Growth drivers of retail banking

The growth drivers of retail lending are analyzed as under :

Macro-Economic Factors:

 Shift in the pattern of GDP from hitherto agriculture and manufacturing sectors to services sector with increase per capita income especially that of the younger generation. [India's industrial sector accounted for about 21.8% of GDP, where as the services sector accounted for around 56.1 of GDP in 2002-03 as per revised estimates released by Central. Statistical Organization].

 The lower uptake in the non-retail sector has compelled bans to shift their focus on retail assets - specially housing finance- for deployment of funds for a longer period, which is considered as the safest within the retail portfolio. Housing loans and other retail loans are comparatively high yielding in terms of interest spread and safer, as risk is diversified among a large number of individuals across the geographic dimensions. The sector enjoys a privilege of lowest NPAs amongst all categories of banks.

 Depressed stock and real estate markets as compared to those prevailing in 1992-93 to 1995-96 thereby diverting deposits to the banking sectors.

  Comparatively stable real estate prices during last 4/5 years have laid to spurt in demand for housing loans.
  Inflation continued to be under control.
 Keenness shown by the consumer goods/ automobile manufacturers to -push up finance schemes through market tie-up with banks with a view to increasing their marketing share.

Awareness and sophistication in urban and semi-urban households for urban convenience. Social security and status have also contributed to higher demand for housing units, cars, etc.

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