Indian banks have recorded a significant credit growth of 15 percent in the financial year 2024, surpassing the 13 percent growth in deposits, according to a recent report by Boston Consulting Group (BCG). This marks a notable achievement for the banking sector, with total net profits crossing Rs 3 lakh crore in FY24, accompanied by a return on assets (ROA) exceeding 1 percent across all bank groups.
Unified Payments Interface (UPI) transactions have seen a remarkable surge, rising by 57 percent year-on-year in FY24. PhonePe and Google Pay emerged as dominant players in this segment, collectively holding an 86 percent market share, as highlighted in the BCG report on the banking sector’s performance for FY24.
The digital payments landscape witnessed a notable shift, with credit card transactions doubling over the past three years, while debit card transactions experienced a 43 percent decline year-on-year. Overall, the Indian banking system maintained a robust momentum in credit growth, outpacing deposit growth in FY24.
Private banks saw a 25 percent increase in profits year-on-year, while public sector banks (PSBs) recorded a significant 34 percent growth in net profits. The report also pointed out a favorable trend in asset quality, with gross non-performing assets (GNPAs) hitting a decadal low of 2.8 percent, supplemented by a healthy provision coverage ratio (PCR).
India’s economic growth in FY24 exceeded expectations, registering an 8.2 percent year-on-year growth, leading to an upgrade in the sovereign rating outlook by S&P Global Ratings. Despite the positive financial performance, the cost-to-income ratio (CIR) for the sector witnessed a slight deterioration, pointing to areas of focus for improved efficiency.
The banking sector remains well-capitalized, with most banks maintaining a capital to risk-weighted assets ratio (CRAR) above the regulatory requirement. Public sector banks have displayed steady growth in market valuation over the past three years, outperforming private banks and non-banking financial companies (NBFCs).
The latest data underscores the resilience and profitability of the Indian banking sector, setting a positive outlook for future growth and stability.
