From the daily archives: Thursday, February 18, 2010
ive heard that critics have said that he is different from the average. as in he doesnt follow the normal guidelines of a science fiction novel.
Our english teacher has assigned us to write an essay.
The problem is, she hasn’t taught the class how to write an essay or given us any tips to perfect it.
I can’t exactly ask her for help, since we have a holiday break.
Can you please share any essay writing tips?
Thank you. 
Fictional History
In our lives, at times we come across stories that are being told so reverently that we almost take it for real. Such stories can be a part of the book that has become so popular, engaging and ageless that people always remember it that it has seem to become real. When such thing happens, it is known as fictional history. And as the term suggests, it has more fictional than reality or facts. However, we find that such historical stories are a part of our social lives and many of them have been the most inspirational stories that help us to stand difficult times. One of the most common and legendary example of fictional history would be of Swiss patriot William Tell. The story states that he lived in the 14th century and he repudiated to a autocratic Austrian governor and for the fury of the governor Tell was ordered to shoot an apple placed on his son’s head. This has become a tale passed down on generation that you can find many modern plays and operas based on the life of William Tell.
While you look at fictional history closely, you can find that it also may include real history with fictional characters. Another effective example of fictional history would be The Lord of the Rings which is a very popular story that has long fictional history. Even though the fictional history in The Lord of the Rings do not resemble with real history as in William Tell, this book has become widely read and the movie watched by millions of people that the fictional history of the story is in many people’s minds.
Another stupendous example in continuation would be of the Harry Potter chronicles the life of a great wizard boy in his seven years at a wizard school. In this fascinating book authored by J K Rownlings, each book has made the previous one a history. It has also been recreated as a box office rocking movie which has created waves around the world. The fictional history involves the history of four wizards whose names were taken into the four houses of Hogwarts the wizarding school. It also has fictional history of the evil Lord Voldemort.
Fictional history can be considered as sub-genre of fiction wherein the fictional characters try to capture the real time, feel and spirit of a given non-fictional history. Many books focusing on fictional history have been written. Also, there are plenty of television shows, movie shows and theater that feature fictional history. Authors of these stories have become famous due to the fact that many fictional history have become very famous that people sometimes confuse them with real history. English novelit Christopher Hart is a fictional history author who wrote about Rome and Atilla in their final days. Another fictional history author is British author Conn Iggulden. His main genre in writing is really on historical fiction.
Looking for more information on Fictional History check out www.FICTIONAL-HISTORY.COM your guide to Fictional History.
I am in 7th grade and i am tutoring a sixth grader in Reading and Writing! He tends to slack off and not pay attention, he also needs constant help on the reading/writing activity’s! Since we are in 3rd quarter now, were starting new stuff in reading/writing! What are some activity’s should i do to help this kid!? Any tips?
Overview Of Banking Project
Title: Comparative study of non interest income of the Indian Banking Sector
Submitted by:
Gaurav Sharma
BBA(Finance, Gold Medal),MBA(Finance)
gksindia1@gmail.com
Index
Introduction                                                                                                        1
Methodology                                                                                             3
SBI& Associates                                                                                       5
Nationalized banks(Public sector banks)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 10
Private sector banks                                                                                  15
Foreign banks                                                                                            20
Findings                                                                                                     25
Conclusion                                                                                                26
Literature review                                                                                       26
References                                                                                                 26
Introduction
There are two broad sources of bank revenues:
Interest income Non-interest income.
Interest income is generated from what is known as â??the spread.â? The spread is the difference between the interest a bank earns on loans extended to customers, corporate etc and the interest paid to depositors for the use of their money. It is also earned from any securities that the banks own, such as treasury bills or bonds.
Non-interest income is earned by providing a variety of services, such as trading of securities, assisting companies to issue new equity financing, securities commissions and wealth management, sale of land, building, profit and loss on revaluation of assets etc.
As compared to the developed world, the Indian banking sector, apart from the relying on traditional sources of revenue like loan making are also focusing on the activities that generate fee income, service charges, trading revenue, and other types of noninterest income. While noninterest income plays an important role in banking revenues in the developed world, its contribution to the total income of the Indian banking was 25% as on 31st March 2008.
Components of non interest income
The major components of non interest income in our banking sector are as follows:
Commission/ exchange and brokerage Profit or loss on Sale of investments Profit or loss Sale of land& buildings Profit/loss on revaluation of investments Profit or loss on Exchange transaction etc. Miscellaneous income source which includes advisory, trading etc.
Share of various sources of non interest income
The share of various sources of non interest income to the total income of banking sector as on 31st march 2008 is shown in the pie chart below:
In the above figure we find that the highest contribution to the non interest income has been of the commission followed by sale of investments, miscellaneous income and exchange transactions.
