The banking industry in India first originated back in the 18th century, when the first banks were initially established.
The Bank of Hindustan is one of the entities which gave birth to the banking sector in India, since its foundation in 1770.
It later liquidated in 1829-1832.
In 1786, the General Bank of India was born.
But it failed and went bankrupt in 1791, just 5 years after its launch.
The State Bank of India (SBI) is the largest and the oldest bank still in existence today.
Originary it started as the Bank of Calcutta, in mid-June 2806, and it was renamed as the Bank of Bengal in 1809.
Along with two other banking institutions, the Bank of Bombay and the Bank of Madras, they were the only three presidency government funded banks in India. They merged in 1921, thus giving birth to the Imperial Bank of India, which became the State Bank of India in 1955.
Now let’s start coming back to modern times and take a closer look at the banking system in India and check out the Indian banking sector overview.
Overview of the banking industry in India
According to the latest report developed by the Reserve Bank of India (RBI), the Indian banking sector is well-capitalized and regulated. The report also states that India’s banks performance and financial conditions are superior to any other country worldwide.
12 public sector banks, 22 private sector banks and 46 foreign banks.
The Indian banking system also consists of an additional 56 regional rural banks, 1485 urban cooperative banks and 96,000 rural cooperative banks, and other cooperative credit institutions.
210,049 is the total number of ATMs in India.
The data has been updated as of September 2020.
407,000 is the estimated number of ATMs in India for the year 2021.
As you can see, the trends show that the numbers of cash machines in India will almost double in the time span of just one year.
Rs. 107.83 lakh crore ($1.52 trillion) is the asset amount of public sector banks in India.
All the data is presented for the FY20 (Fiscal Year 2020).
Growth in the Indian banking sector
Any relevant Indian banking sector analysis will reveal one thing. The banking sector is on a positive trend and it will continue to grow in a world that is rapidly moving from cash to credit.
A cashless world could very well be obtained in the next two decades, if all countries continue with the same banking and financial trends.
The COVID-19 pandemic also accelerated the efforts made into putting a stronger focus on credit card payments, as opposed to cash.
3.57% is the Compound Annual Growth Rate (CAGR) of bank credit between FY16 to FY20.
The total credit extended reached $1,698.97 billion.
13.93% is the Compound Annual Growth Rate (CAGR) of deposit between FY16 to FY20.
Indian deposits grew, reaching a total of $1.93 trillion by FY20.
Rs. 103.46 trillion (US$ 1.40 trillion) is the total credit for non-food industries.
Numbers depict the banking statistics as of November 2020.
$75 billion was the amount of India’s digital lending in FY18.
By FY23, it is estimated to reach a total number of $1 trillion. This is largely due to the five times increase in digital disbursements.
Private banking Sector: By the Numbers
The private banking sector has been on the rise ever since its beginnings. Starting off as a way to fund naval trading and the discovery of new trading routes, bankers from the private sector have been “pulling the strings†of the global economy for almost 500 years.
Take a quick look at the world’s leading TOP 10 banks:
- China Industrial and Commercial Bank of China – $4,324.27 billion in total assets
- China China Construction Bank – $3,653.11
- China Agricultural Bank of China – $3,572.98
- China Bank of China – $3,270.15
- Japan Mitsubishi UFJ Financial Group – $2,892.97
- United Kingdom HSBC – $2,715.15
- United States JPMorgan Chase – $2,687.38
- United States Bank of America – $2,434.08
- France BNP Paribas – $2,429.26
- France Crédit Agricole – $2,256.72
China owns the 4 largest banks in the world, according to the data provided for 2019.
The top 10 largest wealth managers in the world control approximately 27% of the entire private banking industry.
That’s according to the latest banking stats provided by Euromoney.
$62 billion is the total US Market Size for the private banking sector.
It’s quite an impressive number, especially taking into consideration the current global economic turmoil.
6,298 businesses operating in the United States private banking sector.
Banking services are constantly growing throughout the US and worldwide.
