Statistics Project Data: 2012-13

1. Business Statistics Project Report
Analysing and Forecasting the Impact of
Green Initiatives on the Operating Profits
of Banks
Section A Group 2
Abhishek Verma 3A
Akansha Kumari 4A
Devansh Doshi 16A
Manoj Kumar Yadav 25A
Shubham Jain 47A
Thomas Chandy 51A

2. Contents
Title Page No.
1. Introduction…………………………………………………………………………………………… 1
2. Key Statistics………………………………………………………………………………………… 2
3. Recent Developments…………………………………………………………………………… 4
4. Government Initiatives and the Road Ahead…………….………………………… 5
5. Mobile Banking……………………………………………………………………………………… 6
6. Green Banking & Other Green Initiatives in Banking. ………………………. 7
7. Analysis of the Impact of Green Initiatives……………….………………………… 9
8. Forecasting using Exponential Smoothing…………………………………………… 15
References

3. Page 1
Chapter 1
Introduction
As per July 2013, India’s banking industry stands at Rs 77 trillion (US$ 1.30 trillion) and
is well at par with global standards and norms. Prudent practises and conventional
framework adopted by the regulator, Reserve Bank of India (RBI), have insulated Indian
banks from the global financial crisis.
The country has 87 scheduled commercial banks with deposits worth Rs.71.6
trillion (US$ 1.21 trillion) as on 31 May, 2013. Of this, 26 are public sector banks, which
control over 70 per cent of India’s banking sector, 20 are private banks and 41 are
foreign banks. Of the total, 41 banks are listed with a total market capitalisation of
Rs.9.35 trillion (US$ 158.16 billion) as per the recent statistics.
[1]
Figure 1.1: The Structure of the Indian Banking Industry

4. Page 2
Chapter 2
Key Statistics
“Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks –
December 2012” provides information on aggregate deposits and gross bank credit of
Scheduled Commercial Banks (SCBs) as on December 28, 2012 based on branch-wise
data received from all SCBs (including Regional Rural Banks) through Basic Statistical
Return (BSR)-7.
The number of banked centres of SCBs stood at 37,530 covering 101,567 offices
of SCBs. Of these centres, 29,079 were single office centres and 72 centres had 100 or
more bank offices.
The growth (yoy) in aggregate deposits at 11.3 per cent in December 2012 was
lower as compared with 13.6 per cent in September 2012 as well as with 17.3 per cent
a year ago. Population group-wise, aggregate deposits of rural, semi-urban, urban and
metropolitan branches grew by 16.0 per cent, 16.7 per cent, 16.0 per cent and 7.5 per
cent, respectively in December 2012.
The growth in gross bank credit at 14.7 per cent in December 2012 was lower
than 15.1 per cent in September 2012. The growth in gross bank credit extended by
rural branches in December 2012 was influenced by shifting of some large credit
accounts from metropolitan to rural branches. Adjusted for such large accounts, growth
in gross bank credit for rural and metropolitan branches stood at 13.6 per cent and
13.9 per cent, respectively. Growth in gross bank credit of semi-urban and urban
branches was at 21.7 per cent and 14.2 per cent, respectively.
The top hundred centres, arranged according to the size of deposits accounted for
68.0 per cent of the aggregate deposits and the top hundred centres arranged
according to the size of gross bank credit accounted for 77.1 per cent of gross bank
credit.
Nationalised Banks accounted for 51.5 per cent of the aggregate deposits, while
State Bank of India and its Associates accounted for 22.5 per cent. The share of New
Private Sector Banks, Old Private Sector Banks, Foreign Banks, and Regional Rural
Banks in aggregate deposits was 13.8 per cent, 5.0 per cent, 4.4 per cent and 2.9 per
cent, respectively. Nationalised Banks accounted for the highest share of 49.9 per cent
in gross bank credit followed by State Bank of India and its Associates (22.6 per cent)
and New Private Sector Banks (14.8 per cent). Foreign Banks, Old Private Sector Banks
and Regional Rural Banks had relatively lower shares in the gross bank credit at 5.1 per
cent, 4.9 per cent and 2.6 per cent, respectively.

