Retail banking grows despite economic slowdown

Leading banks in India continue to grow their retail banking business. A report by the Reserve Bank of India on 'Trends and Progress of Banking in India 2012-13' says that "... even in a period of overall slowdown in credit growth, retail credit maintained its growth."

SBI, ICICI Bank, HDFC Bank and Axis Bank, among others, are aggressive in retail banking. In fact, retail banking is actually compensating for the lower credit growth in the corporate book.

There appears to be little hope of recovery in corporate loans for banks in the near future. Many corporates have already built large capacities but demand has been hit because of the economic slowdown.

The share of retail loans in the total loans has risen from 18.4 per cent in 2011/12 to 18.8 per cent in 2012/13. In absolute terms, the retail loan portfolio expanded 15 per cent, from Rs 4,11,800 crore in 2011/12 to Rs 4,75,400 crore in 2012/13.

The growth in the retail portfolio was lead by a double-digit growth in housing loans. Auto loans also saw healthy growth.

Meanwhile, the number of credit cards issued grew 10 per cent, from 17.7 million in 2011/12 to 19.5 million in 2012/13. The private banks were the most aggressive in issuing more cards and their numbers improved from 9.7 million to 11.1 million.

The credit card transaction value witnessed a rise of 27.3 per cent in 2012/13 at Rs 1, 23,000 crore. Debit cards have been a more popular mode of electronic money than credit cards in India, according to the report. The total number of debit cards increased from 278.4 million to 331.2 million. The debit card transaction value saw a jump of 39 per cent in 2012/13 at Rs 74,300 crore.