Increase in working population and disposable incomes are likely to propel demand for banking services in India. Rural banking is also expected to witness strong growth in the future.
Credit off-take has surged at a compound annual growth rate (CAGR) of 18.8 per cent over FY07-12. Loan growth has been driven by strong economic growth, rising consumerism and income levels. Demand has grown for both corporate and retail loans.
Deposits have grown at a CAGR of 17.6 per cent over FY07-FY12. Deposit growth has been mainly driven by strong growth in savings amid rising disposable income levels.
Despite the global financial crisis the net non-performing assets (NPA) of Indian banking sector have declined over past few years. Net NPA levels declined from 1.20 per cent in FY12 from 0.97 per cent in FY11, indicating significant improvement in asset quality.
Indian banks, including public sector banks are aggressively improving their technology infrastructure to enhance customer experience and gain competitive advantage. Internet and mobile banking is gaining rapid foothold.