Fibac 2019 Annual Benchmarking and Insights

FIBAC 2019 ANNUAL BENCHMARKING AND INSIGHTS

AUGUST 2019 The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-forprofit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 85 offices in 48 countries. For more information, please visit bcg.com.

Boston Consulting Group partners with leaders Established in 1927, FICCI is the largest and Indian Banks’ Association (IBA) the only advisory in business and society to tackle their most oldest apex business organisation in India. Its body for banks in India, was set up in 1946 as an important challenges and capture their greatest history is closely interwoven with India’s struggle association to discuss vital issues of Banks. The opportunities. BCG was the pioneer in business for independence, its industrialization, and its onward journey of IBA has been progressive and strategy when it was founded in 1963. Today, we emergence as one of the most rapidly growing enriched by the development of India’s banking help clients with total transformation—inspiring global economies. sector since independence. complex change, enabling organizations to grow, A non-government, not-for-profit organisation, Having bestowed with the status of the “torch building competitive advantage, and driving FICCI is the voice of India’s business and industry. bearer” for the banking industry, IBA has initiated bottom-line impact. From influencing policy to encouraging debate, several path breaking policies during the last To succeed, organizations must blend digital and engaging with policy makers and civil society, FICCI seven decades which have eventually transformed human capabilities. Our diverse, global teams articulates the views and concerns of industry. the banking sector. Over a period of time IBA bring deep industry and functional expertise It serves its members from the Indian private has evolved as the “Voice of the Indian Banking and a range of perspectives to spark change. and public corporate sectors and multinational Industry”. At present IBA has 251 Members, 144 BCG delivers solutions through leading-edge companies, drawing its strength from diverse Ordinary Members comprising Public, Private, management consulting along with technology regional chambers of commerce and industry across Foreign and Cooperative Banks and 107 financial and design, corporate and digital ventures— states, reaching out to over 2,50,000 companies. institutions and Banking related organizations as and business purpose. We work in a uniquely FICCI provides a platform for networking and Associate Members. collaborative model across the firm and consensus building within and across sectors and throughout all levels of the client organization, is the first port of call for Indian industry, policy generating results that allow our clients to thrive. makers and the international business community. Established in 1927, FICCI is the largest and oldest apex business organisation in India. Its history is closely interwoven with India‘s struggle for independence, its industrialization, and its emergence as one of the most rapidly growing global economies. Credit InsightsA non-government, Partner not-for-profit organisation,TransUnion FICCI is CIBILthe voice is India’s of India‘s leading business credit informationand industry. company From influencing and maintains policy one ofto the encouraging largest repositories debate, engaging with policy makers and civilof creditsociety, information FICCI articulates globally. We the have views over and 4500 concerns members–including of industry. allIt servesleading its banks, members financial from institutions, the Indian private and public corporate sectorsnon-banking and multinational financial companies companies, and drawinghousing financeits strength companies–and from diverse maintain regional more chambers than 1000 of million credit commerce and industry across states, reachingrecords out ofto individuals over 2,50,000 and businesses.companies. FICCI provides a platform for networking and consensus building within and across sectors and is the first port of call for Indian industry, policy makers and the internationalOur business mission community.is to create information solutions that enable businesses to grow and give consumers faster, cheaper access to credit and other services. We create value for our members by helping them manage Indian Banks’ Association (IBA) the only advisoryrisk and bodydevise for appropriate banks in lendingIndia, wasstrategies set up to in reduce 1946 costsas an and association increase portfolioto discuss profitability. vital issues With of Banks. The onward journey of IBA has beencomprehensive, progressive and reliable enriched information by the development on consumer andof India’s commercial banking borrowers, sector since they independence.are able to make sound Having bestowed with the status of the “torchcredit bearer” decisions for the about banking individuals industry, and businesses. IBA has initiated Through several the power path of breakinginformation, policies TransUnion during CIBIL is the last seven decades which have eventuallyworking transformed to support the our banking members sector. drive credit Over penetration a period ofand time financial IBA hasinclusion evolved for buildingas the “Voicea stronger of economy. the Indian Banking Industry”. At present IBA has 248 Members, 144 Ordinary Members comprising Public, Private, Foreign and Cooperative Banks and 104 financial institutions and Banking related organizations as Associate Members. FIBAC 2019 ANNUAL BENCHMARKING AND INSIGHTS

August 2019 | Boston Consulting Group Executive Summary 04

Overall Metrics 05

Deposits 11

Advances 23

Fee Income 43

Non-Performing Assets 51

Traditional Channels 57

Digital Channels 67

Organization Design 77

Glossary 85

For Further Reading 86

Note to the Reader 87 FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS Executive Summary 04 4

Overall Metrics 05 Executive Summary Deposits 11 The banking sector in India is at an inflection point. The worst phase of the recent NPA crisis is well and truly over. However, the gap between strong and weak banks is widening by the year, necessitating a change in the landscape of the industry with consolidation Advances 23 of players becoming one of the key ways to achieve this change. The past year saw muted growth in credit as well as deposits, however margins for banks improved due to lower cost of funds. Also, recoveries from write-offs gave a boost to fee income across the industry. Although overall growth in credit and deposits slowed, NPAs for retail as well as SME loans improved across all bank Fee Income 43 categories.

With all these changing market dynamics, there is a pressing need to assess new paradigms which would define the success for the Non-Performing Assets 51 banking industry. NBFCs continue to play a crucial role by leading the acquisition of new-to-credit (NTC) customers. In fact, NBFCs are adding as many new-to-credit customers as rest of the banking industry put together. However, the problem of NPAs in NBFCs Traditional Channels 57 seems to persist and needs to be addressed. PSU banks are playing a critical role in extending credit to Tier 3-4-5 towns. The link between branch growth and savings account deposits growth has weakened. There is a disruption in CASA, with rate war shifting incremental market shares in a significant manner. Across bank categories, there is an apparent trend of shifting market Digital Channels 67 shares in savings deposits, with Private-New banks increasingly taking away share from peers. This is attributed to their continued investment in branch infrastructure, better digital adoption as well as higher interest rate offerings. On the lending front, lenders are exercising more caution as they sanction loans to customers with higher credit scores. However, it leaves a section of people Organization Design 77 unserved, leading to a higher demand-supply gap. Among the other factors, this has led to a slower growth in the retail segment.

85 As the digitization wave is picking up steam, for the first time in the history of Indian banking, almost two-thirds of all banking Glossary financial transactions are now digital; with UPI, mobile and internet banking leading the way. Growth in traditional channels like ATMs and branches has stagnated for all bank categories and the industry is investing heavily in non-traditional channels. For Further Reading 86 Relocation and rationalization of ATMs and branches is leading to higher efficiency of these channels. Digital penetration is showing results with an average of one in five savings account holders using their debit cards at POS terminals. Banks are also increasingly improving their capabilities to monetize their digital channels with almost one in four personal loans being sold digitally. Note to the Reader 87 OVERALL METRICS FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 6

Gap in overall performance further widened within PSU and Private banks in FY 19

Return on Assets1(%) Return on Equity2 (%)

(%) (%) 2 1.8% 1.6% 20 17% 1.4% 15% 11% 12% 1.1% 1.1% 9% 10% 10% 10% Private-New 1 0.8% Private-New 4% 0.7% 9% 2% 5% 0.7% 5% Private-Old 0.3% 0.4% 0.4% 3% 0 -2% -4% 0.6% 0.2% Private-Old -6% Industry 0.2% 5% 0% 0 -0.1% -0.3% PSU-Large -0.4% PSU-Large -7% 0.3% 0.0% -7% -9% -0.4% -0.4% -0.2% Industry -0.6% -20 -1

-28% PSU-Medium -31% -1.5% PSU-Medium -2 -1.8% -40 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19

1Return on Assets is calculated as net profit/average assets 2Return on Equity is calculated as net profit/average shareholders' fund Note: 1. Data of 6 PSU-Large banks, 13 PSU-Medium banks, 4 Private-New banks and 8 Private-Old banks included for the purpose of this analysis Source: RBI data; Capitaline data; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 7

Slowdown in advances growth in PSU banks evident in asset profile

Balance Sheet Composition (%): Asset Mix

FY15 FY19 FY15 FY19 FY15 FY19 FY15 FY19 FY15 FY19 Other Assets 100 100 100 100 100

Fixed Assets

Balances with Banks and Money at Call 50 50 50 50 50 Cash and Balances with RBI

Investments

Advances 0 0 0 0 0 Private-New Private-Old PSU-Large PSU-Medium Industry

Growth1 in 16% 10% 7% 3% 8% total assets (%)

15 yr CAGR (FY 14 to FY 19) Note: 1. Data of 6 PSU-Large banks, 13 PSU-Medium banks, 4 Private-New banks and 8 Private-Old banks included for the purpose of this analysis Source: RBI data; Capitaline data; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 7 8

Liability side balance sheet of the industry has improved with higher share of Slowdown in advances growth in PSU banks evident in asset profile savings deposits; trend very prominent in PSU banks

Balance Sheet Composition (%): Asset Mix Balance Sheet Composition (%): Liability Mix

FY15 FY19 FY15 FY19 FY15 FY19 FY15 FY19 FY15 FY19 FY15 FY19 FY15 FY19 FY15 FY19 FY15 FY19 FY15 FY19 Other Assets 100 100 100 100 100 100 100 100 100 100 Other Liabilities and Fixed Assets Provisions Reserves and Surplus Balances with Banks and Money at Call Capital 50 50 50 50 50 50 50 50 50 50 Cash and Balances Borrowings with RBI Term Deposits Investments Current Deposits

Advances Savings Deposits 0 0 0 0 0 0 0 0 0 0 Private-New Private-Old PSU-Large PSU-Medium Industry Private-New Private-Old PSU-Large PSU-Medium Industry

Growth1 in Growth1 in 16% 10% 7% 3% 8% 16% 10% 7% 3% 8% total assets (%) total assets (%)

15 yr CAGR (FY 14 to FY 19) 15 yr CAGR (FY 14 to FY 19) Note: 1. Data of 6 PSU-Large banks, 13 PSU-Medium banks, 4 Private-New banks and 8 Private-Old banks included for the purpose of this analysis Note: 1. Data of 6 PSU-Large banks, 13 PSU-Medium banks, 4 Private-New banks and 8 Private-Old banks included for the purpose of this analysis Source: RBI data; Capitaline data; BCG analysis Source: RBI data; Capitaline data; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 9

Drop in savings account share of deposits for Private-New banks; steady growth for rest of the players in the industry

Savings Account Deposits/Total Deposits1 (%) Current Account Deposits/Total Deposits1 (%)

(%) (%) 17.9% 35 34% 18 33% 32% 32% 16.8% 16.0% 32% 15.9% 30 31% 16 29% 8.7% 28% 30% 30% 8.6% 15.6% 28% 8.2% 8.2% 8.6% 26% 28% 8 7.8% 25% 7.3% 7.4% 7.4% 25 26% 24% 6.7% 6.7% 6.8% 25% 23% 24% 6.4% 21% 6.6% 6.6% 6.7% 6.6% 22% 0 0 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19

PSU-Large PSU-Medium Private-New Private-Old Industry

1Ratio is calculated on basis of deposits in India and abroad Note: 1. Data of 6 PSU-Large banks, 13 PSU-Medium banks, 4 Private-New banks and 8 Private-Old banks included for the purpose of this analysis Source: RBI data; Capitaline data; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 9 10

Drop in savings account share of deposits for Private-New banks; steady growth While Cost to Income Ratio continued to rise, Net Interest Margin has started to for rest of the players in the industry inch up

Savings Account Deposits/Total Deposits1 (%) Current Account Deposits/Total Deposits1 (%) Cost to Income Ratio2 (CIR) (%) Net Interest Margin1 (NIM) (%)

