12-04-2013, 04:52 PM
Banking Industry in India
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Growth Drivers :
High growth of Indian Economy: The growth of the banking industry is closely linked with the
growth of the overall economy. India is one of the fastest growing economies in the world and is set
to remain on that path for many years to come. This will be backed by the stellar growth in
infrastructure, industry, services and agriculture. This is expected to boost the corporate credit
growth in the economy and provide opportunities to banks to lend to fulfil these requirements in
the future.
Rising per capita income: The rising per capita income will drive the growth of retail credit.
Indians have a conservative outlook towards credit except for housing and other necessities.
However, with an increase in disposable income and increased exposure to a range of products,
consumers have shown a higher willingness to take credit, particularly, young customers. A study of the
customer profiles of different types of banks, reveals that foreign and private banks share
of younger customers is over 60% whereas public banks have only 32% customers under the
age of 40. Private Banks also have a much higher share of the more profitable mass
affluent segment.
New channel – Mobile banking is expected to become the second largest channel for
banking after ATMs: New channels used to offer banking services will drive the growth of
banking industry exponentially in the future by increasing productivity and acquiring new
customers. During the last decade, banking through ATMs and internet has shown a
tremendous growth, which is still in the growth phase. After ATMs, mobile banking is expected to
give another push to this industry growth in a big way, with the help of new 3G and smart phone
technology (mobile usage has grown tremendously over the years). This can be looked at as
branchless banking and so will also reduce costs as there is no need for physical infrastructure
and human resources. This will help in acquiring new customers, mainly who live in rural areas
(though this will take time due to technology and infrastructure issues). The IBA-FICCI-BCG
report predicts that mobile banking would become the second largest channel of banking after
ATMs.