Movements of interest and non interest income of the Indian banking sector (1994-2004)
Methodology
Under this I have done a comparative study of non interest income of the Indian banking sector by classifying banks into four categories:
SBI and associates which includes State bank of India, State bank of Bikaner and Jaipur, State bank of Hyderabad, State bank of Mysore, State bank of Patiala, State bank of Saurashtra and State bank of Travancore. Nationalized banks: (Public sector banks) which includes Allahabad bank, Andhra bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Canara bank, Central Bank of India, Corporation bank, Dena bank, Indian bank, Indian Overseas bank, New bank of India, Oriental bank of Commerce, Punjab &Sind bank, Punjab National Bank, Syndicate bank, UCO bank, Union bank of India, United bank of India, Vijaya bank.( Total 19) Other scheduled banks: (Private sector banks) which includes Development credit bank, Times bank, Axis bank, Indus land Bank, ICICI bank, Bank of Rajasthan, Catholic Syrian bank, Lakshmi Vilas bank, HDFC bank, Centurion bank, Bank of Punjab, Tamilnad Mercantile Bank, Federal bank, Punjab Cooperative bank, Lord Krishna bank, ING Vyasya bank, IDBI bank, Dhanlakshmi bank.(total 18 banks) Foreign banks: which includes Barclays bank, ING bank, ABN Amro bank, Bank of America, BNP  Paribas, Standard Chartered bank, DBS bank ,Citibank, HSBC, Deutsche bank, Mashreq bank, Bank of Nova Scotia, Bank of Bahrain & Kuwait, American Express bank (total 14 banks)
The banks used under private sector and foreign sector category are reflective of major portion of their respective market/category. Moreover data was not available for other banks within that category.
The period of study taken was 11 years i.e. 1994-2004. The period of study was taken as 11 years because, for the above mentioned period the data was available for all the bank and to ensure uniformity.
Objectives of the study:
To analyze the growth of non interest income as a source of revenue for the Indian banking sector over a period of 11 years (1994-2004). To analyze the contribution of major components of the non interest income over a period of 11 years (1994-2004). To find out statistically that how much of the profits of the banking sector over a period of 11 years is determined by non interest income and interest income. To find out statistically the contribution of various components of Non interest income towards the profits of the bank over a period of 11 years. To find out the contribution of interest and non interest income towards the total income in each of the 11 years (1994-04). To find out the correlation between the non interest income and the total income of the banking sector over a period of 11 years. To find out the reasons for the increase in the non interest income and what are the challenges involved to generate non interest income.
Tool used:
Data regarding the interest income, non interest income, profits, various components of non interest income, total income of the banking sector has been collected from the RBI website.
To find out the influence of interest and non interest income on the profits of the banking sector, I have made use of multiple regression tool in E-views software.
The interest and non interest income were independent variable and the profits of the bank was the dependent variable
Two Multiple Regression equation was used for the study:
Equation 1
Profits=a+b1*interest income+b2*noninterest income
Where b1 and b2 were coefficient and a is the intercept term which shows the profits of the bank had been c if interest and non interest income had been 0
Equation 2
Profits: a+b1*commission+b2*profit/loss on sale of land+ profit/loss on sale of investment+ profit/loss on revaluation of investment +profit/loss on exchange transactions+ Miscellaneous income
Where profits was the dependent variable and various components of non interest income were independent variable and a is the constant term
The equation 2 was used to find out the influence of various components of non interest income on the profits of the bank.
SBI and Associates
(Rsâ??000)
In the above table we see the following:
Column1: Average
Column 2: Year
Column 3: Other income or the non interest income of the bank
Column 4: Commission, exchange and brokerage
Column 5: Net profit/loss on sale of investment
Column6:Â Net profit/loss on revaluation of investment
Column7: Net profit/loss on sale of land, building and other assets
Column 8: Net profit/ loss on exchange transactions
Column 9: Miscellaneous income
Column 10: Total income of the bank
Column 11: Profit/loss of the bank
Column 12: Interest income of the bank
Column 13: Noninterest income as a percentage of total income
Column 14: Interest income as a percentage of total income
Influence of interest and non interest income on profits of SBI& Associates
The above output is of the multiple regression equation where we have tried to find out that how much of the profits of the SBI and its associates are determined by interest and non interest income.
We find non -interest income to be a significant variable in explaining the profits of SBI as the prob value is less the .05 (.0095)and the value of t stat is more than 2(3.386)[ Rule: an independent variable is said to be significant is its prob value is less than .05 or the t-stat is more than 2). We find that in our regression model the percentage of variation in the profits of SBI and its associate that is explained by interest and non interest income is 92.81% ( Rule: for a regression model to be efficient the r-square shall be at least .6) From the above output we find that Noninterest income had a significant influence on the profits of SBI and its associates over a period of 11 years.
