet items.The aggregate will be taken into account forreckoning the minimum capital ratio.

* Credit risk is risk due to uncertainty in counterparty’sability to meet its obligations. Because there are manytypes of counterparties from individuals to sovereigngovernments and many different types of obligations fromauto loans to derivatives transactions, credit risk takesmany forms. Institutions manage it in different ways. Inassessing credit risk from a single counterparty, aninstitution must consider three issues: Default probabilitywhich is the likelihood that the counterparty will defaulton its obligation either over the life of the obligation orover some specified horizon, such as a year, Creditexposure which is in the event of a default, how largewill the outstanding obligation be when the default occursand the Recovery rate which is in the event of a default,what fraction of the exposure may be recovered throughbankruptcy proceedings or some other form of settlement.

Every risk comprises two elements: exposure anduncertainty. For credit risk, credit exposure representsthe former, and credit quality represents the latter.

Prior to extending credit, a bank or other lender willobtain information about the party requesting a loan. Inthe case of a bank issuing credit cards, this might includethe party’s annual income, existing debts, whether theyrent or own a home, etc. A standard formula is appliedto the information to produce a number, which is calleda credit score. Based upon the credit score, the lendinginstitution will decide whether or not to extend credit.

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Capital requirement for market risks*: The BaselCommittee on Banking Supervision (BCBS) hadissued the ‘Amendment to the Capital Accord toincorporate market risks’ containingcomprehensive guidelines to provide explicitcapital charge for market risks. Market risk isdefined as the risk of losses in on-balance sheetand off-balance sheet positions arising frommovements in market prices. The market riskpositions subject to capital charge requirement are:

* The risks pertaining to interest rate relatedinstruments and equities in the tradingbook; and

* Foreign exchange risk (including openposition in precious metals) throughout thebank (both banking and trading books).

As an initial step towards prescribing capitalrequirement for market risks, banks were advisedto:

i) assign an additional risk weight of 2.5per cent on the entire investmentportfolio;

ii) assign a risk weight of 100 per cent onthe open position limits on foreignexchange and gold; and

iii) build up Investment Fluctuation Reserveup to a minimum of five per cent of theinvestments held in Held for Trading andAvailable for Sale categories in theinvestment portfolio.

The interim measures adopted in India representa broad brush and simplistic approach. Besides,over a period of time, banks’ ability to identifyand measure market risk has improved. Keepingin view the ability of banks to identify andmeasure market risk, it was decided to assignexplicit capital charge for market risks. Banksare required to maintain capital charge for

market risks in a phased manner over a twoyear period, as detailed below:

(a) Banks were required to maintain capital formarket risks on securities included in theHeld for Trading category, open goldposition, open forex position, tradingpositions in derivatives and derivativesentered into for hedging trading bookexposures by March 31, 2005.Consequently, the additional risk weight of2.5% towards market risk on the investmentincluded under Held for Trading categoryis not required.

(b) Banks should maintain capital for marketrisks on securities included in the Availablefor Sale category also by March 31, 2006.Consequently, the additional risk weight of2.5% towards market risks maintained atpresent on the investment included underAvailable for Sale and Held to Maturitycategories would not be required with effectfrom the above date or from an earlier datefrom which bank provides capital for marketrisk for securities held in the Available forSale category.

Return on Total assets: Profit after Tax ÷ TotalAssets × 100

Return on Equity: Profit after Tax ÷ Total Capitaland Reserves × 100

Cost / Income ratio: Operating expenses ÷ (Totalincome – Interest expenses) × 100

Operating expenses: Total expenses – interestexpenses

Net interest income: Interest income net ofinterest tax – interest expenses

Net profit: Profit after tax.

Bank groups: Banks are be broadly categorizedinto:

i. Public sector banks comprising:

a. Nationalised banks: 14 banks werenationalized under the BankingCompanies (Acquisition and Transferof Undertakings) Act, 1970. Further,

* Market Risk: Market risk is the risk that is common toan entire class of assets or liabilities. The value ofinvestments may decline over a given time period simplybecause of economic changes or other events that impactlarge portions of the market. Asset allocation anddiversification can protect against market risk becausedifferent portions of the market tend to underperform atdifferent times. Market risk is also known as SystematicRisk.