5. Page 3
The All-India credit-deposit (C-D) ratio of all SCBs stood at 77.7 per cent in
December 2012. Among the States/Union Territories, the highest C-D ratio was
observed in Tamil Nadu (124.2 per cent) followed by Chandigarh (123.6 per cent) and
Andhra Pradesh (112.6 per cent). At the bank group level, C-D ratios of Foreign Banks
(91.4 per cent), New Private Sector Banks (83.6 per cent), and SBI and its Associates
(78.2 per cent) were higher than the all-India average.
The distribution of the offices of SCBs by size of deposits showed that offices with
deposits of Rs.100 million or more accounted for 70.3 per cent of the bank offices, 97.8
per cent of aggregate deposits and 94.7 per cent of gross bank credit. The offices with
outstanding gross bank credit of Rs.100 million or more accounted for 48.4 per cent of
the offices, 80.0 per cent of deposits and 95.7 per cent of gross bank credit.
[2]
India's foreign exchange (forex) reserves stood at US$ 280.19 billion for the week
ended July 12, 2013, according to data released by the central bank. The value of
foreign currency assets (FCA) - the biggest component of the forex reserves – stood at
US$ 252.14 billion, according to the weekly statistical supplement released by the RBI.
The number of mobile banking transactions doubled to 5.6 million in January 2013
from 2.8 million in January 2012. The value of these transactions increased three-times
to Rs 625 crore (US$ 105.73 million) during the month from Rs 191 crore (US$ 32.31
million) in the corresponding month last year.
Moreover, non-resident Indians (NRIs) parked deposits aggregating US$ 14.18
billion in the financial year ended March 2013, depicting an increase of 19 per cent over
the previous year.
[3]

6. Page 4
Chapter 3
Recent Developments
India's leading infrastructure development and finance company Infrastructure Leasing
& Financial Services Limited (IL&FS), has inked a Memorandum of Understanding (MoU)
with Industrial and Commercial Bank of China (Asia) Limited (ICBC (Asia)), for mutual
cooperation in infrastructure project development services and financial services related
thereto.
The agreement envisages a scope of cooperation between the two financial
entities for providing infrastructure project development services, including financial
services relating thereto, trade, corporate banking, investment banking and treasury
related services, debt raising, advisory and other form of permissible economic
cooperation for such projects across Northern and Eastern Asia and is expected to
facilitate more business opportunities for both the institutions in these geographies.
Meanwhile, Standard Chartered Bank has announced that it will buy US-based
Morgan Stanley’s domestic private wealth management business. The deal, to be
completed by the end of 2013, would boost Standard Chartered’s private wealth assets
under management by 25 per cent or about US$ 750 million.
Marking another milestone in achieving financial inclusion, Vodafone India and
ICICI Bank have partnered to launch a mobile money transfer and payment service, M-
Pesa. The service will allow customers to transfer money to any mobile phone in India,
remit funds to bank accounts, deposit and withdraw cash from designated outlets, pay
utility bills, and shop at select merchant establishments.
The new service will initially be offered in West Bengal, Bihar and Jharkhand
through 8,300 authorised agents. It will be made available across India by 2014-15.
Public sector lender SBI intends to make a strong position in refinance market in
2013. The bank offers lowest lending rates for buying homes. The fast growing market
of ‘home loans transferred from other banks’ consists 25 per cent of the total home
loans disbursed by the bank in FY13. SBI made Rs 30,000 crore (US$ 5.08 billion) of
home loans in 2012-13.
Meanwhile, US-based Customers Bancorp Inc (CUBI) has plans to infuse US$ 51
million in multiple securities of Religare Enterprises Ltd. Religare is currently aspiring for
a banking licence to enter the banking industry.
The investments will take place through a combination of primary and secondary
market transactions.
[4]