Influence of non interest components on profit of SBI& Associate
Model Summary
Model
R
R Square
Adjusted R Square
Std. Error of the Estimate
1
.990(a)
.981
.943
4040785.55743
a Predictors: (Constant), misc, plland, plexchange, pllinvest, plreav, comm
Coefficients(a)
Model
Unstandardized Coefficients
Standardized Coefficients
t
Sig.
B
Std. Error
Beta
1
(Constant)
-20565743.526
10099548.868
-2.036
.135
comm
2.109
.603
1.153
3.495
.040
pllinvest
.970
.255
.944
3.805
.032
plreav
27.569
76.257
.100
.362
.742
plland
76.158
97.743
.221
.779
.493
plexchange
-1.077
.815
-.135
-1.322
.278
misc
-4.728
2.151
-1.042
-2.198
.115
a Dependent Variable: profit
In the above regression output the independent variable used were various components of non interest income i.e. commission/exchange /brokerage, profit/loss on sale of investment, profit and loss on revaluation of investment, profit/loss on sale of land/building, profit/loss on exchange transaction and miscellaneous income. And the dependent variable used was the profits of the SBI& associates
The objective is to find out that which one of the non interest component had a major influence on the profit of SBI & associates over a period of 11 years.
We find the following:
The percentage of variation in the profits of the SBI& associates explained by the 6 independent variables is 98.1% which is significant(as R square shall be more than .6) We find that commission/exchange/brokerage and profit/loss on sale of investment had a major influence on the profits of the SBI and its associates over a period of 11 years. As they are having a prob values less than .05(level of significance) and is having a t-stat more than 2.
This means that SBI and its associates shall focus more on commission exchange and brokerage for its non interest income.
Contribution of various components of non-interest income of SBI& Associate(94-04)
The above pie graph has been prepared by taking into account the average values of non interest income components over a period of 11 years (94-04). From the above graph we find that commission/exchange and brokerage had around 59% (highest) contribution to the non interest income followed by sale of investment (20%). Exchange transaction was having a contribution of 12% and miscellaneous income was having an influence of 9%. The sale of land/buildings, revaluation of investment was having a very negligible influence on the non interest income.
Movements of interest and non interest income of SBI & Associates(94-04)
If we look at the movement of interest and non interest income of SBI and associates over a period of 11 years we will find that the non interest income has grown at a CAGR of 18.46% and the interest income has grown at a CAGR of 13.15%.The noninterest income over a period of 11 years has grown by 444.563% whereas interest income has increased by 244.14% which shows how aggressively the bank is working on its non interest income.
Contribution of interest and non interest income of SBI & Associate
From the above table we find the contribution of interest and non interest income as a percentage of total income in each of the 11 years period. We find the share of non interest income has increased over a period of time from 14% to 21% and share of interest income has decreased from 85% to 78%.
On an average over a period of 11 years the contribution of non interest income as been 15% and interest income has been 85% to the total income of the SBI and its associates.
Correlation between non interest income and total income
0.935642
There is a very positive correlation between non interest income and the total income of SBI and its associates which shows that higher the non interest income higher the total income of the SBI& associate.
Nationalized banks: Public sector banks
(Rsâ??000)
In the above table we see the following:
Column1: Average
Column 2: Year
Column 3: Other income or the non interest income of the bank
Column 4: Commission, exchange and brokerage
Column 5: Net profit/loss on sale of investment
Column6:Â Net profit/loss on revaluation of investment
Column7: Net profit/loss on sale of land, building and other assets
Column 8: Net profit/ loss on exchange transactions
Column 9: Miscellaneous income
Column 10: Total income of the bank
Column 11: Profit/loss of the bank
Column 12: Interest income of the bank
Column 13: Noninterest income as a percentage of total income
Column 14: Interest income as a percentage of total income
Influence of interest and non interest income on profits of Public sector banks (94-04)
The above output is of the multiple regression equation where we have tried to find out that how much of the profits of the public sector banks are determined by interest and non interest income.
Non interest and Interest income are independent variables and profit is the dependent variable
From the above output we find:
We find non -interest income to be a significant variable in explaining the profits of public sector banks as the prob value is less the .05 (.0268) and the value of t stat is more than 2(2.7056) [Rule: an independent variable is said to be significant if its prob value is less than .05(level of significance) or the t-stat is more than 2]. We find that in our regression model the percentage of variation in the profits of public sector banks that is explained by interest and non interest income is 88.86%( Rule for a regression model to be efficient the r-square shall be at least .6) From the above output we find that noninterest income had a significant influence on the profits of public sector banks over a period of 11 years.