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Banking Statistics

in 1980, six corresponding new bankswere nationalised under the theBanking Companies (Acquisition andTransfer of Undertakings) Act 1980.Prior to their nationalization, thesebanks were in the Private sector. Theminimum shareholding of theGovernment of Indian in these banksis 51 percent. IDBI converted itselfinto a bank w.e.f. October, 2004. Itwas included as ‘Other Public SectorBank’.

b. State Bank of India and AssociateBanks (SBI group): State Bank ofIndia (SBI) was established under theState Bank of India Act, 1955 and ittook over the undertaking of theImperial Bank of India established in1921. SBI has 7 associate banksestablished under the State Bank ofIndia (Subsidiary Banks) Act of 1959by taking over the bankingundertakings of certain formerprincely States in India.

ii. Private sector banks consists of:

a. Old Private Sector banks: These arethe banks existing in the privatesector before the issue of newguidelines for entry of private banksin 1993. These banks are registeredunder the Companies Act.

b. New Private Sector banks: These arebanks that were established underthe new guidelines in 1993 whichenforces relatively stricter entry pointnorms.

iii. Foreign banks: These banks operatethrough branches only. The ‘tests of entry’as applicable to Indian banks are alsoapplied to branches of foreign banks.Besides, the RBI insists on prior consentof home country regulator and ensuresthat the laws of the home country do notdiscriminate in any way against banksincorporated in India.

iv. Local Area Banks: Local area banks were

set up in private sector to cater to thecredit needs of the local people and toprovide efficient and competitive financialintermediation services in their area ofoperation. They are registered as a publiclimited company under the Companies Act,1956 and licensed under the BankingRegulation Act, 1949 and will be eligiblefor including in the Second Schedule ofthe Reserve Bank of India Act, 1934.Theminimum paid up capital for such a bankshall be Rs.5 crore. The promoters’contribution for such a bank shall at leastbe Rs.2 crore. The area of operation of theproposed bank shall be a maximum ofthree geographically contiguous districts.

2.1.4.3 Statistics on Interest Rates andSectoral Deployment of Credit

2.1.4.3.1. Data on Interest Rates

Data on interest rates offered on deposits /charged on credit by the scheduled commercialbanks are collected by the Monetary PolicyDepartment (MPD) of RBI on a regular basis.For a variety of reasons, data on interest ratesis of vital importance to the Reserve Bank. Forexample, interest rates have a major influenceon the demand and supply of bank deposits andcredit, saving / investment behaviour, havingclose linkages with output, prices, etc.

2.1.4.3.1.2. Measurement needs, Concepts,Definitions and Classification

2.1.4.3.1.2.1. Credit

As a step towards deregulation of interest ratesand providing more operational flexibility tobanks, Prime Lending Rate (PLR) was introducedin October 1994 on advances with credit limitsover Rs. 2 lakh. Since then, the norms relatingto the operation of PLR by banks had beenrationalised. Banks were given freedom to declaretheir own PLRs along with a maximum spreadin April 1999, banks were provided the freedomto offer tenor linked PLRs. Until theannouncement of Monetary and Credit Policy inApril 2001, PLR served as the ceiling rate forcredit limits up to Rs.2 lakh (other thanconsumer credit) and as floor rate for loans above

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Rs.2 lakh. In April 2001 Monetary and CreditPolicy, the PLR was converted to a reference orbenchmark rate for banks, which allowed banksto offer loans at sub-PLR rates to exporters orother creditworthy borrowers including publicenterprises on the lines of a transparent andobjective policy approved by their Boards.Nevertheless, the practice of treating PLR as theceiling for loans up to Rs.2 lakh continued, giventhe prevailing condition of the credit market inIndia and the need to continue withconcessionality for small borrowers.

With the change in PLR norms, the ReserveBank, monitors the trend in PLR of commercialbanks as also the actual trend in lending rates.For this purpose, the information system on PLRhad been modified so as to collect informationon PLR as well as minimum and maximumlending rate and also the share of outstandingcredit at, below and above PLR to facilitatemonitoring the actual trend of lending rates inIndia vis-à-vis PLR.

The Reserve Bank, in the Monetary and CreditPolicy for 2002-03 on April 2002, indicated itsintention of collecting maximum and minimuminterest rates on advances charged by banks andplace the same in the public domain to enhancetransparency. Accordingly, Reserve Bank isreceiving actual lending rates from scheduledcommercial banks (excluding RRBs).

2.1.4.3.1.2.2. Deposits

Banks were given freedom to determine theirrates for deposit with maturity of over 2 yearswith effect from October 1, 1995. Effective fromJuly 2, 1996, the rates of deposits for over 1year, were freed and minimum maturity periodwas reduced to 30 days from 46 days. EffectiveOctober 22, 1997, banks were given the freedomto determine their interest rates on term depositsof 30 days and over. The Reserve Bank has alsoencouraged the banks to put in place a flexibleinterest rate system for deposits with reset atsix-monthly intervals, along with the fixed rateoption for depositors in its Monetary and CreditPolicy Statement, 2002-03. Banks were allowedat their discretion to reduce the minimum tenorof retail domestic term deposits (under Rs.15

lakh) from 15 days to 7 days with effect fromNovember 1, 2004.