7. Page 5
Chapter 4
Government Initiatives and the Road Ahead
India’s central bank is about to propose fundamental changes in the structure of Indian
banking industry. The suggestions include consolidation of some large banks to create
two-three global ones, setting up of smaller banks, separate licenses for specific
banking operations instead of a single universal one, continuous licensing for new banks
and conversion of some urban cooperative banks into full-fledged commercial banks.
Also, the RBI has, for the time being, relaxed the norm that stipulates non-
banking finance companies (NBFCs) to have a minimum gap of six months between two
non-convertible debentures (NCDs) issues. The move is aimed at streamlining the
process of moving into a more robust asset-liability management framework in a non-
disruptive manner.
In order to boost retail participation in sovereign debt, RBI had allowed direct
access to bond holders in the Annual Monetary and Credit Policy for 2012-13. To further
enhance the participation, it has launched the web-based platform at www.ndsind.com
which is being supported and run by the Clearing Corporation of India Limited (CCIL).
Retail participants can now manage their Government bond holdings directly and can
also initiate trade in the secondary market through the web portal. Currently, banks and
financial institutions are the major investors in Government debt.
Furthermore, in order to ensure expansion of ATMs in smaller cities across India,
RBI has issued final guidelines allowing non-bank entities to set-up, own and operate
ATM.
RBI has also made things easier for customers who change jobs or locations.
Previously it was difficult for them to shift their bank account to the new location as
they were asked to open a fresh account or undergo the full know your customer (KYC)
process again. RBI has now made it compulsory for banks to allow easy transfer of
accounts from one branch to another by having a central customer ID. It would
facilitate portability of accounts and ensure that all customer information is centralised.
Over the past few years, Indian banking system has majorly went revamp and
modernisation. The new infrastructure adopted by the banking system is mainly
comprised of information technology (IT) products and services.
Indian banking and securities companies will spend around US$ 422 billion on IT
products and services in 2013. That will imply a 13 per cent rise from Rs 37,300 crore
(US$ 6.31 billion) spent in 2012. IT services is the largest overall spending category at
Rs 13,200 crore (US$ 2.23 billion) in 2013. This ensures that IT service providers lay a
strong focus on the financial services sector, according to a study by research and
analyst firm Gartner.
[5]

8. Page 6
Chapter 5
Mobile Banking
After the success of online banking, mobile banking is the next revolutionary step which
has attracted huge attention from all over the country Mobile banking can perform all
the banking functions such as money transfer, credit card payment, bill payment,
account updates and other transactions The banking industry averages about 3 lakh
transactions per day through mobile banking and most big banks have seen 100%
growth in mobile banking with more services likely to be introduced in the near future
The leading banks in the space are ICICI Bank, HDFC and SBI. Some of the other key
players that will join the race in the future include Axis Bank, Syndicate Bank, Canara
Bank and Bank of Baroda Many customer segments are clearly getting comfortable with
using mobile banking. It is particularly true of the Generation-Y group (18-32-year olds)
who are three times more likely to adopt mobile banking than older users
Overall the growth in mobile banking that has taken place in the country till date,
though at a rapid pace, is yet to reach the critical mass that will enable it to deliver on
its promise of taking banking, including payment services, at a cheaper, secure and
seamless manner to the existing and potential customers. “Banks providing local offers
through their mobile banking apps can be a huge value addition and in the next two
years banks are expected to leverage on this trend” –A Krishna Kumar, Managing
Director, Group Executive – National Banking, SBI
Figure 5.1: Key Mobile Banking Services
(Source: PwC)

9. Page 7
Chapter 6
Green Banking & Other Green Initiatives in Banking
While the banking industry is undergoing computerization, networking and
offering of online banking is naturally gaining momentum. Besides several
benefits of computerization like speed, accuracy, ambience, efficient
handling of sizeable business etc., there is a factor like paperless business
resulting in waste management, eco friendliness and pollution control.
Banks can do much more to help the environment than just
promote online banking. A truly green bank can reduce their carbon
footprint by building more efficient branches implementing more energy-
efficient operational procedures, offering transportation services for their
employees and carefully screening their lending in environment-sensitive
industries. Banks can also support eco-friendly groups, offer green lending
and raise money for local environment initiatives. Banks that go to these
significant lengths to be eco-friendly are a little more difficult to find than
the banks that claim to be green by merely offering online services. Banks
that offer rate incentives on CDs, money market accounts, online savings
accounts and checking accounts for online banking also help the green
banking cause by rewarding online banking customers. It takes a little bit of
an incentive to convert some people away from paper statements and
branch banking.
Pravakar Sahoo and Bibhu Prasad Nayak (2008) have stated that
since banking sector is one of the major stake holders in the Industrial
sector, it can find itself faced with credit risk and liability risks. Further,
environmental impact might affect the quality of assets and also rate of
return of banks in the long-run. Thus the banks should go green and play a
pro-active role to take environmental and ecological aspects as part of their
lending principle, which would force industries to go for mandated
investment for environmental management, use of appropriate technologies
and management systems. The authors suggested that possible policy
measures and initiative to promote green banking in India.
Suresh Chandra Bihari (2011) explained that Green Banking
involves promoting environmental and social responsibility. It starts with the
aim of protecting the environment where banks consider before financing a
project whether it is environment friendly and has any implications for the
future. A company will be awarded a loan only when all the environmental
safety standards are followed.
Nigamananda Biswas (2011) interpreted Green Banking as
combining operational improvements, technology and changing client habits
in market place. Adoption of greener banking practices will not only be
useful for environment, but also benefit in greater operational efficiencies, a

