research report on banking sector in india

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• Financial Institutions

Banking industry in India - statistics & facts

Indian banking landscape, banking outreach, key insights.

Detailed statistics

Number of banks in India 2023, by type

Value of bank assets in India FY 2013-2023

Number of ATMs in India 2019-2022

Editor’s Picks Current statistics on this topic

Current statistics on this topic.

Leading public sector banks in India 2023, by market cap

Leading private sector banks in India 2023, by market cap

Fintech (Mobile/online banking)

Status of online banking in India 2020

Related topics

Recommended.

• Banking industry in China
• Mobile banking in the U.S.
• Banking industry in Europe
• Banking industry in Japan

Recommended statistics

• Premium Statistic Number of banks in India 2023, by type
• Premium Statistic Value of bank assets in India FY 2013-2023
• Premium Statistic Reserves to debt ratio in India FY 2015-2023
• Premium Statistic Gross non-performing loan ratio SCBs India FY 2008-2023, with estimates for FY 2024
• Premium Statistic Value of foreign exchange reserves in India FY 2010-2023
• Premium Statistic Financial conditions index India Q2 FY 2023, by category

Number of banks across India as of November 2023, by type

Total assets of banks in India from financial year 2013 to 2023 (in trillion U.S. dollars)

Reserves to debt ratio in India FY 2015-2023

Reserves to debt ratio in India from financial year 2015 to 2022, with an estimate for 2023

Gross non-performing loan ratio SCBs India FY 2008-2023, with estimates for FY 2024

Gross non-performing loan ratio of scheduled commercial banks across India from financial year 2008 to 2023, with estimates until September 2024

Value of foreign exchange reserves in India FY 2010-2023

Value of foreign exchange reserves across India from financial year 2010 to 2023 (in billion U.S. dollars)

Financial conditions index India Q2 FY 2023, by category

Financial conditions index in India in 2nd quarter of financial year 2023, by category of banks and financial institutions

• Premium Statistic Distribution of number of banks in India FY 2021, by sector
• Basic Statistic Public sector bank assets in India FY 2013-2023
• Basic Statistic Private sector bank assets in India FY 2013-2023
• Basic Statistic Assets of foreign banks in India FY 2013-2023
• Basic Statistic Loan to deposit ratio of public sector banks in India FY 2012-2023
• Premium Statistic Loan to deposit ratio of private sector banks in India FY 2017-2023
• Premium Statistic Loan to deposit ratio of foreign sector banks in India FY 2019-2023

Distribution of number of banks in India FY 2021, by sector

Distribution of the banking market in India in financial year 2021, by sector

Public sector bank assets in India FY 2013-2023

Public sector bank assets in India from financial year 2013 to 2023 (in trillion U.S. dollars)

Private sector bank assets in India FY 2013-2023

Value of private sector bank assets in India from financial year 2013 to 2023 (in billion U.S. dollars)

Assets of foreign banks in India FY 2013-2023

Foreign banks assets in India from financial year 2013 to 2023 (in billion U.S. dollars)

Loan to deposit ratio of public sector banks in India FY 2012-2023

Credit to deposit ratio of public sector banks across India from financial year 2012 to 2023

Loan to deposit ratio of private sector banks in India FY 2017-2023

Credit to deposit ratio of private sector banks across India from financial year 2017 to 2023

Loan to deposit ratio of foreign sector banks in India FY 2019-2023

Credit to deposit ratio of foreign sector banks across India from financial year 2019 to 2023

Key players

• Premium Statistic Leading public sector banks in India 2023, by market cap
• Premium Statistic Leading private sector banks in India 2023, by market cap
• Premium Statistic State Bank of India's brand value 2016-2023
• Premium Statistic Value of deposits at Punjab National Bank FY 2017-2023
• Premium Statistic Value of deposits at HDFC Bank FY 2017-2023
• Premium Statistic ICICI Bank's total advances FY 2016-2023

Leading public sector banks in India as of December 2023, based on market capitalization (in billion Indian rupees)

Leading private sector banks across India as of 2023, based on market capitalization (in billion Indian rupees)

State Bank of India's brand value 2016-2023

Brand value of State Bank of India from 2016 to 2023 (in billion U.S. dollars)

Value of deposits at Punjab National Bank FY 2017-2023

Value of deposits at Punjab National Bank between financial year 2017 and 2023 (in trillion Indian rupees)

Value of deposits at HDFC Bank FY 2017-2023

Value of deposits at HDFC Bank Limited between financial year 2017 and 2023 (in trillion Indian rupees)

ICICI Bank's total advances FY 2016-2023

Total advances of ICICI Bank Limited from financial year 2016 to 2023 (in billion Indian rupees)

Digital banking

• Premium Statistic Penetration rate of online banking in India 2014-2029
• Premium Statistic UPI usage in India in Q4 2023, by platform
• Premium Statistic Number of NETC partner banks India 2016-2022
• Premium Statistic Partner banks for IMPS India 2013-2023
• Premium Statistic Number of member banks affiliated to NFS India 2018-2023
• Premium Statistic Online banking frauds reported in India 2022, by state

