India’s Leading BFSI and FinTech Companies 2021

18 Sectoral Deployment of Gross Credit Credit growth during FY20 decelerated across sectors but has been more prominent in the industry and services segment, partly reflecting elevated levels of non-performing assets (NPAs) amid low credit demand and corporate deleveraging. Construction and power sectors, in particular, had high NPA levels amid problems pertaining to land acquisition, clearances, long gestation periods, contractual issues and cost overruns. In the retail loans segment, consumer durables witnessed sharp recovery while advances against fixed deposits also gained traction. On the other side, advances to individuals against shares, bonds etc reduced significantly. Growth in housing and auto loans remained subdued amid ongoing uncertainty and low consumer confidence. Banks, in general, managed to achieve the overall priority sector lending. However, in several sub-sectors like agriculture, micro enterprises, small and marginal farmers and non-corporate individual farmers, these targets were missed. The central bank issued revised guidelines for private sector lending in September 2020, which is expected to boost lending to small and marginal farmers and other weaker sections as well as to other key target sectors such as renewable energy, health infrastructure and start-ups. (5.0) - 5.0 10.0 15.0 20.0 25.0 30.0 Agriculture Industry Servi ces Retail Loans Sectora l Deployment of GrossBank Credit (% y-o-y growth) FY18 FY19 FY20 Source: RBI Return Ratios The Return on Assets (RoA) and Return on Equity (RoE) for various banks turned positive during FY20. Public sector banks continued to log significant erosion in RoE along with payment banks, which proved to be a drag on the overall profitability of the banking segment. -30 -25 -20 -15 -10 -5 0 5 Public Sector Banks Private Banks Foreign banks SFBs PBs Return on Assets FY19 FY20 -70 -60 -50 -40 -30 -20 -10 0 10 20 Public Sector Banks Private Banks Foreign banks SFBs PBs Return on Equity FY19 FY20 Source: RBI Dun & Bradstreet