Retail credit in India has witnessed significant growth over the last ten years, from 9 per cent of GDP in 2013-14 to 18 per cent in 2024-2025, while bank credit has largely remained stable, according to a report by Motilal Oswal.
“Bank credit to GDP has remained relatively stable at 55 per cent over the past decade. In contrast, retail credit in India has witnessed significant growth, with its share of GDP rising to 18 per cent in FY25 from 9 per cent in FY14”, said the report.
Bank credit to GDP during the period has remained relatively stable at 55 per cent over the past decade. Retail offers huge untapped potential, and rapid retailization of loan books is being done by banks, the report added.
The growth in retail credit is driven by private banks. Increased digitalisation, the emergence of fintech platforms, and the relentless efforts by the regulator to promote financial inclusion have led to the growth of retail loans, said the report.
“The shift towards consumer lending, aided by rising disposable income, technology advancement, and improved credit models, has broadened access to housing, vehicle, and personal loans,” read the brokerage report.
That said, India’s retail credit penetration still remains below global standards, indicating substantial growth potential, particularly with the growing middle class. “We believe that the next phase will witness hyper-personalised banking experiences, driven by AI and decentralised finance, alongside the growing adoption of Central Bank Digital Currencies (CBDCS).
Financial institutions must innovate and embrace technology to remain relevant as the pace of change accelerates and the industry continues to reinvent itself,” Motilal Oswal said. The Motilal Oswal report also painted a bright picture about the rise in deposit accounts in India.
Over the past decade, the number of deposit accounts in India has more than doubled to 2,652 million. This growth has been fueled by government initiatives such as Jan Dhan Yojana and digitalisation, which have enhanced financial inclusion and banking penetration.
Deposit accounts per capita have risen to 1.90 in 2023-24 from 0.63 in 2009-10, indicating increased formalisation and penetration levels. The Pradhan Mantri Jan Dhan Yojana (PMJDY) has played a significant role in this growth, with the number of accounts rising to 520 million in 2023-24 from 145 million in 2015.
“PMJDY has enabled strengthening of digital infrastructure and facilitated Direct Benefit Transfers, empowering the underserved population,” said the Motilal Oswal report.