Influence of non interest components on profit of Public sector banks(94-04)
Model Summary
Model
R
R Square
Adjusted R Square
Std. Error of the Estimate
1
.974(a)
.948
.870
14640946.95589
a Predictors: (Constant), misc, plland, plreav, pllinvest, plexchange, comm.
Coefficients(a)
Model
Unstandardized Coefficients
Standardized Coefficients
t
Sig.
B
Std. Error
Beta
1
(Constant)
-84595095.339
58218744.505
-1.453
.220
comm
.151
5.866
.024
.026
.981
pllinvest
.017
.478
.014
.035
.974
plreav
-13.928
8.434
-.348
-1.651
.174
plland
48.353
63.394
.105
.763
.488
plexchange
5.954
8.910
.276
.668
.541
misc
3.451
7.536
.470
.458
.671
a Dependent Variable: profit
In the above regression output the independent variable used were various components of non interest income i.e. commission/exchange /brokerage, profit/loss on sale of investment, profit and loss on revaluation of investment, profit/loss on sale of land/building, profit/loss on exchange transaction and miscellaneous income. And the dependent variable used was the profits of the public sector banks
The objective is to find out which one of the non interest component had a major influence on the profit of public sector banks over a period of 11 years.
We find the following:
The percentage of variation in the profits of the public sector banks explained by the 6 independent variables is 94.8% which is significant(as r square shall be more than .6) We find that none of the non interest component was individually sufficient in explaining the profits of the public sector banks as we find that none of the non interest component is having a significance value of less than .5 or having a t-stat of more than 2.
Contribution of various components of non interest income of Public Sector banks (94-04)
The above pie graph has been prepared by taking into account the average values of non interest income components over a period of 11 years (94-04). From the above graph we find that commission/exchange and brokerage had around 36% (highest) contribution to the non interest income followed by sale of investment (35%). Miscellaneous income was having a contribution of 16% followed by exchange transaction i.e. 12%. The sale of land/buildings, revaluation of investment was having a very negligible influence on the non interest income.
Movements of interest and non interest income of Public sector banks(94-04)
If we look at the movement of interest and non interest income of public sector banks over a period of 11 years we will find that the non interest income has grown at a CAGR of 19.85% and the interest income has grown at a CAGR of 12.68%.The noninterest income over a period of 11 years has grown by 511.87%Â whereas interest income has increased by 230.03% which shows how aggressively the bank is working on its non interest income.
Contribution of interest and non interest income of the Public Sector banks(94-04)
From the above table we find the contribution of interest and non interest income as a percentage of total income in each of the 11 years period. We find the share of non interest income has increased over a period of time from 11% to 20% and share of interest income has decreased from 88% to 79%.
On an average over a period of 11 years the contribution of non interest income as been 13% and interest income has been 87% to the total income of the public sector banks.
Correlation between non interest income and total income of Public sector banks
0.940162
There is a very positive correlation between non interest income and the total income of public sector banks which shows that higher the non interest income higher the total income of the public sector banks.
Private sector banks
(Rs â??000)
In the above table we see the following:
Column1: Average
Column 2: Year
Column 3: Other income or the non interest income of the bank
Column 4: Commission, exchange and brokerage
Column 5: Net profit/loss on sale of investment
Column6:Â Net profit/loss on revaluation of investment
Column7: Net profit/loss on sale of land, building and other assets
Column 8: Net profit/ loss on exchange transactions
Column 9: Miscellaneous income
Column 10: Total income of the bank
Column 11: Profit/loss of the bank
Column 12: Interest income of the bank
Column 13: Noninterest income as a percentage of total income
Column 14: Interest income as a percentage of total income
Influence of interest and non interest income on profits of Private sector banks(94-04)
The above output is of the multiple regression equation where we have tried to find out that how much of the profits of the private sector banks are determined by interest and non interest income.
Non interest and Interest income are independent variables and profit is the dependent variable
From the above output we find:
We find non -interest income to be a significant variable in explaining the profits of private sector banks as the prob value is less the .05 (.0128) and the value of t stat is more than 2(3.188) [Rule: an independent variable is said to be significant if its prob value is less than .05(level of significance) or the t-stat is more than 2]. We find that in our regression model the percentage of variation in the profits of private sector banks that is explained by interest and non interest income is 95.95 %( Rule for a regression model to be efficient the R-square shall be at least .6) From the above output we find that noninterest income had a significant influence on the profits of private sector banks over a period of 11 years.