(%) (%) (%) (%) 17.9% 55% 35 34% 18 55 54% PSU-Medium 4 33% 53% Private-Old 3.6% 32% 32% 52% 54% 3.6% 16.8% PSU-Large 3.5% 3.5% 51% 53% 3.4% 16.0% 53% Private-New 32% 15.9% 52% 51% 31% 16 30 29% 50 49% Industry 30% 8.7% 8.6% 15.6% 50% 3.0% 28% 30% 50% 3 2.8% 2.9% 2.9% 2.9% 28% 8.2% 8.2% 8.6% 48% 48% Private-Old 49% 49% 2.6% 2.6% 26% 28% 8 7.8% 2.5% 2.4% Industry 25% 7.3% 7.4% 7.4% 47% 47% 2.4% 26% 2.4% PSU-Large 25 24% 6.8% 45 2.5% 25% 6.7% 6.7% 2.3% 2.1% 23% 42% 43% 2.2% PSU-Medium 24% 6.7% 6.4% Private-New 2 2.2% 2.1% 2.2% 21% 6.6% 6.6% 6.6% 41% 41% 41% 2.0% 2.0% 22% 0 0 40 0 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19

PSU-Large PSU-Medium Private-New Private-Old Industry

1Net Interest Margin is calculated as net interest income/average assets 2Cost to Income Ratio is calculated as operating costs/revenues; Revenue is calculated as 1Ratio is calculated on basis of deposits in India and abroad sum of net interest income and other income Note: 1. Data of 6 PSU-Large banks, 13 PSU-Medium banks, 4 Private-New banks and 8 Private-Old banks included for the purpose of this analysis Note: 1. Data of 6 PSU-Large banks, 13 PSU-Medium banks, 4 Private-New banks and 8 Private-Old banks included for the purpose of this analysis Source: RBI data; Capitaline data; BCG analysis Source: RBI data; Capitaline data; BCG analysis DEPOSITS FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 12

Private-New banks grew retail term deposits aggressively to further transform liability side balance sheet; overall deposits growth was muted Composition of Total Deposits1 Growth in Total Deposits1 (FY 19) (%) FY 19 over FY 18 (%)

Bulk PSU- PSU- Private- Private- Term 13% 13% 13% 15% Large Medium New Old Industry Deposits 21% Savings 8% 8% 11% 14% 9% Retail Term Deposits 44% 43% 53% 44% Current 7% 19% 9% 7% 10% 41% Current Retail Account 2 1% 3% 25% 14% 6% 7% 12% 8% Term Deposits 7% 8% Savings Bulk 36% 31% 32% 26% 34% 36% -5% 23% 3% 16% Account Term3 Deposits

PSU- PSU- Private- Private- Industry Total 8% 4% 18% 12% 9% Large Medium New Old

1Total Deposits represent only the domestic operations of banks 2Retail Term Deposits include Retail Fixed Deposits (less than INR 2 Crore) & Recurring Deposits 3Bulk Term Deposits include Bulk Term Deposits & CDs (equal to or more than 2 Crore) and Interbank Deposits & Others Note: 1. Data of 6 PSU-Large banks, 11 PSU-Medium banks, 4 Private-New banks and 7 Private-Old banks included for the purpose of this analysis 2. Total may not sum to 100 because of differences due to rounding off Source: FIBAC Productivity Survey 2019; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 13 As on 31st March 2019

Most of the states in southern India showed robust growth in low cost deposits Savings Account Deposits Growth (%) Current Account Deposits Growth (%) (FY 19 over FY 18) (FY 19 over FY 18)

Jammu and Kashmir Jammu and Kashmir

Goa Goa Andhra Pradesh Andhra Pradesh Karnataka Andaman and Karnataka Andaman and Puducherry Nicobar Islands Puducherry Nicobar Islands Lakshadweep Kerala Lakshadweep Kerala Tamil Nadu Tamil Nadu

Quartile 1: SA Growth more than 12% Quartile 3: SA Growth between 8% & 10% Quartile 1: CA Growth more than 12% Quartile 3: CA Growth between -1% & 3% Quartile 2: SA Growth between 10% Quartile 4: SA Growth less than 8% Quartile 2: CA Growth between 3% Quartile 4: CA Growth less than -1% & 12% & 12%

Note: 1. Data of 5 PSU-Large banks, 10 PSU-Medium banks, 2 Private-New banks and 7 Private-Old banks included for the purpose of this analysis Source: FIBAC Productivity Survey 2019; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 13 14 As on 31st March 2019 On branch productivity, PSU banks enjoy relative advantage in semi-urban & rural Most of the states in southern India showed robust growth in low cost deposits areas, Private-New banks in urban & metro and Private-Old in semi-urban Savings Account Deposits Growth (%) Current Account Deposits Growth (%) (FY 19 over FY 18) (FY 19 over FY 18) CASA Deposits per Branch for FY 19 (INR Crore)

128

Jammu and Kashmir Jammu and Kashmir

Himachal Pradesh Himachal Pradesh Chandigarh Chandigarh Punjab Punjab Uttarakhand Arunachal Pradesh Uttarakhand Arunachal Pradesh Haryana Haryana Sikkim Delhi Delhi Sikkim 75 77 Rajasthan Uttar Pradesh Assam Nagaland Rajasthan Uttar Pradesh Assam Nagaland 71 Bihar Meghalaya Bihar Meghalaya Manipur Manipur 59 Jharkhand Tripura Jharkhand Tripura Gujarat Mizoram Gujarat Mizoram Madhya Pradesh West Bengal Madhya Pradesh West Bengal 52 50 Daman and Diu Chhattisgarh Daman and Diu Chhattisgarh 40 Dadra and Nagar Orissa Dadra and Nagar Maharashtra Orissa Maharashtra 34 32 30 Haveli Haveli 25 25 28 Telangana Telangana 20 22 20 15 Goa Goa Andhra Pradesh Andhra Pradesh 7 7 Karnataka Andaman and Karnataka Andaman and Puducherry Nicobar Islands Puducherry Nicobar Islands Lakshadweep Kerala Lakshadweep Kerala Metro Urban Semi-Urban Rural Tamil Nadu Tamil Nadu

Note: 1. Data of 5 PSU-Large banks, 10 PSU-Medium banks, 2 Private-New banks and 7 Private-Old banks included for the purpose of this analysis Note: 1. Data of 6 PSU-Large banks, 10 PSU-Medium banks, 4 Private-New banks and 7 Private-Old banks included for the purpose of this analysis Source: FIBAC Productivity Survey 2019; BCG analysis Source: FIBAC Productivity Survey 2019; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 15

In savings deposits, individual salary accounts and BSBD grew faster than the other categories; PSU-Large dominating growth in both these segments Composition of Total Savings Account Growth in Total Savings Account Deposits1 Deposits1 for FY 19 (%) for FY 19 over FY 18 (%)

Individual- Salary PSU- PSU- Private- Private- Large Medium New Old Industry Individual- 28% 20% 18% 29% 23% Individual- Salary Non-Salary Individual- 7% 6% 8% 11% 7% Non-Salary

BSBD 24% 13% -12% 13% 19% BSBD Non- 5% 14% 9% 28% 8% Non- Individuals Individuals PSU- PSU- Private- Private- Industry Total 8% 8% 11% 14% 9% Large Medium New Old

1Total Savings Account Deposits pertain to banks' operations in India Note: 1. Data of 6 PSU-Large banks, 11 PSU-Medium banks, 3 Private-New banks and 6 Private-Old banks included for the purpose of this analysis 2. Total may not sum to 100 because of differences due to rounding off Source: FIBAC Productivity Survey 2019; BCG analysis FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 16

Overall savings account deposits growth at its slowest in a decade

Overall Savings Account Deposits1 Growth2 (%) (%) 40

31% 30 26% 27% 23% 21% 25% 22% 19% 20 21% 16% 15% 15% 12% 13% 14% 11% 9% 10% 8% 9% 7% 0 FY11 FY13 FY15 FY17 FY19

PSU-Large PSU-Medium Private-New Private-Old Industry

1Overall Savings Account Deposits include both domestic as well as foreign deposits 2Growth represents absolute growth between each 2 year period Note: 1. Data of 6 PSU-Large banks, 13 PSU-Medium banks, 9 Private-New banks and 9 Private-Old banks included for the purpose of this analysis Source: RBI data; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 17

Market shares in savings account deposits are shifting faster than before; banks with better digital capabilities at an advantage

Market share for incremental Savings Account Deposit1 (%)

47% PSU-Large 55% 55%

22% PSU-Medium 25% 25% Private-New-Large 19% Private-New-Small2 18% 16% 10% Private-Old 2% 0% 2% 2% 2% FY05-FY09 FY09-FY14 FY14-FY19

1Total Savings Account Deposits pertains to banks' operations in India and abroad 2Private-New-Small banks are considered based on total assets less than INR 5 billion as on 31 March 2019 Note: 1. Data of 6 PSU-Large banks, 15 PSU-Medium banks, 3 Private-New-Large banks, 6 Private-New-Small banks and 9 Private-Old banks included for the purpose of this analysis Source: RBI data; BCG analysis FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 18

In savings deposits, PSU banks have struck a balance across MUSR; Private-New skewed towards metro and urban; Private-Old have semi-urban as their strength Composition of Total Savings Account Growth in Total Savings Account Deposits1 Deposits1 by Geography for FY 19 (%) FY 19 over FY 18 (%)

PSU- PSU- Private- Private- Large Medium New Old Industry Metro 24% 27% 34% 34% Metro 5% 4% 12% 10% 7% 59% Urban 28% 20% 25% 26% Urban 9% 9% 14% 12% 10%

Semi- Semi-Urban 24% 40% 9% 10% 6% 15% 9% 22% 24% 22% Urban

Rural 24% 13% Rural 11% 11% -3% 21% 11% 19% 13% 18% 4% PSU- PSU- Private- Private- Industry Large Medium New Old Total 8% 8% 11% 14% 9%

1Total Savings Account Deposits pertains to banks' operations in India Note: 1. Data of 6 PSU-Large banks, 11 PSU-Medium banks, 4 Private-New banks and 7 Private-Old banks included for the purpose of this analysis 2. Total may not sum to 100 because of differences due to rounding off Source: FIBAC Productivity Survey 2019; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 19

Average size of savings account deposits remains stagnant across all bank categories

Average Size of Savings Account Deposits (INR '000)

+1%

+3% 67 67 +5% +3% +1%

25 25 26 23 24 19 19 24

PSU-Large PSU-Medium Private-New Private-Old Industry

FY 18 FY 19

Note: 1. Data of 6 PSU-Large banks, 11 PSU-Medium banks, 3 Private-New banks and 6 Private-Old banks included for the purpose of this analysis Source: FIBAC Productivity Survey 2019; BCG analysis FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 20

PSU-Large banks driving financial inclusion agenda across geographies Market Share in BSBD Accounts by Average Balance per BSBD Account for Geography by value for FY 19 (%) FY 19 (INR)

3,281

2,866 2,502 2,500 PSU-Large 2,352 50% 56% 66% 72% 69%

PSU-Medium 45% 40% 30% Private-New 25% 28% Private-Old 3% 3% 2% 1% 2% 1% 1% 2% 1% 1% PSU-Large PSU- Private-New Private-Old Industry Metro Urban Semi- Rural Overall Medium Urban

Note: 1. Data of 6 PSU-Large banks, 11 PSU-Medium banks, 3 Private-New banks and 5 Private-Old banks included for the purpose of this analysis 2. Total may not sum to 100 because of differences due to rounding off Source: FIBAC Productivity Survey 2019; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 21

High activation of BSBD accounts for PSU-Large banks; however RuPay card activation lagging for them

Active1 BSBD Accounts for BSBD Accounts with RuPay BSBD Accounts with Active RuPay FY 19 (%) Debit Cards for FY 19 (%) Debit Cards at POS for FY 19 (%)

70% 64%

49% 49%

38% 28%

18% 18% 18% 15% 17%

3% 3% 2% 3%

PSU- PSU- Private- Private- Industry PSU- PSU- Private- Private- Industry PSU- PSU- Private- Private- Industry Large Medium New Old Large Medium New Old Large Medium New Old

1Active BSBD Accounts defined as accounts with at least 1 customer initiated financial transaction in last 6 months (as of 31 March 2019) Note: 1. Data of 6 PSU-Large banks, 11 PSU-Medium banks, 3 Private-New banks and 5 Private-Old banks included for the purpose of this analysis Source: FIBAC Productivity Survey 2019; BCG analysis

ADVANCES FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 24

Retail loans continue to grow in FY 19 with Private-New banks leading the pack; PSU-Medium growth extremely slow across the board

Total Advances in FY 19 (%) Growth in Advances in FY 19 over FY 18 (%)