The data on interest rates in respect of differenttypes deposits and credit are collected onfortnightly/monthly/quarterly basis from theSCBs in pre-defined formats. For deposits, theclassification is based on domestic deposits, NREand NRNR deposits and is maturity period-wise.In the case of quarterly data on credit, the majoraccount types are cash credit, demand loans andterm loans with maturity period-wise break-up.For each of these categories, data includes PLR,minimum and maximum rates charged(excluding extreme values), interest rate rangeat which 60 per cent or more business iscontracted and amount outstanding below PLR,at PLR and above PLR*. Data on export credit(in Rupee terms) is collected for - pre-shipmentand post-shipment export credit, which arefurther categorized according to duration as perexport credit norms.

Interest rates on term deposit for various tenorscan be known from which the interest rate rangeaccording to the groups of the banks can beworked out.

Monthly data on deposit rates offered by Publicsector banks, Private sector banks and Foreign

* BPLR: Banks are free to fix Benchmark Prime LendingRate (BPLR) for credit limits over Rs.2 lakhs with theapproval of their respective Boards. BPLR has to bedeclared and made uniformly applicable at all thebranches. The banks may authorize their Asset-LiabilityManagement Committee (ALCO) to fix interest rates onDeposits and Advances, subject to their reporting to theBoard immediately thereafter. The banks should alsodeclare maximum spread over the BPLR with the approvalof the ALCO/Board for the advances.

Sub BPLR: Downward flexibility of PLR emerged in therecent past as a significant policy issue for the RBI,especially with respect to credit delivery to small andmedium borrowers, at reasonable costs. Sub-PLR lendinghad enabled corporates to raise funds at competitive ratesfrom banks without incurring any additional cost towardsstamp duty, dematerialisation costs or fee payments toissuing/paying agents. The BPLR was introduced tobestow larger transparency in pricing of bank credit.However, with sub-PLR lending, the spreads betweenminimum and maximum lending rates have risen in asignificant manner.

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Banking Statistics

banks of various maturities are published inRBI’s various publications such as Bank’sAnnual Report, Report on Trend & Progress ofBanking in India, Macroeconomic & MonetaryDevelopments, etc.

The quarterly lending rates data of Scheduledcommercial banks are available on the RBIwebsite since quarter ended June 2002. The dataare also available bank-group wise consolidatedposition on the range of actual lending rates ofcredit, with credit limit of Rs.2 lakh and above,other than export credit; bank-group wise rangeof median interest rates on credit, with creditlimit of Rs.2 lakh and above other than exportcredit; bank-group wise range of actual lendingrates; bank-group wise median interest rates onexport credit; lending rates of individual bankson export credit as well as other credit, havingcredit limit Rs.2 lakh and above under demandand term loans.

2.1.4.3.1.4. Ensuring Quality Standards

Good quality data is a pre-requisite for anyinformed decision-making process. Appropriatesystem for ensuring data quality is in place.

2.1.4.3.2. Sectoral Deployment of Credit

Statistics on flow of gross bank credit to differentsectors of the economy, viz.; agriculture,industry, etc., is collected and compiled throughBSR 1 return on an annual basis. In view ofthe need for such information on a more frequentintervals and with minimum time lag in thecontext of formulation of policy, Monetary PolicyDepartment collects provisional information onsectoral deployment of credit from select bankson a monthly basis, in addition to the annualdata collected through BSR system. Suchinformation provides an indication of themovements in flow of bank credit across varioussectors and industries and provides inputs foranalysis. The consolidated information based onthe data is published in various publications ofthe RBI.

2.1.4.3.2.1. Measurement Needs of the Area

The data on flow of bank credit to differentsectors of the economy are useful in analysis

the direction of credit flows, portfolio changes,linkages with the other macroeconomic variablesand for providing inputs for policy making. Thedata can also be of use to the researchers.

2.1.4.3.2.2. Concepts, Definitions andClassification

The broad concept of gross bank credit is thesame as in BSR. The concepts and classificationare broadly in alignment with that of BSR/NIC,except in the case of loans to construction sector.Besides, these data provide more details ofpersonal loans. The data are collected for totalnon-food gross bank credit divided into fourmajor sectors, viz.; Agriculture, Industry, Servicesand Personal Loans with further classificationon select sub-sectors and also on credit to thepriority sectors. Industrial classification includesdata on major industries includinginfrastructure. The classification of data onsectoral deployment of credit has changed fromtime to time with structural shifts in sectoraldeployment of credit. Some features of theclassification is given below:

a. Agriculture: Includes direct as well asindirect credit to agriculture.

b. Industry: Credit given to manufacturingsector. It includes credit given to foodprocessing, textiles, petroleum, chemicals,cement, metals, engineering, vehicles, gemsand jewellery, construction andinfrastructure industries.

