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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

Commercial90 % 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

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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

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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 Creditaccounts, etc.

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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

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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.

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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

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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 accounts1991: 59 mn (62 mn total)

2009: 104 mn (110 mn total)

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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

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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 Growth1991-2009 : 25.5 %, 2001-09: 39.5 %

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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 %

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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 amountHousehold sector loans average about 34 % ofall loan accounts average amount

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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 loansterm loans

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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 higherproportion in CASA deposits

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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 (1996-2009)

(for all sectors: Higher 1.9 years in 2009)

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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

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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

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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 highercompared to all sectors.

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Thank you [email protected]
mailto:[email protected]:[email protected]

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