Changing Profile of Household Sector Credit

and Deposits in Indian Banking System

-Deepak Mathur

November 30, 2010

1
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

2
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

3
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.

4
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

5
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.
6
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

7
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)

8
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

9
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 %

10
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 %

11
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
12
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

13
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

14
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)

15
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
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
17
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.

18
Thank you !
dmathur@rbi.org.in
19