c. Services: Include credit given to transportoperators (excluding water transport),computer software, tourism, hotels andrestaurants, shipping (water transport),professional and other services, etc. Realestate loans include credit given toindividuals/firms engaged in development ofreal estate activities (like preparation ofresidential/ commercial buildings/complexes, land development, etc. for thepurpose of purchase/ sale/ lease of realestate, etc.).

d. Personal Loans: Include credit given toindividuals for their own consumptionpurpose; loans to individuals for purchase

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of consumer durables; residential house; foreducation; personal loans given againstsecurity of fixed deposits or share/debentures; credit card outstandings, etc.Credit given to individuals as business loansis not included in personal loans, but theyare classified into the respective businessactivity (industry/ service).

e. Priority Sector: The loans under prioritysector are classified as per the extantdefinition given by the RBI from time totime. The details of credit to agriculture,small scale industry, housing, transportoperators, computer software under prioritysector criteria are required to be shownseparately.

Aggregate data for all reporting banks ispublished for the sectoral classification.


The data are collected monthly from the selectedbanks in a pre-defined specific format onoutstanding credit as on last reporting Friday ofthe month. The selection of banks is based onthe size of their business and includes publicsector banks, select private sector and foreignbanks. Banks with large business are includedin the sample so as the total non-food grossbank credit of all select banks comprises above90 per cent of the total non-food gross bankcredit of all the scheduled commercial banks.The returns are received in printed form throughe-mail. There are plans to receive these data on-line from banks.

2.1.4.3.2.4. Ensuring Quality Standards

Good quality data is a pre-requisite for anyinformed decision-making process. Appropriatesystem for ensuring data quality is in place. Inorder to improve quality of data, the coverage isalso extended from time to time. The last suchrevision in classification of data and coverage ofbanks is effective since September 2005.

2.2 Statistics on Cooperative Banks

The cooperative movement in India startedand originated as a measure againstrural poverty, aggravated by chronic

indebtedness of the farmers and practiceof usuary at its worst by themoneylenders. Agrarian disturbances in1875 in the Deccan against themoneylenders necessitated the enactmentof Taccavi Legislation by the governmentand also led to the concept of thecooperative approach. The Northern IndiaTaccavi Loan Act, 1875, the LandImprovement Loans Act, 1883, theAgriculturist Loans Act, 1884, etc. were,all enacted to facilitate the availability ofcredit to farmers. In 1892, Sir FederickNicholson recommended the establishmentof rural cooperative credit societies onGerman pattern. The Famine Commission(1901) recommended introduction ofcooperatives in the country. In 1904, theCooperative Credit Societies Act wasenacted by the Imperial Government tofacilitate organisation of credit cooperativesand confer upon them special privilegesand facilities, the scope of which wassubsequently enlarged by the morecomprehensive Cooperative Societies Act of1912. Under the Government of India Act,1919, the subject of Cooperation wastransferred to the then Provinces, whichwere authorized to enact their owncooperative laws. Under the Governmentof India Act, 1935, cooperatives remaineda provincial subject. In order to administerthe operations of cooperative societieswhere membership was from more thanone province, the Government of Indiaenacted the Multi-Unit CooperativeSocieties Act, 1942, which wassubsequently replaced by the Multi-stateCooperative Societies Act, 1984, underentry 44 of the Union List.

The societies were not in a position toextend loans to farmers so that the farmersmay liquidate past debts, redeem theirland and other assets from usuriousmoneylenders. Loans from cooperativesocieties were also not enough to enablefarmers to improve upon their land andaugment their incomes. It was felt that thelong term (LT) loans needed by farmers

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Banking Statistics

for these purposes would have to be metby a separate set of institutions. Thisrealization led to the establishment of thecooperative land mortgage banks (LMBs)in the early 1920s. The first cooperativeLMB was set up in Punjab in 1920,followed by two more in the MadrasPresidency in 1925.

Later, the All India Rural Credit SurveyCommittee (AIRCSC) recommendedestablishment of a separate institution,which could provide LMBs the resourcesfor long term lending to farmers for thedevelopment of agriculture. Therecommendation led to the establishmentof the Agricultural Refinance Corporationin 1963 and enabled the LT structure toexpand rapidly and change from beingland ‘mortgage’ banks to land‘development’ banks (LDBs).

2.2.1. Structures of Cooperative Banks

Co-operatives are structured into twoseparate arms namely short-term (forproviding Production Credit) and long-terminstitutions (for providing InvestmentCredit). The short-term co-operative creditstructure has at its base the PrimaryAgricultural Credit Societies (PACS). Thelong-term co-operative credit structurecomprises the Primary Agricultural andRural Development Banks. These groundlevel institutions cater to villages usingfunds received from higher financinginstitutions.