10. Page 8
lower vulnerability to manual errors and fraud, and cost reductions in
banking activities. Alice Mani (2011) indicated that as Socially Responsible
Corporate Citizens (SRCC), banks have a major role and responsibility in
supplementing governmental efforts towards substantial reduction in carbon
emission. Bank’s participation in sustainable development takes the form of
Green Banking.
Indian Banks can adopt green banking as business model for
sustainable banking. Some of following strategies little reflected in their
banking business must be adopted by banks.
1. Carbon Credit Business: Under the Kyoto Protocol, all nations must
reduce greenhouse gases emission and reduce carbon to protect our
environment. These emissions must be certified by Certified Emission
Reductions (CERs), commonly known as carbon credit. The Indian Bank
may start this business as in London the business of carbon credit is
around 30 billion Euro.
2. Green Banking Financial Products: Banks can develop innovative
green based products or may offer green loans on low rate of interest.
As Housing and Car loan segments are the main portfolio of all banks so
they adopt green loans facility. SME loans on the basis of National
Environmental Policy and its certification ISO 14000
3. Green Mortgages: Green mortgages allow home buyers to add as
much as an additional 15% of the price of your house into your loan for
upgrades including energy-efficient windows, solar panels, or water
heaters
4. Green Credit Cards: A green credit card allows cardholders to earn
rewards or points which can be redeemed for contributions to eco-
friendly charitable organizations. These cards offer an excellent incentive
for consumers to use their green card for their expensive purchases
5. Paperless Banking: All banks are shifting on CBS or ATM platform, also
providing electronic banking products and services. So there is ample
scope for banks to adopt paperless or lee-paper banking. Private and
foreign banks are using electronics for their office correspondence but
still in PSU banks they are using huge paper quantity
6. Energy Consciousness: Banks have to install energy efficient
equipment in their office, use CFL and avoid wrong utilization of these
equipment. Banks have to transform this green banking in Hardware,
waste Management in office, Energy efficient Technology products.
Banks can Donate Energy Saving Equipment to school, hospitals etc.
7. Using Mass Transportations Systems: Banks have to provide
common transport for groups of officials posted at one office
8. Green Buildings: Banks have their residential houses, branches or
ATMs, so bank may adopt green building to protect our environment
9. Plantation: Most of the banks are conducting plantation program in the
rainy season to save our environment. They plant trees, grass etc. at
local gardens, schools or colleges and shows that banks are very careful
about environment.
[6]

