Report on Trend and Progress of Banking in India 2023-2024 - 26th December 2024 - Reserve Bank of India - Gazette Notification PDF

REPORT ON TREND AND PROGRESS OF BANKING IN INDIA 2023-24 Reserve Bank of India REPORT ON TREND AND PROGRESS OF BANKING IN INDIA 2 0 2 3 - 2 4 Reserve Bank of IndiaReport on Trend and Progress of Banking in India for the year ended March 31, 2024 submitted to the Central Government in terms of Section 36(2) of the Banking Regulation Act, 1949 REPORT ON TREND AND PROGRESS OF BANKING IN INDIA 2023-24 RESERVE BANK OF INDIA© Reserve Bank of India 2024 All rights reserved. Reproduction is permitted provided an acknowledgement of the source is made. Published by Dr. Snehal S. Herwadkar for the Reserve Bank of India, Mumbai 400 001 and designed and printed by her at Jayant Printery LLP, 352/54, Girgaum Road, Murlidhar Temple Compound, Near Thakurdwar Post Office, Mumbai - 400 002.LETTER OF TRANSMITTALContents Sr. No. Particulars Page No. Chapter I: Perspectives 1 Introduction ............................................................................................................. 1 2 Regulation and Supervision ...................................................................................... 2 3 Payment and Settlement Systems ............................................................................. 4 4 Adoption of Emerging Technologies .......................................................................... 5 5 Financial Inclusion ................................................................................................... 6 6 Consumer Protection ................................................................................................ 6 7 Climate Change ........................................................................................................ 7 8 Overall Assessment .................................................................................................. 8 Chapter II: Global Banking Developments 1 Introduction ............................................................................................................. 9 2 Global Macroeconomic Conditions ........................................................................... 9 3 Global Banking Policy Developments ....................................................................... 11 4 Performance of the Global Banking Sector ............................................................... 17 5 World’s Largest Banks .............................................................................................. 23 6 Overall Assessment .................................................................................................. 25 Chapter III: Policy Environment 1 Introduction ............................................................................................................ 26 2 The Macroeconomic Policy Setting ........................................................................... 26 3 Regulatory and Supervisory Policies ......................................................................... 28 4 Technological Innovations ........................................................................................ 35 5 Financial Markets..................................................................................................... 37 6 Consumer Protection ................................................................................................ 38 7 Credit Delivery and Financial Inclusion .................................................................... 38 8 Payment and Settlement Systems ............................................................................. 40 9 Overall Assessment .................................................................................................. 41 Chapter IV: Operations and Performance of Commercial Banks 1 Introduction ............................................................................................................. 42 2 Balance Sheet Analysis ............................................................................................. 42 3 Financial Performance .............................................................................................. 50 vSr. No. Particulars Page No. 4 Soundness Indicators ............................................................................................... 53 5 Sectoral Bank Credit: Distribution and NPAs ........................................................... 63 6 Ownership Pattern in Commercial banks ................................................................. 70 7 Corporate Governance ............................................................................................. 71 8 Foreign Banks’ Operations in India and Overseas Operations of Indian Banks ........ 73 9 Payment Systems and Scheduled Commercial Banks .............................................. 73 10 Technology Adoption and Scheduled Commercial Banks ......................................... 76 11 Consumer Protection ................................................................................................ 76 12 Financial Inclusion ................................................................................................... 80 13 Regional Rural Banks ............................................................................................... 84 14 Local Area Banks ..................................................................................................... 86 15 Small Finance Banks ............................................................................................... 87 16 Payments Banks ....................................................................................................... 88 17 Overall Assessment .................................................................................................. 89 Chapter V: Developments in Co-operative Banking 1 Introduction ............................................................................................................. 91 2 Structure of the Co-operative Banking Sector .......................................................... 91 3 Urban Co-operative Banks ....................................................................................... 93 4 Rural Credit Co-operatives ....................................................................................... 102 5 Overall Assessment .................................................................................................. 113 Chapter VI: Non-Banking Financial Institutions 1 Introduction ............................................................................................................. 114 2 Non-Banking Financial Companies (NBFCs) ............................................................ 115 3 Housing Finance Companies (HFCs) ........................................................................ 134 4 All India Financial Institutions ................................................................................. 138 5 Primary Dealers ....................................................................................................... 143 6 Overall Assessment .................................................................................................. 146 viList of Boxes Sr. No. Particulars Page No. II.1 Optimal Credit-to-GDP Ratio: A Cross-country Analysis .......................................... 18 III.1 New Investment Guidelines: Analysis of Investment Portfolio of Banks .................... 32 III.2 Disclosure Framework on Climate-related Financial Risks ...................................... 33 III.3 Bank Lending to Non-Conventional Energy Sector ................................................... 39 IV.1 Determinants of Deposit Growth in Commercial Banks ........................................... 46 IV.2 Why do Banks Hold Excess CRAR? .......................................................................... 55 IV.3 Impact of Credit Diversification on Banks’ Profitability ............................................ 64 IV.4 Adoption of Generative AI by Regulated Entities ....................................................... 76 V.1 Determinants of Non-Interest Income in Scheduled Urban Co-operative Banks ....... 98 VI.1 Impact of Recent Regulatory Changes on NBFCs’ Unsecured Retail Lending ............ 123 viiList of Tables Sr. No. Particulars Page No. II.1 Asset Quality ............................................................................................................ 19 II.2 Regulatory Capital to Risk-weighted Assets Ratio ..................................................... 22 IV.1 Consolidated Balance Sheet of Scheduled Commercial Banks ................................. 44 IV.2 Investments of SCBs ................................................................................................ 47 IV.3 Bank Group-wise Maturity Profile of Select Liabilities/Assets ................................... 49 IV.4 Trends in Income and Expenditure of Scheduled Commercial Banks ...................... 52 IV.5 Cost of Funds and Return on Funds - Bank Group-wise ........................................... 53 IV.6 Component-wise Capital Adequacy of SCBs ............................................................. 53 IV.7 Resources Raised by Banks through Private Placements .......................................... 56 IV.8 Leverage Ratio and Liquidity Coverage Ratio ............................................................ 56 IV.9 Net Stable Funding Ratio .......................................................................................... 57 IV.10 Movements in Non-Performing Assets by Bank Group ............................................. 58 IV.11 Classification of Loan Assets by Bank Group ........................................................... 58 IV.12 NPAs of SCBs Recovered through Various Channels ................................................. 59 IV.13 Details of Financial Assets Securitised by ARCs ....................................................... 60 IV.14 Frauds in Various Banking Operations Based on the Date of Reporting ................... 61 IV.15 Frauds in Various Banking Operations Based on the Date of Occurrence ................. 61 IV.16 Enforcement Actions ................................................................................................ 62 IV.17 Sectoral Deployment of Gross Bank Credit by SCBs ................................................ 63 IV.18 Credit Flow to the MSME sector by SCBs ................................................................. 67 IV.19 Priority Sector Lending by Banks ............................................................................. 67 IV.20 Weighted Average Premium on Various Categories of PSLCs .................................... 69 IV.21 Sector-wise GNPAs of Banks .................................................................................... 69 IV.22 Independent Directors on the Board and its Committees ......................................... 72 IV.23 Operations of Foreign Banks in India ....................................................................... 73 IV.24 Payment Systems Indicators ..................................................................................... 74 IV.25 Number of ATMs ...................................................................................................... 75 IV.26 Geographical Distribution of ATMs: Bank Group-wise ............................................. 75 IV.27 Nature of Complaints Received by ORBIOs .............................................................. 78 IV.28 Bank Group-wise Insured Deposits .......................................................................... 79 viiiSr. No. Particulars Page No. IV.29 Progress in Financial Inclusion Plan ......................................................................... 81 IV.30 Tier-wise Break-up of Newly Opened Bank Branches by SCBs ................................. 82 IV.31 Progress in MSME Financing through TReDS .......................................................... 83 IV.32 Consolidated Balance Sheet of Regional Rural Banks ............................................... 84 IV.33 Financial Performance of Regional Rural Banks ....................................................... 85 IV.34 Purpose-wise Outstanding Advances by RRBs .......................................................... 86 IV.35 Profile of Local Area Banks ...................................................................................... 86 IV.36 Financial Performance of Local Area Banks ............................................................. 87 IV.37 Consolidated Balance Sheet of Small Finance Banks ............................................... 87 IV.38 Financial Performance of Small Finance Banks ........................................................ 88 IV.39 Consolidated Balance Sheet of Payments Banks ....................................................... 88 IV.40 Financial Performance of Payments Banks ............................................................... 89 IV.41 Select Financial Ratios of Payments Banks ............................................................... 89 V.1 Share in Credit Flow to Agriculture .......................................................................... 93 V.2 Tier-wise Distribution of Urban Co-operative Banks ................................................ 94 V.3 Balance Sheet of Urban Co-operative Banks ............................................................ 96 V.4 Distribution of UCBs by size of Deposits, Advances and Assets ................................ 97 V.5 Investments by Urban Co-operative Banks ............................................................... 97 Financial Performance of Scheduled and Non-Scheduled Urban Co-operative V.6 98 Banks ....................................................................................................................... V.7 Select Profitability Indicators of UCBs ...................................................................... 99 V.8 CRAR-wise Distribution of UCBs .............................................................................. 100 V.9 Component-wise Capital Adequacy of UCBs ............................................................. 101 V.10 Non-Performing Assets of UCBs ............................................................................... 101 V.11 Composition of Credit to Priority Sectors by UCBs .................................................. 103 V.12 A Profile of Rural Credit Co-operatives ..................................................................... 105 V.13 Liabilities and Assets of State Co-operative Banks ................................................... 106 V.14 Select Balance Sheet Indicators of Scheduled State Co-operative Banks .................. 107 V.15 Financial Performance of State Co-operative Banks ................................................. 107 V.16 Soundness Indicators of State Co-operative Banks .................................................. 108 V.17 Liabilities and Assets of District Central Co-operative Banks ................................... 109 ixSr. No. Particulars Page No. V.18 Financial Performance of District Central Co-operative Banks ................................. 109 V.19 Soundness Indicators of District Central Co-operative Banks .................................. 110 VI.1 Classification of NBFCs by Activity under the Scale Based Regulatory Framework ... 116 VI.2 Composition of NBFCs ............................................................................................. 116 VI.3 Ownership Pattern of NBFCs .................................................................................... 118 VI.4 Abridged Balance Sheet of NBFCs ............................................................................ 118 VI.5 Major Components of Liabilities and Assets of NBFCs by Classification ................... 120 VI.6 Sectoral Credit Deployment by NBFCs ..................................................................... 122 VI.7 Sources of Borrowings of NBFCs ............................................................................. 126 VI.8 Foreign Liabilities of NBFCs ..................................................................................... 130 VI.9 Financial Parameters of the NBFC Sector ................................................................. 131 VI.10 Ownership Pattern of HFCs ...................................................................................... 135 VI.11 Consolidated Balance Sheet of HFCs ........................................................................ 136 VI.12 Financial Parameters of HFCs ................................................................................ 137 VI.13 Financial Assistance Sanctioned & Disbursed by AIFIs ............................................ 139 VI.14 AIFIs’ Balance Sheet ................................................................................................. 140 VI.15 Resources Mobilised by AIFIs in 2023-24................................................................. 140 VI.16 Resources Raised by AIFIs from the Money Market .................................................. 141 VI.17 AIFIs’ Sources and Deployment of Funds ................................................................. 141 VI.18 Financial Performance of AIFIs ................................................................................. 142 VI.19 AIFIs’ Select Financial Parameters ............................................................................ 142 VI.20 Performance of PDs in the Primary Market .............................................................. 144 VI.21 Performance of SPDs in the G-secs Secondary Market ............................................. 144 VI.22 Sources and Application of SPDs’ Funds .................................................................. 145 VI.23 Financial Performance of SPDs ................................................................................ 145 VI.24 SPDs’ Financial Indicators ....................................................................................... 146 xList of Charts Sr. No. Particulars Page No. II.1 Growth and Inflation ................................................................................................ 10 II.2 Monetary Policy Rates .............................................................................................. 10 II.3 Current Account and General Government Gross Debt ............................................ 11 II.4 Bank Credit to the Private Non-Financial Sector ...................................................... 17 II.5 Provision Coverage Ratio .......................................................................................... 20 II.6 Return on Assets ...................................................................................................... 21 II.7 Leverage Ratio .......................................................................................................... 21 II.8 Market-based Indicators of Banks’ Health ................................................................ 23 II.9 Distribution of the Top 100 Global Banks by Tier 1 Capital ..................................... 23 II.10 Asset Quality of the Top 100 Global Banks .............................................................. 24 II.11 Soundness of the Top 100 Global Banks .................................................................. 25 III.1 Unclaimed Deposits with Scheduled Commercial Banks .......................................... 30 III.2 Share of Credit to NCE Sector in Total Credit to Energy (Electricity, Gas, and 39 Water) ....................................................................................................................... IV.1 Select Aggregates of SCBs ........................................................................................ 43 IV.2 Balance Sheet Composition ...................................................................................... 45 IV.3 Deposit Growth ........................................................................................................ 45 IV.4 Credit Growth ......................................................................................................... 46 IV.5 Contribution of Population Groups in Credit Growth ............................................... 47 IV.6 Credit-Deposit and Investment-Deposit Gap ............................................................. 48 IV.7 Maturity Brackets-wise Assets and Liabilities Gap ................................................... 48 IV.8 International Assets and Liabilities of Banks ............................................................ 49 IV.9 Consolidated International Claims of Indian Banks ................................................. 50 IV.10 Off-Balance Sheet Liabilities of Banks ...................................................................... 50 IV.11 Profitability Ratios .................................................................................................... 51 IV.12 Net Interest Income and Net Interest Margin ............................................................ 51 IV.13 Provision Coverage Ratio .......................................................................................... 52 IV.14 Bank Group-wise CRAR and CET1 Ratio ................................................................. 54 IV.15 Excess CRAR ............................................................................................................ 54 IV.16 Reduction in GNPAs ................................................................................................. 57 IV.17 Overall Stress vis-à-vis Stress in Large Borrowal Accounts ..................................... 59 IV.18 Restructured Standard Advances Ratio .................................................................... 59 xiSr. No. Particulars Page No. IV.19 Stressed Asset sales to ARCs .................................................................................... 60 IV.20 Bank Group-wise Frauds ......................................................................................... 62 IV.21 Sectoral GNPA Ratios ............................................................................................... 65 IV.22 GNPA Ratio in Various Sub-Sectors .......................................................................... 66 IV.23 Trading Volume of PSLCs ......................................................................................... 68 IV.24 Buyers and Sellers in PSLC Market.......................................................................... 68 IV.25 Exposure to Sensitive Sectors .................................................................................. 70 IV.26 Share of Unsecured Advances .................................................................................. 70 IV.27 Ownership Pattern of Banks ..................................................................................... 71 IV.28 Components of Total Remuneration of MDs and CEOs ............................................ 72 IV.29 Overseas Operations of Indian Banks ....................................................................... 73 IV.30 Average Value of Retail Digital Payments vis-à-vis Paper-based Instruments ............ 74 IV.31 Digital Payments Index ............................................................................................. 75 IV.32 Entity Type-wise Complaints Received at ORBIOs .................................................... 78 IV.33 Distribution of Complaints ....................................................................................... 78 IV.34 Bank Group-wise Insured Deposits as per cent of Assessable Deposits ................... 79 IV.35 Progress of Financial Inclusion in Select Countries .................................................. 80 IV.36 RBI – Financial Inclusion Index ................................................................................ 81 IV.37 Progress in PMJDY................................................................................................... 82 IV.38 Distribution of Newly Opened Bank Branches of SCBs ............................................ 82 IV.39 SHGs – Regional Distribution of Credit and Average Loan Size ................................ 83 IV.40 Regional Penetration of Banks .................................................................................. 84 IV.41 Asset Quality of RRBs ............................................................................................... 85 IV.42 Capital to Risk-weighted Assets Ratio of RRBs ......................................................... 86 IV.43 Profitability Indicators of Payments Banks ............................................................... 89 V.1 Structure of Credit Co-operatives ............................................................................. 92 V.2 Distribution of Credit Co-operatives by Asset Size ................................................... 92 V.3 Number of UCBs ...................................................................................................... 93 V.4 Consolidation Drive in UCBs .................................................................................... 93 V.5 Asset Growth ............................................................................................................ 94 V.6 Performance of UCBs vis-à-vis SCBs........................................................................ 95 xiiSr. No. Particulars Page No. V.7 Credit-Deposit Ratio: UCBs versus SCBs ................................................................. 96 V.8 Distribution of UCBs by Asset Size ........................................................................... 96 V.9 Investments: UCBs versus SCBs .............................................................................. 97 V.10 Profitability Indicators: UCBs versus SCBs .............................................................. 100 V.11 CRAR: UCBs versus SCBs ........................................................................................ 100 V.12 Asset Quality ............................................................................................................ 102 V.13 Priority Sector Lending ............................................................................................ 102 V.14 RCCs versus UCBs: Balance Sheet and Asset Quality Indicators .............................. 103 V.15 Share of Rural Credit Co-operatives in Total Co-operative Sector ............................ 104 V.16 Long-term versus Short-term RCCs ......................................................................... 104 V.17 Profit-Making Co-operatives ..................................................................................... 105 V.18 Resource Composition: Short-term Co-operatives .................................................... 106 V.19 StCBs’ Profits ........................................................................................................... 107 V.20 Capital Adequacy of State Co-operative Banks ......................................................... 108 V.21 NPA Ratio: StCBs versus DCCBs .............................................................................. 110 V.22 Capital Adequacy of District Central Co-operative Banks ......................................... 110 V.23 Liabilities and Assets of Long-Term Rural Co-operatives: A Comparison .................. 112 VI.1 Structure of NBFIs under the Reserve Bank’s Regulation ......................................... 115 VI.2 NBFCs’ Credit vis-à-vis SCBs’ Credit and GDP ........................................................ 117 VI.3 Registrations and Cancellations of Certificates of Registration of NBFCs .................. 117 VI.4 Nature of NBFCs’ Loans and Advances ..................................................................... 119 VI.5 Total Assets of NBFCs, by Classification ................................................................... 119 VI.6 Maturity Profiles of Receivables and Payables ........................................................... 120 VI.7 Sectoral Distribution of Credit, by Classification ...................................................... 121 VI.8 Distribution of NBFCs’ Credit .................................................................................. 121 VI.9 NBFCs’ Credit to MSME Sector ................................................................................ 122 VI.10 Vehicle Loans- NBFCs vis-à-vis SCBs ....................................................................... 124 VI.11 Advances against Gold by NBFCs and SCBs ............................................................. 125 VI.12 Micro-credit Outstanding across Regulated Entities ................................................. 125 VI.13 Major Sources of Borrowings ................................................................................... 126 VI.14 Banks’ Exposure to NBFCs ...................................................................................... 127 xiiiSr. No. Particulars Page No. VI.15 Nature of NBFCs’ Borrowings ................................................................................... 127 VI.16 NCD Private Placements of Private NBFCs ................................................................ 128 VI.17 Issuance of CPs by Private NBFCs ............................................................................ 128 VI.18 Public Deposits with NBFCs-D ................................................................................. 129 VI.19 Loan Sales and Securitisation by NBFCs .................................................................. 129 VI.20 Structural Liquidity Statement of NBFCs ................................................................. 130 VI.21 Profitability Ratios of NBFCs .................................................................................... 131 VI.22 Classification of NBFCs’ Loans & Advances .............................................................. 132 VI.23 Portfolio Analysis of Performing Loans & Advances .................................................. 132 VI.24 Asset Quality of NBFCs, by Classification ................................................................. 133 VI.25 NPA Ratios, by Layer ................................................................................................ 133 VI.26 Sectoral GNPA Ratios ............................................................................................... 133 VI.27 Stress in Large Borrowal Accounts .......................................................................... 134 VI.28 CRAR of NBFCs ........................................................................................................ 134 VI.29 Exposure to Sensitive Sectors .................................................................................. 135 VI.30 Credit to Housing Sector by HFCs, SCBs and other NBFCs ..................................... 135 VI.31 Resources Mobilised by HFCs .................................................................................. 136 VI.32 Distribution of HFCs’ Public Deposits ...................................................................... 137 VI.33 Asset Quality of HFCs, by Layer ............................................................................... 138 VI.34 Capital Adequacy...................................................................................................... 138 VI.35 Distribution of AIFIs, by Asset-Size .......................................................................... 139 VI.36 Weighted Average Cost and Maturity of Rupee Resources Raised by AIFIs ................ 141 VI.37 Long-term PLR Structure of Select AIFIs .................................................................. 142 VI.38 RoA of AIFIs ............................................................................................................. 143 VI.39 Soundness Indicators of AIFIs .................................................................................. 143 VI.40 Average Rate of Underwriting Commission of PDs .................................................... 144 VI.41 Capital and Risk-weighted Asset Position of SPDs .................................................... 146 xivList of Appendix Tables Sr. No. Particulars Page No. IV.1 Indian Banking Sector at a Glance ........................................................................... 147 IV.2 International Liabilities of Banks in India – By Type of Instruments ......................... 148 IV.3 International Assets of Banks in India - By Type of Instruments ............................... 149 IV.4 Consolidated International Claims of Banks on Countries other than India ............. 150 IV.5 Consolidated International Claims of Banks: Residual Maturity and Sector ............. 151 IV.6 Off-Balance Sheet Exposure of Scheduled Commercial Banks in India .................... 152 IV.7 Frauds in Various Banking Operations Based on Date of Reporting ......................... 153 IV.8 Kisan Credit Card Scheme: State-wise Progress ....................................................... 156 IV.9 Bank Group-wise Lending to the Sensitive Sectors .................................................. 158 IV.10 Shareholding Pattern of Domestic Scheduled Commercial Banks ............................ 159 IV.11 Overseas Operations of Indian Banks ....................................................................... 162 IV.12 Branches and ATMs of Scheduled Commercial Banks ............................................. 163 IV.13 Progress of Microfinance Programmes ..................................................................... 166 IV.14 Major Financial Indicators of Regional Rural Banks – State-wise ............................. 167 IV.15 RRBs - PSL Target and Achievement - 2023-24 ........................................................ 169 V.1 Indicators of Financial Performance: Scheduled UCBs ............................................. 170 V.2 Select Financial Parameters: Scheduled UCBs ......................................................... 172 V.3 Salient Indicators of Financial Health of State Co-operative Banks .......................... 173 V.4 Salient Indicators of Financial Health of District Central Co-operative Banks .......... 174 V.5 Details of Members and Borrowers of Primary Agricultural Credit Societies ............ 175 V.6 Primary Agricultural Credit Societies ....................................................................... 176 V.7 Select Indicators of Primary Agricultural Credit Societies - State-wise ..................... 177 V.8 Liabilities and Assets of State Co-operative Agriculture and Rural Development 179 Banks ....................................................................................................................... V.9 Financial Performance of State Co-operative Agriculture and Rural Development 180 Banks ....................................................................................................................... V.10 Asset Quality of State Co-operative Agriculture and Rural Development Banks ........ 181 V.11 Financial Indicators of State Co-operative Agriculture and Rural Development 182 Banks - State-wise .................................................................................................... V.12 Liabilities and Assets of Primary Co-operative Agriculture and Rural Development 183 Banks ....................................................................................................................... xvSr. No. Particulars Page No. V.13 Financial Performance of Primary Co-operative Agriculture and Rural Development 184 Banks ....................................................................................................................... V.14 Asset Quality of Primary Co-operative Agriculture and Rural Development Banks ... 185 V.15 Major Financial Indicators of Primary Co-operative Agriculture and Rural 186 Developments Banks ................................................................................................ VI.1 Consolidated Balance Sheet of NBFCs ...................................................................... 187 VI.2 Consolidated Balance Sheet of NBFC-UL.................................................................. 188 VI.3 Consolidated Balance Sheet of NBFC-ML ................................................................. 189 VI.4 Consolidated Balance Sheet of NBFCs-D .................................................................. 190 VI.5 Credit to Various Sectors by NBFCs ......................................................................... 191 VI.6 Financial Performance of NBFC-UL .......................................................................... 192 VI.7 Financial Performance of NBFC-ML ......................................................................... 193 VI.8 Financial Assistance Sanctioned and Disbursed by Financial Institutions ................ 194 VI.9 Financial Performance of Standalone Primary Dealers ............................................. 198 VI.10 Select Financial Indicators of Standalone Primary Dealers ....................................... 200 xviList of Select Abbreviations AA Account Aggregator CBP Co-Branding Partner AA Appellate Authority CCB Capital Conservation Buffer ACB Audit Committee of the Board CCIL Clearing Corporation of India Ltd. AEs Advanced Economies CCPs Central Counterparties AFA Additional Factor of Authentication CCPA Central Consumer Protection Authority AFS Available for Sale CCR Counterparty Credit Risk AGR Alternate Grievance Redress C-D ratio Credit-Deposit Ratio AI Artificial Intelligence CDS Credit Default Swap AID All-inclusive Directions CDs Certificates of Deposit AIFIs All India Financial Institutions CEO Chief Executive Officer ANBC Adjusted Net Bank Credit CEPC Consumer Education and Protection APIs Application Programming Interfaces Cell ARCs Asset Reconstruction Companies CEPD Consumer Education and Protection ARDL Autoregressive Distributed Lag Department ARR Alternative Reference Rate CEOBE Credit Equivalent of Off-Balance Sheet Exposure ATMs Automated Teller Machines CEOs Chief Executive Officers BBPOUs Bharat Bill Payment Operating Units CET1 Common Equity Tier 1 BBPS Bharat Bill Payment System CFLs Centres for Financial Literacy BCs Business Correspondents CGTMSE Credit Guarantee Fund Trust for BCBS Basel Committee on Banking Micro and Small Enterprises Supervision CIR Cost-to-Income Ratio BDDR Bad and Doubtful Debt Reserve CISBI Central Information System for BIS Bank for International Settlements Banking Infrastructure BoE Bank of England CKYCR Central Know Your Customer bps basis points Registry BR Act Banking Regulation Act CMBs Cash Management Bills BSBDA Basic Savings Bank Deposit CMs Clearing Members Accounts COD Commencement Operations Date CAB Current Account Balance CoR Certificate of Registration CAD Current Account Deficit CP Commercial Paper CAGR Compound Annual Growth Rate CPMI Committee on Payments and Market CASA Current Account Savings Account Infrastructures CBDC Central Bank Digital Currency CRAR Capital to Risk-weighted Assets CBDC-R Central Bank Digital Currency-Retail Ratio xviiCRE Commercial Real Estate FBs Foreign Banks CRGFTLIH Credit Risk Guarantee Fund Trust FCNR(B) Foreign Currency Non-Resident for Low Income Housing (Bank) CRILC Central Repository of Information FI Financial Inclusion on Large Credits FIPs Financial Inclusion Plans CRPC Centralised Receipt and Processing FIPs Financial Information Providers Centre FI-Us Financial Information Users CTS Cheque Truncation System FLCs Financial Literacy Centres DBIE Database on Indian Economy FLDG First Loss Default Guarantee DBT Direct Benefit Transfers FPC Fair Practices Code DCCBs District Co-operative Banks FPS Fast Payment System DEA Depositor Education and Awareness FREE-AI Framework for Responsible and DFI Development Financial Institution Ethical Enablement of Artificial Intelligence DFR Deposit Facility Rate FSB Financial Stability Board DI Deposit Insurance FVI Fraud Vulnerability Index DICGC Deposit Insurance and Credit Guarantee Corporation FX Forex DIF Deposit Insurance Fund GCC General Credit Card DLA Digital Lending App GDP Gross Domestic Product DPI Digital Payments Index GenAI Generative Artificial Intelligence ECB European Central Bank GFC Global Financial Crisis ECBs External Commercial Borrowings GHG Greenhouse Gas ECL Expected Credit Loss GMM Generalised Method of Moments ECLGS Emergency Credit Line Guarantee GNPA Gross Non-Performing Asset Scheme G-secs Government Securities ECM Error Correction Term G-SIBs Global Systemically Important EMEs Emerging Market Economies Banks EMDEs Emerging Market and Developing GST Goods and Services Tax Economies GVA Gross Value Added ERP Enterprise Resources Planning HFCs Housing Finance Companies EU European Union HFCs-D Deposit taking Housing Finance EWIs Early Warning Indicators Companies EWS Early Warning Signals HFT Held for Trading EXIM Bank Export-Import Bank of India HITM Human-in-the-middle FATF Financial Action Task Force HQLA High-quality Liquid Assets xviiiHTM Held to Maturity LR Leverage Ratio IBC Insolvency and Bankruptcy Code LTV Loan-to-Value IBUs IFSC Banking Units MCIs Multi-function Crypto-asset Intermediaries I-CRR Incremental Cash Reserve Ratio MD Managing Director ICT Information and Communication Technology MDA Micro-data Analysis IFRS International Financial Reporting ML Machine Learning Standards MPC Monetary Policy Committee IFSC International Financial Services MROs Main Refinancing Operations Centre MSE Micro and Small Enterprises IGR Internal Grievance Redress MSF Marginal Standing Facility IL&FS Infrastructure Leasing & Financial Services MSME Micro, Small and Medium Enterprises IMF International Monetary Fund NABARD National Bank for Agriculture and IMPS Immediate Payment Service Rural Development InvITs Infrastructure Investment Trusts NaBFID National Bank for Financing IO Internal Ombudsman Infrastructure and Development IOSCO International Organisation of NAFSCOB National Federation of State Co- Securities Commissions operative Banks IRACP Income Recognition, Asset NAV Net Asset Value Classification and Provisioning NBFC-BL Non-Banking Financial Company - ISSB International Sustainability Base Layer Standards Board NBFC-CIC Non-Banking Financial Company - IT Information Technology Core Investment Company JLGs Joint Liability Groups NBFC-ICC Non-Banking Financial Company - KCC Kisan Credit Card Investment and Credit Company KPIs Key Performance Indicators NBFC-IFC Non-Banking Financial Company - Infrastructure Finance Company KYC Know Your Customer NBFC-MFI Non-Banking Financial Company - LABs Local Area Banks Micro Finance Institution LAF Liquidity Adjustment Facility NBFC-MGC Non-Banking Financial Company - LBS Lead Bank Scheme Mortgage Guarantee Company LCR Liquidity Coverage Ratio NBFC-ML Non-Banking Financial Company - LEAs Law Enforcement Agencies Middle Layer LEF Large Exposures Framework NBFCs Non-Banking Financial Companies xixNBFC-NOFHC Non-Banking Financial Company NSUCBs Non-Scheduled Urban Co-operative – Non-Operative Financial Banks Holding Company OBS Off-Balance Sheet NBFCs-D Deposit-taking NBFCs OCEN Open Credit Enablement Network NBFCs-P2P Non-Banking Financial OD Overdraft Companies - Peer to Peer OEFs Open-Ended Funds NBFC-UL Non-Banking Financial Company ORBIO Office of the Reserve Bank of India - Upper Layer Ombudsman NBFIs Non-Banking Financial OTC Over-the-Counter Institutions P2M Person-to-Merchant NCCD Non-Centrally Cleared Derivatives P2P Person-to-Person NCDs Non-Convertible Debentures PACS Primary Agricultural Credit Societies NCE Non-Conventional Energy PAs Payment Aggregators NDS-OM Negotiated Dealing System - P&L Profit and Loss Order Matching PBs Payments Banks NDTL Net Demand and Time Liabilities PCA Prompt Corrective Action NEFT National Electronic Funds PCARDBs Primary Co-operative Agriculture Transfer and Rural Development Banks NGFS Network for Greening the PCR Provision Coverage Ratio Financial System PDs Primary Dealers NHB National Housing Bank PLR Prime Lending Rate NII Net Interest Income PMAY Pradhan Mantri Awas Yojana NIM Net Interest Margin PMJDY Pradhan Mantri Jan Dhan Yojana NLDR National Level Data Repository PRAVAAH Platform for Regulatory Application, NNPA Net Non-Performing Assets Validation and AutHorisation NOF Net Owned Funds PSBs Public Sector Banks NPI National Payments Interface PSL Priority Sector Lending NPL Non-Performing Loans PSLCs Priority Sector Lending Certificates NRC Nomination and Remuneration PSOs Payment System Operators Committee PSUs Public Sector Undertakings NRE Non-Resident External PVBs Private Sector Banks NRO Non-Resident Ordinary RB-CRIS Reserve Bank – Climate Risk NSFI National Strategy for Financial Information System Inclusion RB-IOS Reserve Bank – Integrated NSFR Net Stable Funding Ratio Ombudsman Scheme xxRBIH Reserve Bank Innovation Hub SMA Special Mention Account RBP Risk Based Premium SMF Small and Marginal Farmers RCCs Rural Credit Co-operatives SPDs Standalone Primary Dealers REITs Real Estate Investment Trust SR Security Receipt REs Regulated Entities SRO Self-regulatory Organisation RFAs Red Flagged Accounts SRO-FT Self–regulatory Organisation in FinTech sector RMCB Risk Management Committee of Board SSBs Standard Setting Bodies RoA Return on Assets StCBs State Co-operative Banks SUCBs Scheduled Urban Co-operative RoE Return on Equity Banks RPO Recover Point Objective T-bills Treasury Bills RR Reserve Ratio TCFD Task Force on Climate-related RRBs Regional Rural Banks Disclosures RS Regulatory Sandbox TFPG Total Factor Productivity Growth RSA Restructured Standard Advances TOT Toll Operate Transfer RTGS Real Time Gross Settlement TR Trade Repository RTO Recovery Time Objective TReDS Trade Receivables Discounting System RWAs Risk-weighted Assets TVP Target Variable Pay SAF Supervisory Action Framework UAE United Arab Emirates SARFAESI Securitisation and Reconstruction of Financial Assets and Enforcement UCBs Urban Co-operative Banks of Security Interest UIADI Unique Identification Authority of SBR Scale-based Regulation India ULI Unified Lending Interface SCARDBs State Co-operative Agriculture and Rural Development Banks UPI Unified Payments Interface SCB Scheduled Commercial Bank UTs Union Territories SDF Standing Deposit Facility VP Variable Pay SEs Supervised Entities VRRR Variable Rate Reverse Repo SFBs Small Finance Banks WACR Weighted Average Call Rate SGrBs Sovereign Green Bonds WADTDR Weighted Average Domestic Term Deposit Rate SHG Self Help Group WALR Weighted Average Lending Rate SIDBI Small Industries Development Bank of India WAP Weighted Average Premium SLAs Service-level Agreements WEO World Economic Outlook SLR Statutory Liquidity Ratio WLAs White-label ATMs xxiI PERSPECTIVES Macroprudential policies have assiduously nurtured the health parameters of the Indian banking system and non-banking financial companies (NBFCs) in an environment of balancing innovations with safeguards to secure and preserve overall financial stability. This has enabled financial entities to sustain credit growth and support domestic economic activity. 1. Introduction and soundness of the Indian banking and non- banking financial sectors. Banks’ profitability I.1 Following the synchronised global improved for the sixth consecutive year in 2023- monetary tightening undertaken during 2022- 24, while their gross non-performing assets 23, inflation has been easing, while economic (GNPA) ratio reached its lowest level in 13 years at activity is on course for a soft landing. This had 2.7 per cent at end-March 20242. Banks’ capital prompted major central banks to start cutting position remained satisfactory, as reflected in policy rates in 2024. The last mile of disinflation, i.e., alignment with targets, is, however, turning key parameters like leverage ratio and capital out to be challenging and accompanied by bouts to risk weighted assets ratio (CRAR). Strong of volatility in global financial markets. Looking credit expansion by NBFCs was accompanied ahead, geopolitical conflicts, geoeconomic by further strengthening of their balance sheets, fragmentation, commodity price volatility, improvement in credit quality and profitability, climate change, ageing populations and and satisfactory capital buffers. weakening productivity weigh on the global I.4 Against this backdrop, this chapter economic outlook. provides an overall perspective of the I.2 After the banking sector turmoil in opportunities and challenges faced by the certain advanced economies (AEs) in 2023 was domestic banking sector and NBFCs. The quelled by prompt policy actions that forestalled chapter presents an outlook for regulatory and a systemic crisis and potential spillovers, supervisory changes in Section 2. Developments the global banking sector shows signs of in payment and settlement systems are covered resilience, with strong capital buffers, improved in Section 3. Opportunities and risks associated profitability, rising non-interest income and with adoption of emerging technologies are comfortable asset quality. However, the number discussed in Section 4. Issues relating to financial of vulnerable banks with weak risk indicators is inclusion, consumer protection and climate rising, particularly in Asia1. change are covered in sections 5 to 7, I.3 In India, strong macroeconomic respectively. The chapter concludes with an fundamentals have boosted the performance overall assessment in Section 8. 1 International Monetary Fund (2024). Global Financial Stability Report, October. 2 Data pertain to global operations of scheduled commercial banks. 1Report on Trend and Progress of Banking in India 2023-24 2. Regulation and Supervision Unsecured Lending I.5 Building on the Reserve Bank’s recent I.8 In response to the Reserve Bank’s regulatory measures, a consultative process November 2023 macroprudential measures to in formulation of regulations is being fostered contain potentially excessive risk build-up from through the ‘Connect 2 Regulate’ programme. A high credit growth in unsecured retail segments, dedicated section on the Reserve Bank’s website there has been some moderation in credit will be made available to stakeholders to share growth, but delinquency levels and leverage their inputs on topics announced by the Reserve warrant enhanced vigil. While specific limits Bank from time to time3. have been prescribed for unsecured lending by I.6 Under the process of supervision of urban co-operative banks (UCBs), boards of banks, NBFCs and other financial entities, the SCBs and NBFCs have discretion in fixing limits focus is now on early detection and pre-emptive on unsecured exposures. However, some entities correction. The enhanced off-site assessment have fixed very high ceilings, which need to be framework is more analytical and forward- continuously monitored. Going forward, the looking with introduction of macro-stress Reserve Bank expects the boards of REs to show tests, early warning indicators (EWIs), fraud prudence and avoid exuberance in the interest vulnerability index (FVI), micro-data analysis of their own financial health as also systemic (MDA), and use of artificial intelligence (AI) and financial stability4. machine learning (ML) techniques. Gold Loans I.7 The Reserve Bank’s frequent and wide I.9 In view of several irregularities observed interactions with supervised entities (SEs), in grant of loans against gold ornaments and including with managing directors (MDs) and chief executive officers (CEOs) as well as board jewellery, including top-up loans, the Reserve directors, will be carried forward. Engagement Bank advised SEs to comprehensively review with SEs is also being strengthened through their policies, processes and practices on gold DAKSH portal – a SupTech initiative with end- loans to identify gaps and initiate appropriate to-end workflow solution to streamline and remedial measures in a time-bound manner. strengthen various supervisory processes. SEs were advised to closely monitor their gold Additionally, direct interactions with statutory loan portfolios and ensure adequate controls auditors have further strengthened the oversight over outsourced activities and third-party service framework. This consultative approach is also providers. being followed in revision of various regulatory Top-up Loans guidelines including Basel III standards. The Reserve Bank is also working on issuing final I.10 While top-up loans provide additional guidelines on disclosure framework for climate- credit facilities to customers on the strength related financial risks. of their existing collateral such as houses, 3 Reserve Bank of India (2024). Statement on Developmental and Regulatory Policies, December 6. 4 Current Issues in the Indian Banking and Financial Sector, inaugural address by Shri Shaktikanta Das, July 19, 2024 at the Financial Express Modern BFSI Summit, Mumbai. 2PERSPECTIVES automobiles or gold, many REs may perceive resources from high-risk appetite investors to such secured loans as having lower risk. Hence, finance mid-sized companies — a segment which such additional facilities are often sanctioned often faces challenges in getting finance from with minimal processes and due diligence, banks and public debt markets. Recent trends, with liberal underwriting standards and lax however, indicate that the reach of private adherence to prudential guidelines on loan-to- credit is expanding beyond mid-sized corporate value (LTV) ratios, risk weights, and without borrowers, intensifying competition with banks ensuring the end-use of funds. These practices in the syndicated loan markets5. In India, the size of such private credit firms and the resources could lead to build-up of risks, especially during raised by them is not very large. A closer look times when collaterals for such loans become is, however, warranted at the inter-linkages volatile or face cyclical downturns. In view of between REs, including banks and NBFCs, with these concerns, the Reserve Bank in November such firms. Strong interrelationship between 2023 had instructed that all top-up loans them could give rise to systemic concerns along extended by REs against movable assets, which with the possibility of regulatory arbitrage to are inherently depreciating in nature, should be circumvent regulations. treated as unsecured loans for credit appraisal, prudential limits and exposure purposes. The Know Your Customer (KYC) Reserve Bank will assess the need, if any, for I.13 The amendments to KYC master additional regulatory interventions to mitigate directions, issued on November 6, 2024, now the identified risks in cases of other top-up loans. mandate REs to seek from the customer or retrieve from Central KYC Registry (CKYCR), Foreclosure Charges/ Pre-payment Penalties the customer’s KYC identifier for the purpose of on Loans verification of identity of the customer and for I.11 Banks and NBFCs are presently not ongoing due diligence. It also mandates the use permitted to levy foreclosure charges/ pre- of CKYCR for the purpose of re-KYC or periodic payment penalties on any floating rate term loan updation of KYC details by REs. The amendment sanctioned for purposes other than business, further mandates a time limit of seven days or to individual borrowers with or without co- as notified by the central government for REs obligant(s). To safeguard customers’ interest to update customer records in CKYCR. REs are through better transparency, broadening the also required to retrieve the updated information scope of such regulations to cover loans to from CKYCR and maintain the updated record. micro and small enterprises (MSEs) is being I.14 However, certain gaps in implementation considered. of these directions by REs are resulting in several Private Credit Markets accounts getting frozen, denying customers I.12 The shift in lending intermediation from access to their funds. Other related issues include banks to private entities is gaining traction lack of a proactive approach in assisting and globally. Traditionally, private credit firms raise obtaining customers’ documents; inadequate 5 International Monetary Fund (2024). Global Financial Stability Report, The Last Mile: Financial Vulnerabilities and Risks, April. 3Report on Trend and Progress of Banking in India 2023-24 staff deployment in such critical functions training and career development opportunities, resulting in overcrowding or denial of service at mentorship programmes, competitive benefits, branches; directing the customers to their home and a supportive workplace culture to build branch for KYC updation rather than facilitating long-term employee engagement. the same at branch of customers’ convenience; 3. Payment and Settlement Systems and failure to update the details in the system even Payment Aggregators (PAs) after the customers have provided the required documents. There are also instances of accounts I.16 The Payments Vision 2025 emphasised meant to receive direct benefit transfers (DBT) the need to bring all significant payment from the government being made inoperative intermediaries under direct regulation of the or frozen, contrary to regulatory guidelines. In Reserve Bank. In line with the vision, guidelines such matters, it is essential for the banks’ boards for regulation of online PAs are proposed to be to establish policies and direct banks to adopt applied to PA-Point of Sale as well. This measure standard operating procedures that are not only would bring in synergy in regulation and compliant with regulatory guidelines but also convergence of standards. practical for effective implementation. Banks Beneficiary Name Look-up Facility should ensure that KYC guidelines are followed I.17 The facility for the remitter to verify the with both precision and empathy6. name of the receiver before initiating a transaction Higher Employee Attrition in payment systems like Unified Payments Interface (UPI) and Immediate Payment Service I.15 Employee attrition rates are high across (IMPS) is being extended to cover the Real Time select private sector banks (PVBs) and small Gross Settlement (RTGS) and National Electronic finance banks (SFBs). The total number of Funds Transfer (NEFT) systems. This facility will employees of PVBs surpassed that of public help reduce the possibility of wrong credits and sector banks (PSBs) during 2023-24, but their frauds. attrition has increased sharply over the last three years, with average attrition rate of around 25 Cheque Truncation System (CTS) per cent. High attrition and employee turnover I.18 The current batch processing approach rate pose significant operational risks, including of cheque processing results in a clearing cycle disruption in customer services, besides leading of up to two working days. To improve efficiency to loss of institutional knowledge and increased and reduce settlement risk for participants, recruitment costs. In various interactions with a proposal to transition CTS to ‘on realisation banks, the Reserve Bank has stressed that settlement’ is being considered. Under the new reducing attrition is not just a human resource approach, cheques will be scanned, presented, function but a strategic imperative. Banks and passed on a continuous basis during need to implement strategies like improved business hours and the clearing cycle will be onboarding processes, providing extensive reduced to a few hours. 6 The Board’s Role in Navigating Transformation, Special Address by Shri Swaminathan J., November 18, 2024, at the Conference of Directors of Private Sector Banks in Mumbai. 4PERSPECTIVES Internationalisation of Payment Systems services and use cases, and gather market intelligence. The financial sector landscape is I.19 The Reserve Bank has taken several witnessing paradigm shifts with the advent of steps to promote and enhance acceptance of emerging technologies like AI/ML, tokenisation Indian payment instruments globally through and cloud computing. While the benefits of initiatives like interlinking the UPI with their adoption are many, the attendant risks fast payment systems of other countries like algorithmic bias, explainability of decisions and promoting acceptance of RuPay cards and data privacy are also high. To address the globally. Such arrangements have already been attendant risks early in the adoption cycle, the operationalised in Singapore, UAE, Nepal, Reserve Bank announced that a committee Mauritius, Bhutan, France, Sri Lanka and the will be constituted to develop a Framework for Maldives. The deployment of UPI-like payment Responsible and Ethical Enablement of AI (FREE- system is underway in Peru and Namibia. In AI) to recommend a robust, comprehensive, and June 2024, the Reserve Bank joined Project adaptable AI framework for the financial sector7. Nexus, a multilateral international initiative to enable instant cross-border retail payments Digital Lending by interlinking domestic fast payment systems I.22 Several reports indicate continued of five countries viz. Malaysia, the Philippines, presence of unscrupulous players in digital Singapore, Thailand and India, who would be the lending space, who falsely claim association with founding members of this platform. REs. To aid the customers in verifying the claims 4. Adoption of Emerging Technologies of a Digital Lending App’s (DLA’s) association with an RE, the Reserve Bank is in the process of I.20 Digital technologies have been instrumental creating a public repository of DLAs deployed by in expanding financial inclusion, improving REs. The repository will contain data submitted efficiency, and enabling real-time services across by REs, without any intervention by the Reserve India. Initiatives leveraging technologies such as Bank and REs will be required to update the the Unified Lending Interface (ULI) and Open same whenever there is an addition of a new DLA Credit Enablement Network (OCEN) are expected or deletion of an existing DLA. to redefine credit access, particularly for small businesses and individuals. The Reserve Bank Scaling up Unified Lending Interface has been supporting innovations to provide I.23 The ULI (earlier called Public Tech seamless and efficient experience for customers. Platform for Frictionless Credit) is a digital However, the digital shift also introduces risks public infrastructure in lending space, which that must be identified, mitigated and managed to will unlock critical financial, non-financial and maintain a stable and secure financial ecosystem. alternate data for lenders to enable informed I.21 The Reserve Bank convened structured credit decisions. The pilot on ULI commenced and open interactions with FinTechs at periodic from August 17, 2023. As on December 6, 2024, intervals with a view to convey the policy initiatives, over 6 lakh loans amounting to ₹27,000 crore, understand the new developments, products, including a substantial number of micro, small 7 Reserve Bank of India (2024). Statement on Developmental and Regulatory Policies, December 6. 5Report on Trend and Progress of Banking in India 2023-24 and medium enterprise (MSME) loans (1.60 be programmed. The solutions to enable offline lakh loans amounting to ₹14,500 crore) have functionality in CBDC-R (both proximity and been disbursed using application programming non-proximity based) for making transactions in interfaces (APIs) from the platform. 