A comparison between 15 private sector banks operating in the country and 25 public sector banks (PSBs) shows that private sector banks performed better in terms of growth of investment in 2006-07.
In the case of private sector banks, investment at the aggregate level showed a significant increase during 2006-07, against that of 2005-06, while PSBs showed a marginal increase. The total investment of 15 private sector banks increased by 21.9% to Rs 2,03,387 crore during 2006-07 from Rs 1,66,865 crore during 2005-06. But the share of investment to total assets decreased from 31.71% to 28.79% during the same period. This was probably due to the decline in investment in debentures/bonds by most of the banks during the year.
For instance, the J&K Bank invested only Rs 951 crore in debentures/bonds during 2006-07 as against Rs 1,762 crore during 2005-06. Likewise, ING Vysya Bank invested only Rs 295 crore during 2006-07 as against Rs 419 crore during 2005-06.
The share of investments in various instruments was as follows: in company shares Rs 2,895 crore (1.42%); in units Rs 582 crore (0.29%), in debentures/bonds Rs 20,806 crore (10.23%) and in government securities Rs 2,03,387 crore (74.24%).
But in 2005-06, these private banks invested Rs 2,841 crore (1.7%) in company shares, Rs 529 crore in units (0.32%), Rs 22,121 crore in debentures/bonds (13.25%) and Rs 1,18,848 crore in government securities (71.22%). Thus, it is evident that private banks are keener on investing in government securities rather than company shares, units and debentures/bonds.
Five private sector banks recorded more than 40% growth in investments during 2006-07. These were Kotak Mahindra Bank (140.3%), Yes Bank (127.6%), Centurion Bank (57.9%), Bank Of Rajasthan (41.9%) and DCB (41.3%).On the other hand, the total investment of 25 PSBs increased by only 5.1% to Rs 6,32,205 crore during 2006-07 from Rs 6,01,715 crore during 2005-06. The share of investment to total assets decreased from 31.39% to 27.24%.
