Mumbai, Sept 27: The unavailability of credit bureau for securing customer history, poor infrastructure and lengthy legal processes are some of the challenges faced by banks in retail financing, SBI managing director P N Venkatachalam said today. "India's retail finance segment is less than six per cent of gross domestic product and has tremendous potential for growth but banking entities are faced with several challenges," Venkatachalam said at a conference on `Indian Banking: Global Benchmarks 2003'.
High cost and time requirement for verification of customer profile, inability to penetrate deeper, poor infrastructure in smaller locations, high losses and frauds, and underdeveloped securitisation market are some of the challenges, he added.
Retail finance formed only 17 per cent of the total banks' loans, he said adding, in the current fiscal, these loans are expected to record a 34 per cent growth on year-on-year basis.
The retail sector, at present, is mostly driven by housing loans. The Indian home loans market is approximately pegged at Rs 80,000 crore and the compounded annual growth rate stands at around 32 per cent over the last five years, he said.
The penetration in India is only two per cent of GDP compared to eight per cent in China and 20 per cent in Hong Kong and Singapore, the SBI MD added. Bureau Report