36 lenders, areas with poor or limited internet connectivity including various banks (PSBs, PVBs, SFBs, are also being tested in a closed user group. district central co-operative banks, regional These functionalities will be scaled up through rural banks) and NBFCs have been onboarded. pilots in a gradual manner. These lenders are using more than 50 data 5. Financial Inclusion services including, inter alia, authentication and verification services, land records data from six I.25 India has taken significant strides in states, satellite service, transliteration, property enhancing access to banking and financial search services, dairy insights and identity/ services, reaching even the most remote areas of document verification. Further, 12 loan journeys the country. Efforts are envisaged for improving have been introduced, including kisan credit the usage and quality of services, including card, digital cattle, MSME (unsecured), housing, bridging the gender gap8. personal, tractor, micro business, vehicle, digital National Strategy for Financial Inclusion 2.0 gold, e-Mudra, pension and dairy maintenance I.26 The next iteration of the National Strategy loans. Based on the learnings and the positive response from stakeholders, the scope and for Financial Inclusion (NSFI) for the period coverage of the platform is being expanded to 2025-30 is being developed based on wide include more loan journeys, data providers and ranging stakeholder consultations and the lenders. experience gained during the implementation of the current strategy. It will focus on further Central Bank Digital Currency (CBDC) deepening of financial inclusion while tackling I.24 The CBDC-retail (CBDC-R) pilot currently emerging challenges. enables person-to-person (P2P) and person- Review of Lead Bank Scheme (LBS) to-merchant (P2M) transactions using digital rupee wallets provided by pilot banks. The I.27 A comprehensive review of the LBS is programmability and offline functionality in underway to enhance the effectiveness of the CBDC-R are also being tested under the pilot. scheme and achieve deepening of financial Programmability will permit users, including inclusion through improved access, usage, and government agencies, to ensure that payments quality of financial services for all sections of the are made for defined benefits. Similarly, entities population. will be able to program specified expenditures, 6. Consumer Protection such as, business travel for their employees. Features like validity period or geographical I.28 Fair treatment of customers and effective areas within which CBDC-R may be used can also grievance redressal mechanism are the most 8 Reaching the Unreached – Ensuring Last Mile Connectivity of Banking Services-keynote address by Shri Swaminathan J., September 20, 2024 at the Conference of Lead District Managers and District Development Managers in Hubballi. 6PERSPECTIVES important means of consumer protection. In this direction is the AI / ML based model called this regard, a survey is being carried out by MuleHunter.AITM, being piloted by Reserve Bank the Reserve Bank to gain insights into the low Innovation Hub (RBIH)10. number of complaints emanating from rural Dark Patterns and semi-urban populations. The Reserve Bank I.31 Dark patterns, which are design is also encouraging banks to strengthen their interfaces and tactics used to trick users into internal grievance redress frameworks. desired behaviour, have emerged as a new I.29 With a view to fostering greater form of mis-selling. The Central Consumer transparency and disclosure by REs in pricing of Protection Authority (CCPA) notified guidelines loans and other charges levied on the customers, on prevention and regulation of dark patterns with effect from October 1, 2024, it has been on November 30, 2023, with the objective of made mandatory for REs to provide a key facts identifying and regulating such practices. The statement (KFS) to borrowers in respect of all Reserve Bank is also looking into the prevalence new retail and MSME term loans, containing of such practices among its REs and considering the important information regarding a loan appropriate policy actions. agreement, including all-in-cost of the loan, in simple and easy-to-understand format. 7. Climate Change Digital Frauds I.32 Climate change risks are envisaged to impact profitability of financial institutions, I.30 While many cases of digital frauds result growth prospects, and inflation dynamics and, from social engineering attacks on customers, thus, impinge upon financial stability and price there is also a rapid increase in the use of mule stability. To foster assessment of these concerns bank accounts to perpetrate such frauds. This by REs, regulatory and supervisory frameworks exposes banks not only to serious financial need to be strengthened with enhanced and operational risks, but also to reputational risk management guidelines; disclosure risks. Banks, therefore, need to strengthen their requirements; periodic stress testing; and customer onboarding and transaction monitoring stipulating reasonable verification and assurance systems to monitor unscrupulous activities. This functions. also requires effective co-ordination with the law enforcement agencies (LEAs) so that the concerns I.33 In line with India’s commitment towards occurring at a systemic level are detected and net-zero transition, the Reserve Bank has curbed in time. The Reserve Bank is working taken proactive steps like including financing with banks and LEAs to strengthen transaction renewable energy projects under priority sector monitoring systems and ensure sharing of best loans; introducing green deposits framework; practices for control of mule accounts and issuance of sovereign green bonds (SGrBs); prevention of digital frauds9. Another initiative in allowing investment and trading in SGrBs 9 Current Issues in the Indian Banking and Financial Sector-Inaugural Address by Shri Shaktikanta Das, July 19, 2024 at the Financial Express Modern BFSI Summit, Mumbai. 10 Reserve Bank of India (2024). Statement on Developmental and Regulatory Policies, December 6. 7Report on Trend and Progress of Banking in India 2023-24 by eligible foreign investors in International gaps, the Reserve Bank plans to create a data Financial Services Centre (IFSC) in India; and repository, viz., the Reserve Bank – Climate issuing a draft disclosure framework for climate- Risk Information System (RB-CRIS)12. The related financial risks for public consultation. first part of the repository will be a web-based directory, listing various data sources, including I.34 The Reserve Bank is also in the process of meteorological and geospatial data, which will finalising and issuing a guidance note on scenario be publicly accessible at the RBI website. The analysis and stress testing of climate related second part will comprise processed datasets risks for REs, covering modelling techniques, in standardised formats. The access to this data scenario considerations and methodologies for portal will be made available only to REs in a carrying out stress testing exercises. The Reserve phased manner. Bank’s aspirational goals for RBI@100 include 8. Overall Assessment establishing a robust regulatory and supervisory framework to effectively manage challenges I.36 Banks and NBFCs remain the backbone arising from climate change, enhancing the of India’s financial sector, providing support resilience of payment systems against climate to its growth aspirations by meeting the credit risks, and collaborating with the government for requirements of the productive sectors of the finalising a comprehensive taxonomy11. economy. The Reserve Bank will continue to nurture and incentivise the development of Reserve Bank Climate Risk Information infrastructure to give a ‘digital push’ to payments System (RB-CRIS) and settlements. It is also committed to playing I.35 Climate risk assessments by REs would an enabling role in the adoption of emerging require, inter alia, high quality data relating to technology, while reinforcing its customer-centric local climate scenarios, climate forecasts, and measures and deepening financial inclusion. emissions. The publicly available climate related Maintaining financial stability remains the data are characterised by various gaps, such overarching goal and will continue to guide as, fragmented and varied sources, differing the Reserve Bank’s regulatory and supervisory formats, frequencies and units. To bridge these policies. 11 Reserve Bank of India (2024). Governor’s Statement, June 7. 12 Reserve Bank of India (2024). Statement on Developmental and Regulatory Policies, October 9. 8II GLOBAL BANKING DEVELOPMENTS The global banking sector exhibited improvement in asset quality and capital and provision buffers during 2024. Credit growth and profitability moderated, reflecting the impact of tight financial conditions. Global regulatory and supervisory actions were directed towards addressing concerns regarding securitisation, resilience of the non-banking financial sector, climate and nature-related risks and regulation of crypto- assets. Going forward, policy makers will have to remain vigilant against build-up of risks in the financial system amidst escalating geopolitical tensions, rapidly emerging new technologies and increasing climate- related risks. 1. Introduction II.3 Against this backdrop, this chapter covers developments in the global banking sector. II.1 In 2024, the global economy recovered Section 2 reviews current global macroeconomic from post-pandemic supply-chain disruptions, conditions. Global banking policy developments and multi-decadal high inflation1. Global growth are discussed in Section 3. Section 4 examines stabilised and inflation eased to striking distance the performance of the global banking sector, of targets across major jurisdictions. Geopolitical while Section 5 focuses on the performance and tensions, ongoing geoeconomic fragmentation, soundness of the top 100 global banks ranked high government debt, stretched asset valuations, by Tier 1 capital positions. Section 6 concludes cyber threats in conjunction with technological with an overall assessment. transformation and climate change-related 2. Global Macroeconomic Conditions issues, however, weigh on the outlook. II.4 Global gross domestic product (GDP) is II.2 The global banking sector successfully estimated to grow by 3.2 per cent in both 2024 navigated these turbulences. Strains faced by and 20252 (Chart II.1a). Inflation is gradually banks in some jurisdictions in March 2023 were receding from multi-decadal highs across alleviated by swift policy interventions. Although geographies on the back of aggressive monetary a systemic spillover impact was avoided, this tightening, and corrections in food and energy episode flagged financial stability challenges prices. It is estimated to moderate from 6.7 emanating from the liabilities side of banks’ per cent in 2023 to 5.8 per cent in 2024 and balance sheets. Yet, asset quality, provisions further to 4.3 per cent in 2025 (Chart II.1b). and capital buffers remained satisfactory across Services inflation, however, remains at elevated advanced economies (AEs) and emerging market levels across AEs and poses upside risks to the and developing economies (EMDEs). inflation trajectory. 1 Following global practice, throughout this chapter, year pertains to the calendar year viz. January to December. 2 International Monetary Fund (IMF) (2024). World Economic Outlook (WEO), October. 9Report on Trend and Progress of Banking in India 2023-24 Chart II.1 Growth and Inflation Note: *: Projections. Source: World Economic Outlook, IMF. II.5 Major central banks have started reducing which the ECB will steer its monetary policy policy rates as they gain confidence that inflation stance, as compared to the main refinancing is moving towards targets. The US Federal operations (MROs) rate, which was the earlier Reserve reduced the federal funds target rate by policy rate. During 2024, the ECB cut the policy 50 basis points (bps) on September 18, 2024 rate four times. The Bank of England (BoE) - the first rate cut since March 2020 – and by started its easing cycle with a reduction of 25 25 bps each in November and December, 2024. bps in August 2024, followed by another 25 The European Central Bank (ECB) changed its bps reduction in November 2024. The Bank monetary policy operational framework with of Japan exited its negative interest rate policy effect from September 2024. Deposit facility rate after eight years and abandoned yield curve (DFR) is now the de facto policy rate through control (Chart II.2a). Monetary policy responses Chart II.2 Monetary Policy Rates Source: Bank for International Settlements (BIS) and Bloomberg. 10GLOBAL BANKING DEVELOPMENTS Chart II.3 Current Account and General Government Gross Debt Note: *: Projections. Source: World Economic Outlook, IMF. of EMDE central banks were more varied. Chile High government debt levels also posed challenges began cutting rates in 2023 and continued with for EMDEs in an environment of tight financial its easing cycle into 2024. Indonesia and South conditions. Africa began their easing cycles in September 3. Global Banking Policy Developments 2024. Brazil, on the other hand, reversed its easing cycle with a cumulative increase of 175 II.7 Systemic spillovers from the failure of bps in the policy rate during September 2024 to Silicon Valley Bank and some U.S. regional banks December 2024 in response to inflation moving in March 2023 and the collapse of Credit Suisse above the target. China announced monetary and before its merger with the UBS in June 2023 were other stimulus measures in September 2024 to avoided through swift and sizeable regulatory support economic growth and address property actions and liquidity support. These episodes, sector risks (Chart II.2b). however, raised concerns about the resilience of the banking sector and exposed weaknesses II.6 After widening substantially during the in governance, risk management practices, and pandemic years (2020-2022), the current account regulatory frameworks. The growing role of non- deficit (CAD) of AEs has been moderating, though banking financial institutions (NBFIs) in the it remains higher than in the pre-pandemic years. recent years has added an additional layer of Growth in the volume of world trade in goods and services recovered to 3.1 per cent in 2024 from complexity to the financial system. Regulators and 0.8 per cent in 2023, driven by ebbing inflation central banks are strengthening their supervisory and increased exports from Asia, particularly in frameworks to mitigate systemic risks emanating the technology sector (Chart II.3a). Government from interconnectedness. The increased adoption deficits and debt, which came under pressure in of digital banking and FinTech solutions highlights 2020 due to the large pandemic-related support, the need to improve traditional banking models remained elevated, especially for AEs (Chart II.3b). and address new regulatory challenges3. 3 https://www.bis.org/publ/arpdf/ar2024e.pdf 11Report on Trend and Progress of Banking in India 2023-24 3.1 Building Resilient Financial Institutions4 counterparties (CCPs), and large exposures framework (LEF). For capital requirements II.8 The March 2023 banking turmoil for equity investments in funds, securitisation highlighted the need for prudent regulation framework and monitoring tools for intra- and effective supervision and underlined the day liquidity management, one more member importance of implementing all aspects of the jurisdiction has published final rules. Basel III framework. Basel Committee on Banking Supervision (BCBS) member jurisdictions have 3.2 Too-Big-to-Fail Reforms6 made significant progress in implementing the II.10 The FSB’s work on bank resolution until now final Basel III elements, effective January 1, 2023. has primarily been focused on global systemically As of September 2024, one-fourth of Financial important banks (G-SIBs) and significant progress Stability Board (FSB) member jurisdictions has been made in this regard. However, the 2023 had fully implemented the final elements of banking turmoil highlighted the importance of Basel III, while most member jurisdictions had resolution planning and loss-absorbing capacity published final rules for most of the elements5. for non-systemically important banks as well. Since end-September 2023, around half of the In November 2024, the FSB emphasised that 27 member jurisdictions have published the final the existing guidance on resolution planning and rules for the revised credit risk, market risk and execution may also be relevant for banks that may operational risk standards as well as the output be systemically significant or critical if they fail, as floor. In addition, three member jurisdictions have such failure may also have severe consequences issued the final rules for the revised leverage ratio for the financial system or the broader economy7. exposure definition. As a result, over two-thirds The FSB recommended jurisdictions to enhance of member jurisdictions have now published final the usability of resolution tools, address liquidity rules for all the final elements of Basel III and in resolution, and ensure options to manage these standards are in force in more than a third distress without systemic disruption and exposing of the member jurisdictions. taxpayers to loss. II.9 Further progress has also been made on other standards that had implementation II.11 The BCBS has found that the G-SIB dates before January 1, 2023. Since end- assessment framework is influenced by year-end September 2023, eight jurisdictions have values of the indicators reported by participating completed implementing the interest rate risk banks. To address these concerns, the BCBS has in the banking book standard, seven have proposed revisions requiring banks participating implemented various disclosure elements, and in the G-SIB assessment exercise to report and two each have implemented margin requirements disclose the stock G-SIB indicators based on for non-centrally cleared derivatives (NCCDs), average of values over the reporting year instead capital requirements for exposures to central of year-end values8. 4 BIS (2024)- RCAP on timeliness: Basel III implementation dashboard 5 A jurisdiction is considered as having adopted a standard if a final rule is published and as having implemented a standard if a final rule has been published and is implemented by banks. 6 FSB (2024)- Annual Report: Promoting Global Financial Stability 7 FSB (2024)- The importance of resolution planning and loss-absorbing capacity for banks systemic in failure: Public statement 8 BCBS (2024)- Global systemically important banks - revised assessment framework 12GLOBAL BANKING DEVELOPMENTS 3.3 Making Derivatives Markets Safer material negative side-effects on financing to the economy. II.12 Implementation of the G20 over- the-counter (OTC) derivatives reforms has 3.5 Non-Bank Financial Intermediation progressed well in major jurisdictions over II.15 NBFIs accounted for almost half of global the years. Jurisdictions with majority of global financial assets at end-2022. Concerns regarding OTC derivatives activity have implemented their growing size and interconnectedness came comprehensive trade reporting requirements, to the fore in the aftermath of the GFC, the March central clearing and platform trading frameworks, 2020 pandemic-related market turmoil, the 2021 and capital and margin requirements for NCCDs. Archegos Capital episode, and more recently Jurisdictions yet to implement these reforms during the Chinese property sector crisis. In April account for a low proportion of global OTC 2024, the BCBS issued a consultative document derivative market activity. with guidelines for counterparty credit risk (CCR) II.13 Over the past five years, the number of management to replace the 1999 guidelines. FSB member jurisdictions with comprehensive These include key practices critical to resolving trade reporting requirements has remained long-standing industry weaknesses in CCR unchanged, with only one additional jurisdiction management. adopting central clearing or platform trading II.16 Further, to enhance the resilience of the frameworks9. sector and monitor its developments, the FSB and standard setting bodies (SSBs) proposed policies 3.4 Securitisation in early 2024 to enhance margining practices II.14 A number of regulatory reforms have and liquidity preparedness of non-bank market been introduced since the global financial crisis participants for margin and collateral calls11. (GFC) in 2008 to improve transparency, address 3.6 March 2023 Banking Turmoil conflicts of interest, strengthen the regulatory capital treatment for banks’ securitisation II.17 In October 2024, the FSB published a exposures by improving risk sensitivity and report which identified three types of entities reducing cliff effects, and align incentives most vulnerable to a combination of solvency and associated with securitisation. In July 2024, the liquidity risks: weak banks, life insurers, and FSB published a consultative report, evaluating non-bank real estate investors12. The report also the effects of the G20 financial regulatory reforms highlighted that technological advancements have on securitisation10. The findings suggest that the facilitated easier and faster deposit transfers, and reforms have contributed to the resilience of the social media may have influenced some of the securitisation market without strong evidence of recent bank runs. 9 2024 FSB Annual Report- Promoting Global Financial Stability 10 https://www.fsb.org/2024/07/evaluation-of-the-effects-of-the-g20-financial-regulatory-reforms-on-securitisation-consultation- report/ 11 https://www.fsb.org/wp-content/uploads/P220724-2.pdf 12 FSB (2024)- Depositor Behaviour and Interest Rate and Liquidity Risks in the Financial System: Lessons from the March 2023 banking turmoil 13Report on Trend and Progress of Banking in India 2023-24 II.18 In October 2024, the BCBS, at the request of which highlighted areas of progress and the G20 Brazilian Presidency, published a report identified challenges15. The report concluded which summarises the lessons on liquidity risk that at the global level, the KPIs show limited learnt from the March 2023 banking turmoil13. progress towards achieving the targets and that These lessons include: (i) liquidity supervision the differences across regions and corridors may need to evolve in light of recent experience; remain, with some regions continuing to face (ii) importance may be accorded to monitoring greater challenges, particularly in meeting the and managing risks for internationally active targets set for cost and speed. banks at a consolidated group as well as II.21 To take the G20 roadmap forward, the FSB legal entity level; and (iii) discussions may be published two consultation reports in July 2024, warranted on the calibration of assumptions of one which puts forth policy recommendations the Basel standards of liquidity coverage ratio to promote alignment and interoperability (LCR) and net stable funding ratio (NSFR). across cross-border payments related data 3.7 Central Counterparty frameworks, and the other which sets out policy recommendations to strengthen the consistency II.19 The systemic importance of CCPs has in the regulation and supervision of banks and spurred steps to ensure the availability of non-banks in their provision of cross-border sufficient liquidity, loss-absorbing capacities, payment services in a way that is proportionate and recapitalisation tools to sustain the CCPs’ to the risks associated with such activities16, 17. essential functions and mitigate the potential negative impacts on financial stability during a II.22 Service-level agreements (SLAs) used resolution. In 2024, the FSB devised a “toolbox” in cross-border payment arrangements define approach setting a global standard for financial minimum service levels for correspondent resolution resources and tools for CCPs that are banking relationships. In April 2024, deemed systemically important14. The toolbox the Committee on Payments and Market Infrastructures (CPMI) published a report approach provides authorities the flexibility advocating the establishment of clear, to select from a range of resources and tools, transparent and enforceable SLAs, which may complementing the ones that already existing in effectively mitigate risks from cross-border their jurisdictions. payments, adequately define transparent and 3.8 Cross-Border Payments efficient payment processing rules, ensure II.20 In October 2024, the FSB published its timeliness and finality of settlement, and second Key Performance Indicators (KPIs) report promote interoperability with internationally on meeting targets for cross-border payments, accepted technical standards18. 13 BCBS (2024)- The 2023 banking turmoil and liquidity risk: a progress report 14 https://www.fsb.org/2024/04/financial-resources-and-tools-for-central-counterparty-resolution/ 15 https://www.fsb.org/2024/10/annual-progress-report-on-meeting-the-targets-for-cross-border-payments-2024-report-on-key- performance-indicators/ 16 https://www.fsb.org/2024/07/recommendations-to-promote-alignment-and-interoperability-across-data-frameworks-related-to- cross-border-payments-consultation-report/ 17 https://www.fsb.org/2024/07/recommendations-for-regulating-and-supervising-bank-and-non-bank-payment-service-providers- offering-cross-border-payment-services-consultation-report/ 18 https://www.bis.org/cpmi/publ/d222.htm 14GLOBAL BANKING DEVELOPMENTS 3.9 Climate and Nature-related Risks while others are still monitoring international developments, and a few have opted not to II.23 Addressing financial risks emanating address the issue yet. However, there is a from climate change is a key priority for recognition that more expertise is required in the all international bodies. The International supervisory community, in central banks, and in Organisation of Securities Commissions (IOSCO), the private sector to effectively understand and the International Sustainability Standards address nature-related financial risks. Board (ISSB), and other relevant bodies have collaborated to support jurisdictions in adopting II.26 In addition, the Network for Greening and applying the ISSB’s new sustainability- the Financial System (NGFS) put out a report related disclosure standards. on ‘Adapting Central Bank Operations to a Hotter World’ in July 2024 discussing insights II.24 An FSB progress report on climate- from eight case studies from Europe and Asia. related disclosures indicates that out of the 24 These case studies have highlighted how certain FSB member jurisdictions surveyed, 19 have central banks have integrated climate-related already enacted regulations, issued guidelines or factors into their monetary policies through developed strategic roadmaps for climate-related initiatives such as adjusted credit operations, disclosures. 17 FSB jurisdictions have set or adjusted asset purchase schemes, and adjusted proposed voluntary or mandatory disclosure collateral policies21. While the central banks that requirements based on the ISSB Standards have taken action have followed a cautious and and the recommendations of the Task Force on gradual approach so far, it is expected that they Climate-related Disclosures (TCFD). Moreover, will learn more about the associated trade-offs several jurisdictions have taken concrete steps over time before taking more robust action. towards assurance requirements19. II.27 The NGFS published the second edition II.25 Previously, the FSB released a report on of its ‘Guide on Climate-related Disclosure for ‘Stocktake on Nature-related Risks’ in July 2024, Central Banks’ in June 2024, offering both which reviewed current and planned regulatory baseline and building block recommendations22. and supervisory initiatives and outlined the key The NGFS also published a ‘Conceptual challenges that authorities face in identifying, Framework to Guide Action by Central Banks assessing, and managing nature-related financial and Supervisors on Nature-related Financial risks20. The report revealed that financial Risks’ in July 202423. This principle-based risk authorities in FSB member jurisdictions are assessment framework is aimed at assisting at varying stages of evaluating the relevance of central banks and supervisors in identifying and biodiversity loss and other nature-related risks, analysing material nature-related financial risks with differences in mandates. Some jurisdictions and developing relevant policies according to have identified them as material financial risks, their jurisdictional context and mandates. 19 FSB (2024)- Achieving Consistent and Comparable Climate-related Disclosures- Progress Report 20 https://www.fsb.org/2024/07/stocktake-on-nature-related-risks-supervisory-and-regulatory-approaches-and-perspectives-on- financial-risk/ 21 https://www.ngfs.net/en/adapting-central-bank-operations-hotter-world-current-progress-and-insights-practical-examples 22 https://www.ngfs.net/en/guide-climate-related-disclosure-central-banks-second-edition 23 https://www.ngfs.net/en/ngfs-conceptual-framework-nature-risks 15Report on Trend and Progress of Banking in India 2023-24 3.10 Crypto-Assets The FSB published a report on financial stability implications of MCIs in November II.28 The markets for crypto-assets and 2023, which analysed their structure and stablecoins have grown to all-time highs in functioning, the relevant financial stability recent months, with potential implications risks, the key information gaps, and the for macroeconomic and financial stability. implications for policy consideration25. International organisations, including the International Monetary Fund (IMF), the FSB, 3.11 Artificial Intelligence (AI) and the World Bank, the Financial Action Task Force Tokenisation (FATF), and other SSBs have been working II.31 In November 2024, an FSB report on closely towards the implementation of the ‘G20 ‘Financial Stability Implications of Artificial Crypto-asset Policy Implementation Roadmap’. Intelligence’ identified AI-related vulnerabilities II.29 The 2022 crypto market turmoil and that stand out for their potential to increase subsequent collapse and de-pegging of certain systemic risk, which include: (i) third- stablecoins underscored the vulnerabilities party dependencies and service provider arising from their inadequate regulation and concentration; (ii) market correlations; (iii) design. While these risks and challenges cyber risks; and (iv) model risk, data quality and are global, some EMDEs may be exposed to governance26. The report stated that generative additional risks and challenges due to capacity AI (GenAI) also increases the potential for fraud and resource constraints, and prevalence of and disinformation in financial markets, and extensive cross-border operations of foreign misaligned AI systems that are not calibrated currency pegged stablecoins. In its July 2024 to operate within legal, regulatory, and ethical report, the FSB explored potential factors boundaries can engage in behaviour that harms driving the higher level of activity related financial stability. to foreign currency-pegged stablecoins in II.32 In October 2024, an FSB report analysed EMDEs and provided suggestions to address the associated financial stability risks and the financial stability implications of distributed regulatory challenges24. ledger technology (DLT)-based financial asset tokenisation. The report identified several II.30 Multi-function crypto-asset intermediaries financial stability vulnerabilities, which relate (MCIs) are firms that combine a broad range of to liquidity and maturity mismatch, leverage, crypto asset services, products, and functions, asset price and quality, interconnectedness, and typically centred around the operation of a operational fragilities27. trading platform. MCIs face additional vulnerabilities as compared to traditional II.33 The European Parliament in March 2024 financial firms, as certain combinations of adopted the world’s first legal framework- the functions could exacerbate their vulnerabilities. European Union (EU) AI Act, which aims to 24 https://www.fsb.org/wp-content/uploads/P230724.pdf 25 https://www.fsb.org/2023/11/the-financial-stability-implications-of-multifunction-crypto-asset-intermediaries/ 26 FSB (2024)- The Financial Stability Implications of Artificial Intelligence 27 https://www.fsb.org/2024/10/the-financial-stability-implications-of-tokenisation/ 16GLOBAL BANKING DEVELOPMENTS ensure that AI systems used in the EU are safe, set in, amidst high lending rates and tight credit transparent, traceable, non-discriminatory and standards, has shown signs of reversal on recent environment friendly, and that the AI systems rate cuts29 (Chart II.4a). In contrast, recent are overseen by people, rather than by trends in Japan suggest some slowdown in automation, to prevent harmful outcomes28. credit growth (Chart II.4b). Among EMEs, credit growth in Türkiye, initially fuelled by household 4. Performance of the Global Banking Sector credit card use and economic recovery, has II.34 Credit growth to the private non-financial slowed down since Q3:202330 (Chart II.4c). sector, which decelerated sharply in the post- pandemic period, rebounded during Q4:2022 II.35 Credit deepening can start a virtuous to Q3:2023 on strengthened economic activity cycle of GDP growth, but beyond a threshold and accommodative monetary and liquidity it may be detrimental to economic activity conditions. The moderation which subsequently (Box II.1). Chart II.4 Bank Credit to the Private Non-Financial Sector Source: Total Credit Statistics, BIS. 28 https://www.europarl.europa.eu/topics/en/article/20230601STO93804/eu-ai-act-first-regulation-on-artificial-intelligence 29 Economic Bulletin (2024) European Central Bank, Issue 5. 30 https://www.tcmb.gov.tr/wps/wcm/connect/d5b26167-65ec-45fc-b148-8ce753e53a80/III.+Non-Financial+Sector.pdf?MOD=AJP ERES&CACHEID=ROOTWORKSPACE-d5b26167-65ec-45fc-b148-8ce753e53a80-p3LgjUI 17Report on Trend and Progress of Banking in India 2023-24 Box II.1: Optimal Credit-to-GDP Ratio: A Cross-country Analysis Credit deepening can contribute to higher consumption, Table II.1.1: Threshold Regression Results investment and economic activity in the economy. However, Real GDP per Real GDP per Real GDP per there could be an inverted U-pattern in the impact of credit capita growth capita growth capita growth on economic growth: beyond a threshold, credit could be 1 2 3 deployed in less productive or more risky activities and Estimated Threshold 113.1 113.1 113.1 dampen growth (Law et al., 2013) [Chart II.1.1]. 95% confidence Interval [111.9; 113.2] [111.9; 113.2] [111.9; 113.2] Impact of Credit-GDP Ratio To explore these dynamics, the relationship between GDP 0.0130 0.0116 0.0109 growth and credit-to-GDP ratio is estimated as follows: (0.00927) (0.00983) (0.00984) β1 -0.00604* -0.00706* -0.00744** GDP β F I F γ) β F I(F > γ) α μ ε …(Eq.1) (0.00318) (0.00374) (0.00374) it it it it it it i it β2 Impact of Covariates wher=e s1ub–s1cr(ip-t1 ≤i re+pre2se–n1ts th–1e co+un1trXy +and+ t indicates TFPG 1.371*** 1.344*** 1.355*** the year. GDP is the annual GDP per capita growth rate, F (0.0563) (0.0575) (0.0572) is the threshold variable (credit-to-GDP ratio in this case) Investment to GDP Ratio 0.204*** 0.204*** 0.204*** (0.0297) (0.0296) (0.0299) and γ is the estimated threshold value. Matrix X consists of Inflation 0.0691 0.0883* 0.0784 control variables such as the investment rate (as per cent of (0.0499) (0.0506) (0.0535) GDP), the inflation rate and total factor productivity growth GFC Dummy -0.430 -0.362 (0.286) (0.287) (TFPG). In Model 1 (Table II.1.1), the investment-to-GDP Taper Tantrum Dummy 0.172 0.250 ratio, TFPG and inflation are included as control variables. (0.263) (0.268) In Model 2, dummies for the 2008-09 global financial crisis COVID-19 Dummy -0.0242 (0.314) (GFC dummy) and the 2013 taper tantrum episode are Constant -2.145** -1.987** -1.959** added, while a dummy for COVID-19 is added in Model (0.963) (0.967) (0.971) 3. Annual data from 2001 to 2022 for 16 AEs and EMDEs Observations 336 336 336 R-squared 0.675 0.681 0.681 have been used in the estimates. Data on total outstanding Number of Countries 16 16 16 credit cover total borrowings by the private sector from all domestic and foreign sources, including banks and non- Notes: 1) Robust standard errors in parentheses. 2) *** p<0.01, ** p<0.05, * p<0.1 banks31. Source: RBI staff estimates. The results suggest a credit threshold at 113.1 per cent above-threshold coefficient (β ) shows that the expansion 2 of GDP for the sample countries, although the threshold of credit-to-GDP ratio beyond the threshold hampers could differ for each country and vary over time depending economic growth, consistent with the literature (Arcand, on its structural factors. The significant and negative et. al. 2012). As expected, TFPG and the investment-to- Chart II.1.1: Cross-country Credit-to-GDP Ratio and Real GDP Growth Rate Source: RBI staff estimates. 31 Data on credit-to-GDP ratio are sourced from the BIS, while that on inflation and investment-to-GDP ratio are from the IMF’s WEO, and total factor productivity growth (TFPG) are from the Conference Board. 18GLOBAL BANKING DEVELOPMENTS GDP ratio have a positive and significant impact on GDP References: growth. The results remain robust after the inclusion of Arcand, J.L., Berkes, E., & Panizza, U. (2012). Too Much dummies for GFC, taper tantrum and COVID-19 (Table Finance? IMF Working Paper, 2012/161. II.1.1, Model 2 and Model 3). Law, S. H., & Singh, N. (2014). Does Too Much Finance India’s total credit-to-GDP ratio (including credit extended Harm Economic Growth? Journal of Bank and Finance, by banks as well as NBFCs) at 90.1 per cent in 2022 was Vol. 41, 36-44. below that of AEs and of emerging market economies (EMEs) as well as the estimated threshold. As such, higher credit growth remains supportive of economic growth. 4.1 Asset Quality historically high NPL ratio, although it remains II.36 The non-performing loans (NPL) ratio considerably higher than in other Euro area serves as a key indicator of credit risk of a bank’s countries. loan portfolio. The asset quality of banks has 4.2 Provision Coverage Ratio improved in recent years across most AEs and EMDEs (Table II.1). In the Euro area, Greece has II.37 A higher provision coverage ratio made notable progress since 2018 in reducing its (PCR) indicates that the banking system has Table II.1: Asset Quality (NPL Ratio) (Per cent) Country 2015 2019 2020 2021 2022 2023 Q1:2024 Q2:2024 1 2 3 4 5 6 7 8 9 Advanced Economies Australia 0.89 0.96 1.11 0.91 0.72 0.85 0.95 N.A. Canada 0.52 0.50 0.53 0.38 0.33 0.45 0.48 0.53 Denmark 3.28 1.37 1.41 1.24 1.07 0.94 0.93 0.90 UK 1.01 1.02 0.98 0.97 0.95 0.98 0.99 1.01 US 1.47 0.86 1.07 0.81 0.72 0.85 0.90 N.A. Euro Area Belgium 3.85 2.09 2.07 2.03 1.84 1.82 1.88 N.A. France 3.52 2.51 2.38 2.17 2.08 2.06 2.06 N.A. Greece 35.71 38.07 30.81 11.88 8.17 5.96 6.65 6.17 Ireland 16.91 3.36 3.36 2.48 1.61 1.27 1.32 1.17 Netherlands 2.71 1.83 1.88 1.72 1.60 1.55 1.54 1.57 Spain 5.09 3.15 2.85 2.92 3.06 3.06 3.04 2.94 Emerging Markets and Developing Economies Argentina 1.57 5.70 4.15 4.29 3.09 3.55 1.96 1.82 Brazil 2.85 2.66 1.87 2.08 2.64 2.84 2.86 2.83 China 1.67 1.86 1.84 1.73 1.63 1.59 1.59 1.56 India 5.88 9.23 7.94 6.54 4.81 1.72 N.A. N.A. Indonesia 2.32 2.34 2.64 2.64 2.15 1.96 2.04 2.08 Mexico 2.60 2.20 2.56 2.05 2.08 2.08 2.00 1.98 Russia 8.38 8.83 8.16 6.10 5.51 N.A. N.A. N.A. South Africa 3.12 3.89 5.18 4.45 N.A. N.A. N.A. N.A. Thailand 2.68 3.13 3.23 3.11 2.84 2.76 2.84 N.A. Note: N.A. – Data not available. Source: Financial Soundness Indicator, IMF. 19Report on Trend and Progress of Banking in India 2023-24 significant provisions to cover bad loans banks’ profitability increased due to a variety and better preparedness to handle defaults. of reasons. For example, the RoA of UK banks Notwithstanding some moderation in Q1:2024, improved in 2023 on higher net interest income US banks continued to have the highest PCR (NII), reduced provisions and moderate cost escalations32. In the Euro area, Greece’s rating across AEs (Chart II.5a). In the Euro area, upgrade helped reduce the borrowing costs for Ireland, which had a history of high NPLs before its banks, boosting their profitability33. Ireland 2018, has been building provisioning buffers. experienced a notable increase in profitability Among EMDEs, banks in Brazil maintained a in 2023, driven by improved margins on loans high PCR amidst an improvement in asset quality pegged to policy rates34. (Chart II.5b). 4.4 Capital Adequacy 4.3 Bank Profitability II.39 In the first half of 2024, banks further II.38 The profitability [return on assets (RoA)] strengthened their financial positions, of banks across most jurisdictions showed maintaining capital ratios well above regulatory mixed movements in response to higher interest norms. Among AEs, the Scandinavian countries rates. In some countries, such as the US and like Norway and Denmark continued to maintain Türkiye, banks’ profitability moderated as high higher capital buffers than their peers. The policy rates increased their borrowing costs capital to risk-weighted assets ratio (CRAR) while also impacting credit demand (Chart II.6a of US banks improved in 2023 and Q1:2024. and b). In some other jurisdictions, however, The ratio of UK banks remained elevated, Chart II.5: Provision Coverage Ratio (NPL provisions as a per cent of non-performing loans) Source: Financial Soundness Indicators, IMF. 32 https://www.fitchratings.com/research/banks/major-uk-banks-profitability-to-remain-strong-despite-lower-net-interest- income-27-02-2024 33 Financial Stability Review (2024). Central Bank of Greece, April. 34 Financial Stability Review (2024). Central Bank of Ireland, June. 20GLOBAL BANKING DEVELOPMENTS Chart II.6: Return on Assets Source: Financial Soundness Indicators, IMF. notwithstanding the recent moderation. Euro 4.5 Leverage Ratio area countries displayed varying trends, with II.40 Leverage ratio measures the proportion Spain exhibiting improving capital buffers in of a bank’s Tier 1 capital to its total assets, Q2:2024. The CRAR of banks in the Netherlands serving as a safeguard against excessive risk and Belgium declined but remained comfortably exposure. In H1:2024, banks in most countries above regulatory requirements. In EMDEs, maintained leverage ratios well above the Argentina’s CRAR increased dramatically in the minimum Basel III requirement of 3 per cent. post-pandemic period, reflecting substantial Among AEs, the US maintained the highest capital accumulation in response to economic leverage ratio, hovering above 8.5 per cent challenges35 (Table II.2). (Chart II.7a). Canadian banks have a leverage Chart II.7: Leverage Ratio (Regulatory Tier 1 capital as a per cent of total assets) Source: Financial Soundness Indicators, IMF. 35 https://www.elibrary.imf.org/view/journals/002/2024/167/article-A001-en.xml 21Report on Trend and Progress of Banking in India 2023-24 Table II.2: Regulatory Capital to Risk-weighted Assets Ratio (Per cent) Country 2015 2019 2020 2021 2022 2023 Q1:2024 Q2:2024 1 2 3 4 5 6 7 8 9 Advanced Economies Australia 13.80 15.70 17.56 17.87 17.80 19.95 20.40 N.A. Canada 14.20 15.34 16.10 17.17 17.36 17.14 17.20 16.79 Denmark 19.19 22.47 23.29 22.87 22.56 23.47 23.43 23.13 Norway 18.94 24.19 24.80 25.02 25.88 24.66 25.03 25.05 UK 19.61 21.25 21.61 22.05 21.43 21.27 21.01 21.21 US 14.14 14.65 16.28 16.39 15.54 15.90 16.06 N.A. Euro Area Belgium 18.69 18.75 20.34 20.44 20.05 19.61 19.22 N.A. Greece 16.52 17.02 16.66 15.23 17.46 18.75 18.88 18.84 Ireland 27.49 24.97 25.47 25.53 27.80 26.52 27.73 27.69 Netherlands 20.11 22.86 22.79 22.34 20.94 21.08 20.62 20.40 Spain 14.66 15.91 16.98 17.43 16.68 17.12 17.15 17.21 Emerging Markets and Developing Economies Argentina 13.28 17.49 24.19 26.20 29.86 32.51 39.46 37.06 Brazil 16.44 19.42 19.09 18.42 17.52 17.90 17.64 17.51 China 13.45 14.64 14.70 15.13 15.17 15.06 15.43 15.53 India 12.68 15.42 15.59 14.79 15.82 15.59 N.A. N.A. Indonesia 18.86 21.59 22.14 24.02 24.13 25.84 24.29 24.44 Mexico 14.96 15.98 17.70 19.53 19.00 18.81 19.49 19.29 Russia 12.70 12.33 12.55 12.35 N.A. N.A. N.A. N.A. South Africa 14.20 16.58 16.58 18.11 N.A. N.A. N.A. N.A. Thailand 17.11 19.35 19.75 19.58 18.89 19.58 19.56 N.A. Note: N.A. – Data not available. Source: Financial Soundness Indicators, IMF. ratio consistently below 5 per cent. Typically, the markets. US and EU banking stocks the regulatory requirements for capital are experienced steady gains, particularly from higher in EMDEs, prompting them to maintain Q4:2023 onward, reflecting improved market higher leverage ratios than those in AEs (Chart conditions and economic stability (Chart II.8a). II.7b). Argentinian banks invested heavily in II.42 Banks’ credit default swap (CDS) spreads low-risk assets, such as government securities provide insights into the perceived credit risk (G-secs), which boosted their core capital and, of financial institutions, reflecting market in turn, their leverage ratio36. sentiment about the likelihood of default. The CDS market has evolved significantly post- 4.6 Financial Market Indicators GFC, marked by widespread adoption of II.41 Global banking stocks suffered losses standardised coupons, increased reliance on in H1:2023, following the banking crisis in CCPs, introduction of upfront premiums, and March 2023. However, swift policy intervention growing popularity of CDS indices37. Following limited systemic spillovers and helped calm the peak in 2022, driven largely by geopolitical 36 https://www.fitchratings.com/research/sovereigns/argentine-banks-capitalization-mitigates-central-government- exposure-28-02-2023 37 https://www.federalreserve.gov/econres/feds/files/2022023pap.pdf 22GLOBAL BANKING DEVELOPMENTS Chart II.8 Market-based Indicators of Banks’ Health Source: Refinitiv Datastream. tensions and economic uncertainties, CDS 5. World’s Largest Banks spreads have generally narrowed, reflecting II.43 The number of AEs’ banks in the top improved market sentiment. However, Russia’s 100 global banks by Tier 1 capital has been CDS spreads remain an outlier since 2022, decreasing since the GFC, while the number of while China’s spreads have stayed elevated Chinese banks has increased and stabilised at relative to other regions, influenced by economic 21 in 2023 (Chart II.9a). Commensurately, the challenges and concerns about financial sector share of Chinese banks in the total assets of stability (Chart II.8b). These variations indicate top 100 global banks has increased, while the that while global markets have regained some share of AEs has decreased (Chart II.9b). On confidence, region-specific risks still linger. the other hand, the AEs’ banks shifted their Chart II.9: Distribution of the Top 100 Global Banks by Tier 1 Capital Source: Banker Database, Financial Times. 23Report on Trend and Progress of Banking in India 2023-24 focus to their local markets and reduced their for AE and EMDE banks; for the Chinese presence in international markets to control banks, it was lower – between 12 to 14 per risk exposures38. cent (Chart II.11a). A leverage ratio (LR) in the range of 6 to 8 per cent is generally considered II.44 The asset quality of large global banks prudent and this category remained the modal is improving. The proportion of banks with NPL ratios greater than or equal to 2 per cent class for the Chinese banks. EMDE banks had decreased in 2023 as compared to 2022, bi-modal leverage ratio distribution, while that particularly in AEs and EMDEs (excluding of AE banks was in the range of 4 to 6 per cent China). Meanwhile, all Chinese banks appearing (Chart II.11b). Soaring interest income, on the in the top 100 global banks list consistently back of monetary policy tightening, helped maintained their NPL ratios below 2 per cent strengthen the profitability of global banks in (Chart II.10a). Additionally, the PCR of Chinese both AEs and EMDEs in 2023. In comparison, banks in the top 100 banks remained above 100 fewer Chinese banks reported RoAs in the range per cent, indicating greater financial resilience. of one to two per cent (Chart II.11c). Operational The share of banks that had PCRs above 100 efficiency is one of the major pillars of banks’ per cent marginally moderated to 75 per cent in soundness, with the cost-to-income ratio (CIR) EMDEs and 45.3 per cent for AEs in 2023 from serving as a representative indicator. Over 95 76.9 per cent and 46.9 per cent, respectively, in per cent of Chinese banks have a CIR below 2022 (Chart II.10b). 50 per cent, suggesting higher operational II.45 CRARs greater than or equal to 16 per efficiency than banks in other EMDEs and AEs cent was the modal class of capital adequacy (Chart II.11d). Chart II.10: Asset Quality of the Top 100 Global Banks Note: Data in legends indicate per cent share of banks in total. Source: Banker Database, Financial Times. 38 https://www.mckinsey.com/industries/financial-services/our-insights/a-decade-after-the-global-financial-crisis-what-has-and- hasnt-changed 24GLOBAL BANKING DEVELOPMENTS Chart II.11 Soundness of the Top 100 Global Banks Source: Banker Database, Financial Times. 6. Overall Assessment healthy despite some moderation in credit growth and profitability. Prudent and proactive II.46 As the global economy heads towards a financial regulation and supervision remain soft landing with inflation approaching targets, essential to support monetary policy efforts to monetary authorities in several economies have maintain financial stability while supporting started easing cycles, while some remain in a growth. tightening mode and others are on hold. The financials of the global banking sector remain 25III POLICY ENVIRONMENT In India, the monetary policy stance was changed from ‘withdrawal of accommodation’ to ‘neutral’ in October 2024. The regulatory and supervisory policies of the Reserve Bank focused on strengthening risk management practices, harmonisation of prudential guidelines and addressing emerging risks. The Reserve Bank continued its efforts to improve customer awareness and financial inclusion, while enhancing emphasis on good governance and transparency. 1. Introduction inclusion, respectively. Initiatives for enhancing the scope and reach of the payments ecosystem III.1 The Indian financial system demonstrated in a safe and secure environment are set out in sustained resilience during 2023-24 and Section 8. The chapter concludes with an overall 2024-25 against the backdrop of formidable assessment in Section 9. global headwinds, benefitting from a stable macroeconomic environment and an agile 2. The Macroeconomic Policy Setting regulatory and supervisory framework. The III.3 Mindful of the persistence of inflation Reserve Bank remained vigilant about emerging above the target, the monetary policy risks in the financial sector while being committee (MPC) kept the policy repo rate mindful of the need to encourage innovations unchanged at 6.50 per cent during 2023- in the sector. Regulatory initiatives to address 24 and 2024-25 (up to December 2024) after climate-related risks were strengthened. a cumulative hike of 250 basis points (bps) The Reserve Bank has been increasingly during 2022-23. On October 9, 2024, the harnessing technology to improve cyber- MPC decided to change the monetary policy resilience and reporting efficiency of regulated stance from ‘withdrawal of accommodation’ entities (REs). to ‘neutral’ based on its assessment of the III.2 Against this backdrop, the chapter briefly evolving inflation-growth dynamics. Further, on chronicles monetary and liquidity management December 6, 2024, to ease potential liquidity measures of the Reserve Bank during 2023- stress, and consistent with the neutral policy 24 and 2024-25 in Section 2, followed by an stance, the Reserve Bank decided to reduce the overview of regulatory and supervisory policy cash reserve ratio (CRR) of all banks to 4.0 per developments in Section 3. Policies pertaining cent of net demand and time liabilities (NDTL) to various technological innovations are covered in two equal tranches of 25 bps each, effective in Section 4, while those related to financial fortnight beginning December 14 and December markets are discussed in Section 5. Sections 6 28, 2024. CRR was, thus, restored to the level and 7 review the policies related to consumer prevailing before the commencement of the protection and credit delivery and financial policy tightening cycle in April 2022. 26POLICY ENVIRONMENT Developments during 2023-24 liquidity conditions. Overnight rates in the collateralised segment moved in tandem with III.4 In sync with the monetary policy stance, the WACR. In the term money segment, yields system liquidity turned from surplus to deficit on 3-month commercial papers (CPs) for non- in 2023-24. The average daily net injection banking financial companies (NBFCs) firmed up, under the liquidity adjustment facility (LAF) reflecting, inter alia, the regulatory measures stood at ₹485 crore in 2023-24 as against announced by the Reserve Bank on November an average daily net absorption of ₹1.9 lakh 16, 2023. Amidst sustained double-digit growth crore in 2022-23. During 2023-24, average in bank credit, banks resorted to issuances absorption under the standing deposit facility of certificates of deposit (CDs). The yield on (SDF) at ₹0.90 lakh crore constituted 78 per 3-month treasury bills (T-bills) remained stable cent of the average daily total absorption (₹1.16 in 2023-24. Medium to long-term bond yields, lakh crore) under the LAF, while the remaining however, eased from their March 2023 levels, 22 per cent was absorbed through variable rate taking cues from domestic developments, reverse repo (VRRR) auctions – both main and notwithstanding the hardening of US treasury fine-tuning operations. Banks’ recourse to the yields. On June 8, 2023 the Reserve Bank allowed marginal standing facility (MSF) increased, with SCBs [excluding small finance banks (SFBs) average daily borrowing of ₹0.50 lakh crore and payments banks (PBs)] greater flexibility in during 2023-24 as compared with ₹0.06 lakh money market operations by permitting them to crore during 2022-23. set their own limits for borrowings in the call III.5 The reversal of liquidity facilities under and notice money markets within the prescribed both SDF and MSF was allowed even during prudential limits for interbank liabilities, with weekends and holidays, effective December the approval of their internal boards. 30, 2023 to provide banks greater flexibility in Developments during 2024-25 their operations. The incremental CRR (I-CRR) of 10 per cent on the increase in scheduled III.7 The average daily net absorption under commercial banks’ (SCBs’) NDTL between May the LAF stood at ₹0.65 lakh crore during 2024- 19, 2023 and July 28, 2023, with effect from 25 (up to December 17, 2024). While average the fortnight beginning August 12, 2023, was daily absorption under the SDF and reverse discontinued in a phased manner to ensure that repos was ₹1.3 lakh crore, the recourse under system liquidity was not subjected to sudden the MSF averaged ₹0.07 lakh crore. shocks and money markets functioned in an III.8 The WACR remained aligned to the repo orderly manner. rate, averaging 6.54 per cent in 2024-25 (up to III.6 The weighted average call rate (WACR) December 17, 2024), with overnight rates in – the operating target of monetary policy – collateralised segments moving in tandem. In averaged 6.63 per cent in 2023-24 as compared the term money segment, the yield on 3-month with 5.39 per cent in 2022-23, reflecting the T-bills softened due to improved liquidity in the increase in the policy repo rate and the evolving banking system amidst lower market borrowing 27Report on Trend and Progress of Banking in India 2023-24 requirements. The yields on CPs issued by NBFCs banks, certain co-operative banks, all India and that on CDs remained relatively stable financial institutions (AIFIs) and all NBFCs, during 2024-25. Domestic bond yields eased including housing finance companies (HFCs). further in 2024-25, reflecting positive sentiment 3.2 Fraud Risk Management following the inclusion of Indian government III.10 On July 15, 2024 the Reserve Bank issued securities (G-secs) in the global bond index master directions on fraud risk management and reduced market borrowing requirements for REs1. The revised directions are principle- budgeted by the central government for 2024-25. Global factors like easing of US treasury yields based and strengthen the role of the board and decline in crude oil prices also contributed in overall governance and oversight of fraud to the easing of domestic yields. risk management. The framework on early warning signals (EWS) and red flagged accounts 3. Regulatory and Supervisory Policies (RFAs) has further been strengthened for early 3.1 Operational Risk Management and detection and prevention of frauds, and timely Operational Resilience reporting to law enforcement agencies (LEAs) III.9 On April 30, 2024 the Reserve Bank and supervisors. The directions now expressly issued a guidance note on operational risk require REs to ensure compliance with the management and operational resilience to principles of natural justice in a time-bound align with principles of the Basel Committee manner. on Banking Supervision (BCBS). It provides 3.3 Management of Model Risks in Credit overarching guidance to REs to strengthen their III.11 On August 5, 2024 the Reserve Bank operational risk management framework and issued a draft circular to ensure prudence and enhance their operational resilience to enable robustness in the use of various models by REs in them to conduct critical operations even during their credit management. While the application disruption. The guidance note has been built on three pillars viz., prepare and protect; build of technology in the models facilitates faster resilience; and learn and adapt. Across these decision-making, it adds complexity to the model three pillars, the note contains 17 principles. The risk management framework. As per the draft guidance note has addressed areas such as three circular, the models used by REs may either be lines of defence, change management, mapping developed internally or sourced from external of interconnections and interdependencies, third-party suppliers or can be a mix of both third party dependencies and information and as per the provisions of the policy. REs need communication technology (ICT) risk while to adhere to broad principles including, inter explicating the concept of operational resilience. alia, clarity in objectives, robust assumptions, The earlier guidance was applicable to SCBs only, detailed documentation, scalability and while the latest guidance covers all commercial flexibility of models, and consistent and 1 Commercial banks (including regional rural banks) and all India financial institutions; co-operative banks (urban co-operative banks, state co-operative banks and district central co-operative banks); and all non-banking finance companies in the upper layer, middle layer and base layer (with asset size of ₹500 crore and above), including housing finance companies. 28POLICY ENVIRONMENT verifiable outcomes. REs will be ultimately crore and above for local area banks (LABs) and responsible and accountable for the integrity RRBs. Earlier, on January 1, 2024 the Reserve and outcomes of the outsourced models. Bank had also enhanced the bulk deposit limit Further, REs will be required to put in place a for Tier 3 and 4 scheduled urban co-operative model vetting / validation process, independent banks (UCBs) to ₹1 crore and above from ₹15 of model development / selection, for assessing lakh and above. the robustness of models developed in-house or 3.6 Voluntary Transition of Small Finance otherwise. Banks to Universal Banks 3.4 Regulatory Measures towards Consumer III.14 On April 26, 2024 the Reserve Bank Credit and Bank Credit to NBFCs issued eligibility criteria for SFBs to transition III.12 Post-COVID, growth in consumer credit, into universal banks. The eligibility criteria especially the unsecured portfolio, accelerated require SFBs to have scheduled status with a substantially. The increasing dependency of satisfactory track record of performance for a NBFCs on bank borrowings was enhancing minimum period of five years. Further, SFBs’ the interconnectedness. Although these loan shares should be listed on a recognised stock categories did not exhibit any major signs exchange. These SFBs are also required to have of stress, persistent high growth in these a minimum net worth of ₹1,000 crore at end of segments warranted prudential intervention. the previous quarter and meet their prescribed Accordingly, the Reserve Bank increased capital to risk-weighted assets ratio (CRAR) of the risk weights by 25 percentage points on 15 per cent. Moreover, they are mandated to consumer credit exposure of commercial banks have net profits in the preceding two financial and NBFCs, credit card receivables of SCBs and years with gross non-performing assets (GNPA) exposures of SCBs to NBFCs, excluding core and net non-performing assets (NNPA) ratios of investment companies, on November 16, 2023. less than or equal to 3 percent and 1 per cent, Furthermore, REs were advised to review their respectively. The eligible SFBs are also required exposure limits for consumer credit and put to furnish a detailed rationale for the transition. in place board-approved limits for the various sub-segments, specifically unsecured consumer 3.7 Credit Card and Debit Card credit exposures, by February 29, 2024. III.15 On March 07, 2024 the Reserve Bank 3.5 Bulk Deposits amended its master direction on credit and debit III.13 On June 07, 2024 the Reserve Bank cards to align the extant regulations governing revised the definition of bulk deposits to single the issue of credit and debit cards with the fast Rupee term deposits of ₹3 crore and above for -changing card ecosystem. General permission SFBs and SCBs [excluding regional rural banks has been provided to all banks and NBFCs2 (RRBs)]; and single Rupee term deposits of ₹1 registered with the Reserve Bank to become co- 2 NBFCs- investment and credit companies (NBFC-ICC), housing finance companies (HFCs) , NBFCs-Factors, NBFCs- micro finance institution (NBFC-MFI) and NBFCs-infrastructure finance companies (NBFC-IFCs). 29Report on Trend and Progress of Banking in India 2023-24 branding partners (CBPs) of card-issuers. Other Chart III.1: Unclaimed Deposits with Scheduled changes, inter alia, include permission to issue Commercial Banks form factors3 for credit cards, mandating card issuers to display the modes authorised by them for accepting payments towards credit card dues, and to monitor the end use of funds for business credit cards. The extant regulations have also been strengthened in respect of wrongful billing, sharing of customer information, and advising card issuers to ensure that any debit to the credit card account is as per the authentication framework prescribed by the Reserve Bank. 3.8 Arrangements with Card Networks for issue of Credit Cards Note: Data include regional rural banks. Source: Statistical Tables Relating to Banks in India, RBI. III.16 The authorised card networks tie-up with banks/non-banks for issuance of credit cards. of unclaimed deposits has been increasing It was observed that some of these exclusive continuously (Chart III.1). To reduce the tie-ups constrained choices of network for the quantum of unclaimed deposits in the banking customers. On March 06, 2024 therefore, the system and return such deposits to their rightful Reserve Bank directed that card issuers should owners or claimants, comprehensive revised not enter into any arrangement or agreement guidelines for inoperative accounts/ unclaimed with card networks that restrain them from deposits in banks were issued on January 1, availing the services of other card networks. Card 2024. The major changes made in the revised issuers with more than 10 lakh active cards instructions include, inter alia, video-customer should provide an option to their eligible identification process for activating inoperative customers to choose from multiple card accounts, considering certain non-financial networks at the time of issue. transactions and know your customer (KYC) 3.9 Unclaimed Deposits in Banks updation as customer induced transaction for keeping the account active, facility of activating III.17 As per the extant instructions, the credit inoperative account in all branches including balance in any deposit account maintained with banks which has not been operated upon for non-home branches in a time-bound manner ten years or more or any amount remaining and prohibiting debit transactions in inoperative unclaimed for ten years or more, is required to be accounts unless there is a customer induced transferred by banks to the Depositor Education activation. In this regard, launch of Unclaimed and Awareness (DEA) Fund maintained by Deposits – Gateway to Access inforMation the Reserve Bank. Since 2014, the volume (UDGAM) portal by the Reserve Bank has 3 Form factor is a physical or virtual instrument that can be used in place of a card to undertake a payment or banking transaction. 