Banking
Total banking assets in India is expected to cross US$ 28.5 trillion in FY25.

Indian Banking Industry Analysis

Latest update: January, 2016

Deposit growth has been steady

  • Total money supply increased at a CAGR of 11.14 per cent during FY06–16*
  • Between FY06–16*, narrow money supply (M1) rose at a CAGR of 7.69 per cent to US$ 392.8 billion, broad money supply (M2) increased at a CAGR of 6.49 per cent to US$ 395.3 billion and money supply (M3) grew at a CAGR of 11.14 per cent to US$ 1.8 trillion by the end of October’15
  • Time deposits with banks have shown highest average growth of 12.9 per cent during FY06–16*, and stood at US$ 1.44 trillion by the end of October’15

 

Last Updated: January, 2016

The Indian banking system consists of 26 public sector banks, 20 private sector banks, 43 foreign banks, 56 regional rural banks, 1,589 urban cooperative banks and 93,550 rural cooperative banks, in addition to cooperative credit institutions. The Indian banking sector’s assets reached US$ 1.8 trillion in FY14 from US$ 1.3 trillion in FY10, with 70 per cent of it being accounted by the public sector.

Total lending and deposits increased at a compound annual growth rate (CAGR) of 20.7 per cent and 19.7 per cent, respectively, during FY07-14 and are further poised for growth, backed by demand for housing and personal finance. Total asset size of banking sector assets is expected to increase to US$ 28.5 trillion by FY25. Deposits have grown at a CAGR of 13.6 per cent during FY05–15 to an estimated US$ 1.48 trillion in FY15. Deposit growth has been mainly driven by strong growth in savings amid rising disposable income levels.

Indian banks are increasingly focusing on adopting integrated approach to risk management. Banks have already embraced the international banking supervision accord of Basel II. According to RBI, majority of the banks already meet capital requirements of Basel III, which has a deadline of March 31, 2019. Most of the banks have put in place the framework for asset-liability match, credit and derivatives risk management

Rising incomes are expected to enhance the need for banking services in rural areas and therefore drive the growth of the sector; programmes like MNREGA have helped in increasing rural income aided by the recent Jan Dhan Yojana. The Reserve Bank of India (RBI) has relaxed its branch licensing policy, thereby allowing banks (which meet certain financial parameters) to set-up new branches in tier-2 to tier-6 centers, without prior approval from RBI. It has emphasised the need to focus on spreading the reach of banking services to the un-banked population of India.

Sectoral Presentation (January, 2016)

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Banking India

Growth in money supply over past few years (US$ billion)
Gross NPAs to Gross Advances in India

 

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