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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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Indian Banking System • • • • • • • • • Commercial & Co-operative banks Commercial – 90 % of system’s assets 170 commercial banks (166 scheduled) 85.000 centres out of 675. 35 trillion Employment :1 million 2 . 45.000 habitats 660 mn deposit and 110 mn credit accounts Deposits: Rs.000 ATMs 35. 000 branches. 48 trillion Credit : Rs.

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

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

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

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

3 % 2001-09 Though lower than overall deposit growth Largest constituent of depositor base Share 80. 67.Household sector-Credit and Deposits 1991-2009 – Deposits-High growth rates • • • • 16.2 % (1991-2009). 17.5 % in 1991.2 % in 2001 About 58 % in recent years Individuals 90 % in 1991 and 80 % in 2009 • 7 .

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) 8 .Household sector-Credit and Deposits 1991-2009 – Credit-High growth rates • • • • • 16.3 % in 1991. 21.6 % (1991-2009).5 % 2001-09 Though lower than overall credit growth A major constituent of borrower base Share 56.

2009: 71 % – Total credit – Differential 13 -20 percentage points 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 % 1991: 62 %. 2006-07: 70-72% %.

5 % 10 • .productive sectors Share of Personal loans in total credit Number of accounts : 1991-27 %. vehicles.43 % Personal loans Growth 1991-2009 : 25.Household sector-Credit. others) All other loans. 2009.65 % Amount outstanding : 1991-13 %. Consumer durables. 2009.Purpose • • • Personal loans (Housing.5 %. 2001-09: 39.

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

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 Housing loans and Agriculture loans at lower rates • • Small accounts (2004-06) – Average size of loan amount Household sector loans average about 34 % of all loan accounts average amount 12 .Household sector-Credit-Cost.

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 13 .Household sector-Credit.

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

1-3 years and > 3 years. • Share of maturity below 1 year declined.4 years (1996-2009) (for all sectors: Higher 1. • Two-thirds of deposits below 3 years maturity. • Average maturity: about 2.Household sector-Term deposits-Maturity Maturity of term deposits • Data for individuals sub-sector • Original maturity.9 years in 2009) 15 . Maturity brackets: <1 year.

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 16 .

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

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

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