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Changing Profile of Household Sector Credit and Deposits in Indian Banking System -Deepak Mathur November 30, 2010

Changing Profile of Household Sector Credit and Deposits in Indian Banking System -Deepak Mathur November 30, 2010. Indian Banking System. Commercial & Co-operative banks Commercial – 90 % of system’s assets 170 commercial banks (166 scheduled) 85, 000 branches, 45,000 ATMs

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Changing Profile of Household Sector Credit and Deposits in Indian Banking System -Deepak Mathur November 30, 2010

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  1. Changing Profile of Household Sector Credit and Deposits in Indian Banking System -Deepak Mathur November 30, 2010

  2. Indian Banking System • Commercial & Co-operative banks • Commercial – 90 % of system’s assets • 170 commercial banks (166 scheduled) • 85, 000 branches, 45,000 ATMs • 35,000 centres out of 675,000 habitats • 660 mn deposit and 110 mn credit accounts • Deposits: Rs. 48 trillion • Credit : Rs. 35 trillion • Employment :1 million

  3. Basic Statistical Returns • Statutory and non-statutory returns • Basic Statistical Return (BSR) system • Deposits, Credit, Employment, Investments • BSR-1: Credit (annual, branch level) • Two parts • Large accounts: Account level data on several characteristics • Small accounts-Branch level purpose-wise data • Survey of small loan accounts

  4. Basic Statistical Returns • BSR-2 Deposits (annual, branch level) • Broad ownership, Type of deposits • Term deposits- maturity, Interest rate • BSR-4 (sample survey, annual, branch level)- Composition and ownership pattern of deposits • Economic sectors- Government, Private Corporate, Financial, Household and Foreign Sectors, Detailed sub sectors • Type of deposits-Current/Savings/Term • Other returns: Investments, Debits to Deposit and Credit accounts, etc.

  5. Basic Statistical Returns • BSR-4 : Survey of ownership pf deposits • Annual, Sample survey, Branch level data • Stratified sampling-State/UT, Population group, Bank group; Size (deposits) • Ratio Estimator • Type of Deposit account • Economic Sectors • Household sector saving estimation

  6. Basic Statistical Returns • Household sector data • Credit and Deposits • Individuals accounts • Males, Females • Singly or jointly with other individuals and • Unincorporated bodies • Partnerships, Proprietary concerns • Trusts, associations, clubs, etc.

  7. Household sector-Credit and Deposits 1991-2009 • Deposits-High growth rates • 16.2 % (1991-2009), 17.3 % 2001-09 • Though lower than overall deposit growth • Largest constituent of depositor base • Share 80.5 % in 1991, 67.2 % in 2001 About 58 % in recent years • Individuals 90 % in 1991 and 80 % in 2009

  8. Household sector-Credit and Deposits 1991-2009 • Credit-High growth rates • 16.6 % (1991-2009), 21.5 % 2001-09 • Though lower than overall credit growth • A major constituent of borrower base • Share 56.3 % in 1991, 47 % in 2006-07, 44 % in 2008 and 39 % in 2009 • Number of accounts 1991: 59 mn (62 mn total) 2009: 104 mn (110 mn total)

  9. Household sector-Credit and Deposits 1991-2009 • Credit-Deposit Ratio • Household sector-consistently lower • Household sector • 1991: 43 %, 2006-07: 57-59 %, 2009: 47 % • Total credit • 1991: 62 %, 2006-07: 70-72% %, 2009: 71 % • Differential 13 -20 percentage points

  10. Household sector-Credit- Purpose • Personal loans (Housing, Consumer durables, vehicles, others) • All other loans- productive sectors • Share of Personal loans in total credit Number of accounts : 1991-27 %, 2009- 65 % Amount outstanding : 1991-13 %, 2009- 43 % • Personal loans Growth 1991-2009 : 25.5 %, 2001-09: 39.5 %

  11. Household sector-Credit- Purpose • Large accounts (1996-2009) • Agriculture : 10 % • Industry : 1996-2001: 35 %, 2006-09: 20 % • Trade : 10 %, Professionals : 10% • Housing: 1996: 6 %,2006-09: 25 % • Small accounts (2001-06) • Agriculture : 30 % • Industry : 4 % • Personal loans : 40 %

  12. Household sector-Credit-Cost, Size • Weighted average interest rate • Large accounts (1996-2009) • In alignment with overall rate for all sectors • No direct relationship • 60 to 80 bps difference • Small accounts (2004-06) • Housing loans and Agriculture loans at lower rates • Average size of loan amount Household sector loans average about 34 % of all loan accounts average amount

  13. Household sector-Credit- Type of account • Short term accounts: Cash credits, overdrafts and demand loans • Long term loans : Medium term loans and long term loans • Increase in Long term accounts • Number : 1996 : 69 % 2009 : 77 % • Amount : 1996 : 42 % 2009 : 67 % • Personal loans – term loans

  14. Household sector-Deposits-Type of account Type of account • Demand deposits: Current and savings deposits, Term deposits: Fixed maturity • Term deposits : major share, though declining • 1991: 61 %, 2006 : 51 %, 2009: 58% • Individuals sub-sector similar trend • Household sector: recent years higher proportion in CASA deposits

  15. Household sector-Term deposits-Maturity Maturity of term deposits • Data for individuals sub-sector • Original maturity. Maturity brackets: <1 year, 1-3 years and > 3 years. • Two-thirds of deposits below 3 years maturity. • Share of maturity below 1 year declined. • Average maturity: about 2.4 years (1996-2009) (for all sectors: Higher 1.9 years in 2009)

  16. Summary observations Household sector 1991-2009 • Consistently high growth in deposits and credit, though lower than overall • Major share in banking system • Deposits : 58 % (79 % of which individuals) • Credit : 39 % • Credit-Deposit Ratio : 47 % • Net saver-provider of funds

  17. Summary observations • Personal Loans-High and rising share • 65 % accounts, 43 % amount • Housing loans : 56 % of personal loans • Industry-declining share : 20 %, • Agriculture : 10 %, Other services: 10 % • Cost of credit: Similar to all loans • Size per account : one-third of total credit • Long term loans-Increasing share

  18. Summary observations • Deposits • 44 % of current deposits with banks, 85 % of savings deposits, 52 % of term deposits • Decline in share of term deposits in total deposits. Higher proportion of current and savings deposits. • Term deposits average maturity higher compared to all sectors.

  19. Thank you ! dmathur@rbi.org.in

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