30POLICY ENVIRONMENT been bringing significant traction in assisting and will be subject to regulatory and other customers4. restrictions on loans and advances applicable to banks. Additionally, it has been reiterated 3.10 Interest Rate Ceilings on Foreign that a group entity shall not be used to Currency Non-Resident (Bank) [FCNR(B)] circumvent regulations/guidelines applicable to Deposits the parent bank or other group entity to carry III.18 On December 6, 2024, the Reserve Bank on any business activity which is not permitted increased the interest rate ceilings on FCNR(B) otherwise. deposits in order to attract more capital 3.12 Classification, Valuation and Operation inflows. Banks have been permitted to raise of Investment Portfolios of Commercial Banks fresh FCNR(B) deposits of one year to less than III.20 In view of significant developments in the three years maturity at rates not exceeding the global standards on classification, measurement ceiling of overnight alternative reference rate and valuation of investments, their implications (ARR) plus 400 bps as against 250 bps earlier. on the capital adequacy framework as well as For deposits of three to five years maturity, the progress in the domestic financial markets, the ceiling has been increased to overnight ARR prudential norms for the investment portfolios plus 500 bps as against 350 bps earlier. This of banks were reviewed on September 12, 2023. relaxation has been made available till March The updated norms include principle-based 31, 20255. classification of investment portfolios; tightening 3.11 Forms of Business and Prudential of regulations around transfers to/from the held Regulation for Investments to maturity (HTM) category and sales out of HTM; inclusion of non-statutory liquidity ratio III.19 On October 4, 2024, the Reserve Bank (SLR) securities in HTM subject to fulfilment issued draft regulations on forms of business of certain conditions; removal of ceilings on by banks to ringfence their core business from HTM; symmetric treatment of fair value gains other risk bearing non-core businesses. As and losses; a clearly identifiable trading book per the regulations, only a single entity within under held for trading (HFT); removing the a bank group would be allowed to undertake 90-day ceiling on the holding period under a particular form of permissible business. HFT; and more detailed disclosures of the Multiple entities within a bank group will not investment portfolio. An analysis of investment be allowed to undertake the same business. portfolio composition of banks pursuant to the Further, no overlap in the lending activities implementation of the new guidelines reveals undertaken by the bank and its group entities that while the HTM portfolio remains largely would be permitted. NBFC subsidiaries of unchanged, there has been an increase in the banks will have to comply with scale-based HFT portfolio and a reduction in the available regulations applicable to upper layer NBFCs for sale (AFS) portfolio (Box III.1). 4 The Reserve Bank launched a centralised web portal – UDGAM on August 17, 2023 for the public to facilitate searching of their unclaimed deposits across multiple banks at one place. 5 Reserve Bank of India (2024). Statement on Developmental and Regulatory Policies, December 6. 31Report on Trend and Progress of Banking in India 2023-24 Box III.1: New Investment Guidelines: Analysis of the Investment Portfolio of Banks The average share of the HTM category in the total increased from an average of 1.8 per cent under the old investment portfolios of select SCBs [12 public sectors regime to 9 per cent under the new guidelines, which may banks (PSBs); 14 private sector banks (PVBs); and 5 be attributed to securities moving into HFT category due to foreign banks (FBs)] during Q3:2022-23 to Q4: 2023-24 the removal of 90-day holding ceiling, and better capturing was 64.5 per cent. Since the adoption of the new guidelines, of hedging benefits via derivatives (Chart III.1.1 a). Across it has largely remained in the same range – 63.6 per cent bank groups, the share of AFS category has reduced as at end-June 2024. On the other hand, the share of AFS, banks reallocated their portfolios to HTM and HFT which was the residual category as per the old guidelines categories. The increase in the share of HFT category was and had an average share of 33.7 per cent, has reduced substantially higher in the case of PVBs and FBs than PSBs, to 22.8 per cent, mainly reflecting clarity on classification partly reflecting differences in risk appetite and business in the revised guidelines. The share of HFT category has practices (Chart III.1.1 b, c and d). Chart III.1.1: Investment Portfolio of Banks Source: RBI. Banking Book and Trading Book for the Purpose of Chart III.1.2: Comparison of Banking Book vis-á-vis Trading Book Capital Adequacy Concomitant with the implementation of the revised investment norms from April 1, 2024, the definition of trading book for the purpose of computing capital charge for market risks was also revised in line with the BCBS standards6. With the AFS portfolio now being considered a part of the banking book along with the HTM portfolio for the purpose of computing the capital charge, the size of the banking book for capital adequacy computation purpose (HTM+AFS) has increased (Chart III.1.2). Source: RBI. 6 The trading book for computation of capital charge for market risk which comprised of both AFS and HFT earlier has now been revised to include only HFT. 32POLICY ENVIRONMENT Box III.2: Disclosure Framework on Climate-related Financial Risks Climate-related disclosures by REs are an important • Resilience of REs’ strategy, taking into consideration enabler for assessment and mitigation of climate-related different climate scenarios. risks. Currently, REs are required to disclose information Risk Management on material risks as a part of their Pillar 3 disclosures. The draft framework aligns the disclosure standards • Processes and related policies to identify, assess, to internationally accepted standards7. It requires REs prioritise, monitor and manage climate-related to disclose information on various aspects of climate- financial risks. related financial risks and opportunities based on • Integration of climate risk management with traditional four thematic pillars, viz., governance; strategy; risk risk management. management; and metrics and targets. Some areas needed Metrics and Targets to be covered by REs under the four thematic pillars are outlined below: • Metrics and targets used to assess climate-related financial risks and opportunities in line with their Governance strategy and risk management processes. • Board’s oversight of climate-related risks and • Scope 1, scope 2 and scope 3 greenhouse gas (GHG) opportunities. emissions and the related risks. • Senior management’s role in assessing and managing As the disclosures are envisaged to develop alongside the climate-related risks and opportunities. overall ecosystem, a leeway in applicability and timeline Strategy for implementation has been provided. The disclosures • Climate-related risks and opportunities over short, are also required to be subjected to appropriate internal medium, and long term. control assessments and reviewed by the board of directors or a committee of the board. • Impact of climate-related risks and opportunities on REs’ businesses, strategy, and financial planning. 3.13 Disclosure Framework on Climate- as compared to NBFCs. Since the regulatory related Financial Risks concerns associated with deposit acceptance III.21 Climate-related risks are envisaged to are same across all categories of NBFCs, revised significantly impact REs, with implications for regulations were issued on August 12, 2024 financial stability. A detailed, consistent and to align the guidelines for HFCs with NBFCs. comparable disclosure framework for REs is The minimum liquid assets which HFCs-D are crucial to develop competencies and structures required to maintain against public deposits, for assessment and mitigation of climate change have been raised to 15 per cent from 13 per risks. On February 28, 2024 the Reserve Bank cent. The ceiling on quantum of public deposits released a draft disclosure framework on climate- held by HFCs-D has been reduced from 3 related financial risks to obtain comments or times to 1.5 times of their net owned funds. feedback from the stakeholders (Box III.2). Further, HFCs-D holding deposits in excess of the revised limit will not be allowed to accept Non- Banking Financial Companies fresh public deposits or renew existing deposits 3.14 Prudential Guidelines for Deposit taking till they conform to the revised limit. Existing Housing Finance Companies (HFCs-D) excess deposits will be allowed to run off till III.22 HFCs-D were subject to relaxed maturity. The maximum term of public deposits prudential parameters on deposit acceptance of HFCs-D has also been reduced to 60 months 7 Internationally accepted standards such as the International Financial Reporting Standard S2 climate-related disclosures and the BCBS’s climate disclosure consultative document. 33Report on Trend and Progress of Banking in India 2023-24 from 120 months and existing deposits with NBFCs (NBFC-UL). NBFCs in the middle layer maturities above 60 months are required to be (NBFC-ML) are, however, governed by credit repaid as per their existing repayment profile. or investment concentration norms. To ensure Additionally, through a separate circular, the uniformity and consistency in computation risk weights applicable for some assets of HFCs of concentration norms among NBFCs, an were also reviewed and revised. amendment to the extant concentration norms 3.15 Wilful and Large Defaulters was issued on January 15, 2024. In addition to the currently allowed credit default swaps III.23 The existing instructions on wilful and (CDSs), the amendments allow use of additional large defaulters were reviewed, and final master instruments by NBFC-ML to offset the aggregate directions were issued on July 30, 2024. In addition to SCBs, scheduled UCBs, HFCs and exposure8. NBFC-base layer (NBFC-BL) will AIFIs, the framework has been extended to now be required to put in place a board- NBFC-middle and above layers, non-scheduled approved internal policy for credit/investment urban co-operative banks (UCBs) in Tier 3 and 4, concentration limits. LABs and RRBs. The process of classification of 3.17 Information submission by Asset wilful defaulters has been refined by introducing Reconstruction Companies (ARCs) to Credit disclosure of all material and information on Information Companies (CICs) which the show cause notice is based, provision for written representation to a review committee III.25 As per earlier guidelines, ARCs were against the order of identification committee, and stipulated to become a member of at least one provision for personal hearing for the borrower CIC and provide credit information to the CIC of by the review committee. For early detection which they were a member. After a comprehensive and identification of wilful default, a review of review of the CIC-related guidelines applicable all NPA accounts with outstanding amount of to ARCs, the Reserve Bank issued a circular ₹25 lakh and above within six months of their regarding the submission of information to CICs classification as NPA has been prescribed. The by ARCs on October 10, 2024. This was done directions also provide clarity on the treatment in order to align the CIC-related guidelines for of wilful default accounts after undergoing ARCs with guidelines applicable for banks and resolution under the insolvency and bankruptcy NBFCs and to maintain a track of borrowers’ code (IBC) process or on loan assignment. credit history after loan transfers from banks 3.16 Harmonisation of Concentration Norms and NBFCs to ARCs. The salient features of the for NBFCs circular include; (i) advising ARCs to become III.24 Guidelines on the large exposures members of all four CICs; (ii) stipulating the framework (LEF) are applicable to upper layer submission of data by ARCs to CICs on a 8 These include: a) cash margin/caution money/security deposit held as collateral on behalf of the borrower against the advances for which right to set off is available; b) central government guaranteed claims which attract 0 per cent risk weight for capital computation; c) state government guaranteed claims which attract 20 per cent risk weight for capital computation; d) guarantees issued under the Credit Guarantee Schemes of Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), Credit Risk Guarantee Fund Trust for Low Income Housing (CRGFTLIH) and individual schemes under National Credit Guarantee Trustee Company Ltd (NCGTC) subject to meeting certain conditions. 34POLICY ENVIRONMENT fortnightly basis or shorter intervals as agreed appropriations from net profits. In case of between the ARC and the CICs; (iii) prescription appropriations from net profits, the same when for rectification of rejected data within 7 days used to net off NPAs is in contravention of the of receipt of rejected data from CICs; and (iv) applicable accounting standards. Further, the extension of best practices regarding regular treatment of BDDR varies across banks, and in submission/ updation of data and customer many cases, has been found to be at variance grievance redressal to ARCs. with applicable regulatory norms. Accordingly, with a view to bringing uniformity in the Co-operative Banks treatment, revised instructions on BDDR were 3.18 Prompt Corrective Action (PCA) issued, which stipulated that with effect from Framework for Primary (Urban) Co-operative financial year 2024-25, all regulatory provisions Banks shall mandatorily be charged as an expense to III.26 On July 26, 2024 the Reserve Bank the P&L account. Further, a revised treatment introduced a prompt corrective action (PCA) of the BDDR created till end-March 2024 out framework for UCBs, replacing the extant of appropriation from net profits, but which supervisory action framework (SAF). The actually represents regulatory provisions, has framework, effective from April 1, 2025 will also been specified as a one-time measure to be applicable to all UCBs under Tier 2, Tier 3 facilitate transition to an accounting standard and Tier 4 categories except UCBs under all- compliant approach. inclusive directions. Tier 1 UCBs, though not 3.20 Eligibility Norms for Inclusion of UCBs covered under the PCA framework, will be in the Second Schedule of the Reserve Bank of subjected to enhanced monitoring under the India Act, 1934 extant supervisory framework. The framework requires financially weak UCBs to initiate and III.28 On January 17, 2024 the Reserve Bank implement remedial measures in a timely revised eligibility norms for inclusion of UCBs in manner to restore their financial health. The first the second schedule of the Reserve Bank of India risk thresholds for initiating corrective action Act, 1934. In addition to the criteria specified by under the framework include CRAR below the the Government of India in 2023, UCBs which regulatory requirement (up to 250 bps); NNPA have CRAR of at least 3 per cent more than the ratio above 6.0 per cent but below 9.0 per cent; minimum regulatory requirement and no major and net losses during two consecutive years. regulatory and supervisory concerns will be considered for inclusion in the second schedule. 3.19 Prudential Treatment of Bad and Doubtful Debt Reserve 4. Technological Innovations III.27 Several co-operative banks have created III.29 Central banks face a delicate balancing bad and doubtful debt reserves (BDDRs) act of encouraging technological advancements under the provisions of the respective State in financial institutions while safeguarding Co-operative Societies Acts or on prudential them from vulnerabilities. To foster responsible consideration, either by recognising an expense innovation in financial services, promote in the profit and loss (P&L) account or through efficiency and benefit consumers, the Reserve 35Report on Trend and Progress of Banking in India 2023-24 Bank has established regulatory sandbox (RS), organisations in FinTech sector (SRO-FT) on which allows live testing of new products or May 30, 2024. SROs will be responsible for services in a controlled regulatory environment. formulating codes of conduct, monitoring So far, four cohorts – on themes retail payments, compliance, and addressing grievances. The cross-border payments, MSME lending and framework outlines the criteria for industry prevention and mitigation of financial frauds– associations to be recognised as an SRO- have been completed, wherein 90 products FT, their scope of activities, responsibilities were tested, of which 19 products successfully towards the Reserve Bank, and governance exited the RS. The Reserve Bank also organises requirements. The framework also mandates a long form global hackathon annually, called SROs’ functions, including standard-setting and HaRBInger, to encourage development of developmental activities. FinTech Association for technology driven innovative solutions for Consumer Empowerment has been recognised the existing challenges in financial sector. as an SRO-FT. HaRBInger on ‘Zero Financial Frauds’ and 4.3 Platform for Regulatory Application, ‘Being Divyang Friendly’ is currently ongoing. Validation And AutHorisation (PRAVAAH) 4.1 FinTech and EmTech Repositories III.32 The Platform for Regulatory Application, III.30 On May 28, 2024 the Reserve Bank Validation And AutHorisation (PRAVAAH) was launched the FinTech repository, aimed at launched on May 28, 2024. It is a secure and capturing essential information about FinTech centralised web-based portal for any individual entities, their activities and technology usage. or entity to seek authorisation, licence or Both regulated and unregulated FinTech entities regulatory approval on any reference made by it are encouraged to contribute to the repository. to the Reserve Bank. It facilitates ease of doing An EmTech repository was also launched on business for REs and will reduce the turnaround the same day, which is focused on capturing time for processing, thereby bringing efficiency information on adoption of emerging technologies in regulatory processes. [like artificial intelligence (AI), machine learning 4.4 Retail Direct Mobile Application (ML), cloud computing, distributed ledger III.33 The RBI Retail Direct Scheme, launched technology and quantum technology] by various in November 2021, enables individual investors REs. These repositories will enable a better to maintain gilt accounts with the Reserve Bank understanding of developments in the FinTech and invest in G-secs. To further improve ease ecosystem and support appropriate policy of access and convenience for retail investors approach. in G-secs market, an ‘RBI Retail Direct’ mobile 4.2 Self-regulatory Organisation (SRO) application was launched on May 28, 2024. The Framework for FinTechs mobile app has several user-friendly features III.31 To encourage self-regulation in the including single sign-on facility that enables FinTech sector, the Reserve Bank announced seamless navigation between primary and a framework for recognising self–regulatory secondary market using single login credential. 36POLICY ENVIRONMENT 5. Financial Markets of all types of FX transactions – over-the-counter (OTC) and exchange traded – under a single III.34 Financial markets support growth and master direction. This will enhance operational development of an economy by facilitating efficiency and ease access to foreign exchange efficient allocation of resources and sharing derivatives, especially for users with small of risks. Developing safe and stable financial exposures. It will also enable a larger set of users markets is a key policy objective of the Reserve with the necessary risk management capabilities Bank. The measures undertaken by the Reserve to efficiently manage their risks. Bank during the period under consideration included, inter alia, rationalisation of directions 5.3 Margin for Derivative Contracts on money market products; review of regulatory III.37 The extant directions allowed posting and framework for hedging foreign exchange risks; collection of margins for permitted derivative mandating exchange of initial margin for non- contracts between a person resident in India centrally cleared derivative (NCCD) transactions; and a person resident outside India. The and putting in place a framework for recognition directions were revised on May 8, 2024, to of SROs in financial markets. Additionally, direct permit, inter alia, exchange of margins in India access to the Negotiated Dealing System – Order and outside India by applicable entities to enable Matching (NDS-OM) platform was expanded to implementation of the OTC derivative reforms include a larger set of REs. on margin requirements for NCCDs. This aligns 5.1 Commercial Paper and Non-Convertible the Indian framework with global best practices. Debentures (NCDs) of Original or Initial Maturity Indian banks are also permitted to post and up to One Year collect margins for derivative transactions of their overseas branches and IFSC banking units III.35 The extant directions on CPs and NCDs (IBUs). of original or initial maturity up to one year were reviewed. The master directions, which 5.4 Reporting of FX Cash/Tom/Spot came into force with effect from April 1, 2024, Transactions to Trade Repository inter alia, rationalised the default handling III.38 Authorised dealers are mandated to procedures, standardised the issuance process report all OTC foreign exchange derivative and strengthened the disclosure requirement for contracts and foreign currency interest rate CPs and NCDs. These revisions are expected to derivative contracts, undertaken by them bring consistency across different money market directly or through their overseas entities to the products, benefitting issuers, investors and other trade repository (TR) of Clearing Corporation participants. of India Ltd. (CCIL). To ensure completeness of 5.2 Hedging of Foreign Exchange Risks transactions data in TR for all foreign exchange III.36 The regulatory framework for hedging of instruments, the Reserve Bank on November foreign exchange risks was revised in January 8, 2024 expanded the reporting requirement to 2024 which, inter alia, expanded the suite include foreign exchange cash/tom/spot trades, of permitted forex (FX) derivative products, in a phased manner. This measure will facilitate refined the user classification framework, and greater transparency and effective oversight of consolidated the previous instructions in respect the foreign exchange markets. 37Report on Trend and Progress of Banking in India 2023-24 6. Consumer Protection and primary goals of India’s financial inclusion and financial literacy policies, aiming to broaden III.39 The Reserve Bank’s policy initiatives on their impact while maintaining momentum consumer protection are aimed at protection through comprehensive collaboration among of customers’ rights, enhancing the quality of all stakeholders in the financial sector. Over customer service, spreading awareness, and the five years, the strategy has catalysed strengthening the grievance redress mechanism deepening of financial inclusion for individuals in banks and in the Reserve Bank. As a part of and enterprises in the country with increased the consumer awareness initiatives, the Reserve emphasis on proliferation and adoption of digital Bank has been undertaking several initiatives, financial services. including publishing posters and short films, spreading awareness through financial literacy 7.1 Lending to Micro and Small Enterprises weeks and setting up Centres for Financial (MSEs) Literacy (CFLs) and Financial Literacy Centres III.42 On June 11, 2024 the Reserve Bank (FLCs). Continuing the booklet series, the updated master directions on lending to micro, Reserve Bank published ‘The Alert Family’ in small and medium enterprises (MSMEs), 2024, which unlike the earlier booklets, goes mandating that the time taken for credit decisions beyond financial frauds and provides guidance for loans up to ₹25 lakh to MSE borrowers to the public on dealing with various banking should not be more than 14 working days. For services and facilities. loans above this limit, the timelines shall be as 6.1 Internal Ombudsman (IO) for Regulated per the board-approved sanction time norms. Entities III.43 Further, the MSE clusters have now III.40 On December 29, 2023 the Reserve been defined as those identified by the Ministry Bank issued master direction harmonising the of MSME, Government of India or respective instructions applicable to various REs in the state governments. The guidelines provide an IO mechanism. This has brought uniformity in indicative list of activities that constitute credit matters like timeline for escalation of complaints linkage such as assessing the credit needs to the IO, exclusions from escalating complaints of MSE units within these clusters and either to the IO, temporary absence of the IO, minimum directly meeting their credit requirements or qualifications for appointing the IO and updation facilitating their linkage with other banks in the of reporting formats, in addition to introduction area for credit proposals. of the post of Deputy Internal Ombudsman. These 7.2 Collateral-free Agriculture Loan – instructions are expected to further strengthen Enhancement of Limit the mechanism by enabling a review by an apex III.44 Keeping in view the rise in agricultural level authority within the RE before rejection of input costs and overall inflation, the Reserve customer complaints, besides providing ease of Bank, on December 6, 2024, announced an compliance. increase in the limit for collateral-free agriculture 7. Credit Delivery and Financial Inclusion loans from ₹1.6 lakh to ₹2 lakh per borrower to III.41 The National Strategy for Financial further enhance credit availability for small and Inclusion (NSFI) 2019-24 outlines the vision marginal farmers. 38POLICY ENVIRONMENT 7.3 Priority Sector Lending (PSL) Chart III.2: Share of Credit to NCE Sector in Total Credit to Energy (Electricity, Gas, and Water) III.45 On July 1, 2015 the Reserve Bank had expanded the ambit of PSL norms to include loans up to ₹15 crore to borrowers for purposes like solar-based power generators, biomass- based power generators, wind mills, micro- hydel plants and for non-conventional energy (NCE) based public utilities, viz., street lighting systems, and remote village electrification. The limit was subsequently raised from ₹15 crore to ₹30 crore per borrower on September 4, 2020. These policy interventions, in conjunction with other policies, have boosted lending to the NCE Note: Data pertain to end-March. sector (Chart III.2 and Box III.3). Source: Basic Statistical Returns, RBI. Box III.3: Bank Lending to the Non-Conventional Energy Sector An impact analysis of the Reserve Bank’s policy initiatives Table III.3.1: Regression Results in the NCE sector is carried out in a panel regression Dependent variable (Y) = Share of Bank framework using bank-wise quarterly data from December Credit to Non-Conventional Energy Sector 2014 to December 2023. in Total Energy Sector Credit (NCE / TEC) Variables (1) (2) (3) NCE /TEC (L1) 0.825*** 0.802*** 0.801*** (0.0613) (0.0536) (0.0541) NCE GNPA Ratio (L1) -0.0139 -0.0255 -0.0249 (0.0281) (0.0297) (0.0293) Policy 2015 0.0079 0.0069** 0.0069** where the dependent variable ( ) is the share of bank (0.0064) (0.0029) (0.0029) i’s credit to NCE in total credit to the energy sector in Policy 2020 0.0219** 0.0007 0.0011 quarter t; is bank i’s GNPA ratio in the NCE (0.0090) (0.0050) (0.0047) sector in quarter t-1; the dummy variable Policy 2015 * PVB 0.0045 0.0044 takes value 1 for Q2: 2015-16 to Q1:2020-21 and zero (0.0100) (0.0100) Policy 2020 * PVB 0.0406** 0.0406** otherwise; the dummy variable takes (0.0158) (0.0158) the value 1 for Q2:2020-21 to Q3: 2023-24 and zero Credit to Deposit Ratio 0.0007 0.0007 otherwise; is the interaction term (0.0008) (0.0008) between the policy dummies and bank group dummy (0 GDP Growth Rate (L1) 0.0002 for PSBs, 1 for PVBs); is bank i’s credit-to-deposit (0.0003) Constant 0.0202* -0.0298 -0.0317 ratio in quarter t; is one quarter (0.0114) (0.0678) (0.0659) lagged nominal GDP growth rate, which is included as a Observations 1,095 1,095 1,095 macroeconomic control. R-squared 0.688 0.693 0.693 Number of Banks 33 33 33 Positive and statistically significant coefficients of dummy Bank Fixed Effects Yes Yes Yes variables across specifications suggest that both the Notes: 1) Robust standard errors in parentheses. policy interventions were associated with an increase in 2) *** p<0.01, ** p<0.05, * p<0.1 the share of credit to the NCE sector in total credit for 3) In models 2 and 3, PSB is the base category; the coefficients of policy variables (viz., Policy 2015 and Policy 2020), therefore, represent the energy (Table III.3.1). The 2015 policy intervention was policy impact on PSBs’ credit to the NCE sector. effective for PSBs, whereas the 2020 policy helped in Source: RBI staff estimates. (Contd.) 39Report on Trend and Progress of Banking in India 2023-24 increasing PVBs’ lending to the NCE sector (Model 2). The Reference: regression results remain robust even after controlling for Polzin, F., Migendt, M., Täube, F. A., and von Flotow, P. macroeconomic influences (Model 3). Thus, the priority (2015). Public Policy Influence on Renewable Energy sector policy modulations have encouraged credit flows to Investments—A Panel Data Study across OECD Countries. the NCE sector. It, however, needs to be recognised that Energy Policy, Vol. 80, 98-111. this phase also saw significant policies and incentives by the government to promote green energy sources. The results reflect the combined impact of various policy measures and incentives. 8. Payment and Settlement Systems alia, expanding the participation criteria to all authorised non-bank payment aggregators; III.46 The Reserve Bank has been a pioneer in measures to enhance interoperability; customer establishing various technology-based solutions protection measures and requirement of escrow for improvement of the payment and settlement account for non-bank Bharat Bill Payment system infrastructure, coupled with the Operating Units (BBPOUs). introduction of innovative payment products. The global reach of unified payments interface 8.3 Framework on Alternative Authentication (UPI), India’s fast payment system (FPS), is Mechanisms for Digital Payment Transactions steadily growing through partnerships with III.49 On July 31, 2024 the Reserve Bank various countries. released draft framework on alternative 8.1 Cyber Resilience and Digital Payment authentication mechanisms for digital payment Security Controls for Non-Bank Payment transactions. As per the framework, all digital System Operators (PSOs) payment transactions shall be authenticated III.47 On July 30, 2024 the Reserve Bank issued with additional factor/s of authentication (AFA), directions to non-bank PSOs, aimed at enhancing wherein one of the factors of authentication their information security preparedness and should be dynamically created9. Additionally, to cyber resilience. The directions will be applicable decide the appropriate AFA for a transaction, a to all authorised non-bank PSOs and will be risk-based approach needs to be adopted based implemented in a phased manner, starting with on factors like the risk profile of the customer large entities effective April 1, 2025. and / or beneficiary, transaction value and channel of origination. 8.2 Bharat Bill Payment System (BBPS) 8.4 Pre-sanctioned Credit Lines through UPI III.48 BBPS, an integrated bill payment system, offers interoperable and convenient payment III.50 In September 2023 the Reserve Bank services to customers. In view of the evolving had allowed pre-sanctioned credit lines to payment ecosystem, the Reserve Bank issued a be linked through UPI and be used as a revised regulatory framework on February 29, funding account by SCBs excluding PBs, SFBs 2024. Some of the key changes include, inter and RRBs. On December 6, 2024, the Reserve 9 A dynamically created factor is generated after initiation of payment, is specific to the transaction and cannot be reused. 40POLICY ENVIRONMENT Bank announced that SFBs would also be pursue proactive and prudent regulatory and permitted to extend this facility. This will supervisory policies with focus on strengthening further deepen financial inclusion and enhance resilience of REs, consumer protection, grievance formal credit, particularly for ‘new to credit’ redress mechanisms, financial inclusion, customers. mitigation of climate risks, digitalisation and promoting innovation. The robust financial 9. Overall Assessment health of REs enabled them to fund productive III.51 The financial landscape is witnessing a activities of the economy, while embracing dramatic transformation, globally as well as technology. The Reserve Bank remains in India, driven by technological innovations, committed to preserving financial stability changing consumer preferences and emergence and enhancing financial sector efficiency, of alternative business models. While these while adopting a consultative approach in its developments have fostered competition regulatory frameworks and aligning Indian and collaboration, they also raise concerns banking practices with international standards. about customer security and adequate The objective is to shape a resilient financial regulatory oversight. During 2023-24 and sector through a flexible and robust regulatory 2024-25, the Reserve Bank continued to architecture so as to foster growth with stability. 41OPERATIONS AND PERFORMANCE IV OF COMMERCIAL BANKS During 2023-24, the consolidated balance sheet of commercial banks in India remained robust, marked by sustained expansion in both credit and deposits. Asset quality indicated gains across all bank groups. Capital and liquidity buffers remained well above regulatory requirements and profitability exhibited improvement for the sixth consecutive year. 1. Introduction ownership pattern in commercial banks is discussed in Section 6. Corporate governance IV.1 The Indian commercial banking sector and compensation practices are presented in exhibited sustained strength during 2023-24 Section 7. Operations of foreign banks in India and H1: 2024-25. The consolidated balance sheet of scheduled commercial banks (SCBs) and overseas operations of Indian banks are underwent double-digit expansion, led by covered in Section 8, followed by developments robust credit growth1. Banks’ profitability rose in payments systems (Section 9), technology for the sixth consecutive year and asset quality adoption by banks (Section 10), consumer improved further with the gross non-performing protection (Section 11) and financial inclusion assets (GNPA) ratio falling to its lowest in (Section 12). Developments relating to regional 13 years at 2.7 per cent at end-March 2024. rural banks (RRBs), local area banks (LABs), Banks’ capital position remained satisfactory small finance banks (SFBs) and payments banks as reflected in their leverage and capital to risk (PBs) are set out in Sections 13 to 16. An overall weighted assets ratios (CRAR). All bank groups assessment of the domestic commercial banking met regulatory requirements related to liquidity system in Section 17 completes the chapter. while maintaining high provision coverage ratios 2. Balance Sheet Analysis (PCRs). IV.3 At end-March 2024, India’s commercial IV.2 Against this background, this chapter banking sector consisted of 12 public sector is organised into 17 sections. Balance sheet banks (PSBs), 21 private sector banks (PVBs), 45 developments are analysed in Section 2, followed by an assessment of their financial foreign banks (FBs), 12 SFBs, six PBs, 43 RRBs, performance and financial soundness in and two LABs. Out of these 141 commercial Sections 3 and 4, respectively. Section 5 focuses banks, 137 were classified as scheduled banks, on bank credit and its sectoral dynamics. The while four were non-scheduled2. 1 Throughout this chapter, unless explicitly stated otherwise, data for all commercial banks and private sector banks from July 2023 onwards are inclusive of merger of a non-bank with a private sector bank and, therefore, the data may not be strictly comparable to the previous periods. 2 Commercial banks are classified into scheduled and non-scheduled based on their inclusion or otherwise in the second schedule of the RBI Act, 1934. At end-March 2024, two PBs, viz., Jio Payments Bank Ltd. and NSDL Payments Bank Ltd. and two LABs, viz., Coastal Local Area Bank Ltd. and Krishna Bhima Samruddhi LAB Ltd. were non-scheduled commercial banks. 42OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS IV.4 The consolidated balance sheet of 34.7 per cent to 37.5 per cent. PSBs accounted SCBs, excluding RRBs, increased by 15.5 per for 59.3 per cent of total deposits of SCBs and cent during 2023-24 (including the impact 55.5 per cent of total advances (Table IV.1). of the merger3), as compared with 12.2 per IV.6 The share of loans and advances in total cent during 2022-23 (Appendix Table IV.1). assets of SCBs increased by 2.2 percentage On the assets side, this expansion was driven points during 2023-24 (Chart IV.2). by buoyant bank credit, which increased by 2.1 Liabilities 16.0 per cent in 2023-24 (excluding the impact IV.7 Deposit growth of commercial banks of the merger) on top of 17.4 per cent growth a accelerated to 13.4 per cent in 2023-24 year ago. SCBs’ investments grew by 11.6 per (excluding the merger impact)5 from 11.0 cent in 2023-24 (excluding the impact of the per cent a year ago. The weighted average merger) as compared with 11.4 per cent a year domestic term deposit rate (WADTDR) on ago4 (Chart IV.1). fresh deposits of PVBs increased to 6.6 per IV.5 The share of PSBs in the consolidated cent at end-March 2024 from 4.5 per cent at balance sheet of SCBs fell to 55.2 per cent at end-March 2022. Higher term deposit rates end-March 2024 from 57.6 per cent at end- drove a faster pace of growth in term deposits March 2023, with that of PVBs increasing from relative to current account and savings account Chart IV.1: Select Aggregates of SCBs (At end-March) Note: Credit, deposit and investment growth for 2023-24 exclude the impact of merger of a non-bank with a private sector bank. Source: Annual accounts of respective banks. 3 Throughout this chapter, merger refers to the merger of a non-bank with a private sector bank. 4 Including the impact of the merger, bank credit and investments rose by 19.7 per cent and 13.0 per cent, respectively, in 2023-24. 5 14.0 per cent including the merger impact. 43Report on Trend and Progress of Banking in India 2023-24 Table IV.1: Consolidated Balance Sheet of Scheduled Commercial Banks (At end-March) (Amount in ₹ crore) Item Public Sector Private Sector Foreign Small Finance Payments All Scheduled Banks Banks Banks Banks Banks Commercial Banks 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 1. Capital 71,176 72,877 32,468 32,832 1,11,612 1,18,603 7,811 7,844 4,512 5,001 2,27,580 2,37,158 2. Reserve and Surplus 8,24,250 9,56,917 9,34,791 12,14,082 1,60,606 1,80,023 23,557 32,957 -2,404 -2,365 19,40,800 23,81,614 3. Deposits 1,17,09,581 1,28,96,766 62,99,318 75,61,502 8,55,825 10,08,095 1,91,340 2,50,896 12,174 16,184 1,90,68,238 2,17,33,443 (74,51,388) (2,16,23,329) 3.1. Demand 7,48,951 8,00,416 8,85,492 9,88,296 2,89,545 3,46,863 7,429 10,895 393 76 19,31,810 21,46,546 Deposits 3.2. Savings Bank 39,79,202 41,83,455 18,89,846 20,23,962 56,931 57,827 54,668 59,691 11,781 16,108 59,92,427 63,41,043 Deposits 3.3. Term Deposits 69,81,428 79,12,895 35,23,981 45,49,244 5,09,349 6,03,405 1,29,243 1,80,310 - - 1,11,44,001 1,32,45,854 4. Borrowings 9,03,824 10,24,003 8,12,969 12,84,429 2,08,739 2,03,073 31,190 28,255 519 713 19,57,241 25,40,474 5. Other Liabilities and 5,05,949 5,42,671 3,65,924 4,28,526 2,30,921 1,96,198 13,619 15,331 8,156 5,135 11,24,570 11,87,862 Provisions Total Liabilities/assets 1,40,14,781 1,54,93,234 84,45,470 1,05,21,372 15,67,704 17,05,993 2,67,517 3,35,284 22,957 24,668 2,43,18,429 2,80,80,550 1. Cash and Balances 6,41,731 6,18,769 4,13,201 5,32,690 93,411 1,05,980 17,840 17,503 2,295 3,004 11,68,479 12,77,947 with RBI 2. Balances with Banks 4,23,343 4,34,252 2,36,116 1,89,051 1,19,332 74,865 4,530 6,305 4,963 4,313 7,88,284 7,08,785 and Money at Call and Short Notice 3. Investments 38,17,201 40,50,865 18,75,137 23,23,647 6,74,077 8,07,328 58,062 74,239 12,064 14,286 64,36,540 72,70,365 (22,33,887) (71,80,604) 3.1 In Government 32,22,899 34,84,382 15,87,677 19,88,718 6,31,129 7,33,803 52,137 63,824 12,049 14,271 55,05,891 62,84,999 Securities (a+b) a) In India 31,65,076 34,23,192 15,73,022 19,73,422 5,88,166 7,25,476 52,137 63,824 12,049 14,271 53,90,449 62,00,185 b) Outside 57,824 61,190 14,655 15,296 42,963 8,327 - - - - 1,15,442 84,814 India 3.2 Other Approved 5 5 - - - - - - - - 5 5 Securities 3.3 Non-approved 5,94,296 5,66,477 2,87,460 3,34,929 42,948 73,525 5,925 10,415 15 15 9,30,644 9,85,361 Securities 4. Loans and advances 82,83,763 95,06,329 53,66,673 68,61,388 4,91,029 5,48,474 1,77,887 2,26,148 - - 1,43,19,353 1,71,42,340 (63,36,115) (1,66,17,066) 4.1 Bills Purchased 2,84,863 3,57,393 1,34,836 1,50,780 65,506 84,506 872 1,444 - - 4,86,077 5,94,124 and Discounted 4.2 Cash Credits, 29,10,286 33,64,717 16,98,188 19,67,085 2,07,287 2,39,685 18,266 26,966 - - 48,34,027 55,98,453 Overdrafts, etc. 4.3 Term Loans 50,88,614 57,84,218 35,33,648 47,43,524 2,18,236 2,24,283 1,58,750 1,97,738 - - 89,99,248 1,09,49,763 5. Fixed Assets 1,15,288 1,18,864 49,347 56,755 5,624 5,956 2,735 3,353 564 1,189 1,73,558 1,86,117 6. Other Assets 7,33,456 7,64,154 5,04,997 5,57,840 1,84,230 1,63,390 6,463 7,736 3,070 1,876 14,32,216 14,94,997 Notes: 1. -: Nil/negligible. 2. Detailed bank-wise data on annual accounts are collated and published in Statistical Tables Relating to Banks in India, which is being released simultaneously with this Report, available at https://data.rbi.org.in. 3. Data in parentheses exclude the impact of the merger of a non-bank with a bank. All other data are inclusive of the impact of the merger. Source: Annual accounts of respective banks. 44OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS Chart IV.2: Balance Sheet Composition (At end-March) Source: Annual accounts of respective banks. (CASA) deposits (Chart IV.3). In the long-run, economic activity6 (Chart IV.4a). The weighted the overall level of economic activity rather average lending rate (WALR) remained firm than interest rates is the main factor impacting during the year reflecting the monetary policy deposit growth (Box IV.1). stance. Transmission to lending rate on fresh 2.2 Assets loans was generally higher for PSBs than for IV.8 Credit growth remained robust PVBs (Chart IV.4b). during 2023-24, propelled by acceleration in Chart IV.3: Deposit Growth Source: Annual accounts of banks. 6 Real GDP expanded by 8.2 per cent in 2023-24 as compared with 7.0 per cent in 2022-23. 45Report on Trend and Progress of Banking in India 2023-24 Box IV.1 Determinants of Deposit Growth in Commercial Banks The determinants of deposit growth in commercial banks Table IV.1.1: Determinants of Aggregate Deposit: ARDL Model in India are assessed for the period June 2012-March 2024 in an autoregressive distributed lag (ARDL) model (Pesaran Dependent Variable: log Aggregate Deposit and Shin, 1999). In line with the consensus in the literature Long Run (Saleh, M. et al., 2023 and S. A. S. Ali et al., 2019), the Log GVA (-1) 1.083*** (0.360) regression results suggest that the long-run elasticity of WADTDR Outstanding (-1) 0.0458 bank deposits with respect to income, proxied by nominal (0.0603) gross value added (GVA) is close to unity (1.1), i.e., a one Log BSE (-1) -0.0155 per cent growth in income, ceteris paribus, is associated (0.211) ECM -0.166** with almost one per cent increase in bank deposit growth (0.0801) in the long run. Higher deposit interest rates (WADTDR) Short Run contribute to higher bank deposits, but their impact is not D.Log GVA -0.0420 statistically significant in the long run. The negative and (0.0678) D.WADTDR Outstanding 0.0479* statistically significant coefficient of the error correction (0.0267) term (ECM) indicates that around 17 per cent of any D.WADTDR Outstanding (-1) -0.0312 disequilibrium between deposit and income growth due to (0.0273) any shock is corrected in each quarter (Table IV.1.1). D.Log BSE 0.0716 (0.0427) References: D.Log BSE (-1) -0.0916** (0.0403) Pesaran, M. H., & Shin, Y. (1999). An Autoregressive Demonetisation Dummy 0.0244* Distributed-Lag Modelling Approach to Cointegration (0.0121) Analysis. Econometrics and Economic Theory in the 20th COVID Dummy 0.0299** (0.0117) Century: The Ragnar Frisch Centennial Symposium, Quarter2 Dummy -0.00352 371–413. Cambridge: Cambridge University Press. (0.00787) Quarter3 Dummy 0.00396 Saleh, M., et al. (2023). The Impact of Financial (0.00719) Determinants on Bank Deposits Using ARDL Model. Quarter4 Dummy 0.00643 Journal of Statistics Applications & Probability 12(2): (0.00792) 441-452. DOI: https://doi.org/10.18576/jsap/120210. Constant -0.0420 (0.742) S. A. S. Ali, et al. (2019). Determinants of Deposit of Observations 39 Commercial Banks in Sudan: an Empirical Investigation R-squared 0.468 (1970-2012). International Journal of Electronic Finance Source: RBI staff estimates. (9), 230-255. IV.9 Credit growth was led by the metropolitan of rural, semi-urban and urban areas broadly region in 2023-24, as in the past. The contribution remained steady (Chart IV.5). Chart IV.4: Credit Growth Notes: 1. SCBs’ data exclude RRBs. 2. A public sector bank has been categorized as private sector bank with effect from January 21, 2019. Hence, from March 2019 onwards the bank is excluded from PSBs group and included in PVBs group. Therefore, from March 2019 onwards, public and private bank-group wise growth rates are based on adjusted bank-group totals. 3. A private sector bank was amalgamated with a foreign bank with effect from November 27, 2020. Hence, from December 2020 onwards private and foreign bank-group wise growth rates are based on adjusted bank-group totals. 4. Credit data exclude inter-bank advances. Source: Spatial Distribution of Deposits and Credit and RBI. 46OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS Chart IV.5: Contribution of Population Groups in Credit Growth Notes: 1. SCBs data exclude RRBs. 2. All the centres are classified into following four population groups based on their population in the Census 2011: a) ‘Rural’ group includes centres with population of less than 10,000; b) ‘Semi-urban’ group includes centres with population of 10,000 and above but less than 1,00,000; c) ‘Urban’ group includes centres with population of 1,00,000 and above but less than ten lakh; d) ‘Metropolitan’ group includes all centres with population of one million and above. Source: Spatial Distribution of Deposits and Credit. IV.10 At end-March 2024, 83.1 per cent of SCBs’ deposit growth gap also narrowed during the investments were in SLR approved securities. In year (Chart IV.6b). non-SLR investments, debt comprised nearly 95 2.3 Maturity Profile of Assets and Liabilities per cent (Table IV.2). IV.12 Assets-liability maturity mismatches are IV.11 With a pick-up in deposit growth, the intrinsic to the banking sector as their primary credit-deposit growth gap narrowed during source of funds, i.e., deposits, are of short-to 2023-24 to 3.4 percentage points (excluding the medium-term tenors, while the loans repayment merger impact) (Chart IV.6a). The investment- schedule stretches across the medium-term. Table IV.2: Investments of SCBs (At end-March) (Amount in ₹ crore) PSBs PVBs FBs SFBs SCBs 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 1 2 3 4 5 6 7 8 9 10 11 Total Investments (A+B) 38,33,030 40,54,445 18,81,756 23,11,707 6,55,830 8,01,533 58,244 74,508 64,28,860 72,42,193 A. SLR Investments (I+ II+III) 30,07,757 32,62,932 15,62,365 19,61,384 5,99,061 7,27,546 52,151 63,873 52,21,335 60,15,735 I. Central Government Securities 17,45,055 18,36,240 13,10,477 16,23,034 5,93,438 7,17,980 40,013 47,494 36,88,983 42,24,748 II. State Government Securities 12,60,787 14,22,323 2,51,889 3,38,350 5,623 9,566 12,139 16,379 15,30,437 17,86,618 III. Other Approved Securities 1,916 4,369 0 0 0 0 0 0 1,916 4,369 B. Non-SLR Investments (I+II) 8,25,273 7,91,513 3,19,390 3,50,323 56,769 73,987 6,093 10,634 12,07,525 12,26,458 I. Debt Securities 7,68,545 7,49,178 3,03,474 3,32,937 56,404 73,691 6,016 10,555 11,34,439 11,66,361 II. Equities 56,728 42,335 15,916 17,386 365 297 77 79 73,087 60,097 Source: Off-site returns (global operations), RBI. 47Report on Trend and Progress of Banking in India 2023-24 Chart IV.6: Credit-Deposit and Investment-Deposit Gap Note: Data on credit, deposit and investment growth exclude the impact of merger. Source: RBI. During 2023-24, the maturity mismatch widened IV.13 The share of short-term deposits in total in the short-term bucket from a year ago, although deposits increased for all bank groups, except it remained low relative to pre-pandemic levels. FBs. On the other hand, the share of short- term borrowings declined for all bank groups, The gap remained positive across other buckets7 except SFBs. All the operations of FBs, viz., (Chart IV.7). This mainly reflected an increase in deposits, borrowings, lending and investments shorter maturity deposits raised by banks. were concentrated in short-term buckets. PSBs’ investments are typically in long-term Chart IV.7: Maturity Brackets-wise Assets and Liabilities Gap instruments, while all other bank groups prefer short-term exposures (Table IV.3). 2.4 International Liabilities and Assets IV.14 In 2023-24, growth of all types of non- residents deposits, viz., foreign currency non-resident (Bank) [FCNR(B)], Non-resident External (NRE) Rupee and Non-resident Ordinary (NRO) Rupee contributed to acceleration in international liabilities of banks in India (Appendix Table IV.2). Their international assets fell by 23.5 per cent in 2023-24 on top Notes: 1. Assets consist of loans and advances and investments. Liabilities consist of deposits and borrowings. of a contraction of 13.1 per cent a year ago on 2. Gap is calculated as assets minus liabilities. Source: Annual accounts of banks. account of reduction in NOSTRO balances and 7 Short-term is defined as up to one-year, medium term is one to five years, while long-term is defined as more than five years. 48OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS Table IV.3: Bank Group-wise Maturity Profile of Select Liabilities/Assets (At end-March) (Per cent) Liabilities/Assets PSBs PVBs FBs SFBs PBs All SCBs 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 1 2 3 4 5 6 7 8 9 10 11 12 13 I. Deposits a) Up to 1 year 36.4 38.3 33.0 39.2 65.7 62.2 42.2 49.0 15.5 22.6 36.7 39.8 b) Over 1 year and up to 3 years 21.1 22.0 31.2 27.9 26.1 30.7 54.9 44.8 84.5 77.4 25.0 24.7 c) Over 3 years and up to 5 years 12.8 11.0 9.1 8.3 8.1 7.1 1.8 4.5 0.0 0.0 11.2 9.8 d) Over 5 years 29.7 28.7 26.7 24.6 0.0 0.0 1.1 1.7 0.0 0.0 27.1 25.6 II. Borrowings a) Up to 1 year 60.8 58.1 45.9 33.8 90.5 82.8 38.8 51.3 100.0 100.0 57.4 47.7 b) Over 1 year and up to 3 years 16.7 16.7 32.6 37.8 7.6 16.2 50.6 35.7 0.0 0.0 22.9 27.5 c) Over 3 years and up to 5 years 8.5 6.9 10.3 9.9 0.7 0.4 5.4 7.3 0.0 0.0 8.3 7.9 d) Over 5 years 14.0 18.3 11.2 18.6 1.2 0.6 5.2 5.8 0.0 0.0 11.3 16.9 III. Loans and Advances a) Up to 1 year 28.3 28.0 28.4 27.3 56.2 59.5 36.5 37.7 100.0 100.0 29.4 28.9 b) Over 1 year and up to 3 years 34.3 36.5 36.7 34.6 23.9 23.8 36.0 36.0 0.0 0.0 34.9 35.3 c) Over 3 years and up to 5 years 14.1 12.1 12.5 12.5 10.0 8.2 10.5 10.1 0.0 0.0 13.3 12.1 d) Over 5 years 23.3 23.4 22.4 25.6 9.9 8.5 17.1 16.3 0.0 0.0 22.4 23.7 IV. Investment a) Up to 1 year 26.0 22.4 55.3 58.6 86.4 83.9 61.6 68.6 99.5 99.2 41.3 41.4 b) Over 1 year and up to 3 years 14.6 16.3 19.1 17.2 8.2 10.4 27.0 25.9 0.1 0.4 15.3 16.0 c) Over 3 years and up to 5 years 12.9 11.9 7.1 6.1 1.3 1.6 5.5 4.0 0.0 0.1 9.9 8.8 d) Over 5 years 46.4 49.4 18.5 18.1 4.2 4.1 5.9 1.5 0.4 0.3 33.4 33.8 Note: Figures denote share of each maturity bucket in each component of the balance sheet. Source: Annual accounts of banks. placements abroad as well as in loans to non- the international assets to liabilities ratio of banks residents (Appendix Table IV.3). Consequently, in India declined for the second consecutive year during 2023-24 (Chart IV.8). Chart IV.8: International Assets and Liabilities of Banks IV.15 The consolidated international claims of Indian banks on all the major economies, except US and UAE, increased in 2023-24 (Appendix Table IV.4); in contrast, in the previous year, Indian banks’ consolidated international claims on major economies, except Singapore, had contracted. At end-March 2024, Indian banks’ claims shifted away from their counterparts in other jurisdictions towards non-financial private sector (Chart IV.9a). The proportion of shorter maturity claims increased and remained the dominant category (Appendix Table IV.5 and Source: Annual accounts of banks and DBIE. Chart IV.9b). 49Report on Trend and Progress of Banking in India 2023-24 Chart IV.9: Consolidated International Claims of Indian Banks (At end-March) Source: Annual accounts of banks and DBIE. 2.5 Off-Balance Sheet Operations at end-March 2014 to 32.9 per cent at end- March 2024, while that of PSBs fell from 24.3 IV.16 Growth in contingent liabilities of SCBs per cent to 13.2 per cent over the same period decelerated at end-March 2024, led by forward exchange contracts (Chart IV.10a and Appendix (Chart IV.10b). Table IV.6). As a proportion of balance sheet 3. Financial Performance size, the off-balance sheet exposure of SCBs IV.17 Profitability of banks improved for the decreased to 138.6 per cent at end-March 2024 sixth consecutive year in 2023-24. Both PSBs from 144.8 per cent at end-March 2023. The share of PVBs in contingent liabilities of the and PVBs exhibited an increase in return on banking sector increased from 20.4 per cent assets (RoA) in 2023-24 (Chart IV.11). Gains in Chart IV.10: Off-Balance Sheet Liabilities of Banks Source: Annual accounts of banks. 50OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS Chart IV.11: Profitability Ratios (At end-March) Source: Off-site returns (global operations), RBI. profitability of SCBs continued in H1:2024-25 deceleration in both operating and net profit with RoA at 1.4 per cent and RoE at 14.6 growth (Table IV.4 and Chart IV.12a). per cent. IV.19 The interest expense to interest income IV.18 During 2023-24, banks resorted ratio increased to 57.4 per cent during 2023-24 to borrowings at higher interest rates and from 52.2 per cent in the previous year. The increased their deposit rates to bridge the median Net Interest Margin (NIM) was the credit-deposit growth gap. Consequently, the highest for PVBs, followed by FBs and PSBs. growth of their interest expenditure outpaced NIM is highly dispersed for FBs, followed by that of their interest earnings, resulting in a PVBs and PSBs (Chart IV.12b). Chart IV.12: Net Interest Income and Net Interest Margin Note: The violin chart is created using bank-wise NIM at end-March 2024. The white dot in the chart represents the median, the base of the black bar in the center represents first quartile, whereas the top represents the third quartile. Wider sections of the violin plot represent a higher frequency of the distribution, whereas the thinner sections represent a lower frequency. Black dot represents the outlier for FBs. Source: Off-site returns, RBI and annual accounts of banks. 51Report on Trend and Progress of Banking in India 2023-24 Table IV.4: Trends in Income and Expenditure of Scheduled Commercial Banks (Amount in ₹ crore) Public Sector Private Sector Foreign Small Finance Payments All Banks Banks Banks Banks Banks SCBs 2022-23 2023-24 2022-23 2023-24 2022-23 2023-24 2022-23 2023-24 2022-23 2023-24 2022-23 2023-24 1 2 3 4 5 6 7 8 9 10 11 12 13 1. Income 9,71,421 12,12,665 6,90,504 9,41,864 1,08,132 1,29,870 33,806 45,449 5,965 7,102 18,09,829 23,36,949 (16.8) (24.8) (20.7) (36.4) (36.0) (20.1) (34.6) (34.4) (20.5) (19.0) (19.6) (29.1) a) Interest Income 8,51,078 10,66,243 5,82,278 7,96,569 83,315 1,06,032 29,806 39,646 860 1,416 15,47,337 20,09,907 (20.0) (25.3) (23.6) (36.8) (26.5) (27.3) (34.7) (33.0) (92.7) (64.6) (22.0) (29.9) b) Other Income 1,20,343 1,46,422 1,08,226 1,45,295 24,817 23,838 4,000 5,803 5,105 5,686 2,62,492 3,27,043 (-2.0) (21.7) (6.8) (34.3) (81.9) (-3.9) (34.0) (45.1) (13.3) (11.4) (7.0) (24.6) 2. Expenditure 8,66,772 10,71,463 5,66,369 7,66,567 77,987 1,02,984 29,644 39,230 5,844 7,103 15,46,615 19,87,346 (13.3) (23.6) (19.0) (35.3) (27.6) (32.1) (22.8) (32.3) (15.9) (21.5) (16.1) (28.5) a) Interest Expended 4,87,690 6,58,611 2,75,391 4,29,732 31,678 46,996 12,140 17,474 246 353 8,07,144 11,53,167 (18.6) (35.0) (22.8) (56.0) (47.5) (48.4) (27.6) (43.9) (57.5) (43.8) (21.1) (42.9) b) Operating Expenses 2,44,064 2,95,090 2,02,563 2,39,146 27,958 34,789 13,150 17,189 5,579 6,634 4,93,314 5,92,848 (10.9) (20.9) (29.3) (18.1) (12.0) (24.4) (34.0) (30.7) (14.3) (18.9) (18.5) (20.2) of which: Wage Bill 1,44,690 1,84,025 70,605 90,284 10,065 10,460 6,705 8,504 914 1,215 2,32,978 2,94,488 (9.0) (27.2) (20.0) (27.9) (9.6) (3.9) (26.4) (26.8) (15.9) (32.9) (12.6) (26.4) c) Provision and 1,35,018 1,17,761 88,415 97,688 18,351 21,200 4,354 4,567 20 116 2,46,158 2,41,332 Contingencies (0.7) (-12.8) (-7.1) (10.5) (25.3) (15.5) (-9.4) (4.9) (556.9) (488.4) (-1.0) (-2.0) 3. Operating Profit 2,39,667 2,58,964 2,12,551 2,72,986 48,496 48,085 8,516 10,786 141 114 5,09,371 5,90,935 (19.5) (8.1) (11.0) (28.4) (46.8) (-0.8) (47.3) (26.6) (-263.0) (-18.9) (18.2) (16.0) 4. Net Profit 1,04,649 1,41,202 1,24,136 1,75,297 30,145 26,886 4,162 6,219 121 -1 2,63,214 3,49,603 (57.3) (34.9) (29.0) (41.2) (64.0) (-10.8) (327.6) (49.4) (-235.6) (-101.0) (44.6) (32.8) 5. Net Interest Income (NII) 3,63,388 4,07,632 3,06,888 3,66,836 51,637 59,036 17,666 22,172 615 1,063 7,40,193 8,56,740 (22.0) (12.2) (24.4) (19.5) (16.4) (14.3) (40.1) (25.5) (111.7) (72.9) (23.0) (15.7) 6. Net Interest Margin (NIM) 2.7 2.8 3.9 3.9 3.5 3.6 7.5 7.4 3.0 4.5 3.2 3.3 Notes: 1. NIM has been defined as NII as percentage of average assets. 2. Figures in parentheses refer to per cent variation over the previous year. Source: Annual accounts of respective banks. IV.20 The PCR (not adjusted for write-offs) of 76.7 per cent at end-September 2024, largely SCBs expanded by 210 basis points (bps) y-o-y driven by PSBs (Chart IV.13). to reach 76.2 per cent at end-March 2024, mainly IV.21 An increase of 104 bps in the cost of funds reflecting lower slippages. It further improved to and 89 bps rise in the yield on assets narrowed Chart IV.13: Provision Coverage Ratio Note: Provision coverage ratio is not write-off adjusted. Source: Off-site returns (domestic operations), RBI. 52OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS Table IV.5: Cost of Funds and Return on Funds - Bank Group-wise (Per cent) Bank Group Year Cost of Cost of Cost of Funds Return on Return on Return on Spread Deposits Borrowings Advances Investments Funds (Column 8 – Column 5) 1 2 3 4 5 6 7 8 9 PSBs 2022-23 3.9 6.2 4.1 7.5 6.5 7.1 3.1 2023-24 4.8 7.3 5.0 8.4 6.9 7.9 2.9 PVBs 2022-23 3.8 6.4 4.1 9.2 6.3 8.4 4.3 2023-24 4.8 9.2 5.4 10.4 6.8 9.5 4.1 FBs 2022-23 2.9 4.0 3.1 8.2 5.8 6.9 3.8 2023-24 3.8 5.6 4.1 8.7 6.8 7.6 3.5 SFBs 2022-23 5.9 7.3 6.1 16.5 6.7 14.2 8.0 2023-24 6.8 8.2 7.0 17.0 6.9 14.5 7.5 PBs 2022-23 2.1 7.8 2.4 6.0 5.6 5.6 3.3 2023-24 2.0 11.2 2.4 10.0 7.6 7.6 5.2 All SCBs 2022-23 3.8 6.1 4.0 8.2 6.3 7.6 3.6 2023-24 4.8 8.1 5.1 9.3 6.9 8.5 3.4 Notes: 1. Cost of deposits = Interest paid on deposits/Average of current and previous year’s deposits. 2. Cost of borrowings = (Interest expended - Interest on deposits)/Average of current and previous year’s borrowings. 3. Cost of funds = Interest expended / (Average of current and previous year’s deposits plus borrowings) 4. Return on advances = Interest earned on advances /Average of current and previous year’s advances. 5. Return on investments = Interest earned on investments /Average of current and previous year’s investments. 6. Return on funds = (Interest earned on advances + Interest earned on investments) / (Average of current and previous year’s advances plus investments). Source: Calculated from balance sheets of respective banks. the spread for SCBs during 2023-24. SFBs had well-capitalised, although the CRAR of SCBs the widest spreads, reflecting relatively higher moderated by 30 bps to 16.9 per cent while interest rates on their advances (Table IV.5). Tier 1 capital stood at 14.8 per cent (Table IV.6). The fall in CRAR was due to an increase in risk- 4. Soundness Indicators weighted assets (RWAs) exceeding the increase 4.1 Capital Adequacy in capital funds. Supervisory data indicate that IV.22 The minimum capital to risk-weighted the CRAR of SCBs was 16.8 per cent at end- assets ratio (CRAR) requirement for banks in September 2024. India is set at 9 per cent [11.5 per cent inclusive IV.23 The dispersion of CRAR and CET1 among of capital conservation buffer (CCB)]and Tier 1 constituent banks was higher for PVBs than capital requirement is set at 7 per cent, both one PSBs (Chart IV.14a and b). The mean as well as percentage point above the Basel III requirements. median of both CRAR and CET1 was higher for At end-March 2024, all bank groups remained PVBs than those for PSBs. Table IV.6: Component-wise Capital Adequacy of SCBs (At end-March) (Amount in ₹ crore) PSBs PVBs FBs SCBs 2023 2024 2023 2024 2023 2024 2023 2024 1 2 3 4 5 6 7 8 9 1. Capital Funds 10,16,789 11,74,245 10,20,953 12,83,455 2,43,096 2,70,646 23,15,358 27,69,950 i) Tier 1 Capital 8,47,783 9,94,510 9,11,271 11,55,051 2,20,746 2,43,842 20,10,443 24,30,733 ii) Tier 2 Capital 1,69,006 1,79,735 1,09,681 1,28,404 22,350 26,804 3,04,915 3,39,217 2. Risk Weighted Assets 65,48,771 75,59,396 54,85,172 72,14,513 12,50,775 14,18,639 1,34,38,317 1,63,84,879 3. CRAR (1 as % of 2) 15.5 15.5 18.6 17.8 19.4 19.1 17.2 16.9 Of which: Tier 1 12.9 13.2 16.6 16.0 17.6 17.2 15.0 14.8 Tier 2 2.6 2.4 2.0 1.8 1.8 1.9 2.3 2.1 Source: Off-site returns, RBI. 53Report on Trend and Progress of Banking in India 2023-24 Chart IV.14: Bank Group-wise CRAR and CET1 Ratio (At end-March) Note: The whiskers of the boxplots are indicative of maximum and minimum values. A colored box shows distance between first quantile and third quantile. Horizontal line in each box shows the median, while ‘X’ shows the mean. Source: Off-site returns (domestic operations), RBI. IV.24 Banks across groups and sizes have in tranches from 2016. Excess CRAR, calculated consistently maintained CRAR above the over and above the then applicable minimum regulatory minimum requirements (Chart IV.15). CRAR inclusive of CCB, is influenced by a The CCB was made applicable for Indian banks multitude of factors (Box IV.2). Chart IV.15: Excess CRAR Note: For any given quarter, a bank with asset size below (above) the group median is considered small (large). Source: RBI. 54OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS Box IV.2: Why do Banks Hold Excess CRAR? Banks maintain excess CRAR as a buffer against Table IV.2.1: Regression Results unexpected losses and economic downturns, and to boost Dependent variable: Excess CRAR their market reputation (Lindquist, 2004). CRARs above Model 1 Model 2 Model 3 regulatory requirements could have opportunity costs Lag (RoA) 0.865*** 1.115*** for banks, as excess capital could have been invested (0.0673) (0.0754) Lag (NIM) 1.091*** in higher-yielding assets, including for extending credit (0.0859) (Kashyap, Rajan, and Stein, 2002). Lag (NNPA ratio) -0.0783*** (0.0262) The potential drivers of excess CRAR are estimated by Lag (GNPA ratio) -0.197*** -0.0935*** (0.0140) (0.0162) using supervisory quarterly panel data for 33 PSBs and Lag (loans-to-assets) -0.0339*** -0.0274** PVBs from March 2012 to December 2023 in fixed effects (0.0102) (0.0118) Lag (credit growth) 0.00347 regression models. (0.00475) Group excess CRAR 0.649*** The results indicate that profitability indicators like RoA (0.0474) or NIM positively impact excess CRAR (Table IV.2.1). Log (total assets) -0.676*** -0.315* (0.160) (0.165) Conversely, the ex-post credit risk of banks, measured by WACR -0.116*** -0.439*** -0.411*** the lagged GNPA ratio or net NPA (NNPA) ratio, dampens (0.0305) (0.0397) (0.0405) GDP growth 0.00120 0.0334*** 0.0243*** excess CRAR as banks with weaker asset quality anticipate (0.00792) (0.00848) (0.00845) higher provisions. Additionally, a larger loan portfolio Constant 3.892*** 12.21*** 11.86*** (0.689) (2.084) (2.027) (measured by loans-to-assets ratio) requires more capital, Observations 1,518 1,509 1,518 resulting in a negative relationship with excess CRAR. Fixed Effects Yes Yes Yes The size of a bank, measured by the log of total assets, R-squared 0.394 0.267 0.289 turns out to be negatively related to excess CRAR — larger Number of banks 33 33 33 Notes: 1. Figures in parentheses indicate robust standard errors clustered at bank banks may have the advantage of portfolio diversification, level. economies of scale and easier access to capital markets 2. ***, ** and * represent 1 per cent, 5 per cent and 10 per cent levels of significance, respectively. (Berger & Bouwman, 2009). Source: RBI staff estimates. The decision to hold excess capital can also be influenced References: by peer behaviour (Angora, Distinguin, and Rugemintwari, Angora, A., Distinguin, I., and Rugemintwari, C. (2009). 