India has a very strong financial system. You can judge the financial stability of the country based on the strength of its banks. The banking sector in India is an organized one. The Reserve Bank of India is at the helm of the affairs. You have different types of banks in India. They are the public sector banks or the nationalized banks, the private sector banks, the cooperative banks, the regional rural banks, and the primary agricultural credit societies. The foreign banks having their branches in India also play a strong role in maintaining the financial stability.
About a decade back, many top US banks such as the Lehmann Brothers Inc, went into liquidation because of the sub-prime crisis. Many big banks faced the brunt of this crisis. However, one must say that the Indian banks survived unscathed. This is primarily due to the exemplary control exercised by the Reserve Bank of India and the strong inherent values of the Indian banks in general.
Ranking any bank is a tough task because one has to consider many factors such as total business of the bank, its asset quality, the generation of profit, customer satisfaction, market capitalization, etc.
In this article, we shall consider the top ten public sector banks. This includes the nationalized banks, the State Bank of India, and IDBI Bank. We consider the associate banks of the State Bank as one group, merged with the State Bank of India. We present an honest opinion based on statistics (audited balance sheets as on 31 March 2016). The following is the list of the top ten public sector banks in India.
10. INDIAN OVERSEAS BANK
At No 10, we have the Chennai-based bank Indian Overseas Bank. Founded in 1937, Indian Overseas Bank has 3397 branches in India about one third of which are in the state of Tamil Nadu alone. The bank has 8 branches abroad, all of them in Asia. The bank has a total business of around Rs 397241 crores. This bank has the highest percentage of non-performing assets (NPA) (17.40%) among all the other banks. This resulted in the bank making a huge loss of Rs 2897 crores in 2015-16.
09. SYNDICATE BANK:
Syndicate Bank, a Manipal based branch, comes at No 9 on this list of top 10 public sector banks in India. Founded in 1925, this is a South India based bank. However, they gave ventured north as well in recent times. With total branch strength of 3766, Syndicate Bank has a total business of Rs 468184 crores. The NPA level (6.70%) in this bank is comparatively less as compared to its peers. Syndicate Bank has posted a loss of Rs 1643 crores in 2015-16.
08. IDBI BANK:
This is the only bank in this list that does not come under the nationalized bank sector. However, the ownership percentage of the Government of India is at par with the other nationalized banks. Therefore, you can consider this bank as a public sector bank. Having its headquarters in Mumbai, this bank was founded in 1964 by a special Act of Parliament. With total branch strength of 1846 branches, this bank has a business level of Rs 481613 crores. The bank has a high NPA position (11.52%) that has resulted in the bank posting a loss of Rs 3664 crores in 2015-16. When you consider the overall parameters, this bank comes at No 8 on this list.
07. CENTRAL BANK OF INDIA:
Found in 1911 by an eminent banker, Sir Sorabji Pochkanwala, this is a Mumbai-based bank. However, it has a great presence in the northern states as well. Known for giving good customer service and encouraging the use of Hindi in official correspondence, this bank has a total strength of 4728 branches all over India. At one point in time, this bank has occupied the No 1 rank. However, it has now slipped down to No 7 with total business of Rs 456336 crores. The bank has a high NPA level (11.95%) that drags down its profitability. Having posted a loss of Rs 1418 crores in 2015-16, it hopes to make a profit this year.
06. BANK OF INDIA:
One of the oldest banks in India, Bank of India is a Mumbai based bank as well. In existence since 1906, this bank has done sturdy business over the years to reach a figure of Rs 872190 crores. This is a predominantly Western India based bank with good presence in the north as well. You can compare this bank in size with Central Bank of India. Bank of India has about 5077 branches out of which 61 are situated overseas. This bank has a very high NPA percentage (13.89%). Hence, you find erosion in its profitability figure with the bank posting one of the biggest losses this year to the tune of Rs 6089 crores. They state that they have cleaned up their accounts thoroughly and hope to turn the corner this year. Time alone can tell whether this bank will move ahead from its present No 6.
05. CANARA BANK:
After a couple of Mumbai based banks, we come again to a South based bank, Canara Bank at No 5. Having its headquarters in Bangalore, this is a robust bank having around 5849 branches inclusive of 9 branches overseas. Established in Mangalore in 1906, this bank has done great business and had been in the top 3 banks in India over the years. With a total business of Rs 804507 crores, this bank has posted a loss of Rs 2812 crores in 2015-16 because of the recent slippages. As on date, the NPA percentage (9.74%) hovers around the national average. However, at No 5 this year, it has the potential to go up in the future.
04. BANK OF BARODA:
The Western regions of India have the highest percentage of nationalized banks with Bank of Baroda having its headquarters in Mandvi, Baroda in Gujarat. Along with Bank of India, this bank has a good presence overseas with 49 branches, most of them in the Gulf countries. Its total branch strength is 5379. Founded in 1908, this was amongst the first banks to be nationalized in 1969. This bank has a total business of Rs 957808 crores that is among the highest in the industry along with Punjab National Bank. This bank has a high NPA percentage (10.56%) having posted a net loss of Rs 5395 crores in 2015-16. This is part of a clean-up process.
03. UNION BANK OF INDIA:
Union Bank of India is a Mumbai based bank found in 1919. One of the few banks in India to post a net profit this year, the bank has a total business of Rs 620445 crores. Having a decent NPA percentage (8.70%), this bank has done very good business this year to jump a few spots ahead of its counterparts such as Canara Bank, etc. With 4200 branch out of which 4 are situated overseas, this bank has posted a net profit of Rs 1351 crores in 2015-16. The bank deserves a place among the top 3 in India because of its excellent performance this year.
02. PUNJAB NATIONAL BANK:
From the south and the west, we move towards the northern part of India. Punjab National Bank, founded in 1894 and having its headquarters in Delhi, is among the oldest of the banks in India. This bank has the highest business figures among the nationalized banks in India with a total business of Rs 965377 crores. However, this bank has a high NPA percentage at 13.54% in 2015-16. This is the reason for the posting of a loss of Rs 3974 crores in this financial year. With around 6760 branches, this bank is fit to occupy the No 2 slot behind the State Bank of India.
01. STATE BANK OF INDIA:
Originally, found as the Bank of Calcutta in 1806 this bank saw a reconstitution as the Imperial Bank of India in 1921. The bank acquired the name of The State Bank of India by a special Act of Parliament in 1955. This was the first bank to face nationalization in 1956. There were seven associate banks to the State Bank of India. Subsequently, it has taken over two of them with only five associate banks remaining as on date. This is the Big Daddy of all the banks in India with over 13000 branches and a business of Rs 31,94,422 crores. The entire financial business of the Indian Government is with thus bank. This bank has the lowest NPA percentage of all the banks (6.71%). With a net profit of Rs 9950 crores this financial year, this bank is poised to occupy the No 1 slot for years to come. The other banks can fight for the positions No 2 onwards.
Though banking has several parameters for evaluation, we have concentrated on the core aspects of business alone. You can see that most of the banks have posted heavy losses this year. This is because all the banks are in the process of cleaning up their balance sheets before the Basel III norms take over in 2017-18. In spite of the losses, one must commend the working of these Indian banks for their ability to withstand the toughest of financial shocks.