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Company Profile

Located in Vadodara, Gujarat, Bank of Baroda is a government-owned public sector bank in India. After State Bank of India, it is the third-biggest public sector bank in India. The bank was established in the Gujarati princely state of Baroda on July 20, 1908 by Sayajirao Gaekwad III, the Maharaja of Baroda. Along with thirteen other significant Indian commercial banks, the Bank was nationalized by the Indian government in 1969 and was subsequently classified as a profitable public sector enterprise.

In anticipation of board approval, the Indian government proposed on September 17, 2018, to combine Dena Bank, Vijaya Bank, and Bank of Baroda, therefore forming the nation’s third-largest lender. The merger became operative on April 1st, 2019. Following the merger, State Bank of India and HDFC Bank are the two biggest banks in India, with Bank of Baroda coming in third position. Bank of Baroda declared in May 2019 that, in order to improve operational effectiveness and decrease duplication following the merger, it would either liquidate or rationalize the branches.

Banking Industry in India

•  The Reserve Bank of India (RBI) claims that the banking industry in India is adequately capitalized and subject to strict regulations. The Nation has significantly better financial and economic circumstances than any other developing Nation at present. Studies on credit, market, and liquidity risk indicate that Indian banks have fared well during the global financial crisis and are generally robust. 

•  New banking models, such as payments and small finance banks, have lately been introduced to the Indian banking sector. Through a number of initiatives, including the Pradhan Mantri Jan Dhan Yojana and Post Payment Banks, India has also concentrated on expanding the reach of the banking system in recent years. These kinds of programs, when paired with significant banking sector reforms like neo-banking, digital payments, the growth of Indian NBFCs, and fintech, have greatly improved India’s financial inclusion and have fuelled growth.

• By 2025, the Indian Fintech market is projected to be worth $150 billion USD. The world’s third-largest FinTech ecosystem is located in India. One of the Fintech markets with the highest global growth is India. Of the 25 countries, India’s digital payment system has advanced the most, and the only system ranked at level five on the Faster Payments Innovation Index (FPII) is the country’s Immediate Payment Service (IMPS). 

•   Twelve public sector banks, twenty-one private sector banks, forty-four foreign banks, and twelve small finance institutions make up the Indian financial system. The total number of micro-ATMs in India as of April 2024 was 17,36,972. In 2023, total assets in the public and private banking sectors were US$ 1686.70 billion and US$ 1016.39 billion, respectively. In 2023, assets of public sector banks accounted for 58.31% of the total banking assets (including public, private sector and foreign banks). The interest income of public banks reached US$ 102.4 billion in 2023. In 2023, interest income in the private banking sector reached US$ 70 billion.

•  According to RBI’s Scheduled Banks’ Statement, deposits of all scheduled banks collectively surged by a whopping Rs. 2.04 lakh crore (US$ 2,452 billion) as of FY24. According to the RBI, bank deposits stood at Rs.209.36 trillion (US$ 2507.62 billion) as of May 3, 2024.

•  The banking industry is anticipated to grow even more as a result of increased infrastructure spending, swift project delivery, and ongoing reforms. Due to the fact that these quickly expanding enterprises will need loans from banks, it appears that India’s banking industry is well-positioned for strong development. Technology progress has made online and mobile banking services more popular. Automation and artificial intelligence are proving to be of previously unheard-of value, and blockchain has spurred and will continue to spur innovation across the board in the commercial world. 

Company Perspective and Review

The Bank of Baroda has shown strong financial growth over the past five years, with significant increases in deposits, assets, and reserves. The bank’s capital adequacy ratios have improved, indicating better financial stability and regulatory compliance. Asset quality has notably improved, with decreased NPAs, reflecting effective risk management. The decrease in branches and employees suggests a strategic shift towards operational efficiency and cost management.

The substantial increase in net profit and EPS indicates

effective financial management and a strong performance despite rising expenditure. Payment of dividends suggests improved profitability and shareholder returns, reflecting strong financial performance.