Influence of non interest components on profit of Private sector banks (94-04)
Model Summary
Model
R
R Square
Adjusted R Square
Std. Error of the Estimate
1
.964
.912
.881
309483.83835
a Predictors: (Constant), misc, plreav, plexchange, pllinvest, plland, comm
Coefficients(a)
Model
Unstandardized Coefficients
Standardized Coefficients
t
Sig.
B
Std. Error
Beta
1
(Constant)
-775200.943
177724.748
-4.362
.012
comm
.493
.252
.311
1.955
.122
pllinvest
.623
.147
.672
4.240
.013
plreav
4.129
2.209
.062
1.869
.135
plland
108.894
14.560
.923
7.479
.002
plexchange
-2.522
.513
-.268
-4.915
.008
misc
3.314
.310
1.114
10.680
.000
In the above regression output the independent variable used were various components of non interest income i.e. commission/exchange /brokerage, profit/loss on sale of investment, profit and loss on revaluation of investment, profit/loss on sale of land/building, profit/loss on exchange transaction and miscellaneous income. And the dependent variable used was the profits of the private sector banks
The objective to find out which one of the non interest component had a major influence on the profit of private sector banks over a period of 11 years.
We find the following:
The percentage of variation in the profits of the private sector banks explained by the 6 independent variables is 91.2% which is significant(as r square shall be more than .6) We find that sale of investment , land & building and miscellaneous income and exchange transactions have a major influence on the profits of private sector banks over a period of 11 years as these variable are having a significance level of less than .05 and a t-stat of more than 2. According to the above output miscellaneous income had a major influence o the profits of the as itâ??s is having the maximum t-stat i.e. 10.680 so bank shall focus on it for its non interest income.
Contribution of various components of non interest income of Private Sector banks (94-04)
The above pie graph has been prepared by taking into account the average values of non interest income components over a period of 11 years (94-04). From the above graph we find that sale of investment has around 41%(highest) contribution to the non interest income followed by commission/exchange /brokerage 34% followed by miscellaneous income(17%) and exchange transactions 8%. The sale of land/buildings, revaluation of investment was having a very negligible influence on the non interest income.
Movements of interest and non interest income of Private Sector banks(94-04)
If we look at the movement of interest and non interest income of private sector banks over a period of 11 years we will find that the non interest income has grown at a CAGR of 43.50% and the interest income has grown at a CAGR of 33.95%. The non interest income over a period of 11 years has grown by 3604.74%% whereas interest income has increased by 1760.84% which shows how aggressively the private sector banks are working on its non interest income.
Contribution of interest and non interest income of Private sector banks (94-04)
From the above table we find the contribution of interest and non interest income as a percentage of total income in each of the 11 years period. We find the share of non interest income has increased over a period of time from 13% to 23% and share of interest income has decreased from 86% to 76%.
On an average over a period of 11 years the contribution of non interest income as been 17% and interest income has been 83% to the total income of the private sector banks.
Correlation between non interest income and total income of Private sector banks
0.987067
There is a very positive correlation between non interest income and the total income of private sector banks which shows that higher the non interest income higher the total income of the private sector banks.
Foreign banks
(Rs â??000)
In the above table we see the following:
Column1: Average
Column 2: Year
Column 3: Other income or the non interest income of the bank
Column 4: Commission, exchange and brokerage
Column 5: Net profit/loss on sale of investment
Column6:Â Net profit/loss on revaluation of investment
Column7: Net profit/loss on sale of land, building and other assets
Column 8: Net profit/ loss on exchange transactions
Column 9: Miscellaneous income
Column 10: Total income of the bank
Column 11: Profit/loss of the bank
Column 12: Interest income of the bank
Column 13: Noninterest income as a percentage of total income
Column 14: Interest income as a percentage of total income
Influence of interest and non interest income on profits of Foreign banks (94-04)
The above output is of the multiple regression equation where we have tried to find out that how much of the profits of the foreign  banks are determined by interest and non interest income.
Non interest and Interest income are independent variables and profit is the dependent variable
From the above output we find:
We find non -interest income to be a significant variable in explaining the profits of foreign banks as the prob value is less the .05 (.0006) and the value of t stat is more than 2(5.459) [Rule: an independent variable is said to be significant if its prob value is less than .05(level of significance) or the t-stat is more than 2]. We find that in our regression model the percentage of variation in the profits of foreign banks that is explained by interest and non interest income is 94.64%( Rule for a regression model to be efficient the r-square shall be at least .6)
From the above output we find that noninterest income had a major and significant influence on the profits of foreign banks over a period of 11 years
Influence of non interest components on profit of Foreign banks (94-04)
Model Summary
Model
R
R Square
Adjusted R Square
Std. Error of the Estimate
1
.995(a)
.990
.975
891916.79648
a Predictors: (Constant), misc, plland, plreav, pllinvest, comm, plexchange
Coefficients(a)
Model
Unstandardized Coefficients
Standardized Coefficients
B
Std. Error
Beta
t
Sig.
