India’s retail banking nudges past Russia but sits far behind China

India’s retail banking nudges past Russia but sits far behind China

0
322

With more and more people in the country relying on credit as a means of sustenance, as per a survey carried out, India’s retail banking sector is currently the fastest-growing for emerging markets across the globe. As per the retail loan book, India’s compound annual growth rate (CAGR) of the retail banking sector sits at 16.1%, whereas the retail banking assets of other emerging markets have recorded an average compound annual growth rate (CAGR) of 9.3%, while China proved to be the leader with their annualised compound annual growth rate (CAGR) of 16.9%.
As per a survey carried out by the Bank for International Settlement (BIS), based on the outstanding retail loans disbursed by banks, India’s figures were at $269 at the end of the September 2017 quarter, while Russia stands closely behind with a outstanding loan amount of $248 billion, Malaysia at $211.3 billion, Mexico at $190 billion, and Brazil and Thailand ahead of India with a retail loan standing at $439.4 billion and $310 billion. According to a study, the retail loan market accounts for 11.1% of India’s GDP (Gross Domestic Product), in China contributes towards 48% of their GDP, and 21.6% GDP of Brazil. For other emerging markets, the retail banking sector accounts an average of 34.4% of their GDP.
According to experts, the retail loan market of India will easily surpass the $400 billion mark if the retail loans of NBFCs (Non-banking Financial Companies) such as Shriram Transport Finance, Housing Development Finance Corporation (HDFC), Bajaj Finance, and so on, were included in the loan books. This is vital to India’s retail loan market as in the Financial Year 2017, NBFCs contributed towards 55% of retail loans that were disbursed – amounting to $139 billion.
Lastly, analysts feel that with the Government’s digitisation drive and with loans easily available, the retail loan banking of the country is just going to increase as every year passes, but experts fear that the slow rise of the loan-to-income ratio might be the only hurdle in the future for the retail loan banking sector. According to G.Chokkalingam, MD, Equinomics Research and Advisory, while retail loans are experiencing an annualised growth of 15-20%, the average income of individuals is increasing at an annualised rate of 6-7% – a percentage that threatens the sustainability of the general population.

LEAVE A REPLY

Please enter your comment!
Please enter your name here