PSU- PSU- Private- Private- Industry 25% Large Medium New Old Retail 28% 30% 31% 43% Retail 18% 9% 30% 22% 20% 17% Agriculture 13% 11% 13% 9% Agriculture 10% 5% -5% 8% 6% MSME 16% 17% 20% 16% 14% MSME1 3% -6% 17% 10% 4%

Corporate 42% 41% 34% 39% 40% Corporate 13% 3% 15% 9% 11%

PSU- PSU- Private- Private- Industry Total 12% 3% 19% 13% 12% Large Medium New Old

Only participant banks in FIBAC

1MSME advances includes CV/CE loans Note: 1. Data of 6 PSU-Large banks, 12 PSU-Medium banks, 4 Private-New banks and 8 Private-Old banks included for the purpose of this analysis 2. Total may not sum to 100 because of differences due to rounding off Source: FIBAC Productivity Survey 2019; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 25

While retail loans continue to grow at a steady pace, sharp fall seen in growth for MSME with PSU banks worst hit among all bank categories Growth in Outstanding Retail and MSME Advances (%) Player Category Retail Consumer1 Retail Home Retail Business2 MSME3 FY 18 FY 19 FY 18 FY 19 FY 18 FY 19 FY 18 FY 19 45 45 45 45 41% 26% 26% 30 21% 24% 30 22% 30 30 4 13% 16% NBFCs 15 15 15 15 0 0 0 0 40% 45 32% 45 45 45 30 30 30 30 19% 16% 13% PSU 9% 15 15 15 15 7% 0 0 0 0 -15 -3% 45% 40% 45 41% 45 45 45 27% 27% 26% 30 Private 30 30 20% 16% 30 15 15 15 15 0 0 0 0 45 33% 45 45 34% 45 25% 30 30 20% 30 21% 30 5 17% 14% Industry 15 15 15 15 9% 0 0 0 0 All banks & NBFCs in India

1Retail Consumer includes Auto Loans, Personal Loans, Consumer Loans, Credit Cards and Gold Loans 2Retail Business includes Business Loans, Loan Against Property, Commercial Vehicle and Construction Equipment Loans 3MSME includes loans less than INR 50 crores (data from CIBIL Commercial Bureau) 4NBFCs includes HFCs 5Industry includes NBFCs, HFCs, Private banks, PSU banks, Co-operative banks, MNCs and Regional Rural banks Source: TransUnion CIBIL; BCG analysis FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 26

PSU-Medium banks have higher share of NPA despite low advances growth across retail & MSME; Private-Old need to improve their risk management capabilities

1 2 GNPA (FY19) (%) Retail Consumer GNPA (FY19) (%) Retail Business

10 30 PSU-Medium PSU-Medium NBFCs Private-Old 20 5 PSU-Large NBFCs Private-Old Private-New 10 PSU-Large Private-New 0 0 -20 0 20 40 -15 -10 -5 0 30 Advances Y-o-Y growth (FY19) (%) Advances Y-o-Y growth (FY19) (%)

3 GNPA (FY19) (%) Retail Home GNPA (FY19) (%) MSME 30 4 PSU-Medium PSU-Medium Private-Old 20 PSU-Large 2 NBFCs PSU-Large 10 NBFCs Private-New Private-New Private-Old 0 0 0 5 10 15 20 25 30 -10 0 10 20 30 Advances Y-o-Y growth (FY19) (%) Advances Y-o-Y growth (FY19) (%) All banks & NBFCs in India

1Retail Consumer includes Auto Loans, Personal Loans, Consumer Loans, Credit Cards and Gold Loans 2 Retail Business includes Business Loans, Loan Against Property, Commercial Vehicle and Construction Equipment Loans 3MSME includes loans less than INR 50 crores (data from CIBIL Commercial Bureau) Note: 1. NBFCs includes HFCs 2. Quadrants are defined based on Industry average 2. Industry includes Co-operative banks, MNCs and Regional Rural banks as well Source: TransUnion CIBIL; BCG analysis Retail Advances FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 28

Unsecured loans continue to grow across the board; robust growth seen in home loans followed by auto loans Split of Total Retail Advances Growth in Retail Advances in FY 19 (%) FY 19 over FY 18 (%)

PSU- PSU- Private- Private- Large Medium New Old Industry Home 21% 12% 21% 32% 19% 31% 40% 47% Auto 10% 2% 18% 34% 14% Home 53% 50% 4% Unsecured 11% 28% 37% 33% 24% Retail Advances Auto 14% Personal 15% 2% Unsecured 5% 6% 10% 9% 4% Personal 5% Student 4% -6% 31% 3% 1% 20% 14% Student 13% 4% 3% LADS 9% -18% 9% 5% 1% LADS 4% 1% 43% 3% 4% 32% Jewel/Gold Jewel/Gold & 23% 23% 27% 13% 54% 14% 29% Others 16% & Others PSU-Large PSU- Private- Private-Old Industry Total 18% 9% 30% 22% 20% Medium New

Only participant banks in FIBAC

Note: 1. Data of 6 PSU-Large banks, 12 PSU-Medium banks, 4 Private-New banks and 8 Private-Old banks included for the purpose of this analysis 2. Total may not sum to 100 because of differences due to rounding off Source: FIBAC Productivity Survey 2019; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 29

NBFCs capturing lion's share of new retail loans (40%) and even higher share of New to Credit customer base (56%)

1 1 Share of New Retail Loans1 by Share of New Retail Loans Share of New Retail Loans Customer type by volume (%) to New to Credit Customers to New to Credit by volume (%) Customers by value (%)

New to 12.5% Credit NBFCs2 40% NBFCs2 56%

Known to Private 87.5% 27% Bureau Banks Private 24% Banks PSU Banks PSU Banks 27% 13% Others3 Others3 7% 5% FY19 FY19 FY19

All banks & NBFCs in India

1Retail Loan includes Auto Loans, Personal Loans, Home Loans, Consumer Loans, Business Loans, Loan Against Property, Gold Loan, Credit Cards, Agri, Commercial Vehicle and Construction Equipment Loans 2NBFCs includes HFCs 3Others include Co-operative banks, MNCs and Regional Rural banks Source: TransUnion CIBIL; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 29 30

NBFCs capturing lion's share of new retail loans (40%) and even higher share of NBFCs have captured a dominant share in loans to small business and home New to Credit customer base (56%) retail loans

1 1 Share of New Retail Loans1 by Share of New Retail Loans Share of New Retail Loans Share of Outstanding Retail Loans in FY 19 by value (%) Customer type by volume (%) to New to Credit Customers to New to Credit by volume (%) Customers by value (%)

4% New to NBFCs3 18% 12.5% 14% 30% Credit 41% 42% NBFCs2 40% 2 Private Banks 37% NBFCs 56% 26% 19% 73% 32% Private Known to 27% 87.5% Banks Bureau PSU Banks 39% 38% 39% Private 19% 24% Banks Others4 6% 3% 7% 10% 6% PSU Banks PSU Banks 27% 13% Retail Consumer1 Retail Home Retail Business2 Retail Agri Total Retail Others3 Others3 7% 5% Share of Total FY19 FY19 FY19 Retail loans in 27% 38% 21% 13% 100% FY 19 All banks & NBFCs in India All banks & NBFCs in India

1Retail Loan includes Auto Loans, Personal Loans, Home Loans, Consumer Loans, Business Loans, Loan Against Property, Gold Loan, Credit Cards, Agri, 1Retail Consumer includes Auto Loans, Personal Loans, Consumer Loans, Credit Cards and Gold Loans 2Retail Business includes Business Loans, Loan Against Commercial Vehicle and Construction Equipment Loans 2NBFCs includes HFCs 3Others include Co-operative banks, MNCs and Regional Rural banks Property, Commercial Vehicle and Construction Equipment Loans 3NBFCs includes HFCs 4Others include Co-operative banks, MNCs and Regional Rural banks Source: TransUnion CIBIL; BCG analysis Source: TransUnion CIBIL; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 31

While NPAs in retail home loans remain under control, retail business loans showing signs of stress; Agri loans still a segment under duress

Y-o-Y Growth (%) GNPA (%) Retail Loan Products FY 18 FY 19 FY 17 FY 18 FY 19

Retail Consumer1 33% 4.9% 5.3% 4.3% 17%

1.7% 1.7% 1.7% Retail Home 20% 14%

Retail Business2 34% 7.2% 7.3% 8.6% 21%

Retail Agri 14% 10% 12.5% 12.8% 17.5%

Retail Total 5.2% 5.3% 5.9% 25% 16%

All banks & NBFCs in India

1Retail Consumer includes Auto Loans, Personal Loans, Consumer Loans, Credit Cards and Gold Loans 2Retail Business includes Business Loans, Loan Against Property, Commercial Vehicle and Construction Equipment Loans Source: TransUnion CIBIL; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 31 32

While NPAs in retail home loans remain under control, retail business loans showing signs of stress; Agri loans still a segment under duress NBFCs captured almost 40% of share of new retail loans across geographies

Y-o-Y Growth (%) GNPA (%) Market share of New Retail Loans by Geography and by Volume (%) Retail Loan Products FY 18 FY 19 FY 17 FY 18 FY 19 Retail Consumer1 Retail Home Retail Business2

Retail Consumer1 33% 4.9% 5.3% 4.3% 17% 33% 37% 38% 44% 44% 42% 43% 40% 40% 45% 47% 51% 47% 49% 49% 49% 51% 46% 1.7% 1.7% 1.7% Retail Home 20% 14% 20% 7% 9% 13% 20% 11% 13% 16% 19% 18% 16% 21% 17% 18% 31% 24% Retail Business2 34% 7.2% 7.3% 8.6% 31% 27% 21% 38% 47% 47% 32% 38% 26% 35% 42% 42% 26% 28% 24% 31% 31% 11% 10% 22% 18% 10% 11% 11% 11% 10% 10% Retail Agri 14% 10% 12.5% 12.8% 17.5% 8% 9% 9% 8% 3% 2% 4% 4% 4% 4% 5% 4% FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 City/ Tier 1&2 Tier 3&4 Tier 5&6 Tier 1&2 Tier 3&4 Tier 5&6 Tier 1&2 Tier 3&4 Tier 5&6 Retail Total 5.2% 5.3% 5.9% Town 25% 16%

NBFCs3 Private Banks PSU Banks Others4 All banks & NBFCs in India All banks & NBFCs in India

1Retail Consumer includes Auto Loans, Personal Loans, Consumer Loans, Credit Cards and Gold Loans 2Retail Business includes Business Loans, Loan Against 1Retail Consumer includes Auto Loans, Personal Loans, Consumer Loans, Credit Cards and Gold Loans 2Retail Business includes Business Loans, Loan Against Property, Commercial Vehicle and Construction Equipment Loans Property, Commercial Vehicle and Construction Equipment Loans 3NBFCs includes HFCs 4Others include Co-operative banks, MNCs and Regional Rural banks Source: TransUnion CIBIL; BCG analysis Source: TransUnion CIBIL; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 33

Young India preferring Private-New banks and NBFCs for retail loans

Composition of New Retail Loans1 based on age of borrower in FY 19 by volume (%)

Age of borrowers 13% 12% 12% <29 26% 28%

30% 29% 31%

30-39 38% 39% 27% 29% 30%

40-49 23% 20% 30% 30% 27% >50 13% 13% NBFCs2 PSU-Large PSU-Medium Private-New Private-Old

All banks & NBFCs in India

1Retail Loan includes Auto Loans, Personal Loans, Home Loans, Consumer Loans, Business Loans, Loan Against Property, Gold Loan, Credit Cards, Agri, Commercial Vehicle and Construction Equipment Loans 2NBFCs includes HFCs Source: TransUnion CIBIL; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 33 34

Product leverage inching up as almost half of the loans are given to borrowers Young India preferring Private-New banks and NBFCs for retail loans with two or more active loans

Composition of New Retail Loans1 based on number of existing Active Loans of the Composition of New Retail Loans1 based on age of borrower in FY 19 by volume (%) Borrowers in FY 19 and by Volume (%)

Age of borrowers 10% 7% 9% 8% 8% 5% 13% 12% 12% 16% 12% 12% 10% <29 26% 18% 28% 25% 20% 26% 28% 25% 30% 31% 30% 29% 31% 31% 34% 36% 36% 30-39 38% 39% 41% 44% 42% 42% 27% 29% 39% 44% 30% 37% 42% 40% 40-49 23% 20% 37% 19% 24% 24% 22% 24% 30% 30% 27% 16% 13% 15% >50 13% 13% FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 NBFCs2 PSU-Large PSU-Medium Private-New Private-Old NBFCs2 PSU-Large PSU-Medium Private-New Private-New

