According to Mr. O.P. Bhatt, Chairman, State Bank of India, the banking sector is facing pressure on assets due to a sharp increase in defaults on credit card and personal loan payments.
The number of credit cards in circulation have, however, gone down by 17 per cent to 1.89 crore as on June 30, as against 2.28 crore in the same period last fiscal. They accounted for about Rs 17,000 crore of transactions during the first quarter of the current fiscal, according to the RBI data.
Personal loans, which is another area of concern for the banking sector, are those funds which are provided by the banks, but are not tied to purchase of any specific good. Banks had been aggressively selling personal loans as they fetch higher returns in term of interest rates.
Bhatt further said that losses accruing out of "alleged mis-selling of derivatives", or the selling of inappropriate products, also needed to be checked.
Indian banks, he added, will have to focus on various factors, including hiring the right staff and developing leaders, to meet the growing needs of demanding customers.
Home loans, he added, would be a major growth area for the banking sector in the coming days. The home loan portfolio, he added, would cross $1 trillion in the next ten years.
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