1
(Constant)
2987693.345
1103189.297
2.708
.054
comm
-.182
.245
-.131
-.744
.498
pllinvest
.371
.298
.158
1.248
.280
plreav
-15.101
9.845
-.094
-1.534
.200
plland
-9.579
5.393
-.123
-1.776
.150
plexchange
.808
.384
.485
2.101
.103
misc
2.657
.952
.580
2.790
.049
a Dependent Variable: profit
In the above regression output the independent variable used were various components of non interest income i.e. commission/exchange /brokerage, profit/loss on sale of investment, profit and loss on revaluation of investment, profit/loss on sale of land/building, profit/loss on exchange transaction and miscellaneous income. And the dependent variable used as the profits of the foreign banks
The objective is to find out which one of the non interest component had a major influence on the profit of foreign banks over a period of 11 years.
We find the following:
The percentage of variation in the profits of the foreign banks explained by the 6 independent variables is 99.0% which is significant(as r square shall be more than .6) We find that only miscellaneous income have a major influence on the profits of foreign banks over a period of 11 years as it is having a significance level of less than .05(.049) and a t-stat of more than 2(2.790).
Contribution of various components of non interest income of Foreign banks (94-04)
The above pie graph has been prepared by taking into account the average values of non interest income components over a period of 11 years (94-04). From the above graph we find that commission/exchange /brokerage was having around 48% (highest) contribution to the non interest income followed by exchange transactions 29%. The contribution of sale of investment was 17% followed by miscellaneous income 6% .The sale of land/buildings, revaluation of investment was having a very negligible influence on the non interest income
Movements of interest and non interest income of foreign banks (94-04)
If we look at the movement of interest and non interest income of foreign banks over a period of 11 years we will find that the non interest income has grown at a CAGR of 19.57% and the interest income has grown at a CAGR of 13.49%. The non interest income over a period of 11 years has grown by 497.394%% whereas interest income has increased by 254.54% which shows how aggressively the bank is working on its non interest income
Contribution of interest and non interest income of foreign banks (94-04)
From the above table we find the contribution of interest and non interest income as a percentage of total income in each of the 11 years period. We find the share of non interest income has increased over a period of time from 21% to 31% and share of interest income has decreased from 78% to 68%.
On an average over a period of 11 years the contribution of non interest income as been 23% and interest income has been 77% to the total income of the foreign banks.
Correlation between non interest income and total income of foreign banks
0.972437
There is a very positive correlation between non interest income and the total income of private sector banks which shows that higher the non interest income higher the total income of the private sector banks.
Findings
We have seen that the contribution of non interest income of our banking sector has increased significantly over a period of 11 years. We have also seen that in each type of banks i.e. SBI, public sector banks, private sector banks and foreign banks the contribution of non interest income towards the total income has increased over a period of time and that of the interest income has decreased over a period of time. If we look at the total banking sector we will find that in our banking system the non interest income is having a significant influence on the profits of the banks. On an average the share of the non interest income towards the total income of the banking sector has increased from 12% in 1994 to 20% in 2004.If we look at the components of non interest income of our banking sector we will find that commission/exchange and brokerage earned by the banks had a major contribution i.e. 44% to the total noninterest income of the bank , after the commission the next big contribution to the non interest income had been of the sale of investments which was 28%, followed by exchange transactions having a share of 15%. Miscellaneous income was having the 13% contribution to the total noninterest income of the banking sector. The contribution of sale of land, revaluation of investments was having a negative or even a negligible influence on the noninterest income of the banking sector. On an average the non interest income of the banking sector has grown at a CAGR of 25% as compared to interest income which has grown at a CAGR of 18%. The percentage increase in the non interest income of the banking sector has increased by 1264.64% and interest income has increased by 622%. The private sector banks had seen a significant contribution in the increase of its non interest income over a period of 11 years as compared to other types of banks. Among the various non interest components that had an influence on the profits of the banking sector we find that commission, sale of investment, miscellaneous income had a significant influence on it. We also find that there was a positive correlation between the non interest income and the total income of the banking sector. We also find that in case of public sector banks none of the non interest component was found to be statistically significant enough to influence the profits over a period of 11 years.