No. of active loans 0 1 2-4 5+

All banks & NBFCs in India All banks & NBFCs in India 1Retail Loan includes Auto Loans, Personal Loans, Home Loans, Consumer Loans, Business Loans, Loan Against Property, Gold Loan, Credit Cards, Agri, 1Retail Loan includes Auto Loans, Personal Loans, Home Loans, Consumer Loans, Business Loans, Loan Against Property, Gold Loan, Credit Cards, Agri, Commercial Vehicle and Construction Equipment Loans 2NBFCs includes HFCs Commercial Vehicle and Construction Equipment Loans 2NBFCs includes HFCs Note: 1. Count of loans excludes those loans which got closed before the new loan was sanctioned Source: TransUnion CIBIL; BCG analysis Source: TransUnion CIBIL; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 35

Retail Consumer Loans: Industry appears to have tightened lending standards leading to lower supply and slowdown in growth

New Retail Consumer Loans1 by Credit Score Demand2 vs supply2 of New Retail Consumer by Volume (%) Retail Consumer Loans Advances growth (Number of loans in Crore) Y-o-Y (%)

Private- Private- PSU- PSU- NBFCs3 New Old Large Medium 38% Demand growth 3% 2% 11% 8% 5% 3% 17.0 25% New to 3% 2% 4% 17%17% 19%17% 3% 7% Credit 4% Supply growth 3% 2% 2% 2% 40%37% 12.3 22% 39% 43% 16% 34%34% 40% 49% 45%41% 9.4 Known 7.7 to Bureau 54%58% 45%47% 45%50% 50% 35%39% 38%

FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19

Credit scores -1 Below 650 650-750 750+ Demand Supply

All banks & NBFCs in India

1Retail Consumer includes Auto Loans, Personal Loans, Consumer Loans, Credit Cards and Gold Loans 2Demand refers to unique enquiries made by a consumer and supply refers to number of new loans sanctioned 3NBFCs includes HFCs Source: TransUnion CIBIL; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 35 36

Retail Consumer Loans: Industry appears to have tightened lending standards Tightening of norms has not led to improvement in profile of borrowers of small leading to lower supply and slowdown in growth business loans, indicating business environment stress

New Retail Consumer Loans1 by Credit Score Demand2 vs supply2 of New Retail Consumer New Retail Business Loans1 by Credit Score Demand2 vs supply2 of New Retail Business by Volume (%) Retail Consumer Loans Advances growth by Volume (%) Retail Business Loans Advances growth (Number of loans in Crore) Y-o-Y (%) (Number of loans in Crore) Y-o-Y (%)

Private- Private- PSU- PSU- Private- Private- PSU- PSU- 29% NBFCs3 New Old Large Medium 38% NBFCs3 New Old Large Medium Demand growth Demand growth 1.5 3% 2% 11% 8% 5% 3% 17.0 25% 18% 18% 12% 8% 16% 20% 34% New to 3% 2% 4% New to 17%17% 19%17% 3% 7% 19%18% 16%16% 7% Credit 4% Supply growth Credit 5% 1.2 3% 2% 2% 2% 3% 2% 7% 37% 8% 8% 6% 6% 6% 40% 43% 12.3 22% 39% 16% Supply growth 21% 34% 40% 49% 41% 34% 42%42% 47%45% 45% 9.4 39% 44% 42% 48% 6% Known 7.7 Known 42% 46% to to 0.5 0.5 Bureau Bureau 54%58% 45%47% 45%50% 50% 35%39% 38% 39%40% 35%36% 36%40% 31%30% 29%27%

FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19

Demand Supply Credit scores -1 Below 650 650-750 750+ Demand Supply Credit scores -1 Below 650 650-750 750+

All banks & NBFCs in India All banks & NBFCs in India

1Retail Consumer includes Auto Loans, Personal Loans, Consumer Loans, Credit Cards and Gold Loans 2Demand refers to unique enquiries made by a consumer 1Retail Business includes Business Loans, Loan Against Property, Commercial Vehicle and Construction Equipment Loans 2Demand refers to unique enquiries made and supply refers to number of new loans sanctioned 3NBFCs includes HFCs by a consumer and supply refers to number of new loans sanctioned 3NBFCs includes HFCs Source: TransUnion CIBIL; BCG analysis Source: TransUnion CIBIL; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 37 As on 31st March 2019 Gujarat and Andhra Pradesh growing rapidly in retail loans; Maharashtra and Punjab reeling under high NPAs

Retail Loans1 by Geography: Advances vs GNPA GNPA (FY19) (%)

10 Bihar

Punjab Uttar Pradesh 8 Madhya Pradesh Odisha Karnataka Jharkhand Assam 6 Maharashtra Himachal Pradesh West Bengal Goa Andhra Pradesh Haryana Chattisgarh Arunachal Pradesh Rajasthan Uttarakhand Telangana 4 Gujarat Tamil Kerala Meghalaya Nadu Nagaland Tripura Mizoram 2 Sikkim Manipur

0 5 20 25 30 35

Advances growth (2year CAGR FY17-FY19)

All banks & NBFCs in India 1Retail Loan includes Auto Loans, Personal Loans, Home Loans, Consumer Loans, Business Loans, Loan Against Property, Gold Loan, Credit Cards, Agri, Commercial Vehicle and Construction Equipment Loans Note: 1. Quadrants defined based on Industry average Source: TransUnion CIBIL; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 37 As on 31st March 2019 Gujarat and Andhra Pradesh growing rapidly in retail loans; Maharashtra and Punjab reeling under high NPAs

Retail Loans1 by Geography: Advances vs GNPA GNPA (FY19) (%)

10 Bihar

Punjab Uttar Pradesh 8 Madhya Pradesh Odisha Karnataka Jharkhand Assam 6 Maharashtra Himachal Pradesh West Bengal MSME Advances Goa Andhra Pradesh Haryana Chattisgarh Arunachal Pradesh Rajasthan Uttarakhand Telangana 4 Gujarat Tamil Kerala Meghalaya Nadu Nagaland Tripura Mizoram 2 Sikkim Manipur

0 5 20 25 30 35

Advances growth (2year CAGR FY17-FY19)

Loans to medium sized enterprises growing fastest within MSME with PSU-Large banks leading the way

Total MSME Advances1 for Growth in MSME Advances1 FY 19 (%) FY 19 over FY 18 (%)

PSU- PSU- Private- Private- 34% 37% Micro 43% 46% 43% Large Medium New Old Industry

Micro 1% 4% -8% 4% 1%

52% Small 42% 49% 42% 43% Small -2% -5% -7% 13% -2%

Medium 15% 12% 13% 14% 14% Medium 15% -16% -4% 4% 4% PSU- PSU- Private-New Private- Industry Large Medium Old

Only participant banks in FIBAC

1MSME Advances does not include CV/CE loans Notes: 1. Data of 6 PSU-Large banks, 11 PSU-Medium banks, 2 Private-New banks and 7 Private-Old banks included for the purpose of this analysis 2. Total may not sum to 100 because of differences due to rounding off Source: FIBAC Productivity Survey 2019; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 39 40

Loans to medium sized enterprises growing fastest within MSME with PSU-Large Within MSME lending, loans with ticket size between INR 10 lacs to 10 crores banks leading the way emerging as the sweet spot for lenders

Total MSME Advances1 for Growth in MSME Advances1 FY 19 (%) FY 19 over FY 18 (%) Y-o-Y Growth (%) GNPA (%) MSME1 (by ticket size) FY 18 FY 19 FY 17 FY 18 FY 19

<10 Lacs 35% 14.7% 16.4% 18.3% 10% PSU- PSU- Private- Private- 34% 37% Micro 43% 46% 43% Large Medium New Old Industry 10 Lacs-1 Crore 23% 16% 10.0% 11.3% 11.1% Micro 1% 4% -8% 4% 1%

52% Small 42% 49% 1 Crore-10 Crore 28% 11.4% 11.8% 11.1% 42% 43% Small -2% -5% -7% 13% -2% 14%

Medium 15% 13% 14% 14% Medium 15% -16% -4% 4% 4% 12% 10 Crore-50 Crore 22% 15.2% 16.1% 15.6% PSU- PSU- Private-New Private- Industry 1% Large Medium Old

MSME Total 25% 12.7% 13.5% 13% Only participant banks in FIBAC 9%

1MSME Advances does not include CV/CE loans All banks & NBFCs in India Notes: 1. Data of 6 PSU-Large banks, 11 PSU-Medium banks, 2 Private-New banks and 7 Private-Old banks included for the purpose of this analysis 2. Total may not sum to 100 because of differences due to rounding off 1MSME loans includes loans less than INR 50 crores (data from CIBIL Commercial Bureau) Source: FIBAC Productivity Survey 2019; BCG analysis Source: TransUnion CIBIL; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 41 As on 31st March 2019 In MSME advances, states in southern India performing better on risk management and have high advances growth

MSME Loans1 by Geography: Advances vs GNPA GNPA (FY19) (%)

Arunachal Pradesh 25 Meghalaya

Goa Punjab Nagaland West Bengal Jharkhand 15 Maharashtra Tamil Assam Odisha Bihar Uttar Nadu Telangana Tripura Himahcal Pradesh Haryana Sikkim Pradesh Andhra 10 Madhya Chattisgarh Manipur Mizoram Kerala Pradesh Pradesh Gujarat Karnataka Uttarakhand Jammu & Kashmir Rajasthan

0 0 15 20 25

Advances growth (2year CAGR FY17-FY19)

All banks & NBFCs in India

1MSME loans includes loans less than INR 50 crores (data from CIBIL Commercial Bureau) Note: 1. Quadrants defined based on Industry average Source: TransUnion CIBIL; BCG analysis FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 42

Sharp reduction in MSME credit by PSU banks due to high NPAs

Growth (%) GNPA (%)

50 41% 40% 30 25% 40 20% 20% 21% 30 27% 20 MSME 25% 20 16% 13% 14% Loans1 8% 10 9% 10 5% 5% 6% 13% 0 3% 3% -10 -3 0 Private- NBFCs3 Private- PSU- PSU- NBFCs3 Private PSU banks New Old Large Medium banks

Growth (%) GNPA (%) 60 30 45% 24% 40% 19% 20% Retail 40 20 26% 26% 27% 34% 13% Business 10% 2 20 21% 10 8% 9% Loans 7% 5% 5% 1% 1% 7% 0 0 NBFCs3 Private PSU banks Private- NBFCs3 Private- PSU- PSU- banks New Old Large Medium

FY 18 FY 19 FY 19 Industry4 Average FY 18 Industry Average

All banks & NBFCs in India

1MSME loans includes loans less than INR 50 crores (data from CIBIL Commercial Bureau) 2Retail Business loans include Business loans, Loan Against Property, Commercial Vehicle and Construction Equipment Loans 3NBFCs includes HFCs 4Industry includes Co-operative banks, MNCs and Regional Rural banks as well Source: TransUnion CIBIL; BCG analysis FEE INCOME FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 44

Recovery income driving up share of fee income for the industry; Retail fee a driving factor for Private-New banks

Fee Income1/Total Income2 (%) Fee Income1/Average Assets (%)

(%) (%) 1.6% 30 29% 29% 1.6 Private-New 1.5% 1.5% 27% 27% 27% Private-New Industry 1.4 1.4% 1.4% 25% 25% 26% PSU-Large 1.0% 25 PSU-Medium Industry 24% 25% 23% 0.9% 0.9% PSU-Large 0.8% 0.8% 0.9% 22% 22% Private-Old 0.8% 22% Private-Old 0.8 0.7% 0.8% 22% PSU-Medium 20% 20% 21% 0.8% 0.8% 21% 20 0.7% 20% 18% 0.6% 18% 0.6% 0.6% 0 0.0 FY 15 FY 16 FY 17 FY 18 FY 19 FY 15 FY 16 FY 17 FY 18 FY 19

1Fee Income is calculated as sum of commission, exchange and brokerage, forex income and miscellaneous income 2Total Income is calculated as sum of net interest income and other income Note: 1. Data of 6 PSU-Large banks, 13 PSU-Medium banks, 4 Private-New banks and 7 Private-Old banks included for the purpose of this analysis Source: RBI data; Capitaline data; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 45

