IBEF印度银行业分析英文20181037页1mb

Summary of the Indian Banking Sector

Core Content

The Indian banking sector has experienced significant growth and transformation over the years, driven by economic development, technological advancements, and government initiatives aimed at financial inclusion. Key metrics include robust asset growth, increasing lending and deposit volumes, and the expansion of digital banking services.

Main Trends and Developments

• Asset Growth:
  The total value of public sector bank assets increased to US$1.56 trillion in FY18, up from US$1.52 trillion in FY17. The overall banking sector assets reached US$2.22 trillion in FY18, with public sector banks accounting for over 70% of total assets.

  • Private sector banks grew at a CAGR of 12.68% during FY13–18, while foreign banks grew at 4.69% during FY13–17.

• Lending and Deposits:

  • Total lending in the sector grew at a CAGR of 10.94% from FY07–18.
  • Total deposits grew at a CAGR of 11.66% during the same period and reached US$1.6 trillion by FY17.
  • As of Q1 FY19, total deposits stood at US$1.716 trillion.

• ATM Penetration:

  • As of August 2018, India had 213,004 ATMs, and the number is expected to increase to 407,000 by 2021.
  • The IMPS system is the only system in India at level 5 in the Faster Payments Innovation Index (FPII), showing rapid digital payment growth.

• Digital Lending:

  • Digital lending in India reached US$75 billion in FY18 and is projected to grow to US$1 trillion by FY2023 due to a five-fold increase in digital disbursements.

• Financial Inclusion:

  • The Pradhan Mantri Jan Dhan Yojana (PMJDY) has been pivotal in expanding financial access, with 328.8 million accounts opened as of September 2018.
  • India Post Payments Bank (IPPB) was launched in September 2018 to increase financial inclusion, opening branches in 650 districts.

• Technology Adoption:

  • Banks are increasingly adopting mobile and internet banking to improve operational efficiency.
  • SBI Digi Bank and Keya (India’s first integrated voicebot) are examples of technological innovation.
  • KYC standards have been mandated to prevent money laundering, with a focus on simplification and accessibility.

• Rural Banking:

  • Rural tele-density reached 58.45% in July 2018, enabling the expansion of mobile banking solutions.
  • 51.4% of farm households in India lack access to credit, making bank credit a viable alternative.
  • The Mudra scheme provided Rs 6 trillion (US$93 billion) in loans to 120 million beneficiaries in 2018.

• Regulatory and Policy Support:

  • The Banking Regulation (Amendment) Bill 2017 empowers the RBI to manage NPAs more effectively.
  • The Insolvency and Bankruptcy Code (Amendment) Ordinance 2017 is expected to strengthen the banking sector.
  • Common Service Centers (CSC) are planned to offer banking services, enhancing rural access.

Key Industry Organizations

• Indian Banks' Association (IBA):
  • Headquarters: World Trade Centre, Mumbai
  • Email: webmaster@iba.org.in

Useful Information

• Glossary:

  • ATM: Automated Teller Machine
  • CAGR: Compound Annual Growth Rate
  • FY: Financial Year (April to March)
  • GDP: Gross Domestic Product
  • INR: Indian Rupee
  • KYC: Know Your Customer
  • NIM: Net Interest Margin
  • NPA: Non-Performing Assets
  • RBI: Reserve Bank of India
  • US$: US Dollar

• Exchange Rates (Fiscal Year):

  Year	INR Equivalent of one US$
  2004–05	44.95
  2005–06	44.28
  2006–07	45.29
  2007–08	40.24
  2008–09	45.91
  2009–10	47.42
  2010–11	45.58
  2011–12	47.95
  2012–13	54.45
  2013–14	60.50
  2014–15	61.15
  2015–16	65.46
  2016–17	67.09
  2017–18	64.45

Key Growth Drivers and Opportunities

• Economic and Demographic Factors:

  • India's working-age population is expected to grow, increasing demand for banking services.
  • Rising per capita income and disposable income are driving the demand for personal and housing finance.

• Government Initiatives:

  • PMJDY and IPPB are key initiatives to improve financial inclusion.
  • Atal Pension Yojana provides a fixed pension of up to Rs 5,000 (US$74.58) to subscribers at age 60.
  • Pradhan Mantri Suraksha Bima Yojana and Pradhan Mantri Jeevan Jyoti Bima Yojana offer insurance coverage to low-income groups.

• M&A and Investment Activities:

  • Mergers and acquisitions in the banking and NBFC sectors increased in 2017.
  • The largest merger of 2017 was between IndusInd Bank and Bharat Financial Inclusion Limited, valued at US$2.4 billion.

Conclusion

The Indian banking sector is evolving rapidly with a focus on technology, financial inclusion, and market expansion. With a growing working-age population, rising disposable income, and supportive government policies, the sector is well-positioned for sustainable growth and innovation. Digital banking and mobile solutions are playing a crucial role in reaching the unbanked population, especially in rural areas.