Growth of Banking Industry in India

 

Brief Introduction of Indian banking sector & Process of Banking Industry:

Every country in the world has a banking system. This banking system plays a big role in the economy of every country. If we say that the economy of any country rests on the banking industry, then it would not be wrong to say so. The banking industry is a topic that everyone wants to know about. This topic is important for stock market investors, for college students, for university students and for every competitive exam. If we talk about stock market then investors want to invest in banking stocks. If we talk about common people, then he wants to know the interest rate of every bank because every person has a desire to take bank loan. If we talk about students then questions related to banking sector are expected for studying finance, accounting or management or any competitive exam. From the perspective the banking industry is important for everyone.

In today's time everyone wants to save money. For which people also have savings accounts in banks. People get interest from the bank on the amount deposited in savings accounts. Talking about the banking sector, it also benefits to banks. Now you must be thinking that if the bank has interest rate on the deposits of the people then what is the benefit to the banking industry? So let's know this too. Have you ever wondered why a bank hires a marketing or sales team? Why a bank gives advertisement for opening a savings account?

So understand that there is a chain system in the banking industry. Let us understand this chain system. We deposit amount in banks, the same amount is used by the bank for retail loans, corporate loans, which generate income for the bank as the bank charges interest on the loan issued. I hope that you now understand how the bank makes profit or pays interest to the people on their savings. From this point of view the banking industry provides benefits for all. Whether it is a borrower or a depositor of money. That is why it has been said that the banking industry plays a big role in the development of any country's economy.

Today is the era of electronic banking, that's why all the banks are focusing more on online banking. Nowadays, bank amount is transferred on a single click from mobile applications, if we talk about 15 and 20 years ago from today, people used to spend hours in lines for depositing money in banks and withdrawing money. Online banking has changed the face of the banking industry. Thanks to Information Technology for this.

Credit Growth of Private & Public sector banks of India:

If we talk about the growth of the Indian banking system, then the private banking sector has played a very good role in the growth of the banking industry. According to an estimate, the credit growth of private banks has been recorded at more than 23% in the financial year 2021. Talking about the loan growth in the financial year 2021, the loan growth rate of government banks has been more than 3% and the loan growth rate of private banks has been 9%. If we compare this loan growth with that of FY20, the private banking sector's people growth was a few hey points above 9% and we can say that FY21 has seen moderate loan growth. On the other hand, if we talk about the loan growth rate of the public sector banking sector, then in FY20 it was more than 4%, according to this the loan growth rate of public sector banks has worked. If we talk overall, India's credit growth has decreased because in FY20, India's credit growth was more than 6% in comparison to FY20, which has come down to 5% in FY21. One of the reasons for the low growth is also being considered by covid 19 because due to covid 19 the demand for loans has also been low. The demand for loans has been low in both the retail & corporate sectors. But we should not forget that the employees of the banking industry have also worked in banks during the covid 19 era so that the banking system of India does not suffer much due to this. We should also thank the bank employee for this work.

Talking about the banking industry of India, there are more than 20 private banks and more than 10 public sector banks. On the other hand, if we talk about rural areas banks, then the number of these is more than 55 and there are more than 45 foreign banks too. Talking about ATM's, it is more than 2 lakhs. Asset of Public Sector Banks as per data in FY20. Trillion and talking about the CAGR, a growth of more than 3% has been registered in the last few years. Approximately $1,700 billion of credit has been raised. According to the Reserve Bank of India, deposits are worth more than $2 trillion by the financial year 2021.

Role of Indian government in Banking industry & recovery of non performing Assets of banks (NPA):

According to the Pradhan Mantri Jan Dhan Yojana, a deposit of $23 billion has been registered. UPI has made banking payments even easier. Non-performing assets are a big headache for the banking industry. There have been many such business houses from which they did not make loan payments for the loan, but they lost their business. But the government implemented some good policies to recover the non-performing assets and supported the banking industry to take action. The result of this action is that the banking industry has recovered more than $ 57 billion. Talking about, a record recovery was recorded, which is said to be worth more than $ 22 billion. These are good signs for the Indian banking sector.

In the Union Budget Financial Year 2021-22 of the Indian Government, IDBI & two other public sector banks decided to disinvest. This decision gave life to the Indian banking sector. The Government of India also made an announcement to infuse close to $ 6 billion in public sector banks. This announcement raised hopes of investing back in the stocks of public sector banks.

Talking about UPI transactions, the value of more than $ 65 billion has been registered. India's focus on rural development is huge. Due to this focus, Points of Sales were announced in Villages for Rural Development of Indian Government. All this was done to promote the infrastructure sector of Villages. In this way we can say that the Indian government is doing whatever good it can for the banking sector. That's why we can say that the growth of the India banking industry is going to be even better in the next few years. Modernizing the infrastructure of public sectors, employing non-performing assistants, focusing on rural development, all these are good signs. Since the loan growth of the banking sector will be high, and then the profit will also be good if there is a good recovery.

In nutshell, we can say that the coming few years in the banking industry are going to be very good. The kind of technology with which the Indian banking industry has been upgraded is commendable. Internet banking, mobile banking are all examples of this. Fast work on the infrastructure sector, timely completion of projects and timely financing are all going well for the banking industry.

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