Private-New banks continued to be twice as efficient in cross selling fee products to savings account customers than industry; overall efficiency declined marginally

Retail Commission1 by Total Savings Account Deposits (%) -4 bps

-12 bps -2 bps -2 bps +1 bps 1.01% 0.97% 0.50% 0.28% 0.38% 0.41% 0.39% 0.26% 0.13% 0.14% PSU-Large PSU-Medium Private-New Private-Old Industry Growth in Retail commission 3% 22% 6% -13% 5% FY 19 on FY 18 (%)

Growth in Savings bank balance 8% 8% 11% 14% 9% FY 19 on FY 18 (%) FY 18 FY 19

1Retail commission includes commission on insurance business, brokerage on distribution of mutual funds, income from merchants through POS transactions, and other retail commission (Demat, Gold ETF etc) Note: 1. Data of 6 PSU-Large banks, 9 PSU-Medium banks, 4 Private-New banks and 7 Private-Old banks included for the purpose of this analysis 2. bps = basis points; 100 bps = 1% Source: FIBAC Productivity Survey 2019; BCG analysis FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 46

Third party sales driven by Life Insurance followed by Mutual Funds; Private-Old banks well behind peers in Mutual Fund sales

Retail Commission as a % of Composition of Total Fee Income Retail Commission (%)

PSU- PSU- Private- Private- Industry Large Medium New Old Share of Retail Commission in Total Life Bank type 60% 34% 64% 78% 61% Fee Income (%) Insurance PSU-Large 4%

PSU-Medium 2% General 16% 56% 6% 18% 13% Insurance Private-New 7%

Private-Old 3% Mutual 24% 11% 30% 4% 26% Industry 5% Funds

Note: 1. Data of 6 PSU-Large banks, 9 PSU-Medium banks, 3 Private-New banks and 5 Private-Old banks included for the purpose of this analysis 2. Total may not sum to 100 because of differences due to rounding off Source: FIBAC Productivity Survey 2019; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 47

Processing charges as a percentage of advances fell marginally across the board

Processing Charges by Total Advances (%)

-2 bps

-1 bps -1 bps -1 bps -3 bps

0.31% 0.29% 0.20% 0.19% 0.20% 0.19% 0.17% 0.16% 0.16% 0.13%

PSU-Large PSU-Medium Private-New Private-Old Industry Growth in Processing charges 4% -16% 10% 4% 3% FY 19 on FY 18 (%)

Growth in Total Advances 12% 3% 19% 13% 12% FY 19 on FY 18 (%) FY 18 FY 19

Note: 1. Data of 5 PSU-Large banks, 12 PSU-Medium banks, 4 Private-New banks and 7 Private-Old banks included for the purpose of this analysis 2. bps = basis points; 100 bps = 1% Source: FIBAC Productivity Survey 2019; RBI data; BCG analysis FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 48

Processing charges balanced between Corporate and Retail for Private-New banks; PSU banks focus on Corporate while subsidizing MSME and Retail

Processing Charges as a % of Composition of Total Fee Income Processing Charges on Advances (%)

PSU- PSU- Private- Private- Industry Large Medium New Old Share of Processing Charges in Total Fee Corporate Bank type 88% 57% 51% 56% 59% Income (%) Advances PSU-Large 8%

PSU-Medium 9% MSME 10% 23% 3% 30% 9% Advances Private-New 11%

Private-Old 11% Retail 2% 20% 46% 14% 32% Industry 10% Advances

Note: 1. Data of 6 PSU-Large banks, 12 PSU-Medium banks, 4 Private-New banks and 5 Private-Old banks included for the purpose of this analysis Source: FIBAC Productivity Survey 2019; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 49

Fee from non-fund based lending witnessed a slight decline even as Private-New banks marginally strengthen their position

Commercial Commission1 by Total Corporate and SME Advances (%)

+3 bps

+1 bps -5 bps 0 bps -2 bps 0.46% 0.49% 0.32% 0.33% 0.33% 0.28% 0.33% 0.33% 0.20% 0.18%

PSU-Large PSU-Medium Private-New Private-Old Industry Growth in Commercial Commission 14% -14% 12% -3% 6% FY 19 on FY 18 (%) Growth in Total Corp and SME Advances 10% 1% 4% 9% 7% FY 19 on FY 18 (%) FY 18 FY 19

1Commercial commission includes commission on inland LC, commission on inland guarantee, commission on import LC established/export LC advised or confirmed, commission on foreign guarantee issued, commission on inland bills/cheques for collection/purchased and commission on foreign bills/cheques for collection/purchased Note: 1. Data of 6 PSU-Large banks, 12 PSU-Medium banks, 3 Private-New banks and 7 Private-Old banks included for the purpose of this analysis 2. bps = basis points; 100 bps = 1% Source: FIBAC Productivity Survey 2019; BCG analysis FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 50

Forex income as a percentage of commercial advances fell across most bank categories

Forex Income by Total Corporate and SME Advances (%) -2 bps

-5 bps -9 bps -3 bps +1 bps 0.66% 0.64%

0.39% 0.34% 0.29% 0.34% 0.25% 0.26% 0.21% 0.22%

PSU-Large PSU-Medium Private-New Private-Old Industry

Growth in Forex Income FY 19 on -20% -6% 11% 14% -5% FY 18 (%)

FY 18 FY 19

Notes: 1. Data of 5 PSU-Large banks, 11 PSU-Medium banks, 4 Private-New banks and 7 Private-Old banks included for the purpose of this analysis 2. bps = basis points; 100 bps = 1% Source: FIBAC Productivity Survey 2019; RBI data; BCG analysis FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 52

Improvement in asset quality seen across all asset classes except Agri loans; turnaround in MSME and corporate NPA trend clearly evident

Heat Map indicating Change in Gross NPA (%) Private 3 Bank type Home Vehicle1 Agriculture MSME2 Corporate 1.5% 1.9% 10.1% 12.0% 23.7% PSU-Large 1.3% 1.6% 10.6% 11.6% 15.3% 2.6% 3.4% 7.3% 14.8% 33.5% NON-PERFORMING PSU-Medium 2.4% 3.1% 10.4% 12.8% 29.8% 1.0% 1.0% 3.4% 2.5% 5.9% ASSETS Private-New X% X = Gross NPA (%) in FY 18 0.8% 1.0% 4.3% 2.3% 4.5% Y% Y = Gross NPA (%) in FY 19 1.5% 1.1% 2.4% 4.9% 10.0% Private-Old Change in Gross NPA (%) in basis points 1.3% 1.1% 3.1% 5.8% 10.1% Greater than 100 Between -1 and -100 1.6% 1.6% 8.1% 10.8% 22.8% Industry 1.4% 1.5% 9.4% 10.1% 16.5% Between 0 and 100 Less than -100

All participant banks in FIBAC

1Private vehicle includes two wheeler and four wheeler vehicles 2MSME includes data for MSMEs, construction equipment and commercial vehicles 3Corporate advances includes mid corporate and large corporate advances Note: 1. Data of 6 PSU-Large banks, 11 PSU-Medium banks, 3 Private-New banks and 7 Private-Old banks included for the purpose of this analysis Source: FIBAC Productivity Survey 2019; FIBAC Productivity Survey 2018; BCG analysis FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 52

Improvement in asset quality seen across all asset classes except Agri loans; turnaround in MSME and corporate NPA trend clearly evident

Heat Map indicating Change in Gross NPA (%) Private 3 Bank type Home Vehicle1 Agriculture MSME2 Corporate 1.5% 1.9% 10.1% 12.0% 23.7% PSU-Large 1.3% 1.6% 10.6% 11.6% 15.3% 2.6% 3.4% 7.3% 14.8% 33.5% PSU-Medium 2.4% 3.1% 10.4% 12.8% 29.8% 1.0% 1.0% 3.4% 2.5% 5.9% Private-New X% X = Gross NPA (%) in FY 18 0.8% 1.0% 4.3% 2.3% 4.5% Y% Y = Gross NPA (%) in FY 19 1.5% 1.1% 2.4% 4.9% 10.0% Private-Old Change in Gross NPA (%) in basis points 1.3% 1.1% 3.1% 5.8% 10.1% Greater than 100 Between -1 and -100 1.6% 1.6% 8.1% 10.8% 22.8% Industry 1.4% 1.5% 9.4% 10.1% 16.5% Between 0 and 100 Less than -100

All participant banks in FIBAC

Marked improvement seen in asset quality across all retail consumer loans

GNPA: Retail Consumer1 GNPA: Retail Consumer Loans by Loans (%) Product type (%) % % 13 14 13.4% 12.3% 8.1% 12.0% 12 8 10.5% 7.5% 5.3% 9.8% 5.3% 10 9.5% 5.2% 8.4% 5 4.6% 4.9% 4.4% 3.9% 4.4% 4 3.3% 4.2% 4 2.8 3.6% 4.1% 4.3% 3.6% 3.0% 3.5% 2 2.7% 3.5% 1.5% 1.6% 3.0% 3.2% 1.2% 0 0 FY17 FY18 FY19 FY17 FY18 FY19

NBFCs2 Private-Old PSU-Medium Auto Personal Unsecured Gold Private-New PSU-Large Industry3 Consumer Durable Credit Card

All banks & NBFCs in India

1Retail Consumer includes Auto Loans, Personal Loans, Consumer Loans, Credit cards and Gold 2NBFCs includes HFCs 3Industry includes NBFCs, HFCs, Private banks, PSU banks, Co-operative banks, MNCs and Regional Rural banks Source: TransUnion CIBIL; BCG analysis FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 54

Stress in CV/CE and LAP segments hurting smaller banks and NBFCs; PSU banks' NPAs in small business lending at unsustainable levels

GNPA: Retail Business1 GNPA: Retail Business Loans by Loans (%) Product type (%)

% % 24.4% 25 15 14.0% 14.0% 20.3% PSU-Medium 13.0% Unsecured Business 19.0% 19.3% 13.3% PSU-Large 14.5% 8.6% Industry3 10 9.7% 7.6% CE & CV 7.2% 7.3% 8.2% NBFCs2 7.7% Private-Old 5.5% 4.5% 5 6.1% 5 3.4% 4.8% 3.0% 5.0% 2.6% LAP 1.4% 1.4% 1.1% Private-New 0 0 FY17 FY18 FY19 FY17 FY18 FY19

All banks & NBFCs in India

1Retail Business loans include Business loans, Loan Against Property, Commercial Vehicle and Construction Equipment Loans 2NBFCs includes HFCs 3Industry includes NBFCs, HFCs, Private banks, PSU banks, Co-operative banks, MNCs and Regional Rural banks Source: TransUnion CIBIL; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 55 Home loans continue to be the safest asset class in retail loans with home loan NPAs further improving in FY19; Agriculture retail loans showing higher NPA across the board

GNPA: Retail Home Loans (%) GNPA: Retail Agri Loans (%)

% % 4.0 30 3.9% 3.9% 27.1% 3.7% PSU-Medium 19.6% 20.3% 2.0% 2.0% PSU-Medium 20 Private-Old 2.0 16.5% 17.5% Industry2 NBFCs1 1.8% 15.7% 16.1% PSU-Large 1.7% 1.7% Private-Old 15 14.6% 2 12.5% 1.7% Industry 12.8% 1.6% 11.1% 12.5% 1.5 1.4% 1.4% 10 PSU-Large 8.2% 9.8% Private-New 1.5% 1 Private-New 9.0% 7.9% NBFCs 0.6% 0.6% 0.5% 7.7% 0.0 0 FY17 FY18 FY19 FY17 FY18 FY19

All banks & NBFCs in India

1NBFCs includes HFCs 2Industry includes NBFCs, HFCs, Private banks, PSU banks, Co-operative banks, MNCs and Regional Rural banks Source: TransUnion CIBIL; BCG analysis FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 56

While Private New banks and NBFCs sustained their NPA levels in MSME, rest of the industry saw a major increase; PSU banks at unsustainable levels

