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Snapshot

Banking for $1.37 bn

Total Banking Assets of $2.33 tn, growing at a 6.64% CAGR from FY14-19

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’s underbanked population under the banking gamut.

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. However, India’s Supreme Court has recently ruled that Aadhaar is mandatory only for income tax returns (ITR) and allotment of the permanent account number (PAN).

Upto 74% FDI is allowed in Private banking and Public Sector.

For further information, please refer the FDI policy

  • Public sector banks

  • Private sector banks

  • Foreign banks

  • Regional rural banks

A

Largest microfinance market in the world

B

179 bank accounts opened in India every minute

C

India to become the third-largest domestic banking sector by 2050

Industry Scenario

Total Banking Assets of $2.32 tn, growing as a 6.64% CAGR from FY14-19

Indian Banking industry consists of 27 public sector banks, 21 private sector banks, 49 foreign banks, 56 regional rural banks, 1,562 urban cooperative banks and 94,384 rural cooperative banks. Public sector banks account for 61.21% of the total banking assets in FY19. In FY19, total assets in public and private banking sector were $1,422.97 bn and $741.79 bn, respectively.

Investments – the second-largest component in the assets side of banks’ balance sheets after loans and advances – picked up, mostly driven by government securities.

Further to this, during 2019-2020 (up to December 2019), capital adequacy remained above regulatory requirements in spite of the NPA ratio increasing. RBI relaxed the leverage ratio for banks to boost lending.

Moreover, 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.

Banks continued to post robust growth in retail loans in 2018-2019. Housing loans were supported by incentives for affordable housing such as the Pradhan Mantri Awas Yojana (PMAY) and the implementation of the Real Estate (Regulation and Development) Act (RERA). Furthermore, rationalisation of risk weights and provisioning on standard assets in certain categories of individual housing loans in June 2017 gave a fillip to the segment. Auto loans growth also edged up. 

Growth Drivers

  • Robust demand & incomes

    Increase in working population and growing disposable income will raise the demand for banking and related services

  • Digital Push

    Mobile banking, internet banking and ATM facilities

  • Policy support

    The industry has healthy regulatory oversight with the credible monetary policy by RBI

  • New banking licenses

    Post 2014, new banking licenses have been issued to 2 new private sector banks, 7 payment banks and 10 small finance banks.

Major Investors

Data On Map

Banking in India

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FAQ

Frequently
Asked Questions

Whether Banks are required to capture the details of ATMs in registration certificate as a ‘place of business’?

No. Banks are not required to provide the details of ATMs while applying for registration. For the purposes of registration, ATM on its own does not constitute a place of business, as defined in the CGST Act, 2017.

Is it necessary for banks/ insurers to report the details of exempt and non-GST supplies in Table 8 of GSTR-1?

Yes. In the absence of any specific exemption to the banks/ insurers, the information is required to be provided in the said table.

Is a “Bill of Supply” to be issued by a bank for exempt services like interest on loans and advances, inter-se sale or purchase of foreign currency amongst banks?

As per clause (c) of sub-section (3) of section 31 of the CGST Act, 2017 read with Rule 49 of the CGST Rules, 2017, there is a requirement for issuance of bill of supply for supply of exempt services by Banks. It may be noted, however, that there is no need to issue a separate bill of supply in case any invoice or document has already been issued in accordance with the provisions of any other law. Further, in view of the provisions contained in sub-rule (5) of rule 54 of the CGST Rules, 2017, banks may issue any other document in lieu of bill of supply.

Would services provided by banks to RBI be also taxable?

Yes. Services provided by banks to RBI would be taxable as these are not covered by any of the exemptions or excluded from the purview of GST under the CGST Act, 2017 or under the IGST Act, 2017.

For more information, click here.

Is interest on debt instruments exempt from GST?

Yes. As debt instruments such as debentures, bonds etc. are in the nature of loans, interest thereon will be exempt from GST.

For more information, click here.

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