The short-term cooperative credit structureconsists of 31 State Cooperative Banks(SCBs), 367 District Central CooperativeBanks (DCCBs) and 1,05,735 PrimaryAgricultural Credit Societies (PACS) as on31 March 2005. The long-term co-operativecredit structure consisted of 20 StateCooperative Agriculture and RuralDevelopment Banks (SCARDBs) (8 unitaryand 12 federal/mixed structures) with 727Primary Cooperative Agriculture and RuralDevelopment Banks (PCARDBs) as on 31March 2005.

2.2.2. Data Dissemination

National Bank for Agriculture and RuralDevelopment (NABARD) is the major source ofdata on cooperatives in India.1 Besides data oncooperative movements, NABARD brings out fourregular publications. Title-wise contents of thesepublications are discussed below:

Dossier on Cooperatives: This publicationpresents data on Cooperative credit Structures,viz., Short Term and Long Term on yearly basis.Consolidated information of SCBs, DCCBs andSCARDBs and PCARDBs on various parameters,viz., Resources, Investment, Outreach, Recovery,Management, Profitability, Classification ofAssets, Erosion in Assets, Dividend payingBanks, and Market share of Business are alsopresented.

Overview on Cooperatives: This publication isbrought out annually by NABARD (InstitutionalDevelopment Department (IDD)), on theperformance of Cooperative credit Structures inthe country. The performance is reviewed on thevarious parameters with reference to previousyear.

Financial Parameters and Financial RatioAnalysis: This publication presents an analyticaloverview of performance of cooperatives basedon the annual balance sheet information. Variousimportant ratios on financial parameters, viz.,Financial Return, Financial Cost, FinancialMargin, Cost of Management, Operating Margin,Risk Cost, Miscellaneous Income, and NetMargin, etc., are analysed. In addition, Credit-Deposit Ratio, Recovery and Non-PerformingAssets (NPAs) to Loans Outstanding are alsopresented.

The major source of information for theabovementioned publications is the Balance-Sheet (as at the end of the financial year i.e.,March 31). Sometime un-audited data are alsoconsidered. The information/details are collectedby Regional Offices of NABARD from the SCBs/SCARDBs in the prescribed format. RegionalOffices consolidate the information separately by

1 The data on Urban Cooperative Banks are, however,disseminated by RBI in its key publications.

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ST/LT structure and thereafter forward to HeadOffice for consolidation at the national level.Recovery position giving the details of Demand,Collection and Balance (DCB) of loans is collectedas at the end of 30 June every year. The DCBhas worked out for each institution as also aconsolidated position for the institutions as awhole, in particular structure for a State.Regional Offices compile the details on the basisof audited figures and in case the details areunaudited, they indicate specifically so that suchof the details can be checked up with auditedfigures and rectified at subsequent validation.Client institutions, viz., SCBs, DCCBs, SCARDBsand PCARDBs are advised to include the subjectof data compilation in their Training Programmesas well.

Statistical Statements Relating to CooperativeMovement in India: This publication is broughtout in two parts - Part I relates to Credit Societies(SCBs, CCBs, ICBs, PACS, GBs, PCBs, PNACS,SCARDBs and PCARDBS) and Part II relates toNon-Credit Societies (All Marketing Societies, AllProcessing Societies, Farming, Fisheries, Weaver,Housing, Consumer Co-operative, ForestLabourer, Other Industrial Societies, etc. Thecontents of the Publication includes statisticaldata like number, membership, liabilities, assets,operations, etc., in respect of both Credit andNon-credit societies based on audited BalanceSheet and Profit & Loss accounts for a particularyear pertaining to the respective co-operativesocieties. The source of data for the publicationis SCBs, CCBs, ICBs, SCARDBs, RCS, etc., forCredit Co-operative Societies and

RCS and Functional Registrars in respect of Non-Credit Co-operative Societies.

The work pertaining to compilation of thestatements was originally being done by theDepartment of Commercial Intelligence andStatistics, GoI since 1932 and published by theManager of Publications, Delhi. It wassubsequently entrusted by them to RBI in March1942, with effect from the issue for 1940-41 asthey considered that the Agricultural CreditDepartment of the Bank, being in close touchwith the Co-operative Movement in the country,was in the best position to undertake the work,

especially as, in the normal course of its duties,it was already collecting data, statistical andotherwise, relating to the working of variousclasses of co-operative societies and considerableduplication of effort would be avoided. This workwas then transferred to NABARD in 1982 by RBIconsequent upon the transfer of the regulatoryfunction of RBI in respect of Cooperative Creditstructure to NABARD.

The Department of Agriculture and Co-operationunder the Ministry of Agriculture, GoI, isconcerned with the development of cooperativesand ensuring uniform spread of cooperativemovement in the country. To have anunderstanding of the developments ofCooperatives and for implementation of variouscooperative development schemes, the vitalinformation was sought to be compiled at oneplace. These Statements serve as database forGovernment of India and Reserve Bank of Indiain policymaking and also as a source materialfor internal use and other publications. Thescope of the publication has increased over timewith the diversification of activities, under Co-operative Movement in the country.