2009). In the Indian context, the average excess capital Excess Capital of European Banks: Does Bank Heterogeneity held by banks within the same category (size-wise groups Matter? Working paper. University of Limoges. of PSBs and PVBs) shows a significant and positive Berger, A. N., and Bouwman, C. H. (2009). Bank Liquidity relationship with a bank’s own excess CRAR. The weighted Creation. The Review of Financial Studies, 22(9), 3779- average call rate (WACR), a proxy for opportunity cost of 3837. holding excess capital, dampens excess capital holdings. Kashyap, A. K., Rajan, R. G., and Stein, J. C. (2002). Banks Excess CRAR also appears to be procyclical, as evident as Liquidity Providers: An Explanation for the Coexistence from its positive and significant relationship with GDP of Lending and Deposit-taking. Journal of Finance, 57(1), growth. 33-73. In conclusion, banks maintaining excess CRAR may be Lindquist, K.-G. (2004). Banks’ Buffer Capital: How influenced by their own financial conditions as well as Important is Risk. Journal of International Money and Finance, 23(3), 493-513. peer influences apart from macroeconomic conditions. IV.25 Resources raised by banks through recorded a notable increase of 38.6 per cent in private placement of debt, qualified institutional total amount raised during 2023-24 compared to placement and preferential allotment of equity 2022-23 (Table IV.7). increased marginally during 2023-24. PSBs 55Report on Trend and Progress of Banking in India 2023-24 Table IV.7: Resources Raised by Banks through Private Placements (Amount in ₹ crore) 2021-22 2022-23 2023-24 2024-25 (Up to October) No. of issues Amount raised No. of issues Amount raised No. of issues Amount raised No. of issues Amount raised 1 2 3 4 5 6 7 8 9 PSBs 34 70,719 27 70,260 26 97,380 17 90,811 PVBs 16 40,034 14 52,903 14 33,426 6 14,519 FBs 0 0 2 224 0 0 0 0 Total 50 1,10,753 43 1,23,387 40 1,30,806 23 1,05,330 Notes: 1. Include private placement of debt, qualified institutional placement and preferential allotment. 2. Data for 2024-25 are provisional. Source: SEBI, BSE and NSE. 4.2 Leverage and Liquidity IV.28 The net stable funding ratio (NSFR) – the ratio of available stable funding to required IV.26 The leverage ratio (LR) is a non-risk stable funding – limits overreliance of banks on based backstop measure complementing the short-term wholesale funding and encourages Basel III risk-based capital framework. The LR better assessment of funding risk across all on- — the ratio of Tier 1 capital to total exposures and off-balance sheet items, promoting funding — improved during 2023-24 for all bank groups, stability. In line with international standards, except FBs (Table IV.8). the minimum NSFR that banks in India are IV.27 The liquidity coverage ratio (LCR) — required to maintain is set at 100 per cent. At end-March 2024, all bank groups met this target designed to help banks withstand liquidity (Table IV.9). pressures in the short-term — requires banks to maintain high quality liquid assets (HQLAs) 4.3 Non-Performing Assets to meet 30 days’ net outgo under stressed IV.29 The improvement in asset quality of banks, conditions. At end-March 2024, the LCR was measured by their GNPA ratios, commenced in 130.3 per cent, which was above the required 2018-19. GNPAs of SCBs reduced by 15.9 per 100 per cent, notwithstanding some moderation cent y-o-y to ₹ 4.8 lakh crore as on March 31, during the year (Table IV.8). 2024. The GNPA ratio declined to 2.7 per cent at Table IV.8: Leverage Ratio and Liquidity Coverage Ratio (in Per cent) Leverage Ratio Liquidity Coverage Ratio Mar-22 Mar-23 Mar-24 Sep-24 Mar-22 Mar-23 Mar-24 Sep-24 1 2 3 4 5 6 7 8 9 PSBs 5.1 5.5 6.0 6.0 155.8 153.5 129.3 127.4 PVBs 9.7 9.6 9.7 10.0 127.7 127.9 127.1 126.1 FBs 11.0 11.0 10.8 10.6 171.0 154.6 145.0 142.6 All SCBs 7.2 7.4 7.8 7.9 147.1 144.6 130.3 128.6 Source: Off-site returns (global operations), RBI. 56OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS Table IV.9: Net Stable Funding Ratio IV.31 The slippage ratio, which measures (At end-March 2024) new accretions to NPAs as a share of standard (Amount in ₹ crore) Available Required NSFR advances at the beginning of the year, improved Stable Stable (per cent) during 2023-24 (Chart IV.16a). For the third Funding Funding 1 2 3 4 consecutive year, the slippage ratio of PVBs Public Sector Banks 1,11,95,611 88,65,493 126.3 remained higher than PSBs on account of Private Sector Banks 77,28,087 60,47,820 127.8 the former’s larger fresh accretion to NPAs Foreign Banks 6,78,655 5,34,056 127.1 (Chart IV.16b). Small Finance Banks 2,04,965 1,63,860 125.1 Scheduled Commercial 1,98,07,318 1,56,11,229 126.9 IV.32 Reflecting these gains in asset quality, Banks the proportion of standard assets in total Source: Off-site returns (global operations), RBI. advances increased for all bank groups at end- end-March 20248, the lowest in 13 years, from March 2024 from a year ago. The decline in 3.9 per cent at end-March 2023. During 2023- share of non-standard advances (comprising 24, around 44.4 per cent of the reduction in sub-standard, doubtful and loss advances) GNPAs was attributable to better recoveries and was led by moderation in doubtful assets upgradations. (Table IV.11). IV.30 The net NPA (NNPA) ratio also declined IV.33 The share of large borrowal accounts9 in to a decadal low of 0.62 per cent at end-March total advances of SCBs declined to 43.9 per cent 2024, driven by stronger provision buffers at end-March 2024 from 46.5 per cent at the (Table IV.10). At end-September 2024, the NNPA end of the previous year. The special mention ratio improved further to 0.57 per cent. accounts-1 (SMA-1)10 ratio declined for both Chart IV.16: Reduction in GNPAs Source: Off-site returns (global operations) and annual accounts of banks. 8 Latest available supervisory data suggests that the GNPA ratio improved further to 2.5 per cent at end-September 2024. 9 Large borrowal accounts refer to accounts with total exposure of ₹ 5 crore and above. 10 SMA-1 indicates accounts with interest or principal payments overdue between 31-60 days. 57Report on Trend and Progress of Banking in India 2023-24 Table IV.10: Movements in Non-Performing Assets by Bank Group (Amount in ₹ crore) PSBs PVBs FBs SFBs# All SCBs 1 2 3 4 5 6 Gross NPAs Closing Balance for 2022-23 4,28,197 1,25,214 9,526 8,608 5,71,546 Opening Balance for 2023-24 4,28,197 1,25,214 9,526 8,608 5,71,546 Addition during the year 2023-24 84,435 1,16,801 5,199 7,152 2,13,587 Reduction during the year 2023-24 1,73,090 1,12,852 8,202 10,170 3,04,314 i. Recovered 43,018 25,794 3,513 2,348 74,673 ii. Upgradations 17,558 38,856 1,961 2,159 60,535 iii. Written-off 1,12,515 48,202 2,728 5,662 1,69,106 Closing Balance for 2023-24 3,39,541 1,29,164 6,523 5,590 4,80,818 Gross NPAs as per cent of Gross Advances* Closing Balance for 2022-23 5.0 2.3 1.9 4.7 3.9 Closing Balance for 2023-24 3.5 1.9 1.2 2.4 2.7 Net NPAs Closing Balance for 2022-23 1,02,532 29,510 1,656 1,622 1,35,320 Closing Balance for 2023-24 72,544 31,594 799 1,796 1,06,732 Net NPAs as per cent of Net Advances 2022-23 1.2 0.5 0.3 0.9 0.9 2023-24 0.8 0.5 0.1 0.8 0.6 Notes: 1. #: Data pertain to scheduled SFBs. 2. *: Calculated by taking gross NPAs from annual accounts of respective banks and gross advances from off-site returns (global operations). Source: Annual accounts of banks and off-site returns (global operations), RBI. PVBs and PSBs, overall as well as for large of the restructured standard advances (RSA) and borrowal accounts (Chart IV.17). also improvements in asset quality, the number of restructured accounts declined, for both PSBs IV.34 Restructured accounts had increased significantly in 2021-22 due to resolution and PVBs. The share of RSA in gross loans and schemes (RSA 1.0 and RSA 2.0) introduced in advances declined overall as well as for large the aftermath of the pandemic. Subsequently, borrowal accounts. The share remained lower reflecting the expiry of deadlines for invocation for PVBs than for PSBs (Chart IV.18). Table IV.11: Classification of Loan Assets by Bank Group (Amount in ₹ crore) Bank Group End-March Standard Assets Sub-standard Assets Doubtful Assets Loss Assets Amount Per cent* Amount Per cent* Amount Per cent* Amount Per cent* 1 2 3 4 5 6 7 8 9 10 PSBs 2023 72,86,427 94.8 62,444 0.8 2,28,806 3.0 1,10,054 1.4 2024 84,24,922 96.3 58,576 0.7 1,78,483 2.0 83,681 1.0 PVBs 2023 51,99,732 97.8 34,288 0.6 52,469 1.0 29,033 0.5 2024 66,96,942 98.2 44,199 0.6 52,944 0.8 26,397 0.4 FBs 2023 4,89,212 98.1 1,697 0.3 6,648 1.3 1,182 0.2 2024 5,39,598 98.8 1,344 0.2 4,228 0.8 950 0.2 SFBs** 2023 1,76,199 95.3 3,035 1.6 2,491 1.3 3,082 1.7 2024 2,24,245 97.6 4,005 1.7 1,514 0.7 71 0.0 All SCBs 2023 1,31,51,571 96.1 1,01,465 0.7 2,90,414 2.1 1,43,351 1.0 2024 1,58,85,707 97.2 1,08,125 0.7 2,37,169 1.5 1,11,099 0.7 Notes: 1. *: As per cent of gross advances. 2. **: Data pertain to scheduled SFBs. Source: Off-site returns (domestic operations), RBI. 58OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS Chart IV.17: Overall Stress vis-à-vis Stress in Chart IV.18: Restructured Standard Advances Ratio Large Borrowal Accounts (At end-March) Note: The ratios for large borrowal accounts and overall accounts are calculated as percentage of their respective amounts outstanding. Source: CRILC database and off-site returns (global operations), RBI. Source: CRILC database and off-site returns (global operations), RBI. 4.4 Recoveries recovery, with a share of 48.1 per cent in total amount recovered in 2023-24 (Table IV.12). IV.35 During 2023-24, the number of cases Under the IBC, the realisable value remained referred for resolution declined across high at 161.1 per cent of liquidation value at end- channels, except those under the Securitisation September 2024. and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) IV.36 Banks also cleaned up their balance sheets Act. The increase in the number of SARFAESI through sale of NPAs to asset reconstruction cases during 2023-24 reflected a low base as the companies (ARCs). During 2023-24, the ratio of number of cases had declined by 24.6 per cent asset sales to GNPAs declined to 5.8 per cent from during 2022-23. The Insolvency and Bankruptcy 9.7 per cent in the previous year. Amongst bank Code (IBC) remained the dominant mode of groups, the ratio increased for PSBs and FBs due Table IV.12: NPAs of SCBs Recovered through Various Channels (Amount in ₹ crore) Recovery Channel 2022-23 2023-24 (P) No. of cases Amount Amount Col. (4) as No. of cases Amount Amount Col. (8) as referred involved recovered* per cent of referred involved recovered* per cent of Col. (3) Col. (7) 1 2 3 4 5 6 7 8 9 Lok Adalats 1,37,72,958 1,88,135 3,774 2.0 1,26,84,815 1,89,694 3,322 1.8 DRTs 56,198 4,02,753 39,785 9.9 31,414 1,06,887 16,202 15.2 SARFAESI Act 1,87,340 1,11,359 30,957 27.8 2,31,407 1,23,363 30,460 24.7 IBC @ 1,262 1,38715 54,161 39.0 1,004 1,63,943 46,340 28.3 Total 1,40,17,758 8,40,962 1,28,676 15.3 1,29,48,640 5,83,887 96,325 16.5 Notes: 1. P: Provisional. 2. *: Refers to the amount recovered during the given year, which could be with reference to the cases referred during the given year as well as during the earlier years. 3. DRTs: Debt Recovery Tribunals. 4. @: Cases admitted by National Company Law Tribunals (NCLTs). Source: Off-site returns, RBI and Insolvency and Bankruptcy Board of India (IBBI). 59Report on Trend and Progress of Banking in India 2023-24 to higher sale to ARCs as well as moderation in Table IV.13: Details of Financial Assets Securitised by ARCs GNPAs. In the case of PVBs, the decline in sales to (Amount in ₹ crore) ARCs outpaced the reduction in GNPAs, pulling Mar-22 Mar-23 Mar-24 the ratio down (Chart 19a). The acquisition cost 1 2 3 4 of ARCs as a proportion of their book values of Number of reporting ARCs 29 28 27 1. Book Value of Assets Acquired 6,29,314 8,39,126 10,25,429 assets declined for the second consecutive year 2. Security Receipt issued by 2,04,841 2,46,290 2,83,330 in 2023-24, suggesting lower realisable value of SCs/RCs 3. Security Receipts Subscribed to the assets (Chart IV.19b). by (a) Banks 1,28,007 1,49,253 1,67,483 IV.37 Banks and FIs subscribed to 59.1 per (b) SCs/RCs 41,350 49,519 57,201 cent of the total security receipts (SRs) issued at (c) Financial Institutional 15,069 19,383 21,518 Investors end-March 2024 as compared with 60.6 per cent (d) Others (Qualified 20,415 28,135 37,128 Institutional Buyers) a year ago and 62.5 per cent at end-March 2022, 4. Amount of Security Receipts 31,331 41,078 52,332 indicative of increasing diversification of investor Completely Redeemed 5. Security Receipts Outstanding 1,25,359 1,39,422 1,48,070 base. The ratio of SRs issued to book value of Notes: 1. Total as at the end of quarter (Cumulative/stock figures). assets acquired declined from 29.4 per cent 2. SCs- Securitisation Companies and RCs – Reconstruction Companies. during 2022-23 to 27.6 per cent during 2023- Source: Quarterly statements submitted by ARCs. 24. The SRs completely redeemed, an indicator of recovery through this mode, improved to risk, operational risk, business risk and erosion 37.5 per cent of previous years’ outstanding SRs of customer confidence with financial stability during 2023-24 from 32.8 per cent during the implications. During 2023-24, based on date of previous year (Table IV.13). reporting by banks, the amount involved in frauds 4.5 Frauds in the Banking Sector was the lowest in a decade, while the average IV.38 Frauds present multiple challenges for value was the lowest in 16 years (Appendix Table the financial system in the form of reputational IV.7 and Table IV.14). Chart IV.19: Stressed Asset sales to ARCs Source: Quarterly statements submitted by ARCs and off-site returns (domestic operations), RBI. 60OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS Table IV.14: Frauds in Various Banking Operations Based on the Date of Reporting (Amount in ₹ crore) Area of Operation 2021-22 2022-23 2023-24 2023-24 (April-Sept.) 2024-25 (April-Sept.) Number Amount Number Amount Number Amount Number of Amount Number of Amount of frauds involved of frauds involved of frauds involved frauds involved frauds involved 1 2 3 4 5 6 7 8 9 10 11 Advances 3,745 41,485 4,063 22,421 4,124 11,017 1,136 1,747 3,531 19,748 Off-balance Sheet 21 1,077 14 285 11 256 4 73 0 0 Forex Transactions 7 7 13 12 19 38 5 5 6 1 Card/Internet 3,596 155 6,699 277 29,082 1,457 12,069 630 13,133 514 1 Deposits 471 493 652 258 2,002 240 915 103 934 363 Inter-Branch Accounts 3 2 3 - 29 10 0 0 3 1 Cash 649 93 1,485 159 484 78 210 31 205 18 Cheques/DDs, etc. 201 158 118 25 127 42 60 14 49 54 Clearing Accounts, etc. 16 1 18 3 17 2 2 0 3 1 Others 300 100 472 423 171 35 79 20 597 667 Total 9,009 43,571 13,537 23,863 36,066 13,175 14,480 2,623 18,461 21,367 Notes: 1. Refers to frauds of ₹1 lakh and above. 2. The figures reported by banks and financial institutions are subject to change based on revisions filed by them. 3. Frauds reported in a year could have occurred several years prior to year of reporting. 4. Amounts involved are as reported and do not reflect the amount of loss incurred. Depending on recoveries, the loss incurred gets reduced. Further, the entire amount involved in loan accounts is not necessarily diverted. 5. Post issuance of revised Master Directions on Fraud Risk Management dated July 15, 2024, the banks are reporting only those payment system related transactions which are concluded as fraud committed on bank(s). Source: RBI. IV.39 Based on the date of occurrence of frauds, IV.40 In 2023-24, the number of fraud cases in 2023-24, the share of internet and card frauds reported by PVBs accounted for 67.1 per cent in the total stood at 44.7 per cent in terms of of the total (Chart IV.20a). In terms of amount amount and 85.3 per cent in terms of number of involved, however, PSBs had the highest share cases (Table IV.15). (Chart IV.20b). In terms of number of frauds, the Table IV.15: Frauds in Various Banking Operations Based on the Date of Occurrence (Amount in ₹crore) Area of Operation Prior to 2021-22 2021-22 2022-23 2023-24 2024-25 (April - Sept.) Number Amount Number Amount Number Amount Number Amount Number Amount of frauds involved of frauds involved of frauds involved of frauds involved of frauds involved 1 2 3 4 5 6 7 8 9 10 11 Advances 7,435 82,256 2,541 8,867 2,942 2,343 2,115 1,127 430 76 Off-balance Sheet 40 1,592 2 27 4 0 0 0 0 0 Forex Transactions 3 1 9 8 21 47 11 2 1 0 Card/Internet 1,078 165 4,395 173 11,979 626 27,604 1,214 7,454 225 Deposits 519 621 456 122 716 200 1,903 230 465 182 Inter-Branch Accounts 6 2 8 1 20 1 4 9 0 0 Cash 284 52 941 101 1,047 116 455 71 96 8 Cheques/DDs, etc. 108 156 169 29 107 22 89 36 22 36 Clearing Accounts, etc. 9 1 19 4 14 1 12 2 0 0 Others 314 227 216 84 382 268 177 26 451 619 Total 9,796 85,073 8,756 9,416 17,232 3,624 32,370 2,717 8,919 1,146 Notes: 1. Refers to frauds of ₹1 lakh and above. 2. The figures reported by banks and financial institutions are subject to change based on revisions filed by them. 3. Data based on date of occurrence may change for a period of time as frauds reported late but having occurred earlier would get added. 4. Data in the table pertain to cases reported from FY 2021-22 till September 30, 2024. 5. Amounts involved are as reported and do not reflect the amount of loss incurred. Depending on recoveries, the loss incurred gets reduced. Further, the entire amount involved in loan accounts is not necessarily diverted. 6. Post issuance of revised Master Directions on Fraud Risk Management dated July 15, 2024, the banks are reporting only those payment system related transactions which are concluded as fraud committed on bank(s). Source: RBI. 61Report on Trend and Progress of Banking in India 2023-24 Chart IV.20: Bank Group-wise Frauds Notes: 1. Frauds based on date of reporting. 2. Others include clearing accounts, foreign exchange transactions, inter-branch accounts, non-resident accounts, off balance sheet. Source: RBI. share of card and internet frauds was highest Table IV.16: Enforcement Actions for all bank groups in 2023-24 (Chart IV.20c). Regulated Entity 2022-23 2023-24 Instances of Total Instances of Total 4.6 Enforcement Actions imposition Penalty imposition Penalty of penalty (₹ crore) of penalty (₹ crore) IV.41 Instances of penalty imposed on 1 2 3 4 5 regulated entities (REs) increased during 2023- Public Sector Banks 7 3.6 16 23.7 Private Sector Bank 7 12.2 12 24.9 24 across all bank groups, except FBs and Co-operative Banks 176 14.0 215 12.1 SFBs. The total penalty amount more Foreign Banks 5 4.7 3 7.0 than doubled in 2023-24, led by public Payments Banks - - 1 5.4 Small Finance Banks 2 1.0 1 0.3 and private sector banks. The amount of Regional Rural Banks 1 0.4 4 0.1 penalty imposed on co-operative banks NBFCs 11 4.4 22 11.5 HFCs 2 0.1 3 0.1 declined during the year, while there was an CICs - - 4 1.0 increase in instances of penalty imposition Total 211 40.4 281 86.1 (Table IV.16). Source: RBI. 62OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS 5. Sectoral Bank Credit: Distribution and NPAs of NBFCs on banks’ borrowings, the Reserve IV.42 Bank credit growth in 2023-24 was broad- Bank on November 16, 2023 tightened lending based, led by services sector and personal loans norms in these sectors12. Bank credit growth to segment, followed by agriculture and industry segments like consumer durables, credit card (Table IV.17)11. To address the build-up of any receivables and lending to NBFCs, for which risk risks due to high growth in certain sub-segments weights were increased, has moderated. of consumer credit and increasing dependence Table IV.17: Sectoral Deployment of Gross Bank Credit by SCBs (Amount in ₹ crore) Sector Outstanding as on Per cent variation (y-o-y) Mar-23 Mar-24 Oct-24 Mar-23 Mar-24 Oct-24 1. Agriculture and Allied Activities 17,26,410 20,71,251 22,05,299 15.4 20.0 15.5 2. Industry (Micro and Small, Medium and Large) 33,66,406 36,52,804 37,74,252 5.8 8.5 7.9 (36,35,810) (37,59,186) (8.0) (8.0) 2.1. Micro and Small 6,33,289 7,26,315 7,49,790 13.1 14.7 10.0 2.2. Medium 2,68,286 3,03,998 3,35,822 12.3 13.3 19.6 2.3. Large 24,64,831 26,22,490 26,88,640 3.5 6.4 6.0 3. Services, of which 37,18,805 45,92,227 47,84,938 19.5 23.5 12.7 (44,90,467) (47,04,550) (20.8) (14.1) 3.1. Transport Operators 1,92,059 2,30,175 2,46,407 14.7 19.8 15.0 3.2. Computer Software 24,924 25,917 30,581 7.1 4.0 24.0 3.3. Tourism, Hotels and Restaurants 69,342 77,513 79,732 3.3 11.8 5.4 3.4. Trade 8,72,340 10,25,752 10,79,498 18.5 17.6 12.4 3.5. Commercial Real Estate 3,22,591 4,69,013 5,07,671 8.4 45.4 13.9 (4,00,470) (4,52,869) (24.1) (26.0) 3.6. Non-Banking Financial Companies (NBFCs) 13,42,539 15,48,027 15,36,655 29.9 15.3 6.4 4. Personal Loans, of which 41,82,767 53,31,290 56,47,476 20.7 27.5 12.9 (49,19,468) (52,78,594) (17.6) (15.8) 4.1. Consumer Durables 20,985 23,713 23,640 17.7 13.0 6.6 4.2. Housing (Including Priority Sector Housing) 19,91,164 27,18,715 28,71,845 14.5 36.5 12.1 (23,31,935) (25,25,138) (17.1) (17.8) 4.3. Advances against Fixed Deposits 1,22,484 1,25,239 1,27,533 46.4 2.2 10.9 (Including FCNR (B), NRNR Deposits etc.) 4.4. Advances to Individuals against Shares, Bonds, etc. 7,633 8,492 9,060 12.1 11.3 16.0 4.5. Credit Card Outstanding 2,04,708 2,57,016 2,81,392 32.5 25.6 16.9 4.6. Education 96,482 1,19,380 1,30,309 15.3 23.7 17.6 4.7. Vehicle Loans 5,01,979 5,89,251 6,16,405 24.0 17.4 11.4 4.8. Loans against Gold Jewellery 89,370 1,02,562 1,54,282 19.6 14.8 56.2 5. Bank Credit 1,36,75,235 1,64,32,164 1,72,38,250 15.0 20.2 11.5 (1,59,01,477) (1,67,72,605) (16.3) (12.8) 5.1 Non-food Credit 1,36,55,330 1,64,09,083 1,72,19,596 15.4 20.2 11.5 (1,58,78,397) (1,67,53,951) (16.3) (12.8) Notes: 1. Data are provisional. 2. Data since July 28, 2023 include the impact of the merger of a non-bank with a bank. Figures in parentheses exclude the impact of the merger. 3. NBFCs include HFCs, PFIs, microfinance Institutions (MFIs), NBFCs engaged in gold loan and others. Source: RBI. 11 Bank credit and non-food credit data are based on fortnightly Section-42 return, which covers all scheduled commercial banks (SCBs), while sectoral non-food credit data are based on sector-wise and industry-wise bank credit (SIBC) return, which covers select banks accounting for about 95 per cent of total non-food credit extended by all SCBs pertaining to the last reporting Friday of the month. 12 Risk weight for consumer credit exposure of commercial banks (outstanding as well as new) was increased for personal loans, excluding housing loans, education loans, vehicle loans and loans secured by gold and gold jewellery, by 25 percentage points to 125 per cent. Moreover, risk weight for credit card receivables of SCBs was increased by 25 percentage points to 150 per cent. Risk weight for lending to NBFCs was increased by 25 percentage points. 63Report on Trend and Progress of Banking in India 2023-24 IV.43 The shares of services and personal cent, respectively, at end-March 202413. Credit loans segments in total credit have grown from diversification can help banks improve their 21.9 per cent and 17.1 per cent, respectively, at profitability (Box IV.3). end-March 2013 to 27.9 per cent and 32.4 per Box IV.3: Impact of Credit Diversification on Banks’ Profitability Portfolio diversification reduces financial intermediation Table IV.3.1: Regression Results cost of banks and can enhance their profitability (Diamond Variables Dependent variable: Net interest margin 1984). Sectoral credit diversification, however, can also lead (1) (2) (3) (4) to scale inefficiency which can reduce banks’ profitability Lag (HHI) 3.096*** 2.201 (Acharya, 2006). Empirical evidence of the impact of sectoral (0.957) (1.319) credit diversification on bank profitability is, therefore, mixed Lag (entropy) 1.712*** 1.595* (Mulwa, 2018). (0.423) (0.790) Lag (log assets) 0.0404 -0.000524 -0.0168 -0.0248 The impact of diversification on banks’ profitability is examined (0.372) (0.364) (0.379) (0.370) in a fixed effect panel framework (Eq. 1) using quarterly data Lag (GNPA ratio) -0.0307*** -0.0309*** -0.0308*** -0.0309*** (0.00544) (0.00542) (0.00548) (0.00549) for 12 public and 19 private sector banks for the period March Lag (credit growth) 0.00392 0.00429 0.00413 0.00419 2015 to December 2023. (y-o-y) (0.00246) (0.00251) (0.00246) (0.00248) (Eq. 1) AQR dummy -0.183*** -0.190*** -0.189*** -0.190*** (0.0455) (0.0494) (0.0463) (0.0509) where, NIM is the net interest margin of bank i at time t, it Covid dummy -0.00876 -0.00214 -0.00777 -0.00632 D is the diversification measure of bank i at time t, V is a (0.0366) (0.0348) (0.0365) (0.0353) it it vector of control variables including bank assets, GNPA Lag (PVB*HHI) 1.345 (1.671) ratio, credit growth and IIP growth. Drawing from literature, Lag (PVB*Entropy) 0.149 two diversification indices are constructed, the first using (0.911) the Hirschman-Herfindahl methodology and the other using Log(IIP) 1.337** 1.402** 1.348** 1.364** (0.508) (0.528) (0.509) (0.533) Shannon Entropy. Constant -1.573 -1.441 -1.326 -1.283 (1.495) (1.426) (1.498) (1.398) ; Observations 1,081 1,081 1,081 1,081 R-squared 0.738 0.738 0.739 0.739 where s is the share of each sector14 in total credit of bank i Fixed Effects Yes Yes Yes Yes it at time t. Higher value of each of the indices indicates higher Number of Banks 31 31 31 31 portfolio diversification. The scatter plot suggests a positive Notes: 1. Figures in parentheses indicate robust standard errors. 2. ***, ** and * represent 1 per cent, 5 per cent and 10 per cent levels of relationship between portfolio diversification and banks’ significance, respectively. profitability (Chart IV.3.1). 3. Covid dummy takes value 1 during the quarters ending March 2020 to March 2022 and zero otherwise. The results indicate a positive and significant relationship 4. AQR dummy takes value 1 during the quarters ending September 2015 to March 2018 and zero otherwise. between NIM and diversification indices, suggesting that Source: RBI staff estimates. portfolio diversification has benefitted banks in terms of profitability. Additionally, asset quality, measured by the GNPA of credit diversification on profitability of PVBs vis-à-vis PSBs, ratio, is negatively correlated with NIM. The differential impact measured by the interaction of the private bank dummy with the diversification indices (PVB*HHI and PVB*Entropy), is Chart IV.3.1: HHI and Net Interest Margin found to be insignificant. This suggests a symmetric impact of credit diversification on profitability of both PVBs and PSBs (Table IV.3.1). References: Acharya, V., Hasan, I., & Saunders, A. (2006). Should Banks Be Diversified? Evidence from Individual Bank Loan Portfolios. The Journal of Business, 79(3), 1355–1412. Diamond, D. (1984). Financial Intermediation and Delegated Monitoring. The Review of Economic Studies, 51(3), 393. Mulwa, J. (2018). Sectoral Credit Diversification, Bank Performance and Monitoring Effectiveness: A Cross-country Notes: Scatter graph is plotted after absorbing panel fixed effects. Analysis of East African Banking Industries. Journal of Source: RBI staff estimates. Finance and Investment Analysis, 7(2), 17–36. 13 Data for March 2024 are inclusive of merger of a non-bank with a private sector bank. Exclusive of merger, the shares at end- March 2024 were: services 28.2 per cent and personal loans 30.5 per cent. 14 Sectors include agriculture, industry, services, and personal loans. 64OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS IV.44 The GNPA ratio remained the highest (Chart IV.22a). In the services sector, the GNPA for the agricultural sector (6.2 per cent) and ratio of tourism, hotel and restaurants sector the lowest for retail loans (1.2 per cent) at remained elevated, notwithstanding a decline end-September 2024. The asset quality of the from 6.7 per cent at end-March 2023 to 4.3 industrial sector has been improving since per cent at end-March 2024 and 4.0 per cent March 2018, with the GNPA ratio declining to at end-September 2024 (Chart IV.22b). Among 2.9 per cent at end-September 2024. The GNPA the industrial sub-sectors, the GNPA ratio of ratio of sectoral credit across bank groups has the gems and jewellery segment moderated converged over the years (Chart IV.21). from 16.5 per cent at end-March 2023 to 6.7 IV.45 The GNPA ratio of education loans fell per cent in March 2024 and 5.0 per cent at from 5.8 per cent at end-March 2023 to 3.6 end-September 2024, partly reflecting higher per cent at end-March 2024 and 2.7 per cent recoveries. At end-September 2024, the leather at end-September 2024 but it remained the and leather products industry had the highest highest across retail loan segments, followed by GNPA ratio of 7.3 per cent, despite some recent credit card receivables and consumer durables improvement (Chart IV.22c). Chart IV.21: Sectoral GNPA Ratios Source: Off-site returns (domestic operations), RBI. 65Report on Trend and Progress of Banking in India 2023-24 Chart IV.22: GNPA Ratio in Various Sub-Sectors Source: Off-site returns (domestic operations), RBI. 5.1 Credit to the MSME Sector 5.2 Priority Sector Credit IV.46 Credit growth of PVBs to the micro, small IV.48 SCBs’ priority sector lending rose by 16.9 and medium-sized enterprise (MSME) sector has per cent in 2023-24 from 10.8 per cent in the consistently remained in double digits, reaching previous year, with a step up in growth among 28.7 per cent in 2023-24. Outstanding credit by both PVBs (to 23.5 per cent from 15.7 per SCBs to the MSME sector increased to ₹27.25 cent) and PSBs (to 12.3 per cent from 7.1 per lakh crore, accounting for 19.3 per cent of the total cent). All bank groups managed to achieve their adjusted net bank credit (ANBC) at end-March overall priority sector lending targets and sub- 2024. targets (Table IV.19). The amount outstanding IV.47 The number of MSME credit accounts of under operative Kisan Credit Cards (KCC) also SCBs increased during 2023-24, reversing the registered an improvement in growth to 10.7 per trend during the period 2020-21 to 2022-23. The cent during 2023-24 from 8.8 per cent in the growth in the amount of credit to the MSMEs previous year, mainly led by the southern region. was marginally higher than the growth in the The southern region also had the highest share number of accounts, resulting in an increase in of amount outstanding under KCC. Although average credit (Table IV.18). its growth decelerated to 13.2 per cent during 66OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS Table IV.18: Credit Flow to the MSME sector by SCBs (Number of accounts in lakh, amount outstanding in ₹ crore) 2019-20 2020-21 2021-22 2022-23 2023-24 1 2 3 4 5 6 7 Public Sector Banks No. of accounts 111 151 150 139 144 (-1.9) (36.1) (-0.7) (-7.4) (4.2) Amount Outstanding 8,93,315 9,08,659 9,55,860 10,84,953 12,22,687 (1.5) (1.7) (5.2) (13.5) (11.3) Private Sector Banks No. of accounts 271 267 113 73 110 (31.8) (-1.4) (-57.7) (-35.2) (50.2) Amount Outstanding 6,46,988 7,92,042 9,69,844 10,89,833 14,02,324 (14.8) (22.4) (22.4) (12.4) (28.7) Foreign Banks No. of accounts 3 3 2 2 3 (14.1) (-5.1) (-19.0) (-26.3) (72.9) Amount Outstanding 73,279 83,224 85,352 85,349 1,00,261 (9.5) (13.6) (2.6) (0.0) (17.5) All SCBs No. of accounts 384 420 265 213 257 (19.8) (9.4) (-37.0) (-19.4) (20.5) Amount Outstanding 16,13,582 17,83,925 20,11,057 22,60,135 27,25,272 (6.8) (10.6) (12.7) (12.4) (20.6) Note: Figures in the parentheses indicate y-o-y growth rates. Source: RBI. 2023-24 from 18.3 per cent in the previous year, IV.49 The total trading volume of priority sector it remained above the all-India expansion rate lending certificates (PSLCs) grew by 25.5 per cent (Appendix Table IV.8). during 2023-24, primarily led by PSLC-General. Table IV.19: Priority Sector Lending by Banks (At end-March 2024) (Amount in ₹ crore) Item Target/ Public Sector Private Sector Foreign Small Finance Scheduled sub- Banks Banks Banks Banks Commercial Banks target (per Amount Per Amount Per Amount Per Amount Per Amount Per cent of outstanding cent of outstanding cent of outstanding cent of outstanding cent of outstanding cent of ANBC/ ANBC/ ANBC/ ANBC/ ANBC/ ANBC/ CEOBE) CEOBE CEOBE CEOBE CEOBE CEOBE 1 2 3 4 5 6 7 8 9 10 11 12 Total Priority Sector 40/75* 31,85,092 42.6 24,09,329 47.4 2,51,550 41.6 1,31,967 90.6 59,77,938 45.0 Advances of which Total Agriculture 18.0 14,25,554 19.1 9,51,089 18.7 49,700 18.6 38,964 26.8 24,65,307 19.0 Small and Marginal 10.0 8,32,757 11.2 5,05,484 10.0 29,309 11.0 26,517 18.2 13,94,068 10.8 Farmers Non-corporate 13.8 11,05,493 14.8 7,08,677 14.0 29,435 14.2 36,962 25.4 18,80,568 14.6 Individual Farmers# Micro Enterprises 7.5 5,97,854 8.0 5,17,925 10.2 22,682 8.5 47,494 32.6 11,85,956 9.2 Weaker Sections 12.0 10,53,784 14.1 6,37,014 12.5 32,284 12.1 52,146 35.8 17,75,229 13.7 Notes: 1. Amount outstanding and achievement percentage are based on the average achievement of banks for four quarters of the financial year. 2. *: Total priority sector lending target for Small Finance Banks is 75 per cent. 3. #: Target for non-corporate farmers is based on the system-wide average of the last three years’ achievement. For financial year 2023-24, the applicable system wide average figure is 13.78 percent. 4. For foreign banks having less than 20 branches, only the total PSL target of 40 per cent is applicable. 5. Data are provisional. Source: RBI. 67Report on Trend and Progress of Banking in India 2023-24 Among the four PSLC categories, the small and Chart IV.23: Trading Volume of PSLCs marginal farmers (SMF) category registered the highest trading volume, partly reflecting specialisation by a few banks in lending to this category of borrowers and the inability of other banks to meet sub-targets through direct lending (Chart IV.23). IV.50 In the last five years, PVBs have emerged as major sellers of PSLCs. In 2023-24, PVBs accounted for 49.2 per cent of total sales as compared with 20.7 per cent in the case of PSBs (Chart IV.24). IV.51 Over the last three years, the weighted average premium (WAP) has declined for all Source: RBI. categories, except for PSLC-SMF. This could be SCBs increased to 57.3 per cent at end-March reflective of, inter alia, lower demand for PSLC- 2024 from 51.1 per cent at end-March 2023, as micro enterprises as banks make inroads into NPAs in the non-priority sector declined more lending to micro enterprises to meet the PSL sharply. NPAs in the priority sector were led by sub-targets organically (Table IV.20). agricultural defaults. IV.52 The GNPA ratio of priority sector lending IV.53 While PSBs extended 42.6 per cent of declined to 4.4 per cent at end-March 2024 from their ANBC/ credit equivalent of off-balance sheet 5.4 per cent at end-March 2023. Nonetheless, exposure (CEOBE) to the priority sector, this the share of the priority sector in total GNPA of portfolio contributed 64.2 per cent to their total Chart IV.24: Buyers and Sellers in PSLC Market Source: RBI. 68OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS Table IV.20: Weighted Average Premium on Various Categories of PSLCs (Per cent) 2020-21 2021-22 2022-23 2023-24 2023-24 (Apr-Jun) 2024-25 (Apr-Jun) 1 2 3 4 5 6 7 PSLC-Agriculture 1.55 1.37 0.62 0.24 0.27 0.24 PSLC-Micro Enterprises 0.88 0.95 0.16 0.04 0.12 0.01 PSLC-Small and Marginal Farmers 1.74 2.01 1.68 1.74 1.98 1.97 PSLC-General 0.46 0.6 0.19 0.02 0.02 0.01 Source: RBI. NPAs. In the case of SFBs, the priority sector to these sectors was 22.1 per cent of their total comprises 90.6 per cent of their ANBC/CEOBE; loans and advances, marginally higher than 21.7 its share in their total NPAs rose significantly to per cent a year ago. PVBs’ exposure to sensitive 72.1 per cent in 2023-24 from 42.1 per cent in sectors increased to 34.7 per cent of their total the previous year (Table IV.21). loans and advances from 27.8 per cent a year ago, 5.3 Credit to Sensitive Sectors largely reflecting the merger impact. The growth of capital market exposure of SCBs accelerated IV.54 Banks’ exposure to the capital market and real estate is reckoned as sensitive in view of to 31.3 per cent during 2023-24 from 20.2 per the risks inherent in fluctuations in asset prices. cent in the previous year, contributed by both the Data compiled using annual accounts of banks bank groups. (Chart IV.25a and b and Appendix suggest that at end-March 2024 PSBs’ exposure Table IV.9). Table IV.21: Sector-wise GNPAs of Banks (At end-March) (Amount in ₹crore) Bank Group Priority Sector Of which Non-priority Total Sector NPAs Agriculture Micro and Small Others Enterprises Amount Per cent Amount Per cent Amount Per cent Amount Per cent Amount Per cent Amount Per cent 1 2 3 4 5 6 7 8 9 10 11 12 13 PSBs 2023 2,25,638 56.2 1,14,409 28.5 80,577 20.1 30,652 7.6 1,75,666 43.8 4,01,304 100.0 2024 2,05,777 64.2 1,06,451 33.2 75,278 23.5 24,049 7.5 1,14,963 35.8 3,20,740 100.0 PVBs 2023 42,321 36.5 19,999 17.3 14,569 12.6 7,752 6.7 73,470 63.5 1,15,791 100.0 2024 49,986 40.5 21,211 17.2 18,340 14.8 10,435 8.4 73,553 59.5 1,23,540 100.0 FBs 2023 2,149 22.6 221 2.3 1,542 16.2 386 4.1 7,377 77.4 9,526 100.0 2024 1,795 27.5 162 2.5 1,315 20.2 318 4.9 4,728 72.5 6,523 100.0 SFBs 2023 3,621 42.1 1,397 16.2 1,054 12.2 1,170 13.6 4,987 57.9 8,608 100.0 2024 4,031 72.1 1,878 33.6 1,137 20.3 1,015 18.2 1,560 27.9 5,590 100.0 All SCBs 2023 2,73,729 51.1 1,36,026 25.4 97,742 18.3 39,960 7.5 2,61,500 48.9 5,35,229 100.0 2024 2,61,589 57.3 1,29,701 28.4 96,070 21.0 35,817 7.8 1,94,804 42.7 4,56,393 100.0 Note: Per cent: Per cent of total NPAs. Source: Off-site returns (domestic operations), RBI. 69Report on Trend and Progress of Banking in India 2023-24 Chart IV.25: Exposure to Sensitive Sectors (At end-March) Source: Annual accounts of banks. 5.4 Unsecured lending Bank’s November 2023 measures to contain build-up of risk in these sectors (Chart IV.26a). IV.55 Unsecured loans, characterised by Among various bank groups, PSBs had the absence or inadequacy of collateral, present lowest share of unsecured advances, followed by higher credit risk for banks in the event of a PVBs. The mean, median as well as dispersion default. The share of unsecured loans in total of bank-wise exposure to unsecured loans was credit of SCBs had been increasing since end- the highest amongst FBs (Chart IV.26b). March 2015, touching 25.5 per cent by end-March 6. Ownership Pattern in Commercial Banks 2023. This share declined marginally to 25.3 per cent at end-March 2024, mainly led by PVBs, IV.56 The ownership pattern of banks plays a reflecting, inter alia, the impact of the Reserve crucial role in governance, stability, and overall Chart IV.26: Share of Unsecured Advances Notes: 1. Data exclude regional rural banks. 2. The whiskers of the boxplots are indicative of maximum and minimum values. A colored box shows distance between first quantile and third quantile. Horizontal line in each box shows the median, while ‘X’ shows the mean. Source: Annual accounts of banks. 70OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS performance of banks. During 2023-24, the depositors’ interest, and maintenance of financial central government brought down its stake in stability. The Reserve Bank on April 26, 2021 Bank of India, Indian Bank and Union Bank laid down norms for the composition of certain of India to below 75 per cent (Chart IV.27a). committees of the board; chair and meetings With this, seven PSBs met the minimum public of the board; age, tenure and remuneration shareholding norm at end-March 2024. The of directors; and appointment of the whole- Government, vide its notification dated July 19, time directors for robust and transparent risk 2024, granted exemption upto August 1, 2026 management and decision-making in banks15. to five PSBs that are yet to meet the criterion. 7.1 Composition of Boards PVBs have a more diversified ownership pattern (Chart IV.27b). IV.59 Independent directors contribute to the board’s deliberations by providing independent IV.57 During 2023-24, non-resident ownership judgement especially on issues of strategy, of banks remained within the limits of 74 per performance, risk management, resources, cent for PVBs, LABs and SFBs, and 20 per cent key appointments and standard of conduct. At for PSBs (Appendix Table IV.10). end-March 2024, for both PVBs and SFBs, the 7. Corporate Governance share of independent directors in the board IV.58 Corporate governance is critical for and its committee was well above the stipulated efficiency in allocation of resources, protection of threshold (Table IV.22)16. Chart IV.27: Ownership Pattern of Banks Note: SCBs include 12 PSBs, 21 PVBs, 12 SFBs and 6 PBs. Source: RBI and BSE website. 15 These instructions were made applicable to all PVBs (including SFBs) and wholly owned subsidiaries of FBs. In respect of State Bank of India and Nationalised Banks, these guidelines were specified to apply only to the extent that they were not inconsistent with provisions of specific statutes applicable to them, or instructions issued under the statutes. 16 Instructions on corporate governance issued by the Reserve Bank on April 26,2021, inter alia, mandate that at least half of the directors attending the meetings of the board shall be independent directors; half of the members attending the meeting of the Risk Management Committee of Board shall be independent directors, of which at least one member shall have professional expertise/qualification in risk management; half of the members attending the meeting of the Nomination and Remuneration Committee shall be independent directors, of which one shall be a member of the RMCB; at least two-thirds of the members attending the meeting of the Audit Committee of the Board shall be independent directors. 71Report on Trend and Progress of Banking in India 2023-24 Table IV.22: Independent Directors on the Board and its Committees (At end-March) (Share in per cent) Board Risk Management Nomination and Remunera- Audit Committee of the Committee of Board (RMCB) tion Committee (NRC) Board (ACB) 2023 2024 2023 2024 2023 2024 2023 2024 1 2 3 4 5 6 7 8 9 PVBs 65 65 67 70 78 85 83 87 SFBs 68 67 76 73 83 79 83 82 Source: Annual report and websites of banks. IV.60 Banks are required to constitute a Risk require a substantial portion of compensation Management Committee of Board (RMCB), with (at least 50 per cent) to be variable and to be a majority of non-executive directors. The chair paid on the basis of individual, business- of the board may be a member of the RMCB unit and firm-wide indicators that adequately only if he/she has the requisite risk management measure performance17. Further the guidelines expertise. The proportion of PVBs in which stipulate that if target variable pay (TVP) is up the chair is not a member of the RMCB was to 200 per cent (above 200 per cent) of fixed pay unchanged at 38 per cent at end-March 2024. then minimum 50 per cent (67 per cent) of TVP For SFBs, the proportion decreased from 42 per shall be paid via non-cash components. During cent at end-March 2023 to 33 per cent at end- 2022-23, the share of actual variable pay (VP) in March 2024. total remuneration improved for both PVBs and 7.2 Executive Compensation SFBs, (Chart IV.28a). The share of the non-cash IV.61 To maintain balance between short-term component in the actual VP moderated to 52 per risk-taking and long-term stability, the Reserve cent for PVBs and increased to 38 per cent for Bank’s revised guidelines of November 2019 SFBs (Chart IV.28b). Chart IV.28: Components of Total Remuneration of MDs and CEOs (At end-March) Source: RBI. 17 Guidelines on compensation of whole-time directors/ chief executive officers/ material risk takers and control function staff, issued on November 4, 2019, became effective for the pay cycles beginning from/after April 01, 2020. These guidelines are applicable to PVBs including LABs, SFBs and PBs, and FBs operating in India through branches and wholly owned subsidiary. 72OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS 8. Foreign Banks’ Operations in India and Chart IV.29: Overseas Operations of Indian Banks Overseas Operations of Indian Banks (At end-March) IV.62 During 2023-24, the number of FBs operating in India increased as one of the foreign banks, which previously had only a representative office, opened a fully functioning bank branch. However, the number of FBs’ branches declined for the third consecutive year, reflecting re-alignment of global strategy and business value optimisation (Table IV.23). IV.63 Indian banks conduct their overseas operations primarily through branches (Chart IV.29). During 2023-24, PSBs rationalised their overseas presence by closing non-viable Source: RBI. branches, whereas overseas presence of PVBs driven by technological advancements, a robust remained unchanged (Appendix Table IV.11). regulatory framework, and policy initiatives 9. Payment Systems and Scheduled aimed at promoting cashless transactions and Commercial Banks financial inclusion. IV.64 India’s payment systems have evolved 9.1 Digital Payments rapidly, embracing both innovation and IV.65 During 2021-2024, digital payment inclusivity to cater to a diverse population methods registered a compound annual growth while also maintaining high safety standards. The landscape combines traditional banking rate (CAGR) of 49.9 per cent in volume terms channels with cutting-edge digital solutions, and 14.1 per cent in value terms. In contrast, enabling secure, quick, and convenient paper-based instruments such as cheques and transactions. This transformation has been demand drafts contracted, with a CAGR of (-)10.1 per cent in volume terms and (-)1.6 per Table IV.23: Operations of Foreign Banks in India cent in value terms. The average value of retail digital payments has reduced from ₹8,769 in Foreign banks operating Foreign through branches/WOS banks having March 2021 to ₹4,560 in March 2024, with representative No. of Banks Branches# offices growing popularity of digital modes for small 1 2 3 4 value payments (Chart IV.30). Mar-21 45 874 36 Mar-22 45 861 34 IV.66 At end-March 2024, in terms of value, Mar-23 44 782 33 97.1 per cent of the total payments were through Mar-24 45 780 31 digital mode. The Unified Payments Interface Note: #: Including branches of two foreign banks, viz., SBM Bank (India) Limited and DBS Bank India Limited, which are operating (UPI) has the majority share in volume of through Wholly Owned Subsidiary (WOS) mode. Source: RBI. transactions, while real time gross settlements 73Report on Trend and Progress of Banking in India 2023-24 IV.67 The Reserve Bank launched a composite Chart IV.30: Average Value of Retail Digital Payments vis-à-vis Paper-based Instruments Digital Payments Index in January 2021 to measure the progress of digitalisation and assess the deepening and penetration of digital payments comprising five broad parameters: payment enablers; payment infrastructure – demand-side factors; payment infrastructure – supply-side factors; payment performance; and consumer centricity. The index is computed semi-annually with March 2018 as the base year. At end-March 2024, the index stood at Notes: 1. Retail digital payments include NEFT, IMPS, UPI, NACH, BHIM Aadhar Pay, AePS fund transfer, NETC, card payments 445.5 compared to 395.6 a year ago, driven and prepaid payment instruments. 2. Paper-based instruments include cheques, demand drafts by significant growth in payment performance and others. Source: RBI. and payment infrastructure across the country (RTGS) accounted for the largest share in terms (Chart IV.31). of value (Table IV.24). Table IV.24: Payment Systems Indicators Volume (lakh) Value (₹ crore) 2021-22 2022-23 2023-24 2021-22 2022-23 2023-24 1 2 3 4 5 6 7 1. Large Value Credit Transfers – RTGS 2,078 2,426 2,700 12,86,57,516 14,99,46,286 17,08,86,670 2. Credit Transfers 5,77,935 9,83,621 14,86,107 4,27,28,006 5,50,09,620 6,75,42,859 2.1 AePS (Fund Transfers) 10 6 4 575 356 261 2.2 APBS 12,573 17,834 25,888 1,33,345 2,47,535 3,90,743 2.3 ECS - - - - - - 2.4 IMPS 46,625 56,533 60,053 41,71,037 55,85,441 64,95,652 2.5 NACH 18,758 19,257 16,227 12,81,685 15,41,815 15,25,104 2.6 NEFT 40,407 52,847 72,640 2,87,25,463 3,37,19,541 3,91,36,014 2.7 UPI 4,59,561 8,37,144 13,11,295 84,15,900 1,39,14,932 1,99,95,086 3. Debit Transfers and Direct Debits 12,189 15,343 18,250 10,34,444 12,89,611 16,87,658 3.1 BHIM Aadhaar Pay 228 214 194 6,113 6,791 6,112 3.2 ECS Dr - - - - - - 3.3 NACH 10,755 13,503 16,426 10,26,641 12,80,219 16,78,769 3.4 NETC (linked to bank account) 1,207 1,626 1,629 1,689 2,601 2,777 4. Card Payments 61,783 63,325 58,470 17,01,851 21,52,245 24,23,563 4.1 Credit Cards 22,399 29,145 35,610 9,71,638 14,32,255 18,31,134 4.2 Debit Cards 39,384 34,179 22,860 7,30,213 7,19,989 5,92,429 5. Prepaid Payment Instruments 65,783 74,667 78,775 2,79,416 2,87,111 2,83,048 6. Paper-based Instruments 6,999 7,109 6,632 66,50,333 71,72,904 72,12,333 Total Digital Payments (1+2+3+4+5) 7,19,768 11,39,382 16,44,302 17,44,01,233 20,86,84,872 24,28,23,799 Total Retail Payments (2+3+4+5+6) 7,24,689 11,44,065 16,48,234 5,23,94,049 6,59,11,490 7,91,49,461 Total Payments (1+2+3+4+5+6) 7,26,767 11,46,491 16,50,934 18,10,51,565 21,58,57,776 25,00,36,131 Source: RBI. 74OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS Table IV.25: Number of ATMs Chart IV.31: Digital Payments Index (At end-March) Bank Total Number of On-site ATMs Off-site ATMs Group ATMs 2023 2024 2023 2024 2023 2024 (2+4) (3+5) 1 2 3 4 5 6 7 PSBs 78,777 77,033 59,646 57,661 1,38,423 1,34,694 PVBs 41,426 45,438 35,549 34,446 76,975 79,884 FBs 612 603 612 566 1,224 1,169 SFBs* 2,797 3,042 24 26 2,821 3,068 PBs 1 0 62 0 63 0# All SCBs 1,23,613 1,26,116 95,893 92,699 2,19,506 2,18,815 WLAs 0 0 35791 34602 35,791 34,602 Source: RBI. Total 1,23,613 1,26,116 1,31,684 1,27,301 2,55,297 2,53,417 9.2 ATMs Notes: 1. *: Data pertain to 12 scheduled SFBs. 2. #: Significant decline due to closure of ATMs by a PB. Source: RBI. IV.68 During 2023-24, the total number of automated teller machines (ATMs) (on-site and IV.69 At end-March 2024, the share of PSBs off-site) declined moderately, primarily driven and PVBs in metropolitan ATMs was almost by PSBs and white-label ATMs (WLAs). At end- equal. In contrast, PSBs operated 78.7 per cent March 2024, PSBs and PVBs accounted for 61.6 of ATMs in rural areas. The majority of WLAs per cent and 36.5 per cent, respectively, of total ATMs deployed by all SCBs (Table IV.25 and (83.9 per cent) were concentrated in rural and Appendix Table IV.12). semi-urban areas (Table IV.26). Table IV.26: Geographical Distribution of ATMs: Bank Group-wise (At end-March 2024) Bank group Rural Semi-urban Urban Metropolitan Total 1 2 3 4 5 6 Public Sector Banks 28,784 39,773 34,100 32,037 1,34,694 (78.7) (63.9) (62.1) (49.2) (61.6) Private Sector Banks 7,400 21,207 19,607 31,670 79,884 (20.2) (34.1) (35.7) (48.7) (36.5) Foreign Banks 112 317 320 420 1,169 (0.3) (0.5) (0.6) (0.6) (0.5) Small Finance Banks* 282 938 896 952 3,068 (0.8) (1.5) (1.6) (1.5) (1.4) Payments Banks 0 0 0 0 0 (0.0) (0.0) (0.0) (0.0) (0.0) All SCBs 36,578 62,235 54,923 65,079 2,18,815 (100) (100) (100) (100) (100) All SCBs (y-o-y growth) 0.15 0.97 -0.84 -1.25 -0.29 WLAs 17,496 11,550 3,766 1,790 34,602 WLAs (y-o-y growth) -4.63 -0.28 -1.23 -12.64 -3.32 Notes: 1. Figures in parentheses indicate percentage share in total ATMs of SCBs in each geographical region. 2. *: Data pertain to 12 scheduled SFBs. Source: RBI. 75Report on Trend and Progress of Banking in India 2023-24 10. Technology Adoption and Scheduled this effect, the Reserve Bank administers an Commercial Banks Alternate Grievance Redress (AGR) mechanism18 and regulates the Internal Grievance Redressal IV.70 The banking sector has undergone mechanism (IGR) at the REs. profound transformation in recent years, driven by rapid advancements in technology. From 11.1 Grievance Redressal digital payments to other technologies that IV.72 During 2023-24, the Centralised Receipt have revolutionised the financial landscape, and Processing Centre (CRPC) and Offices of the growing interest in generative artificial Reserve Bank of India Ombudsman (ORBIOs) intelligence (GenAI) and its integration into received 9.34 lakh complaints, an increase of the financial sector has the potential to drive 32.8 per cent over the previous year. Of these further advancements, fostering innovation, complaints, 31.5 per cent were received by efficiency, and resilience for the benefit of the the ORBIOs and the rest were received at the financial sector. A recent Reserve Bank survey CRPC. Majority of the complaints received indicates that banks in India are at a nascent stage in adoption of GenAI although majority of by the ORBIOs during the year pertained to the respondents recognise its potential benefits PSBs, although their share in the total declined (Box IV.4). (Chart IV.32). 11. Consumer Protection IV.73 Structural changes in the Reserve Bank IV.71 With the advent of technology-based – Integrated Ombudsman Scheme (RB-IOS), banking products and growing usage of effective November 2021, rationalised complaints these products by vulnerable sections of the categories, making ‘deficiency in service’ as society, consumer education and protection the sole ground for lodging a complaint, with have assumed unprecedented importance. To a specified list of exclusions. Hence, data on Box IV.4: Adoption of Generative AI by Regulated Entities GenAI can perform routine and repetitive tasks effectively, the respondents, who were not leveraging GenAI when the and enhance the efficiency of operations, improve survey was conducted, were considering its adoption in productivity and add to customer satisfaction. At the the near future for similar tasks (Chart IV.4.1b). same time, it could also introduce new risks such as 20 per cent of the adopters reported their preference for infringement of privacy, intentional misuse, introduction building models from scratch for specific uses. Extending of biases or amplification of the existing risks like cyber the existing models via fine tuning and/or data retrieval security and third-party dependency. According to a survey conducted by the Reserve Bank in October 2024, 45 per was the most accepted approach (Chart IV.4.2). These cent of the respondent REs indicated that they were using strategies allow REs to tailor GenAI models for specific use it for tasks such as providing assistance to employees and cases, enhance performance and seamlessly incorporate document summarisation (Chart IV.4.1a). 55 per cent of AI capabilities into existing workflows. (Contd.) 18 The AGR Framework of the Reserve Bank comprises RBI Ombudsmen (RBIOs), Consumer Education and Protection Cells (CEPCs) and Consumer Education and Protection Department (CEPD). The RBIOs function under the framework of RB-IOS, 2021. The CEPCs take up complaints against REs not falling under the ambit of RB-IOS, 2021. CEPD provides assistance to the Appellate Authority (AA) under the RB-IOS and processes the appeal cases. 76OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS Chart IV.4.1: Adoption of GenAI in Regulated Entities Note: In the survey, REs were allowed to choose more than one current or potential use cases. Source: RBI. Chart IV.4.2: Approaches for Adopting GenAI Chart IV.4.3: Risks Perceived by REs Note: In the survey, REs were allowed to choose more than one approach for their current or potential use cases. Source: RBI. Amongst the concerns, most REs acknowledged data bias Note: In the survey, REs were allowed to choose multiple risks. and representativeness as challenges, followed by data Source: RBI. privacy and explainability & interpretability of models (Chart IV.4.3). To address such concerns, most REs adopt instead of using confidential or sensitive data for training the human-in-the-middle (HITM) approach19. To mitigate or fine-tuning GenAI-based tools. 90 per cent of the data privacy concerns, REs reported using publicly survey participants preferred not to use GenAI for critical available data or pseudonymised internal information applications like core banking and payment systems. the nature of complaints may not be strictly mobile/electronic banking and deposit accounts comparable across the years. With this caveat, were the highest during 2023-24, contributing grievances relating to loans and advances, 64 per cent of the total complaints (Table IV.27). 19 HITM refers to an approach under which continuous human oversight, judgement and control is integrated in usage of AI systems as a guardrail to ensure, inter-alia, the quality, reliability, safety and ethical alignment of AI-generated outputs. 77Report on Trend and Progress of Banking in India 2023-24 Table IV.27: Nature of Complaints Received by Chart IV.32: Entity Type-wise Complaints ORBIOs Received at ORBIOs 2021-22 2022-23 2023-24 1 2 3 4 Loans and Advances 30,734 59,762 85,281 Mobile/ Electronic Banking 42,271 43,167 57,242 Deposit Accounts 16,989 34,481 46,358 Credit Cards 34,828 34,151 42,329 ATM/ Debit Cards 41,849 29,929 25,231 Others 36,607 22,551 24,355 Para-banking 1,608 2,782 4,380 Pension Payments 6,206 4,380 4,108 Remittances 3,443 2,940 4,101 Notes and Coins 302 511 539 Non-observance of Fair Practice Code 37,880 20 - Levy of Charges without Prior Notice 14,519 3 - DSAs and Recovery Agents 1,640 7 - Failure to Meet Commitments 22,420 5 - Non-adherence to BCSBI Codes 5,069 1 - Out of Purview of BO Scheme 8,131 - - Total 3,04,496* 2,34,690^ 2,93,924@ Source: RBI. Notes: 1. *: Excludes 1,13,688 complaints handled by CRPC. 2. ^: Excludes 4,68,854 complaints handled by CRPC. IV.74 The share of complaints emanating from 3. @: Excludes 6,40,431 complaints handled at CRPC. Source: RBI. urban and metropolitan areas accounted for __ were filed against PSBs traditionally preferred 71.6 per cent of the total complaints received by pensioners. On the other hand, a large share by RBIOs during 2023-24, which could reflect of complaints (60.1 per cent) relating to credit greater awareness in these regions regarding the cards were filed against PVBs (Chart IV.33b). Reserve Bank’s grievance redress mechanism 11.2 Deposit Insurance (Chart IV.33a). PSBs and PVBs together accounted for 72.7 per cent of the total complaints received IV.75 Deposit insurance is a vital pillar of the by RBIOs. Almost all pension-related complaints financial safety-net system, playing a crucial role Chart IV.33: Distribution of Complaints Source: RBI. 78OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS in bolstering public confidence in the banking Chart IV.34: Bank Group-wise Insured Deposits as per sector, especially among small depositors, and cent of Assessable Deposits (At end-March) fostering overall financial stability. In India, the Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of the Reserve Bank, administers deposit insurance covering all commercial banks, including RRBs, LABs, and co-operative banks. At end-March 2024, 1,997 banks were insured by DICGC. At present, the deposit insurance coverage limit in India stands at ₹5 lakh per depositor per account. This limit covers 97.7 per cent of deposit accounts and in terms of value, 43.1 per cent of assessable deposits are Source: DICGC. insured (Table IV.28). of insured deposits in the event of liquidation IV.76 The proportion of insured deposits or imposition of all-inclusive directions (AID). to assessable deposits declined in 2023-24, During 2023-24, claims amounting to ₹1,432 reflective of the growing deposit base (Chart crore were settled through DIF. At end-March IV.34). 2024, the balance in DIF stood at ₹1,98,753 IV.77 The deposit insurance fund (DIF) is crore. With the growth of DIF (17.2 per cent) constituted with DICGC to settle the claims above that of insured deposits (9.1 per cent), Table IV.28: Bank Group-wise Insured Deposits (Amount in ₹ crore) Bank Groups As on March 31, 2023 As on March 31, 2024 No. of Insured Assessable IDR No. of Insured Assessable IDR Insured Deposits Deposits {(3) / Insured Deposits Deposits {(7) / Banks (4)} Banks (8)} 1 2 3 4 5 6 7 8 9 I. Commercial Banks (i to vii) 139 79,22,120 1,83,48,838 43.2 140 86,66,416 2,06,73,077 41.9 i) Public Sector Banks 12 52,20,324 1,05,07,639 49.7 12 56,47,846 1,15,76,001 48.8 ii) Private Sector Banks 21 21,20,937 62,37,833 34.0 21 23,63,912 72,35,902 32.7 iii) Foreign Banks 43 50,037 8,62,909 5.8 44 50,568 10,08,506 5.0 iv) Small Finance Banks 12 66,745 1,63,183 40.9 12 89,532 2,15,426 41.6 v) Payments Banks 6 12,533 12,694 98.7 6 16,794 16,937 99.2 vi) Regional Rural Banks 43 4,50,675 5,63,377 80.0 43 4,96,827 6,19,010 80.3 vii) Local Area Banks 2 869 1,204 72.2 2 937 1,295 72.4 II. Co-operative Banks (i to iii) 1,887 7,09,139 11,10,076 63.9 1,857 7,46,290 11,79,084 63.3 i) Urban Co-operative Banks 1,502 3,62,991 5,34,413 67.9 1,472 3,71,846 5,56,962 66.8 ii) State Co-operative Banks 33 64,041 1,46,931 43.6 33 64,202 1,48,080 43.4 iii) District Central Co-operative Banks 352 2,82,107 4,28,733 65.8 352 3,10,242 4,74,041 65.4 Total (I+II) 2,026 86,31,259 1,94,58,915 44.4 1,997 94,12,705 2,18,52,160 43.1 Note: IDR: Insured Deposits Ratio. Source: DICGC. 79Report on Trend and Progress of Banking in India 2023-24 the reserve ratio (RR)20 improved to 2.11 per the number of banking and BC outlets, basic cent at end-March 2024 from 1.96 per cent a savings bank deposit accounts (BSBDAs), overdraft (OD) facilities availed in these year ago. Under Section 21 of the DICGC Act, accounts, transactions in KCC and General 1961, the corporation has the mandate to Credit Cards (GCCs) and transactions through recover insurance claim payouts. During 2023- the Business Correspondents - Information and 24, the DICGC made a total recovery of claims Communication Technology (BC-ICT) channel. amounting to ₹901 crore as compared to ₹883 At end-March 2024, deposits in BSBDAs crore during 2022-23. through the BC mode surpassed those through 12. Financial Inclusion the branches mode, indicating the effectiveness of the BC model at the grassroots level IV.78 The Reserve Bank persevered with its initiatives to improve financial access, including (Table IV.29). by leveraging technology-driven innovations 12.2 Financial Inclusion Index to bring the benefits of financial services to all sections of society. Despite fast paced IV.80 The Reserve Bank’s Financial Inclusion digitalisation in India, the number of commercial Index (FII) monitors the progress of financial bank branches per one lakh population inclusion in the country. It captures information increased 1.5 times during the period 2010 to on 97 indicators, based on three dimensions, 2023 (Chart IV.35a). Per capita availability of viz., access, usage and quality. The index rose ATMs in India has also increased threefold since to 64.2 in March 2024 from 60.1 in March 2010 (Chart IV.35b). 2023, with growth across all sub-indices (Chart 12.1 Financial Inclusion Plans IV.36). The improvement in the FII in 2023-24 IV.79 Financial Inclusion Plans (FIPs) capture was largely contributed by the usage dimension, banks’ achievements on parameters, such as, reflecting deepening of financial inclusion. Chart IV.35: Progress of Financial Inclusion in Select Countries Source: Financial Access Survey, 2023, IMF. 20 Ratio of deposit insurance fund to insured deposits. 80OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS Table IV.29: Progress in Financial Inclusion Plan (At end-March) S. No. 2015 2020 2021 2022 2023 2024* 1 2 3 4 5 6 7 8 Banking Outreach 1 Banking Outlets in Villages- Branches 49,571 54,561 55,112 53,287 53,802 54,198 2 BC Outlets in Villages with population >2000 90,877 1,49,106 8,50,406 18,92,462 13,48,038 12,66,756 3 BC Outlets in Villages with population <2000 4,08,713 3,92,069 3,40,019 3,26,008 2,77,844 2,80,922 4 Total BC Outlets in Villages 4,99,590 5,41,175 11,90,425 22,18,470 16,25,882 15,47,678 5 Urban Locations Covered Through BCs 96,847 6,35,046 4,26,745 12,95,307 4,15,218 3,06,658 Basic Saving Bank Deposits Account (BSBDA) 6 BSBDA - Through Branches (No. in lakh) 2,103 2,616 2,659 2,661 2,750 2,768 7 BSBDA - Through Branches (Amt. in ₹ crore) 36,498 95,831 1,18,392 1,20,464 1,33,661 1,46,306 8 BSBDA - Through BCs (No. in lakh) 1,878 3,388 3,796 4,015 4,105 4,290 9 BSBDA - Through BCs (Amt. in ₹ crore) 7,457 72,581 87,623 1,07,415 1,29,531 1,53,489 10 BSBDA - Total (No. in lakh) 3,981 6,004 6,455 6,677 6,856 7,059 11 BSBDA - Total (Amt. in ₹ crore) 43,955 1,68,412 2,06,015 2,27,879 2,63,192 2,99,795 12 OD Facility Availed in BSBDAs (No. in lakh) 76 64 60 68 51 48 13 OD Facility Availed in BSBDAs (Amt. in ₹ crore) 1,991 529 534 516 572 564 KCC and General Credit Card (GCC) 14 KCC - Total (No. in lakh) 426 475 466 473 493 515 15 KCC - Total (Amt. in ₹ crore) 4,38,229 6,39,069 6,72,624 7,10,715 7,68,339 8,47,237 16 GCC - Total (No. in lakh) 92 202 202 96 66 23 17 GCC - Total (Amt. in ₹ crore) 1,31,160 1,94,048 1,55,826 1,70,203 1,90,568 34,340 Business Correspondents 18 ICT-A/Cs-BC-Total Transactions (No. in lakh) # 4,770 32,318 30,551 28,533 34,055 36,388 19 ICT-A/Cs-BC-Total Transactions (Amt. in ₹ crore) # 85,980 8,70,643 8,49,771 9,05,252 11,39,521 13,10,973 Notes: 1. *: Provisional 2. #: Transactions during the financial year. Source: FIP returns submitted by PSBs, PVBs and RRBs. 12.3 Pradhan Mantri Jan Dhan Yojana (PMJDY) Chart IV.36: RBI – Financial Inclusion Index IV.81 The PMJDY, which has played a pivotal role in fostering financial inclusion in marginalised areas and sections of society, completed 10 years of its inception in August 2024. The number of beneficiaries under PMJDY reached 54.2 crore, with deposits of ₹2.4 lakh crore as on December 11, 2024 and 66.6 per cent of the beneficiaries are in rural/semi-urban areas (Chart IV.37a). Notwithstanding some recent moderation, the average balance in PMJDY accounts has expanded four times since its launch, reflecting growing usage and successful integration of previously unbanked individuals into the formal Source: RBI. financial system (Chart IV.37b). 81Report on Trend and Progress of Banking in India 2023-24 Chart IV.37: Progress in PMJDY Source: PMJDY, Government of India. 12.4 New Bank Branches by SCBs core of customer engagement. During 2023-24, IV.82 While banks are increasingly emphasising 41.9 per cent of the bank branches were opened digital channels, physical branches remain the in centers with population less than 50,000, improving banking penetration in smaller towns Table IV.30: Tier-wise Break-up of Newly and villages (Table IV.30). Opened Bank Branches by SCBs IV.83 During 2023-24, 65.5 per cent of the new 2020-21 2021-22 2022-23 2023-24 branches opened were by PVBs, with 44.1 per 1 2 3 4 5 cent of these branches in rural and semi-urban Tier 1 1,545 1,558 2,285 2,675 (50.0) (47.9) (43.1) (49.7) areas (Chart IV.38). Tier 2 278 233 468 452 (9.0) (7.2) (8.8) (8.4) Tier 3 475 427 812 683 Chart IV.38: Distribution of Newly Opened Bank (15.4) (13.1) (15.3) (12.7) Branches of SCBs Tier 4 265 292 545 433 (8.6) (9.0) (10.3) (8.0) Tier 5 179 229 424 368 (5.8) (7.0) (8.0) (6.8) Tier 6 347 512 768 768 (11.2) (15.7) (14.5) (14.3) Total 3,089 3,251 5,302 5,379 (100.0) (100.0) (100.0) (100.0) Notes: 1. Tier-wise classification of centres is as follows: ‘Tier 1’ includes centres with population of 1,00,000 and above, ‘Tier 2’ includes centres with population of 50,000 to 99,999, ‘Tier 3’ includes centres with population of 20,000 to 49,999, ‘Tier 4’ includes centres with population of 10,000 to 19,999, ‘Tier 5’ includes centres with population of 5,000 to 9,999, and ‘Tier 6’ includes centres with population of less than 5000. 2. Data exclude ‘Administrative Offices’. 3. All population figures are as per census 2011. 4. Figures in the parentheses represent proportion of the branches opened in a particular area vis-à-vis the total. Source: CISBI, RBI. CISBI data are dynamic in nature and are updated based on information received from banks. Source: CISBI, RBI. 82OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS 12.5 Microfinance Programme 12.6 Trade Receivables Discounting System (TReDS) IV.84 Microfinance serves as an effective instrument for advancing financial IV.85 TReDS is an electronic platform for inclusion, entailing the delivery of financial facilitating the financing/discounting of trade services, including small-value credit, to the receivables of MSMEs through multiple underserved and unbanked segments of the financiers. These receivables can be due population, thereby fostering social equity and from corporates and other buyers, including empowerment. During 2023-24, steady progress Government departments and public sector was observed in the delivery of micro-credit undertakings (PSUs). The revisions in TReDS through self-help groups (SHGs) and joint guidelines on June 7, 2023 enabled insurance for financiers to hedge against default risk, liability groups (JLGs). The number of SHGs expanded the pool of financiers, and enabled accessing credit from banks rose from 43.0 secondary market for factoring units. Reflecting lakh in 2022-23 to 54.8 lakh in 2023-24. The these changes, the number and amount of outstanding loans of SHGs increased by 38.1 per invoices uploaded and financed increased cent during 2023-24 as compared with 24.5 per sharply in 2023-24. The success rate of number cent in the previous year. A significant portion of invoices financed improved from 93.9 per of the credit disbursement to SHGs remained cent in 2022-23 to 94.4 per cent in 2023-24 concentrated in the southern and eastern regions (Table IV.31). of the country (Chart IV.39). Credit disbursed to JLGs grew by 41.2 per cent during 2023-24 as 12.7 Regional Banking Penetration compared with 18.3 per cent in the previous year IV.86 During the last five years, banking (Appendix Table IV.13). penetration, gauged by population per bank branch, improved across all regions. The Chart IV.39: SHGs – Regional Distribution of Credit and Average Loan Size improvement in usage, measured by the number (At end-March 2024) of deposit accounts per thousand population, was most evident in the northern region (Chart IV.40). Table IV.31: Progress in MSME Financing through TReDS Financial Year Invoices Uploaded Invoices Financed Number Amount Number Amount 1 2 3 4 5 2020-21 8,61,560 19,670 7,86,555 17,080 2021-22 17,33,553 44,112 16,40,824 40,309 2022-23 27,24,872 83,955 25,58,531 76,646 2023-24 44,04,148 1,51,343 41,58,554 1,38,241 Source: NABARD. Source: RBI. 83Report on Trend and Progress of Banking in India 2023-24 Table IV.32: Consolidated Balance Sheet of Chart IV.40: Regional Penetration of Banks Regional Rural Banks (Amount in ₹ crore) Sr. Item At Y-o-y growth No. end-March (in per cent) 2023 2024 (P) 2022-23 2023-24 1 2 3 4 5 6 1 Share Capital 17,232 19,042 15.8 10.5 2 Reserves 40,123 46,659 16.8 16.3 3 Deposits 6,08,509 6,59,815 8.2 8.4 3.1 Current 11,945 11,952 -0.8 0.1 3.2 Savings 3,19,572 3,47,193 8.5 8.6 3.3 Term 2,76,992 3,00,670 8.2 8.5 4 Borrowings 84,712 92,444 14.7 9.1 4.1 from NABARD 73,119 77,166 9.0 5.5 4.2 Sponsor Bank 3,408 4,293 -12.1 26.0 4.3 Others 8,185 10,986 177.7 34.2 5 Other Liabilities 20,885 22,120 5.8 5.9 Notes: 1. Total deposit accounts exclude inter-bank deposit accounts. Total Liabilities/Assets 7,71,462 8,40,080 9.4 8.9 2. Data pertain to SCBs. Sources: RBI and Office of the Registrar General & Census 6 Cash in Hand 2,888 2,933 -7.4 1.6 Commissioner, India Ministry of Home Affairs. 7 Balances with RBI 29,332 30,990 32.3 5.7 8 Balances in Current Account 7,150 8,173 -12.0 14.3 9 Investments 3,13,401 3,19,099 6.0 1.8 13. Regional Rural Banks21 10 Loans and Advances (net) 3,86,951 4,45,286 13.0 15.1 11 Fixed Assets 1,406 1,581 12.0 12.4 IV.87 At end-March 2024, there were 43 RRBs 12 Other Assets, of which, 30,333 32,019 -6.9 5.6 12.1 Accumulated Losses 9,841 8,921 8.6 -9.4 sponsored by 12 SCBs operating through 22,078 Note: P: Provisional. branches in 26 States and 3 Union Territories Source: NABARD. (Puducherry, Jammu & Kashmir, Ladakh). In IV.89 Deposits accounted for 78.5 per cent of line with their mandate, 91.8 per cent of RRB RRBs’ total sources of funds, although their branches were in rural/semi-urban areas. The deposit growth remained below that of SCBs southern region has the highest number of during 2023-24. Low-cost CASA deposits had a RRBs, and the region contributed nearly half to share of 54.4 per cent in RRBs’ total deposits the RRBs’ total profit (Appendix Table IV.14). during 2023-24, the highest amongst all 13.1 Balance Sheet Analysis categories of SCBs, except PBs22. The average IV.88 The growth in the combined balance PMJDY deposit amount per account was ₹4,667 sheet of RRBs decelerated to 8.9 per cent during in RRBs, higher than ₹4,432 for other categories 2023-24 from 9.4 per cent in the previous year of banks. The C-D ratio of RRBs increased to on account of a slowdown in borrowings on the 71.4 per cent at end-March 2024, its highest liabilities side, even as there was an acceleration level in 33 years, as growth of loans and advances in deposits and credit growth (Table IV.32). outpaced deposit growth. 21 RRBs were established as professionally managed alternative channel for credit dispensation to small and marginal farmers, agricultural labourers, and socio-economically weaker section of the population. Their functional focus areas have been agriculture, trade, commerce and small-scale industries in the rural areas. 22 PBs are not permitted to mobilise term deposits. 84OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS 13.2 Financial Performance IV.91 The GNPA ratio of RRBs reached a decadal low of 6.2 per cent at end-March IV.90 After reporting net losses during 2018-20, 2024 (Chart IV.41). The improvement in asset RRBs reported their highest ever consolidated quality was accompanied by higher provision net profit of ₹ 7,571 crore during 2023-24. buffers. Higher income growth and contraction in operating expenses, especially staff cost, boosted IV.92 Consequent upon the capital infusion profitability (Table IV.33). of ₹10,890 crore during 2021-23, the number of RRBs with CRAR below the regulatory Table IV.33: Financial Performance of Regional Rural Banks minimum of 9 per cent declined (Chart IV.42a). (Amount in ₹ crore) The consolidated CRAR stood at an all-time Sr. Item Amount Y-o-y change No. (in per cent) high of 14.2 per cent at end-March 2024 2022-232023-24(P) 2022-23 2023-24 (Chart IV.42b). The number of loss-making 1 2 3 4 5 6 A Income (i + ii) 59,427 70,443 5.0 18.5 RRBs has steadily declined from 18 in 2019-20 i. Interest Income 53,640 61,341 11.6 14.4 to 3 in 2023-24 (Appendix Table IV.14). ii. Other Income* 5,787 9,101 -32.2 57.3 B Expenditure (i+ii+iii) 54,454 62,872 2.0 15.5 IV.93 During 2023-24, priority sector lending i. Interest Expended 26,704 33,237 7.6 24.5 ii. Operating Expenses 21,878 21,267 2.7 -2.8 accounted for 87.0 per cent of RRBs’ total of which, Wage Bill 16,683 15,305 2.1 -8.3 iii. Provisions and 5,872 8,368 -19.1 42.5 lending and all banks met their target of Contingencies* lending 75 per cent of their ANBC/CEOBE to of which, Income Tax 1,424 2,430 11.4 70.7 C Profit the priority sector (Table IV.34 and Appendix i. Operating Profit 10,845 15,938 4.9 47.0 Table IV.15). ii. Net Profit 4,974 7,571 54.5 52.2 D Total Average Assets 7,16,796 7,90,902 7.5 10.3 E Financial ratios # i. Operating Profit 1.5 2.0 ii. Net Profit 0.7 1.0 Chart IV.41: Asset Quality of RRBs (At end-March) iii. Income (a + b) 8.3 8.9 a) Interest Income 7.5 7.8 b) Other Income 0.8 1.2 vi. Expenditure (a+b+c) 7.6 7.9 a) Interest Expended 3.7 4.2 b) Operating Expenses 3.1 2.7 of which, Wage Bill 2.3 1.9 c) Provisions and 0.8 1.1 Contingencies F Analytical Ratios (%) Gross NPA Ratio 7.3 6.2 CRAR 13.4 14.2 Notes: 1. P: Provisional 2. #: as per cent of average total assets. 3. *: As per the Reserve Bank’s extant master directions on presentation of financial statements, provision for depreciation in investments, which was earlier reported under provisions and contingencies head of expenditure, is now required to be deducted from other income. Accordingly, an amount of ₹ 2,204.4 crore provisioned by RRBs for MTM losses has been deducted from other income during 2022-23. Source: NABARD. Source: NABARD. 85Report on Trend and Progress of Banking in India 2023-24 Chart IV.42: Capital to Risk-weighted Assets Ratio of RRBs (At end-March) Source: NABARD. 14. Local Area Banks23 branches in operation. During 2023-24, the consolidated balance sheet growth of LABs IV.94 At end-March 2024, there were two LABs (down from four at end-March 2004), with 79 decelerated, with slowdown in credit as well as deposit growth. With credit growth above deposit Table IV.34: Purpose-wise Outstanding Advances by RRBs growth, the C-D ratio increased to 81.4 per cent (At end-March) at end-March 2024 from 81.1 per cent a year ago (Amount in ₹ crore) Sr. Purpose 2023 2024(P) (Table IV.35). No. 1 2 3 4 14.1 Financial Performance of LABs I Priority (i to v) 3,62,503 4,08,810 Per cent of total loans outstanding 88.3 87.0 IV.95 Profits of LABs fell during 2023-24, as i. Agriculture 2,81,971 3,16,671 ii. Micro, Small and Medium 49,323 57,639 interest income growth decelerated, while interest Enterprises iii. Education 1,744 1,609 expenditure growth accelerated (Table IV.36). vi. Housing 24,503 2,6047 v. Others 4,963 6,843 Table IV.35: Profile of Local Area Banks II Non-priority (i to vi) 48,236 61,300 (At end-March) Per cent of total loans outstanding 11.7 13.0 (Amount in ₹ crore) i. Agriculture 16 17 2023 2024 ii. Micro Small and Medium 84 187 1 2 3 Enterprises 1. Assets 1,474 1,584 iii. Education 218 343 (15.7) (7.5) iv. Housing 9,100 13,620 2. Deposits 1,190 1,271 (16.6) (6.8) v. Personal Loans 12,985 17,788 3. Gross Advances 965 1,034 vi. Others 25,833 29,345 (15.1) (7.2) Total (I+II) 4,10,738 4,70,109 Note: P: Provisional. Note: Figures in parentheses represent y-o-y growth in per cent. Source: NABARD. Source: Off-site returns (global operations), RBI. 23 Local Area Banks (LABs) are small, privately-owned banks established with the objective of functioning as low-cost entities to offer efficient and competitive financial intermediation services. LABs have a defined geographical area of operation, specifically targeting rural and semi-urban regions encompassing three contiguous districts. 86OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS Table IV.36: Financial Performance of growth accelerated during 2023-24, thereby Local Area Banks reducing their reliance on borrowings. The C-D Sr. Amount Y-o-y growth ratio of SFBs moderated to 90.1 per cent at No. (in ₹ crore) (in per cent) end-March 2024 from 93.0 per cent a year ago, 2022-23 2023-24 2022-23 2023-24 1 2 3 4 5 6 though it remained higher than that of SCBs A.Income (i+ii) 179 197 12.6 10.1 (Table IV.37). i. Interest Income 153 172 17.1 12.8 ii. Other Income 26 25 -7.6 -5.7 15.2 Financial Performance B.Expenditure(i+ii+iii) 143 162 7.7 13.7 i. Interest Expended 63 79 8.8 25.9 IV.98 The asset quality of SFBs improved for ii. Provisions and 21 15 -6.8 -26.0 Contingencies the third consecutive year during 2023-24. The iii. Operating Expenses 59 68 12.5 14.6 net profit ratio also increased during the year, as of which, Wage Bill 29 33 14.6 13.5 C.Profit gains in the income ratio exceeded the increase in i. Operating Profit/Loss 57 50 17.3 -11.9 Table IV.37: Consolidated Balance Sheet of ii. Net Profit/Loss 36 35 37.7 -3.9 Small Finance Banks D.Net Interest Income 90 93 23.6 3.7 E.Total Assets 1,474 1,584 15.7 7.5 (At end-March) F. Financial Ratios (Amount in ₹ crore) (as per cent of total assets) Sr. Item Amount Y-o-y growth i. Operating Profit 3.9 3.2 No. (in per cent) ii. Net Profit 2.5 2.2 iii. Income 12.1 12.4 2023 2024 2023 2024 iv. Interest Income 10.4 10.9 1 2 3 4 5 6 v. Other Income 1.8 1.6 1 Share Capital 7,811 7,844 8.6 0.4 vi. Expenditure 9.7 10.2 2 Reserves & Surplus 23,557 32,957 38 39.9 vii. Interest Expended 4.3 5.0 3 Tier 2 Bonds and Tier 2 1,926 2,458 -15.7 27.6 viii.Operating Expenses 4.0 4.3 Debt ix. Wage Bill 1.9 2.1 4 Deposits 1,91,372 2,50,896 28 31.1 x. Provisions and 4.1 Current Demand 7,456 10,895 22.7 46.1 1.4 1.0 Contingencies Deposits xi. Net Interest Income 6.1 5.9 4.2 Savings 54,667 59,691 16.2 9.2 4.3 Term 1,29,248 1,80,310 34.1 39.5 Note: Wage Bill is taken as payments to and provisions for employees. 5 Borrowings (Including 31,170 28,261 10.8 -9.3 Source: Off-site returns (global operations), RBI. Tier II Bonds) 5.1 Bank 4,241 4,500 -6.3 6.1 15. Small Finance Banks24 5.2 Others 26,929 23,761 14.1 -11.8 6 Other Liabilities & 13,606 15,326 14.1 12.6 IV.96 Following the merger of Fincare Small provisions Finance Bank with AU Small Finance Bank, Total liabilities/Assets 2,67,5173,35,284 25.1 25.3 7 Cash in Hand 1,371 1,333 9.7 -2.8 11 SFBs with 7,230 domestic branches were 8 Balances with RBI 16,468 16,170 115.8 -1.8 operational in India at end-June 2024. 9 Other Bank Balances/ 4,484 6,261 -69 39.6 Balances with Financial Institutions 15.1 Balance Sheet 10Investments 58,115 74,283 30.8 27.8 11Loans and Advances 1,77,887 2,26,148 28.7 27.1 IV.97 During 2023-24, SFBs’ combined balance 12Fixed Assets 2,734 3,353 18.7 22.6 sheet growth was in double digits, in line 13Other Assets 6,455 7,736 15.5 19.8 with the trend observed since their inception. Note: Data pertains to 12 SFBs. Source: Off-site returns (global operations), RBI. SFBs’ credit growth decelerated and deposit 24 Small finance banks (SFBs) are specialised institutions set up to provide formal saving avenues to the unserved and underserved sections of the population. SFBs aim to supply credit to small business units, small and marginal farmers, micro and small industries and other unorganised sector entities through high technology and low-cost operations. 87Report on Trend and Progress of Banking in India 2023-24 expenditure ratio. Provisions and contingencies 16.1 Balance sheet (as per cent of total assets) declined due to the IV.100 During 2023-24, the combined balance improvement in asset quality (Table IV.38). sheet growth of PBs decelerated, primarily 16. Payments Banks25 driven by slowdown in deposit growth on the IV.99 At end-March 2024, six PBs were liabilities side as well as slowdown in growth of operational with 82 branches. Of these, five PBs cash and balances with the RBI and investments reported operational profit during 2023-24. on the asset side. Deposits constituted 62.4 per cent of the liabilities of PBs (Table IV.39). Table IV.38: Financial Performance of Small Finance Banks 16.2 Financial Performance (Amount in ₹ crore) Sr. Item Amount Y-o-y growth IV.101 PBs turned profitable for the first time No. (in per cent) since their inception during 2022-23 and this 2022-23 2023-24 2022-23 2023-24 1 2 3 4 5 6 momentum continued during 2023-24, albeit at A Income (i + ii) 33,827 45,437 35.1 34.3 a slower pace (Table IV.40). The share of non- i. Interest Income 29,806 39,588 34.7 32.8 ii. Other Income 4,022 5,848 38.1 45.4 interest income in total income of PBs declined B Expenditure (i+ii+iii) 29,663 39,214 23.3 32.2 from 91.3 per cent during 2021-22 to 81.7 per i. Interest Expended 12,139 17,473 27.6 43.9 ii. Operating Expenses 13,153 17,186 34.0 30.7 cent during 2023-24. of which, 6,707 8,494 26.4 26.6 Staff Expenses iii. Provisions and 4,371 4,555 -7.6 4.2 Table IV.39: Consolidated Balance Sheet of contingencies Payments Banks C Profit (Before Tax) 5,417 7,835 321.9 44.6 (At end-March) i. Operating Profit 8,534 10,774 49.7 26.2 (EBPT) Sr Item Amount Y-o-y growth ii. Net Profit (PAT) 4,162 6,219 327.3 49.4 No. (in ₹ crore) (in per cent) D Total Assets 2,67,517 3,35,284 31.8 25.3 E Financial Ratios # 2022 2023 2024 2022 2023 2024 i. Operating Profit 3.2 3.2 1 2 3 4 5 6 7 8 ii. Net Profit 1.6 1.9 1 Total Capital and 2,485 2,938 3,440 41 18.2 17.1 iii. Income (a + b) 12.6 13.6 Reserves a. Interest Income 11.1 11.8 2 Deposits 7,859 12,222 16,330 69.9 55.5 33.6 b. Other Income 1.5 1.7 3 Other Liabilities 7,771 8,380 6,385 28 7.8 -23.8 iv. Expenditure (a+b+c) 11.1 11.7 and Provisions a. Interest Expended 4.5 5.2 Total Liabilities/ 18,115 23,540 26,155 45 29.9 11.1 b. Operating 4.9 5.1 Assets Expenses 1 Cash and 1,560 2,453 3,094 24.3 57.3 26.1 of which, 2.5 2.5 Balances with Staff Expenses RBI c. Provisions and 1.6 1.4 2 Balances with 3,322 5,008 4,350 39 50.7 -13.1 Contingencies Banks and F Analytical Ratios (%) Money Market Gross NPA Ratio 4.7 2.4 3 Investments 10,178 12,397 14,627 43 21.8 18.0 CRAR 22.5 21.6 4 Fixed Assets 372 562 1,266 4.7 51.1 125.3 Core CRAR 19.9 19.4 5 Other Assets 2,683 3,120 2,819 98.8 16.3 -9.6 Note: #: As per cent of total assets. Note: Data pertain to 6 PBs. Source: Off-site returns (domestic operations), RBI. Source: Off-site returns (domestic operations), RBI. 25 Payments banks (PBs) are specialised financial institutions established with the objective of enhancing financial inclusion by leveraging technological advancements. 88OPERATIONS AND PERFORMANCE OF COMMERCIAL BANKS Table IV.40: Financial Performance of income relative to interest expenses (Chart IV.43). Payments Banks RoA and RoE of PBs remained positive at end- Sr. Amount Y-o-y growth March 2024. No. (in ₹ crore) (in per cent) 2021-22 2022-23 2023-24 2021-22 2022-23 2023-24 IV.103 PBs’ cost-to-income ratio declined further 1 2 3 4 5 6 7 8 during 2023-24, suggesting improvement in A Income i. Interest Income 460 877 1,441 27.5 90.7 64.3 efficiency (Table IV.41). ii. Non-interest 4,801 5,630 6,416 34.8 17.3 14.0 Income 17. Overall Assessment B Expenditure i. Interest 157 247 356 56.0 57.5 44.1 IV.104 During 2023-24, banks’ consolidated Expenses balance sheet expanded at a healthy pace, with ii. Operating 5,216 6,154 7,292 13.8 18.0 18.5 Expenses robust deposit and credit growth. Broad-based iii. Provisions and 20 15 115 -44.4 -25.5 688.6 Contingencies credit growth was led by personal loans and of which, services sectors. Banks’ profitability improved, Risk Provisions 21 4 11 133.3 -81.7 185.3 while liquidity and provision buffers remained Tax Provisions -2 8 68 -111.0 415.8 773.4 C Net Interest 303 630 1,085 15.7 107.7 72.2 comfortable. Lower slippages helped strengthen Income asset quality across the board. The share of D Profit i. Operating -111 106 209 85.4 195.4 97.0 unsecured advances in total advances declined, Profit (EBPT) reflecting the Reserve Bank’s measures to ii. Net Profit/Loss -131 92 94 83.6 170.0 3.0 Source: Off-site returns (domestic operations), RBI. contain build-up of risk in these sectors. IV.102 Their NIM improved from 3.7 per cent at IV.105 New and emerging technologies are end-March 2023 to 5.7 per cent at end-March reshaping the banking industry by bringing in 2024, reflecting higher increase in interest innovative solutions along with new challenges. Chart IV.43: Profitability Indicators of Payments Banks Table IV.41: Select Financial Ratios of Payments Banks (At end-March) Sr. Item 2022 2023 2024 No. 1 2 3 4 5 1 Return on Assets -0.7 0.4 0.4 2 Return on Equity -5.3 3.1 2.7 3 Investments to Total Assets 56.1 52.7 55.9 4 Net Interest Margin 2.3 3.7 5.7 5 Efficiency (Cost-Income Ratio) 102.2 98.3 97.2 6 Operating Profit to Working Funds -0.6 0.5 0.8 7 Profit Margin -2.6 1.5 1.3 Note: Data pertain to 6 PBs. Source: Off site returns (domestic operations), RBI. Source: Off-site returns (domestic operations), RBI. 89Report on Trend and Progress of Banking in India 2023-24 Indian banks are at the forefront of digitalisation, IV.106 Going forward, there is a continuing need for banks to strengthen their risk aiming to leverage technology for productivity management standards, IT governance and efficiency gains. With the adoption of new arrangements and customer onboarding and technology, however, the risks of cyber attacks, transaction monitoring systems to check digital frauds, data breaches and operational unscrupulous activities, including suspicious failures have also increased. and unusual transactions. 90DEVELOPMENTS IN V CO-OPERATIVE BANKING Deposit growth of urban co-operative banks (UCBs) recovered in 2023-24 and credit growth remained steady. The financial performance of UCBs improved on the back of higher profitability, strengthened capital buffers and lower gross non-performing assets (GNPA) ratio. The GNPA ratio of state co-operative banks (StCBs) and district central co-operative banks (DCCBs) declined, but remained elevated relative to commercial banks. 1. Introduction followed by evaluation of profitability, asset quality and capital adequacy of UCBs in Section V.1 Co-operative banks play a vital role in 3. Section 4 examines the financial performance India’s financial ecosystem, particularly in of short-term and long-term rural co-operatives. promoting financial inclusion and supporting This is followed by an overall assessment in rural development. Over the years, various Section 5. reforms have been initiated to strengthen the co-operative banking sector – expanding the 2. Structure of the Co-operative Banking regulatory powers of the Reserve Bank under Sector the Banking Regulation (BR) Act to address V.3 The co-operative banking structure, issues relating to dual regulation of the sector; comprising UCBs and rural credit co-operatives greater freedom to co-operative banks to (RCCs), supplements the commercial banking raise capital; and deposit insurance reforms institutions by focusing on serving the to strengthen depositors’ confidence in the marginalised borrowers and promoting financial sector. The Reserve Bank introduced a prompt inclusion in villages and small towns. UCBs are corrective action (PCA) framework in July 2024 classified as scheduled or non-scheduled, based for urban co-operative banks (UCBs) in Tier 2 on whether they are included in the second to 4 and enhanced monitoring for Tier 1 UCBs, schedule of the Reserve Bank of India Act, 19342 which will be effective from April 1, 2025. and their geographical outreach (single-state V.2 Against this backdrop, the rest of the or multi-state). RCCs are classified into short- chapter focuses on the performance of urban term and long-term institutions. During the and rural co-operative banks during the period period under review, there were 1,472 UCBs and under review1. Section 2 discusses the evolving 1,07,961 RCCs3 (Chart V.1). In terms of number structure of the co-operative banking sector, of institutions, more than 97 per cent of total co- 1 Although primary agriculture credit societies (PACS) and long-term rural credit co-operatives are outside the regulatory purview of the Reserve Bank, a brief description of their activities and performance is given in this chapter for the sake of completeness of the analysis. 2 Apart from scheduled co-operative banks, scheduled commercial banks are also included in the same schedule of the Act. 3 Data for PACS, state co-operative agriculture and rural development banks (SCARDBs) and primary co-operative agriculture and rural development banks (PCARDBs) are available with a lag of one year, i.e., they relate to 2022-23. 91Report on Trend and Progress of Banking in India 2023-24 Chart V.1: Structure of Credit Co-operatives Notes: 1. SUCBs: Scheduled Urban Co-operative Banks; NSUCBs: Non-Scheduled Urban Co-operative Banks; StCBs: State Co-operative Banks; DCCBs: District Central Co-operative Banks; PACS: Primary Agricultural Credit Societies; SCARDBs: State Co-operative Agriculture and Rural Development Banks; PCARDBs: Primary Co-operative Agriculture and Rural Development Banks. 2. Figures in parentheses indicate the number of institutions at end-March 2024 for UCBs, StCBs and DCCBs and at end-March 2023 for other RCCs. Source: RBI, NABARD and National Federation of State Co-operative Banks Ltd (NAFSCOB). operative sector are primary agricultural credit at end-March 2014. RCCs comprise 70.4 per societies (PACS), although in terms of assets, cent of the assets of the total co-operative sector their share is only 17.8 per cent in the total co- (rural and urban co-operatives combined) (Chart V.2). operative segment and 25.3 per cent in RCCs. V.4 UCBs are regulated and supervised by the Chart V.2: Distribution of Credit Co-operatives by Asset Size (At end-March 2023) Reserve Bank. State co-operative banks (StCBs) and district central co-operative banks (DCCBs) are registered under the provisions of State Cooperative Societies Act of the State concerned and are regulated by the Reserve Bank. They are supervised by National Bank for Agriculture and Rural Development (NABARD) under Sec 35 (6) of the BR Act. V.5 The consolidated assets of the co- operative banking sector at end-March 2023 stood at ₹22.9 lakh crore, accounting for Note: The sunburst chart represents layers in the co-operative around 9.5 per cent of scheduled commercial banking sector. Size of each segment is proportional to its share (mentioned in parentheses) in total assets of the sector. Source: RBI, NABARD and NAFSCOB. banks’ (SCBs’) assets, down from 11.2 per cent 92DEVELOPMENTS IN CO-OPERATIVE BANKING Table V.1 Share in Credit Flow to Agriculture Chart V.3: Number of UCBs (Per cent) Rural Credit Regional Rural Commercial Co-operatives Banks Banks 1 2 3 4 2016-17 13.4 11.6 75.0 2017-18 12.9 12.1 74.9 2018-19 12.1 11.9 76.0 2019-20 11.3 11.9 76.8 2020-21 12.1 12.1 75.8 2021-22 13.0 11.0 76.0 2022-23 11.0 11.2 77.8 2023-24 9.5 11.1 79.4 Source: NABARD (ENSURE portal). V.6 Rural co-operatives were set up with the primary objective of lending to agriculture. In 2023-24, their share in total credit to agriculture declined for the second consecutive year to less than 10 per cent due to increasing reach of Source: Off-site surveillance returns, RBI. commercial banks via technology and branch expansion (Table V.1). issuance of new licences. As a result, the number of UCBs declined steadily over the last two 3. Urban Co-operative Banks decades from 1,926 to 1,472 (Chart V.3). V.7 The number of UCBs surged in the 1990s V.8 Since 2004-05, the sector has witnessed on the back of a liberal licensing policy. Over the years, nearly a third of the newly licensed 156 mergers, including six in 2023-24, of banks became financially unsound. Starting which three were in Maharashtra, two were in 2004-05, the Reserve Bank initiated a process Telangana and one was in Gujarat. Maharashtra of consolidation, including amalgamation of accounted for majority of the mergers in the last unviable UCBs with their viable counterparts, two decades, followed by Gujarat and Andhra closure of non-viable entities and suspension of Pradesh (Chart V.4a). During 2023-24, licences Chart V.4: Consolidation Drive in UCBs Source: RBI. 93Report on Trend and Progress of Banking in India 2023-24 of 24 UCBs were cancelled, raising the total Chart V.5: Asset Growth number of cancellations to 70 since 2015-16. 94.3 per cent of the cancellations have been in the non-scheduled category (Chart V.4b). V.9 In line with the recommendations of the Expert Committee on Urban Co-operative Banks (Chairman: Shri. N.S. Vishwanathan), the Reserve Bank adopted a four-tiered regulatory framework for UCBs in 2022-234. At end-March 2024, the share of UCBs in Tier 1 declined, while that of Tier 2 increased year- on-year (y-o-y), partly reflecting a growing Note: For SCBs, private sector bank data for 2023-24 is inclusive of deposit base. Tier 3 UCBs, with nearly 5 per cent merger of a non-bank with a private sector bank and therefore, the data may not be comparable to past periods before the merger. share in the total number of UCBs, dominated Source: Off-site surveillance returns, RBI and annual accounts of respective banks. the sector with more than one-third share in deposits, advances as well as total assets relative to SCBs fell for the seventh successive (Table V.2). year to 2.5 per cent at end-March 2024 from 3.8 3.1. Balance Sheet per cent at end-March 2017, dragged down by subdued deposit growth on the liabilities side V.10 During 2023-24, the consolidated balance and loans on the asset side (Chart V.5). sheet of UCBs exhibited a muted growth of 4 per cent, albeit higher than 2.3 per cent in the V.11 Deposit growth of all UCBs exhibited a previous year. The balance sheet size of UCBs marginal improvement to 4.1 per cent during Table V.2: Tier-wise Distribution of Urban Co-operative Banks (At end-March 2024) (Amount in ₹ crore, share in per cent) Tier Type No. of Banks Deposits Advances Total Assets Number Share Amount Share Amount Share Amount Share 1 2 3 4 5 6 7 8 9 1 850 57.7 63,627 11.5 41,842 12.1 88,669 12.5 2 538 36.5 1,71,039 30.8 1,03,498 29.8 2,17,142 30.7 3 78 5.3 1,93,105 34.8 1,16,143 33.5 2,39,240 33.8 4 6 0.4 1,27,698 23.0 85,420 24.6 1,62,618 23.0 All UCBs 1,472 100 5,55,469 100 3,46,903 100 7,07,669 100 Notes: 1. Data are provisional. 2. Components may not add up to the whole due to rounding off. Source: Off-site surveillance returns, RBI. 4 UCBs with deposits up to ₹100 crore have been classified as Tier 1; those with deposits more than ₹100 crore and up to ₹1,000 crore as Tier 2; those with deposits more than ₹1,000 crore and up to ₹10,000 crore as Tier 3; and those above ₹10,000 crore are placed in Tier 4. As per the circular dated December 01, 2022, all unit UCBs and salary earners’ UCBs (irrespective of deposit size) are classified as Tier 1 UCBs. The deposits referred to above shall be reckoned as per audited balance sheet as on 31st March of the immediate preceding financial year. 94DEVELOPMENTS IN CO-OPERATIVE BANKING Chart V.6: Performance of UCBs vis-à-vis SCBs Note: Data of deposits and advances for SCBs, for 2023-24, exclude the impact of the merger of a non-bank with a private sector bank. Source: Off-site surveillance returns, CISBI portal of RBI and annual accounts of respective banks. 2023-24, remaining well below 13.4 per cent correspondents (BCs) model extensively to growth in SCBs (Chart V.6a). The pace sustained expand their reach. in H1:2024-25 with 4.4 per cent growth in V.12 The credit-deposit (C-D) ratio of UCBs deposits of UCBs. Credit growth of UCBs was increased for the third consecutive year in steady at 5.0 per cent in 2023-24, less than a 2023-24 to 62.5 per cent (Chart V.7). The share third of the expansion of 16.0 per cent recorded of borrowings in total liabilities of UCBs was 0.8 by SCBs (Table V.3 and Chart V.6b). The credit per cent at end-March 2024, less than a tenth of growth of UCBs, however, accelerated to 6.2 per that of SCBs (9.0 per cent). cent at end-September 2024. Deposit and credit V.13 The distribution of the number of UCBs growth of UCBs has trailed that of SCBs in in terms of assets and deposits has been shifting recent years reflecting, inter alia, the decline in rightwards over the years and has turned from the number of UCBs and their branch network bi-modal to unimodal (Chart V.8). In 2014-15, (Chart V.6c). SCBs, on the other hand, have been more than 40 per cent of UCBs were in the asset leveraging technology as well as the business classes ₹25 crore to ₹50 crore and ₹100 crore to 95Report on Trend and Progress of Banking in India 2023-24 Table V.3: Balance Sheet of Urban Co-operative Banks (At end-March) (Amount in ₹ crore) Scheduled UCBs Non-Scheduled All UCBs All UCBs (y-o-y growth in UCBs per cent) 2023 2024 2023 2024 2023 2024 2022-23 2023-24 1 2 3 4 5 6 7 8 9 Liabilities 1) Capital 4,256 4,293 10,459 10,831 14,715 15,124 3.2 2.8 (1.4) (1.3) (2.8) (2.8) (2.2) (2.1) 2) Reserves and Surplus 22,287 25,298 25,958 29,435 48,245 54,732 12.7 13.4 (7.3) (7.9) (6.9) (7.6) (7.1) (7.7) 3) Deposits 2,39,982 2,54,479 2,93,484 3,00,991 5,33,466 5,55,469 1.5 4.1 (78.3) (79.1) (78.6) (78.0) (78.4) (78.5) 4) Borrowings 5,776 5,082 465 297 6,241 5,380 10.3 -13.8 (1.9) (1.6) (0.1) (0.1) (0.9) (0.8) 5) Other Liabilities and Provisions 34,280 32,571 43,250 44,392 77,530 76,963 0.5 -0.7 (11.2) (10.1) (11.6) (11.5) (11.4) (10.9) Assets 1) Cash in Hand 1660 1759 4224 4434 5884 6193 -6.4 5.3 (0.5) (0.5) (1.1) (1.1) (0.9) (0.9) 2) Balances with RBI 12,770 13,778 3,592 4,545 16,362 18,323 -0.4 12.0 (4.2) (4.3) (1.0) (1.2) (2.4) (2.6) 3) Balances with Banks 21,011 24,701 45,718 47,715 66,729 72,415 -4.9 8.5 (6.9) (7.7) (12.2) (12.4) (9.8) (10.2) 4) Money at Call and Short Notice 2,554 2,367 886 919 3,440 3,286 -31.1 -4.5 (0.8) (0.7) (0.2) (0.2) (0.5) (0.5) 5) Investments 83,254 86,626 1,07,412 1,07,188 1,90,666 1,93,814 1.6 1.7 (27.2) (26.9) (28.7) (27.8) (28.0) (27.4) 6) Loans and Advances 1,51,663 1,59,553 1,78,828 1,87,350 3,30,491 3,46,903 5.0 5.0 (49.5) (49.6) (47.9) (48.5) (48.6) (49.0) 7) Other Assets 33,668 32,939 32,957 33,795 66,625 66,734 2.4 0.2 (11.0) (10.2) (8.8) (8.8) (9.8) (9.4) Total Liabilities/ Assets 3,06,581 3,21,723 3,73,616 3,85,946 6,80,197 7,07,669 2.3 4.0 (100) (100) (100) (100) (100) (100) Notes: 1. Data for 2024 are provisional. 2. Figures in parentheses are proportion to total liabilities / assets (in per cent). 3. Components may not add up to the whole due to rounding off. Source: Off-site surveillance returns, RBI. ₹250 crore; in 2023-24, 44.3 per cent of UCBs crore. In terms of advances, the modal class were in the asset classes ₹50 crore to ₹250 was ₹25 crore to ₹50 crore at end-March 2024, Chart V.7: Credit-Deposit Ratio: UCBs versus SCBs Chart V.8: Distribution of UCBs by Asset Size (At end-March) Note: Data for SCBs for March 2024 exclude the impact of the merger of a non-bank with a private sector bank. Source: Off-site surveillance returns, RBI and annual accounts of respective banks. Source: Off-site surveillance returns, RBI. 96DEVELOPMENTS IN CO-OPERATIVE BANKING Table V.4: Distribution of UCBs by Size of Chart V.9: Investments: UCBs versus SCBs Deposits, Advances and Assets (At end-March 2024) (Amount in ₹ crore) Deposits Advances Assets No. of No. of No. of Amount Amount Amount UCBs UCBs UCBs 1 2 3 4 5 6 7 0 ≤ X < 10 83 495 183 1,093 40 251 10 ≤ X < 25 164 2,914 241 4,096 118 2,072 25 ≤ X < 50 240 8,879 282 9,921 212 7,839 50 ≤ X < 100 300 21,543 258 18,084 308 22,489 100 ≤ X < 250 322 52,648 256 39,538 344 55,860 250 ≤ X < 500 156 55,565 135 47,284 199 70,093 500 ≤ X < 1000 116 79,450 65 45,585 132 92,885 1000 ≤ X 91 3,33,976 52 1,81,301 1194,56,181 Total 1,472 5,55,469 1,472 3,46,903 1,472 7,07,669 Notes: 1. Data are provisional. Note: Data for SCBs for 2023-24 exclude the impact of the merger of 2. ‘X’ indicates amount of deposits, advances and assets. a non-bank with a private sector bank. Source: Off-site surveillance returns, RBI and annual accounts of Source: Off-site surveillance returns, RBI. respective banks. with more than 80 per cent of UCBs with total the share of state government securities in total advances less than ₹250 crore (Table V.4). SLR investments of UCBs has been rising. V.14 During 2023-24, UCBs’ investment 3.2. Financial Performance and Profitability growth remained largely unchanged, widening V.16 The operating profits of UCBs fell during the wedge with SCBs (Chart V.9). 2023-24 as total expenditure expanded at a V.15 90 per cent of UCBs’ investments were faster pace than total income. However, net in SLR instruments, as compared with 83 profits (before as well as after tax) were higher per cent for SCBs. During 2023-24, the SLR due to decline in provisions and contingencies investments of UCBs in central government on the back of improved asset quality. securities contracted (Table V.5). Over the years, Non-interest income fell due to decline in Table V.5: Investments by Urban Co-operative Banks (Amount in ₹ crore) Amount Outstanding (At end-March) Variation (%) 2022 2023 2024 2022-23 2023-24 1 2 3 4 5 6 Total Investments (A + B) 1,87,612 1,90,666 1,93,814 1.6 1.7 (100.0) (100.0) (100.0) A. SLR Investments (i to iii) 1,67,802 1,71,715 1,74,352 2.3 1.5 (89.4) (90.1) (90.0) (i) Central Govt. Securities 1,04,762 1,06,716 1,06,223 1.9 -0.5 (55.8) (56.0) (54.8) (ii) State Govt. Securities 62,613 64,695 67,741 3.3 4.7 (33.4) (33.9) (35.0) (iii) Other approved Securities 427 304 388 -28.8 27.6 (0.2) (0.2) (0.2) B. Non-SLR Investments 19,809 18,951 19,462 -4.3 2.7 (10.6) (9.9) (10.0) Notes: 1. Data for 2024 are provisional. 2. Figures in parentheses are proportion to total investments (in per cent). 3. Components may not add up to the whole due to rounding off. Source: Off-site surveillance returns, RBI. 97Report on Trend and Progress of Banking in India 2023-24 Table V.6: Financial Performance of Scheduled and Non-Scheduled Urban Co-operative Banks (Amount in ₹ crore) Scheduled UCBs Non-Scheduled UCBs All UCBs All UCBs Variation (%) 2022-23 2023-24 2022-23 2023-24 2022-23 2023-24 2022-23 2023-24 1 2 3 4 5 6 7 8 9 A. Total Income [i+ii] 22,460 24,172 29,921 31,054 52,381 55,226 1.8 5.4 (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) i. Interest Income 19,473 21,476 28,125 29,232 47,598 50,708 2.1 6.5 (86.7) (88.8) (94.0) (94.1) (90.9) (91.8) ii. Non-interest Income 2,987 2,696 1,796 1,821 4,783 4,518 -0.8 -5.5 (13.3) (11.2) (6.0) (5.9) (9.1) (8.2) B. Total Expenditure [i+ii] 17,820 19,785 24,592 25,999 42,411 45,784 -0.5 8.0 (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) i. Interest Expenditure 11,093 12,838 16,382 17,451 27,475 30,289 -4.3 10.2 (62.3) (64.9) (66.6) (67.1) (64.8) (66.2) ii. Non-interest Expenditure 6,727 6,947 8,209 8,548 14,936 15,495 7.5 3.7 (37.7) (35.1) (33.4) (32.9) (35.2) (33.8) of which : Staff Expenses 2,955 2,999 4,259 4,370 7,214 7,368 2.7 2.1 C. Profits i. Amount of Operating Profits 4,641 4,387 5,329 5,055 9,970 9,441 12.9 -5.3 ii. Provision and Contingencies 2,899 1,200 2,671 1,904 5,570 3,104 15.9 -44.3 iii. Provision for taxes 468 751 852 858 1,319 1,609 16.9 21.9 iv. Amount of Net Profit before Taxes 1,742 3,187 2,658 3,151 4,400 6,338 9.3 44.0 v. Amount of Net Profit after Taxes 1,274 2,435 1,807 2,293 3,080 4,729 6.4 53.5 Notes: 1. Data for 2023-24 are provisional. 2. Figures in parentheses are proportion to total income/expenditure (in per cent). 3. Components may not add up to the whole due to rounding off. Source: Off-site returns, RBI. dividend income, loss on sale of fixed assets Table V.1). The share of non-interest income and reduced profits on forex operations. The in total income was higher in larger SUCBs growth in non-interest expenditure of UCBs and inversely related to their profitability decelerated, partly on account of moderation (Box V.1). in staff expenses (Table V.6 and Appendix Box V.1: Determinants of Non-Interest Income in Scheduled Urban Co-operative Banks While interest income is the core of banking activity, introduced to assess the differential impact of profitability diversification through non-interest earnings can help yield of Tier 4 SUCBs on share of non-interest income. Dummy higher risk-adjusted profits (Ahamed, 2017). Tier123 takes the value 1 for SUCBs with deposit base of less than ₹ 10,000 crore, i.e., Tier 1 to 3 SUCBs, and value The share of non-interest income in total income of 0 for Tier 4 SUCBs (deposits > ₹10,000 crore). SUCBs in India increased from 10.7 per cent in 2014- 15 to 16.7 per cent in 2019-20 before moderating to The regression estimates indicate that SUCBs with larger 13.3 per cent in 2022-23. Using annual panel data for asset size have a higher share of non-interest income. 47 SUCBs for the period 2014-15 to 2022-23, two fixed Higher profitability (RoA) seems to dampen the share of effects panel regression models are estimated to explore non-interest income (Table V.1.1). Moreover, as profitability the determinants of the share of non-interest income in increases, the decline in the share of non-interest income total income. Bank specific explanatory variables, such for Tier 1 to 3 SUCBs is less, as compared to Tier 4 SUCBs as, asset size, return on assets (RoA) and cost to income (Model II). Overall, the empirical analysis suggests that ratio and macroeconomic control variables (nominal GDP as banks grow in size, they are able to diversify towards growth) have been incorporated in Model I. In Model II, an non-traditional activities, which boosts their non-interest interaction dummy [Dummy Tier123*ROA (-1)] has been income. (Contd.) 98DEVELOPMENTS IN CO-OPERATIVE BANKING Table V.1.1: Determinants of SUCBs’ Non-Interest Income Explanatory Variables Share of Non-interest income Share of Non-interest income (1) (2) Share of Non-interest income (-1) 0.00361 0.00193 (0.128) (0.128) GDP growth rate -0.119* -0.117* (0.0606) (0.0603) Cost to income ratio (-1) -3.143 -3.235 (6.719) (6.720) Log total assets (-1) 4.285*** 4.613*** (1.551) (1.599) ROA (-1) -0.431* -2.953** (0.243) (1.428) Dummy Tier123*ROA (-1) 2.522* (1.392) Constant -19.09 -21.45 (15.36) (15.60) Observations 376 376 R-squared 0.513 0.514 Notes: 1. Robust standard errors in parentheses. 2. *** p<0.01, ** p<0.05, * p<0.1 Source: RBI staff estimates. Reference: Ahamed, M. M. (2017). Asset Quality, Non-Interest Income, and Bank Profitability: Evidence from Indian Banks, Economic Modelling, 63, 1-14. V.17 Reflecting higher net profits, UCBs’ 3.3. Soundness return on assets (RoA), return on equity (RoE) V.19 The number of instances of penalty and net interest margin (NIM) improved during imposition on co-operative banks (including 2023-24. During H1:2024-25, UCBs’ profitability UCBs) increased by 22 per cent to 215 during improved further (Table V.7). 2023-24 from 176 in the previous year. However, V.18 UCBs’ profitability, which dipped in the amount of penalty imposed declined by 13.8 2019-20 due to losses incurred by a large UCB, per cent (Table IV.16 in Chapter IV). The Deposit has recovered since then with an improvement Insurance and Credit Guarantee Corporation in asset quality (Chart V.10 a and b). (DICGC) settled claims of ₹1,432 crore during Table V.7: Select Profitability Indicators of UCBs 2023-24, which pertained entirely to co-operative (Per cent) banks placed under liquidation/ all-inclusive Scheduled Non-Scheduled All directions (AID). UCBs UCBs UCBs 2022-23 2023-24 2022-23 2023-24 2022-23 2023-24 Sep-24 3.4. Capital Adequacy 1 2 3 4 5 6 7 8 Return on 0.42 0.78 0.49 0.60 0.46 0.68 0.84 V.20 In July 2022, the revised regulatory Assets Return on framework (effective from April 1, 2023) for 5.08 8.68 5.17 5.98 5.13 7.12 8.4 Equity Net UCBs increased the minimum regulatory capital Interest 2.77 3.35 3.17 4.02 2.99 3.70 3.42 Margin requirement for Tier 2 to Tier 4 UCBs to 12 per Note: Data for 2023-24 are provisional. cent, while keeping it at 9 per cent for Tier 1 Source: Off-site surveillance returns, RBI. 99Report on Trend and Progress of Banking in India 2023-24 Chart V.10: Profitability Indicators: UCBs versus SCBs (At end-March) Source: Annual accounts of banks and off-site surveillance returns, RBI. UCBs. At end-March 2024, 42.3 per cent of the long-term subordinate bonds strengthened their UCBs belonged to upper tiers (Tier 2 to Tier 4), capital base. while more than 90 per cent maintained CRARs V.22 Reflecting sharper accretion to capital above 12 per cent (Table V.8 and Appendix from 2021-22 onward, UCBs’ CRAR was higher Table V.2). than that of SCBs at end-March 2024 (Chart V.11). V.21 During 2023-24, the consolidated CRAR The CRAR remained stable at 17.5 per cent at of UCBs improved on the back of higher Tier I end-September 2024. capital, driven inter alia by increased profitability Chart V.11: CRAR: UCBs versus SCBs due to lower provisions and regulatory permission (At end-March) to include revaluation reserves in Tier I capital5 (Table V.9). Additionally, UCBs’ efforts to raise Table V.8: CRAR-wise Distribution of UCBs (At end-March 2024) (Number of banks) CRAR Scheduled Non-Scheduled All (in per cent) UCBs UCBs UCBs 1 2 3 4 CRAR < 3 1 28 29 3 <= CRAR < 6 1 13 14 6 <= CRAR < 9 0 14 14 9 <= CRAR < 12 2 85 87 12 <= CRAR 45 1,283 1328 Total 49 1,423 1,472 Note: Data are provisional. Source: Off-site surveillance returns, RBI. Source: Off-site surveillance returns, RBI 5 Revaluation reserves were earlier considered as Tier II capital, but were allowed as Tier I capital, subject to certain conditions, from end-March 2023. 100DEVELOPMENTS IN CO-OPERATIVE BANKING Table V.9: Component-wise Capital Adequacy of UCBs (At end-March) (Amount in ₹ crore) Scheduled UCBs Non-Scheduled UCBs All UCBs 2023 2024 2023 2024 2023 2024 1 2 3 4 5 6 7 8 1 Capital Funds 23,367 25,964 30,715 33,238 54,081 59,202 i) Tier I Capital 18,016 20,125 26,762 29,086 44,778 49,210 ii) Tier II Capital 5,351 5,839 3,953 4,152 9,304 9,992 2 Risk-weighted Assets 1,50,776 1,57,866 1,70,247 1,80,672 3,21,024 3,38,538 3 CRAR (1 as % of 2) 15.5 16.4 18.0 18.4 16.8 17.5 Of which: Tier I 11.9 12.7 15.7 16.1 13.9 14.5 Tier II 3.5 3.7 2.3 2.3 2.9 3.0 Note: Data for 2024 are provisional. Source: Off-site surveillance returns, RBI. 3.5. Asset Quality large borrowers accounted for 15.3 per cent of V.23 The asset quality of UCBs, measured NSUCBs’ NPAs, and 63.0 per cent of SUCBs’ NPAs. For the sector as a whole, special mention by the gross non-performing assets (GNPA) accounts-1 (SMA-1) declined during the year ratio, improved for the third consecutive year, but SMA-2 increased, mainly led by SUCBs although remaining well above that of SCBs (Chart V.12b). (Chart V.12a). At end-September 2024, the GNPA ratio of UCBs was 9.6 per cent as compared to 3.6. Priority Sector Lending 10.9 per cent at end-September 2023. Among V.25 The revised guidelines for priority sector UCBs, NSUCBs had higher GNPA ratios. As the lending set higher targets for UCBs to be achieved decline in GNPAs outpaced falling provisions, in a phased manner7. The target for end-March the provision coverage ratio (PCR) improved 2023 and end-March 2024 was 60 per cent of and is likely to increase further with the phased harmonisation of UCBs’ provisioning norms for Table V.10: Non-Performing Assets of UCBs (At end-March) standard advances6 (Table V.10). Scheduled Non-Scheduled All UCBs V.24 At end-March 2024, large borrowal UCBs UCBs 2023 2024 2023 2024 2023 2024 accounts, i.e., accounts with exposures of ₹5 1 2 3 4 5 6 7 crore and above, constituted 24.3 per cent Gross NPAs (₹ crore) 10,016 8,422 19,188 16,988 29,204 25,411 of UCBs’ total lending and 31.1 per cent of Gross NPA Ratio (%) 6.6 5.3 10.7 9.1 8.8 7.3 Net NPAs (₹ crore) 2,298 1,960 4,386 1,953 6,684 3,913 their GNPAs. These accounts exhibited varied Net NPA Ratio (%) 1.6 1.3 2.7 1.1 2.2 1.2 behaviour between SUCBs and NSUCBs. 43 Provisioning (₹ crore) 7,718 6,462 14,802 15,035 22,520 21,497 per cent of SUCBs’ lending was concentrated Provisioning 77.1 76.7 77.1 88.5 77.1 84.6 Coverage Ratio (%) in these accounts, while NSUCBs’ exposure to Note: Data for 2024 are provisional. these borrowers was less than 10 per cent. The Source: Off-site surveillance returns, RBI. 6 The erstwhile Tier I UCBs, which were maintaining standard asset provision of 0.25 per cent on ‘all other loans and advances not included above’, are required to increase the provisioning requirement in a staggered manner to reach: 0.30 per cent by March 31, 2024, 0.35 per cent by September 30, 2024 and 0.40 per cent by March 31, 2025. 7 The guidelines issued in March 2020 and revised in July 2023 require UCBs to meet the target of 60 per cent, 65 per cent and 75 per cent of the higher of their ANBC or CEOBE by end-March 2024, 2025, and 2026, respectively. 101Report on Trend and Progress of Banking in India 2023-24 Chart V.12: Asset Quality (At end-March) Source: Off-site surveillance returns, RBI and annual accounts of banks. the adjusted net bank credit (ANBC) or CEOBE. enterprises exceeded the target of 7.5 per cent. While the UCBs had met the target comfortably Although lending to weaker sections declined, at end-March 2023, they missed it at end-March UCBs met the target of 11.5 per cent. The share of renewable energy in total advances increased, 2024 (Chart V.13). albeit marginally (Table V.11). V.26 During 2023-24, the share of MSMEs, 4. Rural Credit Co-operatives particularly small enterprises, in total priority sector lending declined. UCBs’ lending to micro V.27 Rural credit co-operatives (RCCs) came into existence as institutional mechanisms Chart V.13: Priority Sector Lending to provide adequate and affordable credit for (At end-March) farming and allied activities. They play an important role in rural credit delivery due to their grass root level presence in the hinterland. RCCs differ from their urban peers in terms of their area of operations, reach, performance and composition of liabilities. At end-March 2024, there were 34 state co-operative banks (StCBs) with 2,140 branches and 351 district central co-operative banks (DCCBs)8 operating through 13,759 branches. At end-March 2023, 1,06,955 primary agriculture credit societies (PACS) were spread over 6.5 lakh villages and long- term RCCs comprised of 13 state co-operative Source: Off-site surveillance returns, RBI. agriculture and rural development banks 8 Including 3 DCCBs in Jammu and Kashmir, which are yet to be licensed and excluding Tamil Nadu Industrial Co-operative Bank Ltd., which is considered a DCCB only for the purposes of regulation/supervision. 102DEVELOPMENTS IN CO-OPERATIVE BANKING Table V.11: Composition of Credit to Priority (SCARDBs) with 692 branches and 608 primary Sectors by UCBs co-operative agriculture and rural development (At end-March) banks (PCARDBs). (Amount in ₹ crore) 2023 2024 V.28 While UCBs primarily depend on deposits Amount Share Amount Share in Total in Total to raise funds, RCCs rely heavily on borrowings. Advances Advances (%) (%) Deposits constituted 78.4 per cent of UCBs’ 1 2 3 4 5 6 total liabilities at end-March 2023 as compared 1 Agriculture [(i)+(ii)+(iii)] 15,404 4.7 16,329 4.7 with 54.2 per cent for RCCs. On the other hand, (i) Farm Credit 11,470 3.5 12,328 3.6 (ii) Agriculture 902 0.3 1,224 0.4 borrowings were around 33 per cent of total Infrastructure liabilities of RCCs and less than 1 per cent of (iii) Ancillary Activities 3,032 0.9 2,777 0.8 2 Micro and Small Enterprises 1,24,658 37.7 1,29,069 37.2 UCBs’ liabilities at end-March 2023. [(i) + (ii) + (iii) + (iv)] (i) Micro Enterprises 52,849 16.0 56,533 16.3 V.29 The owned funds9 to liabilities ratio of (ii) Small Enterprises 48,903 14.8 48,495 14.0 UCBs has increased over time and surpassed (iii) Medium Enterprises 22,281 6.7 23,492 6.8 that of RCCs at end-March 2023 due to higher (iv) Advances to KVI 625 0.2 549 0.2 (Including ‘Other reserves of the former. Amongst RCCs, SCARDBs Finance to MSMEs’) 3 Export Credit 319 0.1 723 0.2 continue to have the highest share of owned funds 4 Education 3,187 1.0 3,226 0.9 in total liabilities (Chart V.14a). The asset quality 5 Housing 29,286 8.9 29,268 8.4 of UCBs remained better than RCCs, with the 6 Social Infrastructure 1,151 0.3 1,038 0.3 7 Renewable Energy 972 0.3 1,419 0.4 latter dragged down by the deteriorating GNPA 8 ‘Others’ category under 30,121 9.1 25,326 7.3 ratio of long-term co-operatives (Chart V.14b). Priority Sector 9 Total (1 to 8) 2,05,269 62.1 2,06,399 59.5 V.30 RCCs, consisting of short-term and long- of which, Loans to Weaker 45,565 13.8 42,743 12.3 Sections under Priority Sector term institutions, expanded their operations Notes: 1. Data for 2024 are provisional. further in 2022-23. Their share in the total 2. Percentages are with respect to the total credit of UCBs. Source: Off-site surveillance returns, RBI. assets of the co-operative sector (urban and Chart V.14: RCCs versus UCBs: Balance Sheet and Asset Quality Indicators (At end-March) Source: RBI, NABARD and NAFSCOB. 9 Owned funds include capital and reserves and surplus. 103Report on Trend and Progress of Banking in India 2023-24 rural co-operatives combined) increased to Chart V.15: Share of Rural Credit Co-operatives in 70.4 per cent from 69.2 per cent a year ago Total Co-operative Sector (Chart V.15). V.31 Amongst RCCs, the short-term institutions provide crop loans and working capital loans to farmers and rural artisans. The long-term co- operatives - SCARDBs and PCARDBs - provide funding for investment in agriculture, including land development, farm mechanisation and minor irrigation, rural industries and housing. SCARDBs borrow from institutions, such as, the NABARD for direct lending as well as lending through PCARDBs. The RCC sector is dominated by short-term institutions and their share in Source: RBI, NABARD and NAFSCOB. total assets increased to 96.3 per cent at end- March 2023 from 94.4 per cent at end-March non-performing assets, low recoveries and high 2016 (Chart V.16a). While the reliance of both operating costs. short-term and long-term credit co-operatives on V.32 Despite the drag from the PACS, borrowings is higher than UCBs, the depositor the RCC sector remained profitable for the base of long-term credit co-operatives is especially fourth consecutive year (Table V.12). In 2022- small. The financial performance of short-term 23, the number of profit-making PCARDBs rural co-operatives has been relatively better increased significantly on account of sharp than their long-term counterparts (Chart V.16b). increase in income (both interest and non- RCCs face challenges from a non-diversified interest) and contraction in total expenditure lending portfolio focussed on agriculture, high (Chart V.17). Chart V.16: Long-term versus Short-term RCCs (At end-March) Source: NABARD and NAFSCOB. 104DEVELOPMENTS IN CO-OPERATIVE BANKING Table V.12: A Profile of Rural Credit Co-operatives (At end-March 2023) (Amount in ₹ crore) Short-term Long-term Rural Credit Co-operatives StCBs DCCBs PACS SCARDBs (P) PCARDBs (P) Mar-22 Mar-23 1 2 3 4 5 6 7 8 A. Number of Co-operatives 34 351 1,06,955 13 608 1,05,268 1,07,961 B. Balance Sheet Indicators i. Owned Funds (Capital + Reserves) 30,318 55,216 48,565 6,545 5,527 1,35,460 1,46,171 ii. Deposits 2,42,327 4,33,358 1,97,239 2,621 1,720 8,33,844 8,77,263 iii. Borrowings 1,54,970 1,47,207 2,01,329 12,559 16,712 4,55,373 5,32,778 iv. Loans and Advances 2,65,580 3,70,851 2,00,491 20,770 15,773 7,66,470 8,73,466 v. Total Liabilities/Assets 4,51,840 6,97,304 4,09,377^ 27,794 32,445 14,98,292 16,18,761 C. Financial Performance i. Institutions in Profits a. No. 32 305 47,794 10 351 48,461 48,492 b. Amount of Profit 2,517 2,879 2,142 448 525 6,754 8,512 ii. Institutions in Loss a. No. 2 46 37,357 3 252 39,081 37,660 b. Amount of Loss 60 998 3,586 40 305 5,506 4,989 iii. Overall Profits (+)/Loss (-) 2,458 1,881 -1,444 408 220 1,248 3,523 D. Non-performing Assets i. Amount 14,296 35,722 44,042^^ 7,571 6,371 1,16,718 1,08,002 ii. As percentage of Loans Outstanding 5.4 9.6 23.3 36.5 40.4 15.2 12.4 E. Recovery-to-Demand Ratio* (Per cent) 91.7 76.5 78.9 42.8 39.1 - - Notes: 1. P: Data are provisional. 2. *: This ratio captures the share of outstanding demand amount (amount due) that has been recovered at end-June 2022. 3. Data for financial year 2022-23 are available in respect of 603 of 608 reported PCARDBs. 4. ^: Working capital. 5. ^^: Total overdues. Source: NABARD and NAFSCOB. 4.1. Short-term Rural Credit Co-operatives Chart V.17: Profit-Making Co-operatives (At end-March) V.33 Short-term RCCs - StCBs at state level, DCCBs at district level and PACS at the village level - primarily meet crop loan and working capital requirements of dairy farmers and fishery units. Over time, their scope has widened to cover non-farm sector activity, and term lending to allied sectors and microfinance. Short-term RCCs operate in a two-, three- or mixed-tier structure10. In the two-tier structure, StCBs lend through their own branches as well as through PACS. In the three-tier structure, StCBs work as the apex bank for all DCCBs, which constitute the intermediate tier and provide loans to Source: NABARD and NAFSCOB. affiliated societies. In states with the mixed-tier 10 20 states/union territories (UTs) have one or more DCCBs and in 15 states/UTs there are no DCCBs and only a two-tier structure exists. 105Report on Trend and Progress of Banking in India 2023-24 structure, StCBs operate through their own SCBs) at end-March 2023. The share of current branches in some districts and through DCCBs account and savings account (CASA) deposits in the remaining districts. Deposits are the major declined to 18.6 per cent at end-March 2024 source of funds for StCBs and DCCBs. On the from 19.5 per cent at end-March 2023, resulting other hand, PACS rely heavily on borrowings; in an increase in interest expenditure. Deposit the share of deposits has declined over the years growth improved but trailed that in borrowings (Table V.13). (Chart V.18). V.36 Credit growth of scheduled StCBs 4.1.1. State Co-operative Banks decelerated in 2023-24, while deposits recovered V.34 StCBs, the apex institutions in the rural from the contraction in the previous year co-operative structure, provide credit for a range (Table V.14). of agricultural and non-agricultural purposes. Profitability They also provide liquidity and technical assistance to the other two tiers. Agricultural V.37 During 2023-24, growth of interest loans constituted more than 45 per cent of their expenditure of StCBs accelerated to 24.9 per total loan portfolio. cent, outpacing that of interest income; their net interest income (NII) declined by 5.7 per cent. Net Balance Sheet Operations Table V.13: Liabilities and Assets of State V.35 In 2023-24, StCBs’ balance sheet grew by Co-operative Banks over 8 per cent for the fourth consecutive year, (Amount in ₹ crore) At end-March Variation (%) driven by credit on the assets side and borrowings 2023 2024 P 2022-23 2023-24 and deposits on the liabilities side. At end-March 1 2 3 4 5 Liabilities 2024, the C-D ratio increased to 114.7 per cent 1. Capital 9,774 10,531 5.5 7.7 (compared to 76.8 per cent in the case of SCBs) (2.2) (2.2) 2. Reserves 20,544 22,861 14.3 11.3 from 109.6 per cent (75.1 per cent in the case of (4.5) (4.7) 3. Deposits 2,42,327 2,56,819 0.6 6.0 (53.6) (52.6) Chart V.18: Resource Composition: Short-term Co-operatives 4. Borrowings 1,54,970 1,73,116 25.2 11.7 (At end-March) (34.3) (35.5) 5. Other Liabilities 24,226 24,940 -4.1 2.9 (5.4) (5.1) Assets 1. Cash and Bank Balances 21,237 22,661 12.6 6.7 (4.7) (4.6) 2. Investments 1,48,666 1,55,826 5.5 4.8 (32.9) (31.9) 3. Loans and Advances 2,65,580 2,94,577 11.2 10.9 (58.8) (60.3) 4. Accumulated Losses 1,348 1,146 -0.4 -15.0 (0.3) (0.2) 5. Other Assets 15,009 14,057 -12.4 -6.3 (3.3) (2.9) Total Liabilities/Assets 4,51,840 4,88,266 8.3 8.1 (100.00) (100.00) Notes: 1. Figures in parentheses are proportion to total liabilities/ assets (in per cent). 2. Y-o-y variations could be slightly different because absolute numbers have been rounded off to ₹1 crore. 3. Components may not add up to the total due to rounding off. 4. P: Provisional. Source: NABARD and NAFSCOB. Source: NABARD. 106DEVELOPMENTS IN CO-OPERATIVE BANKING Table V.14: Select Balance Sheet Indicators of Scheduled State Co-operative Banks (At end-March) (Amount in ₹ crore) 2020 2021 2022 2023 2024 1 2 3 4 5 6 Deposits 1,87,456 1,97,751 2,11,784 2,04,432 2,15,540 (69.6) (5.5) (7.1) (-3.5) (5.4) Credit 1,94,310 2,06,322 2,28,194 2,55,750 2,78,147 (47.9) (6.2) (10.6) (12.1) (8.8) SLR Investments 54,181 67,788 77,677 74,721 77,525 (63.5) (25.1) (14.6) (-3.8) (3.8) Credit plus SLR Investments 2,48,492 2,74,110 3,05,871 3,30,471 3,55,671 (51.0) (10.3) (11.6) (8.0) (7.6) Notes: 1. Data pertain to last reporting Friday of March of the corresponding year. 2. Figures in brackets are growth rates in per cent over previous year. Source: Form B under Section 42 of RBI Act. profit, however, increased by 9.5 per cent due to V.38 94 per cent of StCBs (i.e. 32 StCBs out growth in non-interest income and contraction in of 34) reported profits during 2023-24, as operating expenses (Table V.15). against 91 per cent in 2021-2211. Profits were dominated by western and southern region Table V.15: Financial Performance of State Co-operative Banks StCBs (Chart V.19 and Appendix Table V.3). (Amount in ₹ crore) Asset Quality Percentage 2022-23 2023-24 P Variation V.39 The asset quality of StCBs improved 2022-23 2023-24 1 2 3 4 5 for the third consecutive year, with the GNPA A. Income (i+ii) 27,648 32,401 10.8 17.2 ratio declining from 6.7 per cent at end- (100.00) (100.00) i. Interest Income 26,654 30,974 10.3 16.2 March 2021 to 4.9 per cent at end-March (96.4) (95.6) ii. Other Income 994 1,427 26.9 43.6 (3.6) (4.4) Chart V.19: StCBs’ Profits B. Expenditure (i+ii+iii) 25,191 29,710 11.1 17.9 (100.00) (100.00) i. Interest Expended 19,043 23,793 15.1 24.9 (75.6) (80.1) ii. Provisions and 1,920 1,979 -19.2 3.0 Contingencies (7.6) (6.7) iii. Operating 4,227 3,938 12.7 -6.8 Expenses (16.8) (13.3) Of which, Wage Bill 2,060 2,077 -0.2 0.8 (8.2) (7) C. Profits i. Net Interest Income 7,611 7,181 -0.3 -5.7 ii. Operating Profits 3,990 4,205 35.4 5.4 iii. Net Profits 2,458 2,691 7.4 9.5 Notes 1. Figures in parentheses are proportion to total income/ expenditure (in per cent). 