Indian Banking Industry Analysis

As of 2022, more than 80% of the Indian population has a bank account in comparison to 17% in 2009.

Advantage India

Robust
Demand

* According to the EY 2021 NextWave Global Consumer Banking Survey explored consumers’ primary financial relationships and found that FinTechs and neobanks are gaining ground.

* That demand seems particularly strong when it comes to the critical need of protecting consumer data, where incumbent banks have a trust advantage. Some super apps may also turn to banks for access to banking licenses and to meet other regulatory requirements.

* Indian Fintech industry is estimated to be at US$ 150 billion by 2025. India has the 3rd largest FinTech ecosystem globally.

* BCG predicts that the proportion of digital payments will grow to 65% by 2026.

Robust Demand Icon

Innovation in
Services

* In the recent period, technological innovations have led to marked improvements in efficiency, productivity, quality, inclusion and competitiveness in the extension of financial services, especially in the area of digital lending.

* Digitalization of Agri-finance was conceptualized jointly by the Reserve Bank and the Reserve Bank Innovation Hub (RBIH). This will enable delivery of Kisan Credit Card (KCC) loans in a fully digital and hassle-free manner.

* In Union Budget 2023, the KYC process will be streamlined by using a 'risk-based' strategy rather than a 'one size fits all' approach.

* In September 2023, Hitachi Payment Services launched India's first-ever UPI-ATM with NPCI.

Opportunities in MRO

Business
Fundamentals

* The Indian banking industry has been on an upward trajectory aided by strong economic growth, rising disposable incomes, increasing consumerism and easier access to credit.

* Digital modes of payments have grown by leaps and bounds over the last few years. As a result, conventional paper-based instruments such as cheques and demand drafts now constitute a negligible share in both the volume and value of payments.

Policy Support

Policy
Support

* The RBI has launched a pilot to digitalize KCC lending in a bid for efficiency, higher cost savings, and reduction of TAT. This is expected to transform the flow of credit in the rural economy.

* In November 2022, RBI launched a pilot project on central bank digital currency (CBDC).

* In Union Budget 2023, a national financial information registry would be constructed to serve as the central repository for financial and ancillary data.

* In March 2023, India Post Payments Bank (IPPB), in collaboration with Airtel, announced the launch of WhatsApp Banking Services for IPPB customers in Delhi.

Increasing Investments
Last updated: Feb, 2024

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India will contribute 2.2% to the world's digital payments market by 2023, while the value of such transaction is expected to reach US$ 12.4 trillion globally by 2025.

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