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lesson for banks that generated many property loans in the period. Project finance mostly is granted by large banks to big firms because it requires a large capital base.

Retail banking with individual customers is quite distinguishable from wholesale banking. This is an extremely potential market for the banks because currently only a fraction of the population in this cash economy is accessed to banking products and services. Most of bank users live in big cities. They are customers of personal loans (consumer loans, house loans, car loans, stock investment loans, etc.), credit cards and mortgages.

In general, credit in the last few years has been growing at a considerable rate. The loan ratio to GDP jumped to 93% in 2008 (table 5). Credit growth has been at the average annual rate of 25% over the past 5 years (Tran, 2008). This year 2010, the RBI sets a target of 25% increase for credit. The growth till the end of August 2010 was 16.27% compared to 2009 year end (Vneconomy 2010).

4.1.2.3. Threats in the credit market India credit market is fairly risky and poses a lot of threats to the credit institutions.

The primary problems are irrational division of market, poor lending practices, lack of credit data and high quantity of non-performing loans.

Irrational division of market In the banking sector, there is still intangible distinction among the markets of SOCBs, commercial banks and foreign banks. Generally, SOCBs are for large corporate and state-owned sector. SOCBs are said to show discrimination towards private businesses when they can only offer unsecured loans to firms with at least two consecutive years of profits (Leung 2009, 49). commercial banks are geared