72,817 employees work in the US banking industry alone.
That number equates to the size of a small European city, according to the same source as quoted above.
Public banking sector statistics
Judging by the growth rate of the banking sector in India, these are the country’s most important state banks.
Bank of Baroda – 71.60% Government shareholding
Merged banks: Vijaya Bank and Dena Bank
Number of branches: 9,481
Year of establishment: 1908
Headquarters: Vadodara, Gujarat
Total assets: ₹16,130 billion ($230 billion)
Revenues: ₹422 billion ($5.9 billion)
Bank of India – 89,10% Government shareholding
Merged banks: none
Number of branches: 5,000
Year of establishment: 1906
Headquarters: Mumbai, Maharashtra
Total assets: ₹9,030 billion ($130 billion)
Revenues: ₹418 billion ($5.9 billion)
Bank of Maharashtra – 92,49% Government shareholding
Merged banks: none
Number of branches: 1,897
Year of establishment: 1935
Headquarters: Pune, Maharashtra
Total assets: ₹2,340 billion ($33 billion)
Revenues: ₹130.53 billion ($1.8 billion)
Canara Bank – 78.52% Government shareholding
Merged banks: Syndicate Bank
Number of branches: 10,342
Year of establishment: 1906
Headquarters: Bengaluru, Karnataka
Total assets: ₹15,203 billion ($210 billion)
Revenues: ₹558.30 billion ($7.8 billion)
Central Bank of India – 92.39% Government shareholding
Merged banks: none
Number of branches: 4,666
Year of establishment: 1911
Headquarters: Mumbai, Maharashtra
Total assets: ₹4,680 billion ($66 billion)
Revenues: ₹259 billion ($3.6 billion)
Indian Bank – 88.06% Government shareholding
Merged banks: Allahabad Bank
Number of branches: 6,104
Year of establishment: 1907
Headquarters: Chennai, Tamil Nadu
Total assets: ₹8,080 billion ($110 billion)
Revenues: ₹405.74 billion ($5.7 billion)
Indian Overseas Bank – 95.84% Government shareholding
Merged banks: none
Number of branches: 3,400
Year of establishment: 1937
Headquarters: Chennai, Tamil Nadu
Total assets: ₹3,750 billion ($53 billion)
Revenues: ₹235.2 billion ($3.3 billion)
Punjab and Sind Bank – 83.06% Government shareholding
Merged banks: none
Number of branches: 1,554
Year of establishment: 1908
Headquarters: New Delhi, Delhi
Total assets: ₹1,710 billion ($24 billion)
Revenues: ₹87.44 billion ($1.2 billion)
Punjab National Bank – 85.59% Government shareholding
Merged banks: Oriental Bank of Commerce and United Bank of India
Number of branches: 11,437
Year of establishment: 1894
Headquarters: New Delhi, Delhi
Total assets: ₹17,940 billion ($250 billion)
Revenues: ₹774.22 billion ($11 billion)
State Bank of India – 56.92% Government shareholding
Merged banks: State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, State Bank of Mysore, State Bank of Patiala, State Bank of Saurashtra, State Bank of Travancore and Bhartiya Mahila Bank
Number of branches: 24,000
Year of establishment: 1955
Headquarters: Mumbai, Maharashtra
Total assets: ₹52,050 billion ($730 billion)
Revenues: ₹2,110.00 billion ($30 billion)
UCO Bank – 94.44% Government shareholding
Merged banks: none
Number of branches: 4,000
Year of establishment: 1943
Headquarters: Kolkata, West Bengal
Total assets: ₹3,170 billion ($44 billion)
Revenues: ₹185.61 billion ($2.6 billion)
Union Bank of India – 89.07% Government shareholding
Merged banks: Andhra Bank and Corporation Bank
Number of branches: 9,609
Year of establishment: 1919
Headquarters: Mumbai, Maharashtra
Total assets: ₹14,594 billion ($200 billion)
Revenues: ₹696.39 billion ($9.8 billion)
Major players in the banking industry
India has many banks, both public and private. Since we’ve already seen who the major players of the Indian public banking sector are, let’s go over the TOP 10 private banking sector entities.
