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 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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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.

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

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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.
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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

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)
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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% %, 2009: 71 %

Total credit

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 Growth 1991-2009 : 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 %
Agriculture : 30 % Industry : 4 % Personal loans : 40 %
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Small accounts (2001-06)

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 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
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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 loans term 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 higher proportion 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: <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)
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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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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
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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.

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Thank you !
dmathur@rbi.org.in
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