Reasons for increase in the non interest income
Now if we look at the reason for the increase in the non interest income of the banking sector we will find that it has majorly increased due to following reasons:
With economy growing at an unprecedented rate of 9.4 per cent during 2006-07 and acceleration in the growth rate being attributable to the buoyancy in the industrial and service sector, the demand for fee-based services of banks has gone up and as a result of which the non interest income has also risen up. Noninterest income is an effective way used by banks to respond to its squeezing margins At the bank level, greater reliance on noninterest income, particularly trading revenue, is associated with lower risk-adjusted pro?ts attached to it.
Challenges involved
Not aggressive direct customer interaction of public sector banks. High cost and less expertise involved in launching of innovative products/services as per the customersâ?? expectations. Technology requirements.
Conclusion
After studying the non interest growth pattern of the Indian banking sector over a period of 11 years we can say that it is slowly and gradually becoming one of the important avenues for our Indian banks to generate revenue from. In this respect we see that not only private banks and foreign banks are ahead but also our public sector banks are gradually catching it. We can say that it to be an important source available with our banking sector to respond to the squeezing margins and meeting the shareholders expectations.
Literature review
1. Business Efficiency of Public Sector Commercial Banks: A Data Envelopment Approach :
Ram Pratap Sinha (2008)
The article says that following the nationalization of 20 major commercial banks in 1969 and 1980, the government followed policies of financial repression up to the 1980s. During this period the public sector commercial banks had rapid expansion of branches, especially in the rural and semi urban areas and had reasonable success in the matter of deposit mobilization and disbursement of loans. However, the operating efficiency of public sector commercial banks, declined during the period due to various reasons. In the 1990s, the banking environment was radically transformed by certain bold initiatives taken by RBI including the dismantling of entry barriers, rate deregulation, introduction of prudential accounting norm and the implementation of Basel I capital adequacy norms. The changed competition and accounting environment compelled the commercial banks to provide unprecedented attention to cost cutting and supplementing fund-based income by fee-based income.
Product mix and earnings volatility at commercial bank: evidence from a degree of leverage model:Â Robert De young & Karin P Roland(1999)
The article says that the commercial banks lending and deposit taking business has declined in recent years. Deregulation and new technology have eroded bankâ??s comparative advantages and made it easier for non bank competitors to enter these markets. In response, banks have shifted their sales mix towards noninterest income-by selling non bank fee based financial services such as mutual funds, by charging fees for services that used to be bundled together with deposit or loan products .It says that the conventional wisdom in the banking industry is that earnings from fee based products are more stable than loan based earnings and that fee based activities reduce bank risk via diversification.
References
RBI website Icfai Journal of Banking studies Sept 2008 issue pg 22-26 Ideas.repec.org
Gaurav Sharma
BBA(Finance, Gold Medal),MBA(Finance)
I am not the biggest fan of science fiction books. I read more horror like stories i also read vampire love stories. Are there any book that i might like because i haven’t found one yet.
~Thanks For any help O_o ~
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Farhat Parveen is a Pakistani expatriate Urdu fiction writer in Saudi Arabia who has written lot of short stories which has won appreciation from big literary critics and contemporary writers of South Asian Countries. Three collections of her short stories “The Frozen” “From the window of Restaurant” and “The rocks of glass” has come face to face to the contemporary trends in modern fiction.
Her fictions are the product of a beautiful, high and pathetic scenario of her creativity. Her creativity takes off with the help of her creative unrest, motivated by her aesthetic tastes and visions. Understanding life, keeping it’s effects on her ownself, condensing the pain of the mankind in her own pathetic creative canvas, asking for encouragement from life itself and criticizing the same, are the identity of Farhat Parveen which is creating a new era in the history of postmodern Urdu fiction in Middle East and South Asian region. Closeness to the life, understanding it through creativeness, the disorder of human and social values, the new features of the society, human psychology, and the post modern scenario of societies are the axis of Farhat Parveen’s creativity. In her fictions, when she looks up on the social and human bondage, she brings every thing in to our knowledge which is useful in creating a healthy society.
Farhat Parveen likes to safeguard the interests of human and social behaviors. Sometimes, she concentrates upon in the dynamics of behavior so exclusively that all human values look confined in the instinct of a single human being. While studying society she goes deeper into her ‘characters’ and while studying her ‘characters’ she goes deeper into the dialectics of society. The subjects of her fiction appears as a new infra-structure of the new human and social values. Travelling from individual to individual, individual to society and from society to individuals she emerges as a captain of social and human values. The main subject of her fiction is the HUMAN BEING. She has used her fictions as modern tools for psychotherapy. Through supportive psychotherapy she creates aspirations, trust and faith up on life.
