NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, October 20, 2016

Financial inclusion may have become a buzzword among India’s econocrats and central bankers but India continues to lag behind most major economies when it comes to access to banking, the results of the Financial Access Survey for 2016 released by the International Monetary Fund (IMF) shows.

Consider this: as of 2015, India had over 1.2 lakh branches of commercial banks across the country. This is higher than the number in the US, China, Brazil, Russia and South Africa. However, this translates to just over 13 commercial bank branches for every 100,000 adults—much lower than in the case of Brazil, Russia, the UK and the US. In this respect, China is no better than India with 8 branches for every 100,000 adults.

While India remains an under-banked country compared to most peers, its banking network is less concentrated in the top cities compared to several of its peers. Of the total number of bank branches in the country, close to 6% of them were located in the three largest cities in India in 2015. In comparison, over 46% of branches of commercial banks were located in three largest cities in South Korea. The corresponding figure for Australia was 39.2%, Brazil (16.4%), China (8.3%) and the US (2.5%).