Capturing the evolution of the financial landscape in the country over the past 50 years, Patra underscored that the patterns of financial intermediation are 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 retail loans
Within retail, 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″ Patra said in his speech at the central bank’s in-house conference on completion of the 50 years of ” Basis Statistical Returns (BSR)” one of its major data disseminating platforms.
Another notable feature is the reduced role of term lending institutions and emergence of corporate treasuries with new avenues for short-term financing doe large firms. This has resulted in increased reliance on banks for long-term funds besides by large firms, 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 their total loans. “This transformation has brought in its trail of associated changes in assessment, risk management and pricing of loans”, Patra noted.
The BSR is being continuously upgraded to capture the structural changed in the banking system and the economy and serves well as a policy guide where central bankers’ policy is increasingly data driven.
He highligted the entire gamut of areas which the BSR covers that could help policy makers. We now have one commercial bank branch for every nine thousand citizens, a far cry from a branch per forty thousand citizens in 1972. Commercial banks maintain around 2.25 lakh customer service points, including over 1.75 lakh ATMs. Co-operative banks also have a significant network of branches and ATMs. In addition, over nine lakh fixed point business correspondents (BCs) bring banking services virtually to the doorstep. Digital banking has become a reality.
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. 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. “Branches across rural, semi urban and urban areas have contributed to this mammoth financial intermediation” said Patra.