HDFC Bank
Number of branches: 5,430
Year of establishment: 1994
Headquarters: Mumbai, Maharashtra
Total assets: ₹8,638 billion ($120 billion)
Revenues: ₹816.02 billion ($11 billion)
ICICI Bank
Number of branches: 5,324
Year of establishment: 1994
Headquarters: Mumbai, Maharashtra
Total assets: ₹12,720 billion ($180 billion)
Revenues: ₹736.60 billion ($10 billion)
Axis Bank
Number of branches: 4800
Year of establishment: 1993
Headquarters: Mumbai, Maharashtra
Total assets: ₹10,600 billion ($150 billion)
Revenues: ₹414.093 billion ($5.8 billion)
IndusInd Bank
Number of branches: 1,911
Year of establishment: 1994
Headquarters: Mumbai, Maharashtra
Total assets: ₹1,786 billion ($25 billion)
Revenues: ₹185.77 billion ($2.6 billion)
IDBI Bank
Number of branches: 1,892
Year of establishment: 1964
Headquarters: Mumbai, Maharashtra
Total assets: ₹3,144.57 billion ($44 billion)
Revenues: ₹253.71 billion ($3.6 billion)
Kotak Mahindra Bank
Number of branches: 1,600
Year of establishment: 2003
Headquarters: Mumbai, Maharashtra
Total assets: ₹2,146 billion ($30 billion)
Revenues: ₹211.76 billion ($3.0 billion)
Federal Bank
Number of branches: 1,284
Year of establishment: 1931
Headquarters: Kochi, Kerala
Total assets: ₹1,149.8 billion ($16 billion)
Revenues: ₹97.5920 billion ($1.4 billion)
Bandhan Bank
Number of branches: 1,187
Year of establishment: 2015
Headquarters: Kolkata, West Bengal
Total assets: ₹302.36 billion ($4.2 billion)
Revenues: ₹43.20 billion ($610 million)
Yes Bank
Number of branches: 1,119
Year of establishment: 2004
Headquarters: Mumbai, Maharashtra
Total assets: ₹2,578 billion ($36 billion)
Revenues: ₹102.47 billion ($1.5 billion)
Jammu & Kashmir Bank
Number of branches: 1,038
Year of establishment: 1938
Headquarters: Srinagar, Jammu and Kashmir
Total assets: ₹820.18 billion ($11 billion)
Revenues: ₹71.66 billion ($1.0 billion)
Global Banking Trends
Global banking trends show that even though the COVID-19 pandemic has affected the economy, the banking sector will still continue its growth, but at a smaller scale.
0.9% is the average industry growth between 2015–2020 in the United States.
These numbers reveal wealth management services offered to high-net-worth (with assets of over $1.0 million) and to ultra-high-net-worth (with assets of over $10.0 million) individuals.
Biometrics authentication is the number 1 trend in banking.
The COVID-19 pandemic has also pushed the banking sector to innovative solutions. Most of them have/or will have some form of biometrics authentication, Face recognition, QR Code Payments, Invisible payments, Voice-enabled payments, and more.
89% of people said they use mobile banking.
Based on Insider Intelligence’s Mobile Banking Competitive Edge Study, 9 out of 10 people use a mobile banking app.
97% of millennials indicated use mobile banking.
It’s clear that millennials will exclusively use some form of mobile banking, without any other “traditional†forms of banking.
Citibank, Wells Fargo, USAA, NFCU, and Bank of America are the TOP 5 mobile banking apps.
These banks are also some of the largest in the world.
80% of people say that mobile is their primary way of accessing their bank account.
The data provided by Business Insider shows that 8 out of every 10 people access their bank accounts via mobile apps.
The latest development in the banking sector
As all industries, the banking sector couldn’t remain without new and innovative developments, designed to offer better services and to attract more clients and capital.