GNPA: MSME Loans1 GNPA: MSME Loans by Ticket size in (%) INR (%) % % 24.6% 25 20 20.5% PSU-Medium 19.9% PSU-Large 18.3% 20.2% 16.4% <10L 19.6% 14.5% 16 15.2% 13.0% Industry3 16.1% 10-50Cr 13.5% 15.6% 12.7% Private-Old 6.4% 5.9% 8.0% 14 14.7% 5.7% 5 NBFCs2 11.8% 5.2% 5.2% 12 11.4% Private-New 11.1% 10L-1Cr 4.2% banks & NBFCs 3.3% Private-New 11.3% 1-10Cr operate majorly 2.7% in this bracket 10.0% 0 0 FY17 FY18 FY19 FY17 FY18 FY19

All banks & NBFCs in India

1MSME loans includes loans less than INR 50 crores (data from CIBIL Commercial Bureau) 2NBFCs includes HFCs 3Industry includes NBFCs, HFCs, Private banks, PSU banks, Co-operative banks, MNCs and Regional Rural banks Source: TransUnion CIBIL; BCG analysis TRADITIONAL CHANNELS FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 58

Banking industry invested in self-service machines across the board; number of ATMs declined for all bank categories

Self Service Machines per Branch

Cheque Cash deposit deposit Passbook Self service Bank type ATMs POS terminals machines machines printers kiosks 2.04 13.8 0.28 0.12 0.54 0.13 X = FY 18 PSU- X Y Large Y = FY 19 1.97 16.7 0.28 0.12 0.61 0.12 1.08 10.0 0.15 0.04 0.20 0.06 PSU- Medium 1.02 10.8 0.20 0.09 0.27 0.06 Growth in FY 19 over FY 18 2.88 87.7 0.26 0.03 0.05 0.21 Private- Growth less than or New equal to 0% 2.73 91.1 0.44 0.05 0.07 0.24 Growth greater than 0% 1.61 13.1 0.33 0.12 0.18 0.07 Private- and less than 25% Old 1.51 14.6 0.40 0.17 0.19 0.05 Growth greater than or equal to 25% 1.86 22.5 0.24 0.09 0.37 0.13 Industry 1.78 26.2 0.29 0.11 0.43 0.13

Note: 1. Data of 5 PSU-Large banks, 7 PSU-Medium banks, 2 Private-New banks and 5 Private-Old banks included for the purpose of this analysis Sources: FIBAC Productivity Survey 2019; RBI data; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 59 60

Led by PSU banks, branch growth in India almost coming to a halt PSU banks rationalizing branch footprint across geographies Branch Distribution by Geography Growth in Number of Branches Total Number of Branches ('00s) for FY 19 (%) FY 19 over FY 18 (%)

+6% +1%

Private- Private- Metro 19% PSU- PSU- New- New- Private- 22% 25% 22% 29% Large Medium Large Small1 Old Industry +3% -2% Urban 18% 21% 20% Metro -1% -1% 5% 17% 2% 2% 21% +3% 0% 21% Semi- Urban -1% 0% 4% 12% 2% 1% +4% 1,1411,159 29% +11% 1,023 Urban 27% 28% 38% Semi- 489 515 499 +10% 31% -1% 0% 5% 10% 2% 1% +58% +4% Urban 340 362 362 +4% Rural 34% 31% 25% 20% Rural 0% 0% 3% 6% 3% 1% 105 128 139 89 19% 29 72 59 65 69 PSU- PSU- Private- Private- Private- PSU-Large PSU-Medium Private- Private- Private-Old Industry Total -1% 0% 5% 11% 2% 1% Large Medium New-Large New-Small1 Old New-Large New-Small1 x% Represents CAGR for 2 years FY 15 FY 17 FY 19

1Private-New-Small banks are considered based on total assets less than INR 5 billion as on 31 March 2019 1Private-New-Small banks are considered based on total assets less than INR 5 billion as on 31 March 2019 Note: 1. Data of 5 PSU-Large banks, 12 PSU-Medium banks, 3 Private-New-Large banks, 6 Private-New-Small banks and 10 Private-Old banks included for the Note: 1. Data of 6 PSU-Large banks, 13 PSU-Medium banks, 3 Private-New-Large banks, 6 Private-New-Small banks and 10 Private-Old banks included for the purpose of this analysis purpose of this analysis 2. Total may not sum to 100 because of differences due to rounding off Source: RBI Data; BCG analysis Source: RBI Data; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 59 60

+6% +1%

Decline in number of ATMs deployed across the country; PSU banks leading ATM consolidation Clear push towards driving ATM profitability; financial transactions on the rise

Number of ATMs ('000) Financial Transactions per ATM per Day

-1% -3% +20% +18% +15% +15% +17% -3% -4% 174 145 136 97 112 116 71 81 80 93 195 193 187 +1% -2% -4% PSU-Large PSU-Medium Private-New Private-Old Industry 106 103 99 0% Growth in Financial 15% 10% 13% 20% 14% +4% +3% transactions for FY 19 over FY 18 (%) 37 37 35 42 43 42 10 10 11 Growth in No. of PSU-Large PSU-Medium Private-New Private-Old Industry ATMs for FY 19 over -4% -4% -2% 3% -3% FY 18 (%)

FY 17 FY 18 FY 19 FY 18 FY 19

Note: 1. No. of days has been taken as 365 for the year 2. Data of 6 PSU-Large banks, 13 PSU-Medium banks, 4 Private-New banks and 8 Private-Old banks included Note: 1. Data of 6 PSU-Large banks, 13 PSU-Medium banks, 4 Private-New banks and 8 Private-Old banks included for the purpose of this analysis for the purpose of this analysis Source: RBI Data; BCG analysis Source: RBI data; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 61 62

Decline in number of ATMs deployed across the country; PSU banks leading ATM consolidation Clear push towards driving ATM profitability; financial transactions on the rise

Number of ATMs ('000) Financial Transactions per ATM per Day

FY 17 FY 18 FY 19 FY 18 FY 19

Relocation and rationalization of ATMs leading to higher own ATM hits

Share of Hits on Own and Other ATMs by Own Customers (%)

Hits on 26% 40% 38% 44% 42% own ATMs 54% 49% 53% 58% 65%

Hits on 74% 60% 62% 56% 58% other ATMs 46% 51% 47% 42% 35%

FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 PSU-Large PSU-Medium Private-New Private-Old Industry

Note: 1. Data of 6 PSU-Large banks, 11 PSU-Medium banks, 3 Private-New banks and 6 Private-Old banks included for the purpose of this analysis Source: FIBAC Productivity Survey 2019; FIBAC Productivity Survey 2018; BCG analysis FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 64

PSU-Large and Private-Old banks driving POS penetration in rural and semi-urban areas

POS Terminal Distribution by Geography (%)

Metro 42% 40% 58% 71% 83% Urban 13% 27% Semi- 19% 15% Urban 21% 28% 14% Rural 25% 9% 6% 13% 3% 1% 7% 6% PSU-Large PSU-Medium Private-New Private-Old Industry

Note: 1. Data of 6 PSU-Large banks, 11 PSU-Medium banks, 2 Private-New banks and 8 Private-Old banks included for the purpose of this analysis 2. Total may not sum to 100 because of differences due to rounding off Source: FIBAC Productivity Survey 2019; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 65

With improved automation, almost half of all calls by customers to banks' contact centers now resolved on IVR

% Calls Truncated on IVR: % Calls Dropped: Inbound calls per account1 Calls Truncated/Total Calls Dropped/Total per year (FY 19) Inbound calls (FY 19) Inbound calls (FY 19)

59% 57%

46%

39% 13% 7% 28% 6% 1.6 5%

0.3 0.3 0.4 3% 0.1 PSU- PSU- Private- Private- Industry PSU- PSU- Private- Private- Industry PSU- PSU- Private- Private- Industry Large Medium New Old Large Medium New Old Large Medium New Old

1Account includes all CASA and Retail loan accounts Note: 1. Data of 6 PSU-Large banks, 8 PSU-Medium banks, 3 Private-New banks and 8 Private-Old banks included for the purpose of this analysis Source: FIBAC Productivity Survey 2019; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 65

With improved automation, almost half of all calls by customers to banks' contact centers now resolved on IVR

% Calls Truncated on IVR: % Calls Dropped: Inbound calls per account1 Calls Truncated/Total Calls Dropped/Total per year (FY 19) Inbound calls (FY 19) Inbound calls (FY 19)

59% 57%

46%

39% 13% 7% 28% 6% 1.6 5%

0.3 0.3 0.4 3% 0.1 PSU- PSU- Private- Private- Industry PSU- PSU- Private- Private- Industry PSU- PSU- Private- Private- Industry Large Medium New Old Large Medium New Old Large Medium New Old

Almost two-thirds of all banking financial transactions are now digital with UPI, mobile and internet banking leading the way

Breakdown of Total Financial Transactions (%) Growth in Total Financial Transactions (%)

5% 0% 4% 8% 14% UPI FY 18 on FY 17 FY 19 on FY 18 11% Internet banking1 37% 36% 13% Mobile 10% 17% banking Mobile banking2 92% 231% 10% Internet UPI 5024% 485% 16% 11% banking 17% NACH (non-branch) 22% 21% 6% 8% NACH 9% 5% POS POS 35% 34% 2% 15% 6% Total Digital 1% Cheque 49% 94% 3% Channels 4% Cash 1% 42% NEFT Cheque 2% -2% 35% 26% ATM Cash -13% 7% NEFT (at branch) 4% 9% Total Branch Based -6% 5% Total FY17 FY18 FY19 number of ATM2 0% 15% 20 24 37 transactions (bn)

1Internet transactions include RTGS, ECS, NEFT and IMPS financial transactions 2ATM and Mobile transactions included are financial transactions only Note: 1. Data of 5 PSU-Large banks, 10 PSU-Medium banks, 3 Private-New banks and 6 Private-Old banks included for the purpose of this analysis 2. Total may not sum to 100 because of differences due to rounding off Source: RBI data; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 69

Rural and Semi-Urban area well behind metro and urban in digital adoption by savings accounts

Percentage of Savings Account active1 Percentage of Savings Account Financially on Mobile Banking (FY 19) active2 on Mobile Banking (FY 19)

29% 19% 12% 13% 5% 8% 5% 3%

Metro Urban Semi-Urban Rural Metro Urban Semi-Urban Rural

Percentage of Savings Account active1 on Percentage of Savings Account Financially Internet Banking (FY 19) active2 on Internet Banking (FY 19)

40% 27% 16% 15% 7% 8% 5% 2% Metro Urban Semi-Urban Rural Metro Urban Semi-Urban Rural

1Accounts active on Mobile Banking and Internet Banking defined as accounts with at least 1 login to Mobile Banking or Internet Banking in the last 6 months (as of 31 March 2019) 2Financially active on a channel defined as at least 1 user initiated financial transaction in last 6 months (as of 31 March 2019) Note: 1. Data of 5 PSU-Large banks, 11 PSU-Medium banks, 3 Private-New banks and 6 Private-Old banks included for the purpose of this analysis Source: FIBAC Productivity Survey 2019; BCG analysis FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 70

Almost one in five savings account holders uses debit card at POS; wide variation seen across bank categories and geographies

Percentage of active Savings Account1 Percentage of active Savings Account1 that use Debit card at ATMs (FY 19) that use Debit card at POS (FY 19)

57% 47% 46% 43% 36% 42% 18% 14% 20% 19%

PSU- PSU- Private- Private-Old Industry PSU- PSU- Private- Private-Old Industry Large Medium New Large Medium New

Percentage of active Savings Account1 Percentage of active Savings Account1 that use Debit card at ATMs (FY 19) that use Debit card at POS (FY 19)

52% 49% 42% 31% 32% 24% 16% 11%

Metro Urban Semi-Urban Rural Metro Urban Semi-Urban Rural

1Active account defined as an account with at least 1 user initiated transaction in the last 6 months (as of 31 March 2019) Note: 1. Data of 6 PSU-Large banks, 12 PSU-Medium banks, 3 Private-New banks and 6 Private-Old banks included for the purpose of this analysis Source: FIBAC Productivity Survey 2019; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 71 As on 31st March 2019

Most states in southern India leading in usage of debit cards at POS terminals

Percentage of active Savings Account1 Percentage of active Savings Account1 that use Debit card at ATMs (FY 19) that use Debit card at POS (FY 19)