2. Y-o-y variations could be slightly different because absolute numbers have been rounded off to ₹1 crore in the table. 3. Components may not add up to the total due to rounding off. 4. P: Provisional. Source: NABARD. Source: NABARD. 11 StCB in Arunachal Pradesh and Jammu and Kashmir reported losses for the sixth and fourth consecutive year, respectively, and the cumulative losses of these two StCBs were close to ₹35 crore at end-March 2024. 107Report on Trend and Progress of Banking in India 2023-24 2024. Although the slippages were higher, Chart V.20: Capital Adequacy of State Co-operative Banks the GNPA ratio declined due to robust credit (At end-March) growth. The NPAs under the doubtful category shrank after growing for six consecutive years. The PCR increased on account of greater provisions made against NPAs and hence net NPA ratio also improved (Table V.16). V.40 During 2023-24, the GNPA ratio of 70 per cent of StCBs declined, led by the western and northern region. The GNPA ratio reduced for all regions, except for the marginal increase in the eastern region (Appendix Table V.3). Capital Adequacy Note: 13 of the 14 DCCBs in Kerala (except Malappuram DCCB) amalgamated with Kerala StCB during 2019-20. Source: NABARD. V.41 The consolidated CRAR of StCBs declined at end-March 2024, as growth in capital funds 4.1.2. District Central Co-operative Banks trailed the increase in risk weighted assets V.42 DCCBs mobilise funds through public (Chart V.20). Two StCBs had CRAR less than deposits, borrowings from StCBs and refinance the regulatory minimum requirement of 9 from the NABARD. Due to their extensive per cent. branch network, they have better access to Table V.16: Soundness Indicators of State CASA deposits, which accounted for 41.7 per Co-operative Banks cent of their total deposits at end-March 2024 (Amount in ₹ crore) (compared to 18.6 per cent for StCBs). More At end-March Percentage than 75 per cent of the total advances and 96 Variation 2023 2024 P 2022-23 2023-24 per cent of the agricultural advances of DCCBs 1 2 3 4 5 are towards PACS/ societies. A. Total NPAs (i+ii+iii) 14,296 14,537 -0.3 1.7 i. Sub-standard 4,609 4,974 -14.4 7.9 Balance Sheet Operations (32.2) (34.2) ii. Doubtful 8,292 8,237 10.0 -0.7 V.43 Deposit growth of DCCBs accelerated (58) (56.7) iii. Loss 1,395 1,326 -0.7 -4.9 to 10.0 per cent in 2023-24, exceeding that of (9.8) (9.1) StCBs’ (6.0 per cent). The C-D ratio of DCCBs B. Gross NPA Ratio (%) 5.4 4.9 - - C. Net NPA Ratio (%) 2.1 2.0 - - increased from 85.6 per cent at end-March D. Provision Coverage 67.2 68.5 - - Ratio (%) 2023 to 86.7 per cent at end-March 2024 due to E. Recovery to Demand 91.7 92.4 - - higher growth in advances (Table V.17). Ratio (%) Notes: 1. Figures in parentheses are shares in total NPAs (in per cent). Profitability 2. P: Provisional. 3. Recovery-to-demand ratio captures the share of outstanding V.44 Growth in NII of DCCBs decelerated demand amount (amount due) that has been recovered at end-June 2022 and 2023 for 2022-23 and 2023-24, from 14.5 per cent during 2022-23 to 5.4 per respectively. Source: NABARD. cent during 2023-24, as interest expenditure 108DEVELOPMENTS IN CO-OPERATIVE BANKING Table V.17: Liabilities and Assets of District Table V.18: Financial Performance of District Central Co-operative Banks Central Co-operative Banks (Amount in ₹ crore) (Amount in ₹ crore) At end-March Percentage Variation 2022-23 2023-24P Percentage Variation 2023 2024P 2022-23 2023-24 2022-23 2023-24 1 2 3 4 5 1 2 3 4 5 Liabilities A. Income (i+ii) 46,309 52,408 11.1 13.2 1. Capital 26,486 28,661 8.2 8.2 (100.00) (100.00) (3.8) (3.7) i. Interest Income 43,967 49,989 10.8 13.7 2. Reserves 28,729 31,701 8.5 10.3 (94.9) (95.4) (4.1) (4.1) ii. Other Income 2,342 2,420 17.9 3.3 3. Deposits 4,33,358 4,76,610 5.0 10.0 (5.1) (4.6) (62.1) (62.3) B. Expenditure (i+ii+iii) 44,428 50,515 10.2 13.7 4. Borrowings 1,47,207 1,61,728 14.5 9.9 (100.00) (100.00) (21.1) (21.1) i. Interest Expended 27,600 32,731 8.6 18.6 5. Other Liabilities 61,524 66,876 7.0 8.7 (62.1) (64.8) (8.8) (8.7) ii. Provisions and 5,639 5,733 15.3 1.7 Assets Contingencies (12.7) (11.3) 1. Cash and Bank iii. Operating Expenses 11,189 12,051 11.6 7.7 Balances 33,767 38,705 5.2 14.6 (25.2) (23.9) (4.8) (5.1) Of which, Wage Bill 6,942 7,430 9.7 7.0 2. Investments 2,47,942 2,65,692 5.1 7.2 (15.6) (14.7) (35.6) (34.7) C. Profits 3. Loans and Advances 3,70,851 4,13,161 10.2 11.4 i. Net Interest Income 16,367 17,257 14.5 5.4 (53.2) (54) ii. Operating Profits 6,933 7,107 17.6 2.5 4. Accumulated Losses 8,357 9,405 7.8 12.5 iii. Net Profits 1,881 1,894 38.5 0.7 (1.2) (1.2) 5. Other Assets 36,388 38,615 -2.3 6.1 Notes: 1. Figures in parentheses are proportion of total liabilities/ (5.2) (5) assets (in per cent). Total Liabilities/Assets 6,97,304 7,65,577 7.4 9.8 2. P: Provisional. (100.00) (100.00) Source: NABARD. Notes: 1. Figures in parentheses are proportion to total liabilities/ assets (in per cent). Asset Quality 2. P: Provisional. Source: NABARD. V.46 Asset quality of DCCBs improved for the rose faster than interest income (Table V.18). fourth consecutive year, with the GNPA ratio Consequently, net profit growth moderated declining from 12.6 per cent at end-March 2020 sharply to 0.7 per cent in 2023-24 from 38.5 per to 8.9 per cent at end-March 2024. The GNPA cent in the previous year, which had benefited ratio of DCCBs, however, remained higher than from a low base (contraction in 2021-22). that of StCBs (Chart V.21 and Table V.19). The GNPA ratio declined in 15 of the 20 states/UTs V.45 During 2023-24, there were 312 profit-making DCCBs and 39 loss-making with DCCBs. The central and western regions – entities. While the number of loss-making particularly Madhya Pradesh and Maharashtra DCCBs declined in 2023-24, cumulative - have the highest GNPA ratio, and the southern losses of DCCBs increased by 40.6 per cent. region has the highest recovery-to-demand ratio Madhya Pradesh, Uttar Pradesh, Punjab (Appendix Table V.4). and Bihar accounted for 64.1 per cent of the Capital Adequacy loss-making DCCBs. On the other hand, the western and southern regions added the V.47 The consolidated CRAR and Tier I capital maximum to the total profits of DCCBs (Appendix ratio of DCCBs declined at end-March 2024 to a Table V.4). four-year low (Chart V.22). However, the number 109Report on Trend and Progress of Banking in India 2023-24 Chart V.21: NPA Ratio: StCBs versus DCCBs Chart V.22: Capital Adequacy of District Central Co-operative Banks (At end-March) Source: NABARD. Source: NABARD. of DCCBs with CRAR less than the minimum Punjab, Jammu and Kashmir, Maharashtra and regulatory requirement of 9 per cent declined West Bengal. from 41 at end-March 2023 to 39 at end-March 4.1.3. Primary Agricultural Credit Societies 2024. 90 per cent of the DCCBs with CRAR less V.48 PACS form the lowest tier in the rural than 9 per cent were concentrated in six states co-operative ladder with individuals as member /UTs, viz., Madhya Pradesh, Uttar Pradesh, shareholders. At end-March 2023, PACS served 16.03 crore members and 4.9 crore borrowers; Table V.19: Soundness Indicators of District Central Co-operative Banks with 45.6 per cent members and 57.3 per cent (Amount in ₹ crore) of the borrowers being small farmers. The At end-March Percentage Variation borrower-to-member ratio – a metric to gauge 2023 2024 P 2022-23 2023-24 1 2 3 4 5 credit penetration of PACS – increased to 30.7 A. Total NPAs (i+ii+iii) 35,722 36,958 -1.7 3.5 per cent at end-March 2023 after declining i) Sub- standard 12,541 13,433 -6.5 7.1 (35.1) (36.3) sharply to 28.6 per cent at end-March 2022. ii) Doubtful 20,739 20,912 2.2 0.8 (58.1) (56.6) The improvement in the ratio reflected both iii) Loss 2,442 2,612 -6.8 7.0 a decrease in the number of members and an (6.8) (7.1) B. Gross NPA Ratio (%) 9.6 8.9 - - increase in the number of borrowers (Appendix C. Net NPA Ratio (%) 3.9 3.4 Table V.5). More than 80 per cent of PACS’ loans D. Provision Coverage 78.4 83.9 Ratio (%) were for short duration and were extended E. Recovery-to-Demand 76.5 76.8 - - towards agriculture. The western region - with Ratio (%) Notes: 1. Figures in parentheses are proportion to total NPAs (in per 29.1 per cent share in total number of PACS cent). - dominates the sector. However, the southern 2. Recovery-to-demand ratio captures the share of outstanding demand amount (amount due) that has been recovered region’s deposits and loans and advances at end-June 2022 and 2023 for 2022-23 and 2023-24, respectively. dominated with a share of 79.0 per cent and 3. P: Provisional. Source: NABARD. 46.2 per cent, respectively. 110DEVELOPMENTS IN CO-OPERATIVE BANKING V.49 The NABARD is implementing the SCARDBs at the state level and PCARDBs at the centrally sponsored scheme for computerisation district/taluka level. Currently, they operate in of about 67,930 functional PACS across the a unitary structure in five states/UTs (Gujarat, country over a period of 5 years to enable Jammu and Kashmir, Puducherry, Tripura them to capture records of all credit and non- and Uttar Pradesh) where SCARDBs operate credit operations digitally. The total budget of through their branches located in different the scheme at ₹2,516 crore is shared between parts of the state and customers are linked to Government of India, State governments and the bank by virtue of their direct membership of NABARD. The project comprises development the bank. Six states, viz., Haryana, Karnataka, of cloud-based common software with cyber Kerala, Punjab, Rajasthan and Tamil Nadu security, uploading and building a National Level have a federal structure, i.e., SCARDBs work Data Repository (NLDR), training and other as an apex entity of all the affiliated PCARDBs support services. This initiative will pave the way operating at the district/taluka level, which, in for seamless integration of PACS with the core turn, enrol members and offer loans to them. banking solutions of DCCBs and StCBs, resulting Two states (Himachal Pradesh and West Bengal) in improved efficiency and transparency. have a mixed structure where SCARDBs operate V.50 The asset quality and recovery-to-demand through PCARDBs as well as through their ratio of PACS improved significantly in 2022-23; branches. the high GNPA ratio, however, remains a cause of concern (Table V.12). The total resources of V.53 At end-March 2023, there were 13 PACS increased during 2022-23 due to higher SCARDBs and 608 PCARDBs with a total borrowings and increase in total reserves. On the membership of 1.08 crore members, of which 36 assets side, the outstanding loans and advances per cent were borrowing members. The business expanded sharply due to nearly 20 per cent model of SCARDBs and PCARDBs depends on growth in short-term loans (Appendix Table V.6). borrowings, where SCARDBs borrow primarily V.51 In 2022-23, 44.7 per cent of the total from the NABARD, while PCARDBs get financial number of PACS were profit making, with their assistance from SCARDBs (Chart V.23a). consolidated profits increasing by 18.3 per cent SCARDBs have lower accumulated losses and to ₹2,142 crore. The consolidated losses of loss- higher share of loans and advances in total assets making PACS decreased by 4.3 per cent to ₹3,585 (Chart V.23b). crore and the sector, as a whole, recorded losses V.54 In January 2024, the Ministry of of ₹1,443 crore in 2022-23. At the regional level, Cooperation launched the project for only the western region posted net profits, while computerisation of 1,851 units of long-term the southern region registered the highest losses RCCs in 11 states and 2 UTs. The project aims (Appendix Table V.7). at providing computer hardware along with 4.2. Long-term Rural Credit Co-operatives Enterprise Resources Planning (ERP) based V.52 Long-term RCCs were set up with the common software to enhance the operational primary objective of offering long-term finance efficiency, accountability and transparency in for agricultural development and comprise RCCs’ functioning. 111Report on Trend and Progress of Banking in India 2023-24 Chart V.23: Liabilities and Assets of Long-Term Rural Co-operatives: A Comparison (At end-March 2023) Source: NABARD. 4.2.1. State Co-operative Agriculture and the lowest GNPA ratio and the highest recovery Rural Development Banks ratio (Appendix Table V.11). V.55 At end-March 2023, SCARDBs operated 4.2.2. Primary Co-operative Agriculture and in 13 states/UTs, with 46.7 per cent of branches Rural Development Banks in Uttar Pradesh. Borrowings constituted 45.2 V.58 At end-March 2023, there were 608 per cent of the total liabilities of SCARDBs; more PCARDBs in 8 states/UTs. The consolidated than 80 per cent of these borrowings were from balance sheet of PCARDBs contracted during the NABARD, given their limited deposit base. the year on account of decrease in loans and After expanding for two years, the consolidated advances on the assets side and borrowings on balance sheet of SCARDBs contracted in 2022- the liabilities side (Appendix Table V.12). 23 due to decline in loans and advances. On the V.59 During 2022-23, the income of PCARDBs liabilities side, SCARDBs’ borrowings decreased expanded by 18.8 per cent, while their along with deceleration in deposit growth expenditure contracted, leading to net profits. (Appendix Table V.8). The increase in income was contributed by both V.56 Notwithstanding the reduction in their interest and non-interest income, while the fall balance sheet, NII of SCARDBs increased by 25.3 in operating expenses, particularly the wage bill, per cent in 2022-23, as interest income expanded led to decline in total expenses (Appendix Table more than interest expenditure. The increase in V.13). Of the eight states/UTs having PCARDBs, NII as well as non-interest income contributed to five posted consolidated net losses. a sharp increase in net profit, albeit on a low V.60 The GNPA ratio of PCARDBs declined base (Appendix Table V.9). marginally during 2022-23 on account of V.57 The GNPA ratio increased during reduction in sub-standard and doubtful 2022-23, even as the recovery ratio improved categories. However, the GNPA ratio remained (Appendix Table V.10). The southern region had elevated at over 40 per cent, as the loss category 112DEVELOPMENTS IN CO-OPERATIVE BANKING loans expanded further (Appendix Table V.14). Bank has undertaken several initiatives to In contrast to the trend in other regions, the promote sound governance practices in UCBs, GNPA ratio of the northern region increased. including, inter alia, the introduction of four- tiered regulatory framework, engaging directly This region continued to have the highest GNPA with the Directors on Boards of UCBs and ratio and the lowest recovery-to-demand ratio heads of Assurance functions of UCBs through during 2022-23. On the other hand, the southern conferences for conveying the supervisory region had the lowest GNPA ratio and the highest expectations. Significant efforts are also being recovery-to-demand ratio (Appendix Table V.15). undertaken to address the IT and cyber security 5. Overall Assessment risks in UCBs. V.61 During 2023-24, UCBs exhibited an V.62 Among rural credit co-operatives, StCBs improvement in capital buffers, profitability have consistently outperformed others and and asset quality. Their credit and deposit improved their asset quality along with higher growth, however, remained subdued relative to profits in 2023-24. Going forward, the co- commercial banks. Assurance functions, viz., operative sector must stay vigilant about cyber risk management, internal audit and compliance threats and economic uncertainties and adapt to functions are effective gatekeepers for efficient technological advancements to remain relevant risk management. To this end, the Reserve in the fast-changing world. 113NON-BANKING FINANCIAL VI INSTITUTIONS Non-banking financial companies (NBFCs) expanded credit strongly in 2023-24. Credit quality improved and balance sheets were strengthened with improved profitability and strong capital buffers. Housing finance companies’ (HFCs) credit also grew in double digits amidst structural changes in the aftermath of the merger of a dominant HFC with a bank. Disbursements by all India financial institutions (AIFIs) rose steadily along with higher profitability. 1. Introduction (NABARD), the Export-Import Bank of India (EXIM Bank), the Small Industries Development VI.1 Non-banking financial institutions Bank of India (SIDBI), the National Housing (NBFIs) are an important constituent of India’s Bank (NHB) and the National Bank for Financing financial system. Entities regulated by the Infrastructure and Development (NaBFID)3 Reserve Bank1 include non-banking financial are apex financial institutions providing companies (NBFCs), housing finance companies long-term funding to important sectors like (HFCs)2, all India financial institutions (AIFIs), agriculture, foreign trade, small businesses and and standalone primary dealers (SPDs) [Chart infrastructure. Primary dealers (PDs) underwrite VI.1]. issuances of government securities (G-secs) and VI.2 NBFCs are registered companies, both act as market makers in the G-sec market. government and non-government, which engage in credit intermediation and facilitate last-mile VI.3 This chapter covers the performance of credit delivery to unbanked and underbanked NBFIs in 2023-24 and the first half of 2024-25. sectors. They are also at the forefront of the Section 2 provides an assessment of the NBFC digital transformation of the lending space, sector, with a focus on the NBFCs in the upper leveraging technology to offer tailor-made credit layer (NBFC-UL) and the middle layer (NBFC- offerings to customers. HFCs provide housing ML). Section 3 discusses the performance of the credit to individuals, co-operative societies and HFCs. Sections 4 and 5 evaluate the performance corporates. The five AIFIs, namely, the National of AIFIs and PDs, respectively. Section 6 contains Bank for Agriculture and Rural Development concluding observations. 1 Although merchant banking companies, stock exchanges, companies engaged in the business of stock-broking/sub-broking, nidhi companies, alternative investment fund companies, insurance companies and chit fund companies are NBFCs, they have been exempted from the requirement of registration with the Reserve Bank under Section 45-IA of the RBI Act, 1934. 2 The Finance (No.2) Act, 2019 (23 of 2019) amended the National Housing Bank Act, 1987, conferring certain powers for regulation of housing finance companies (HFCs) with the Reserve Bank of India. HFCs are now treated as a category of NBFCs for regulatory purposes. 3 NaBFID has been set up as a Development Financial Institution (DFI) and shall be regulated and supervised as an AIFI by the Reserve Bank under Sections 45L and 45N of the RBI Act, 1934. 114NON-BANKING FINANCIAL INSTITUTIONS Chart VI.1: Structure of NBFIs under the Reserve Bank’s Regulation (As on March 31, 2024) Notes: 1. Figures in parentheses indicate the number of institutions (provisional). 2. NBFCs, viz., NBFC-ICC, NBFC-MFI, NBFC Factors, and NBFC-MGC could lie in any of the layers depending on the parameters of SBR. NBFC-CICs, HFCs, and IFCs could lie either in the upper or middle layer. 3. Government-owned NBFCs are placed in the base or middle layer. Sources: RBI and NHB. 2. Non-Banking Financial Companies (NBFCs) principles for self-regulation, which complement the extant regulatory/statutory VI.4 NBFCs regulated by the Reserve Bank framework and incentivise enhanced are a group of heterogenous financial entities professionalism, compliance, innovation and operating with diverse business strategies. ethical conduct. The Reserve Bank’s scale-based regulation (SBR) framework categorises NBFCs into top, VI.6 NBFC-UL and ML dominate the NBFC upper, middle and base layers, based on their sector in terms of assets. In terms of number, size, activity, and perceived riskiness. The NBFCs in the base layer (NBFC-BL) constituted SBR framework is progressive in that it is 96.2 per cent of the total, while accounting for built on the principle of proportionality, with only six per cent of total assets (Table VI.2). regulations commensurate with the size and VI.7 Credit extended by NBFCs5 was 13.6 per interconnectedness of the NBFCs (Chart VI.1 cent of gross domestic product (GDP) during and Table VI.1). Smaller and/or less complex 2023-24. At end-March 2024, it accounted for NBFCs are relatively lightly regulated, while 24.5 per cent of the outstanding credit of SCBs larger and more systemically important NBFCs (Chart VI.2). are subjected to enhanced regulatory scrutiny. VI.8 The number of registrations and VI.5 Given the inherently diverse and dynamic cancellations of certificates of registration nature of these entities, applications were (CoRs) of NBFCs declined in 2023-24 (Chart invited by the Reserve Bank for recognising VI.3). The surrender of CoRs by NBFCs and their self-regulatory organisations4 (SROs) for the subsequent cancellations were on account of NBFC sector in June 2024. This establishes factors such as the entities exiting NBFI business 4 An omnibus framework for recognising SROs for regulated entities of the Reserve Bank was issued in March 2024. 5 Subsequent analysis in this section focuses on NBFCs in the upper and middle layers excluding CICs, HFCs and SPDs (the latter two are covered in separate sections). 115Report on Trend and Progress of Banking in India 2023-24 Table VI.1: Classification of NBFCs by Activity under the Scale Based Regulatory Framework Classification Activity Layer 1 2 3 1. Investment and Credit Company Lending which supports productive/economic Any layer, depending on the parameters of the SBR. (NBFC-ICC) activities, offer consumption/personal finance and acquisition of securities for investment. 2. NBFC-Infrastructure Finance Infrastructure loans. Middle or upper layer, as the case may be. Company (NBFC-IFC) 3. Core Investment Company (CIC) Investment in equity shares, preference shares, debt, Middle or upper layer, as the case may be. or loans to group companies. 4. NBFC-Infrastructure Debt Fund Refinance post commencement operations date (COD) Middle layer (NBFC-IDF) infrastructure projects which have completed at least one year of commercial operations and finance toll operate transfer (TOT) projects as the direct lender. 5. NBFC-Micro Finance Institution Providing collateral free small ticket loans to Any layer, depending on the parameters of SBR. (NBFC-MFI) economically disadvantaged groups. 6. NBFC-Factors Acquisition of receivables of an assignor or extending Any layer, depending on the parameters of SBR. loans against the security interest of the receivables at a discount. 7. NBFC-Non-Operative Financial Facilitation of promoters/ promoter groups in setting Base layer Holding Company (NBFC-NOFHC) up new banks. 8. Mortgage Guarantee Company Undertaking of mortgage guarantee business. Any layer, depending on the parameters of SBR. (MGC) 9. NBFC-Account Aggregator Collecting and providing information about a Base layer (NBFC-AA) customer’s financial assets in a consolidated, organised, and retrievable manner to the customer or others as specified by the customer. 10. NBFC–Peer to Peer Lending Providing an online platform to bring lenders and Base layer Platform (NBFC-P2P) borrowers together to help mobilise funds. 11. Housing Finance Company (HFC) Financing for purchase/ construction/ reconstruction/ Middle or upper layer, as the case may be. renovation/ repairs of residential dwelling units. 12. Standalone Primary Dealer (SPD) Underwrites issuances of government-dated securities Middle layer and participate in primary auctions. Source: RBI. or ceasing to be a legal entity after amalgamation, including those related to data confidentiality merger, dissolution or voluntary strike-off. In and security of customer information, code of exercise of powers conferred under Section 45- conduct in outsourcing of financial services and IA (6) of the Reserve Bank of India Act, 1934, the the fair practices code (FPC). Reserve Bank cancelled CoRs of 143 NBFCs due 2.1. Ownership Pattern to the surrender of CoRs, violation of guidelines, VI.9 The NBFC sector is dominated by non- Table VI.2: Composition of NBFCs (At end-March 2024) government companies, with a share of 93.1 (Share in per cent) per cent by numbers at end-March 2024. Layer Number Assets Government companies, albeit much less in 1 2 3 NBFC-UL 0.1 25.2 number, had a substantial share in total assets NBFC-ML 3.7 68.8 of the NBFC sector (Table VI.3). Owing to their NBFC-BL 96.2 6.0 Total 100.0 100.0 large size and concentration of funding towards Note: Data excludes HFCs, CICs and SPDs. the infrastructure sector, the prompt corrective Source: RBI. action (PCA) framework was extended to the 116NON-BANKING FINANCIAL INSTITUTIONS Chart VI.2: NBFCs’ Credit vis-à-vis SCBs’ Credit and GDP (At end- March) Sources: Report on Trend and Progress of Banking in India, various issues; Handbook of Statistics on the Indian Economy, various issues. government companies (except those in the base are private limited companies in contrast to layer) from October 1, 2024. NBFCs-UL (Table VI.3). VI.10 Out of nine NBFC-UL, three are deposit- 2.2. Balance Sheet taking while the rest are non-deposit taking. VI.12 During 2023-24, the balance sheet of the Post identification as NBFC-UL, NBFCs must get NBFC sector expanded in double digits (16.3 listed within three years. per cent as compared with 17.2 per cent in the VI.11 In terms of assets, NBFCs-ML dominate preceding year). On the liability side, NBFCs’ the NBFC sector, with a share of 73.2 per cent borrowings from banks decelerated, while funds in the total assets. Most of these companies raised through debentures picked up, reflecting Chart VI.3: Registrations and Cancellations of Certificates of Registration of NBFCs Note: Data are provisional. Source: Supervisory Returns, RBI. 117Report on Trend and Progress of Banking in India 2023-24 Table VI.3: Ownership Pattern of NBFCs (At end-March 2024) (Amount in ₹ crore) Type NBFC Sector NBFC-UL NBFC-ML Number Asset Asset Number Asset Asset Number Asset Asset Size share in Size share in Size share in per cent per cent per cent 1 2 3 4 5 6 7 8 9 10 A. Government Companies 23 19,01,090 37.5 - - - 23 19,01,090 51.3 B. Non-government Companies (1+2) 308 31,67,517 62.5 9 13,59,521 100.0 299 18,07,995 48.7 1. Public Limited Companies 45 14,76,379 29.1 6 10,23,139 75.3 39 4,53,240 12.2 2. Private Limited Companies 263 16,91,138 33.4 3 3,36,382 24.7 260 13,54,755 36.5 C. Total (A+B) 331 50,68,607 100.0 9 13,59,521 100.0 322 37,09,086 100.0 Note: Data are provisional. Source: Supervisory Returns, RBI. inter alia the impact of the increase in risk by upper layer NBFCs (Table VI.4). NBFC-MLs’ weights on banks’ lending to NBFCs, effective credit growth was relatively muted on account November 2023. On the asset side, growth in of contraction in unsecured loans (Chart VI.4). loans and advances accelerated to 18.5 per cent Aggregate credit continued to expand in double in 2023-24 from 17.4 per cent in 2022-23, driven digits even though unsecured lending contracted Table VI.4: Abridged Balance Sheet of NBFCs (Amount in ₹ crore) Items As at end-March 2023 As at end-March 2024 As at end- September-2024 NBFCs NBFC-UL NBFC-ML NBFCs NBFC-UL NBFC-ML NBFCs NBFC-UL NBFC-ML 1 2 (3+4) 3 4 5 (6+7) 6 7 8 (9+10) 9 10 1. Share Capital and Reserves 9,62,763 1,99,283 7,63,480 11,54,950 2,54,221 9,00,729 12,41,007 2,52,505 9,88,502 (21.3) (26.3) (20.1) (20.0) (27.6) (18.0) (22.0) (17.9) (23.2) 2. Public Deposits 85,254 64,797 20,457 1,02,994 83,102 19,893 1,12,512 92,707 19,805 (20.8) (36.1) (-10.9) (20.8) (28.2) (-2.8) (16.9) (22.6) (-3.9) 3. Debentures 11,05,943 2,25,415 8,80,528 12,28,997 2,71,444 9,57,553 13,28,203 2,76,674 10,51,529 (9.8) (14.1) (8.8) (11.1) (20.4) (8.7) (16.2) (15.0) (16.5) 4. Bank Borrowings 11,23,748 3,25,197 7,98,551 13,31,619 4,13,073 9,18,545 13,94,324 4,12,473 9,81,851 (23.6) (27.6) (22.0) (18.5) (27.0) (15.0) (16.3) (14.6) (17.0) 5. Commercial Papers 83,529 39,550 43,979 1,05,374 54,146 51,228 1,16,143 48,326 67,816 (21.8) (61.4) (-0.2) (26.2) (36.9) (16.5) (2.3) (-15.6) (20.6) 6. Others 9,95,882 2,16,808 7,79,074 11,44,673 2,83,535 8,61,139 12,61,403 2,91,100 9,70,303 (14.5) (32.5) (10.4) (14.9) (30.8) (10.5) (17.2) (22.9) (15.6) Total Liabilities/Assets 43,57,119 10,71,050 32,86,069 50,68,607 13,59,521 37,09,086 54,53,592 13,73,785 40,79,806 (17.2) (26.6) (14.4) (16.3) (26.9) (12.9) (17.4) (16.0) (17.9) 1. Loans and Advances 33,99,655 9,18,302 24,81,353 40,27,478 11,85,621 28,41,857 42,92,708 11,94,234 30,98,474 (17.4) (26.3) (14.4) (18.5) (29.1) (14.5) (16.0) (15.4) (16.2) 2. Investments 5,16,141 75,479 4,40,663 6,24,260 95,189 5,29,071 6,93,397 89,520 6,03,877 (18.6) (48.9) (14.7) (20.9) (26.1) (20.1) (33.7) (24.8) (35.1) 3. Cash and Bank Balances 1,73,802 46,946 1,26,856 1,72,422 43,228 1,29,194 2,01,157 56,110 1,45,047 (3.4) (3.2) (3.5) (-0.8) (-7.9) (1.8) (11.6) (25.9) (6.9) 4. Other Assets 2,67,520 30,323 2,37,197 2,44,446 35,483 2,08,963 2,66,330 33,921 2,32,409 (21.5) (34.1) (20.1) (-8.6) (17.0) (-11.9) (9.1) (2.1) (10.2) Notes: 1. Data are provisional. 2. Figures in parentheses indicate y-o-y growth in per cent. 3. Layer-wise identification of NBFCs is based on their position at end-March 2024. Source: Supervisory Returns, RBI. 118NON-BANKING FINANCIAL INSTITUTIONS Chart VI.4: Nature of NBFCs’ Loans and Advances (At end-March) Note: Data are provisional. Source: Supervisory Returns, RBI. at end-September 2024 (Appendix Tables VI.1, crucial for last mile credit delivery, have been VI.2 and VI.3). growing their share in aggregate assets of the sector. Growth in the assets of the NBFC-Factors VI.13 At end-March 2024, NBFC-ICCs and IFCs outperformed the sectoral average (Chart VI.5b). together accounted for 95.6 per cent of the assets of the sector (Chart VI.5a). Upper layer NBFCs VI.14 High growth in loans and advances of are primarily NBFC-ICCs, which mainly cater to NBFC-ICCs, the largest category, was sustained the retail segment. Most of the NBFC-IFCs are in 2023-24 (Table VI.5). The pace of expansion government-owned, mainly providing credit to of NBFC-IFCs, the second largest category, the infrastructure sector. NBFC-MFIs, which are decelerated as lending by a major entity in the Chart VI.5: Total Assets of NBFCs, by Classification (At end-March) Note: Data are provisional. Source: Supervisory Returns, RBI. 119Report on Trend and Progress of Banking in India 2023-24 Table VI.5: Major Components of Liabilities and Assets of NBFCs by Classification (Amount in ₹ crore) As at end-March As at end-September Percentage Variation 2023 2024 2024 (March over March) Liabilities Borrowings Total Borrowings Total Borrowings Total 2023 2024 Liabilities Liabilities Liabilities Borrowings 1 2 3 4 5 6 7 8 9 NBFC-ICC 16,11,815 26,67,598 19,37,105 31,84,714 21,40,886 34,89,254 20.1 20.2 NBFC-Factors 1,308 2,664 2,560 3,880 2,847 4,255 12.8 95.8 NBFC-IDF 31,985 39,023 40,122 48,310 44,385 53,083 18.0 25.4 NBFC-IFC 12,29,875 15,15,824 13,40,429 16,60,542 13,86,069 17,39,872 11.4 9.0 NBFC-MFI 99,050 1,32,010 1,25,807 1,71,161 1,18,485 1,67,127 37.8 27.0 Total 29,74,034 43,57,119 34,46,024 50,68,607 36,92,670 54,53,592 16.8 15.9 Assets Loans and Total Loans and Total Loans and Total Loans and Advances Advances Assets Advances Assets Advances Assets NBFC-ICC 18,83,195 26,67,598 23,38,506 31,84,714 25,52,461 34,89,254 21.3 24.2 NBFC-Factors 2,047 2,664 3,425 3,880 3,839 4,255 4.7 67.3 NBFC-IDF 36,506 39,023 44,612 48,310 48,383 53,083 23.9 22.2 NBFC-IFC 13,68,506 15,15,824 14,99,348 16,60,542 15,51,439 17,39,872 10.9 9.6 NBFC-MFI 1,09,402 1,32,010 1,41,587 1,71,161 1,36,586 1,67,127 40.3 29.4 Total 33,99,655 43,57,119 40,27,478 50,68,607 42,92,708 54,53,592 17.4 18.5 Note: Data are provisional Source: Supervisory Returns, RBI. category, which lends to railway infrastructure VI.15 NBFCs maintained comparable maturity profiles on both sides of their balance sheets projects, recorded a marginal contraction. Two during 2023-24. At end-March 2024, more than NBFC-IFCs engaged in lending to the power two-thirds of the aggregate credit exposures and sector, on the other hand, recorded higher total borrowings were long-term i.e., more than disbursements in 2023-24 than a year ago. 12 months (Chart VI.6). Chart VI.6: Maturity Profiles of Receivables and Payables Note: Data are provisional. Source: Supervisory Returns, RBI. 120NON-BANKING FINANCIAL INSTITUTIONS 2.3. Sectoral Credit of NBFCs Chart VI.7: Sectoral Distribution of Credit, by Classification VI.16 NBFC-ICCs have a relatively diversified (At end-March) lending portfolio, dominated by retail loans. IFCs lend mainly to industries (mostly power and railways). MFIs primarily cater to the credit needs of retail customers through collateral-free small ticket loans (Chart VI.7). At end-March 2024, NBFC-ICCs, IFCs and MFIs together provided 99 per cent of the total credit disbursed by the sector. VI.17 Industry and retail sectors receive a dominant share of NBFCs’ credit (71.2 per cent of the total loan portfolio at end-March 2024). Note: Data are provisional. During 2023-24, NBFCs recorded higher growth Source: Supervisory Returns, RBI. of credit to all sectors (except services) relative to banks. NBFCs’ credit to agriculture and allied climate-related financial risks were taken into activities has also grown at a robust pace in the consideration by the Reserve Bank while issuing past two years, resulting in a rise in its share in draft guidelines on the ‘disclosure framework total lending (Chart VI.8). on climate-related financial risks’ for regulated VI.18 At end-March 2024, credit to the power entities (REs) [including all top and upper layer sector accounted for 75.2 per cent of total credit NBFCs] in February 2024. Credit growth to to industries, driven by large government-owned major sectors remained robust on a year-on- NBFCs (Table VI.6). Concentration risk and year basis at end-September 2024. Chart VI.8: Distribution of NBFCs’ Credit (At end-March) Note: Data are provisional. Source: Supervisory Returns, RBI. 121Report on Trend and Progress of Banking in India 2023-24 Table VI.6: Sectoral Credit Deployment by NBFCs (Amount in ₹ crore) Items End- End- End- Percentage Variation March 2023 March 2024 September 2024 2022-23 2023-24 1 2 3 4 5 6 1. Agriculture and Allied Activities 60,674 84,175 89,800 16.5 38.7 2. Industry, of which 12,69,175 14,96,425 15,90,339 13.7 17.9 2.1 Power 9,40,408 11,25,725 11,89,784 14.5 19.7 2.2 Others 3,28,767 3,70,700 4,00,555 11.5 12.8 3. Services, of which 4,68,009 5,66,932 6,08,246 19.4 21.1 3.1 Transport Operators 1,20,245 1,32,810 1,41,289 16.4 10.4 3.2 Trade 69,520 92,324 1,05,415 39.5 32.8 4. Retail Loans, of which 10,45,168 13,69,820 15,02,697 27.5 31.1 4.1 Vehicle/Auto Loans 3,82,825 4,74,839 5,17,092 17.3 24.0 4.2 Advances to Individuals against Gold 1,28,774 1,53,481 1,74,325 8.7 19.2 4.3 Micro Finance Loan/SHG Loan 1,15,187 1,48,503 1,44,162 51.1 28.9 5. Others 5,56,630 5,10,176 5,01,626 8.2 -8.3 Gross Advances (1 to 5) 33,99,655 40,27,528 42,92,708 17.4 18.5 Note: Data are provisional. Source: Supervisory Returns, RBI. VI.19 NBFCs have steadily expanded their framework, is helping in flow of credit to share in total credit extended by banks and MSMEs. This is expected to get a boost from the NBFCs to MSMEs (11.7 per cent of total credit at proposed unified lending interface6 (ULI). end-March 2024), with those engaged in services VI.20 Vehicle loans, loans against gold and cornering a larger share than their industry microfinance loans have been the stronghold counterparts (Chart VI.9). NBFCs’ ‘digital first’ of NBFCs, together accounting for 56.7 per approach, e.g., utilisation of account aggregator cent of their retail portfolio at end-March 2024 Chart VI.9: NBFCs’ Credit to MSME Sector Note: Data are provisional. Source: Supervisory Returns, RBI. 6 FinTech Innovations for India @100: Shaping the Future of India’s Financial Landscape - address by Governor, RBI on August 28, 2024. 122NON-BANKING FINANCIAL INSTITUTIONS (Appendix Table VI.5). The growth of unsecured tightening of macroprudential measures in retail credit by NBFCs moderated after the November 2023 (Box VI.1). Box VI.1: Impact of Recent Regulatory Changes on NBFCs’ Unsecured Retail Lending The Reserve Bank increased risk weights on consumer where the dependent variable is defined as the four- credit exposures of NBFCs [excluding loans to categories quarter log difference growth of unsecured retail credit9. like housing, vehicles, education, gold and microfinance/ is a dummy variable that takes the value 1 in the self-help group (SHG) loans] in November 2023 to 125 per period after the Reserve Bank increased the risk weights, cent from 100 per cent (Chart VI.1.1). In order to curtail i.e., the quarter ending December 2023 onwards and 0 in NBFCs’ excessive reliance on bank borrowings, risk the period before that. weights on exposures of SCBs to NBFCs were increased is a categorical variable which takes the value 0 if the share by 25 percentage points in those cases where the extant of bank borrowings in total borrowings by the NBFC in the risk weight as per external rating of NBFCs was below 100 period before the implementation of the policy is below per cent. the 25th percentile value (1 otherwise). is the vector The impact of the changes in the risk weights on credit of controls, which includes NBFC-specific variables like of NBFCs is formally explored in a panel regression return on assets (RoA) (defined as a ratio of net profits framework using quarterly supervisory data for 95 NBFCs to total assets), CRAR (defined as the ratio of total capital for the period December 2022 to March 20247. These funds to risk-weighted assets) and gross non-performing NBFCs operate in the retail space and represent 74 per assets (GNPA) ratio of the unsecured retail portfolio cent of the NBFC sector’s retail credit8. The following (defined as the ratio of non-performing assets of this regression is estimated by using the system generalised segment to total unsecured retail credit). Nominal gross method of moments (GMM) approach: domestic product (GDP) growth is also included to control for the macroeconomic environment. , , The negative coefficient of the policy dummy indicates that the growth rate of unsecured retail loans fell in the , , Chart VI.1.1: Retail Credit by NBFCs Source: Supervisory Returns (Contd.) 7 95 NBFCs were used based on the availability of continuous data. 8 At end- March 2023. 9 All those categories of retail loans by NBFCs for which risk-weights were increased are considered unsecured retail loans. 123Report on Trend and Progress of Banking in India 2023-24 aftermath of the increase in the risk weights (Model 1). The Table VI.1.1: Regression Results negative coefficient of the term representing the interaction VARIABLES Model 1 Model 2 Model 3 between the ex-ante share of bank borrowings with the Unsecured Unsecured Other Retail Retail Credit Retail Credit Credit policy dummy suggests that the fall in growth of unsecured Growth Growth Growth retail credit was driven by NBFCs with higher ex-ante Lag (Unsecured Retail 0.671*** 0.587*** Credit Growth) (0.0866) (0.120) dependence on bank borrowings (Model 2). NBFCs with Policy (Post=Dec 2023 onwards) -0.159*** 0.108 0.00761 lower ex-ante dependence on bank borrowings did not (0.0568) (0.119) (0.0218) experience any statistically significant change. Among Ex-Ante Share of Bank Borrowings 0.434 (Base= Low share) (0.559) NBFC-specific controls, unsecured retail credit growth Policy * Ex-Ante Share of Bank -0.359** is positively related to NBFC size and negatively related Borrowings (0.163) Lag (Size) 0.330* 0.407* -0.0141 to the GNPA ratio of the segment. For robustness, Model (0.176) (0.227) (0.0962) 3 focuses on retail credit not subject to increase in risk Lag (CRAR) 0.00666 0.0117 -0.00491* (0.00803) (0.0121) (0.00266) weights, i.e., ‘other retail credit growth’ defined as total Lag (RoA) -0.00521 -0.00270 0.00646 (0.0498) (0.0568) (0.0141) retail credit excluding the unsecured component. The Lag (Unsecured Retail Credit -0.0438*** -0.0375*** estimates indicate that such loans were not impacted by GNPA Ratio) (0.0115) (0.0127) these measures. Overall, the empirical analysis suggests Lag (Nominal GDP Growth) -0.00101 -0.00136 0.00377* (0.00361) (0.00434) (0.00218) that the countercyclical prudential measures undertaken Lag (Other Retail Credit Growth) 0.474*** by the Reserve Bank dampened the growth of unsecured (0.0841) Lag (Other Retail Credit -0.0303* retail lending, consistent with the policy objective. GNPA Ratio) (0.0155) Constant -2.744* -3.850* 0.385 Reference (1.596) (2.211) (0.903) Observations 542 530 542 RBI. (2023, November 16). Regulatory measures towards Number of NBFCs 95 93 95 consumer credit and bank credit to NBFCs. Retrieved AR (1) 0.00 0.00 0.00 AR (2) 0.55 0.42 0.58 from https://rbidocs.rbi.org.in/rdocs/notification/PDFs/ Hansen Statistic 0.47 0.53 0.49 REGULATORYMEASURES8785E7886A044B678FB8AF- Robust standard errors in parentheses 2C6C051807.PDF *** p<0.01, ** p<0.05, * p<0.1 Note: Data are provisional. Source: Supervisory Returns, RBI; RBI staff estimates. VI.21 Vehicle loans remain the largest NBFCs’ vehicle loans grew at a higher rate than component of NBFCs’ retail loan portfolio, with SCBs in 2023-24 (Chart VI.10). a share of 34.7 per cent at end-March 2024. Chart VI.10: Vehicle Loans- NBFCs vis-à-vis SCBs Note: Data are provisional. Sources: Supervisory Returns, RBI; and Society of Indian Automobile Manufacturers (SIAM). 124NON-BANKING FINANCIAL INSTITUTIONS VI.22 NBFCs maintained their dominance in Chart VI.11: Advances against Gold by NBFCs and SCBs loans against pledge of gold ornaments and jewellery, with a share of 59.9 per cent of total gold loans (banks and NBFCs together) at end- March 2024 (Chart VI.11). Considering irregular practices of certain supervised entities (SEs), the Reserve Bank advised SEs on September 30, 2024 to comprehensively review their policies, processes and practices on gold loans to identify gaps and take remedial measures. VI.23 NBFC-MFIs– dominant players in the Indian microfinance space– ease credit constraints on traditionally underserved communities by giving them access to a host Note: Data are provisional. Source: Supervisory Returns, RBI. of financial services. The share of micro-credit in the total retail lending portfolios of NBFCs 2.4. Resource Mobilisation stood at 10.8 per cent at end-March 2024. VI.24 NBFCs mobilise funds from a wide range NBFCs (including MFIs) have maintained their of sources led by borrowing from banks and share in total micro-credit loans (Chart VI.12). issuance of debentures. For NBFCs-D, public SROs for MFIs have put in place safeguards like deposits remain an important source of funds. limiting the number of microfinance lenders to a More recently, asset sales and securitisation borrower to four and capping total indebtedness have emerged as important funding sources, to ensure market discipline and borrowers’ particularly because of their role in facilitating welfare. liquidity management. Chart VI.12: Micro-credit Outstanding across Regulated Entities (At end-March) Sources: Microfinance Institutions Network (MFIN). 125Report on Trend and Progress of Banking in India 2023-24 Table VI.7: Sources of Borrowings of NBFCs (Amount in ₹ crore) Items End-March End-March End-September Percentage Variation 2023 2024 2024 2022-23 2023-24 1 2 3 4 5 6 1. Debentures 11,05,943 12,28,997 13,28,203 9.8 11.1 (37.2) (35.7) (36.0) 2. Bank borrowings 11,23,748 13,31,619 13,94,324 23.6 18.5 (37.8) (38.6) (37.8) 3. Borrowings from FIs 86,289 1,11,753 1,09,005 30.5 29.5 (2.9) (3.2) (3.0) 4. Inter-corporate borrowings 1,01,924 1,04,788 1,17,369 21.0 2.8 (3.4) (3.0) (3.2) 5. Commercial papers 83,529 1,05,374 1,16,143 21.8 26.2 (2.8) (3.1) (3.1) 6. Borrowings from government 18,781 18,282 18,352 1.2 -2.7 (0.6) (0.5) (0.5) 7. Subordinated debts 71,457 75,313 78,237 0.4 5.4 (2.4) (2.2) (2.1) 8. Other borrowings 3,82,363 4,69,898 5,31,037 19.3 22.9 (12.9) (13.6) (14.4) Total borrowings 29,74,034 34,46,024 36,92,670 16.8 15.9 Notes: 1. Data are provisional. 2. Figures in parentheses indicate share in total borrowings. Source: Supervisory Returns, RBI. 2.4.1 Borrowings growth of borrowings from banks moderated due, inter alia, to higher risk weights on bank VI.25 In the immediate aftermath of the credit to NBFCs. The moderation in borrowings IL&FS episode in 2018, NBFCs encountered from banks continued at end-September 2024 significant challenges, including an erosion of (Table VI.7). confidence, rating downgrades, and liquidity constraints that limited their ability to borrow VI.26 Bank borrowings remain the primary from the market. Exacerbated by the COVID-19 source of funds for NBFCs. In fact, the reliance pandemic, this led to increased dependence of of NBFCs on market borrowings has declined in NBFCs on banks for funding. In 2023-24, the recent years (Chart VI.13). Chart VI.13: Major Sources of Borrowings Note: Data are provisional. Source: Supervisory Returns, RBI. 126NON-BANKING FINANCIAL INSTITUTIONS Chart VI.14: Banks’ Exposure to NBFCs Note: Data are provisional. Source: Supervisory Returns, RBI. VI.27 Apart from lending directly to NBFCs, The reduction in NBFCs’ reliance on banks for banks also subscribe to debentures and CPs funds bodes well for overall financial stability. issued by NBFCs. With decline in subscription to VI.28 Growth in secured borrowings of NBFCs decelerated during 2023-24, while unsecured debentures by banks, overall banks’ exposure as borrowings picked up on the back of market a share of NBFCs’ borrowings moderated from borrowings (through the issuance of debt 43.1 per cent at end-March 2023 to 42.7 per instruments, viz., debentures and commercial cent at end-March 2024 (Chart VI.14a). Overall papers) [Chart VI.15]. Across layers, NBFC-ML bank exposure to NBFCs as share of total bank mobilise more unsecured funds mainly because credit also declined in 2023-24 (Chart VI.14b). of the presence of government NBFCs. Chart VI.15: Nature of NBFCs’ Borrowings (At end-March) Note: Data are provisional. Source: Supervisory Returns, RBI. 127Report on Trend and Progress of Banking in India 2023-24 Chart VI.16: NCD Private Placements of Private NBFCs Sources: 1. Staff calculations. 2. PRIME database. VI.29 Funds mobilised by NBFCs through 2.4.2 Public Deposits issuance of non-convertible debentures (NCDs) VI.30 The balance sheet of NBFCs-D expanded increased in 2023-24, with more than 80 per by 21.6 per cent in 2023-24, with robust growth cent of issuances being highly rated (AAA or AA) in both deposits and credit (Appendix Table (Chart VI.16). Borrowing by NBFCs via CPs also VI.4). Notwithstanding a reduction in the number increased in 2023-24 (Chart VI.17). of NBFCs-D to 25 at end-March 2024 from 36 a year ago, their deposits recorded double digit growth (20.8 per cent) in 2023-24 (Chart VI.18a). Chart VI.17: Issuance of CPs by Private NBFCs Five NBFCs accounted for 96.4 per cent of total deposits (Chart VI.18b). The Reserve Bank has undertaken a cautious approach towards deposits mobilised by NBFCs-D, as they are not insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC). As per the extant regulatory requirements for acceptance of deposits, these NBFCs should have at least an investment-grade rating of ‘BBB–’ on their fixed deposits from any SEBI-registered credit rating agency. Furthermore, the quantum of deposits should not exceed 1.5 times their net owned funds (NOF) for terms ranging from 12 Sources: 1. Staff calculations. 2. PRIME database. to 60 months and interest rates capped at 12.5 per cent. 128NON-BANKING FINANCIAL INSTITUTIONS Chart VI.18: Public Deposits with NBFCs-D Notes: 1. NBFCs-D have been grouped into different buckets based on the size of their aggregate public deposits. No NBFCs-D had deposits in the bucket of ₹ 250-500 crore and ₹ 500-1,000 crore. 2. Data are provisional. Source: Supervisory Returns, RBI. 2.4.3 Loan Sales and Securitisation 2.4.4 Foreign Liabilities VI.31 NBFCs raised a higher volume of funds VI.32 Apart from the domestic market, NBFCs through loan sales than securitisation during also secure funds from foreign sources, mainly 2023-2410. Banks are a major participant in through external commercial borrowings (ECBs) both segments. The cumulative funds mobilised and issuance of debentures at competitive rates. through these methods witnessed growth during At end-March 2024, foreign liabilities stood at this period (Chart VI.19). 8.8 per cent of the aggregate liabilities of the Chart VI.19: Loan Sales and Securitisation by NBFCs (During the quarter) Note: Data are provisional. Source: Supervisory Returns, RBI. 10 Loan sales and securitisation are resorted to by lending institutions for reasons like liquidity generation, rebalancing of exposures or strategic sales and regulatory compliance. 129Report on Trend and Progress of Banking in India 2023-24 Table VI.8: Foreign Liabilities of NBFCs (Amount in ₹ crore) Items End- End- End- Percentage Variation March 2023 March 2024 September 2024 2022-23 2023-24 1 2 3 4 5 6 1. Equity shares 39,331 46,931 54,637 -25.0 19.3 i) Foreign Institutional Investors 1,351 1,861 2,193 2.6 37.7 ii) Foreign Direct Investment 37,980 45,070 52,444 -25.7 18.7 2. Borrowings (ECBs) 2,02,724 2,56,772 3,24,830 19.1 26.7 3. Bonds/Debentures 1,26,349 1,24,130 1,20,221 -3.8 -1.8 4. Others 14,080 19,045 17,384 -16.1 35.3 Total Foreign Liabilities 3,82,484 4,46,877 5,17,071 3.1 16.8 Notes: 1. Data are provisional. 2. Foreign liabilities of NBFCs are part of total liabilities mentioned under balance sheet. Source: Supervisory Returns, RBI. sector, led by ECBs (57.5 per cent of total foreign 2.6. Financial Performance liabilities) [Table VI.8]. VI.35 About 90 per cent of NBFCs’ income accrues from fund-based sources, mainly via 2.5. Asset Liability Profile of NBFCs interest and investment earnings, while fee- VI.33 The structural liquidity position of based income contributes the rest. During NBFCs is arrived at by deducting cash outflows 2023-24, the aggregate income growth of NBFCs from cash inflows across various time buckets11. accelerated to 25.8 per cent from 23.2 per cent Within the critical 1-30/31 days bucket, NBFCs in 2022-23, with both fee and fund-based income had more than 100 per cent positive mismatch as a share of total outflows at end-March 2024. Chart VI.20: Structural Liquidity Statement of NBFCs (At end- March) All buckets, except over five years maturity, maintained a positive mismatch at end-March 2024 (Chart VI.20). VI.34 The liquidity coverage ratio (LCR)12 was extended to NBFCs13 to promote short-term resilience to potential liquidity disruptions by ensuring that they have sufficient high quality liquid assets (HQLAs) to survive an acute stress scenario lasting for 30 days. With effect from December 1, 2020, NBFCs are required to maintain a minimum stipulated LCR and progressively attain the required level of 100 per Notes: 1. Data are provisional. 2. Mismatch is defined as inflows minus outflows. cent by December 1, 2024. Source: Supervisory Returns, RBI. 11 A positive mismatch highlights a comfortable structural liquidity position which can be attributed to either an increase in cash inflows or a decrease in cash outflows in the corresponding time bucket, whereas a negative mismatch points towards shortage of cash inflows vis-a-vis cash outflows in the corresponding time bucket. 12 LCR is represented as the ratio of the stock of HQLAs to total net cash outflows over the next 30 calendar days. 13 All non-deposit taking NBFCs with asset size of ₹5,000 crore and above and all deposit taking NBFCs irrespective of the asset size, excluding CICs, Type 1 NBFC-NDs, NOFHCs and SPDs. 130NON-BANKING FINANCIAL INSTITUTIONS Table VI.9: Financial Parameters of the NBFC Sector (Amount in ₹ crore) Items 2022-23 2023-24 H1:2024-25 NBFCs NBFC-UL NBFC-ML NBFCs NBFC-UL NBFC-ML NBFCs NBFC-UL NBFC-ML 1 2 3 4 5 6 7 8 9 10 A. Income 4,64,021 1,41,310 3,22,712 5,83,957 1,82,115 4,01,842 3,29,583 1,01,219 2,28,365 (23.2) (25.1) (22.4) (25.8) (28.9) (24.5) (29.1) (19.6) (33.7) B. Expenditure 3,32,638 1,02,181 2,30,457 4,09,765 1,30,395 2,79,370 2,35,161 71,939 1,63,223 (12.8) (18.5) (10.4) (23.2) (27.6) (21.2) (31.6) (18.3) (38.5) C. Net Profit 1,06,107 28,756 77,351 1,37,133 38,618 98,515 76,189 22,017 54,171 (72.5) (44.3) (86.0) (29.2) (34.3) (27.4) (27.0) (24.4) (28.1) D. Total Assets 43,57,119 10,71,050 32,86,069 50,68,607 13,59,521 37,09,086 54,53,592 13,73,785 40,79,806 (17.2) (26.6) (14.4) (16.3) (26.9) (12.9) (17.4) (16) (17.9) E. Financial Ratios (as per cent of Total Assets) (i) Income 10.6 13.2 9.8 11.5 13.4 10.8 12.1 14.7 11.2 (ii) Expenditure 7.6 9.5 7.0 8.1 9.6 7.5 8.6 10.5 8.0 (iii) Net Profit 2.4 2.7 2.4 2.7 2.8 2.7 2.8 3.2 2.7 F. Cost to Income Ratio 71.7 72.3 71.4 70.2 71.6 69.5 71.4 71.1 71.5 (Per cent)* *: Cost to Income Ratio = Total Expenditure / Total Income. Notes: 1. Data are provisional and financial ratios for H1: 2024-25 have been annualised. 2. Figures in parentheses indicate y-o-y growth in per cent. Source: Supervisory Returns, RBI. growing in double digits. Aggregate expenditure VI.36 Key indicators of financial performance, grew in 2023-24, albeit at a slower rate than viz., return on assets (RoA) and return on equity total earnings. Interest expense was the largest (RoE), improved during 2023-24 across all expenditure component (59.0 per cent of the total layers and classifications of NBFCs, benefitting from operational efficiency gains and effective at end-March 2024). Other financing costs along risk management (Chart VI.21). with operating expenditure constituted the rest of gross expenditure. Cost-to-income ratios fell 2.7. Soundness Indicators across both layers, boosting profitability. Growth VI.37 The Reserve Bank’s prompt corrective of net profit remained robust in H1:2024-25 action (PCA) framework assesses the health and (Table VI.9 and Appendix Tables VI.6 and VI.7). resilience of an NBFC with focus on asset quality Chart VI.21: Profitability Ratios of NBFCs Return on Assets (RoA) = Net Profit/ Average Total Assets. Return on Equity (RoE) = Net Profit/ Average Total Equity. Net Interest Margin (NIM) = Net Interest Income/Average Total Assets. Note: Data are provisional. Source: Supervisory Returns, RBI. 131Report on Trend and Progress of Banking in India 2023-24 and capital adequacy as the key monitorable non performing assets (NPAs) [Chart VI.24]. metrics. At an aggregate level, the NBFC sector This trend continued in H1: 2024-25, with achieved an improvement in both asset quality gross and net NPA ratios declining to 3.4 per cent and 1.1 per cent, respectively, as at end- and capital adequacy during 2023-24. September 2024. 2.7.1 Asset Quality VI.41 GNPA and NNPA ratios declined across VI.38 The share of standard assets in NBFC-UL and ML in 2023-24. NNPA ratio of aggregate credit increased further in 2023- NBFC-ML was lower than that of NBFC-UL due 24, strengthening the quality of NBFCs’ assets to higher provisions (Chart VI.25). (Chart VI.22). VI.42 Sector-wise, asset quality improved for VI.39 Within standard assets, incipient stress vehicle loans, transport operators and agriculture in loan accounts is identified by classifying loans and allied activities, while it deteriorated as special mention accounts (SMAs). While marginally for credit card receivables and loans against gold (Chart VI.26). the share of SMA-2 accounts has come down, NBFCs need to be vigilant about the rise in the VI.43 Gross advances under larger borrowal shares of SMA-0 and SMA-1 accounts in 2023-24 accounts (exposure of ₹5 crore and above) grew (Chart VI.23). by 14.1 per cent during 2023-24 (13.5 per cent in the previous year). Asset quality of these VI.40 The asset quality of NBFCs across accounts exhibited significant improvement different classifications improved further in during the year, bringing down their share in 2023-24, indicating effective resolution of total NPAs (Chart VI.27). The GNPA ratio of large bad assets. NBFCs have also maintained borrowal accounts, however, stood higher than adequate provisions against outstanding that of the overall NBFC sector. Chart VI.22: Classification of NBFCs’ Loans & Advances Chart VI.23: Portfolio Analysis of Performing Loans & (At end-March) Advances (At end-March) Notes: 1. SMA-0, where principal or interest payment was not overdue for more than 30 days, but the account showed signs of incipient stress. 2. SMA-1, where principal or interest payment was overdue for 31-60 days. 3. SMA-2, where principal or interest payment was overdue for 61-90 days. Note: Data are provisional. 4. Data are provisional. Source: Supervisory Returns, RBI. Source: Supervisory Returns, RBI. 132NON-BANKING FINANCIAL INSTITUTIONS Chart VI.24: Asset Quality of NBFCs, by Classification (At end-March) Note: Data are provisional. Source: Supervisory Returns, RBI. 2.7.2 Capital Adequacy of a minimum of nine per cent of risk-weighted assets, within the overall CRAR of 15 per cent. At VI.44 At end-March 2024, the NBFC sector end-September 2024, CRAR of the sector stood maintained capital to risk-weighted assets ratio at a comfortable level of 26.1 per cent. (CRAR) of 26.9 per cent, well above the regulatory requirement (Chart VI.28). Under the SBR, 2.8. Exposure to Sensitive Sectors NBFCs [except core investment companies14 VI.45 Lending and investments in capital (CICs)] in the upper layer are required to markets and commercial real estate are maintain common equity tier 1 capital (CET 1) susceptible to fluctuations, with implications for Chart VI.25: NPA Ratios, by Layer Chart VI.26: Sectoral GNPA Ratios (At end-March) (At end-March) Note: Data are provisional. Note: Data are provisional Source: Supervisory Returns, RBI. Source: Supervisory Returns, RBI. 14 CICs shall maintain adjusted net worth of minimum 30 per cent of their aggregate risk weighted assets on balance sheet and risk adjusted value of off-balance sheet items. 133Report on Trend and Progress of Banking in India 2023-24 Chart VI.27: Stress in Large Borrowal Accounts Note: Data are provisional. Source: Central Repository of Information on Large Credits (CRILC) database. financial stability and are, therefore, classified as viz., public sector banks and private sector sensitive sectors. NBFCs’ exposure to sensitive banks in providing housing finance. Effective sectors increased to 23.8 per cent of their total August 09, 2019, the Reserve Bank took over the assets at end-March 2024 from 21.2 per cent at regulation of HFCs from the NHB. HFCs are now end-March 2023, driven by lending to the capital treated as a category of NBFCs for regulatory market (Chart VI.29). purposes. Supervisory responsibilities and grievance redressal remain with the NHB. Under 3. Housing Finance Companies (HFCs) the SBR framework, HFCs are placed either in VI.46 HFCs are specialised institutions and the middle or the upper layer. Out of the 93 HFCs complement other primary lending institutions, registered with NHB, five HFCs were placed in Chart VI.28: CRAR of NBFCs (At end-March) Note: Data are provisional. Source: Supervisory Returns, RBI. 134NON-BANKING FINANCIAL INSTITUTIONS Table VI.10: Ownership Pattern of HFCs Chart VI.29: Exposure to Sensitive Sectors (At end- March) (At end-March) (Amount in ₹ crore) Type 2023 2024 Number Asset Size Number Asset Size 1 2 3 4 5 A. Government 1 83,054 1 95,990 Companies B. Non-Government 96 16,04,245 92 9,78,455 Companies (1+2) (95) (8,65,326) 1. Public Ltd. 74 15,95,917 71 9,66,912 Companies (73) (8,56,998) 2. Private Ltd. 22 8,328 21 11,542 Companies Total (A+B) 97 16,87,300 93 10,74,445 (96) (9,48,381) Notes: 1. Data are provisional. 2. Data for 2024 reflect the impact of the merger of an HFC with a bank. Figures in parentheses for 2023 exclude data CME: Capital market exposure; REE: Real estate exposure; IIS: for the merged entity. Investment in securities; AAC: Advances against commodities; SSE: Source: NHB. Sensitive sector exposure. Note: Data are provisional. Source: Supervisory Returns, RBI. HFCs (after adjusting for the merger15) recorded growth of 13.1 per cent. the upper layer by the Reserve Bank. A major VI.49 The share of HFCs in total credit to the development in the sector during 2023-24 was housing sector (banks, HFCs and other NBFCs the merger of a large HFC with a bank on July combined) was 34.1 per cent at end-March 1, 2023, resulting in reduction in the aggregate 2023; post-merger, the share of HFCs was 19.9 assets of the HFCs. per cent at end-March 2024 (Chart VI.30). VI.47 Considering the specialised nature of HFCs, the Reserve Bank has sought to harmonise Chart VI.30: Credit to Housing Sector by HFCs, SCBs and other NBFCs the regulations applicable to HFCs and to align (At end-March) them with those applicable to NBFCs in a phased manner. To this end, the Reserve Bank released revised regulations in August 2024 pertaining to inter alia acceptance of public deposits by eligible HFCs and participation of HFCs in various financial instruments for hedging purposes (Paragraph III.22). VI.48 One HFC is government-owned, with a share of 8.9 per cent in the total asset size of the sector at end-March 2024 (Table VI.10). This government-owned HFC registered growth of Note: Data are provisional. 15.6 per cent in its assets, while the rest of the Source: NHB. 15 For comparison, HFCs’ growth rates for 2023-24 are calculated excluding the merged HFC for the year 2022-23. 135Report on Trend and Progress of Banking in India 2023-24 3.1. Balance Sheet Chart VI.31: Resources Mobilised by HFCs (At end-March) VI.50 During 2023-24, the balance sheet of HFCs increased by 13.3 per cent, driven mainly by loans and advances extended by the middle layer HFCs (Table VI.11). On the liabilities side, borrowings via banks picked up, while those through debentures slackened. Rising income, push for urbanisation and increased demand for home ownership have sustained the demand for credit in the housing market. The objectives of housing for all under Pradhan Mantri Awas Yojana (PMAY) and subsidised credit for affordable housing have also supported housing credit demand. Notes: 1. Data are provisional. 2. Data for 2024 reflect the impact of the merger of an HFC with a bank. 3.2. Resource Profile of HFCs Source: NHB VI.51 Debentures and borrowings from banks VI.52 Public deposits for deposit-taking HFCs are the major sources of funds for HFCs (75.7 rose by 3.3 per cent during 2023-24 (adjusted per cent of total resources mobilised at end- for the effect of the merger) as compared with March 2024) [Chart VI.31]. 