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India Retail Banking: Opportunities and Risks to 2023

January 2020 | 41 pages | ID: IC03049CC86BEN

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India Retail Banking: Opportunities and Risks to 2023


Based on our proprietary datasets, this report analyzes the Indian lending market, with a focus on the consumer lending segment. The report discusses in detail the credit card, personal, and mortgage loan markets, covering market size, competitors’ market shares, and survey insights. The report also provides a market overview and insights on the retail deposit segment. In addition, it covers the key digital disruptors in India’s retail lending segment.

Total loan balances outstanding (including credit card balances, personal loan balances, and residential mortgage balances outstanding) in India recorded a compound annual growth rate (CAGR) of 17.5% during 2014-18 to reach INR22.2tn ($319.1bn).

The majority of loan balances outstanding are from home loans, with residential mortgage balances outstanding accounting for 52.2% of total balances in 2018, followed by personal loans (43.8%) and credit cards (4%). Poor business sentiment, declining consumer confidence, and the growing unemployment rate are likely to impact the growth of total loan balances outstanding in the coming years.

As a result, we estimate total loan balances outstanding to record a subdued CAGR of 11.3% over 2019-23. The Indian lending space is dominated by State Bank of India (SBI), HDFC, and ICICI Bank. But these banks are facing increased competition from non-banking financial companies (NBFCs), digital banks, and digital lending platforms breaking into the market, offering faster and hassle-free loan approvals.

The savings market in India recorded a CAGR of 9.8% over 2014-18 to reach INR78.2tn ($1.1tn) in 2018. The market grew at a lower rate compared to loan balances during the five-year review period, but is improving amid a weak economic scenario. Indians are inclined to save more than spend as consumer confidence is dipping.

  • Mortgage balances in India grew by 19% in 2018, the highest annual growth rate of the review period.
  • The personal loan market in India recorded a CAGR of 17.7% during 2014-18. Although personal loan balances increased by 12.4% in 2018, this was almost half the 22.2% growth registered during 2017.
  • Credit card balances recorded a CAGR of 30.5% during 2014-18, driven by the increasing popularity of credit cards for e-commerce purchases in India.
  • Make strategic decisions using top-level historic and forecast data on the Indian retail lending industry.
  • Identify the most promising lending segment.
  • Receive detailed insights into lending in India, including consumer lending.
  • Understand the changing market and competitive dynamics by learning about new competitors and recent deals in the retail lending space.
  • Receive comprehensive coverage of the retail deposit market in India.
Market Overview
Key Facts
Consumer Lending: Market Size
Macroeconomic Overview
Mortgage Loans
Personal Loans
Credit Card Loans
Retail Deposits
Digital Disruptors
Recent Deals


State Bank of India
Punjab National Bank
Bank of Baroda
Canara Bank
Axis Bank
Union Bank of India
Kotak Mahindra Bank
Yes Bank
Kogta Financial
InCred Financial Services

The total retail loans in India recorded a compound annual growth rate (CAGR) of 17.5% during 2014-18 to reach INR22.2 trillion (US$319.1bn) in 2018. However, weakening economic growth and slowdown in auto sales are expected to impact the growth over the next four years and as a result the total loans are projected to reach INR39.4 trillion (US$566.7bn) in 2023, says GlobalData.

According to GlobalData’s latest report, ‘India Retail Banking: Opportunities and Risks to 2023’, home loans accounted for the largest share with 52.2% of total balances in 2018, followed by personal and auto loans at 43.8% while credit cards accounted for the remaining 4%.

Ravi Sharma, Banking and Payments Lead Analyst at GlobalData, comments: “Affordable house prices and increase in supply of residential property have contributed to strong growth in mortgage loan. Additionally, government reforms such as implementation of Real Estate (Regulation & Development) Act, 2016 and Benami Properties (Prevention) Act – along with favorable policies like reduction of goods and services tax for homes purchased under the Credit Linked Subsidy Scheme – helped growth in mortgage loans.”

India: Total Retail Loans Balances Outstanding (INR Trillion), 2014-2023*

Although personal and auto loans have grown at a robust pace, a dip in growth rate was seen in 2018, mainly due to slump in motor finance market. The ongoing liquidity crisis of NBFCs affected auto sector, with sales declining across segments including passenger vehicles, tractors, and two- and three-wheelers. As a result, vehicle sales fell by 8% in the FY 2018.

Credit card loan was the fastest-growing segment mainly due to the rise in credit card usage and thriving e-commerce sales. E-commerce companies are partnering with banks to offer additional discounts and cashback on EMI purchases using credit cards, helping drive its growth.

With increase in loans, banks, especially mid-sized ones, are focusing on reducing impairment to remain profitable against a backdrop of weak recovery prospects. This is seen in case of state-owned banks such as Union Bank of India and Canara Bank, which registered a decline in net impairment ratio in FY2018 (ending March 2019). However, it’s still very high with compared to their private counterparts. For instance in FY2018, Union Bank of India and Canara Bank had net impairment ratios of 6.5% and 5.7%, respectively, compared to 2.1% of HDFC Bank and 0.8% of Axis Bank.

Sharma concludes: “Growing unemployment, economic weakness and recent fall in consumer confidence is causing households to cut back on borrowing. This is expected to persist in the near term, resulting in lower growth in retail loan over the next four years.”

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