The report has revealed that expanding economy, middle class, and technological innovations are all contributing to this growth. India’s economy is growing at a rate of 8%, with banking industry assets experiencing a compound annual growth rate of 24%, from $374.4 billion in 2003 to $616.15 billion in 2006. Considering a nominal compound annual growth rate (CAGR) of 17% during the last five years, Celent expects the industry to grow at a rate of 15-17% to reach $1 trillion by 2010.
According to the report, public sector banks still dominate India’s banking industry, although the private sector is growing. Public sector banks hold 72.3% of banking assets, followed by private sector banks with 17.2% of assets; foreign banks and regional rural banks hold 7.2% and 3.2% respectively.
The Indian banking industry is focusing on the retail side of the market, moving towards increasing credit distribution, with a CAGR of 23% in the last five years. Loans and advances of SCBs registered a robust growth of 31.8% over the previous year compared to $335.2 billion in 2005-2006.
The banking industry in India is in the midst of an IT revolution. As of March 2006, 78% of all public sector bank branches were computerized. Since 2000, growth in the number of ATMs has been exponential, with a CAGR of 70% to 21,523 ATMs by the end of March 2006. Celent expects this number to hit 175,000 by 2010.
The research from Celent has noted that global banks are now competing with domestic banks. Currently, there are 29 foreign banks from all over the world operating in India with approximately 258 offices spread across the country.
