Similar to other Emerging Market Economies, the banking sector in India dominates as a supplier of credit to households with almost 80% share in the total credit. Non-bank entities i.e., HFCs and NBFCs are also emerging fast as the source of credit in the recent years. The share of non-bank debt increased by around 7 percentage points from end-March 2012 to end-March 2023, states an article published in RBI’s July bulletin.
Mortgages make up the lion’s share (more than 50%) of household debt in advanced economies (AEs), while in EMEs non-mortgage debt forms at least two-thirds of the total, states the article. The latter comprises both secured and unsecured personal loans, viz., vehicle loans, education loans, credit card outstanding, business loans for industry, trade, transport, finance and loans for agriculture.
Deposits have sustained their dominance in total financial wealth in the last decade, though with an increasing interest towards other investment instruments, viz., equity and investment funds and insurance and pension funds. The share of equity and investment funds in total financial wealth increased by more than 50% between 2011-12 and 2022- 23.