Finance

A strong and vibrant financial and banking sector supports the rapidly expanding Indian economy. Its inherent strengths include an extensive commercial banking system, an independent regulatory authority and active stock market. Established term lending institutions, development banks, investment funds, equipment leasing companies, venture capital funds etc., add to the strength of this sector.

As of February 2006, there were close to 300 foreign, public-sector, and regional banks -- up from about 60 in 1997 -- doing business in India last year. Total bank loans alone grew about 30%, and consumer lending grew 8%. The size of the Indian credit-card market is estimated to be about $4 billion and growing at 35% yearly, according to GE Money.

The total number of tax payers in India has increased from 10 million in 1997-98 to an estimated 50 million in 2002-03. Also due to falling interest rates, amount of outstanding homeowners mortgages in India has increased from Rs. 18,600 Cr. in 1998 to Rs. 81,000 Cr. in 2003-04 (estimated). According to a 2004 report by Merrill Lynch. Indian household debt was a mere 4% of gross domestic product -- the lowest among a group of south Asian countries including South Korea and Taiwan, each of which reported household debt exceeding 60% of GDP, and Malaysia and Thailand, with 25% each.

Banking indicators	1998-99	1999-2000	2005-06
Credit off-take increase % Total bank credit (Rs. cr.) Deposits growth/ increase % Total Deposits (Rs. cr.) Total investments increase % Total investments (Rs. cr.)	13.8% 368,889 19.3% 713,714 16.4% 51,196	17.7% 434,182 13.5% 810,065 21.3% 62,101	- 1507,077 - 2109,049 - 717,454

The banking system (over 70,000 branches in the country) has an extensive coverage with commercial banks (public sector, private sector and foreign), regional rural banks, co-operative banks present all over India.

Bank statistics (India)	1969	1995	2006
Number of banks Number of bank branches Population per branch Deposits (Rs.billion) Per capita deposits (Rs.) Deposits as % of GDP Credit/Deposit Ratio (%) Cash/Deposit Ratio (%)	89 8262 62697 46 90 13 78 8	282 62264 14000 3758 4148 41 59 4	222 71177 16000 21090 19130 66.3 70 6.7

The Ministry of Finance, responsible for the administration of finances of the Government, handles all economic and financial matters of the country. The Reserve Bank of India ('RBI') - India's central banking institution supervises all banking operations in the country. Among the public sector banks, the State Bank of India is the largest.

Non-performing Assets (NPA) of Nationalized banks, 2006
Source: Economic Survey of India

Indian Banks Abroad
101 branches of 9 Indian commercial banks were operating in foreign countries, as on March 31, 1994. These branches are spread over a number of countries and located in major centers like London, New York, Paris, Tokyo, Singapore and Bahrain. These branches specialize in various areas of international trade including financing of foreign trade.

Financial Institutions:
Industrial development in India has been financed by an integrated network of financial institutions. These institutions cater to the long and medium term financing needs of industrial projects by way of project loans, underwriting and direct subscription to shares and bonds, deferred payments guarantees, leasing venture capital, bill discounting and a variety of other financial products.

The institutional framework for providing finance comprises 12 institutions at the national level and 46 at the State level. The financial institutions constitute the major sources of rupee and forex funds, as well as the non-fund based facilities such as guarantees and underwriting for medium and large sized projects. They offer additional services such as foreign exchange risk management and investment banking services to cater to all the financing needs of a customer. Currently, they can syndicate forex loans for domestic companies only.