Mumbai (TIP)- India’s digital economy is poised to constitute a fifth of GDP by 2026 from one-tenth at present, according to a Reserve Bank report.
In the foreword of ‘Report on Currency and Finance (RCF) for the year 2023-24’, Reserve Bank Governor Shaktikanta Das emphasised that digitalisation in finance is paving the way for next-generation banking and improving access to financial services at affordable cost.
India is at the forefront of the digital revolution, the report said. The country has embraced not just financial technology (FinTech) by speeding up digital payments but has also celebrated India Stack comprising biometric identification, the Unified Payments Interface (UPI), mobile connectivity, digital lockers and consent-based data sharing.
The digital revolution is galvanising banking infrastructure and public finance management systems covering both direct benefit transfers and tax collections, the report said. Vibrant e-markets are springing up and expanding their reach.
“It is estimated that the digital economy currently accounts for a tenth of India’s GDP; going by growth rates observed over the past decade, it is poised to constitute a fifth of GDP by 2026,” the report said.Several enabling forces have come together to energise this revolution. Although internet penetration in India was at 55 per cent in 2023, the internet user base has grown by 199 million in the recent three years.
India’s cost per gigabyte (GB) of data consumed is the lowest globally at an average of Rs 13.32 per GB. India also has one of the highest mobile data consumption in the world, with an average per-user per-month consumption of 24.1 GB in 2023.
Bank credit growth declines, gold loans rise 30.5%, credit card outstanding rises by Rs 51,000 cr
An Unfavourable base effect brought down the overall non-food credit growth of the banks to 13.9 per cent at Rs 163.46 lakh crore as of June 30, 2024 as against 16.3 per cent in June 2023, even as gold and housing loans rose sharply, according to the Reserve Bank’s latest data. The growth in credit card outstanding, meanwhile, declined during the 12-month period.
Analysts have attributed the slower rate to RBI measures such as higher risk weights on unsecured loans, a higher base effect and banks’ focus on managing the credit-to-deposit ratio. Gold loan outstanding jumped by 30.5 per cent to Rs 123,776 crore as of June 2024 from Rs 94,872 crore (19.3 per cent growth) in June 2023. Credit card outstanding rose by Rs 51,000 crore to Rs 273,044 crore, showing a slower growth of 23.3 per cent as against 37.6 per cent a year ago, according to RBI data.
“The rise in gold loans could be due to the sharp rise in gold prices in the last one year which prompted people to pledge gold to raise finances,” said a banking source. Gold loan NBFCs also hold a sizeable gold portfolio with Muthoot Finance alone accounting for a loan asset portfolio of Rs 63,200 crore in 2023.
Overall growth in the personal loan segment was lower at 16.6 per cent (Rs 50.91 lakh crore) in June 2024 as compared to 21.3 per cent a year ago, largely due to moderation in growth recorded in ‘other personal loans’ and ‘advances against fixed deposits’. However, credit growth to housing, the largest constituent of the segment, accelerated by 18.2 per cent at Rs 24.27 lakh crore in June 2024 from 14.8 per cent (Rs 20.52 lakh crore) a year ago, RBI data shows.
RBI measures to check the unprecedented growth in unsecured loans had slowed down the growth in the segment. In November 2023, the RBI had increased risk weight on the exposure of banks towards consumer credit, credit card receivables and non-banking finance companies (NBFCs) by 25 per cent up to 150 per cent. The move was aimed to address build-up of any risks in these segments.