11. Page 9
Chapter 7
Analysis of the Impact of Green Initiatives
In analysing the impact of one of the key green initiative of e-
Governance, volume of transactions is a very important consideration
over the Value of the transactions since it is volume of transaction which
gives clarity on how effectively the initiative is working towards reducing
the consumption of papers in day-to-day functioning of the banks. Also,
the banks need not have to trade off their operating profits while
following the green initiative practices since, the implementation of Green
practices are actually contributing positively to the operating profits of the
banks. Let us analyse how the initiatives are impacting the business
across the banks – Nationalized Banks, Private Banks and Foreign Banks.
Here State bank group haven’t been considered for the analysis since the
State Bank group falls under outlier category due to its sheer volume of
business linked to the huge number of branches with very high market
penetration.
In order to understand the relationship between the operating profit
and the volume of transactions from RTGS, NEFT, Mobile banking and
ATM, multiple regression could be used considering the operating profit in
Rs.Crore as dependent variable and the other variables as independent
variables. Ideally the transaction value would be used as independent
variables from the business perspective but the volume of the
transactions need to be used for analysing the impact of green initiative.
The data has been taken from the RBI website. Refer references 8, 9, and
10 for the links. The data is for the fiscal year 2012-13.
(A) Nationalized Banks
ATM Credit
Card
Transactions
RGTS
(Outwar
ds)
Mobile
Transactions
NEFT
(Outwa
rds)
Operating
Profit in
INR Lakhs
Allahabad
Bank
0 2280 14656 3320180 376392
Andhra Bank 91667 76740 168453 2111342 276723
Bank of
Baroda
13011 1445 368843 5364281 907378
Bank of India 109547 7116 7642 4452515 274900
Bank of
Maharashtra
42445 1445 2430 1897095 214871
Canara Bank 105947 58484 68542 5743693 599900
Central Bank
of India
3128 95402 4027 3297572 3172570
Corporation
Bank
14947 101914 48554 3791892 303701

12. Page 10
Dena Bank 0 41427 1260 947656 173886
Indian Bank 29081 81372 25241 3577430 306063
Indian
Overseas
Bank
33684 111 10873 6310218 381701
Oriental Bank
of Commerce
0 134121 22195 2422114 369069
Punjab and
Sind Bank
0 2058 49278 216237 93885
Punjab
National Bank
25744 265346 103984 7162681 1090737
Syndicate
Bank
21414 7953 459476 2955310 344958
UCO Bank 0 5562933 61649 1694578 335708
Union Bank
of India
9759 61922 61649 7074423 558270
Vijaya Bank 47158 5562933 51597 1447351 112230
Model Summary
Model R R
Square
Adjusted R
Square
Std. Error of the
Estimate
Change Statistics
R Square
Change
F
Change
df1 df2 Sig. F
Change
1 .364
a
.132 -.135 7.48884E5 .132 .496 4 13 .739
ANOVA
Model Sum of
Squares
df Mean Square F Sig.
1 Regression 1.113E12 4 2.782E11 .496 .739
a
Residual 7.291E12 13 5.608E11
Total 8.404E12 17
Coefficients
Model Unstandardized
Coefficients
Standardized
Coefficients
t Sig. 95% Confidence Interval for
B
B Std. Error Beta Lower
Bound
Upper Bound
1 (Constant) 401984.919 419785.964 .958 .356 -504907.521 1308877.359
RGTS -.033 .108 -.084 -.307 .764 -.267 .201
NEFT .097 .094 .287 1.024 .325 -.107 .300
Mobile -.328 1.434 -.060 -.229 .822 -3.426 2.770
ATM -4.749 5.095 -.246 -.932 .368 -15.756 6.259

13. Page 11
Analysis:
A low R square value indicates that there is weak correlation between
operating profit and RGTS, NEFT, ATM credit cards, and mobile banking.
The independent variable can explain a meagre 13.2% variation in the
dependent variable.
Anova test indicates that there is no statistically significant
relationship between profit and green initiatives. The null hypothesis is
rejected outright.
The standardized coefficients indicate low and negative correlation
between profits and green initiatives such as mobile banking and ATM
credit cards.
A near zero correlation of operating profits and mobile banking
indicates that mobile banking is yet to contribute to profits. This can be
perhaps due to low penetration of mobile phones and also their low usage
as an banking medium.
Most nationalized banks tend to have a rural bias when it comes to
areas of operations. They are guided by the governments to increase
reach in rural areas. The Indian attitude towards debt is inclined towards
avoidance. And hence, acceptance of credit cards is lower in rural areas.
This impacts the profits accrued due to credit cards.
(B) Private Banks
ATM Credit
Card
Transactions
RGTS
(Outwards)
transaction
Mobile
Transactions
NEFT
(Outwards)
transactions
Operating
Profit in
INR Lakhs
Catholic
Syrian Bank
Ltd.
0 8584 832 285087 3275
City Union
Bank Ltd
0 355 28901 2155591 37420
Dhanalaxmi
Bank Ltd.
80 41 6192 426581 5140
Federal
Bank
Limited
0 41 245777 3976239 145956
ING Vysya
Bank
0 111 37276 4485230 99270
Karnataka
Bank Ltd.
0 2055 98018 988008 63533
Karur
Vysya Bank
0 1689 34754 1445523 84883

