A tightening of money could, therefore, be likely during the busy season, as has already been indicated by the Reserve Bank governor.
The mitigating factor would be the higher rate of accretion to bank deposits, which may mean the severity of last year's squeeze is not repeated.
Establishment expenses: Banks may be going through a rough patch since liberalisation, but that does not seem to hold true for their establishment expenses, of which staff expenses constitute a major chunk. The table shows that establishment costs as a percentage of total income have increased sharply for almost all public sector banks, indicating the inability of these banks to rein in this important cost.
For SBI, the percentage of establishment expenses increased from 14.4 per cent in 1991-92 to 21.3 per cent during the previous year. For some of the sick banks, the ratio is even worse. Indian Bank, for example, had a ratio of 11.8 per cent in 1990-91, which went up to 21.4 per cent last fiscal. United Bank of India saw the ratio increasing from 20.6 per cent to 28.8 per cent during the same period.
There have been honourable exceptions, and these are the banks which have performed well. At Corporation Bank, the ratio declined from 16.9 per cent in 1991-92 to 12.3 per cent, and at the Oriental Bank of Commerce, the ratio fell from 13.5 per cent to 12.6 per cent.
The older private sector banks saw this ratio fall from 19.7 per cent to 14.2 per cent. For foreign banks, the ratio went up from 5 per cent to 12. 1 per cent, possibly reflecting the boom in financial sector salaries.
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Total income per employee at SBI increased from 4.9 lakh in 1991-92 to 5.3 lakh in 1994-95. For Bank of Baroda, the comparable figures are Rs 5.4 lakh and Rs 7.3 lakh. For the older private banks, total income per employee was an average of Rs 5.9 lakh in 1994-95. In comparison, the foreign banks had higher levels of income per employee, with Citibank's Rs 65.5 lakh, ANZ Grindlays' Rs 18.5 lakh and Hongkong Bank's Rs 22.3 lakh in 1994-95.
SBI: Figures culled from the Indian Banks Association's Indian Banking Review and IBA Bulletin show that SBI's share of total income of the banking sector has been declining. While SBI's total income constituted 27.6 per cent of total income of all banks in 1991-92, this declined to 24.6 per cent in 1993-94 and 1994-95, which again fell to 24.1 per cent last fiscal. As a percentage of total public sector bank income, SBI's total income fell from 31.7 per cent in 1991-92 to 29.3 per cent in 1995-96. The bank's share of profit, however, was far more than its share of income.
Colour-Chem
Sales growth at Colour-Chem has dipped marginally for the first quarter of the current fiscal. Net sales at Rs 66.31 crore were down 3.5 per cent compared with Rs 68.73 crore for the corresponding period of the previous year.
This performance has been mirrored in the markets' dwindling sentiment for the company's stock. The scrip has been on a continuos downward spiral since July 1996, when it was hovering around the Rs 3,100 level. Since then it plummeted to a 52-week low of Rs 2,110 in August 1996. A minor revival has taken the scrip now trading at Rs 2,200.
For the 12 months ended March 1996, sales revenues increased 16.35 per cent to Rs 303.68 crore. The company has barely managed to maintain its margins at the operational level, because of increased competition from imports. Besides, it has had to absorb steeper raw materials like acetic acid for its diketene-based intermediates.
For 1996-97, diversification into laminating adhesives for the packaging industry is unlikely to boost revenues. The closure of tanneries in southern and eastern parts of the country could also effect the demand for the leather chemicals, which does not augur well for the future. But there is a reason for cheer at the company's export front, with the European Commission introducing a revised generalised scheme of preferences (GSP). This should give Colour-Chem an additional access to newer export markets.