Growth of Retail Credit and Its Composition in Indian Banking : A Macro Evaluation

An ever growing middle class population and rising income levels, combined with the demographic change of smaller household sizes has boosted demand for retail credit. There may exist meaningful inter-linkages among economic indicators and personal finance growth such that the variation in the retail credit at the macro level can be explained. Banks credit policies and credit processes are prepared with the broad risk management objective and the oversight of the credit policy remains with the senior management. However, increasing population, increase in the number of households, per capital income, number of employed people and also per capita household income, etc provide the need for fulfilling the gap between the existing level of debt and income. The purpose of this study is to provide meaningful analysis of inter-linkages among economic and financial variables such that the growth in retail credit at the macro level is explained. We conclude that with or without financial inclusion, a large section of the population or households have remained unserved with retail credit products and the gap between income to debt at retail level is increasing