Jammu and Kashmir Jammu and Kashmir

Himachal Pradesh Himachal Pradesh Punjab Chandigarh PunjabChandigarh Uttarakhand Arunachal Pradesh Uttarakhand Arunachal Pradesh Haryana Haryana Delhi Sikkim Delhi Sikkim Assam Assam Rajasthan Uttar Pradesh Nagaland Rajasthan Uttar Pradesh Nagaland Bihar Meghalaya Bihar Meghalaya Manipur Manipur Tripura Tripura Gujarat Jharkand Mizoram Gujarat Jharkand Mizoram Madhya Pradesh West Bengal Madhya Pradesh West Bengal Daman and Diu Chhattisgarh Daman and Diu Chhattisgarh Dadra and Nagar Orissa Dadra and Nagar Orissa Haveli Maharashtra Haveli Maharashtra Telangana Telangana Goa Goa Andhra Pradesh Andhra Pradesh Karnataka Andaman and Karnataka Andaman and Puducherry Nicobar Islands Puducherry Nicobar Islands Lakshadweep Kerala Lakshadweep Kerala Tamil Nadu Tamil Nadu

Quartile 1: Penetration > 45% Quartile 3: Penetration between 35% and 40% Quartile 1: Penetration > 23% Quartile 3: Penetration between 15% and 19% Quartile 2: Penetration Quartile 4: Penetration < 35% Quartile 2: Penetration Quartile 4: Penetration < 15% between 41% and 45% between 19% and 23%

1Active account defined as an account with at least 1 user initiated transaction in the last 6 months (as of 31 March 2019) Note: 1. Data of 5 PSU-Large banks, 10 PSU-Medium banks, 3 Private-New banks and 7 Private-Old banks included for the purpose of this analysis Source: FIBAC Productivity Survey 2019; BCG analysis FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 72 As on 31st March 2019 While states in southern India lead in internet banking penetration, states in eastern India lead in mobile penetration

Percentage of Savings Account Financially Percentage of Savings Account Financially active1 on Internet Banking (FY 19) active1 on Mobile Banking (FY 19)

Jammu and Kashmir Jammu and Kashmir

Quartile 1: Penetration > 12% Quartile 3: Penetration between 8% and 9% Quartile 1: Penetration > 8% Quartile 3: Penetration between 4% and 5% Quartile 2: Penetration Quartile 4: Penetration < 8% Quartile 2: Penetration Quartile 4: Penetration < 4% between 10% and 12% between 5% and 7%

1Financially active on a channel defined as at least 1 user initiated financial transaction in last 6 months (as of 31 March 2019) Note: 1. Data of 5 PSU-Large banks, 10 PSU-Medium banks, 3 Private-New banks and 7 Private-Old banks included for the purpose of this analysis Source: FIBAC Productivity Survey 2019; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 73

Digital activation of current accounts in rural is half of that in metros

Percentage of Current Accounts Percentage of Current Accounts Financially active1 on Mobile Banking (FY 19) active2 on Mobile Banking (FY 19)

29% 29% 28% 21% 18% 16% 17% 13%

Metro Urban Semi-Urban Rural Metro Urban Semi-Urban Rural

Percentage of Current Accounts Percentage of Current Accounts Financially active1 on Internet Banking (FY 19) active2 on Internet Banking (FY 19)

54% 45% 35% 28% 24% 23% 20% 15%

Metro Urban Semi-Urban Rural Metro Urban Semi-Urban Rural

1Accounts active on Mobile Banking and Internet Banking defined as accounts with at least 1 login to Mobile Banking or Internet Banking in the last 6 months (as of 31 March 2019), 2Financially active on a channel defined as at least 1 user initiated financial transaction in last 6 months (as of 31 March 2019) Note: 1. Data of 4 PSU-Large banks, 10 PSU-Medium banks, 2 Private-New banks and 5 Private-Old banks for mobile banking 2. Data of 5 PSU-Large banks, 11 PSU-Medium banks, 2 Private-New banks and 8 Private-Old banks for internet banking included for the purpose of this analysis Source: FIBAC Productivity Survey 2019; BCG analysis FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 74

Current account customers preferring internet banking over mobile banking

Percentage of Current Accounts Percentage of Current Accounts Financially active1 on Mobile Banking (FY 19) active2 on Mobile Banking (FY 19)

31% 21% 21% 24% 20% 22% 19% 12% 8% 12%

PSU-Large PSU- Private- Private-Old Industry PSU-Large PSU- Private- Private-Old Industry Medium New Medium New

Percentage of Current Accounts Percentage of Current Accounts Financially active1 on Internet Banking (FY 19) active2 on Internet Banking (FY 19)

66% 31% 41% 32% 34% 20% 22% 10% 18% 18%

PSU-Large PSU- Private- Private-Old Industry PSU-Large PSU- Private- Private-Old Industry Medium New Medium New

1Accounts active on Mobile Banking and Internet Banking defined as accounts with at least 1 login to Mobile Banking or Internet Banking in the last 6 months (as of 31 March 2019), 2Financially active on a channel defined as at least 1 user initiated financial transaction in last 6 months (as of 31 March 2019) Note: 1. Data of 4 PSU-Large banks, 11 PSU-Medium banks, 2 Private-New banks and 5 Private-Old banks for mobile banking 2. Data of 5 PSU-Large banks, 12 PSU-Medium banks, 2 Private-New banks and 8 Private-Old banks for internet banking included for the purpose of this analysis Source: FIBAC Productivity Survey 2019; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 75

Almost one in four personal loans in India sold digitally

Split of Personal Loans sold by banks in India in FY 19 (%)

2% Digital 18% Channels1 27% 38% 45%

98% Physical 82% Channels2 73% 62% 55%

PSU-Large PSU-Medium Private-New Private-Old Industry

1Digital channels include UPI, mobile banking, internet banking, NACH and POS 2Physical channels include cheque, cash, NEFT (at branch) and ATM Note: 1. Data of 2 PSU-Large banks, 8 PSU-Medium banks, 3 Private-New banks and 6 Private-Old banks included for the purpose of this analysis Sources: FIBAC Productivity Survey 2019; RBI data; BCG analysis

ORGANIZATION DESIGN FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 78

PSU banks have reduced total headcount, while Private banks continue to hire

Total FTEs1 in Indian Banking Industry (in '000) +0.4%

+0.3%

-2.1%

-1.2% -2.9% +8.8% 1,146 1,149 1,154 -1.1% +3.9% +2.0%

547 540 528 +5.3% 288 285 277 255 265 289 56 59 60 PSU-Large PSU-Medium Private-New Private-Old Industry

FY 17 FY 18 FY 19

1FTE: Full time employees Note: 1. Data of 6 PSU-Large banks, 13 PSU-Medium banks, 4 Private-New banks and 8 Private-Old banks included for the purpose of this analysis Source: Capitaline data; Company financials; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 79

Cost per employee highest in PSU-large banks and growing faster than revenue per employee; Private-new banks have contained cost per employee Total Revenue1/Total Employees Employee Cost/Total Employees (INR Lacs) (INR Lacs)

INR Lacs INR Lacs 55 55 14 52 Private-New 50 12.9 50 PSU-Large 46 11.2 42 44 12 45 Industry Industry 41 10.6 43 PSU-Large 10.3 11.0 PSU-Medium 40 39 40 10.1 10.3 10 9.8 Private-Old 36 35 37 Private-Old 9.9 10.6 35 34 8.9 34 33 PSU-Medium 9.7 33 35 9.4 33 8.6 9.1 9.1 30 30 30 32 8 8.2 7.8 Private-New 28 7.9 25 27 7.4 7.5 6.5 7.0 0 6 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19

1Revenue is calculated as sum of net interest income and other income Note: 1. Data of 6 PSU-Large banks, 13 PSU-Medium banks, 4 Private-New banks and 8 Private-Old banks included for the purpose of this analysis Source: Capitaline data; Company financials; BCG analysis FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 80

Digitization, automation and newer branch formats resulting in lower branch staff per branch across all geographies

Branch Staff per Branch by Geography

+3% -2% -1% -1% +1% -3% +3% -3%

9.7 10.0 9.8 9.9 9.8 9.7 7.0 7.0 6.8 5.5 5.7 5.5

Metro Urban Semi-Urban Rural Growth in branch staff FY 19 on -0.2% -1.2% -2.9% -3.1% FY 18 (%) Growth in number of 2.1% -0.2% -0.2% -0.1% branches FY 19 on FY 18 (%)

FY 17 FY 18 FY 19

Note: 1. Data of 5 PSU-Large banks, 10 PSU-Medium banks, 4 Private-New banks and 3 Private-Old banks included for the purpose of this analysis Source: FIBAC Productivity Survey 2019; FIBAC Productivity Survey 2018; FIBAC Productivity Survey 2017; RBI data; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 81

CASA per branch staff increasing across the board showing impact of digitization

CASA per Branch Staff (INR Crore)

+18 0%

+14% +15% +8% +9% +7 0% +6 +14 7.2 7.2 6.1 4.9 4.0 4.0 4.4 3.7 4.2 4.2 4.6 3.5 2.6 3.0 3.5 PSU-Large PSU-Medium Private-New Private-Old Industry Growth in CASA (INR Crore) FY 19 7% 10% 1% 12% 6% on FY 18 (%)

Growth in Branch staff FY 19 -2% -4% 1% -2% -2% on FY 18 (%)

FY 17 FY 18 FY 19

Note: 1. Data of 5 PSU-Large banks, 11 PSU-Medium banks, 4 Private-New banks and 3 Private-Old banks included for the purpose of this analysis Source: FIBAC Productivity Survey 2019; FIBAC Productivity Survey 2018; FIBAC Productivity Survey 2017; BCG analysis FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 82

6% of Indian banks' FTEs in centralized back office; one-third deployed in credit related activities

Credit and Operational Back Office1 FTEs as % of Total FTE2 (FY 19)

7.3%

6.2% 2.0% 5.7% 1.8%

2.9% 3.6% 3.8%

Credit 1.6% 2.0% 5.3% 4.4% 2.8% Operational 2.0% 1.8%

PSU- PSU- Private- Private- Industry Large Medium New Old

1Credit back office includes Retail, SME and Corporate credit back offices 2Total staff includes staff of captive subsidiary as well as outsourced staff Note: 1. Data of 2 PSU-Large banks, 7 PSU-Medium banks, 1 Private-New banks and 3 Private-Old banks included for the purpose of this analysis Source: FIBAC Productivity Survey 2019; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 83

Straight-Through Processing and back office automation resulting in sharp drop in operational back office employees for liabilities processing

Liabilities Operational Back Office Employee per INR '000 Crore of CASA

-24%

-5% -16% -23% -28% 137 92 87 103 63 52 49 38 46 33 PSU-Large PSU-Medium Private-New Private-Old Industry Growth in Liabilities operational back -18% -21% 5% -15% -9% office employee FY 19 on FY 18 (%)

Growth in CASA deposits FY 19 on FY 18 7% 10% 10% 12% 9% (%)

FY 18 FY 19

Note: 1. Data of 5 PSU-Large banks, 9 PSU-Medium banks, 3 Private-New banks and 4 Private-Old banks included for the purpose of this analysis Source: FIBAC Productivity Survey 2019; FIBAC Productivity Survey 2018; BCG analysis FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 84

Banks continue to invest in call centers to improve customer service

Call Center Employees per 100 Branch Employees

-18%

5.5 -6% +15% 4.5 +17% -11% 1.9 1.8 1.1 1.3 0.5 0.4 0.7 0.8 PSU-Large PSU-Medium Private-New Private-Old Industry Growth in call center employee 13% -15% -14% 13% -7% FY 19 on FY 18 (%)

FY 18 FY 19

Note: 1. Data of 4 PSU-Large banks, 7 PSU-Medium banks, 3 Private-New banks and 5 Private-Old banks included for the purpose of this analysis Source: FIBAC Productivity Survey 2019; FIBAC Productivity Survey 2018; BCG analysis BOSTON CONSULTING GROUP  FICCI  IBA 85