14. Page 12
Ltd
Lakshmi
Vilas Bank
Ltd.
0 50784 5319 642258 25115
Ratnakar
Bank Ltd.
0 20 101061 94666 9253
South
Indian
Bank Ltd
0 437 271074 1326816 88848
Tamilnadu
Mercantile
Bank Ltd.
0 6637 31802 813178 69000
Developme
nt Credit
Bank Ltd.
1225 4 6192 426581 12600
HDFC Bank
Ltd.
896620 26 841816 57253380 15440
ICICI Bank
Ltd.
96980 265656 6554067 39608929 1319900
IndusInd
Bank Ltd
5805 81372 37276 4870557 191289
Kotak
Mahindra
Bank Ltd
31325 96964 5319 7550902 332734
Axis Bank
Ltd.
97402 312236 4410330 34075642 930300
Model Summary
Model R R
Square
Adjusted R
Square
Std. Error of the
Estimate
Change Statistics
R Square
Change
F
Change
df1 df2 Sig. F
Change
1 .990
a
.980 .974 57002.08786 .980 160.362 4 13 .000
ANOVA
Model Sum of
Squares
df Mean Square F Sig.
1 Regression 2.084E12 4 5.211E11 160.362 .000
Residual 4.224E10 13 3.249E9
Total 2.126E12 17
Coefficients
Model Unstandardized Coefficients Standardized Coefficients t Sig. 95% Confidence Interval for B
B Std. Error Beta Lower Bound Upper Bound
1 (Constant) 17126.890 19336.829 .886 .392 -24647.789 58901.569
RGTS .026 .011 .096 2.320 .037 .002 .050
NEFT .032 .007 1.505 4.606 .000 .017 .047
Mobile .025 .038 .125 .656 .523 -.057 .106

15. Page 13
ATM -2.072 .405 -1.230 -5.119 .000 -2.946 -1.197
Analysis:
A high R square value indicates that there is strong correlation
between operating profit and RGTS, NEFT, ATM credit cards, and mobile
banking. The independent variables can explain 98% variation in the
dependent variable.
Anova test indicates that there is statistically significant relationship
between profit and green initiatives. The null hypothesis is not rejected
outright.
The standardized coefficient of mobile banking is positive. This
indicates that mobile banking is positively contributing to operating
profits.
The standardized coefficient for ATM credit card transactions is
negative. This indicates that credit card ATM banking service isn’t
positively contributing to profits.
We can see that there are very few banks that provide credit card
ATM services. If we observe similar data for debit card transactions at the
RBI website, we will find that debit card transactions are huge in volumes.
This confirms that people largely prefer debit over credit cards. There are
numerous reasons for it. The private banks are really notorious about late
charges, other processing fees, and high rate of interests in case of delays
in payments. Also, the general attitude towards debt is not favourable.
People would rather spend their own money rather than money on credit.
Comparison of Nationalized and Private Sector banks: Legacy
Costs
Data shows that private banks that propped up after liberalization
already started building up their banking services using technology and
ATMs. Hence, they didn’t have to make a transition into technology. On
the other hand, you have the nationalized banks that were under
government control for a long time. Also, they had recruited a lot of
people. So, they already have to bear the burden of huge salary costs.
And then a transition to technology in general added to a lot of costs.
They also didn’t have the liberty to lay off staff. Hence, the workforce
increased. This increased the operational costs, and hence affected the

16. Page 14
operational profits. Hence, nationalized banks have to bear the brunt of
this legacy costs. The reference to legacy cost is in terms of continuing to
pay employees irrespective of their need at work.
Also, there is a general perception that makes people feel that
private banks connect more with their tech savvy consumers and they are
better suited for its needs.