Wealth services amount to 35% of the valuation of modern banks.
Research conducted by JPMorgan offers these banking sector statistics. They are considered one of many of the latest developments popping up in the banking sector.
The top 100 US banks had provisioned $103.4 billion as of 2020.
The top 100 European banks on the other hand had provisioned only $62.5 billion while the top 100 banks in Asia-Pacific had provisioned $68.8 billion. The numbers apply for the second quarter of the year (Q2).
Digitization and automation could push 150 million people into “extreme poverty†by 2021.
The banking sector has to cut costs as well in difficult economic times, like today’s current COVID-19 pandemic. The unemployment rate from all lines of work could lead to a big economic downfall.
Future of banking industry in India
If everything goes as projected by large financial institutions, the Indian banking industry is looking at a blooming future.
12.8% is India’s projected GDP growth for the financial year ending March 2022 (FY22).
Given the contribution of the banking sector in the Indian economy, the forecast done by Fitch is more than realistic. The numbers include an expected slowdown in the second quarter of 2021, due to the increase of new coronavirus cases.
6.64% is the credit growth of Indian banks.
This is considered a healthy number, but predictions point to a slight decrease in credits due to the COVID-19 pandemic.
$2.27 trillion is the total worth of the assets across India’s banking sector.
The total figure includes both private and public Indian banks, as well as foreign banks operating in the country, according to IBEF.
Over 1000 Fin-Tech start-ups have been launched in India, as of FY19.
Banks and other financial institutions are keeping an eye out on all the Fin-Tech start-ups that have been taking India by storm during the past couple of years.
Government initiatives
For a very long time, the Indian government has been lacking initiative when it came to the BFSI sector in India (Banking, financial services and insurance).
However, in the last couple of years, some actions have been taken to sustain the country’s entire banking industry.
The Indian Government proposed a fully automated GST refund module and an electronic invoice system.
According to the Union Budget 2019-20. This initiative will eliminate the need for a separate e-way bill.
A total of Rs. 70,000 crore ($10.2 billion) was proposed by the Government to the public sector banks.
Under the same Union Budget 2019-20, this amount will aid the public sector banks, especially given the current global pandemic.
The number of Public Sector Banks was reduced by eight entities.
Consolidation efforts carried out by the Government lead to a more productive banking sector.
Since September 2018, the Indian Government made Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme an open-ended scheme.
In addition to this action, they also added more incentives.
Rs. 42,000 crores ($5.99 billion) is the planned amount to be injected into the public sector banks.
By March, Government officials declared that they plan on helping out public sector banking entities with a sizable injection of funds.
Sure, many of the actions initiated by the Indian Government have not materialized yet. But when we break down all the achievements, the list goes as follows:
The Unified Payments Interface (UPI) has recorded a number of 2.21 billion transactions.
As of November 2020, the total value of these transactions was worth Rs. 3.90 lakh crore ($53.06 billion).
$574.82 billion as of November 27, 2020, is the number reached by India’s foreign exchange.
According to the Reserve Bank of India, these numbers will continue to grow.
204,000 point of sale (PoS) terminals has been installed by the Financial Inclusion Fund by National Bank for Agriculture & Rural Development (NABARD).
This initiative was created to improve the payment infrastructure currently present in villages across the country.
Conclusion
India is expected to overtake China’s total population in 2026. Currently, India is the second-largest country by population, with a number of 1,380,004,385 inhabitants, while China ranks on top with a total population of 1,439,323,776 inhabitants.
Since the trends of switching to a world without cash in the next few decades is obviously clear, and with the country’s rapidly-growing population, the banking industry in india will most likely follow the same positive trend.
The entire banking sector in India is on the rise as we speak, and if the government will continue to push economic and technological developments in the future, chances are that this sector of activity will be blooming for years to come.
What are your future predictions for India? What about the global banking system? Where do you see it in the next decade, or even two decades from now?
