Mumbai : The Indian banking sector has witnessed a structural transformation over the last two decades, with a sharp rebound in credit intermediation post-pandemic, according to the latest SBI Research report, "Indian Banking Sector: A Trend Analysis."
Key Insights from the Report:
Scale Expansion: Between FY05 and FY25, bank deposits surged from ₹18.4 lakh crore to ₹241.5 lakh crore, while advances grew from ₹11.5 lakh crore to ₹191.2 lakh crore. This exponential growth reflects the deepening reach of formal banking in India.
Rising Credit-Deposit (C-D) Ratio: The report notes that the pace of credit growth has consistently outstripped deposit growth. Consequently, the banking system’s C-D ratio improved significantly from 63% in FY05 to 79% in FY25, indicating robust financial intermediation.
From Savers to Investors: A defining trend highlighted is the shift in Indian households' financial behavior. In states like Gujarat and Karnataka, incremental capital is moving towards financial markets (Equities and Mutual Funds) at a faster pace than traditional bank deposits.
Banking Assets & GDP: Post-pandemic, bank asset growth saw a sharp recovery, rising from 77% of GDP in FY21 to 94% by FY25, signaling strong balance sheet health across the sector.
Digital Dominance: UPI is expected to dominate the digital payment landscape, accounting for 85% of total digital transactions by FY25. The physical footprint also expanded, with branch density increasing to 16 branches per 1 lakh adults.