17. Page 15
Chapter 8
Forecasting using Exponential Smoothing
Exponential smoothing is a technique that can be applied to time series
data, either to produce smoothed data for presentation, or to make
forecasts. The time series data themselves are a sequence of
observations. The observed phenomenon may be an essentially random
process, or it may be an orderly, but noisy, process. Whereas in the
simple moving average the past observations are weighted equally,
exponential smoothing assigns exponentially decreasing weights over
time. Also, as the name suggests it smoothens the data over time,
removes any major cyclic variations and random spikes and dips.
Exponential smoothing is commonly applied to financial market and
economic data, but it can be used with any discrete set of repeated
measurements. The raw data sequence is often represented by {xt}, and
the output of the exponential smoothing algorithm is commonly written as
{st}, which may be regarded as a best estimate of what the next value of
x will be. When the sequence of observations begins at time t = 0, the
simplest form of exponential smoothing is given by the formulae:
Where α is the smoothing factor, and 0 < α < 1.
Allahabad Bank has been considered for the demonstration purpose
for forecasting the transactions that can be expected for the key green
initiatives – eGovernance. Here based on the past trends in the monthly
data, volumetric data for the month of June has been forecasted for NEFT,
RTGS, Mobile transactions, and ATM Debit card transactions.
Exponential Smoothing method has been followed for the
forecasting with a smoothing coefficient of 0.4. A low coefficient is chosen
to remove the random spikes and dips. This is in line with the service
sector industries especially banking where the industry scenario is not
that dynamic and a lot of future issues are dependent on the past
performances.
The data is from December 2012 to May 2013.

18. Page 16
The same forecasting method could be applied to any banks and
this forecasting method helps in scheduling the operational process well in
advance.
Table 8.1: Forecasting of ATM Debit Card and NEFT transactions
ATM Debit Card Transactions NEFT (Outwards)
Original Forecasted Original Forecasted
December 2617816 2617816 328658 328658
January 2727510 2661693.6 372594 346232
February 2527755 2608118.16 347737 346834
March 3089665 2800736.9 468087 395335
April 3028020 2891650.13 319527 365012
May 3039185 2950664.08 422001 387808
June(F) 2986072.45 401485
Figure 8.1: Forecasting ATM Debit Card Transactions using exponential smoothing (α=0.4)
0
500000
1000000
1500000
2000000
2500000
3000000
3500000
VolumeofTransactons
ATM Debit Card Transactions
Original
Forecasted

19. Page 17
Figure 8.2: Forecasting NEFT Transactions using exponential smoothing (α=0.4)
Table 8.2: Forecasting of RGTS and Mobile Transactions
RGTS (Outwards) Mobile Transactions
Original Forecasted Original Forecasted
December 80863 80863 1466 1466
January 85664 82783.4 1344 1417.2
February 78692 81146.84 1272 1359.12
March 101038 89103.304 1524 1425.072
April 92975 90651.982 1295 1373.043
May 96790 93107.189 1167 1290.626
June(F) 94580.314 1241.176
Figure 8.3: Forecasting ATM Debit Card Transactions using exponential smoothing (α=0.4)
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
500000
VolumeofTransactions NEFT (Outwards)
Original
Forecasted
0
20000
40000
60000
80000
100000
120000
VolumeofTransactions
RGTS (Outwards)
Original
Forecasted

20. Page 18
Figure 8.4: Forecasting ATM Debit Card Transactions using exponential smoothing (α=0.4)
0
200
400
600
800
1000
1200
1400
1600
1800
VolumeofTransactions Mobile Transactions
Original
Forecasted

21. Page 19
References
[1]
http://www.ibef.org/industry/banking-india.aspx
[2]
http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/HIGH
_02072013.pdf
[3]
http://www.dinodiacapital.com/pdfs/Indian%20Bankin
g%20Industry%20-
%20Rising%20Above%20the%20Waves,%20January%
202013.pdf
[4]
http://greenbankreport.com/
[5]
http://www.mbaskool.com/business-
articles/finance/899-banks-going-green.html
[6]
http://gogreenindia.co.in/special-reports.php
[7]
http://dbie.rbi.org.in/DBIE
[8]
http://www.rbi.org.in/scripts/NEFTView.aspx
[9]
http://www.rbi.org.in/scripts/ATMView.aspx
[10]
http://www.rbi.org.in/scripts/statistics.aspx