Michael Debabrata Patra,Deputy Governor, Reserve Bank of India
There is one commercial bank branch for every 9,000 citizens now from one branch for 40,000 citizens in 1972. Banks today operate around 2.25 lakh customer service points, including over 1.75 lakh ATMs. In addition, there are more than 9 lakh business correspondents who bring banking services virtually to the doorstep, said RBI Deputy Governor Michael Debabrata Patra
Mumbai:
Banking penetration has grown by leaps and bounds over the past 50 years as the ratio of per capita bank deposits to income rose from 15.8 in 1972 to 71.2 in 2022, according to a central bank official.
The reach and spread of the banking network have improved the mobilisation of financial resources in the economy. The number of deposit accounts per thousand population has increased from 43 in 1972 to over 1,600 now. Households currently account for 63 per cent of total bank deposits, said RBI Deputy Governor Michael Debabrata Patra while addressing the 50 years of BSR over the weekend.
This is also reflected in the rise in the ratio of per capita bank deposits to income from 15.8 per cent to 71.2 per cent and the ratio of per capita credit to income from 12.2 per cent to 51.3 per cent over the period from 1972 to 2022, he said.
Branches across rural, semi urban and urban areas have contributed to this mammoth financial intermediation, said Patra.
Patra said there is one commercial bank branch for every 9,000 citizens now from one branch for 40,000 citizens in 1972. Banks today operate around 2.25 lakh customer service points, including over 1.75 lakh ATMs. In addition, there are more than 9 lakh business correspondents who bring banking services virtually to the doorstep, he added.
Patterns of financial intermediation are also shifting. Industry has been a major recipient of bank credit but its share in total credit has come down from 60 per cent to 27 per cent during 1972-2022, broadly equal to that of services and personal loans, he said.
In the personal loans segment, borrowings by individuals now account for over 40 per cent as compared with less than 10 per cent share in 2000. This has ushered in to a unique phenomenon – the share of smaller loans – of up to Rs.10 crore – in total loans has increased to 60 per cent in 2022 from 45 per cent in 2014.
This transformation has brought in its trail of associated changes in assessment, risk management and pricing of loans. On the lending side, a feature that has impacted the banking system is the reduced role of term lending institutions and emergence of corporate treasuries with new avenues for short-term financing. This has resulted in (a) increased reliance on banks for long-term funds; and (b) gradual reduction in the share of working capital in total loans. Banks’ asset portfolios have become elongated, with term loans accounting for 65 per cent of total loans, explained Patra.