Present Status of Banking System in India

The credit growth to the MSME sector has been remarkably high, over 30.6% (on avg. during Jan-Nov 2022) supported by the extended Emergency Credit Linked Guarantee Scheme (ECLGS) of the Union government
The share of MSMEs in gross credit offtake to the industry rose from 17.7 % (Jan 2020) to 23.7% (Nov 2022)
At the end of FY23, the banking sector reported deposits of ~$2.2 Tn and loans of ~$1.67 Tn, leading to a credit-deposit ratio of 75.8% (highest in the past three years)
Scheduled commercial banks (SCBs) reported a robust credit growth of 15.4% in FY23 (11 year high) compared to 9.7% in FY22. The growth was powered by personal loans, loans to the services sector, and agriculture and allied activities. Personal loans registered a growth of 20.6% in FY23 as compared to 12.6% in the year-ago period, primarily driven by housing loans.
New bank branches opened by SCBs increased by 4.6% during FY 22. The growth was led by new branches opened in Tier 4, Tier 5 and Tier 6 centres

NBFCs

The growing importance of the NBFC sector in the Indian financial system is reflected in the consistent rise of NBFCs’ credit as a proportion to GDP
NBFCs continued to deploy the largest quantum of credit from their balance sheets to the industrial sector, followed by retail, services, and agriculture
The continuous improvement in asset quality is seen in the declining GNPA ratio of NBFCs from the peak of 7.2% in June 2021 to 5.9% in Sept 2022. The personal loans portfolio of NBFCs grew the most during the last four-year period {compound annual growth rate (CAGR) being more than 30 per cent} resulting in increase of its share in total loan portfolio to 31.2% in Mar 2023
Credit extended by NBFCs has picked up momentum, with the aggregate outstanding amount at INR 31.5 Lakh Cr as of September 2022. NBFCs continued to deploy the largest quantum of credit from their balance sheets to the industrial sector, followed by retail, services, and agriculture.

Pradhan Mantri Jan Dhan Yojana: The world’s largest financial inclusion initiative, “Jan Dhan Yojna”, has helped in new bank account enrolment of 486+ Mn beneficiaries, with 265+ Mn being women
Scheme for Setting up of Wholly Owned Subsidiaries (WOS) by foreign banks in India: In 2013, the RBI published guidelines for setting up of WOS by foreign banks in India to promote foreign investments into the sector
Introduction of Kisan Credit Card (KCC) loans in a fully digital and hassle-free manner
Aadhaar e-KYC authentication for NBFC/Non-Banking entities: All NBFCs, payment system providers and payment system participants can now obtain Aadhaar Authentication Licence (KUA/sub-KUA)
Establishment of Digital Banking units: In 2022, 75 DBUs were announced in 75 districts of the country to commemorate 75 years of India’s independence