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Snapshot
Banking for $1.37 bn
Total Banking Assets of $2.16 Tn in FY21 with a CAGR was at 2.25%
Number of offline and online ATMs: ~214,000
Number of bank branches: ~158,400
Total Deposits: ~$ 1.6 Tn
Historically Indian banking has benefited from high savings rates and growth in savings as well as disposable income growth
The Banking industry in India has historically been one of the most stable systems globally, despite global upheavals. The government has consistently strived to promote financial inclusion through various initiatives targeted to bring the country’sunderbanked population under the banking gamut.
Personal Loan Origination to grow at 27% CAGR (FY21-26); Digital Lending to grow at ~48% CAGR
The Government of India has been supportive of the banking sector in the country especially on the financial inclusion agenda. A flagship program, the Pradhan Mantri Jan Dhan Yojana (PMJDY), was launched in August 2014 which aims to provide universal banking services to the unbanked by setting up bank accounts for them and issuing payment cards to all. Meanwhile, to respond to the impact of COVID-19, the government implemented various policies in order to aid the banking sector.
As a part of the Digital India initiative, the Govt. mandated an open API policy, known as India Stack, giving third-party providers access to the proprietary software for five key programs: Aadhaar (the Government’s biometric identity database), e–KYC, e–signing, privacy-protected data sharing and the UPI
For further information, please refer the FDI policy
Public sector banks
Private sector banks (PSUs)
Small Finance Bank
Foreign banks
Regional rural banks
India set to become the third-largest domestic banking sector by 2050
Number of Jan Dhan Yojana Bank accounts are over 450 Million
- Industry Scenario
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- POLICIES & SCHEMES
Industry Scenario
Bank accounts opened under GoI Pradhan Mantri Jan Dhan Yojana are over 450 Mn with deposits of ~$21.5 Bn in beneficiary accounts
Investments stood as the 2nd largest component in the assets side of the total banks’ balance sheets after loans and advances, driven primarily by Government securities. As of 2020, the capital adequacy amongst Indian banks remained above regulatory requirements with RBI also further relaxing the leverage ratio for banks to boost lending.
RBI has taken steps to enable mobile payments key enablers to growth, by removing the transaction limit of $745 and allowing banks to set their own limits. Recovery of stressed assets improved during 2019-20 through the IBC, 2016 and Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI) Act, 2002.
The Top 5 banks in India banking assets are ~$ 1.3 Tn: State Bank of India, ICICI Bank, Punjab National Bank, Bank of Baroda, and Bank of India
On an y/y basis, loans and advances were up by 6% in Q1 FY2022 suggesting a generally better lending activity compared to Q1 FY2021 which was at the height of the pandemic
Total Loans and Deposits are projected to grow at CAGRs of 8.77% and 8.48% respectively from 2020-2025 with Total Loans expected at ~ $ 4 Tn by 2025 and Deposits at $3.7 Tn
Gross bank credit by commercial banks was up by 6.7% in August 2021, after expanding by 5.6% in 2020/21, and 6.8% in 2019/20.
Lending to industry growing by 2.3% and to services up by 3.5%. Credit to infrastructure—a major segment of industrial credit—rose by 5.9%. (FY 2021)
Industries make up about 30% of the commercial banks' loan book, followed by personal loans (29%) and the services sector (27%) (June 2021)
Citibank (US) is the largest foreign-owned lender in India, followed by HSBC (UK), Standard Chartered (UK) and Deutsche Bank (Germany). In recent years, Singapore's DBS has been aggressive in expanding its presence in India.
GROWTH DRIVERS
Large consumption market
India will become the 3rd largest consumer economy by 2030, driven by a young population comprising 65% population below the age of 35 years
Rural Digitization
Digital adoption continues to be propelled by rural India – clocking an 8% YoY growth to 333 Mn internet users (37% of rural population). Rural consumption accounts for 45% of all data consumption in India. Now there are 7 Rural Internet Subscriber, for every 10 Urban Internet Subscribers.
Number of Smartphone Users
India already has the 2nd highest number of smartphone users globally, and is the 2nd largest Internet user market
Digital Push
Mobile banking internet banking, neo-banking and rise in digital products and solutions by private and Government of India support: 93% digital payments (by volume) done via mobile (2021) and over 1 Bn cards are in circulation
Industrial Land Bank Portal
GIS - based map displaying available infrastructure for setting up business operations in the state.
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