A Comparative Analysis of Investment Patterns in Indian Public and Private Sector Banks

Banks mobilize deposits and employ these in their investment and lending activities for profitable purposes. Banks in India are required by regulation to invest a sizable proportion of their funds in specified securities to meet the requirements of Statutory Liquidity Ratio (SLR). Banks also invest their funds in non SLR securities as part of treasury operations or otherwise keeping in view their expertise, experience, business needs and overall asset composition. These SLR and non SLR investments are transacted in accordance with regulatory norms set by the Reserve Bank of India (RBI), the banking regulator in India and disclosed accordingly in the annual reports of the banks. Banks make investments both in domestic and overseas markets in suitable proportions. The non SLR investments are directed in a variety of instruments and disclosed in terms of issuer specific details as well as in securities through modes of private placements, unrated securities, below investment grade instruments and unlisted securities etc. Disclosure by banks in these classifications reflect on risk factor of concerned securities and soundness of banks’ judgment in investment decisions The paper analyses various nuances of investment pattern of Indian banks, in public and private sector.