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Mumbai , Sept. 29

CONSUMER credit in the banking system is growing, but penetration levels remain low.

"Consumer credit is growing at six per cent of GDP and occupies 17 per cent of the overall loans in the banking system.

The retail finance segment still has tremendous potential for growth'', said Mr P.N. Venkatachalam, Managing Director, State Bank of India, speaking at a FICCI seminar, on `Indian Banking: Global Benchmarks'.

Banks now occupy a much larger share of the domestic financial system. With spreads shrinking on alternative assets and corporate sector availing loans at sub-PLR etc, banks have rediscovered retail financing which offer better margins.

And with the present situation of negative returns on deposit rates, consumers had all the more incentive to spend rather than save, he said.

According to Mr Venkatachalam, bank's willingness and motivation to lend had risen with stronger creditor rights and the spread contraction on government bonds.

``There is an increased awareness among consumers and today they are more discerning and demanding of choices and quality. Service expectations are not just anytime, anywhere, but also any mode'', he said.

Speaking to press persons at the sidelines of the seminar, Mr Venkatachalam said SBI had put in place `credit scoring models', to gauge the credit-worthiness of individual customers, with respect to personal loans and was considering extending it to other retail segments.

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