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

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Presentation on theme: "1 Changing Profile of Household Sector Credit and Deposits in Indian Banking System -Deepak Mathur November 30, 2010."— Presentation transcript:

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

2 2 Indian Banking System Commercial & Co-operative banks Commercial – 90 % of systems 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 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 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 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 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 7 Household sector-Credit and Deposits –Deposits-High growth rates 16.2 % ( ), 17.3 % 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 8 Household sector-Credit and Deposits –Credit-High growth rates 16.6 % ( ), 21.5 % Though lower than overall credit growth A major constituent of borrower base Share 56.3 % in 1991, 47 % in , 44 % in 2008 and 39 % in 2009 Number of accounts 1991: 59 mn (62 mn total) 2009: 104 mn (110 mn total)

9 9 Household sector-Credit and Deposits –Credit-Deposit Ratio –Household sector-consistently lower –Household sector 1991: 43 %, : %, 2009: 47 % –Total credit 1991: 62 %, : 70-72% %, 2009: 71 % –Differential percentage points

10 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 : %, % Amount outstanding : %, % Personal loans Growth : 25.5 %, : 39.5 %

11 11 Household sector-Credit- Purpose Large accounts ( ) –Agriculture : 10 % –Industry : : 35 %, : 20 % –Trade : 10 %, Professionals : 10% –Housing: 1996: 6 %, : 25 % Small accounts ( ) –Agriculture : 30 % –Industry : 4 % –Personal loans : 40 %

12 12 Household sector-Credit-Cost, Size Weighted average interest rate Large accounts ( ) –In alignment with overall rate for all sectors –No direct relationship –60 to 80 bps difference Small accounts ( ) –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 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 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 15 Household sector-Term deposits-Maturity Maturity of term deposits Data for individuals sub-sector Original maturity. Maturity brackets: 3 years. Two-thirds of deposits below 3 years maturity. Share of maturity below 1 year declined. Average maturity: about 2.4 years ( ) (for all sectors: Higher 1.9 years in 2009)

16 16 Summary observations Household sector 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 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 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 19 Thank you !


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