Banks in India continue to be under pressure rebuilding their consumer banking portfolio
All major players in India have decreased their investments in the credit card business due to high delinquency rates. March 28, 2011 | ResearchThe retail banking sector in India has undergone dramatic changes. The consumer finance business has collapsed for most banks, indicating that Indian banks under-estimated the risk in this line. DBS has divested its partnership with Cholamandalam DBS Finance Ltd (CDFL) and GE Finance has exited the market. Local banks have scaled back their retail business or exited altogether. While the mortgage market has recovered after bottoming out in 2009, credit card outstanding balances continued to experience decline, shrinking from $6.62 million in 2009 to $3.97 million in 2010. All major banks in India have scaled back on their retail banking portfolio mix between 2007 and 2010. Proportion of Retail Banking Assets in Total Bank Portfolio for 2007-2010 Please click to view enlarged image Some key reasons why Indian banks have scaled back their retail lending business include: 1. Rural/Agricultural lending: Banks have failed to focus on providing rural or agricultural credit due to the costly nature of micro-financing in remote areas and lack of proper infrastructure. 2. Technology integrity: Although technology enabled the overall development of the banking sector through internet banking, phone banking, ATMs, credit and debit cards, etc, it also posed new threats, including hacking, phasing and farming, which are both widespread and difficult to check. 3. Lack of appropriate product strategy: Indian banks lack interest in innovating time-co... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Consumer Credit, India, Mortgage, Retail BankingConsumer Credit,India,Mortgage,retail, Consumer Credit,India,Mortgage,Retail Banking, RBI, SBI
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