A Standing Committee known as “ReviewCommittee on Co-operative Statistics” – Co-operative Movement in India” under the Ministryof Agriculture is entrusted with the responsibilityof rationalizing the system of collection ofstatistical data and suggesting ways and meansfor early collection and publication of the same.

The publication upto the period 1942-43included statistics in respect of the Co-operativeMovement in British India and only nine IndianStates were included in the Publication.Subsequently, from the period 1943-44, all thestates where at least one hundred and more co-operative organizations existed, were alsoincluded in the publication. A new set of formsto make the statistics more comprehensive andclear, were approved by the GoI and the revisedforms were adopted for 1949-50. Some of themodifications introduced from 1949-50 were:

a. The data relating to credit and non-creditsocieties - agricultural as well as non-agricultural, were separately presented.

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Banking Statistics

b. A new table, showing separately theoperations of provincial and central non-credit societies was included.

c. Several new pictorial and graphicalillustrations, and figures at a glance wereintroduced.

From the publication for the year 1950-51onwards, the statistical data for all theconstituent states of the Indian Union wereavailable and there was uniformity in the periodto which the data relate, i.e, the statisticalstatements in respect of all States except Jammuand Kashmir pertained to one uniform period,viz., the year ended 30 June.

From 1955-56 onwards, few additional featureswere added in the publication, viz., data relatingto marketing societies were given separately andthree new abstract tables showing the progressmade by PACS, DCCBs and SCBs during thefive-year period 1951-56.

The structure and contents of statisticalstatements were reviewed and redrawn in theyear 1995 by the Review Committee onCooperative Statistics’ set up by Government ofIndia. The input formats for collection of data ofCredit and Non-Credit Co-operatives which wereoriginally hundred (100) in number were revisedand reduced to fifty one by removal of duplicateformats by merging similar formats, Omissionof formats that are not widely used and exclusionof redundant items. The following new items wereadded to serve the requirements in presentstructure of Co-operatives.

a. To assess the fixed assets, depreciationvalues and other related information, inputitems on land, building, plant andmachinery were added.

b. Items on membership break up as SC, STand Women have been added.

c. In credit societies’ formats, items onDebentures were added.

d. In non-credit sector formats, many newclasses of societies under Industrial Co-operatives, Processing Societies, Weavers’Societies, Fisheries Co-operatives, etc., wereadded.

e. Period of reporting has been changed fromend of June to end of March (i.e. financialyear).

The broad contents of Part I and Part II of thepublication are given in Annex 2.13. Thepublication attempts to ensure quality standard,and for the purpose the following steps areundertaken:

i. Compilation of data on the basis ofaudited data submitted by the State leveland District level agencies.

ii. Sensitising officials of offices/agenciesproviding data for compilation of theStatistical Statements, by organizingzonal workshops, to facilitate accurate,complete and prompt submission of data.

iii. Validation, by comparison of the outputtables with previous year’s tables. In caseof discrepancies, clarification is soughtfrom the concerned agency.

iv. Validation of entries by rechecking of vitaldata vis-à-vis annual report and balancesheets received from agencies.

2.3. Statistics on Regional Rural Bankspublished by NABARD

In 1972, the Banking Commission observed intheir report that despite the massive expansionof network of commercial Banks, there wouldstill be the need and possibility of havingspecialised network of bank branches to caterto the needs of the rural poor. This lead to theconcept of “rural bank” by 1975, when thestructure of rural money lenders was regulatedunder the Government’s efforts to eradicate ruralindebtedness as a part of its 20 point economicprogramme, and an urgent need was felt for analternative institutional mechanism to reach therural poor particularly the small and marginalfarmers, artisans and agricultural labourers.Consequently, GOI, vide, its notification dated 1July 1975, constituted a Working Group on ruralbanks under Chairmanship of Shri M Narasimhan.

The working group submitted its report on 31July 1975 and recommended for setting up ofstate sponsored, region based, rural orientedcommercial banks which would blend the ruraltouch, local feel, familiarity with rural problemsand low cost profile with the professional

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discipline, ability to mobilise deposits and accessto central money markets and the modernisedoutlook of rural commercial banks. The role asperceived for this new institution was tosupplement and not supplant the existingfinancial institution in the rural sector. Further,it was envisaged that this institution would helpin reducing regional imbalances by mobilisingand simultaneously deploying resources in thesame region. It was asserted that these bankswould cover primarily the small and marginalfarmers, landless labourers, rural artisans, smalltraders and other weaker sections of the ruralsociety for the productive credit needs and tolimited extent, the consumption credit needs.

