· Southern states are outshining the rest of India in mobile banking adoption in savings accounts, according to a report by The Boston Consulting Group (BCG).
· The report was done in association with FICCI and Indian Banks’ Association.
· As per the report, in terms of accounts with at least one financial transaction on mobile banking in the last six months of FY18, as a percentage of total active savings bank accounts (FY18) - Telangana is at 10%, Andhra Pradesh at 6.30%, Karnataka at 5.50%, Puducherry at 5.80%, Tamil Nadu at 5% and Kerala at 4.70%. The India average is 3.40%.
· The report had a sample size of over 2,600 respondents and BCG factored 34 banks across four segments – 15 medium PSU banks; six large PSU banks; and five new private banks.
· Mobile banking activation is at 21% for private banks and at 3% for public sector banks for FY18, BCG said in the report.
· It also said that eastern and southern states were leading the charge as India continued on the digital journey.
· In terms of accounts with at least one financial transaction on Internet banking in the last six months of FY18, as a % of total active savings bank accounts- Telangana, Manipur and Mizoram had over 20% when compared to national average of 11.30%. Other southern states too topped the national average on the metric.
· The theme of the report is Providing financial services to SMEs in an increasingly digital ecosystem.
· The report pointed out that digital lending to MSME had a huge untapped potential.
· Currently, in India, out of the total formal credit of around ₹100 lakh crores, only 25% is extended to MSMEs.
· Spurred by the introduction of the Goods and Services tax (GST), small businesses are increasingly getting formalized as well as digitised.
· The percentage of MSMEs using digital channels has increased from 41% before the introduction of GST to 47% after GST.
· BCG said that MSME lending in the economy was at an inflection point, and could be the next engine of credit growth.
· Currently, digital lending accounts for only 4% of total MSME lending. However, it is expected to rise to twenty-one per cent over the next five years.
· This significant jump will close the gap with digital retail lending, which is expected to reach around forty-eight per cent of total retail lending in five years.
Source : The Hindu