7.9 per cent in the previous year. Public deposits Table VI.11: Consolidated Balance Sheet of HFCs (Amount in ₹ crore) At end-March At end-March Percentage Variation 2023 2024 (Sector) Items ML UL Sector ML UL Sector 2022-23 2023-24 1 2 3 4(2+3) 5 6 7(5+6) 8 9 1. Share capital 13,956 28,817 42,773 14,721 30,562 45,283 6.0 6.8 2. Reserves and surplus 59,570 1,95,598 2,55,168 76,540 74,324 1,50,865 13.6 24.1 3. Public deposits 4,903 1,30,280 1,35,183 5,076 19,689 24,764 7.9 3.3 4. Debentures 42,952 4,04,211 4,47,163 59,642 1,96,411 2,56,053 25.5 10.3 5. Bank borrowings 1,44,893 2,73,608 4,18,501 1,86,614 1,76,984 3,63,598 11.7 17.8 6. Borrowings from NHB 37,375 29,892 67,267 47,549 20,792 68,341 13.0 27.2 7. Inter-Corporate Borrowings 26,085 50,430 76,516 2,577 8,833 11,411 -38.8 -67.8 8. Commercial papers 4,203 57,643 61,847 10,241 20,734 30,975 23.2 58.2 9. Borrowings from Government - 431 431 - - - -83.3 0.0 10. Subordinated debts 4,173 10,227 14,401 4,575 6,520 11,095 -6.3 -2.7 11. Other borrowings 29,168 11,397 40,565 45,448 7,231 52,680 -43.2 29.9 12. Current liabilities 9,326 19,113 28,439 10,784 9,304 20,088 -1.7 11.5 13. Provisions 4,652 26,142 30,794 6,526 13,517 20,043 -8.9 12.4 14. Other 6,852 61,401 68,253 4,548 14,703 19,250 264.3 -16.1 Total Liabilities/Assets 3,88,109 12,99,191 16,87,300 4,74,841 5,99,604 10,74,445 10.5 13.3 (5,60,272) (9,48,381) 1. Loans and advances 3,51,770 11,06,072 14,57,842 4,36,062 5,25,390 9,61,452 9.8 14.8 2. Investments 11,713 1,29,377 1,41,089 10,044 32,753 42,797 34.9 -3.7 3. Cash and bank balances 15,098 12,597 27,695 16,480 11,006 27,486 -30.7 3.8 4. Other assets 9,528 51,145 60,673 12,255 30,455 42,710 11.8 6.5 Notes: 1. Data are provisional. 2. Data for 2024 reflect the impact of the merger of an HFC with a bank. Figures in parentheses for 2023 exclude data for the merged entity. 3. Growth rates for 2023-24 are calculated by excluding the merged entity from 2022-23. Source: NHB. 136NON-BANKING FINANCIAL INSTITUTIONS Chart VI.32: Distribution of HFCs’ Public Deposits (At end-March) Notes: 1. Data are provisional. 2. Data for 2024 reflect the impact of the merger of an HFC with a bank. Source: NHB. constituted three per cent of total resources 3.3. Financial Performance mobilised by HFCs at end-March 2024 as VI.54 Income of the HFCs expanded on account compared with 10.7 per cent a year ago, reflecting of both fund and fee income in 2023-24. With the merger’s impact. expenditure increasing marginally more than VI.53 Deposits are concentrated in the 6-9 income, the cost-to-income ratio inched up in percent interest rate bracket (96.8 per cent 2023-24. RoA remained same during the year, deposits at end-March 2024). Maturity wise, adjusted for the effect of the merger (Table the deposits in the 4-5 years segment dominate VI.12). (Chart VI.32). Table VI.12: Financial Parameters of HFCs (Amount in ₹ crore) Particulars 2021-22 2022-23 2023-24 Percentage Variation 2022-23 2023-24 1 2 3 4 5 6 Total Income 1,25,425 1,55,197 1,07,639 23.7 13.3 (94,973) 1. Fund Income 1,22,998 1,45,086 1,02,451 18.0 18.4 2. Fee Income 1,376 1,950 2,366 41.8 48.1 Total Expenditure 1,00,264 1,14,841 85,292 14.5 14.3 (74,632) 1. Financial Expenditure 74,467 87,425 61,796 17.4 19.4 2. Operating Expenditure 10,638 13,963 14,733 31.3 24.7 Tax Provision 4,766 1,798 826 -62.3 -34.2 Net Profit (PAT) 20,395 28,692 18,139 40.7 45.7 (12,453) Cost to Income Ratio 79.9 74.0 79.2 Return on Assets (RoA) 1.3 1.7 1.7 PAT = Total Income - (Total Expenditure + Tax Expenses); Cost to Income Ratio = Total Expenditure/Total Income; Return on Assets (RoA) = PAT/Total Assets Notes: 1. Data are provisional. 2. Data for 2024 reflect the impact of the merger of an HFC with a bank. Figures in parentheses for 2022-23 exclude data for the merged entity. 3. Growth rates for 2023-24 are calculated by excluding the merged entity from 2022-23. Source: NHB. 137Report on Trend and Progress of Banking in India 2023-24 Chart VI.33: Asset Quality of HFCs, by Layer (At end-March) Notes: 1. Data are provisional. 2. Data for 2024 reflect the impact of the merger of an HFC with a bank. Source: NHB. 3.4. Soundness Indicators VI.56 To sum up, post-merger, the asset quality of the HFCs has remained healthy, supporting VI.55 The asset quality of HFCs remained double-digit credit growth. HFCs are expanding broadly stable in 2023-24, with improvement in to Tier II and III cities and rural areas, which the middle layer and some slippage in the upper offer growth opportunities. The recent move layer segment (Chart VI.33). The CRAR for the towards harmonisation of regulations for HFCs sector is well above the mandated requirement will act as a catalyst for sustainable growth of of 15 per cent (Chart VI.34). the sector. Going forward, HFCs need to adjust to the changing landscape to maintain their Chart VI.34: Capital Adequacy relevance in the Indian financial system. (At end-March) 4. All India Financial Institutions VI.57 All India Financial Institutions (AIFIs) play an important role in fulfilling long-term funding requirements of many sectors. At end- March 2024, five AIFIs (NABARD, SIDBI, NHB, EXIM Bank and NaBFID) were registered, regulated and supervised by the Reserve Bank. As an apex development financial institution, the NABARD aims to facilitate agricultural and rural development. The SIDBI is tasked with the promotion, financing and development of the Notes: 1. Data are provisional. 2. Data for 2024 reflect the impact of the merger of an HFC MSME sector. The NHB is the principal agency with a bank. Source: NHB. for promoting housing finance companies and 138NON-BANKING FINANCIAL INSTITUTIONS Table VI.13: Financial Assistance Sanctioned & Chart VI.35: Distribution of AIFIs, by Asset-Size Disbursed by AIFIs (At end-March 2024) (Amount in ₹ crore) Institutions Sanctions Disbursements 2022-23 2023-24 2022-23 2023-24 1 2 3 4 5 EXIM Bank 79,764 1,06,312 68,787 89,073 NABARD 3,84,319 4,42,649 3,64,832 4,36,584 NHB 42,905 35,671 35,701 32,085 SIDBI 2,88,137 3,02,590 2,80,787 2,94,942 NaBFID 18,560 83,280 10,045 26,243 Total 8,13,685 9,70,501 7,60,153 8,78,927 Notes: 1. Data are provisional. 2. NHB data for 2023-24 reflect the impact of the merger of an HFC with a bank. Source: Respective Financial Institutions. and disbursements (Table VI.13 and Appendix Table VI.8). Source: Respective Financial Institutions 4.2. Balance Sheet providing financial support to such institutions. VI.59 The consolidated balance sheet of AIFIs The EXIM Bank aims to promote India’s grew by 20.1 per cent in 2023-24, marginally international trade by providing financial higher than 19.8 per cent in the preceding assistance to exporters and importers. The year. While growth in loans and advances recently established NaBFID is focussed on moderated, primarily due to the deceleration addressing the long-term financing requirements in loans extended by the SIDBI and the NHB, of the infrastructure sector in India. NABARD is investments by AIFIs surged by 31.8 per cent. the largest AIFI, accounting for over half of the On the liabilities side, bonds and debentures assets of all AIFIs (Chart VI.35). rose by 18.9 per cent, driven by NABARD, 4.1. AIFIs’ Operations16 which inter alia issued India’s first AAA-rated rupee-denominated social bond in 2023-2417. VI.58 Financial assistance sanctioned and Borrowings and deposits - the largest sources of disbursed by AIFIs grew by 19.3 per cent and funds for AIFIs (61.9 per cent of all liabilities at 15.6 per cent, respectively, in 2023-24. NHB, end-March 2024) - continued to grow at a robust however, underwent a decrease in sanctioned pace in 2023-24 (Table VI.14). and disbursed amounts during the year, attributable to the earlier noted merger of a VI.60 Resource mobilisation by all AIFIs large HFC with a commercial bank. NaBFID, expanded by 27.9 per cent in 2023-24. The which saw its first full year of operation in 2023- share of long-term resources increased to 45.1 24, registered robust growth in both sanctions per cent in 2023-24 from 37.0 per cent in 16 The financial year for EXIM Bank, SIDBI, NABARD and NaBFID is from April to March, while for NHB, it is from July to June. 17 NABARD mobilised ₹1,040.5 crore through these social bonds in FY2024, championing the cause of environmental, social and governance (ESG) investing in India. The funds raised by this issuance will be utilised to refinance drinking water projects under GoI’s Jal Jeevan Mission. 139Report on Trend and Progress of Banking in India 2023-24 Table VI.14: AIFIs’ Balance Sheet (At end-March) (Amount in ₹ crore) 2022 2023 2024 Percentage Variation 2022-23 2023-24 1 2 3 4 5 6 1. Capital 55,008 55,008 55,008 0.0 0.0 2. Reserves 86,658 99,638 1,15,568 15.0 16.0 3. Bonds & Debentures 3,40,616 3,62,319 4,30,847 6.4 18.9 4. Deposits 4,36,057 4,94,762 5,58,894 13.5 13.0 5. Borrowings 2,59,406 4,11,113 5,50,613 58.5 33.9 6. Other Liabilities 68,614 70,230 81,687 2.4 16.3 Total Liabilities / Assets 12,46,359 14,93,070 17,92,616 19.8 20.1 1. Cash & Bank Balances 43,371 46,041 87,711 6.2 90.5 2. Investments 1,16,334 1,00,427 1,32,375 -13.7 31.8 3. Loans & Advances 10,69,116 13,17,700 15,39,223 23.3 16.8 4. Bills Discounted /Rediscounted 3,058 5,290 6,401 73.0 21.0 5. Fixed Assets 1,268 1,260 1,268 -0.6 0.6 6. Other Assets 13,212 22,352 25,639 69.2 14.7 Note: Data are Provisional. Source: Respective Financial Institutions. the previous year, driven by NABARD. AIFIs’ VI.61 Borrowings through commercial paper reliance on short-term resources fell to 51.6 per (CP) accounted for 56.1 per cent of resources cent in 2023-24 from 58.9 per cent in 2022-23 raised by AIFIs from the money market at-end (Table VI.15). March 2024. While CP issuances of EXIM Bank, NABARD and NHB increased in 2023-24, those Table VI.15: Resources Mobilised by AIFIs in of SIDBI recorded a decline. AIFIs mobilise 2023-24 resources from the money market based on a (Amount in ₹ crore) specified umbrella limit, which is linked to their Institution Total Resources Raised Total Outstand- net owned funds (NOF). The utilisation of this Long- Short- Foreign Total ing Term Term Currency limit rose to 65.3 per cent in 2023-24 from 63.9 1 2 3 4 5 6 per cent a year ago (Table VI.16). EXIM Bank 11,300 37,093 29,042 77,434 1,54,611 NABARD 2,13,832 2,25,343 0 4,39,175 7,60,865 4.3. Sources and Uses of Funds NHB* 25,504 9,200 0 34,704 94,407 SIDBI** 1,23,340 1,85,818 0 3,09,158 4,76,978 VI.62 In 2023-24, funds raised and deployed NaBFID 25,219 0 0 25,219 25,219 Total 3,99,195 4,57,454 29,042 8,85,690 15,12,079 by AIFIs increased by 52.5 per cent. External * Short-term resources figure represents borrowings through sources replaced internal funds as the dominant transactions in the overnight Tri-Party Repo Dealing System (TREPS) on a roll-over basis (gross amount on roll-over basis). source, driven by SIDBI’s borrowings (growth ** Short-term under total resources raised also include short-term loans from banks. of over 100 per cent for the second consecutive Note: Long-term rupee resources comprise borrowings by way of bonds/ debentures; while short-term resources comprise CPs, term deposits, year). In 2023-24, around three-fourths of ICDs, CDs and borrowings from the term money market. Foreign currency resources largely comprise borrowings by issuing bonds in the mobilised funds were used to repay past the international market. Source: Respective Financial Institutions. borrowings (Table VI.17). 140NON-BANKING FINANCIAL INSTITUTIONS Table VI.16: Resources Raised by AIFIs from Table VI.17: AIFIs’ Sources and Deployment the Money Market of Funds (At end-March) # (Amount in ₹ crore) (Amount in ₹ crore) Items 2022-23 2023-24 Percentage Variation 2022-23 2023-24 Percentage Variation 1 2 3 4 1 2 3 4 A. Sources of Funds (i+ii+iii) 57,92,482 88,34,046 52.5 i. Internal 34,74,360 39,25,315 13.0 Instrument ii. External 22,48,393 48,09,252 113.9 A. Total 1,54,707 1,79,181 15.8 iii. Others@ 69,729 99,479 42.7 i) Term Deposits 8,709 12,632 45.0 B. Deployment of Funds (i+ii+iii) 57,92,482 88,34,046 52.5 ii) Term Money 1,942 2,508 29.1 i. Fresh Deployment 15,33,679 15,75,117 2.7 iii) Inter-corporate Deposits - - ii. Repayment of Past Borrowings 35,62,866 63,64,347 78.6 iv) Certificate of Deposits 49,560 63,595 28.3 iii. Other Deployment 6,95,937 8,94,581 28.5 v) Commercial Paper 94,496 1,00,446 6.3 of which: Interest Payments 52,845 72,978 38.1 Memo: B. Umbrella Limit^ 2,42,208 2,74,407 13.3 @: Includes cash and balances with banks and the Reserve Bank of India. C. Utilisation of Umbrella limit 63.9 65.3 - Note: Data are provisional. (A as percentage of B) Source: Respective Financial Institutions. #: End-June for NHB. ^: post adoption of accounts by the Board VI.36b). Long-term prime lending rates (PLRs) Note: The umbrella limit is applicable for five instruments– term increased for EXIM Bank and NHB, while they deposits; term money borrowings; certificates of deposits (CDs); commercial paper (CPs); and inter-corporate deposits. remained constant for SIDBI and NaBFID (Chart Source: Respective Financial Institutions. VI.37). 4.4. Maturity Profile and Cost of Borrowings 4.5. Financial Performance VI.63 The weighted average cost of rupee VI.64 The income of AIFIs increased steadily in resources raised by all AIFIs increased 2023-24, buoyed by interest income, particularly further in 2023-24 (Chart VI.36a). Among of NABARD and SIDBI. On the expenditure all AIFIs, resources raised by NaBFID had side, the growth in interest expenses of AIFIs the highest weighted average maturity, given accelerated, again mainly due to NABARD and its focus on infrastructure financing (Chart SIDBI. AIFIs also recorded a steady growth in Chart VI.36: Weighted Average Cost and Maturity of Rupee Resources Raised by AIFIs Note: Data are provisional. Source: Respective Financial Institutions. 141Report on Trend and Progress of Banking in India 2023-24 Chart VI.37: Long-term PLR Structure of Select AIFIs Note: 1. EXIM Bank is using long-term minimum lending rate based on the base rate. 2. Not applicable for NABARD. 3. Data are provisional. Source: Respective Financial Institutions. operating profit and net profit during the year VI.66 The profitability of EXIM Bank, NABARD (Table VI.18). and NHB, as reflected in their return on assets (RoAs), improved in 2023-24 (Chart VI.38). VI.65 The ratio of interest income to average working funds improved for all AIFIs during 4.6. Soundness Indicators 2023-24. Operating profits as a proportion of VI.67 Considering the important role played by average working funds dipped for EXIM Bank, AIFIs in promoting the flow of credit to various SIDBI and NaBFID (Table VI.19). sectors, the Reserve Bank extended the Basel Table VI.18: Financial Performance of AIFIs III Capital Framework to AIFIs with effect from (Amount in ₹ crore) April 2024. AIFIs are required to maintain a 2021-22 2022-23 2023-24 Percentage Variation minimum CRAR of 9 per cent. At end-March 2022-23 2023-24 2024, the capital position of all AIFIs remained 1 2 3 4 5 6 healthy, with CRARs well above the regulatory A) Income 59,145 75,411 1,05,875 27.5 40.4 a) Interest 57,666 73,982 1,04,276 28.3 40.9 requirement (Chart VI.39a). At end-March 2024, Income b) Non-Interest 1,479 1,429 1,599 -3.4 11.9 Table VI.19: AIFIs’ Select Financial Parameters Income B) Expenditure 43,674 56,679 82,396 29.8 45.4 a) Interest 40,281 53,353 76,395 32.5 43.2 As a per cent of Average Working Funds Net Profit per Expenditure Interest Non-interest Operating Employee b) Operating 3,393 3,326 6,001 -2.0 80.5 Income Income Profit (₹ crore) Expenses 2023 2024 2023 2024 2023 2024 2023 2024 of which 2,269 1,991 3,914 -12.3 96.6 1 2 3 4 5 6 7 8 9 Wage Bill C) Provisions for 4,064 3,230 4,631 -20.5 43.4 EXIM 7.8 9.0 0.4 0.3 2.6 2.3 4.3 7.1 Taxation NABARD 5.4 6.1 0.03 0.01 1.0 1.1 1.7 1.9 D) Profit NHB 5.6 6.2 0.2 0.1 2.0 2.3 6.3 7.8 Operating Profit 14,862 17,347 21,059 16.7 21.4 SIDBI 5.4 6.7 0.2 0.1 1.6 1.5 3.2 3.7 (PBT) NaBFID 5.3 7.9 0.02 0.7 5.2 4.8 23.3 19.8 Net Profit (PAT) 9,817 12,568 15,913 28.0 26.6 Note: Data are provisional. Note: Data are provisional. Source: Respective Financial Institutions. Source: Respective Financial Institutions. 142NON-BANKING FINANCIAL INSTITUTIONS departmentally as bank PDs and seven as Chart VI.38: RoA of AIFIs (At end-March) standalone PDs (SPDs) registered as NBFCs under Section 45-IA of the RBI Act, 1934. 5.1. Operations and Performance of PDs VI.69 PDs are mandated to underwrite issuances of central government dated securities and participate in primary auctions. They are also mandated to achieve a minimum success ratio (bids accepted as a proportion to bidding commitment) of 40 per cent in primary auctions of Treasury Bills (T-bills) and Cash Management Bills (CMBs), assessed on a half-yearly basis. In 2023-24, all PDs achieved more than their Notes: 1. RoA refers to Return on Average Assets. 2. Data are provisional. minimum bidding commitments and subscribed Source: Respective Financial Institutions. to 69.6 percent of the total quantum of T-Bills nearly all assets of AIFIs were standard, except issued during the year, marginally higher than for EXIM Bank, whose doubtful assets edged 68.9 percent achieved in the previous year. In up slightly during 2023-24. Net NPA ratios of 2024-25 (up to September 2024), the share of all AIFIs, except EXIM Bank, were zero (Chart PDs in the total quantum of T-Bills issued stood VI.39b). at 76.4 per cent. PDs’ share in allotment in the primary issuance of dated securities rose from 5. Primary Dealers 56.6 per cent in 2022-23 to 63.5 per cent in VI.68 As at end-March 2024, there were 2023-24. This increased further to 67.0 per cent 21 Primary Dealers (PDs), 14 functioning in H1:2024-25 (Table VI.20). Chart VI.39: Soundness Indicators of AIFIs (At end-March) Note: Data are provisional. Source: Respective Financial Institutions. 143Report on Trend and Progress of Banking in India 2023-24 Table VI.20: Performance of PDs in the Chart VI.40: Average Rate of Underwriting Primary Market Commission of PDs (Amount in ₹ crore) Items 2021-22 2022-23 2023-24 H1:2024-25 1 2 3 4 5 Treasury Bills and CMBs (a) Bidding 15,37,735 16,27,045 16,40,785 5,50,745 commitment (b) Actual bids 37,21,906 36,47,564 35,46,730 13,18,661 submitted (c) Bids accepted 9,59,380 9,74,028 9,96,891 3,67,511 (d) Success ratio 62.4 59.9 60.8 66.7 (c) / (a) (in Per cent) (e) Share of PDs in 76.9 68.9 69.6 76.4 total allotment (in Per cent) Central Government Dated Securities (f) Notified 10,80,000 14,37,000 15,43,000 7,50,000 amount (g) Actual bids 22,22,924 25,55,668 29,79,456 17,23,480 submitted Source: Returns filed by PDs. (h) Bids of PDs 5,33,201 8,03,600 9,79,036 4,95,320 accepted 5.2. Performance of Standalone PDs (i) Share of PDs 47.3 56.6 63.5 67.0 (in per cent)* VI.72 SPDs’ turnover increased in both outright Notes: 1. Data are provisional. and repo segments, resulting in an increase 2. *Calculated with respect to the total issued amount Source: Returns filed by PDs in their overall share in the secondary market turnover (Table VI.21). VI.70 The underwriting commission paid to Table VI.21: Performance of SPDs in the G-secs PDs (exclusive of GST) during 2023-24 was Secondary Market ₹41.1 crore as compared with ₹91.1 crore in the (Amount in ₹ crore) Items 2021-22 2022-23 2023-24 H1:2024-25 previous year; it was ₹8.34 crore in H1:2024-25. 1 2 3 4 5 The average rate of underwriting commission Outright decreased from ₹0.76 paise/₹100 in 2022-23 Turnover of 25,91,788 36,02,796 51,02,936 29,60,959 SPDs to ₹0.27 paise/₹100 in 2023-24 and further to Market 87,98,428 1,01,21,207 1,34,32,806 82,45,716 turnover ₹0.11 paise in 2024-25 (up to September 2024) Share of SPDs 29.5 35.6 38.0 35.9 (Per cent) [Chart VI.40]. Repo Turnover of 95,60,700 1,32,57,623 1,87,85,160 99,25,332 VI.71 The turnover target to be achieved by SPDs Market 2,55,25,641 3,40,48,195 3,83,50,154 1,95,81,992 PDs in the secondary market has been fixed turnover Share of SPDs 37.5 38.9 49.0 50.7 as a specific percentage of the average of the (Per cent) Total (Outright previous three years’ outright market turnover in + Repo) G-secs and T-bills, taken on an aggregate basis. Turnover of 1,21,52,488 1,68,60,419 2,38,88,096 1,28,86,291 SPDs Accordingly, the target was fixed at 1.5 per cent Market 3,43,24,069 4,41,69,402 5,17,82,961 2,78,27,709 turnover for 2023-24 as compared to one percent for Share of SPDs 35.4 38.2 46.1 46.3 (Per cent) 2022-23. All the PDs individually achieved the Notes: 1. Data are provisional. minimum stipulated annual turnover ratio. The 2. Total Turnover for Market Participants / Standalone PDs includes Outright and Repo 1st Leg settlement volumes. target for 2024-25 has been fixed at two per cent. Source: CCIL. 144NON-BANKING FINANCIAL INSTITUTIONS Table VI.22: Sources and Application of SPDs’ Funds (Amount in ₹ crore) 2021-22 2022-23 2023-24 H1:2024-25 Percentage variation 2023-24 over 2022-23 1 2 3 4 5 6 Sources of Funds 86,670 1,25,165 1,58,667 1,59,108 26.8 1. Capital 1,849 2,368 2,368 2,512 0.0 2. Reserves and surplus 7,426 9,724 11,243 12,738 15.6 3. Loans (a+b)* 77,394 1,13,074 1,45,057 1,43,857 28.3 (a) Secured 61,188 96,432 1,25,026 1,23,944 29.7 (b) Unsecured 16,207 16,643 20,031 19,913 20.4 Application of Funds 86,670 1,25,165 1,58,667 1,59,108 26.8 1. Fixed assets 70 91 104 100 14.3 2. HTM investments (a+b) 3,937 6,273 5,151 7,035 -17.9 (a) Government securities 3,755 6,082 4,904 6,781 -19.4 (b) Others 182 191 248 254 29.8 3. Current assets 79,861 1,18,397 1,54,122 1,51,329 30.2 4. Loans and advances 6,753 4,839 4,526 9,135 -6.5 5. Current liabilities 3,900 4,377 5,077 8,341 16.0 6. Deferred tax -44 -48 -141 -133 193.8 Notes: 1. Data are provisional. 2. * Outstanding borrowing of SPDs. Source: Returns submitted by SPDs. 5.3. Sources and Application of SPDs’ Funds 5.4. Financial Performance of SPDs VI.73 Funds mobilised by SPDs increased by VI.74 SPDs’ profitability registered a significant 26.8 per cent in 2023-24, dominated by secured improvement in 2023-24 on the back of higher borrowings (78.8 per cent of total). Current interest and discount incomes. SPDs made trading profits in 2023-24 after registering assets (97.1 per cent of SPDs’ assets) grew by losses in the previous two consecutive years 30.2 per cent during the year (Table VI.22). (Table VI.23). Consequently, their return on Table VI.23: Financial Performance of SPDs (Amount in ₹ crore) Items 2021-22 2022-23 2023-24 H1:2024-25 Variation 2023-24 over 2022-23 Amount Per cent 1 2 3 4 5 6 7 A. Income (i to iii) 4,030 5,382 10,270 6,221 4,888 90.8 (i) Interest and discount 4,143 5,816 9,158 5,468 3,342 57.5 (ii) Trading profits -224 -495 1,060 701 1,555 -314.1 (iii) Other income 112 61 52 51 -9 -14.8 B. Expenses (i to ii) 2,625 5,074 8,422 4,949 3,348 66.0 (i) Interest 2,238 4,664 7,897 4,666 3,233 69.3 (ii) Other expenses including 386 410 524 282 115 28.0 establishment and administrative costs C. Profit before tax 1,254 485 2,237 1,751 1,752 361.6 D. Profit after tax 942 342 1,663 1,308 1,321 385.9 Notes: 1. Data are provisional. 2. Figures may not add up due to rounding-off. Source: Returns submitted by SPDs. 145Report on Trend and Progress of Banking in India 2023-24 Table VI.24: SPDs’ Financial Indicators SPDs remained above the stipulated norm of 15 (Amount in ₹ crore) per cent (Chart VI.41 and Appendix Table VI.10). Indicators 2021-22 2022-23 2023-24 H1:2024-25 6. Overall Assessment 1 2 3 4 5 (i) Net profit 942 342 1,663 1,308 VI.76 During 2023-24, the NBFC sector (ii) Average assets 79,068 1,01,642 1,40,388 1,58,257 (iii) Return on average 1.2 0.3 1.2 0.8 remained healthy, with sustained double digit assets (Per cent) balance sheet growth. The importance of NBFCs (iv) Return on net 10.5 3.2 12.9 9.1 worth (Per cent) in domestic credit intermediation is rising. (v) Cost to income 21.6 57.1 22.1 18.2 ratio (Per cent) Innovative approaches like the first loss default Note: Data are provisional. guarantee (FLDG) framework and the co- Source: Returns submitted by SPDs. lending model have the potential to help NBFCs in expanding their footprint. The HFCs also assets and return on net worth increased in exhibited double-digit growth in credit, adjusted 2023-24. In H1:2024-25, their return on assets for the merger. Asset quality of NBFCs improved and return on net worth declined, even though further across layers. The consolidated balance their cost-to-income ratio decreased (Table VI.24 sheet of AIFIs grew at a marginally higher pace and Appendix Table VI.9). in 2023-24. All PDs exceeded their minimum VI.75 The combined CRAR of SPDs declined bidding commitments in 2023-24 and to 42.2 per cent in 2023-24 from 50 per cent individually achieved the minimum stipulated in 2022-23 on account of an increase in risk- annual turnover ratio. weighted assets of SPDs. The CRAR of all the VI.77 Going forward, besides the challenges Chart VI.41: Capital and Risk-weighted Asset emanating from cybersecurity threats, NBFCs Position of SPDs need to be mindful of the evolving concentration risk and climate-related financial risks associated with credit to certain sectors. The dependence of NBFCs on banks remain high, notwithstanding some moderation; NBFCs need to further diversify their sources of funds as a risk mitigation strategy. An imprudent ‘growth at any cost’ approach would be counter-productive, and a robust risk management framework should be implemented. Moreover, they need to strengthen their initiatives to address customer grievances, adhere to fair practices and avoid recourse to usurious interest rates so as to ensure their Source: Returns submitted by SPDs. relevance in a fast-changing financial landscape. 146APPENDIX TABLE Appendix Table IV.1: Indian Banking Sector at a Glance (Amount in ₹ crore) Sr. Items Amount Outstanding Percentage Variation No (At end-March) 2023 2024* 2022-23 2023-24* 1 2 3 4 5 6 1 Balance Sheet Operations 1.1 Total Liabilities/assets 2,43,18,429 2,80,80,550 12.2 15.5 1.2 Deposits 1,90,68,238 2,17,33,443 11.0 14.0 1.3 Borrowings 19,57,241 25,40,474 17.7 29.8 1.4 Loans and advances 1,43,19,353 1,71,42,340 17.4 19.7 1.5 Investments 64,36,540 72,70,365 11.4 13.0 1.6 Off-balance sheet exposure (as percentage of on-balance sheet 144.8 138.6 liabilities) 1.7 Total consolidated international claims 6,65,899 6,32,852 -8.7 -5.0 2 Profitability 2.1 Net profit 2,63,214 3,49,603 2.2 Return on Asset (RoA) (Per cent) 1.2 1.2 2.3 Return on Equity (RoE) (Per cent) 12.3 13.4 2.4 Net Interest Margin (NIM) (Per cent) 3.7 3.3 3 Capital Adequacy 3.1 Capital to risk weighted assets ratio (CRAR) @ 17.2 16.9 3.2 Tier 1 capital (as percentage of total capital) @ 86.8 87.8 3.3 CRAR (Tier 1) (Per cent) @ 15.0 14.8 4 Asset Quality 4.1 Gross NPAs 5,71,546 4,80,818 -23.1 -15.9 4.2 Net NPAs 1,35,320 1,06,732 -33.7 -21.1 4.3 Gross NPA ratio (Gross NPAs as percentage of gross advances) 3.9 2.8 4.4 Net NPA ratio (Net NPAs as percentage of net advances) 0.9 0.6 4.5 Provision Coverage Ratio (Per cent)** 74.9 76.6 4.6 Slippage ratio (Per cent) 1.8 1.5 5 Sectoral Deployment of Bank Credit 5.1 Gross bank credit 1,36,75,235 1,64,32,164 15 20.2 5.2 Agriculture 17,26,410 20,71,251 15.4 20.0 5.3 Industry 33,66,406 36,52,804 5.8 8.5 5.4 Services 37,18,805 45,92,227 19.5 23.5 5.5 Personal loans 41,82,767 53,31,290 20.7 27.5 6 Technological Development 6.1 Total number of credit cards (in lakhs) 853 1,018 15.9 19.3 6.2 Total number of debit cards (in lakhs) 9,613 9,649 4.8 0.4 6.3 Number of ATMs and CRMs (in lakhs) 2.59 2.58 2.7 -0.3 7 Customer Services 7.1 Total number of complaints received during the year^ 2,34,690 2,93,924 -22.9 25.2 7.2 Total number of complaints handled during the year ## 2,45,391 2,99,022 -22.7 21.9 Of 7.2 Total number of complaints addressed/disposed during the year 2,40,453 2,84,355 -22.7 18.3 Of 7.2 Percentage of complaints addressed/disposed during the year 98 95 8 Financial Inclusion 8.1 Credit-deposit ratio (Per cent) 75.1 78.9 8.2 Number of new bank branches opened 5,308 5,379 63.1 1.3 Notes: 1. * : Provisional. 2. ** : Based on off-site returns. 3. @ : Figures are as per the Basel III framework. 4. ^ : Excludes complaints closed at CRPC and those auto closed at the CMS Portal. 5. ## : Complaints handled includes complaints received during the year and the complaints brought forward from previous year. 6. Table includes the impact of the merger of a non-bank with a bank. 7. Percentage variation could be slightly different as figures have been rounded off to lakh/crore. 147Report on Trend and Progress of Banking in India 2023-24 Appendix Table IV.2: International Liabilities of Banks in India – By Type of Instruments (Amount in ₹ crore) Liability Type Amount Outstanding Percentage Variation (At end-March) 2023 (PR) 2024 (P) 2022-23 2023-24 1 2 3 4 5 1. Loans and Deposits 12,96,066 15,69,186 7.5 21.1 (63.0) (63.8) a) Foreign Currency Non-resident (Bank) [FCNR (B)] Scheme 1,35,725 1,98,611 28.5 46.3 (6.6) (8.1) b) Foreign Currency Borrowings* 96,587 1,59,151 18.4 64.8 (4.7) (6.5) c) Non-resident External Rupee (NRE) Accounts 7,64,751 8,12,252 2.1 6.2 (37.2) (33.0) d) Non-resident Ordinary (NRO) Rupee Accounts 1,64,786 2,28,483 16.7 38.7 (8.0) (9.3) 2. Own Issues of Securities/ Bonds 3,039 3,044 0.0 0.2 (0.1) (0.1) 3. Other liabilities 6,87,171 8,24,875 19.6 20.0 (33.4) (33.6) Of which: a) ADRs/GDRs 1,18,681 1,50,363 28.6 26.7 (5.8) (6.1) b) Equities of Banks 3,86,776 4,72,007 20.0 22.0 Held by Non-residents (18.8) (19.2) c) Capital / Remittable Profits of Foreign Banks in India and 1,81,714 2,02,504 13.6 11.4 Other Unclassified International Liabilities (8.8) (8.2) 4. Negative MTM Derivatives 69,873 60,718 -13.1 (3.4) (2.5) Total International Liabilities 20,56,148 24,57,823 15.3 19.5 (100.0) (100.0) Notes: 1. PR: Partially Revised; P: Provisional. 2. *: Inter-bank borrowings in India and from abroad and external commercial borrowings of banks. 3. Figures in parentheses are percentages to total. 4. Percentage variation could be slightly different as absolute numbers have been rounded off to ₹ crore. 5. Based on the latest BIS guidelines, MTM derivatives have been introduced in this statement from September 2022 quarter. Source: International Banking Statistics, RBI. 148APPENDIX TABLE Appendix Table IV.3: International Assets of Banks in India - By Type of Instruments (Amount in ₹ crore) Asset Type Amount Outstanding Percentage Variation (At end-March) 2023 (PR) 2024 (P) 2022-23 2023-24 1 2 3 4 5 1. Loans and Deposits 5,52,425 4,39,804 -18.6 -20.4 (83.0) (86.3) Of which: (a) Loans to Non-residents 1,33,070 97,450 -5.4 -26.8 (20.0) (19.1) (b) Foreign Currency Loan to Residents 1,08,304 1,21,229 -19.4 11.9 (16.3) (23.8) (c) Outstanding Export Bills 34,225 29,228 -35.7 -14.6 (5.1) (5.7) (d) Foreign Currency in hand, Travellers Cheques, etc. 743 858 117.5 15.5 (0.1) (0.2) (e) NOSTRO Balances and Placements Abroad 2,76,083 1,91,039 -21.2 -30.8 (41.5) (37.5) 2. Holdings of Debt Securities 44,632 11,816 -37.4 -73.5 (6.7) (2.3) 3. Other International Assets 21,165 13,865 32.9 -34.5 (3.2) (2.7) 4. Positive MTM Derivative 47,448 43,890 -7.5 (7.1) (8.6) Total International Assets* 6,65,669 5,09,375 -13.1 -23.5 (100.0) (100.0) Notes: 1. * : In view of the incomplete data coverage from all the branches, the data reported under the locational banking statistics (LBS) are not strictly comparable with those capturing data from all the branches. 2. PR: Partially Revised; P: Provisional. 3. The sum of components may not add up due to rounding off. 4. Figures in parentheses are percentage to total. 5. Based on the latest BIS guidelines, MTM derivatives have been introduced in this statement from September 2022 quarter. Source: International Banking Statistics, RBI. 149Report on Trend and Progress of Banking in India 2023-24 Appendix Table IV.4: Consolidated International Claims of Banks on Countries other than India (Amount in ₹ crore) Country Amount Outstanding Percentage Variation (At end-March) 2023 (PR) 2024 (P) 2022-23 2023-24 1 2 3 4 5 Total Consolidated International Claims 6,65,899 6,32,852 -8.7 -5.0 Of which 1. United States of America 2,29,016 1,86,677 -6.9 -18.5 (34.4) (29.5) 2. United Kingdom 66,094 67,944 -26.4 2.8 (9.9) (10.7) 3. Hong Kong 20,468 24,972 -31.9 22.0 (3.1) (3.9) 4. Singapore 46,424 48,363 11.2 4.2 (7.0) (7.6) 5. United Arab Emirates 85,841 75,242 -4.1 -12.3 (12.9) (11.9) 6. Germany 16,734 20,044 -46.2 19.8 (2.5) (3.2) Notes: 1. PR: Partially Revised; P: Provisional. 2. Figures in parentheses are percentages to total. 3. Percentage variation could be slightly different as absolute numbers have been rounded off to ₹ crore. Source: International Banking Statistics, RBI. 150APPENDIX TABLE Table IV.5: Consolidated International Claims of Banks: Residual Maturity and Sector (Amount in ₹ crore) Residual Maturity/Sector Amount Outstanding Percentage Variation (At end-March) 2023 (PR) 2024 (P) 2022-23 2023-24 1 2 3 4 5 Total Consolidated International Claims 6,65,899 6,32,852 -8.7 -5.0 (100.0) (100.0) Residual Maturity Short Term 5,17,959 5,28,829 -12.1 2.1 (77.8) (83.6) Long Term 1,42,515 1,01,514 5.6 -28.8 (21.4) (16.0) Unallocated 5,425 2,509 13.7 -53.8 (0.8) (0.4) Sector Banks 3,10,972 2,64,100 -24.4 -15.1 (46.7) (41.7) Official Sector 49,733 46,513 -3.1 -6.5 (7.5) (7.3) Non-Bank Financial Institutions 1,837 2,457 -40.4 33.8 (0.3) (0.4) Non-Financial Private 2,44,717 2,97,151 11.0 21.4 (36.7) (47.0) Others 58,640 22,631 36.8 -61.4 (8.8) (3.6) Notes: 1. PR: Partially Revised; P: Provisional. 2. Figures in parentheses are percentages to total. 3. The sum of components may not add up due to rounding off. 4. Residual Maturity ‘Unallocated’ comprises maturity not applicable (for example, for equities) and maturity information not available. 5. The official sector includes official monetary authorities, general government and multilateral agencies. 6. Non-financial private sector includes non-financial corporations and households including non-profit institutions serving households (NPISHs). 7. Others include non-financial public sector undertakings and the unallocated sector. 8. Percentage variation could be slightly different as absolute numbers have been rounded off to ₹ crore. Source: International Banking Statistics, RBI. 151Report on Trend and Progress of Banking in India 2023-24 Appendix Table IV.6: Off-Balance Sheet Exposure of Scheduled Commercial Banks in India (Amount in ₹ crore) Item PUBLIC SECTOR PRIVATE SECTOR FOREIGN BANKS SMALL PAYMENTS ALL SCHEDULED BANKS BANKS FINANCE BANKS COMMERCIAL BANKS BANKS 2024 Percent 2024 Percent 2024 Percent 2024 Percent 2024 Percent 2024 Percent Variation Variation Variation Variation Variation Variation 1 2 3 4 5 6 7 8 9 10 11 12 13 1. Forward 32,62,522 -6.6 1,15,28,125 20.0 1,88,62,772 5.8 5.0 - 0 - 3,36,53,424 8.8 exchange (21.1) (109.6) (1105.7) (0.0) (119.8) contract@ 2. Guarantees 6,31,279 6.4 6,68,833 20.3 2,09,110 8.5 3,627 34.7 0 - 15,12,849 12.5 given (4.1) (6.4) (12.3) (1.1) (5.4) 3. Acceptances, 12,57,758 21.5 6,11,646 31.9 18,94,524 30.8 2,394 69.3 390 38.3 37,66,711 27.8 endorsements, (8.1) (5.8) (111.1) (0.7) (1.6) (13.4) etc. Contingent 51,51,558 0.6 1,28,08,605 20.6 2,09,66,406 7.7 6,026 46.7 390 38.3 3,89,32,984 10.5 Liabilities (33.3) (121.7) (1229.0) (1.8) (1.6) (138.6) Notes: 1. -: Nil/Negligible. 2. @: Includes all derivative products (including interest rate swaps) as admissible. 3. Figures in brackets are percentages to total liabilities of the concerned bank-group. Source: Annual accounts of respective banks. 152APPENDIX TABLE Appendix Table IV.7: Frauds in Various Banking Operations Based on Date of Reporting (Continued) (Amount in ₹ crore) 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Bank Group No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount Advances 1,564 672 1,525 1,162 1,734 1,055 1,750 721 1,976 1,388 2,190 1,263 2,382 2,740 Card/Internet 26 3 144 6 491 11 679 15 1,036 37 1,215 35 763 21 Deposits 374 28 325 28 384 49 458 79 599 66 666 195 790 583 Off-balance sheet 6 33 7 25 4 4 6 8 9 22 10 370 10 212 Foreign exchange 16 14 10 30 28 7 25 30 15 14 16 28 19 148 transactions Cash 75 4 89 16 87 7 99 5 141 36 143 14 154 21 Cheques/demand drafts, 108 15 110 9 141 10 192 17 234 15 202 17 184 27 etc. Inter-branch accounts 31 6 36 7 18 1 22 3 16 5 18 2 10 1 Clearing, etc accounts 20 2 23 4 35 12 30 9 52 45 51 7 34 11 Non-resident accounts 11 2 9 0 17 1 9 4 26 2 13 2 9 2 Others 204 16 148 29 88 51 97 26 146 39 146 64 179 56 Grand Total 2,435 795 2,426 1,316 3,027 1,208 3,367 917 4,250 1,669 4,670 1,997 4,534 3,822 Notes: 1. Refers to frauds of ₹1 lakh and above. 2. The figures reported by banks and financial institutions are subject to change based on revisions filed by them. 3. Frauds reported in a year could have occurred several years prior to year of reporting. 4. Amounts involved are as reported and do not reflect the amount of loss incurred. Depending on recoveries, the loss incurred gets reduced. Further, the entire amount involved in loan accounts is not necessarily diverted. 5. Post issuance of revised Master Directions on Fraud Risk Management dated July 15, 2024, the banks are reporting only those payment system related transactions which are concluded as fraud committed on bank(s). Source: RBI. 153Report on Trend and Progress of Banking in India 2023-24 Appendix Table IV.7: Frauds in Various Banking Operations Based on Date of Reporting (Continued) (Amount in ₹ crore) 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 Bank Group No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount Advances 1,953 3,552 2,087 6,530 1,984 7,949 2,254 16,924 2,116 17,180 2,313 20,196 2,520 22,388 Card/Internet 629 23 793 49 978 54 845 52 1,191 40 1,372 42 2,058 102 Deposits 857 219 791 291 774 331 875 437 759 809 693 903 691 457 Off-balance sheet 5 373 18 1,527 15 1,088 10 699 4 132 5 63 20 16,288 Foreign exchange 22 130 10 98 9 144 16 899 16 31 16 2,201 9 1,426 transactions Cash 173 20 140 23 145 24 153 43 160 22 239 37 218 40 Cheques/demand drafts, 172 40 141 22 180 19 254 26 234 25 235 40 207 34 etc. Inter-branch accounts 24 8 6 3 7 1 4 0 4 10 1 0 6 1 Clearing, etc accounts 38 31 36 7 36 24 29 7 17 87 27 6 37 6 Non-resident accounts 11 3 17 3 38 10 23 8 8 9 10 3 6 6 Others 207 98 197 112 135 64 179 162 176 146 153 77 138 242 Grand Total 4,091 4,497 4,236 8,665 4,301 9,708 4,642 19,257 4,685 18,491 5,064 23,568 5,910 40,990 Notes: 1. Refers to frauds of ₹1 lakh and above. 2. The figures reported by banks and financial institutions are subject to change based on revisions filed by them. 3. Frauds reported in a year could have occurred several years prior to year of reporting. 4. Amounts involved are as reported and do not reflect the amount of loss incurred. Depending on recoveries, the loss incurred gets reduced. Further, the entire amount involved in loan accounts is not necessarily diverted. 5. Post issuance of revised Master Directions on Fraud Risk Management dated July 15, 2024, the banks are reporting only those payment system related transactions which are concluded as fraud committed on bank(s). Source: RBI. 154APPENDIX TABLE Appendix Table IV.7: Frauds in Various Banking Operations Based on Date of Reporting (Concluded) (Amount in ₹ crore) 2024-25 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 Bank Group (till Sep. 2024) No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount Advances 3,556 53,069 4,455 1,56,466 3,364 1,12,681 3,745 41,485 4,063 22,421 4,124 11,017 3,531 19,748 Card/Internet 1,866 71 2,677 129 2,545 119 3,596 155 6,699 277 29,082 1,457 13,133 514 Deposits 593 148 530 616 503 434 471 493 652 258 2,002 240 934 363 Off-balance sheet 27 5,250 29 2,279 23 535 21 1,077 14 285 11 256 0 0 Foreign exchange 13 695 8 54 4 129 7 7 13 12 19 38 6 1 transactions Cash 274 56 371 63 329 39 649 93 1,485 159 484 78 205 18 Cheques/demand 189 34 201 39 163 84 201 158 118 25 127 42 49 54 drafts, etc. Inter-branch accounts 3 0 2 0 2 0 3 2 3 0 29 10 3 1 Clearing, etc accounts 24 209 22 7 14 4 16 1 18 3 17 2 3 1 Non-resident accounts 3 0 8 1 1 0 1 2 2 1 6 2 1 0 Others 197 244 242 172 277 54 299 98 470 422 165 33 596 667 Grand Total 6,745 59,776 8,545 1,59,826 7,225 1,14,079 9,009 43,571 13,537 23,863 36,066 13,175 18,461 21,367 Notes: 1. Refers to frauds of ₹1 lakh and above. 2. The figures reported by banks and financial institutions are subject to change based on revisions filed by them. 3. Frauds reported in a year could have occurred several years prior to year of reporting. 4. Amounts involved are as reported and do not reflect the amount of loss incurred. Depending on recoveries, the loss incurred gets reduced. Further, the entire amount involved in loan accounts is not necessarily diverted. 5. Post issuance of revised Master Directions on Fraud Risk Management dated July 15, 2024, the banks are reporting only those payment system related transactions which are concluded as fraud committed on bank(s). Source: RBI. 155Report on Trend and Progress of Banking in India 2023-24 Appendix Table IV.8: Kisan Credit Card Scheme: State-wise Progress (Continued) (Amount in ₹ crore and number of cards issued in ‘000) Sr. State/UT Co-operative Banks Regional Rural Banks No. Number of Operative Amount outstanding Number of Operative Amount outstanding KCCs under Operative KCCs KCCs under Operative KCCs 2023 2024 2023 2024 2023 2024 2023 2024 1 2 3 4 5 6 7 8 9 10 Northern Region 5,423 5,564 35,431 37,387 1,492 1,556 37,304 40,101 1 Haryana 1,155 1,154 12,300 13,063 297 307 8,302 9,054 2 Himachal Pradesh 118 134 2,062 2,302 83 92 1,281 1,425 3 Jammu & Kashmir 7 7 62 63 126 134 1,068 1,152 4 Ladakh 0 0 0 0 0 0 0 0 5 New Delhi 0 0 1 0 0 0 0 0 6 Punjab 940 910 7,194 6,645 158 160 6,100 6,582 7 Rajasthan 3,204 3,358 13,811 15,314 828 863 20,553 21,889 8 Chandigarh 0 0 0 0 0 0 0 0 North-Eastern Region 72 63 157 212 460 445 2,174 2,350 9 Assam 1 1 21 19 287 281 1,485 1,623 10 Arunachal Pradesh 1 1 7 7 3 2 22 16 11 Meghalaya 16 12 32 49 35 39 201 237 12 Mizoram 1 1 7 11 21 21 243 268 13 Manipur 3 3 16 18 10 10 44 48 14 Nagaland 4 4 22 22 1 1 2 1 15 Tripura 44 37 43 73 105 90 178 157 16 Sikkim 2 2 8 11 0 0 0 0 Western Region 4,571 4,600 38,860 43,810 1,184 1,264 15,358 17,834 17 Gujarat 993 999 14,810 16,106 453 502 8,426 10,192 18 Maharashtra 3,576 3,598 24,031 27,674 731 762 6,931 7,642 19 Goa 2 2 19 30 0 0 0 0 20 Dadar & Nagar Haveli & Daman & Diu 0 0 0 0 0 0 0 0 Central Region 8,371 8,685 38,195 36,877 4,325 4,519 55,978 62,662 21 Uttar Pradesh 2,727 2,673 9,070 8,964 3,677 3,851 46,843 52,694 22 Uttarakhand 289 305 1,750 1,297 28 30 199 219 23 Madhya Pradesh 3,865 4,008 23,146 23,946 452 464 7,577 8,041 24 Chhattisgarh 1,491 1,700 4,229 2,671 168 174 1,358 1,708 Southern Region 8,016 8,939 57,830 64,540 3,770 4,082 49,446 56,259 25 Karnataka 3,003 3,673 20,888 24,751 757 839 13,364 16,152 26 Kerala 705 485 5,832 4,554 480 541 8,097 9,597 27 Andhra Pradesh 1,477 1,682 12,925 13,733 951 972 11,826 12,138 28 Tamil Nadu 1,904 2,201 12,889 16,030 80 160 1,420 3,124 29 Telangana 926 897 5,297 5,470 1,502 1,568 14,724 15,233 30 Lakshdweep 0 0 0 0 0 0 0 0 31 Puducherry 0 0 0 1 1 2 14 15 Eastern Region 4,935 5,067 18,963 24,852 2,636 2,652 17,739 18,546 32 Odisha 2,939 3,358 13,475 19,624 436 447 2,575 2,737 33 West Bengal 1,727 1,477 4,970 4,755 417 410 2,085 2,199 34 Andaman and Nicobar Islands 7 8 18 19 0 0 0 0 35 Bihar 246 209 452 401 1,405 1,420 10,684 11,133 36 Jharkhand 16 16 49 54 378 374 2,396 2,477 Total 31,389 32,917 1,89,436 2,07,678 13,868 14,517 1,77,999 1,97,753 Note: * : Data are Provisional. Source: NABARD/Returns from Scheduled Commercial Banks (excluding RRBs). 156APPENDIX TABLE Appendix Table IV.8: Kisan Credit Card Scheme: State-wise Progress (Concluded) (Amount in ₹ crore and number of cards issued in ‘000) Scheduled Commercial Banks Total (excluding RRBs) Sr. State/UT Number of Operative Amount outstanding Number of Operative Amount outstanding No. KCCs under Operative KCCs KCCs under Operative KCCs 2023 2024* 2023 2024* 2023 2024* 2023 2024* 1 2 11 12 13 14 15 16 17 18 Northern Region 5,511 5,925 1,47,046 1,59,797 12,426 13,045 2,19,780 2,37,286 1 Haryana 835 901 29,440 31,883 2,287 2,362 50,042 54,000 2 Himachal Pradesh 257 277 4,666 5,345 458 503 8,009 9,072 3 Jammu & Kashmir 778 926 5,233 5,759 911 1,067 6,363 6,974 4 Ladakh 28 28 258 268 28 28 258 268 5 New Delhi 3 3 43 43 3 3 44 43 6 Punjab 1,100 1,164 42,129 44,604 2,198 2,235 55,423 57,830 7 Rajasthan 2,508 2,624 65,178 71,770 6,540 6,846 99,543 1,08,973 8 Chandigarh 1 2 99 126 1 2 99 126 North-Eastern Region 530 542 3,450 4,056 1,063 1,050 5,781 6,618 9 Assam 400 389 2,612 2,973 688 671 4,119 4,615 10 Arunachal Pradesh 6 16 52 172 10 18 81 195 11 Meghalaya 21 26 127 181 72 77 360 467 12 Mizoram 14 18 64 94 35 40 315 373 13 Manipur 7 6 106 92 20 20 165 159 14 Nagaland 25 27 155 168 30 32 179 192 15 Tripura 50 53 286 326 199 181 507 556 16 Sikkim 7 8 49 50 9 10 56 62 Western Region 4,450 4,505 78,634 87,715 10,205 10,368 1,32,851 1,49,359 17 Gujarat 1,572 1,637 39,137 44,835 3,018 3,137 62,373 71,132 18 Maharashtra 2,868 2,857 39,366 42,702 7,175 7,218 70,329 78,018 19 Goa 8 9 91 138 9 12 109 169 20 Dadar & Nagar Haveli & Daman & Diu 2 2 40 40 2 2 40 40 Central Region 6,701 6,917 1,29,155 1,40,667 19,398 20,121 2,23,328 2,40,205 21 Uttar Pradesh 4,302 4,394 72,202 76,963 10,705 10,917 1,28,115 1,38,621 22 Uttarakhand 191 222 4,417 4,964 509 557 6,365 6,479 23 Madhya Pradesh 1,950 2,029 47,369 52,537 6,267 6,500 78,092 84,523 24 Chhattisgarh 258 272 5,168 6,203 1,917 2,147 10,756 10,582 Southern Region 8,013 8,488 1,38,002 1,56,799 19,799 21,509 2,45,279 2,77,598 25 Karnataka 961 987 19,908 21,891 4,720 5,499 54,161 62,794 26 Kerala 1,409 1,566 29,472 34,885 2,594 2,592 43,401 49,036 27 Andhra Pradesh 2,124 2,200 36,129 39,583 4,552 4,853 60,879 65,455 28 Tamil Nadu 1,596 1,671 27,823 32,959 3,580 4,032 42,132 52,112 29 Telangana 1,910 2,044 24,384 27,083 4,337 4,509 44,405 47,786 30 Lakshdweep 2 3 15 22 2 3 15 22 31 Puducherry 12 18 272 376 13 20 286 392 Eastern Region 3,085 3,438 22,198 25,940 10,657 11,157 58,901 69,338 32 Odisha 596 660 5,694 6,736 3,971 4,466 21,744 29,097 33 West Bengal 988 1,118 7,477 8,902 3,132 3,005 14,531 15,856 34 Andaman and Nicobar Islands 2 1 20 5 9 8 38 23 35 Bihar 926 1,053 6,251 7,267 2,577 2,683 17,388 18,801 36 Jharkhand 574 606 2,755 3,029 968 996 5,200 5,560 Total 28,290 29,814 5,18,485 5,74,974 73,547 77,249 8,85,921 9,80,404 Note: *: Data are Provisional. Source: NABARD/Returns from Scheduled Commercial Banks (excluding RRBs). 157Report on Trend and Progress of Banking in India 2023-24 Appendix Table IV.9: Bank Group-wise Lending to the Sensitive Sectors (Amount in ₹ crore) Sector Public Private Foreign Small Scheduled Commercial Sector Banks Sector Banks Banks Finance Banks Banks* 2023-24 Percent 2023-24 Percent 2023-24 Percent 2023-24 Percent 2023-24 Percent Variation Variation Variation Variation Variation 1 2 3 4 5 6 7 8 9 10 11 1. Capital Market # 68,088 25.8 1,61,162 36.4 13,587 8.4 482 9.3 2,43,321 31.3 (0.7) (2.3) (2.5) (0.2) (1.4) 2. Real Estate @ 20,30,270 16.4 22,17,737 61.4 1,26,363 -7.1 45,129 22.4 44,19,498 34.3 (21.4) (32.3) (23.0) (20.0) (25.8) 3. Commodities - - - - - - - - - - Total Advances to 20,98,358 16.6 23,78,899 59.5 1,39,949 -5.8 45,611 22.2 46,62,820 34.1 Sensitive Sectors (22.1) (34.7) (25.5) (20.2) (27.2) Notes: 1. Figures in brackets are percentages to total loans and advances of the concerned bank-group. 2. -: Nil/Negligible. 3. #: Exposure to capital market is inclusive of both investments and advances. 4. *: Inclusive of Payments Banks 5. @: Exposure to real estate sector is inclusive of both direct and indirect lending. Source: Annual accounts of respective banks. 158APPENDIX TABLE Appendix Table IV.10: Shareholding Pattern of Domestic Scheduled Commercial Banks (Continued) (At end-March 2024) Sr. Name of Bank Government Financial Institution Other Corporates Individuals Total No. & RBI (including mutual funds) Resident Resident Non Resident Non Resident Non Resident Non Resident Resident Resident Resident 1 2 3 4 5 6 7 8 9 10 11 Public Sector Banks 1 Bank of Baroda 64.0 8.6 0.0 8.2 12.4 6.5 0.4 87.2 12.8 2 Bank of India 73.4 15.8 4.5 0.5 0.0 5.6 0.2 95.3 4.7 3 Bank of Maharashtra 86.5 4.7 1.0 0.4 0.0 7.2 0.2 98.8 1.3 4 Canara Bank 62.9 14.4 10.6 1.2 0.0 10.7 0.2 89.2 10.8 5 Central Bank of India 93.1 2.8 0.2 0.2 0.0 3.7 0.1 99.8 0.2 6 Indian Bank 73.8 17.0 0.0 0.4 5.3 3.4 0.1 94.6 5.4 7 Indian Overseas Bank 96.4 1.3 0.1 0.1 0.0 2.2 0.1 99.9 0.1 8 Punjab and Sind Bank 98.3 0.7 0.0 0.1 0.0 1.0 0.0 100.0 0.1 9 Punjab National Bank 73.2 12.4 4.8 0.5 0.0 8.9 0.2 95.0 5.1 10 State Bank of India 56.9 23.7 11.0 0.7 1.1 6.3 0.3 87.7 12.3 11 UCO Bank 95.4 1.3 0.0 0.2 0.0 3.0 0.1 99.9 0.1 12 Union Bank of India 74.8 3.8 6.8 9.1 0.0 5.6 0.0 93.3 6.8 Note: Total may not add up to 100 due to rounding off. Source: Off-site returns (domestic), RBI. 159Report on Trend and Progress of Banking in India 2023-24 Appendix Table IV.10: Shareholding Pattern of Domestic Scheduled Commercial Banks (Continued) (At end-March 2024) Sr. Name of Bank Government Financial Institution Other Corporates Individuals Total No. & RBI (including mutual funds) Resident Resident Non Resident Non Resident Non Resident Non Resident Resident Resident Resident 1 2 3 4 5 6 7 8 9 10 11 Private Sector Bank 1 Axis Bank Ltd. 0.0 37.0 55.4 1.1 1.1 5.1 0.3 43.2 56.8 2 Bandhan Bank Ltd. 0.1 12.4 31.2 41.5 0.0 14.3 0.5 68.3 31.7 3 City Union Bank 0.0 29.1 27.0 3.1 0.0 39.7 1.2 71.9 28.1 4 Catholic Syrian Bank Ltd. 0.0 14.2 0.0 7.2 55.0 16.6 6.9 38.1 61.9 5 DCB Bank Ltd. 0.0 28.0 0.0 8.0 27.0 36.0 1.0 72.0 28.0 6 Dhanalakshmi Bank Ltd. 0.5 0.1 0.0 6.9 6.1 67.4 19.0 74.9 25.1 7 Federal Bank Ltd. 0.0 44.5 33.4 2.8 0.0 19.4 0.0 66.6 33.4 8 HDFC Bank Ltd. 0.1 29.4 55.3 1.9 0.0 13.0 0.3 44.5 55.5 9 ICICI Bank Ltd. 0.2 26.1 55.7 11.4 0.0 6.3 0.2 44.1 55.9 10 IDBI Ltd. 45.5 49.4 0.0 0.5 0.0 4.0 0.6 99.4 0.6 11 IDFC Bank Ltd. 3.7 44.2 21.4 1.6 2.3 25.3 1.5 74.8 25.2 12 IndusInd Bank Ltd. 0.0 24.5 45.0 6.2 15.9 7.7 0.7 38.4 61.6 13 Jammu and Kashmir Bank Ltd. 59.4 8.2 7.0 0.0 0.0 23.6 1.9 91.2 8.8 14 Karnataka Bank Ltd. 0.0 23.1 0.0 3.7 18.9 52.4 2.0 79.1 20.9 15 Karur Vysya Bank Ltd. 0.0 34.2 0.0 4.3 15.4 45.0 1.1 83.6 16.4 16 Kotak Mahindra Bank Ltd. 0.0 22.0 37.6 3.4 1.3 35.3 0.5 60.6 39.4 17 Nainital Bank Ltd. 0.0 98.6 0.0 0.0 0.0 1.4 0.0 100.0 0.0 18 RBL Bank Ltd. 0.4 19.0 0.0 12.8 33.7 32.4 1.6 64.7 35.3 19 South Indian Bank Ltd. 0.0 2.0 0.0 8.5 15.2 66.4 8.0 76.8 23.2 20 Tamilnad Mercantile Bank Ltd. 0.0 0.4 3.5 9.0 22.4 63.2 1.5 72.6 27.4 21 Yes Bank Ltd. 0.0 41.7 22.0 1.9 0.0 34.3 0.0 78.0 22.0 Note: Total may not add up to 100 due to rounding off. Source: Off-site returns (domestic), RBI. 160APPENDIX TABLE Appendix Table IV.10: Shareholding Pattern of Domestic Scheduled Commercial Banks (Concluded) (At end-March 2024) Sr. Name of Bank Government Financial Institution Other Corporates Individuals Total No. & RBI (including mutual funds) Resident Resident Non Resident Non Resident Non Resident Non Resident Resident Resident Resident 1 2 3 4 5 6 7 8 9 10 11 Small Finance Banks 1 AU Small Finance Bank 0.0 14.5 36.4 11.9 3.0 34.0 0.2 60.4 39.6 2 Capital Small Finance Bank 0.1 19.1 1.4 15.4 0.0 48.0 16.0 82.6 17.4 3 Equitas Small Finance Bank 0.0 45.2 2.9 22.6 0.0 28.1 1.3 95.9 4.1 4 ESAF Small Finance Bank 0.0 56.6 0.0 17.4 0.8 17.2 8.0 91.2 8.9 5 Fincare Small Finance Bank 0.0 81.3 9.3 7.2 0.0 2.1 0.0 90.7 9.3 6 Jana Small Finance Bank 0.0 1.2 17.7 36.0 27.9 17.0 0.2 54.2 45.8 7 North East Small Finance 0.0 4.2 2.1 92.7 0.0 1.0 0.0 97.9 2.1 Bank 8 Shivalik Small Finance Bank 0.0 0.9 0.0 6.3 21.8 70.7 0.3 78.0 22.0 9 Suryoday Small Finance Bank 0.0 11.4 0.0 10.0 22.2 55.8 0.6 77.2 22.8 10 Ujjivan Small Finance Bank 0.0 2.3 0.0 74.1 3.5 19.5 0.6 95.9 4.1 11 Unity Small Finance Bank 0.0 51.0 0.0 49.0 0.0 0.0 0.0 100.0 0.0 12 Utkarsh Small Finance Bank 0.0 8.7 0.0 71.2 8.6 11.3 0.3 91.2 8.8 Local Area Banks 1 Coastal Local Area Bank Ltd. 0.0 0.0 0.0 21.4 0.0 51.5 27.1 72.9 27.1 2 Krishna Bhima Samruddhi 0.0 0.0 0.0 20.3 0.0 79.7 0.0 100.0 0.0 LAB Ltd. Note: Total may not add up to 100 due to rounding off. Source: Off-site returns (domestic), RBI. 161Report on Trend and Progress of Banking in India 2023-24 Appendix Table IV.11: Overseas Operations of Indian Banks (At end-March) Sr. Name of the Bank Branch Subsidiary Representative Joint Venture Other Offices* Total No. Office Bank 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 1 2 3 4 5 6 7 8 9 10 11 12 13 14 I. Public Sector Banks 100 99 22 22 11 11 6 6 31 33 170 171 (Total) 1 Bank of Baroda 29 28 7 7 0 0 2 2 10 10 48 47 2 Bank of India 21 21 4 4 1 1 0 0 0 0 26 26 3 Canara Bank 3 3 1 1 1 1 0 0 0 0 5 5 4 Indian Bank 3 3 0 0 0 0 0 0 0 0 3 3 5 Indian Overseas Bank 4 4 0 0 0 0 0 0 0 0 4 4 6 Punjab National Bank 1 1 2 2 2 2 2 2 0 0 7 7 7 State Bank of India 34 35 7 7 6 6 2 2 21 23 70 73 8 UCO Bank 2 2 0 0 1 1 0 0 0 0 3 3 9 Union Bank of India 3 2 1 1 0 0 0 0 0 0 4 3 II Private Sector Bank 13 13 3 3 25 25 0 0 2 2 43 43 (Total) 10 Axis Bank Ltd. 2 2 1 1 4 4 0 0 0 0 7 7 11 HDFC Bank Ltd. 3 3 0 0 3 3 0 0 0 0 6 6 12 ICICI Bank Ltd. 6 6 2 2 10 10 0 0 2 2 20 20 13 IDBI Bank Ltd. 1 1 0 0 0 0 0 0 0 0 1 1 14 IndusInd Bank Ltd. 0 0 0 0 3 3 0 0 0 0 3 3 15 Federal Bank Ltd. 0 0 0 0 2 2 0 0 0 0 2 2 16 Kotak Mahindra Bank 1 1 0 0 1 1 0 0 0 0 2 2 Ltd. 17 Yes Bank Ltd. 0 0 0 0 1 1 0 0 0 0 1 1 18 South Indian Bank Ltd. 0 0 0 0 1 1 0 0 0 0 1 1 All Banks 113 112 25 25 36 36 6 6 33 35 213 214 Note: * Other Offices include marketing/sub-office, remittance centres, etc. Source: RBI. 162APPENDIX TABLE Appendix Table IV.12: Branches and ATMs of Scheduled Commercial Banks (Continued) (At end-March 2024) Sr. Name of the Bank Branches ATMs and CRMs No. Rural Semi-urban Urban Metropolitan Total On-site Off-site Total 1 2 3 4 5 6 7 8 9 10 Public Sector Banks 29,208 23,463 16,119 16,069 84,859 77,033 57,661 1,34,694 1 Bank of Baroda 2,874 2,087 1,481 1,784 8,226 8,417 2,634 11,051 2 Bank of India 1,868 1,464 823 932 5,087 5,329 2,900 8,229 3 Bank of Maharashtra 612 719 547 608 2,486 1,865 36 1,901 4 Canara Bank 3,103 2,750 1,901 1,844 9,598 8,198 3,958 12,156 5 Central Bank of India 1,604 1,335 770 794 4,503 2,857 1,144 4,001 6 Indian Bank 1,984 1,526 1,174 1,160 5,844 4,336 601 4,937 7 Indian Overseas Bank 908 964 656 690 3,218 2,774 731 3,505 8 Punjab and Sind Bank 582 294 370 318 1,564 1,009 26 1,035 9 Punjab National Bank 3,925 2,481 1,997 1,724 10,127 7,794 4,337 12,131 10 State Bank of India 8,091 6,531 4,048 3,863 22,533 24,513 39,067 63,580 11 UCO Bank 1,113 872 639 592 3,216 2,249 228 2,477 12 Union Bank of India 2,544 2,440 1,713 1,760 8,457 7,692 1,999 9,691 Notes: 1. Population groups are defined as follows: ‘Rural’ includes centers with population of less than 10,000. ‘Semi-urban’ includes centers with population of 10,000 and above but less than of one lakh. ‘Urban’ includes centers with population of one lakh and above but less than of ten lakh, and ‘Metropolitan’ includes centers with population of 10 lakh and above. All population figures are as per census 2011. 2. Data on branches exclude ‘Administrative Offices’. Source: Central Information System for Banking Infrastructure (erstwhile Master Office File System) database, RBI. 163Report on Trend and Progress of Banking in India 2023-24 Appendix Table IV.12: Branches and ATMs of Scheduled Commercial Banks (Continued) (At end-March 2024) Sr. Name of the Bank Branches ATMs and CRMs No. Rural Semi-urban Urban Metropolitan Total On-site Off-site Total 1 2 3 4 5 6 7 8 9 10 Private Sector Bank 8,924 14,088 9,593 12,086 44,691 45,438 34,446 79,884 1 Axis Bank Ltd 923 1,564 1,291 1,742 5,520 6,244 9,760 16,004 2 Bandhan Bank Ltd 2,100 2,352 1,152 693 6,297 433 5 438 3 Catholic Syrian Bank Ltd. 66 367 156 193 782 683 48 731 4 City Union Bank 152 281 173 189 795 1,140 537 1,677 5 DCB Bank Ltd. 82 111 123 126 442 413 5 418 6 Dhanalakshmi Bank Ltd. 20 112 71 58 261 239 41 280 7 Federal Bank Ltd. 215 739 288 261 1,503 1,678 335 2,013 8 HDFC Bank Ltd. 1,547 3,019 1,759 2,405 8,730 11,649 9,289 20,938 9 ICICI Bank Ltd. 1,361 1,809 1,306 1,913 6,389 9,994 7,189 17,183 10 IDBI Ltd 432 631 480 460 2,003 2,317 986 3,303 11 IDFC Bank Ltd. 60 268 400 477 1,205 853 311 1,164 12 IndusInd Bank Ltd. 305 657 748 850 2,560 1,820 1,136 2,956 13 Jammu and Kashmir Bank 537 178 108 175 998 943 626 1,569 14 Karnataka Bank Ltd 217 213 236 253 919 916 579 1,495 15 Karur Vysya Bank Ltd. 137 331 165 250 883 1,463 799 2,262 16 Kotak Mahindra Bank Ltd. 325 307 425 889 1,946 1,766 1,525 3,291 17 Nainital Bank Ltd. 55 34 47 34 170 - - - 18 RBL Bank Ltd. 65 72 96 311 544 359 36 395 19 South Indian Bank Ltd. 110 460 183 206 959 909 412 1,321 20 Tamilnad Mercantile Bank 119 257 88 88 552 498 660 1,158 Ltd. 21 Yes Bank Ltd. 96 326 298 513 1,233 1,121 167 1,288 Notes: 1. Population groups are defined as follows: ‘Rural’ includes centers with population of less than 10,000. ‘Semi-urban’ includes centers with population of 10,000 and above but less than of one lakh. ‘Urban’ includes centers with population of one lakh and above but less than of ten lakh, and ‘Metropolitan’ includes centers with population of ten lakh and above. All population figures are as per census 2011. 2. Data on branches exclude ‘Administrative Offices’. 3. -: NIL. Source: Central Information System for Banking Infrastructure (erstwhile Master Office File System) database, RBI. 164APPENDIX TABLE Appendix Table IV.12: Branches and ATMs of Scheduled Commercial Banks (Concluded) (At end-March 2024) Sr. Name of the Bank Branches ATMs and CRMs No. Rural Semi-urban Urban Metropolitan Total On-site Off-site Total 1 2 3 4 5 6 7 8 9 10 Foreign Banks 124 143 158 355 780 603 566 1,169 1 AB Bank Plc - - - 1 1 - - - 2 American Express Banking Corp. - - - 1 1 - - - 3 Australia And New Zealand Banking Group Limited 1 - 1 1 3 - - - 4 Bank of America , National Association - - - 4 4 - - - 5 Bank of Bahrain & Kuwait B.s.c. - 1 - 3 4 - - - 6 Bank of Ceylon - - - 1 1 - - - 7 Bank of China Limited - - - 1 1 - - - 8 Bank of Nova Scotia - - - 1 1 - - - 9 Barclays Bank Plc - 1 - 2 3 - - - 10 Bnp Paribas - - - 5 5 - - - 11 Citibank N.A. - - 4 10 14 - - - 12 Cooperatieve Rabobank U.A. - - - 1 1 - - - 13 Credit Agricole Corporate And Investment Bank - - - 5 5 - - - 14 Credit Suisse Ag - - - 1 1 - - - 15 CTBC Bank Co., Ltd. - 1 - 1 2 - - - 16 DBS Bank India Limited 114 136 116 156 522 436 472 908 17 Deutsche Bank AG 1 - 5 11 17 13 2 15 18 Doha Bank Q.P.S.C. - - 1 1 2 2 - 2 19 Emirates NBD Bank (P.J.S.C.) - - 1 2 3 - - - 20 First Abu Dhabi Bank PJSC - - - 1 1 - - - 21 Firstrand Bank Ltd - - - 1 1 - - - 22 The Hongkong And Shanghai Banking Corporation Limited - - 4 22 26 46 28 74 23 Industrial And Commercial Bank of China - - - 1 1 - - - 24 Industrial Bank of Korea - - - 1 1 - - - 25 JPMorgan Chase Bank National Association 2 - - 2 4 - - - 26 JSC VTB Bank - - - 1 1 - - - 27 KEB Hana Bank - 1 - 1 2 1 - 1 28 Kookmin Bank - - 1 - 1 1 - 1 29 Krung Thai Bank Public Company Limited - - - 1 1 - - - 30 Mashreq Bank PSC - - - 1 1 - - - 31 Mizuho Bank Ltd. - 1 1 3 5 - - - 32 MUFG Bank, Ltd. 1 - - 4 5 - - - 33 NatWest Markets Plc - - - 1 1 - - - 34 Nonghyup Bank - - 1 - 1 - - - 35 PT Bank Maybank Indonesia Tbk - - - 1 1 - - - 36 Qatar National Bank (Q.P.S.C) - - - 1 1 - - - 37 SBER Bank - - - 2 2 - - - 38 SBM Bank (India) Limited 3 - 1 12 16 - - - 39 Shinhan Bank 1 - - 5 6 - - - 40 Societe Generale - - - 2 2 - - - 41 Sonali Bank Plc - - 1 1 2 - - - 42 Standard Chartered Bank 1 1 20 78 100 102 64 166 43 Sumitomo Mitsui Banking Corporation - 1 - 2 3 - - - 44 United Overseas Bank Ltd. - - - 1 1 - - - 45 Woori Bank - - 1 2 3 - - - Notes: 1. P opulation groups are defined as follows: ‘Rural’ includes centers with population of less than 10,000. ‘Semi-urban’ includes centers with population of 10,000 and above but less than of one lakh. ‘Urban’ includes centers with population of one lakh and above but less than of ten lakh, and ‘Metropolitan’ includes centers with population of ten lakh and above. All population figures are as per census 2011. 2. Data on branches exclude ‘Administrative Offices’. 3. -: NIL. Source: Central Information System for Banking Infrastructure (erstwhile Master Office File System) database, RBI. 165Report on Trend and Progress of Banking in India 2023-24 Appendix Table IV.13: Progress of Microfinance Programmes (At end-March) Item Self Help Groups Number (lakh) Amount (in ₹ crore) 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 1 2 3 4 5 6 7 8 9 10 11 12 13 Loans 27.0 31.5 28.9 34.0 43.0 54.8 58,317.6 77,659.3 58,070.6 99,729.2 1,45,200.2 2,09,285.9 Disbursed by Banks (During (17.8) (22.1) (17.0) (24.8) (36.9) (47.6) (36,818.5) (55,589.9) (31,755.1) (68,916.9) (1,25,106.3) (1,83,297.1) the FY) Loans 50.8 56.8 57.8 67.4 69.6 77.4 87,098.2 1,08,075.1 1,03,289.0 1,51,051.0 1,88,078.8 2,59,663.7 Outstanding with Banks (35.1) (39.6) (36.0) (47.8) (58.9) (65.0) (58,431.6) (73,183.9) (61,393.1) (1,01,840.1) (1,61,583.9) (2,22,452.1) Savings with 100.1 102.4 112.2 118.9 134.0 144.2 23,324.5 26,152.0 37,477.0 47,240.5 58,892.7 65,089.2 Banks (60.2) (62.6) (70.1) (77.7) (89.4) (91.7) (14,481.6) (15,836.3) (21,307.8) (31,077.1) (40,971.9) (49,738.7) Microfinance Institutions Number (lakh) Amount (in ₹ crore) Loans 0.0 0.0 0.3 0.2 0.8 0.3 13,721.0 19,133.0 12,120.3 23,173.4 36,757.0 31,497.1 Disbursed by Banks Loans 0.1 0.2 0.6 0.6 1.1 1.9 16,044.8 27,255.8 21,062.7 34,865.4 44,119.8 59,592.7 Outstanding with Banks Joint Liability Groups Number (lakh) Amount (in ₹ crore) Loans 16.0 41.8 41.3 54.1 70.0 73.3 30,946.9 83,103.0 58,311.8 1,12,772.8 1,33,372.9 1,88,313.4 Disbursed by Banks (During the FY) Notes: 1. F igures in brackets give the details of SHGs covered under the National Rural Livelihoods Mission (NRLM) and the National Urban Livelihoods Mission (NULM). 2. Actual number of MFIs availing loans from banks may be less than the number of accounts, as most of MFIs avail loans several times from the same bank and from more than one bank. Source: NABARD. 166APPENDIX TABLE Appendix Table IV.14: Major Financial Indicators of Regional Rural Banks - State-wise (Continued) (Amount in ₹ crore) No. of Profit Earning Loss Incurring Net No. of Profit Earning Loss Incurring Net RRBs Profit/ RRBs Profit/ Loss Loss Mar-23 No. Amount No. Amount Mar-24 No. Amount No. Amount 1 2 3 4 5 6 7 8 9 10 11 12 13 Central Region 7 7 1,039.2 0 0.0 1,039.2 7 7 1,262.9 0 0.0 1,262.9 Chhattisgarh 1 1 167.2 0 0.0 167.2 1 1 296.2 0 0.0 296.2 Madhya Pradesh 2 2 236.5 0 0.0 236.5 2 2 500.4 0 0.0 500.4 Uttar Pradesh 3 3 591.6 0 0.0 591.6 3 3 391.0 0 0.0 391.0 Uttarakhand 1 1 43.8 0 0.0 43.8 1 1 75.3 0 0.0 75.3 Eastern Region 8 6 283.1 2 973.4 -690.2 8 8 624.9 0 0.0 624.9 Bihar 2 1 32.4 1 918.4 -886.0 2 2 94.9 0 0.0 94.9 Jharkhand 1 1 94.3 0 0.0 94.3 1 1 115.9 0 0.0 115.9 Odisha 2 2 84.9 0 0.0 84.9 2 2 162.3 0 0.0 162.3 West Bengal 3 2 71.6 1 55.0 16.6 3 3 251.8 0 0.0 251.8 North Eastern Region 7 5 127.6 2 138.2 -10.6 7 6 206.6 1 1.8 204.8 Arunachal Pradesh 1 1 20.6 0 0.0 20.6 1 1 27.3 0 0.0 27.3 Assam 1 0 0.0 1 138.0 -138.0 1 1 4.2 0 0.0 4.2 Manipur 1 0 0.0 1 0.2 -0.2 1 0 0.0 1 1.8 -1.8 Meghalaya 1 1 37.8 0 0.0 37.8 1 1 62.3 0 0.0 62.3 Mizoram 1 1 65.2 0 0.0 65.2 1 1 84.5 0 0.0 84.5 Nagaland 1 1 0.4 0 0.0 0.4 1 1 0.3 0 0.0 0.3 Tripura 1 1 3.6 0 0.0 3.6 1 1 27.9 0 0.0 27.9 Northern Region 7 5 1,091.2 2 93.1 998.1 7 6 1,235.0 1 49.4 1,185.6 Haryana 1 1 275.5 0 0.0 275.5 1 1 338.2 0 0.0 338.2 Himachal Pradesh 1 1 2.2 0 0.0 2.2 1 1 6.9 0 0.0 6.9 Jammu & Kashmir 2 0 0.0 2 93.1 -93.1 2 1 3.8 1 49.4 -45.7 Punjab 1 1 152.7 0 0.0 152.7 1 1 141.1 0 0.0 141.1 Rajasthan 2 2 660.8 0 0.0 660.8 2 2 745.1 0 0.0 745.1 Southern Region 10 10 3,392.6 0 0.0 3,392.6 10 9 3,990.4 1 174.3 3,816.1 Andhra Pradesh 3 3 1,091.5 0 0.0 1,091.5 3 3 1,404.6 0 0.0 1,404.6 Karnataka 2 2 47.8 0 0.0 47.8 2 1 104.2 1 174.3 -70.1 Kerala 1 1 324.6 0 0.0 324.6 1 1 405.8 0 0.0 405.8 Puducherry 1 1 14.3 0 0.0 14.3 1 1 18.9 0 0.0 18.9 Tamil Nadu 1 1 418.3 0 0.0 418.3 1 1 446.7 0 0.0 446.7 Telangana 2 2 1,496.0 0 0.0 1,496.0 2 2 1,610.2 0 0.0 1,610.2 Western Region 4 4 244.6 0 0.0 244.6 4 4 476.4 0 0.0 476.4 Gujarat 2 2 219.3 0 0.0 219.3 2 2 401.3 0 0.0 401.3 Maharashtra 2 2 25.3 0 0.0 25.3 2 2 75.1 0 0.0 75.1 All India 43 37 6,178.3 6 1,204.7 4,973.6 43 40 7,796.2 3 225.5 7,570.7 Notes: 1. Andhra Pradesh Grameena Vikas Bank, with head office at Warangal in Telangana, operates in 21 districts of Telangana and 7 districts of Andhra Pradesh. Since its head office is in Telangana, it has been included under Telangana in the above table. 2. J & K Grameen Bank, with head office at Jammu, has 4 branches in union territory of Ladakh. The data of the bank has been shown under Jammu & Kashmir. Source: NABARD. 