Based on the recommendations of the workinggroup of rural banks, the first 5 RRBs wereestablished on 2 October 1975 under presidentialordinance that followed by the promulgation ofthe Regional Rural Banks Act in April 1976. TheRRBs were required, in particular, to undertakethe business of providing credit facility to thepoorer sections of rural society, generally referredto as ‘target group’. The basic objective of settingof RRBs was provision of credit facility for cropproduction and allied purposes to the rural poor,who had very limited access to the formal creditsystem as it existed in early seventies. As such,85 RRBs were set up by 1980 and the numberof RRBs stood at 196 as on 31 March 2005.

2.3.1. Measurement Needs of the area

To improve the RRBs’ financial health, NABARDis instrumental in preparation of DevelopmentAction Plan (DAP) and is having commitment forits execution by the RRBs after signing an MoUwith the respective sponsor bank. NABARD alsointroduced a comprehensive monitoring andreview mechanism w.e.f. 01 April 1995 bysuitably modifying the formats for QuarterlyProgress Report to collect the required data andinformation through statutory statements.

2.3.2. Concepts, Definition and classification

Based on the information received through theabove statements, following publications arepublished by NABARD for fulfilling therequirements of statute, use of the owners andfor the use of customers and all othershareholders.

Review of Performance of RRBs: The publicationcontains performance of RRBs with sustainableviability, current viability and loss making RRBs.This information is provided for two years in theform of state-wise and sponsor bank-wise datafor RRBs. This also comprises the write up onvarious important parameters like deposits,borrowings, investments, loans and advancesand profit and loss position of RRBs for twoyears. This data is used by GOI for inclusion intheir annual report.

Key Statistics of RRBs: This publication containsimportant broad parameters and financial ratioanalysis for the financial year. This informationis compiled and finalised from the statementQuick Review Report (QRR) which is obtainedfrom all RRBs irrespective of their audits. Thesedata are given both state-wise, sponsor bank-wise and each individual RRB-wise. Certainsalient features of the banks are provided for 5years period for the purpose of assessingprogress.

Financial Statements of RRBs: Based on theinformation received from all RRBs through theirannual reports and audited balance sheets, theassets and liability position of the RRBs ispublished statwise, sponsor bank wise andindividual RRB wise for a period of 2 years (currentand previous). It also comprises of various financialratios and other important information like NPA,Gross NPA, Net NPA, CD ratio, recovery percentage,etc., for the same period.

Statistics on RRBs: This publication comprises22 statements providing detailed information onthe performance of RRBs during the financialyear. Details of the statements are presented inAnnex 2.14.

2.3.3. Sources and Systems

The sources of information are Quick ReviewReport (QRR), Monitoring and Review Mechanism(MRM) Statements, Demand Collection andBalance (DCB) statements, Audited BalanceSheets and /or Annual Reports of the banks asat the end of financial year, i.e., 31 March. Thefigures nay be audited or unaudited. Theinformation / details are collected through thesponsor bank and NABARD’s Regional Offices

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Banking Statistics

are also involved for follow up with the RRBs soas to receive the data in prescribed format.Information received from RRBs are compiled andconsolidated at HO level.

2.3.4. Ensuring Quality Standards

All the data are checked with reference toconsistency, wide variations and are acceptedonly with adequate explanation. All the abovepublications are available in printed form till theyear March 2003 and these publications areavailable in CD form from March 2004 onwards.

2.4. Statistics on Urban Cooperative Banks

Urban Cooperative Banks (UCBs), also referredto as primary cooperative banks, play animportant role in meeting the banking needs ofurban and semi urban areas of the country. Theymobilise savings from the middle and lowerincome groups and purvey credit to smallborrowers, including weaker sections of thesociety and thereby fill up an important gap inthe mechanism for delivery of financial services.The data collected from the UCBs in UrbanBanks Department (UBD) of RBI through On-site inspection and Off-site Surveillance aremostly used for supervision. While On-siteInspection is the predominant mode ofsupervision, Off-site Surveillance (OSS) wasstarted for 55 scheduled banks in April 2001.The scheduled banks were required to submit10 OSS returns to RBI. Subsequently, thesereturns were rationalized with the objective ofincreasing the breadth and depth of informationbeing obtained from UCBs, while reducing thevolume of data required to be submitted by them.Thus, from March 2005, the number of OSSreturns was reduced from 10 to 8 (7 quarterlyand one annual). Number of returns required tobe submitted by UCBs to RBI varies with theirsize & scheduled status, as under:

Scheduled UCBs 32

Non Scheduled UCBs withdeposits > Rs. 100 crore 26

Tier II Non Scheduled UCBswith deposits > Rs. 50 crore 26

Tier I & Tier II banks withdeposits < Rs. 50 crore 18

Box: 2.1

Criteria for Gradation of UrbanCo-operative Banks

Urban co-operative banks are classified into fourgrades, viz., Grade I, II, III and IV on the basis ofcertain broad prudential indicators in the followingmanner:

(a) Grade I: Sound banks having no supervisoryconcerns.