Glossary

Individuals: Includes sole proprietors, Retail Business Loans: Includes Business Loans, PMJDY Accounts: Refers to accounts launched partnership firms, trusts, HUFs, registered Loan Against Property, Commercial Vehicle and under the Pradhan Mantri Jan Dhan Yojana, which societies, association of persons, body of Construction Equipment Loans is a financial inclusion scheme launched in 2014 individuals and artificial juridical persons Retail Commissions: These consist of fee income Volume increasers: This refers to customers who Financial inclusion: Population above the age of earned through mutual fund brokerage, insurance increase number of products or balances in 15 years which has a bank account is considered commissions and other miscellaneous retail account with a bank to be financially included commissions Digital customers: These are customers who use Retail Advances: Includes advances given for Commercial Commissions: These consist of fee digital channels for transactions at least once in home loans, personal loans, education loans, income earned through commissions on inland and three months and have visited a branch less than auto loans, credit card loans, loans against foreign letters of credit, guarantees and bills once or never for a transaction deposits & shares, non-agriculture jewel loans Hybrid customers: These are customers who use and other retail loans Digital transactions: These include transactions done through mobile banking, ECS, POS, internet banking, digital channels for transactions at least once in Micro, Small & Medium Enterprises (MSMEs) NACH and UPI three months and also visit a branch at least once Advances: Includes advances given to entities in three months for doing a transaction defined as MSMEs by RBI Branch Based Transactions: These include transactions through NEFT (in branch), cheque and Face-to-face customers: These are customers Corporate Advances: Includes advances given cash transactions who visit a branch for a transaction at least once in for working capital and term loans, given for three months and have used digital channels less business purposes to corporates other than Electronic points of service outlets: These include than once in a year for transactions Micro, Small & Medium Enterprises cash and cheque deposit machines, passbook printing machines and internet kiosks Mobile capture: Feature in which a customer is NBFCs: Non-Banking Financial Companies able to submit paperwork to the bank by registered under the companies act engaged in Traditional outlets: These include branch and ATMs photographing it with their smartphone camera the business of loans and advances but do not Formalization: Existence of a formal record through Real-time capture information: Information hold a banking license registration with any one Government act/authority like entered by customers in one channel (e.g. branch, Retail Consumer Loans: Includes Auto Loans, GST, EPFO, Factory Act, Municipal/Local corporation or a mobile device) is saved in real time, so that Personal Loans, Consumer Loans, Credit Cards Digital MSMEs: These are MSMEs who have adopted they can continue their task on another channel and Gold Loans digital across any one of accounting processes OR seamlessly payments (>30% payment receipts through online banking, wallets/UPI apps, cards) OR online sales (sales on ecom platforms/websites) FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 86

For further reading

Boston Consulting Group Global Asset Management 2019: Will How Asset Managers Can Win in a Trimming the Sails: Insights from publishes other reports and These ’20s Roar? Winner-Takes-All World BCG’s Treasury Benchmarking articles on related topics that A report by Boston A report by Boston Consulting Group, Survey 2018 may be of interest to senior Consulting Group, July 2019 May 2019 A report by Boston executives. Recent examples Consulting Group, December 2018 include: Banks Brace for a New Wave of Creating a Digital Treasury in Digital Disruption Banking Credit Disrupted: Digital MSME A report by Boston Consulting Group, A report by Boston Consulting Group, Lending in India July 2019 May 2019 A report by Boston Consulting Group, November 2018 How Asset Managers Can Seize the EASE reforms for public sector banks Lead in Sustainable Investing A report by Boston What Do Corporate Banking An article by Boston Consulting Group, Consulting Group, April 2019 Customers Really Want? July 2019 An article by Boston Consulting Group, Global Risk 2019: Creating a More November 2018 Global Wealth 2019: Reigniting Digital, Resilient Bank Radical Growth A report by Boston Global Payments 2018: Reimagining An article by Boston Consulting Group, Consulting Group, March 2019 the Customer Experience June 2019 A report by Boston Consulting Group, How CIB Markets Divisions Can Boost October 2018 Unlocking Success in Corporate Revenue Growth Banking through Digital An article by Boston Banking’s Cybersecurity Blind A report by Boston Consulting Group, March 2019 Spot—and How to Fix It Consulting Group, May 2019 A report by Boston Consulting Group, What Does Personalization in August 2018 How Cashless Payments Help Banking Really Mean? Economies Grow An article by Boston Consulting Group, Four Ways Banks Can Radically An article by Boston Consulting Group, March 2019 Reduce Costs May 2019 An article by Boston Consulting Group, How Mobile Money Agents Can June 2018 Expand Financial Inclusion A report by Boston Consulting Group, February 2019 BOSTON CONSULTING GROUP  FICCI  IBA FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 87 88

ote to the reader ote to the reader

The authors gratefully acknowledge the edium Banks ingh riate ld Banks bout the uthors lesh hah ayank ha Ruchin Goyal data collection efforts on various metrics Punjab & Sind Bank Managing Director and Senior Partner Managing Director and Partner Managing Director and Senior Partner Saurabh Tripathi is a Managing from the 34 participating banks made by anin ubramanian Ragesh BCG Mumbai BCG Mumbai BCG Mumbai Director and Senior Partner in +91 22 6749 7163 +91 22 6749 7295 +91 22 6749 7147 the respective nodal teams as listed Allahabad Bank Renini Catholic Syrian Bank the Mumbai office of Boston [email protected] [email protected] [email protected] below. This report would not have been Syndicate Bank C ubrahmanyam iakumar Consulting Group. possible without their invaluable support. mit umar aurabh Triathi umit umar ha eera ggaral Andhra Bank City Union Bank Managing Director and Partner Managing Director and Senior Managing Director and Senior Partner UCO Bank Varun Kejriwal is a Principal in BCG Mumbai Partner BCG Mumbai arge Banks nkita ingh aaneet ais the Mumbai office of +91 22 6749 7274 BCG New Delhi +91 22 6749 7013 Bank of Maharashtra rabindo ahaatra Federal Bank Boston Consulting Group. [email protected] +91 22 124 459 7078 [email protected] aresh esani United Bank of India [email protected] anak Rau Tari li shish Garg cknoledgements BankMANPOWER of Baroda Deep Narayan Mukherjee is an Managing Director and Partner Central Bank of India Jammu & Kashmir Bank eetu Chitkara riate e Banks Associate Director, Data Science, BCG New Delhi This report has been prepared by hridhar Basudeo arayan in the Mumbai office of Boston +91 124 459 7076 Managing Director and Partner Boston Consulting Group. The authors unil umar adli Ramesh Bank of India ash arekh Consulting Group. [email protected] BCG Mumbai would like to thank IBA and FICCI for Corporation Bank Karnataka Bank conducting surveys within member PRODUCTIVITY Axis Bank +91 22 6749 7219 arthikeyan G emant hahria [email protected] banks. The analysis of the survey has eera Babu eyyam harmaraan ecial cknoledgement Managing Director and Partner been included in this report. A special Canara Bank admakumar IDBI Bank Karur Vysya Bank BCG Mumbai iun alra thanks to Jasmin Pithawala, Micky ESAF Bank We would like to thank IBA for +91 22 6749 7192 Chittora and Bhumika Gupta for iay Rao Managing Director and Partner Rammohan ushanta roy providing data to help create this [email protected] managing the marketing process; Punjab National Bank shini ulkarni report and Ms. Jaya Puthli from BCG Mumbai Dewanshi Vora, Ruchit Lunia, Gopal Indian Bank Lakshmi Vilas Bank IBA for her continued support anmeaya inha +91 22 6749 7280 Sharma, Juhi Agarwal and Gaurav anay Gadge HDFC Bank and cooperation in data Managing Director and Senior Partner [email protected] Agarwal for their comprehensive inputs State Bank of India admaathy it C acob collection. aan rora BCG Mumbai on the survey; Jamshed Daruwalla, Indian Overseas Bank South Indian Bank ranay ehrotra Pradeep Hire, Ankit Kalia and Ratna umit riastaa ICICI Bank or urther Contact +91 22 6749 7419 Managing Director and Partner Soni for their contribution towards the ushil umar hurana Cooeratie Banks [email protected] BCG Mumbai design and production of the report. Union Bank of India rashant garal If you would like to discuss the Oriental Bank of Commerce +91 22 6749 7143 Kotak Mahindra Bank Girish oskote themes and content of this itesh hah [email protected] report, please contact: NKGSB Co-operative Bank Managing Director and Partner BCG Mumbai rateek Roongta bhina Bansal Managing Director and Partner Tade Managing Director and Partner +91 22 6749 7341 BCG Mumbai Saraswat Co-operative Bank BCG Mumbai [email protected] +91 22 6749 7561 +91 22 6749 7005 [email protected] [email protected] BOSTON CONSULTING GROUP  FICCI  IBA FIBAC 2019 | ANNUAL BENCHMARKING AND INSIGHTS 87 88

ote to the reader ote to the reader

The authors gratefully acknowledge the edium Banks ingh riate ld Banks bout the uthors lesh hah ayank ha Ruchin Goyal data collection efforts on various metrics Punjab & Sind Bank Managing Director and Senior Partner Managing Director and Partner Managing Director and Senior Partner Saurabh Tripathi is a Managing from the 34 participating banks made by anin ubramanian Ragesh BCG Mumbai BCG Mumbai BCG Mumbai Director and Senior Partner in +91 22 6749 7163 +91 22 6749 7295 +91 22 6749 7147 the respective nodal teams as listed Allahabad Bank Renini Catholic Syrian Bank the Mumbai office of Boston [email protected] [email protected] [email protected] below. This report would not have been Syndicate Bank C ubrahmanyam iakumar Consulting Group. possible without their invaluable support. mit umar aurabh Triathi umit umar ha eera ggaral Andhra Bank City Union Bank Managing Director and Partner Managing Director and Senior Managing Director and Senior Partner UCO Bank Varun Kejriwal is a Principal in BCG Mumbai Partner BCG Mumbai arge Banks nkita ingh aaneet ais the Mumbai office of +91 22 6749 7274 BCG New Delhi +91 22 6749 7013 Bank of Maharashtra rabindo ahaatra Federal Bank Boston Consulting Group. [email protected] +91 22 124 459 7078 [email protected] aresh esani United Bank of India [email protected] anak Rau Tari li shish Garg cknoledgements Bank of Baroda Deep Narayan Mukherjee is an Managing Director and Partner Central Bank of India Jammu & Kashmir Bank eetu Chitkara riate e Banks Associate Director, Data Science, BCG New Delhi This report has been prepared by hridhar Basudeo arayan in the Mumbai office of Boston +91 124 459 7076 Managing Director and Partner Boston Consulting Group. The authors unil umar adli Ramesh Bank of India ash arekh Consulting Group. [email protected] BCG Mumbai would like to thank IBA and FICCI for Corporation Bank Karnataka Bank conducting surveys within member Axis Bank +91 22 6749 7219 arthikeyan G emant hahria [email protected] banks. The analysis of the survey has eera Babu eyyam harmaraan ecial cknoledgement Managing Director and Partner been included in this report. A special Canara Bank admakumar IDBI Bank Karur Vysya Bank BCG Mumbai iun alra thanks to Jasmin Pithawala, Micky ESAF Bank We would like to thank IBA for +91 22 6749 7192 Chittora and Bhumika Gupta for iay Rao Managing Director and Partner Rammohan ushanta roy providing data to help create this [email protected] managing the marketing process; Punjab National Bank shini ulkarni report and Ms. Jaya Puthli from BCG Mumbai Dewanshi Vora, Ruchit Lunia, Gopal Indian Bank Lakshmi Vilas Bank IBA for her continued support anmeaya inha +91 22 6749 7280 Sharma, Juhi Agarwal and Gaurav anay Gadge HDFC Bank and cooperation in data Managing Director and Senior Partner [email protected] Agarwal for their comprehensive inputs State Bank of India admaathy it C acob collection. aan rora BCG Mumbai on the survey; Jamshed Daruwalla, Indian Overseas Bank South Indian Bank ranay ehrotra Pradeep Hire, Ankit Kalia and Ratna umit riastaa ICICI Bank or urther Contact +91 22 6749 7419 Managing Director and Partner Soni for their contribution towards the ushil umar hurana Cooeratie Banks [email protected] BCG Mumbai design and production of the report. Union Bank of India rashant garal If you would like to discuss the Oriental Bank of Commerce +91 22 6749 7143 Kotak Mahindra Bank Girish oskote themes and content of this itesh hah [email protected] report, please contact: NKGSB Co-operative Bank Managing Director and Partner BCG Mumbai rateek Roongta bhina Bansal Managing Director and Partner Tade Managing Director and Partner +91 22 6749 7341 BCG Mumbai Saraswat Co-operative Bank BCG Mumbai [email protected] +91 22 6749 7561 +91 22 6749 7005 [email protected] [email protected]

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