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.

Indian Fintech industry is estimated to be at US$ 150 billion by 2025. India has the 3rd largest FinTech ecosystem globally. India is one of the fastest-growing Fintech markets in the world. There are currently more than 2,000 DPIIT-recognized Financial Technology (FinTech) businesses in India, and this number is rapidly increasing.

The Indian banking system consists of 12 public sector banks, 21 private sector banks, 46 foreign banks, 43 regional rural banks, 1,534 urban cooperative banks and 96,508 rural cooperative banks in addition to cooperative credit institutions. As of March 2023, the total number of ATMs in India reached 14,74,548. Moreover, there are 1,21,894 on-site ATMs and Cash Recycling Machines (CRMs) and 96,243 off-site ATMs and CRMs. Banks added 2,796 ATMs in the first four months of FY23, against 1,486 in FY22 and 2,815 in FY21. 100% of new bank account openings in rural India are being done digitally.

According to the BCG Banking Sector Roundup Report of 9M FY23, credit growth is expected to hit 18.1% in 2022-23. As of December 30, 2022 bank credit stood at Rs. 133.04 lakh crore (US$ 1,610.31 billion). As of December 30, 2022 credit to non-food industries stood at Rs. 132.50 lakh crore (US$ 1,603 billion).

According to RBI’s Scheduled Banks’ Statement, deposits of all scheduled banks collectively surged by a whopping Rs.1.98 lakh crore (US$ 24.32 billion) as on May 5, 2023, at a growth rate of 10.2%.

According to data released by the National Payments Corporation of India (NPCI), UPI transactions reached 10.241 billion until August 30th, 2023.

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

In September 2023, the Reserve Bank of India is likely to bring in CBDC in the call money market.

In July 2023, Mahindra and Mahindra acquires minority stake in RBL Bank.

In July 2023, State Bank of India to acquire 100% stake of SBI Capital in SBICAP Ventures for US$ 85.25 million (Rs. 708 crore).

In June 2023, State Bank of India to acquire entire 20% stake of SBI Capital Markets in SBI Pension Funds.

In April 2023, HDFC Bank to acquire 20% or more in Griha Pte subsidiary of HDFC Investments.

Bank assets across sectors increased significantly since 2020. In 2022-23, total assets in the public and private banking sectors were US$ 1,553.57 billion and US$ 901.3 billion, respectively. In 2022-23, assets of public sector banks accounted for 58.81% of the total banking assets (including public, private sector and foreign banks).

India's digital lending market witnessed a growth of CAGR 39.5% over a span of 10 years.

According to SBI Chairman, credit demand remains robust, to clock about 14% growth.

RBI has decided to set up Public Credit Registry (PCR), an extensive database of credit information, accessible to all stakeholders. The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 Bill has been passed and is expected to strengthen the banking sector. Microfinance industry’s gross loan portfolio (GLP) by 10% in FY22 to Rs. 2.85 trillion (US$ 36.42 billion).

The Government of India has been supportive of the banking sector in the country, especially on the financial inclusion agenda. A flagship program, the Pradhan Mantri Jan Dhan Yojana (PMJDY), was launched in August 2014 which aims to provide universal banking services to the unbanked by setting up bank accounts for them and issuing payment cards to all. As of 2022-23, the number of bank accounts—opened under the government’s flagship financial inclusion drive ‘Pradhan Mantri Jan Dhan Yojana (PMJDY)’—reached over 486 million and deposits in the Jan Dhan bank accounts totalled over US$ 24.2 billion. 50.18 crore beneficiaries banked till August 2023.

In September 2023, IREDA partners with banks to boost renewable energy projects in India.

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

In October 2022, Prime Minister Mr. Narendra Modi inaugurated 75 Digital Banking Units (DBUs) across 75 districts in India.

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

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

Meanwhile, to respond to the impact of COVID-19, the government implemented various policies in order to aid the banking sector.

Rising income is expected to enhance the need for banking services in rural areas, and therefore, drive the growth of the sector.

India is the world's largest market for Android-based mobile lending apps, accounting for ~82% of all online lenders worldwide. India currently has 887 active lending apps.

The digital payments revolution will trigger massive changes in the way credit is disbursed in India. Debit cards have radically replaced credit cards as the preferred payment mode in India after demonetisation. In December 2022, Unified Payments Interface (UPI) crossed 7.82 billion transactions worth Rs. 12.82 trillion.

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.

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 volume and value of payments. In November 2022, RBI launched a pilot project on central bank digital currency (CBDC). The platform is called NDS-OM CBDC. The Central bank stated that the use case for the wholesale digital rupee is for the “settlement of secondary market transactions in government securities“ as it would reduce transaction costs.

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.