167Report on Trend and Progress of Banking in India 2023-24 Appendix Table IV.14: Major Financial Indicators of Regional Rural Banks - State-wise (Concluded) (Amount in ₹ crore) Region/State Gross NPA CRAR (per cent) (per cent) Mar-23 Mar-24 Mar-23 Mar-24 1 14 15 16 17 Central Region 7.8 7.0 12.5 12.5 Chhattisgarh 2.3 2.0 18.5 17.6 Madhya Pradesh 8.5 7.0 11.2 14.3 Uttar Pradesh 8.3 7.8 12.3 11.5 Uttarakhand 5.5 4.1 11.5 12.6 Eastern Region 19.5 15.0 8.0 9.4 Bihar 30.6 23.8 4.8 6.6 Jharkhand 4.8 3.7 11.3 10.9 Odisha 14.7 11.6 9.8 10.5 West Bengal 10.7 8.0 10.7 12.6 North Eastern Region 11.6 7.3 15.2 15.1 Arunachal Pradesh 2.8 3.3 13.4 15.9 Assam 19.7 10.4 7.8 8.7 Manipur 10.9 10.7 6.9 10.7 Meghalaya 6.4 5.2 13.7 15.3 Mizoram 5.4 4.9 13.3 13.7 Nagaland 1.2 0.8 8.4 10.0 Tripura 5.1 4.7 26.8 24.3 Northern Region 3.8 3.2 12.7 13.6 Haryana 4.3 3.2 14.2 14.8 Himachal Pradesh 4.8 3.9 8.2 8.0 Jammu & Kashmir 5.9 5.4 4.1 9.5 Punjab 5.9 5.1 15.6 16.5 Rajasthan 2.6 2.3 12.4 13.1 Southern Region 4.1 4.0 16.4 17.6 Andhra Pradesh 1.1 0.9 19.6 21.1 Karnataka 10.7 11.5 10.2 10.5 Kerala 2.3 2.1 13.1 13.5 Puducherry 2.0 1.4 10.5 10.4 Tamil Nadu 1.4 1.0 13.6 13.3 Telangana 2.4 2.4 22.7 25.1 Western Region 5.3 4.3 11.2 12.7 Gujarat 2.8 2.2 13.6 15.0 Maharashtra 7.7 6.4 9.0 10.5 All India 7.3 6.2 13.4 14.2 Notes: 1. Andhra Pradesh Grameena Vikas Bank, with head office at Warangal in Telangana, operates in 21 districts of Telangana and 7 districts of Andhra Pradesh. Since its head office is in Telangana, it has been included under Telangana in the above table. 2. J & K Grameen Bank, with head office at Jammu, has 4 branches in union territory of Ladakh. The data of the bank has been shown under Jammu & Kashmir. Source: NABARD. 168APPENDIX TABLE Appendix Table IV.15: RRBs - PSL Target and Achievement - 2023-24 Sector/Sub Sector Target Achievement RRBs not Meeting Target/Sub-target (per cent) (per cent) 1 2 3 4 Overall Priority Sector 75.0 88.6 All RRBs have met all the targets/sub-targets for FY 2023-24 Agriculture 18.0 34.2 Small and Marginal Farmers 10.0 19.0 Non-Corporate Farmers 13.78 94.2 Micro Enterprises 7.5 15.0 Weaker Sections 15.0 84.8 Notes: 1. Achievement for FY 2023-24 is computed as a percentage of Adjusted Net Bank Credit (ANBC) as a simple average of all quarters as per the Reserve Bank’s Master Directions on PSL. 2. ANBC is as on corresponding date of the previous year. 3. Achievement under different categories has been arrived upon after factoring in PSLCs issued/purchased. 4. While computing ANBC, outstanding PSLCs (PSLC purchased less PSLC issued) have been added to net bank credit. Source: NABARD. 169Report on Trend and Progress of Banking in India 2023-24 Appendix Table V.1: Indicators of Financial Performance: Scheduled UCBs (Continued) (As per cent to total assets) Sr. Name of the Bank Interest Income Operating Profit Net Profit after Taxes No. 2022-23 2023-24 2022-23 2023-24 2022-23 2023-24 1 2 3 4 5 6 7 8 1 Abhyudaya Co-operative Bank Limited, Mumbai 6.0 6.6 0.1 0.3 -1.8 -1.9 2 Ahmedabad Mercantile Co-operative Bank Limited 6.7 6.9 2.3 2.2 1.5 1.5 3 Akola Janata Commercial Co-operative Bank Limited, Akola 6.4 7.0 1.8 1.9 1.1 1.3 4 Akola Urban Co-operative Bank Limited, Akola 6.1 6.8 3.2 1.3 0.3 0.8 5 Amanath Co-operative Bank Limited, Bangalore 0.4 0.6 -0.3 0.0 -0.2 0.2 6 Andhra Pradesh Mahesh Co-operative Urban Bank Limited 7.9 8.0 1.0 1.7 0.6 1.9 7 Apna Sahakari Bank Limited 6.5 5.5 0.4 -0.3 -1.5 -1.4 8 Bassein Catholic Co-operative Bank Limited 6.5 6.8 1.5 1.5 0.7 1.1 9 Bharat Co-operative Bank (Mumbai) Limited, Mumbai 6.6 6.8 1.1 1.0 -1.1 0.1 10 Bharati Sahakari Bank Limited 6.1 6.5 1.5 1.8 0.6 1.0 11 Bombay Mercantile Co-operative Bank Limited 4.7 4.7 0.8 0.7 0.1 0.2 12 Citizen Credit Co-operative Bank Limited, Mumbai 6.7 7.1 1.3 1.3 0.6 0.6 13 Cosmos Co-operative Bank Limited 6.8 7.0 2.4 1.9 0.7 1.6 14 Dombivli Nagari Sahakari Bank Limited 6.4 6.1 3.6 2.1 0.5 0.5 15 Goa Urban Co-operative Bank Limited 6.7 7.1 0.8 1.2 0.6 0.9 16 Gopinath Patil Parsik Janata Sahakari Bank Limited, Thane 6.8 6.9 1.3 1.7 0.7 1.0 17 Greater Bombay Co-operative Bank Limited 7.1 6.8 0.7 0.6 0.2 0.2 18 Indian Mercantile Co-operative Bank Limited, Lucknow 4.9 4.2 1.4 1.0 1.4 0.9 19 Jalgaon Janata Sahakari Bank Limited 7.0 7.3 1.7 1.4 0.9 0.9 20 Jalgaon People’s Co-operative Bank Limited 6.2 6.8 1.3 1.0 0.3 0.1 21 Janakalyan Sahakari Bank Limited, Mumbai 5.5 6.9 0.1 1.2 0.1 0.3 22 Janalaxmi Co-operative Bank Limited, Nashik 3.8 4.8 -0.6 0.5 -0.6 0.5 23 Janata Sahakari Bank Limited, Pune 6.2 6.4 1.2 1.0 0.1 0.4 24 Kallappanna Awade Ichalkaranji Janata Sahakari Bank Limited 7.1 7.2 1.6 1.6 0.5 0.4 25 Kalupur Commercial Co-operative Bank Limited 6.1 6.7 2.3 2.4 1.3 1.5 26 Kalyan Janata Sahakari Bank Limited, Kalyan 6.5 7.3 1.0 0.9 -0.6 0.4 27 Kapol Co-operative Bank Limited, Mumbai - - - - - - 28 Karad Urban Co-operative Bank Limited 7.0 6.8 1.5 0.9 0.5 0.6 29 Khamgaon Urban Co-operative Bank Limited, Khamgaon 6.5 6.6 2.2 1.9 0.6 0.6 30 Mahanagar Co-operative Bank Limited, Mumbai 6.9 7.4 1.1 1.1 0.6 1.0 31 Mehsana Urban Co-operative Bank Limited 7.2 7.2 2.7 2.2 1.2 1.1 32 Nagar Urban Co-operative Bank Limited, Ahmednagar - - - - - - 33 Nagpur Nagrik Sahakari Bank Limited 6.6 7.0 1.2 1.3 0.2 0.4 34 Nasik Merchant’s Co-operative Bank Limited 7.8 7.4 2.7 2.6 1.5 1.5 35 New India Co-operative Bank Limited, Mumbai 6.7 6.4 0.0 -0.1 -1.0 0.2 36 NKGSB Co-operative Bank Limited, Mumbai 6.8 6.6 1.1 0.6 0.3 0.2 37 Nutan Nagarik Sahakari Bank Limited, Ahmedabad 6.2 6.8 0.6 0.5 0.5 0.6 38 Pravara Sahakari Bank Limited 7.9 7.8 1.9 1.8 0.5 0.6 39 Punjab & Maharashtra Co-operative Bank Limited - - - - - - 40 Rajarambapu Sahakari Bank Limited 7.3 7.1 1.7 1.4 0.5 0.5 41 Rajkot Nagrik Sahakari Bank Limited 6.8 7.3 2.1 1.8 1.3 1.2 42 Rupee Co-operative Bank Limited - - - - - - 43 Sangli Urban Co-operative Bank Limited, Sangli 6.1 7.2 0.1 1.7 0.0 1.7 44 Saraswat Co-operative Bank Limited, Bombay 5.6 6.1 1.5 1.2 0.6 0.8 45 SBPP Co-operative Bank Limited, Killa Pardi 6.2 6.4 1.7 2.3 0.6 1.7 46 Shamrao Vithal Co-operative Bank Limited 6.8 7.1 1.2 1.4 0.7 0.9 47 Shikshak Sahakari Bank Limited, Nagpur 5.0 6.6 0.0 1.6 0.1 1.8 48 Solapur Janata Sahakari Bank Limited 6.9 6.8 1.9 1.6 1.1 1.2 49 Surat Peoples Co-operative Bank Limited 7.1 7.5 1.7 2.2 1.1 1.5 50 Thane Bharat Sahakari Bank Limited 6.9 7.4 1.0 0.9 0.3 0.4 51 TJSB Sahakari Bank 6.8 7.1 1.7 1.6 1.0 1.2 52 Vasai Vikas Sahakari Bank Limited 6.8 6.7 0.8 1.1 0.2 0.3 53 Zoroastrian Co-operative Bank Limited, Bombay 6.8 7.1 0.9 0.4 0.2 0.2 Notes: 1. Data for 2023-24 are provisional. 2. -: Nil/negligible. Source: Off-site surveillance returns, RBI. 170APPENDIX TABLE Appendix Table V.1: Indicators of Financial Performance: Scheduled UCBs (Concluded) (As per cent to total assets) Sr. Name of the Bank Interest Expended Non-Interest Expenses Provisions and Contingencies No. 2022-23 2023-24 2022-23 2023-24 2022-23 2023-24 1 2 9 10 11 12 13 14 1 Abhyudaya Co-operative Bank Limited, Mumbai 3.8 4.1 2.7 2.8 2.8 3.4 2 Ahmedabad Mercantile Co-operative Bank Limited 3.5 3.8 1.4 1.4 0.8 0.2 3 Akola Janata Commercial Co-operative Bank Limited, Akola 2.9 3.5 2.6 2.5 0.4 0.2 4 Akola Urban Co-operative Bank Limited, Akola 3.3 3.8 2.9 2.8 2.5 0.1 5 Amanath Co-operative Bank Limited, Bangalore 0.2 0.2 0.7 0.5 0.0 0.0 6 Andhra Pradesh Mahesh Co-operative Urban Bank Limited 4.9 4.4 2.6 2.2 0.2 -0.9 7 Apna Sahakari Bank Limited 3.9 4.0 2.7 2.4 2.4 1.4 8 Bassein Catholic Co-operative Bank Limited 3.8 4.1 1.4 1.3 0.5 0.1 9 Bharat Co-operative Bank (Mumbai) Limited, Mumbai 4.0 4.4 2.1 2.0 2.6 0.8 10 Bharati Sahakari Bank Limited 3.3 3.1 1.6 1.7 0.8 0.5 11 Bombay Mercantile Co-operative Bank Limited 1.8 1.8 3.1 3.1 0.9 0.8 12 Citizen Credit Co-operative Bank Limited, Mumbai 3.4 3.9 2.3 2.3 0.4 0.5 13 Cosmos Co-operative Bank Limited 3.7 4.1 2.0 2.0 1.4 0.0 14 Dombivli Nagari Sahakari Bank Limited 3.2 3.2 2.5 2.5 1.7 1.1 15 Goa Urban Co-operative Bank Limited 4.0 3.9 2.3 2.3 0.0 0.0 16 Gopinath Patil Parsik Janata Sahakari Bank Limited, Thane 3.3 3.2 2.6 2.6 0.6 0.5 17 Greater Bombay Co-operative Bank Limited 4.3 4.1 2.8 3.0 0.5 0.3 18 Indian Mercantile Co-operative Bank Limited, Lucknow 1.2 1.6 2.4 2.3 -0.1 -0.5 19 Jalgaon Janata Sahakari Bank Limited 3.6 4.2 2.1 2.4 0.6 0.3 20 Jalgaon People’s Co-operative Bank Limited 3.3 4.0 2.3 2.4 1.9 1.4 21 Janakalyan Sahakari Bank Limited, Mumbai 3.3 3.5 2.4 2.9 -0.3 0.6 22 Janalaxmi Co-operative Bank Limited, Nashik 2.3 2.3 3.0 3.4 0.0 0.0 23 Janata Sahakari Bank Limited, Pune 3.7 4.1 1.6 1.7 1.7 1.1 24 Kallappanna Awade Ichalkaranji Janata Sahakari Bank Limited 4.1 4.4 1.7 1.6 1.1 0.9 25 Kalupur Commercial Co-operative Bank Limited 3.3 3.7 1.1 1.1 0.4 0.4 26 Kalyan Janata Sahakari Bank Limited, Kalyan 4.0 4.2 2.5 2.7 1.5 0.4 27 Kapol Co-operative Bank Limited, Mumbai - - - - - - 28 Karad Urban Co-operative Bank Limited 4.0 4.1 2.1 2.1 0.9 0.4 29 Khamgaon Urban Co-operative Bank Limited, Khamgaon 2.7 3.2 2.3 2.3 1.3 1.0 30 Mahanagar Co-operative Bank Limited, Mumbai 3.6 3.8 2.5 2.9 0.4 0.1 31 Mehsana Urban Co-operative Bank Limited 4.0 4.3 1.0 1.1 1.3 0.6 32 Nagar Urban Co-operative Bank Limited, Ahmednagar - - - - - - 33 Nagpur Nagrik Sahakari Bank Limited 3.3 3.7 2.5 2.7 1.4 0.9 34 Nasik Merchant’s Co-operative Bank Limited 3.8 4.2 2.4 2.4 0.7 -0.2 35 New India Co-operative Bank Limited, Mumbai 4.4 4.5 2.8 2.6 2.1 0.7 36 NKGSB Co-operative Bank Limited, Mumbai 4.0 4.3 2.6 2.3 0.3 0.2 37 Nutan Nagarik Sahakari Bank Limited, Ahmedabad 4.3 5.0 1.6 1.5 0.6 0.2 38 Pravara Sahakari Bank Limited 4.4 4.7 2.4 1.8 1.3 0.9 39 Punjab & Maharashtra Co-operative Bank Limited - - - - - - 40 Rajarambapu Sahakari Bank Limited 4.5 4.7 1.8 1.4 1.2 0.9 41 Rajkot Nagrik Sahakari Bank Limited 3.8 4.2 1.3 1.4 0.4 0.2 42 Rupee Co-operative Bank Limited - - - - - - 43 Sangli Urban Co-operative Bank Limited, Sangli 4.0 4.8 2.4 2.2 0.0 0.0 44 Saraswat Co-operative Bank Limited, Bombay 3.3 3.9 1.7 1.7 0.6 -0.2 45 SBPP Co-operative Bank Limited, Killa Pardi 3.0 3.1 1.9 1.7 0.7 0.1 46 Shamrao Vithal Co-operative Bank Limited 3.8 4.2 2.5 2.2 0.2 0.2 47 Shikshak Sahakari Bank Limited, Nagpur 3.1 3.5 2.5 2.7 0.8 0.3 48 Solapur Janata Sahakari Bank Limited 3.8 3.8 1.9 2.0 1.0 0.1 49 Surat Peoples Co-operative Bank Limited 4.5 4.8 1.2 1.1 0.3 0.3 50 Thane Bharat Sahakari Bank Limited 3.7 4.1 3.3 3.6 0.6 0.4 51 TJSB Sahakari Bank 3.7 4.0 1.9 2.0 0.4 0.0 52 Vasai Vikas Sahakari Bank Limited 4.4 4.1 1.9 2.0 0.7 0.8 53 Zoroastrian Co-operative Bank Limited, Bombay 3.7 3.9 2.8 3.0 0.4 0.1 Notes: 1. Data for 2023-24 are provisional. 2. -: Nil/negligible. Source: Off-site surveillance returns, RBI. 171Report on Trend and Progress of Banking in India 2023-24 Appendix Table V.2: Select Financial Parameters: Scheduled UCBs (At end-March 2024) (Per cent) Sr. Bank Name Average Average Net Net Non- Return CRAR Business Profit per No. Cost of Yield on Interest Interest Interest on per Employee Deposits Advances Income Income to Income to Assets Employee (₹ crores) to Total Working Working (ROA) (₹ crores) Assets Fund Fund (Spread) 1 2 3 4 5 6 7 8 9 10 11 1 Abhyudaya Co-Op. Bank Ltd., Mumbai 4.6 8.6 2.3 2.5 0.9 -1.8 2.1 5.9 -0.1 2 Ahmedabad Mercantile Co-Op.Bank Ltd. 5.6 9.0 3.4 3.2 0.5 1.6 33.4 46.6 0.2 3 Akola Urban Co-Op.Bank Ltd. 4.8 10.1 3.3 3.2 1.2 0.8 15.0 54.4 0.0 4 Amanath Co-Op.Bank Ltd.,Bangalore 0.0 6.7 4.3 4.1 2.8 2.3 94.2 66.9 0.0 5 Andhra Pradesh Mahesh Co-Operative Urban 5.4 11.3 3.5 3.5 0.3 1.8 45.2 28.0 0.1 Bank Ltd.Hyderabad 6 Apna Sahakari Bank Ltd. 5.0 7.2 1.4 1.6 0.6 -1.3 5.6 85.0 -0.1 7 Bassein Catholic Co-Op.Bank Ltd. 5.5 9.0 2.8 2.8 0.2 1.1 22.3 55.0 0.2 8 Bharati Sahakari Bank Ltd.(Poona) 3.9 8.9 3.6 3.5 0.2 1.1 21.2 67.6 0.1 9 Bombay Mercantile Co-Op.Bank Ltd. 3.0 9.6 3.1 4.0 1.4 0.2 15.0 85.2 0.0 10 Citizen Credit Co-Op.Bank Ltd.Mumbai 4.7 8.9 3.1 3.3 0.4 0.6 23.5 49.3 0.0 11 Cosmos Co-Operative Bank Ltd.Pune 5.2 9.4 3.1 3.0 2.3 1.7 15.4 93.3 0.1 12 Dombivali Nagari Sahakari Bank Ltd. 4.4 9.9 3.5 3.5 2.0 0.5 15.6 69.3 0.0 13 Goa Urban Co-Op.Bank Ltd. 5.2 9.3 3.3 32.0 3.6 0.9 21.0 62.1 0.0 14 GP Parsik Sahakari Bank Ltd.,Kalwa,Thane 4.0 8.9 3.8 3.7 0.6 1.0 21.7 48.6 0.1 15 Greater Bombay Co-Op.Bank Ltd. 4.6 8.3 2.8 2.8 2.0 0.2 19.5 72.9 0.0 16 GS Mahanagar Co-Operative Bank Ltd., Mumbai 4.8 10.2 3.7 3.8 0.8 1.0 17.4 57.5 0.1 17 Indian Mercantile Coop.Bank Ltd Lucknow 3.2 4.7 2.9 3.6 1.0 1.0 57.6 21.5 0.0 18 Jalgaon Janata Sahakari Bank Ltd. 5.2 10.2 3.3 3.3 0.7 0.9 15.7 94.8 0.1 19 Jalgaon People’s Co-Op.Bank Ltd. 5.0 9.8 2.9 2.8 1.1 0.1 13.3 74.7 0.0 20 Janakalyan Sahakari Bank Ltd.(Bombay) 4.4 9.3 3.2 3.6 0.8 0.3 13.7 32.1 0.0 21 Janalaxmi Co-Op.Bank Ltd.(Nasik) 5.0 11.1 2.3 3.9 2.3 0.5 32.9 29.0 0.0 22 Janata Sahakari Bank Ltd.(Poona) 5.0 8.8 2.6 2.4 1.8 0.5 14.3 61.3 0.0 23 Kallappanna Awade Ichalkaranji Janata Sahakari 5.9 10.4 3.2 3.4 0.5 0.5 13.2 121.6 0.0 Bank Ltd. 24 Karad Urban Co-Op.Bank Ltd. 5.5 9.5 3.0 3.0 0.9 0.7 16.2 66.0 0.0 25 Khamgaon Urban Co-Op.Bank Ltd. 4.4 10.2 3.5 3.5 0.9 0.7 21.4 49.3 0.0 26 Mehsana Urban Co-Operative Bank Ltd. 5.8 9.9 3.3 3.0 0.5 1.3 15.3 88.7 0.2 27 Nagpur Nagarik Sahakari Bank Ltd. 4.4 9.0 3.3 3.3 0.8 0.4 14.2 86.6 0.0 28 Nasik Merchants’ Co-Op.Bank Ltd. 5.0 9.2 3.6 3.2 1.8 1.7 31.9 33.1 0.1 29 New India Co-Op.Bank Ltd. 4.9 10.0 1.9 2.0 1.7 0.2 9.1 53.8 0.0 30 NKGSB Co-Op. Bank Ltd. 5.3 8.9 2.5 2.5 0.6 0.3 12.8 92.3 0.0 31 Nutan Nagrik Sah.Bank Ltd.(Ahmedabad) 6.1 9.0 1.8 1.7 0.8 0.7 15.3 74.8 0.1 32 Pravara Sahakari Bank Ltd. 5.5 10.0 3.2 3.1 0.5 0.6 14.1 48.0 0.0 33 Rajaram Bapu Sahakari Bank Ltd. 6.1 9.4 2.7 2.7 0.6 0.6 14.3 66.6 0.0 34 Rajkot Nagrik Sahakari Bank Ltd. 5.4 9.8 3.3 3.2 0.1 1.3 18.2 69.7 0.1 35 Sangli Urban Co-Op.Bank Ltd. 5.8 9.8 2.4 2.6 1.6 1.7 14.1 52.5 0.1 36 Saraswat Co-Operative Bank Ltd. 5.3 9.3 2.6 2.4 0.8 0.9 17.3 83.4 0.1 37 SBPP Co-Operative Bank Ltd 4.5 9.7 3.8 3.6 0.8 1.9 20.8 72.3 0.1 38 Shikshak Sahakari Bank Ltd.,Nagpur 4.9 10.9 3.1 3.7 2.5 1.8 16.2 73.6 0.1 39 Sholapur Janata Sahakari Bank Ltd. 5.2 10.5 3.2 3.4 0.6 1.3 17.9 61.3 0.1 40 Surat People’s Co-Op.Bank Ltd. 5.9 9.4 2.9 2.7 0.6 1.6 16.6 68.2 0.3 41 SVC Co-Operative Bank Ltd. 5.4 9.8 3.0 3.4 0.8 0.9 15.4 86.2 0.1 42 Thane Bharat Sahakari Bank Ltd.Thane 4.3 8.9 3.3 3.4 1.4 0.4 14.4 62.4 0.0 43 The Akola Janata Commercial Co-Operative Bank 4.7 11.1 3.9 3.7 0.9 1.4 24.5 47.8 0.1 Ltd. 44 The Bharat Co-Operative Bank (Mumbai)Ltd. 5.4 9.5 2.5 2.5 0.6 0.1 13.7 95.8 0.0 45 The Kalupur Comm.Co-Op.Bank Ltd. 5.3 9.3 3.4 3.2 0.6 1.7 20.4 82.0 0.2 46 The Kalyan Janata Sah.Bank Ltd.Kalyan 4.9 9.8 3.1 3.1 0.7 0.4 11.6 97.4 0.0 47 TJSB Sahakari Bank Ltd. Thane 5.1 9.8 3.4 3.2 0.6 1.4 17.6 62.1 0.1 48 Vasai Vikas Sahakari Bank Ltd. 49.2 8.8 2.7 2.6 0.7 0.3 16.6 55.2 0.0 49 Zoroastrian Co-Operative Bank Ltd. 4.8 8.8 3.2 3.1 0.3 0.2 22.1 50.1 0.0 Note: Data for as on March 31, 2024 are provisional. Source: Off-site surveillance returns, RBI. 172APPENDIX TABLE Appendix Table V.3: Salient Indicators of Financial Health of State Co-operative Banks (At end-March) (Amount in ₹ lakh) Sr. Region/State/UT Amount of Profit/Loss NPAs as Percentage of Recovery to Demand No Loans Outstanding (%) 2022-23 2023-24P 31-Mar-23 31-Mar-24 30-Jun-22 30-Jun-23 1 2 3 4 5 6 7 8 Northern Region 36,429 31,052 3.0 2.2 97.7 97.6 1 Chandigarh 550 1,174 3.3 2.4 80.5 83.9 2 Delhi 2,122 2,123 0.9 0.7 98.0 98.1 3 Haryana 8,852 6,185 0.1 - 100.0 100.0 4 Himachal Pradesh 15,912 11,876 7.0 3.9 71.8 71.9 5 Jammu & Kashmir -993 -1,489 53.0 55.5 73.6 63.0 6 Punjab 2,678 3,561 0.9 0.9 99.3 98.4 7 Rajasthan 7,308 7,621 0.2 0.2 98.8 99.8 North-Eastern Region 5,016 10,148 9.7 9.2 62.3 80.3 8 Arunachal Pradesh -4,990 -2,057 50.1 39.9 26.1 15.8 9 Assam 1,220 1,401 9.6 9.2 63.2 66.1 10 Manipur 366 401 24.1 18.1 63.7 64.6 11 Meghalaya 1,477 1,670 7.6 8.0 48.4 31.4 12 Mizoram 3,966 4,246 2.8 2.5 63.1 84.8 13 Nagaland 242 858 15.9 14.2 60.5 59.7 14 Sikkim 504 834 4.0 3.5 87.8 59.5 15 Tripura 2,231 2,795 7.2 7.6 74.9 93.7 Eastern Region 49,218 54,449 3.7 3.9 87.0 91.3 16 Andaman & Nicobar Islands 608 746 34.9 25.8 67.9 63.4 17 Bihar 7,616 6,764 2.3 3.1 64.1 17.3 18 Jharkhand 3,060 6,669 11.9 9.4 52.7 55.0 19 Odisha 22,914 21,589 1.0 1.1 94.0 98.7 20 West Bengal 15,021 18,682 5.0 4.8 89.2 89.2 Central Region 23,617 23,673 3.9 3.8 94.4 92.7 21 Chhattisgarh 3,389 3,683 1.9 2.0 96.4 97.2 22 Madhya Pradesh 12,817 11,154 4.3 5.1 91.8 86.0 23 Uttar Pradesh 6,076 7,287 3.9 3.1 97.3 98.1 24 Uttarakhand 1,336 1,549 4.9 4.1 96.1 97.6 Western Region 78,361 80,832 8.3 7.2 84.0 77.7 25 Dadra and Nagar Haveli and Daman and Diu 945 970 2.9 4.4 68.1 68.1 26 Goa 177 482 10.0 4.2 80.8 91.7 27 Gujarat 10,559 10,692 0.8 0.7 95.9 96.1 28 Maharashtra 66,680 68,688 10.7 9.2 82.4 73.9 Southern Region 53,114 68,990 5.6 5.1 91.7 94.6 29 Andhra Pradesh 18,265 18,980 0.6 0.5 99.7 97.9 30 Karnataka 11,000 6,500 4.4 4.6 97.9 97.6 31 Kerala 3,252 24,781 12.1 11.2 78.4 73.3 32 Puducherry 1,085 60 13.9 11.6 91.5 71.6 33 Tamil Nadu 11,478 12,129 2.6 2.9 99.4 99.4 34 Telangana 8,034 6,540 0.1 0.1 98.7 98.8 All India 2,45,756 2,69,144 5.4 4.9 91.7 92.4 Notes: 1: P: Provisional 2. Components may not add up to total due to rounding off. 3. Recovery for a financial year is as on 30th June. Source: NABARD. 173Report on Trend and Progress of Banking in India 2023-24 Appendix Table V.4: Salient Indicators of Financial Health of District Central Co-operative Banks (At end-March) (Amount in ₹ lakh) Sr. Region/State/UT 2022-23 2023-24 P 2023 2024 P No. No. of Profit Loss No. of Profit Loss NPA Recovery NPA Recovery DCCBs No. of Amt. No of Amt. DCCBs No. of Amt. No of Amt. to to to to DCCBs DCCBs DCCBs DCCBs loans Demand loans Demand ratio (%) ratio (%) (%) (At end- (%) (At end- June)* June) * 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Northern region 73 65 27,640 8 10,005 73 65 29,841 8 15,330 9.6 77.1 8.5 73.6 1 Haryana 19 19 8,045 0 - 19 19 7,122 0 - 6.3 65.6 5.8 60.2 2 Himachal Pradesh 2 2 6,582 0 - 2 2 8,399 0 - 25.2 76.9 21.0 70.5 3 Jammu & Kashmir 3 2 132 1 1,070 3 2 443 1 639 26.7 19.6 20.4 35.4 4 Punjab 20 14 5,248 6 8,217 20 14 7,255 6 11,410 11.0 77.6 10.7 75.9 5 Rajasthan 29 28 7,633 1 717 29 28 6,622 1 3,282 6.0 87.8 5.2 83.7 Eastern region 58 51 21,202 7 5,025 58 52 28,422 6 9,150 8.5 73.7 8.8 76.6 6 Bihar 23 17 1,145 6 2,301 23 19 2,558 4 3,228 9.2 39.2 12.2 51.8 7 Jharkhand 1 1 85 0 - 1 1 146 0 - 12.7 54.5 28.1 66.6 8 Odisha 17 17 9,796 0 - 17 17 11,946 0 - 7.5 74.4 7.3 78.2 9 West Bengal 17 16 10,176 1 2,723 17 15 13,772 2 5,922 10.0 80.0 10.1 79.0 Central region 104 78 42,504 26 50,467 104 89 62,991 15 63,188 18.4 66.1 15.7 66.4 10 Chhattisgarh 6 6 12,389 0 - 6 6 19,635 0 - 11.0 76.8 9.7 78.7 11 Madhya Pradesh 38 23 14,599 15 40,989 38 29 22,174 9 59,041 25.8 60.2 22.7 57.9 12 Uttar Pradesh 50 39 10,039 11 9,478 50 44 11,446 6 4,147 8.2 73.5 6.3 79.3 13 Uttarakhand 10 10 5,477 0 - 10 10 9,736 0 - 8.8 72.3 7.6 73.3 Western region 49 47 1,21,425 2 21,824 49 46 1,29,124 3 5,585 11.2 73.9 10.3 75.2 14 Gujarat 18 18 41,377 0 - 18 18 44,729 0 - 3.7 94.1 3.0 94.4 15 Maharashtra 31 29 80,048 2 21,824 31 28 84,395 3 5,585 14.1 64.1 13.2 66.0 Southern region 67 64 75,159 3 12,471 67 60 79,359 7 47,093 5.8 87.9 5.8 88.8 16 Andhra Pradesh 13 12 13,377 1 3,569 13 11 13,126 2 30,855 3.6 89.6 4.8 88.1 17 Karnataka 21 20 21,697 1 7,655 21 18 26,726 3 12,123 6.7 91.9 7.2 91.8 18 Kerala 1 0 - 1 1,247 1 0 - 1 3,869 15.4 66.1 15.4 66.1 19 Tamil Nadu 23 23 31,080 0 - 23 23 27,200 0 - 6.3 83.7 5.5 88.6 20 Telangana 9 9 9,004 0 - 9 8 12,307 1 246 3.8 85.4 3.2 84.7 All India 351 305 2,87,929 46 99,791 351 312 3,29,737 39 1,40,346 9.6 76.5 8.9 76.8 Notes: 1. Components may not add up to the total/s due to rounding off. 2. Recovery for a financial year is taken as on 30th June. Source: NABARD. 174APPENDIX TABLE Appendix Table V.5: Details of Members and Borrowers of Primary Agricultural Credit Societies (Numbers in thousands) All India Members Borrowers 2022 2023 2022 2023 1 2 3 4 5 Scheduled Castes 17,919 17,759 5,856 5,420 Scheduled Tribes 19,527 19,254 3,745 3,209 Small Farmers 70,217 73,057 27,518 28,189 Rural Artisans 7,189 7,298 1,454 1,273 Others and Marginal Farmers 54,318 43,011 9,775 11,137 Source: NAFSCOB. 175Report on Trend and Progress of Banking in India 2023-24 Appendix Table V.6: Primary Agricultural Credit Societies (Amount in ₹ crore) At end-March Percentage Variation 2022 2023 2021-22 2022-23 1 2 3 4 5 Liabilities 1. Total Resources (2+3+4) 3,91,518 4,47,134 9.89 14.21 2. Owned Funds (a+b) 42,754 48,566 1.05 13.59 a. Paid-up Capital 19,792 22,191 3.54 12.12 of which Government Contribution 866 889 -3.78 2.66 b. Total Reserves 22,962 26,375 -1.01 14.86 3. Deposits 1,76,390 1,97,239 3.20 11.82 4. Borrowings 1,72,374 2,01,329 20.50 16.80 5. Working Capital 3,69,896 4,09,377 10.51 10.67 Assets 1. Total Loans Outstanding (a+b) 1,59,700 1,88,842 -26.36 18.25 a. Short-Term 1,29,171 1,54,650 -32.05 19.73 b. Medium-Term 30,529 34,192 14.12 12.00 Note: Y-o-y variations could be slightly different because absolute numbers have been rounded off to ₹ crore. Source: NAFSCOB. 176APPENDIX TABLE Appendix Table V.7: Select Indicators of Primary Agricultural Credit Societies-State-wise (Continued) (At end-March 2023) (Amount in ₹ lakh) Sr. State Number of Deposits Working Loans and Advances Societies in Profit No. PACS Capital Outstanding Agriculture Non- Number Amount Agriculture 1 2 3 4 5 6 7 8 9 Northern region 15,081 17,15,959 57,48,792 26,84,829 78,138 10,076 60,371 1 Chandigarh* 17 6 5 0 0 10 1 2 Haryana 776 45,843 16,24,138 6,02,697 33,508 50 875 3 Himachal Pradesh 2,193 6,10,846 7,72,194 1,20,728 12,511 1,847 6,800 4 Jammu & Kashmir 609 405 3,514 2,168 901 474 19 5 Punjab* 3,998 7,72,226 13,28,203 7,12,988 22,050 2,062 22,908 6 Rajasthan 7,488 2,86,632 20,20,738 12,46,248 9,169 5,633 29,768 North-Eastern region 9,741 3,16,586 1,59,417 36,967 32,356 1,000 9,114 7 Arunachal Pradesh 35 N.A. 5,830 0 0 13 22 8 Assam* 766 0 11,123 575 20 309 7,639 9 Manipur 309 7 1,214 5 1 148 96 10 Meghalaya 510 2,15,876 8,169 4,296 44 217 129 11 Mizoram 73 3,071 532 410 311 38 928 12 Nagaland* 7,601 97,313 1,17,058 30,245 31,586 N.A. N.A. 13 Sikkim 179 227 119 1,225 260 153 269 14 Tripura 268 92 15,371 211 134 122 30 Eastern region 18,632 7,98,038 17,05,953 9,32,530 41,617 4,351 7,660 15 Andaman & Nicobar Islands 58 110 2,364 1,748 854 20 32 16 Bihar* 8,463 17,533 50,816 0 0 1,180 604 17 Jharkhand N.A. N.A. N.A. N.A. N.A. N.A. N.A. 18 Odisha 2,703 5,68,806 11,45,467 7,80,159 10,179 772 3,646 19 West Bengal 7,408 2,11,589 5,07,306 1,50,624 30,584 2,379 3,378 Central region 16,043 2,52,035 17,22,415 6,83,267 57,123 8,227 34,953 20 Chhattisgarh 1,924 26,828 6,10,162 1,58,144 3,105 996 7,165 21 Madhya Pradesh* 4,457 81,731 6,45,546 3,39,959 11,892 2,153 13,124 22 Uttarakhand 733 1,36,656 3,40,780 1,05,134 42,125 542 12,891 23 Uttar Pradesh* 8,929 6,820 1,25,927 80,031 0 4,536 1,774 Western region 31,167 10,66,120 64,20,812 44,60,381 6,14,524 14,421 26,722 24 Goa 93 12,202 19,848 1,013 5,815 53 446 25 Gujarat 9,212 76,845 18,88,074 16,37,777 58,675 6,735 14,211 26 Maharashtra 21,862 9,77,072 45,12,891 28,21,590 5,50,034 7,633 12,065 Southern region 16,291 1,55,75,148 2,51,80,342 60,74,386 21,86,080 9,719 75,414 27 Andhra Pradesh 2,042 3,69,807 24,50,386 14,75,391 0 1,194 30,162 28 Telangana* 823 40,254 7,05,820 5,79,231 21,218 579 5,994 29 Karnataka 7,240 17,84,113 49,11,666 23,14,548 9,22,180 4,231 14,024 30 Kerala* 1,620 1,21,69,710 1,35,32,893 4,46,114 2,28,188 927 14,150 31 Puducherry 53 21,815 29,644 35 22,060 16 350 32 Tamil Nadu 4,513 11,89,449 35,49,933 12,59,067 9,92,435 2,772 10,734 All India 1,06,955 1,97,23,884 4,09,37,731 1,48,72,360 30,09,837 47,794 2,14,234 Notes: 1. *: Data relate to previous year. 2. Components may not add up to the exact total /s due to rounding off. 3. N.A.: Not Available Source: NAFSCOB. 177Report on Trend and Progress of Banking in India 2023-24 Appendix Table V.7: Select Indicators of Primary Agricultural Credit Societies-State-wise (Concluded) (At end-March 2023) (Amount in ₹ lakh) Sr. State Societies in Loss Viable Potentially Dormant Defunct Others No. viable Number Amount 1 2 10 11 12 13 14 15 16 Northern Region 4,375 79,695 12,752 1,556 434 205 134 1 Chandigarh* 5 0 4 0 13 0 0 2 Haryana 726 58,577 776 0 0 0 0 3 Himachal Pradesh 254 1,079 642 1,388 130 4 29 4 Jammu & Kashmir 75 2 461 57 17 72 2 5 Punjab* 1,513 6,619 3,505 111 150 129 103 6 Rajasthan 1,802 13,417 7,364 0 124 0 0 North-Eastern Region 947 10,869 9,387 265 66 23 0 7 Arunachal Pradesh 20 12 32 0 0 3 0 8 Assam* 419 9,909 709 57 0 0 0 9 Manipur 70 66 183 103 10 13 0 10 Meghalaya 293 842 401 68 41 0 0 11 Mizoram 7 4 46 27 0 0 0 12 Nagaland* N.A. N.A. 7,601 0 0 0 0 13 Sikkim 22 12 147 10 15 7 0 14 Tripura 116 23 268 0 0 0 0 Eastern Region 9,915 23,531 14,108 2,767 587 412 758 15 Andaman & Nicobar Island 26 197 43 12 3 0 0 16 Bihar* 3,962 94 8,463 0 0 0 0 17 Jharkhand N.A. N.A. N.A. N.A. N.A. N.A. N.A. 18 Odisha 1,912 21,766 1,649 509 11 1 533 19 West Bengal 4,015 1,473 3,953 2,246 573 411 225 Central Region 5,031 44,383 13,326 2,094 386 167 70 20 Chhattisgarh 782 23,240 1,888 36 0 0 0 21 Madhya Pradesh* 2,129 17,824 3,663 720 4 0 70 22 Uttarakhand 152 3,167 660 69 0 4 0 23 Uttar Pradesh* 1,968 153 7,115 1,269 382 163 0 Western Region 12,444 20,202 24,349 4,683 1,100 862 173 24 Goa 13 75 58 4 13 18 0 25 Gujarat 1,590 6,512 5,622 2,867 432 158 133 26 Maharashtra 10,841 13,615 18,669 1,812 655 686 40 Southern Region 4,645 1,79,871 10,717 4,390 279 98 807 27 Andhra Pradesh 842 92,009 1,157 832 16 0 37 28 Telangana* 242 2,827 702 112 1 0 8 29 Karnataka 1,398 4,948 4,638 2,174 117 72 239 30 Kerala* 658 68,110 1,580 0 15 25 0 31 Puducherry 29 3,209 16 29 7 0 1 32 Tamil Nadu 1,476 8,768 2,624 1,243 123 1 522 All India 37,357 3,58,550 84,639 15,755 2,852 1,767 1,942 Notes: 1. *: Data relate to previous year. 2. Components may not add up to the exact total /s due to rounding off. 3. N.A.: Not Available Source: NAFSCOB. 178APPENDIX TABLE Appendix Table V.8: Liabilities and Assets of State Co-operative Agriculture and Rural Development Banks (Amount in ₹ crore) At end-March Percentage Variation 2022 2023P 2021-22 2022-23 1 2 3 4 5 Liabilities 1. Capital 967 973 1.9 0.6 (3.4) (3.5) 2. Reserves 5,294 5,572 3.5 5.2 (18.8) (20) 3. Deposits 2,584 2,621 2.1 1.4 (9.2) (9.4) 4. Borrowings 13,409 12,559 0.9 -6.3 (47.7) (45.2) 5. Other Liabilities 5,842 6,069 8.5 3.9 (20.8) (21.8) Assets 1. Cash and Bank Balances 241 253 3.2 4.7 (0.9) (0.9) 2. Investments 2,357 2,913 3.8 23.6 (8.4) (10.5) 3. Loans and Advances 20,854 20,770 -0.4 -0.4 (74.2) (74.7) 4. Accumulated Losses 586 627 13.2 6.8 (2.1) (2.3) 5. Other Assets 4,058 3,231 22.9 -20.4 (14.4) (11.6) Total Liabilities/Assets 28,097 27,794 3.0 -1.1 (100.00) (100.00) Notes: 1. Figures in parentheses are proportion to total liabilities/assets (in per cent). 2. Y-o-y variations could be slightly different because absolute numbers have been rounded off to ₹1 crore in the table. 3. Components may not add up to the total due to rounding off. 4. P- Provisional. Source: NABARD. 179Report on Trend and Progress of Banking in India 2023-24 Appendix Table V.9: Financial Performance of State Co-operative Agriculture and Rural Development Banks (Amount in ₹ crore) Sr. Item As during Percentage Variation No. 2021-22 2022-23P 2021-22 2022-23 1 2 3 4 5 6 A. Income (i+ii) 2,457 3,412 4.8 38.9 (100.00) (100.00) i. Interest Income 2,069 2,364 -4.1 14.2 (84.2) (69.3) ii. Other Income 388 1,049 107.9 170.4 (15.8) (30.7) B. Expenditure (i+ii+iii) 2,373 3,004 8.8 26.6 (100.00) (100.00) i. Interest Expended 1,009 1,035 -14.3 2.6 (42.5) (34.4) ii. Provisions and Contingencies 614 563 32.3 -8.3 (25.9) (18.7) iii. Operating Expenses 750 1,407 39.2 87.5 (31.6) (46.8) Of which, Wage Bill 390 395 12.1 1.2 (16.5) (13.1) C. Profits i. Operating Profits 698 971 11.2 39.0 ii. Net Profits 85 408 -48.4 382.0 Notes: 1. Figures in parentheses are proportion to total liabilities/assets (in per cent). 2. Y-o-y variations could be slightly different because absolute numbers have been rounded off to ₹1 crore in the table. 3. Components may not add up to the total due to rounding off. 4. P- Provisional. Source: NABARD. 180APPENDIX TABLE Appendix Table V.10: Asset Quality of State Co-operative Agriculture and Rural Development Banks (Amount in ₹ crore) Item At end-March Percentage Variation 2022 2023P 2021-22 2022-23 1 2 3 4 5 A. Total NPAs (i+ii+iii) 7,522 7,571 8.4 0.7 i. Sub-standard 2,786 2,362 19.2 -15.2 (37) (31.2) ii. Doubtful 4,701 5,173 2.9 10.0 (62.5) (68.3) iii. Loss 35 35 -1.2 2.2 (0.5) (0.5) B. Gross NPA Ratio (%) 36.1 36.5 C. Recovery to Demand Ratio (%) 40.8 42.8 Notes: 1. Figures in parentheses are proportions to total NPAs. 2. Y-o-y variations could be slightly different because absolute numbers have been rounded off to ₹1 crore in the table. 3. Components may not add up to the total due to rounding off. 4. P- Provisional. Source: NABARD. 181Report on Trend and Progress of Banking in India 2023-24 Appendix Table V.11: Financial Indicators of State Co-operative Agriculture and Rural Development Banks - State-wise (At end-March) (Amount in ₹ lakh) Sr. Region/State/UT Branches Profit / Loss NPAs to Loans ratio Recovery Ratio (%) No. (%) (at end-June) 2023 2022 2023P 2022 2023P 2021 2022P 1 2 3 4 5 6 7 8 9 Northern region 104 -5,825 16,336 57.2 62.9 18.5 22.4 1 Haryana @ 0 -4,873 -2,057 77.6 76.6 11.6 11.6 2 Himachal Pradesh # 51 185 -165 42.7 38.0 42.6 41.0 3 Jammu & Kashmir* 51 -2,283 -1,790 49.4 55.0 30.7 32.4 4 Punjab @ 0 273 19,680 45.3 62.0 25.7 42.2 5 Rajasthan @ 2 873 669 53.8 55.6 18.2 16.7 North-eastern region 5 -38 16 99.5 98.3 8.8 29.8 6 Assam* - - - - - - - 7 Tripura* 5 -38 16 99.5 98.3 8.8 29.8 Eastern region 11 615 700 24.5 24.7 33.9 34.7 8 Bihar* - - - - - - - 9 Odisha @ - - - - - - - 10 West Bengal # 11 615 700 24.5 24.7 33.9 34.7 Central region 323 491 9,808 80.2 81.9 29.1 29.1 11 Chhattisgarh @ - - - - - - - 12 Madhya Pradesh @ - - - - - - - 13 Uttar Pradesh* 323 491 9,808 80.2 81.9 29.1 29.1 Western region 176 3,331 6,006 58.5 44.1 9.0 14.4 14 Gujarat* 176 3,331 6,006 58.5 44.1 9.0 14.4 15 Maharashtra @ - - - - - - - Southern region 73 9,892 7,936 15.9 14.1 71.0 73.9 16 Karnataka @ 25 2,930 4 33.0 38.7 32.2 32.0 17 Kerala @ 16 2,930 3,447 11.1 8.3 84.0 86.5 18 Puducherry* 1 15 22 8.1 8.8 89.5 91.2 19 Tamil Nadu @ 31 4,018 4,464 22.0 11.6 79.9 88.6 All India 692 8,466 40,803 36.1 36.5 40.8 42.8 @: Federal structure. #: Mixed structure. *: Unitary structure. -: Not applicable. Notes: 1. Components may not add up to the exact total/s due to rounding off. 2. In Chhattisgarh the short-term co-operative credit structure merged with long term during 2014-15. Also, Assam, Bihar, Odisha, Madhya Pradesh and Maharashtra are no longer functional SCARDBs. 3. Recovery for the financial year is taken as on 30th June. 4. P- Provisional. Source: NABARD. 182APPENDIX TABLE Appendix Table V.12: Liabilities and Assets of Primary Co-operative Agriculture and Rural Development Banks (Amount in ₹ crore) Item At end-March Percentage Variation 2022 2023P 2021-22 2022-23 1 2 3 4 5 Liabilities 1. Capital 1,076 1,094 0.1 1.7 (3.2) (3.4) 2. Reserves 4,402 4,433 44.6 0.7 (13.2) (13.7) 3. Deposits 1,675 1,720 6.6 2.7 (5) (5.3) 4. Borrowings 17,286 16,712 1.4 -3.3 (51.7) (51.5) 5. Other Liabilities 9,022 8,486 -9.9 -5.9 (27) (26.2) Assets 1. Cash and Bank Balances 557 420 8.4 -24.7 (1.7) (1.3) 2. Investments 2,305 2,378 -13.6 3.2 (6.9) (7.3) 3. Loans and Advances 16,623 15,773 3.1 -5.1 (49.7) (48.6) 4. Accumulated Losses 6,545 6,664 10.2 1.8 (19.6) (20.5) 5. Other Assets 7,431 7,210 -0.8 -3.0 (22.2) (22.2) Total Liabilities/Assets 33,461 32,445 2.2 -3.0 (100.00) (100.00) Notes: 1. Figures in parentheses are proportion to total liabilities/assets (in per cent). 2. Y-o-y variations could be slightly different because absolute numbers have been rounded off to ₹1 crore in the table. 3. Components may not add up to the total due to rounding off. 4. P - Provisional Data. Source: NABARD. 183Report on Trend and Progress of Banking in India 2023-24 Appendix Table V.13: Financial Performance of Primary Co-operative Agriculture and Rural Development Banks (Amount in ₹ crore) Item As during Percentage Variation 2021-22 2022-23P 2021-22 2022-23 1 2 3 4 5 A. Income (i+ii) 2,877 3,419 -3.3 18.8 (100.00) (100.00) i. Interest Income 1,824 1,912 -9.9 4.8 (63.4) (55.9) ii. Other Income 1,053 1,507 10.7 43.1 (36.6) (44.1) B. Expenditure (i+ii+iii) 3,467 3,199 0.2 -7.7 (100.00) (100.00) i. Interest Expended 1,701 1,632 -6.4 -4.1 (49.1) (51) ii. Provisions and Contingencies 1,067 948 -1.3 -11.1 (30.8) (29.6) iii. Operating Expenses 698 619 24.2 -11.4 (20.1) (19.3) Of which, Wage Bill 493 433 47.2 -12.2 (14.2) (13.5) C. Profits i. Operating Profits 478 1,168 -20.0 144.5 ii. Net Profits -589 220 Notes: 1. Figures in parentheses are proportion to total income/expenditure (in per cent). 2. Y-o-y variations could be slightly different because absolute numbers have been rounded off to ₹1 crore in the table. 3. Components may not add up to the total due to rounding off. 4. P - Provisional Data. Source: NABARD. 184APPENDIX TABLE Appendix Table V.14: Asset Quality of Primary Co-operative Agriculture and Rural Development Banks (Amount in ₹ crore) Item At end-March Percentage Variation 2022 2023P 2021-22 2022-23 1 2 3 4 5 A. Total NPAs (i+ii+iii) 6,768 6,371 -0.7 -5.9 i. Sub-standard 2,925 2,552 -9.9 -12.8 (43.2) (40) ii. Doubtful 3,812 3,784 7.3 -0.7 (56.3) (59.4) iii. Loss 30 36 63.0 17.9 (0.4) (0.6) B. Gross NPA Ratio (%) 40.7 40.4 - - C. Recovery to Demand Ratio (%) 35.6 39.1 - - Notes: 1. Figures in parentheses are proportions to total NPAs. 2. Y-o-Y variations could be slightly different because absolute numbers have been rounded off to ₹1 crore in the table. 3. Components may not add up to the total due to rounding off. 4. P - Provisional Data. 5. Recovery for the financial year is taken as on 30th June. Source: NABARD. 185Report on Trend and Progress of Banking in India 2023-24 Appendix Table V.15: Major Financial Indicators of Primary Co-operative Agriculture and Rural Developments Banks (Amount in ₹ lakh) State 2021-22 2022-23 P NPAs to Loans Recovery ratio (%) ratio (%) (At end-June) Profit Loss Profit Loss Number Amount Number Amount Number Amount Number Amount 2022 2023P 2021 2022P 1 2 3 4 5 6 7 8 9 10 11 12 13 Northern Region 18 985 127 40,600 102 35,310 43 14,821 69.9 70.8 16.0 16.5 Haryana 0 0 19 17,266 0 0 19 8,088 85.0 86.5 10.2 12.2 Himachal Pradesh 0 0 1 55 0 0 1 164 34.6 31.8 52.1 53.6 Punjab 5 355 84 16,642 87 34,866 2 97 78.7 84.0 13.6 13.5 Rajasthan 13 630 23 6,638 15 444 21 6,472 40.1 35.8 32.6 31.3 Central Region - - - - - - - - - - - - Chhattisgarh - - - - - - - - - - - - Madhya Pradesh - - - - - - - - - - - - Eastern Region 12 1,995 12 2,535 8 2,630 16 3,259 35.4 34.2 38.1 36.2 Odisha - - - - - - - - - - - - West Bengal 12 1,995 12 2,535 8 2,630 16 3,259 35.4 34.2 38.1 36.2 Western Region - - - - - - - - - - - - Maharashtra - - - - - - - - - - - - Southern Region 173 6,562 262 25,331 241 14,539 193 12,427 30.5 30.0 58.6 64.4 Karnataka 48 2,620 131 8,097 56 1,997 124 8,386 20.5 19.9 58.0 58.5 Kerala 30 2,528 46 12,040 59 9,154 15 2,102 33.8 34.8 57.5 63.6 Tamil Nadu 95 1,414 85 5,194 126 3,387 54 1,939 20.1 12.5 68.3 80.5 All India 203 9,542 401 68,467 351 52,478 252 30,507 40.7 40.4 35.6 39.1 Notes: 1. In Chhattisgarh the short-term co-operative credit structure merged with long-term during 2014-15. 2. Components may not add up to the total due to rounding off. 3. P - Provisional Data 4. Recovery for the financial year is taken as on 30th June. 5. Data for financial year 2022-23 is available in respect of 603 of 608 reported PCARDBs. Source: NABARD. 186APPENDIX TABLE Appendix Table VI.1: Consolidated Balance Sheet of NBFCs (Amount in ₹ crore) Items End-March End-March End-March End-September Percentage 2022 2023 2024 2024 variation 2023-24 1 2 3 4 5 6 1. Share Capital 1,11,939 1,21,904 1,47,168 1,43,974 20.7 2. Reserves & Surplus 6,81,772 8,40,859 10,07,781 10,97,033 19.9 3. Public Deposits 70,564 85,254 1,02,994 1,12,512 20.8 4. Total Borrowings (A+B) 25,45,808 29,74,034 34,46,024 36,92,670 15.9 A. Secured Borrowings 14,66,499 17,44,236 20,14,281 21,59,496 15.5 A.1. Debentures 5,70,619 6,21,407 6,65,740 7,22,876 7.1 A.2. Borrowings from Banks 7,29,122 9,05,331 10,70,442 11,24,714 18.2 A.3. Borrowings from FIs 56,484 73,218 94,328 89,892 28.8 A.4. Interest Accrued 19,520 15,220 17,011 33,966 11.8 A.5. Others 90,754 1,29,060 1,66,760 1,88,049 29.2 B. Un-Secured Borrowings 10,79,309 12,29,798 14,31,742 15,33,174 16.4 B.1. Debentures 4,36,537 4,84,536 5,63,256 6,05,327 16.2 B.2. Borrowings from Banks 1,80,357 2,18,416 2,61,177 2,69,610 19.6 B.3. Borrowings from FIs 9,654 13,071 17,424 19,114 33.3 B.4. Borrowings from Relatives 2,919 2,598 2,624 2,621 1.0 B.5. Inter-Corporate Borrowings 84,223 1,01,924 1,04,788 1,17,369 2.8 B.6. Commercial Paper 68,568 83,529 1,05,374 1,16,143 26.2 B.7. Interest Accrued 17,061 17,716 21,021 22,450 18.7 B.8. Others 2,79,989 3,08,008 3,56,077 3,80,542 15.6 5. Current Liabilities & Provisions 3,08,930 3,35,068 3,64,639 4,07,402 8.8 Total Liabilities/ Total Assets 37,19,012 43,57,119 50,68,607 54,53,592 16.3 1. Loans & Advances 28,95,753 33,99,655 40,27,478 42,92,708 18.5 1.1. Secured 21,00,743 23,63,698 31,15,385 32,47,905 31.8 1.2. Un-Secured 7,95,010 10,35,957 9,12,093 10,44,803 -12.0 2. Investments 4,35,053 5,16,141 6,24,260 6,93,397 20.9 2.1. Govt. Securities 65,406 93,677 1,22,147 1,33,764 30.4 2.2. Equity Shares 2,32,800 2,54,920 3,39,837 3,73,979 33.3 2.3. Preference Shares 4,362 17,474 12,104 6,270 -30.7 2.4. Debentures & Bonds 32,265 33,287 35,577 43,551 6.9 2.5. Units of Mutual Funds 62,612 63,917 57,272 73,775 -10.4 2.6. Commercial Paper 1,714 2,311 2,547 4,552 10.2 2.7. Other Investments 35,894 50,556 54,777 57,505 8.3 3. Cash & Bank Balances 1,68,099 1,73,802 1,72,422 2,01,157 -0.8 3.1. Cash in Hand 5,195 6,377 6,446 4,948 1.1 3.2. Deposits with Banks 1,49,547 1,54,876 1,51,525 1,79,584 -2.2 4. Others 2,20,106 2,67,520 2,44,446 2,66,330 -8.6 Memo Items 1. Capital Market Exposure 2,22,019 2,71,505 3,74,072 3,55,037 37.8 of which: Equity Shares 1,59,728 1,87,270 2,71,512 2,42,775 45.0 2. CME as per cent to Total Assets 6.0 6.2 7.4 6.5 3. Leverage Ratio 2.4 2.3 2.1 2.2 Notes: 1. Data are provisional. 2. Data given for 2021-22, 2022-23, 2023-24 are for NBFCs (excluding CICs, HFCs & SPDs) falling in Upper layer and Middle layer as on March 31, 2024. 3. Percentage figures are rounded-off. Source: Quarterly returns of NBFCs, RBI. 187Report on Trend and Progress of Banking in India 2023-24 Appendix Table VI.2: Consolidated Balance Sheet of NBFC-UL (Amount in ₹ crore) Item End-March 2022 End-March 2023 End-March 2024 End-September Percentage 2024 variation 2023-24 1 2 3 4 5 6 1. Share Capital 7,000 7,344 9,034 5,299 23.0 2. Reserves & Surplus 1,50,838 1,91,938 2,45,188 2,47,205 27.7 3. Public Deposits 47,609 64,797 83,102 92,707 28.2 4. Total Borrowings (A+B) 5,89,763 7,48,506 9,53,405 9,60,200 27.4 A. Secured Borrowings 5,06,124 6,40,877 8,17,360 8,34,850 27.5 A.1. Debentures 1,87,833 2,13,684 2,56,627 2,63,501 20.1 A.2. Borrowings from Banks 2,48,512 3,18,979 4,08,471 4,07,733 28.1 A.3. Borrowings from FIs 18,143 30,005 44,041 28,807 46.8 A.4. Interest Accrued 7,874 6,165 8,229 8,460 33.5 A.5. Others 43,762 72,044 99,993 1,26,350 38.8 B. Un-Secured Borrowings 83,639 1,07,630 1,36,045 1,25,349 26.4 B.1. Debentures 9,802 11,731 14,817 13,173 26.3 B.2. Borrowings from Banks 6,318 6,218 4,602 4,740 -26.0 B.3. Borrowings from FIs - - - - B.4. Borrowings from Relatives 973 615 700 652 13.7 B.5. Inter-Corporate Borrowings 12,769 21,059 25,589 27,971 21.5 B.6. Commercial Paper 24,511 39,550 54,146 48,326 36.9 B.7. Interest Accrued 1,593 1,889 2,569 2,303 36.0 B.8. Others 27,673 26,568 33,622 28,184 26.5 5. Current Liabilities & Provisions 50,849 58,463 68,793 68,374 17.7 Total Liabilities/ Total Assets 8,46,058 10,71,050 13,59,521 13,73,785 26.9 1. Loans & Advances 7,27,253 9,18,302 11,85,621 11,94,234 29.1 1.1. Secured 5,71,374 6,91,720 8,95,934 9,03,899 29.5 1.2. Un-Secured 1,55,878 2,26,582 2,89,687 2,90,335 27.9 2. Investments 50,703 75,479 95,189 89,520 26.1 2.1. Govt. Securities 25,677 37,465 50,634 46,854 35.2 2.2. Equity Shares 10,265 14,195 21,454 17,299 51.1 2.3. Preference Shares 50 114 35 15 -69.6 2.4. Debentures & Bonds 2,247 1,608 1,634 2,236 1.6 2.5. Units of Mutual Funds 4,590 10,567 7,116 7,253 -32.7 2.6. Commercial Paper - 691 1,005 2,017 45.3 2.7. Other Investments 7,875 10,838 13,312 13,848 22.8 3. Cash & Bank Balances 45,483 46,946 43,228 56,110 -7.9 3.1. Cash in Hand 726 673 853 1,358 26.7 3.2. Deposits with Banks 38,171 44,046 38,463 49,823 -12.7 4. Others 22,619 30,323 35,483 33,921 17.0 Memo Items 1. Capital Market Exposure 30,320 41,880 48,744 54,870 16.4 of which: Equity Shares 5,017 10,553 16,504 16,787 56.4 2. CME as per cent to Total Assets 3.6 3.9 3.6 4.0 3. Leverage Ratio 2.3 2.4 2.3 2.4 Notes: 1. Data are provisional. 2. Data given for 2021-22, 2022-23, 2023-24 are for NBFCs (excluding CICs, HFCs & SPDs) falling in Upper layer and Middle layer as on March 31, 2024. 3. Percentage figures are rounded-off. Source: Quarterly returns of NBFCs, RBI. 188APPENDIX TABLE Appendix Table VI.3: Consolidated Balance Sheet of NBFC-ML (Amount in ₹ crore) Item End-March 2022 End-March 2023 End-March 2024 End-September Percentage 2024 variation 2023-24 1 2 3 4 5 6 1. Share Capital 1,04,939 1,14,559 1,38,135 1,38,675 20.6 2. Reserves & Surplus 5,30,934 6,48,921 7,62,594 8,49,827 17.5 3. Public Deposits 22,955 20,457 19,893 19,805 -2.8 4. Total Borrowings (A+B) 19,56,046 22,25,527 24,92,619 27,32,471 12.0 A. Secured Borrowings 9,60,375 11,03,359 11,96,921 13,24,646 8.5 A.1. Debentures 3,82,786 4,07,723 4,09,113 4,59,375 0.3 A.2. Borrowings from Banks 4,80,610 5,86,352 6,61,971 7,16,981 12.9 A.3. Borrowings from FIs 38,342 43,213 50,288 61,085 16.4 A.4. Interest Accrued 11,646 9,055 8,783 25,506 -3.0 A.5. Others 46,992 57,016 66,767 61,699 17.1 B. Un-Secured Borrowings 9,95,670 11,22,168 12,95,697 14,07,825 15.5 B.1. Debentures 4,26,736 4,72,806 5,48,440 5,92,154 16.0 B.2. Borrowings from Banks 1,74,038 2,12,199 2,56,574 2,64,870 20.9 B.3. Borrowings from FIs 9,654 13,071 17,424 19,114 33.3 B.4. Borrowings from Relatives 1,947 1,983 1,924 1,968 -2.9 B.5. Inter-Corporate Borrowings 71,454 80,864 79,199 89,398 -2.1 B.6. Commercial Paper 44,058 43,979 51,228 67,816 16.5 B.7. Interest Accrued 15,468 15,827 18,452 20,147 16.6 B.8. Others 2,52,316 2,81,440 3,22,455 3,52,358 14.6 5. Current Liabilities & Provisions 2,58,081 2,76,605 2,95,846 3,39,029 7.0 Total Liabilities/ Total Assets 28,72,954 32,86,069 37,09,086 40,79,806 12.9 1. Loans & Advances 21,68,501 24,81,353 28,41,857 30,98,474 14.5 1.1. Secured 15,29,369 16,71,978 22,19,451 23,44,006 32.7 1.2. Un-Secured 6,39,132 8,09,375 6,22,406 7,54,469 -23.1 2. Investments 3,84,350 4,40,663 5,29,071 6,03,877 20.1 2.1. Govt. Securities 39,729 56,212 71,513 86,911 27.2 2.2. Equity Shares 2,22,535 2,40,725 3,18,383 3,56,681 32.3 2.3. Preference Shares 4,313 17,360 12,069 6,256 -30.5 2.4. Debentures & Bonds 30,018 31,679 33,943 41,315 7.1 2.5. Units of Mutual Funds 58,022 53,350 50,156 66,522 -6.0 2.6. Commercial Paper 1,714 1,620 1,542 2,535 -4.8 2.7. Other Investments 28,019 39,717 41,465 43,658 4.4 3. Cash & Bank Balances 1,22,616 1,26,856 1,29,194 1,45,047 1.8 3.1. Cash in Hand 4,469 5,704 5,594 3,590 -1.9 3.2. Deposits with Banks 1,11,376 1,10,830 1,13,061 1,29,761 2.0 4. Others 1,97,487 2,37,197 2,08,963 2,32,409 -11.9 Memo Items 1. Capital Market Exposure 1,91,700 2,29,625 3,25,328 3,00,167 41.7 of which: Equity Shares 1,54,711 1,76,717 2,55,008 2,25,988 44.3 2. CME as per cent to Total Assets 6.7 7.0 8.8 7.4 3. Leverage Ratio 2.4 2.2 2.0 2.1 Notes: 1. Data are provisional. 2. Data given for 2021-22, 2022-23, 2023-24 are for NBFCs (excluding CICs, HFCs & SPDs) falling in Upper layer and Middle layer as on March 31, 2024. 3. Percentage figures are rounded-off. Source: Quarterly returns of NBFCs, RBI. 189Report on Trend and Progress of Banking in India 2023-24 Appendix Table VI.4: Consolidated Balance Sheet of NBFCs-D (Amount in ₹ crore) Item End-March 2022 End-March 2023 End-March 2024 End-September Percentage 2024 variation 2023-24 1 2 3 4 5 6 1. Share Capital 7,048 8,178 8,075 8,170 -1.3 2. Reserves & Surplus 1,04,963 1,28,224 1,55,219 1,67,891 21.1 3. Public Deposits 70,564 85,254 1,02,994 1,12,512 20.8 4. Total Borrowings (A+B) 3,01,017 3,65,642 4,57,846 5,07,693 25.2 A. Secured Borrowings 2,60,271 3,06,685 3,82,154 4,33,172 24.6 A.1. Debentures 1,02,909 1,09,487 1,25,077 1,51,047 14.2 A.2. Borrowings from Banks 1,19,735 1,30,355 1,72,039 1,89,245 32.0 A.3. Borrowings from FIs 11,370 9,748 10,946 9,978 12.3 A.4. Interest Accrued 3,657 2,678 3,294 4,349 23.0 A.5. Others 22,600 54,418 70,797 78,553 30.1 B. Un-Secured Borrowings 40,746 58,957 75,692 74,521 28.4 B.1. Debentures 6,094 7,553 7,902 8,118 4.6 B.2. Borrowings from Banks 85 905 652.47 451.4189 -27.9 B.3. Borrowings from FIs - - 0 0 B.4. Borrowings from Relatives 48 52 73.1331 0 40.6 B.5. Inter-Corporate Borrowings 11,106 18,216 23,119 26,582 26.9 B.6. Commercial Paper 7,899 16,589 27,682 24,491 66.9 B.7. Interest Accrued 1,066 1,476 1,712 1,809 16.0 B.8. Others 14,448 14,166 14,550 13,071 2.7 5. Current Liabilities & Provisions 71,159 73,639 79,885 88,959 8.5 Total Liabilities/ Total Assets 5,54,751 6,60,937 8,04,019 8,85,225 21.6 1. Loans & Advances 4,63,831 5,52,904 6,86,374 7,46,825 24.1 1.1. Secured 3,59,896 4,25,438 5,30,345 5,30,483 24.7 1.2. Un-Secured 1,03,935 1,27,467 1,56,029 2,16,342 22.4 2. Investments 45,953 59,872 69,038 78,113 15.3 2.1. Govt. Securities 25,655 30,383 39,992 37,362 31.6 2.2. Equity Shares 12,279 14,894 16,337 19,020 9.7 2.3. Preference Shares 3 67 5.6735 5.6735 -91.5 2.4. Debentures & Bonds 317 888 503.4778 1007.4021 -43.3 2.5. Units of Mutual Funds 4,523 6,844 3,766 6,332 -45.0 2.6. Commercial Paper 100 705 1735.9268 2625.9386 146.2 2.7. Other Investments 3,077 6,092 6,698 11,759 10.0 3. Cash & Bank Balances 32,750 29,323 27,796 36,105 -5.2 3.1. Cash in Hand 637 612 1088.0694 1133.5392 77.8 3.2. Deposits with Banks 32,112 28,711 22,653 30,446 -21.1 4. Others 12,217 18,838 20,810 24,182 10.5 Memo Items 1. Capital Market Exposure 15,798 27,544 38,966 41,836 41.5 of which: Equity Shares 595 2407 14833 15047 516.2 2. CME as per cent to Total Assets 2.8 4.2 4.8 4.7 3. Leverage Ratio 4.2 4.2 2.2 2.3 Notes: 1. Data are provisional. 2. Data given for 2021-22, 2022-23, 2023-24 are for NBFCs (excluding CICs, HFCs & SPDs) falling in Upper layer and Middle layer as on March 31, 2024. 3. Percentage figures are rounded-off. Source: Quarterly returns of NBFCs, RBI. 190APPENDIX TABLE Appendix Table VI.5: Credit to Various Sectors by NBFCs (Amount in ₹ crore) Item End-March End-March End-March End- Percentage 2022 2023 2024 September variation 2024 2023-24 1 2 3 4 5 6 Gross Advances ( 1 to 5) 28,95,753 33,99,655 40,27,528 42,92,708 18.5 1. Agriculture and Allied Activities 52,069 60,674 84,175 89,800 38.7 2. Industry (2.1 to 2.4) 11,15,957 12,69,175 14,96,425 15,90,339 17.9 2.1 Micro and Small 42,353 69,410 1,00,627 1,21,589 45.0 2.2 Medium 16,013 19,483 20,961 21,504 7.6 2.3 Large 8,90,104 10,21,373 12,32,434 13,00,359 20.7 2.4 Others, if any, Please specify 1,67,486 1,58,908 1,42,404 1,46,887 -10.4 3. Services (3.1 to 3.10 equals 3.a to 3.d) 3,92,121 4,68,009 5,66,932 6,08,246 21.1 3.1 Transport Operators 1,03,283 1,20,245 1,32,810 1,41,289 10.4 3.2 Computer Software 1,652 2,107 3,082 2,579 46.3 3.3 Tourism, Hotel and Restaurants 5,971 7,519 7,439 7,860 -1.1 3.4 Shipping 172 185 272 216 46.9 3.5 Professional Services 20,154 23,580 25,239 29,377 7.0 3.6 Trade 49,837 69,520 92,324 1,05,415 32.8 3.6.1 Wholesale Trade (other than Food Procurement) 9,290 10,657 14,500 17,632 36.1 3.6.2 Retail Trade 40,547 58,863 77,824 87,784 32.2 3.7 Commercial Real Estate 80,264 81,662 88,512 89,482 8.4 3.8 NBFCs 33,774 47,664 60,356 64,319 26.6 3.9 Aviation 1,143 826 455 438 -44.9 3.10 Other Services 95,873 1,14,700 1,56,442 1,67,272 36.4 Total 3.a to 3.d 3,92,121 4,68,009 5,66,932 6,08,246 21.1 3.a Micro and Small 1,11,482 1,60,253 2,09,555 2,24,653 30.8 3.b Medium 17,503 20,322 28,550 25,073 40.5 3.c Large 76,915 78,518 80,697 95,366 2.8 3.d Others 1,86,221 2,08,917 2,48,129 2,63,155 18.8 4. Retail Loans (4.1 to 4.10) 8,19,433 10,45,168 13,69,820 15,02,697 31.1 4.1 Housing Loans (incl. priority sector Housing) 22,340 32,172 33,600 38,467 4.4 4.2 Consumer Durables 24,771 31,541 40,957 48,142 29.9 4.3 Credit Card Receivables 32,710 44,007 55,736 61,171 26.7 4.4 Vehicle/Auto Loans 3,26,347 3,82,825 4,74,839 5,17,092 24.0 4.5 Education Loans 14,145 25,324 44,904 58,466 77.3 4.6 Advances against Fixed Deposits (incl. FCNR(B), etc.) 41 213 151 202 -29.3 4.7 Advances to Individuals against Shares, Bonds, etc. 11,473 13,389 21,780 23,991 62.7 4.8 Advances to Individuals against Gold 1,18,501 1,28,774 1,53,481 1,74,325 19.2 4.9 Micro finance loan/SHG Loan 76,223 1,15,187 1,48,503 1,44,162 28.9 4.10 Other Retail Loans 1,92,881 2,71,735 3,95,868 4,36,679 45.7 5. Other Credit 5,16,173 5,56,630 5,10,174 5,01,626 -8.3 Notes: 1. Data are provisional. 2. Data given for 2021-22, 2022-23, 2023-24 are for NBFCs (excluding CICs, HFCs & SPDs) falling in Upper layer and Middle layer as on March 31, 2024. 3. Percentage figures are rounded-off. Source: Quarterly returns of NBFCs, RBI. 191Report on Trend and Progress of Banking in India 2023-24 Appendix Table VI.6: Financial Performance of NBFC-UL (Amount in ₹ crore) Items 2021-22 2022-23 2023-24 H1: 2024-25 1 2 3 4 5 A. Total Income 1,12,952 1,41,310 1,82,115 1,01,219 (i) Fund Based Income 1,07,477 1,32,676 1,71,480 95,976 (95.2) (93.9) (94.2) (94.8) (ii) Fee Based Income 588 2,424 4,219 2,314 (0.5) (1.7) (2.3) (2.3) B. Expenditure 86,201 1,02,181 1,30,395 71,939 (i) Financial Expenditure 43,258 52,579 72,748 39,868 (50.2) (51.5) (55.8) (55.4) of which, Interest payment 21,849 29,132 42,930 24,514 (25.3) (28.5) (32.9) (34.1) (ii) Operating Expenditure 22,903 30,588 37,349 19,606 (26.6) (29.9) (28.6) (27.3) (iii) Others 20,039 19,014 20,298 12,465 (23.2) (18.6) (15.6) (17.3) C. Tax Provisions 6,823 10,373 13,102 7,263 D. Profit Before Tax 26,751 39,129 51,720 29,280 E. Net Profit 19,928 28,756 38,618 22,017 F. Total Assets 8,46,058 10,71,050 13,59,521 13,73,785 G. Financial Ratios (as Per cent of Total Assets) (i) Income 13.4 13.2 13.4 14.7 (ii) Fund Income 12.7 12.4 12.6 14.0 (iii) Fee Income 0.1 0.2 0.3 0.3 (iv) Expenditure 10.2 9.5 9.6 10.5 (v) Financial Expenditure 5.1 4.9 5.4 5.8 (vi) Operating Expenditure 2.7 2.9 2.7 2.9 (vii) Tax Provision 0.8 1.0 1.0 1.1 (viii) Net Profit 2.4 2.7 2.8 3.2 H. Cost to Income (percentage) 76.3 72.3 71.6 71.1 Notes: 1. Data are provisional and H1: 2024-25 ratios have been annualised. 2. Total income includes non-financial income as well, which is not reported in the table. 3. Data given for 2021-22, 2022-23, 2023-24 are for NBFCs (excluding CICs, HFCs & SPDs) falling in Upper layer and Middle layer as on March 31, 2024. 4. Figures in parentheses are share (in per cent) to respective total. 5. Percentage figures are rounded-off. Source: Quarterly returns of NBFCs, RBI. 192APPENDIX TABLE Appendix Table VI.7: Financial Performance of NBFC-ML (Amount in ₹ crore) Items 2021-22 2022-23 2023-24 H1: 2024-25 1 2 3 4 5 A. Total Income 2,63,729 3,22,712 4,01,842 2,28,365 (i) Fund Based Income 2,45,353 2,79,241 3,68,892 2,12,037 (93) (86.5) (91.8) (92.9) (ii) Fee Based Income 11,452 14,522 18,211 10,117 (4.3) (4.5) (4.5) (4.4) B. Expenditure 2,08,718 2,30,457 2,79,370 1,63,223 (i) Financial Expenditure 1,25,178 1,40,759 1,69,159 99,662 (60) (61.1) (60.6) (61.1) of which, Interest payment 58,582 72,485 94,985 48,447 (28.1) (31.5) (34) (29.7) (ii) Operating Expenditure 37,493 47,232 58,601 35,189 (18) (20.5) (21) (21.6) (iii) Others 46,046 42,465 51,610 28,372 (22.1) (18.4) (18.5) (17.4) C. Tax Provisions 13,426 14,904 23,958 10,971 D. Profit Before Tax 55,011 92,255 1,22,473 65,142 E. Net Profit 41,585 77,351 98,515 54,171 F. Total Assets 28,72,954 32,86,069 37,09,086 40,79,806 G. Financial Ratios (as Per cent of Total Assets) (i) Income 9.2 9.8 10.8 11.2 (ii) Fund Income 8.5 8.5 9.9 10.4 (iii) Fee Income 0.4 0.4 0.5 0.5 (iv) Expenditure 7.3 7.0 7.5 8.0 (v) Financial Expenditure 4.4 4.3 4.6 4.9 (vi) Operating Expenditure 1.3 1.4 1.6 1.7 (vii) Tax Provision 0.5 0.5 0.6 0.5 (viii) Net Profit 1.4 2.4 2.7 2.7 H. Cost to Income (percentage) 79.1 71.4 69.5 71.5 Notes: 1. Data are provisional and H1: 2024-25 ratios have been annualised. 2. Total income includes non-financial income as well, which is not reported in the table. 3. D ata given for 2021-22, 2022-23, 2023-24 are for NBFCs (excluding CICs, HFCs & SPDs) falling in Upper layer and Middle layer as on March 31, 2024. 4. Figures in parentheses are share (in per cent) to respective total. 5. Percentage figures are rounded-off. Source: Quarterly returns of NBFCs, RBI. 193Report on Trend and Progress of Banking in India 2023-24 Appendix Table VI.8: Financial Assistance Sanctioned and Disbursed by Financial Institutions (Continued) (Amount in ₹ crore) Institutions Loans* 2022-23 2023-24 Apr-Sep 2023 Apr-Sep 2024 S D S D S D S D 1 2 3 4 5 6 7 8 9 A. All India financial institutions (1 to 5) 7,98,186 7,53,909 9,55,137 8,73,592 4,41,252 3,14,050 3,69,686 2,87,209 1. NABARD 3,83,494 3,64,248 4,42,156 4,36,033 1,67,846 96,819 1,65,768 1,05,670 2. SIDBI 2,86,308 2,79,309 3,02,581 2,94,942 1,71,759 1,65,598 1,13,520 1,14,244 3. EXIM Bank 66,969 64,875 91,672 84,696 52,153 30,650 53,393 40,313 4. NHB@ 42,905 35,701 35,671 32,085 23,243 15,260 16,275 12,310 5. NaBFID 18,511 9,775 83,058 25,836 26,252 5,722 20,729 14,672 B. Specialised financial institutions 750 561 1,364 763 647 264 943 423 (6, 7 and 8) 6. IVCF - - - - - - - - 7. ICICI venture - - - - - - - - 8. TFCI 750 561 1,364 763 647 264 943 423 C. Investment institutions (9 and 10) - - - - - - - - 9. LIC - - - - - - - - 10. GIC - - - - - - - - D. Financial Institutions (A+B+C) 7,98,936 7,54,469 9,56,500 8,74,355 4,41,899 3,14,313 3,70,629 2,87,632 E. State level institutions (11 and 12) 4,910 4,579 4,606 5,256 .. .. .. .. 11. SFCs^ 4,910 4,579 4,606 5,256 .. .. .. .. 12. SIDCs .. .. .. .. .. .. .. .. F. Total assistance by all financial 8,03,847 7,59,048 9,61,106 8,79,611 4,41,899 3,14,313 3,70,629 2,87,632 institutions (D+E) S: Sanctions. D: Disbursements. -: Nil. .. : Not Available. n.m.: Not Meaningful. *: Loans include rupee loans and foreign currency loans. @: NHB data pertain to July-June. #: Others include guarantees. ^: Data pertain to four SFCs. Notes: 1. Data are provisional. 2. Components may not add up to the total due to rounding off. Source: The respective financial institutions. 194APPENDIX TABLE Appendix Table VI.8: Financial Assistance Sanctioned and Disbursed by Financial Institutions (Continued) (Amount in ₹ crore) Institutions Underwriting and Direct Subscription 2022-23 2023-24 Apr-Sep 2023 Apr-Sep 2024 S D S D S D S D 1 10 11 12 13 14 15 16 17 A. All India financial institutions 1,806 1,476 - - - 9 - - (1 to 5) 1. NABARD - - - - - - - - 2. SIDBI 1,806 1,476 - - - 9 - - 3. EXIM Bank - - - - - - - - 4. NHB@ - - - - - - - - 5. NaBFID - - - - - - - - B. S pecialised financial institutions - - - - - - - - (6, 7 and 8) 6. IVCF - - - - - - - - 7. ICICI venture - - - - - - - - 8. TFCI - - - - - - - - C. I nvestment institutions 1,00,516 52,919 1,66,525 78,584 62,950 11,934 83,050 33,177 (9 and 10) 9. LIC 1,00,516 52,919 1,66,525 78,584 62,950 11,934 83,050 33,177 10. GIC - - - - - - - - D. Financial Institutions (A+B+C) 1,02,322 54,395 1,66,525 78,584 62,950 11,943 83,050 33,177 E. S tate level institutions (11 and 12) .. .. .. .. .. .. .. .. 11. SFCs^ .. .. .. .. .. .. .. .. 12. SIDCs .. .. .. .. .. .. .. .. F. Total assistance by all financial 1,02,322 54,395 1,66,525 78,584 62,950 11,943 83,050 33,177 institutions (D+E) S: Sanctions. D: Disbursements. -: Nil. .. : Not Available. n.m.: Not Meaningful. *: Loans include rupee loans and foreign currency loans. @: NHB data pertain to July-June. #: Others include guarantees. ^: Data pertain to four SFCs. Notes: 1. Data are provisional. 2. Components may not add up to the total due to rounding off. Source: The respective financial institutions. 195Report on Trend and Progress of Banking in India 2023-24 Appendix Table VI.8: Financial Assistance Sanctioned and Disbursed by Financial Institutions (Continued) (Amount in ₹ crore) Institutions Others# 2022-23 2023-24 Apr-Sep 2023 Apr-Sep 2024 S D S D S D S D 1 18 19 20 21 22 23 24 25 A. All India financial institutions 13,693 4,768 15,364 5,335 11,212 2,891 3,513 1,733 (1 to 5) 1. NABARD 825 584 493 551 386 142 83 127 2. SIDBI 23 2 9 - 6 - 2 - 3. EXIM Bank 12,796 3,912 14,640 4,377 10,729 2,749 3,402 1,498 4. NHB@ - - - - - - - - 5. NaBFID 50 270 222 407 91 - 26 108 B. S pecialised financial institutions - - 90 90 90 90 - - (6, 7 and 8) 6. IVCF - - - - - - - - 7. ICICI venture - - - - - - - - 8. TFCI - - 90 90 90 90 - - C. I nvestment institutions 605 306 - 245 - 128 - 126 (9 and 10) 9. LIC 605 306 - 245 - 128 - 126 10. GIC - - - - - - - - D. Financial Institutions (A+B+C) 14,298 5,074 15,454 5,670 11,302 3,110 3,513 1,859 E. S tate level institutions .. .. .. .. .. .. .. .. (11 and 12) 11. SFCs^ .. .. .. .. .. .. .. .. 12. SIDCs .. .. .. .. .. .. .. .. F. Total assistance by all financial 14,298 5,074 15,454 5,670 11,302 3,110 3,513 1,859 institutions (D+E) S: Sanctions. D: Disbursements. -: Nil. .. : Not Available. n.m.: Not Meaningful. *: Loans include rupee loans and foreign currency loans. @: NHB data pertain to July-June. #: Others include guarantees. ^: Data pertain to four SFCs. Notes: 1. Data are provisional. 2. Components may not add up to the total due to rounding off. Source: The respective financial institutions. 196APPENDIX TABLE Appendix Table VI.8: Financial Assistance Sanctioned and Disbursed by Financial Institutions (Concluded) (Amount in ₹ crore) Institutions Total Percentage variation 2022-23 2023-24 Apr-Sep 2023 Apr-Sep 2024 2023-24 Apr-Sep 2024 S D S D S D S D S D S D 1 26 27 28 29 30 31 32 33 34 35 36 37 A. All India financial 8,13,685 7,60,153 9,70,501 8,78,927 4,52,464 3,16,950 3,73,200 2,88,941 19.3 15.6 -17.5 -8.8 institutions (1 to 5) 1. NABARD 3,84,319 3,64,832 4,42,649 4,36,584 1,68,232 96,961 1,65,851 1,05,797 15.2 19.7 -1.4 9.1 2. SIDBI 2,88,137 2,80,787 3,02,590 2,94,942 1,71,765 1,65,607 1,13,522 1,14,244 5.0 5.0 -33.9 -31.0 3. EXIM Bank 79,764 68,787 1,06,312 89,073 62,882 33,399 56,796 41,810 33.3 29.5 -9.7 25.2 4. NHB@ 42,905 35,701 35,671 32,085 23,243 15,260 16,275 12,310 -16.9 -10.1 -30.0 -19.3 5. NaBFID 18,560 10,045 83,280 26,243 26,342 5,722 20,756 14,780 348.7 161.2 -21.2 158.3 B. Specialised 750 561 1,454 853 737 354 943 423 93.8 52.2 28.0 19.6 financial institutions (6, 7 and 8) 6. IVCF - - - - - - - - n.m. n.m. n.m. n.m. 7. ICICI venture - - - - - - - - - - - - 8. TFCI 750 561 1,454 853 737 354 943 423 93.8 52.2 28.0 19.6 C. Investment 1,01,121 53,225 1,66,525 78,829 62,950 12,062 83,050 33,303 64.7 48.1 31.9 176.1 institutions (9 and 10) 9. LIC 1,01,121 53,225 1,66,525 78,829 62,950 12,062 83,050 33,303 64.7 48.1 31.9 176.1 10. GIC - - - - - - - - n.m. n.m. n.m. n.m. D. Financial 9,15,556 8,13,938 11,38,479 9,58,609 5,16,151 3,29,366 4,57,192 3,22,667 24.3 17.8 -11.4 -2.0 Institutions (A+B+C) E. State level 4,910 4,579 4,606 5,256 .. .. .. .. .. .. .. .. institutions (11 and 12) 11. SFCs^ 4,910 4,579 4,606 5,256 .. .. .. .. .. .. .. .. 12. SIDCs .. .. .. .. .. .. .. .. .. .. .. .. F. Total assistance 9,20,467 8,18,517 11,43,085 9,63,865 5,16,151 3,29,366 4,57,192 3,22,667 24.2 17.8 -11.4 -2.0 by all financial institutions (D+E) S: Sanctions. D: Disbursements. -: Nil. .. : Not Available. n.m.: Not Meaningful. *: Loans include rupee loans and foreign currency loans. @: NHB data pertain to July-June. #: Others include guarantees. ^: Data pertain to four SFCs. Notes: 1. Data are provisional. 2. Components may not add up to the total due to rounding off. Source: The respective financial institutions. 197Report on Trend and Progress of Banking in India 2023-24 Appendix Table VI.9: Financial Performance of Standalone Primary Dealers (Continued) (Amount in ₹ crore) Sl. Name of the primary dealers Year Income No. Interest income Trading Other Total (including profit income income discount income) 1 2 3 4 5 6 7 1 STCI Primary Dealer Ltd. 2022-23 846 -49 2 799 2023-24 1,041 139 2 1,182 H1:2024-25 567 148 1.36 716 2 SBI DFHI Ltd. 2022-23 952 -12 6 946 2023-24 1,378 44 8 1,430 H1:2024-25 785 86 3 874 3 ICICI Securities Primary Dealership Ltd. 2022-23 1,249 45 27 1,322 2023-24 2,110 312 26 2,448 H1:2024-25 1,227 148 22 1,397 4 PNB Gilts Ltd. 2022-23 1,222 -237 16 1,001 2023-24 1,518 -48 8 1,478 H1:2024-25 795 68 5 868 5 Morgan Stanley India Primary Dealer Pvt. Ltd. 2022-23 803 -54 3 752 2023-24 1,376 280 3 1,659 H1:2024-25 831 34 19 884 6 Nomura Fixed Income Securities Pvt. Ltd. 2022-23 353 -139 2 216 2023-24 615 215 2 832 H1:2024-25 520 90 2 612 7 Goldman Sachs (India) Capital markets Pvt. Ltd. 2022-23 391 -50 5 346 2023-24 1,120 118 3 1,241 H1:2024-25 742 127 0 870 8 Total 2022-23 5,816 (495) 61 5,382 2023-24 9,158 1,060 52 10,270 H1:2024-25 5,468 701 51 6,221 Source: Returns submitted by SPDs. 198APPENDIX TABLE Appendix Table VI.9: Financial Performance of Standalone Primary Dealers (Concluded) (Amount in ₹ crore) Sl. Name of the primary Year Expenditure Profit Profit after Return on No. dealers Interest Other Total before tax tax networth expenses expenses expenditure (per cent) 1 2 3 8 9 10 11 12 13 1 STCI Primary Dealer Ltd. 2022-23 712 30 741 47 34 4.4 2023-24 944 43 987 266 198 22.4 H1:2024-25 499 21 520 229 170 16.1 2 SBI DFHI Ltd. 2022-23 786 41 827 29 20 1.4 2023-24 1,226 41 1,267 242 180 12.0 H1:2024-25 690 27 717 275 205 12.0 3 ICICI Securities Primary 2022-23 1,063 136 1,199 175 128 8.1 Dealership Ltd. 2023-24 1,871 172 2,043 586 437 25.4 H1:2024-25 1,094 99 1,194 477 356 18.3 4 PNB Gilts Ltd. 2022-23 973 47 1,020 -85 -77 -5.8 2023-24 1,411 66 1,477 99 70 5.4 H1:2024-25 690 29 719 223 168 12.0 5 Morgan Stanley India 2022-23 571 58 629 195 145 5.0 Primary Dealer Pvt. Ltd. 2023-24 1,049 73 1,121 560 418 11.4 H1:2024-25 649 41 690 217 161 4.1 6 Nomura Fixed Income 2022-23 260 47 308 94 70 6.3 Securities Pvt. Ltd. 2023-24 519 72 590 118 88 7.4 H1:2024-25 443 38 481 53 40 2.6 7 Goldman Sachs (India) 2022-23 299 50 350 30 22 1.4 Capital markets Pvt. Ltd. 2023-24 878 58 935 365 272 10.5 H1:2024-25 601 27 628 277 207 7.3 8 Total 2022-23 4,664 410 5,074 485 342 3.2 2023-24 7,897 524 8,422 2,237 1,663 12.9 H1:2024-25 4,666 282 4,949 1,751 1,308 9.1 Source: Returns submitted by SPDs. 199Report on Trend and Progress of Banking in India 2023-24 Appendix Table VI.10: Select Financial Indicators of Standalone Primary Dealers (Continued) (Amount in ₹ crore) Sr. Name of the primary dealers Capital funds (Tier I + Tier II+ Eligible Tier III) CRAR (Per cent) No. H1: H1: 2020-21 2021-22 2022-23 2023-24 2024-25 2020-21 2021-22 2022-23 2023-24 2024-25 1 2 3 4 5 6 7 8 9 10 11 12 1 STCI Primary Dealer Ltd. 731 777 790 902 1,111 28.9 32.3 21.8 29.1 26.8 2 SBI DFHI Ltd. 1,245 1,311 1,247 1,426 1,612 33.4 42.4 46.1 36.0 35.9 3 ICICI Securities Primary 1,723 1,899 1,792 1,903 2,274 44.1 47.7 42.9 26.6 25.8 Dealership Ltd. 4 PNB Gilts Ltd. 1,306 1,426 1,238 1,313 1,453 45.6 66.4 31.8 34.0 41.7 5 Morgan Stanley India Primary 2,105 2,290 3,384 3,774 3,922 51.9 58.5 88.6 69.8 64.1 Dealer Pvt. Ltd 6 Nomura Fixed Income Securities 1,064 1,068 949 1,226 1,766 60.2 49.1 43.0 33.7 50.1 Pvt. Ltd. 7 Goldman Sachs (India) Capital 626 648 2,363 2,429 2,293 109.1 116.1 76.0 67.6 63.7 Markets Pvt. Ltd. Total 8,798 9,418 11,763 12,973 14,433 45.3 51.5 50.0 42.2 42.2 Source: Returns submitted by SPDs. 200APPENDIX TABLE Appendix Table VI.10: Select Financial Indicators of Standalone Primary Dealers (Concluded) (Amount in ₹ crore) Sr. Name of the primary dealers Stock of government securities and treasury bills Total assets No. (Market value) (Net of current liabilities and provisions) H1: H1: 2020-21 2021-22 2022-23 2023-24 2024-25 2020-21 2021-22 2022-23 2023-24 2024-25 1 2 13 14 15 16 17 18 19 20 21 22 1 STCI Primary Dealer Ltd. 11,398 13,616 14,664 14,436 14,224 11,405 12,025 12,286 12,536 12,642 2 SBI DFHI Ltd. 9,589 12,390 16,645 21,360 24,956 9,837 12,659 16,955 21,840 22,739 3 ICICI Securities Primary 15,766 15,864 24,784 31,594 37,817 18,067 17,545 31,873 33,845 39,519 Dealership Ltd. 4 PNB Gilts Ltd. 10,907 15,267 18,518 23,008 21,635 11,179 13,819 16,948 21,240 20,569 5 Morgan Stanley India Primary 12,533 13,645 12,691 26,662 22,363 13,004 16,314 15,452 28,109 25,055 Dealer Pvt. Ltd 6 Nomura Fixed Income Securities 4,044 4,849 6,474 12,337 13,085 4,419 5,629 7,396 13,170 15,115 Pvt. Ltd. 7 Goldman Sachs (India) Capital 3,457 3,468 15,491 21,853 15,932 3,830 4,722 17,949 22,831 16,485 Markets Pvt. Ltd. Total 67,694 79,099 1,09,267 1,51,248 1,50,029 71,758 82,733 1,18,878 1,53,591 1,52,124 Source: Returns submitted by SPDs. 201REPORT ON TREND AND PROGRESS OF BANKING IN INDIA 2023-24 Reserve Bank of India REPORT ON TREND AND PROGRESS OF BANKING IN INDIA 2 0 2 3 - 2 4 Reserve Bank of India