Farhat Parveen is a writer of sadness. In her fiction, sadness, it’s different shades, sadness emerging from love and sadness at the end of pleasures has fogged up her fictions. The picture of this sadness is the only reference of her creative highness. When Farhat Parveen stares up on life she experiences little pleasure and bigger sorrow all through the life. Perhaps this is the real face of this life as some one has said : ‘The life is a long sentence of pain punctuated with happiness’. This is the most accurate discovery of life. This pathetic code of life has emerged as a usual course in all of her fictions. Like Rajendra Sing Bedi [A stalwart from South Asian Fiction(Urdu)] tragedy is her specialty. The difference in the fictions of Rajendara Singh Bedi is that it is buildup with sex with tragedies, but in the fiction of Farhat Parveen, lack of love, poverty and its belongings, the pain of human bondage have become her identity. ‘The frozen’ ‘Junk Yard’ ‘Performer’ ‘Free prisoner’ and ‘Tales’ are her master pieces. I regard these fictions meet the standard of world literature.
In the fiction ‘The frozen’ we sense a sadness which comes out from confession, repeating itself as many times as it can. We also sense a kind of ‘self evaluation’ and process of ‘returning towards ourselves’. From the beginning to its end the canvas of this story get deepen in the ocean of intuition and high morality.
‘Junk Yard’ and “Performer’ are the best fictions of their kind. These stories are valuable editions in the history of post-modern South Asian Literature. ‘Junk Yard’ is a tragedy of the materialistic western social orders as well as a healthy criticism of the society. It is a heart beating story. ‘Performer’ is an amazing story. In accordance with it’s subject and the highness of it’s style this story can be placed at the highest level of world literature. In this story the happenings, situations and the characters came together with truth in their natural style. The story belongs to a poor woman who is suffering form unusual troubles. Her troubles were successfully brought to notice by the story writer.
Apart from this her fiction ‘from the window of the restaurant’ is a living scenario of our life. ‘Amber’ turns out as a sign of deep beloving. The ‘Free prisoner’ is a narrative-symbolic fiction which stands for the eternal human dissatisfaction of living-hood, supposed to be the fate of all human being, specially to the women. The fiction ‘Conflict’ speaks about a prolonged disguised dissatisfaction of a woman, who was misunderstood by all, even by her siblings. Her mystery remains alive even after her death. ‘Curved brick’ refers to the freedom in selection of life partners. Farhat Parveen advocates the right to choose a life partner by own choice. The fiction ‘Death of love’ tells us the fact that love some times dies without cause.
The creative highness of Farhat Parveen is new of it’ own. She acts like a linking person between the art and nature. She has tried to link the tragedies of our life with nature. The fictions of Farhat Parveen give chance to its readers to rearrange themselves time to time. We can say them applied fictions, as every character of her story draws readers towards their own sentiments. Through this approach the readers experience some sorts of aesthetical power, courage, guts, and contentment in their own. With this aesthetical power the life becomes capable of defending itselves.
In Farhat Parveen’s fictions, mortals and immortal, sorrow and joy, love and hate all move adjoining eacher other. She brings some sort of truth from her experession which explores some new dimensions form the mystry of life. In her fiction, death is a common phenomena. When she tells about her character she includes death as an end to all his aspirations. As a result , in all of her fictions, readers are always alert to listen the death news of some of her characters. The death news symbolizes all her fictions to be the real pictures of life. With out death nothing can be understood or be taken seriously as it is the destroyer of pleasures. The death is the other side of the life. So this approach appears as a significant quality of Farhat Parveen’s fictions. The philosophy of death appears as a teacher of ethics in her works. Death is the teacher which forces life to bow down before the unseen power.
Analyzing the fiction works of Farhat Parveen I am of the openion that she is a true writer who has her own approach in fiction writing. She has started writing fiction after 90s and soon she has become a known figure in the history of South Asian fictions[urdu]. She has a post-modern approach in all her writings, she gives a real touch of truthfullness to her fictions. Her fictions are not meant to see the life on its surface but to plunge into its depth and draw some new dimensions in undrstanding the human universe. Moreover, she has a natural aptitude of writing. She has used narratives style of telling stories and has drawn pictures form the surroundings which are hidden from our eyes. She has escaped from vagueness and ambiguity in her writings. Her fictions are as clear as the picture of life itself. By her continuing creative efforts in writings fictions, she has become an established fiction writer of her age. We are expecting some more masterpieces from her which may draw attention of the big writers and critics in the world and can place her at the higher rank in the history of South Asian literature[urdu]. ************
It can be Fiction or Nonfiction, as long as the setting is a real place and the time is in the past. The book has to be at least 300 pages long. If it’s a lot more pages than that, im fine. I’m a total bookworm.