(b) Grade II: Banks meeting any one of thefollowing parameters:

� Capital to risk-weighted asset ratio (CRAR):one per cent below the prescribed norms;or

� Net non-performing assets (NPAs) of 10 percent or more but below 15 per cent; or

� Incurred net loss in the previous financialyear; or

� Defaulted in the maintenance of cashreserve ratio (CRR)/statutory liquidity ratio(SLR) in the previous financial year and/or there is more or less continuous defaultin maintenance of CRR/SLR during thecurrent year.

(c) Grade III: Banks meeting any two of thefollowing parameters:

� CRAR below 75 per cent of the minimumprescribed but 50 per cent or above thelevel required.

� Net NPAs of 10 per cent or more but lessthan 15 per cent.

� Incurred net losses for two years out ofthe last three years.

(d) Grade IV: Banks meeting the followingconditions:

� CRAR less than 50 per cent of theprescribed limit; and

� Net NPAs of 15 per cent or more as onMarch 31 of the previous year.

In addition, as required under the BankingRegulation Act, the Balance Sheet data areobtained from UCBs at monthly intervals. Thenature of data obtained from banks is detailedin Annex 2.15.

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2.4.1. Measurement needs of the area

UCBs account for about 5 per cent of depositsand almost equal proportion of advances of thebanking system. Despite their small share inbusiness, UCBs contribute significantly towardssocial and economic development, as instrumentsof financial inclusion. Presently, the financialposition of several UCBs is a matter of concern.RBI has a system of classifying UCBs into fourgrades based on their performance and strength.While Gr-I banks are considered sound, Grade-II UCBs have minor weaknesses, where responserequired is limited to minor adjustments, andGrade-III and Grade-IV banks signify weakness/sickness (See Box 2.1).

Out of 1853 UCBs in March 2006, 677 UCBs(37%) were in Grade III and Grade IV signifyingweak and sick banks. Also, although UCBsaccount for 5% of total advances of the bankingsystem, they comprise approximately 20% of totalNPAs. Thus, the UCBs are significant both fromthe point of view of their ability to serve themiddle and lower classes and marginalizedsections of society, as also because of theirimportance in maintaining stability of thefinancial system. As such, it is important tomaintain a system of ‘continuous supervision’over UCBs and also establish an early warningsystem, to enable prompt action at an incipientstage of deterioration in the financial position ofthese banks.

2.4.2. Concepts, Definitions andClassifications

a. Tier I & Tier II UCBs – UCBs havingdeposits upto Rs 100 crores, whoseoperations are limited to a single district,are classified as Tier I banks and otherbanks are classified into Tier II banks.

b. Grades - UCBs are classified into differentgrades based on their performance andstrength, as stated earlier (see Box 2.1)

c. NPA – An asset becomes a non-performingone, when it ceases to generate income forthe bank. Earlier an asset was consideredas NPAs based on the concept of ‘past due’.With effect from March 31, 2001, the

concept of ‘past due’ has been dispensedwith and any amount due to the bankunder any credit facility is ‘overdue’, if it isnot paid on the date fixed by the bank.W.e.f March 31, 2004, NPAs are identifiedbased on 90 days overdue norm.

d. NPA definition is different for Tier I banksvis-à-vis international norms - Banks whoseoperations are limited to a single districtand have deposits of less than Rs.100 crore(Tier –I banks) have been allowed to adopt180 days delinquency norms forclassification of assets as non-performing,instead of the 90 days norm which isapplicable for the larger cooperative and allcommercial banks.

e. Net Worth - Paid-up capital + Reserves(Statutory and revaluation reserves) +Unappropriated profits (or minusaccumulated loss) - Intangible Assets -Shortfall in provisions for impaired assets– Investment in subsidiaries

f. Total Assets includes a contra item, viz.,Overdue Interest Reserves (OIR)

2.4.3. Sources and Systems

Data relating to UCBs are received throughvarious returns. The returns submitted by UCBsand agencies involved in data collection arepresented in Annex 2.15. The data submitted bybanks are as prescribed by RBI Act and BankingRegulation Act. RBI obtains certain data inexercise of its powers given under Section 27(2) of BR Act.

2.4.4. Ensuring Quality Standards

In order to maintain the data integrity, theapplication software adopted for the purposeprovides checks for data consistency within andacross returns. Quality of data can also bechecked through the software for comparing on-site with off-site data for the same period. Thequality of data provided by the regional officesis also checked in the form of variance reportscompiled across time. Consistency checks acrossbanks of similar size are also done throughstandard reports.

Documents

Manual on Financial and Banking Statistics - RBI · Manual on Financial and Banking Statistics 2. BANKING STATISTICS The banking system in India comprises ... RBI fortnightly return