Penetration rate of online banking in India 2014-2029

Penetration rate of online banking in India from 2014 to 2029

UPI usage in India in Q4 2023, by platform

Unified Payment Interface (UPI) usage across India in third quarter of 2023, by platform

Number of NETC partner banks India 2016-2022

Number of NETC partner banks in India from November 2016 to January 2022

Partner banks for IMPS India 2013-2023

Number of partner banks for IMPS in India from September 2013 to June 2023

Number of member banks affiliated to NFS India 2018-2023

Number of member banks affiliated to NFS in India from August 2018 to June 2023

Online banking frauds reported in India 2022, by state

Number of online banking frauds reported across India in 2022, by state

Government initiatives

• Premium Statistic Number of rural and urban PMJDY recipients in India 2023, by sector
• Premium Statistic Value of PMJDY deposits in India 2023, by sector
• Premium Statistic Number of PMJDY recipients in India 2023, by public sector bank
• Premium Statistic Value of PMJDY deposits in India 2023, by public sector bank
• Premium Statistic Number of PMJDY recipients in India 2023, by major private bank
• Premium Statistic Value of PMJDY deposits in India 2023, by major private bank
• Premium Statistic Number of loan accounts under PMMY scheme India FY 2021, by category
• Premium Statistic Value of sanctioned loans under PMMY scheme India FY 2022, by financial institution

Number of rural and urban PMJDY recipients in India 2023, by sector

Number of Pradhan Mantri Jan-Dhan Yojana recipients in India as of August 2023, by type and sector (in millions)

Value of PMJDY deposits in India 2023, by sector

Value of Pradhan Mantri Jan-Dhan Yojana deposits in India as of August 2023, by sector (in billion Indian rupees)

Number of PMJDY recipients in India 2023, by public sector bank

Number of Pradhan Mantri Jan-Dhan Yojana recipients in India as of August 2023, by public sector bank (in millions)

Value of PMJDY deposits in India 2023, by public sector bank

Value of Pradhan Mantri Jan-Dhan Yojana deposits in India as of August 2023, by public sector bank (in billion Indian rupees)

Number of PMJDY recipients in India 2023, by major private bank

Number of Pradhan Mantri Jan-Dhan Yojana recipients in India as of August 2023, by major private bank (in millions)

Value of PMJDY deposits in India 2023, by major private bank

Value of Pradhan Mantri Jan-Dhan Yojana deposits in India as of August 2023, by major private bank (in million Indian rupees)

Number of loan accounts under PMMY scheme India FY 2021, by category

Number of loan accounts under Pradhan Mantri Mudra Yojana (PMMY) in India in financial year 2021, by category (in 1,000s)

Value of sanctioned loans under PMMY scheme India FY 2022, by financial institution

Value of sanctioned loans under Pradhan Mantri Mudra Yojana (PMMY) in India in financial year 2022, by financial institution (in billion Indian rupees)

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India Organic Biofach 2022

Gulfood dubai 2023, indian banking industry analysis, as of 2022, more than 80% of the indian population has a bank account in comparison to 17% in 2009., advantage india, robust demand.

* According to the EY 2021 NextWave Global Consumer Banking Survey explored consumers’ primary financial relationships and found that FinTechs and neobanks are gaining ground.

* That demand seems particularly strong when it comes to the critical need of protecting consumer data, where incumbent banks have a trust advantage. Some super apps may also turn to banks for access to banking licenses and to meet other regulatory requirements.

* Indian Fintech industry is estimated to be at US$ 150 billion by 2025. India has the 3rd largest FinTech ecosystem globally.

* BCG predicts that the proportion of digital payments will grow to 65% by 2026.

Innovation in Services

* In the recent period, technological innovations have led to marked improvements in efficiency, productivity, quality, inclusion and competitiveness in the extension of financial services, especially in the area of digital lending.

* Digitalization of Agri-finance was conceptualized jointly by the Reserve Bank and the Reserve Bank Innovation Hub (RBIH). This will enable delivery of Kisan Credit Card (KCC) loans in a fully digital and hassle-free manner.

* In Union Budget 2023, the KYC process will be streamlined by using a 'risk-based' strategy rather than a 'one size fits all' approach.

* In September 2023, Hitachi Payment Services launched India's first-ever UPI-ATM with NPCI.

Business Fundamentals

* The Indian banking industry has been on an upward trajectory aided by strong economic growth, rising disposable incomes, increasing consumerism and easier access to credit.

* Digital modes of payments have grown by leaps and bounds over the last few years. As a result, conventional paper-based instruments such as cheques and demand drafts now constitute a negligible share in both the volume and value of payments.

Policy Support

* The RBI has launched a pilot to digitalize KCC lending in a bid for efficiency, higher cost savings, and reduction of TAT. This is expected to transform the flow of credit in the rural economy.

* In November 2022, RBI launched a pilot project on central bank digital currency (CBDC).

* In Union Budget 2023, a national financial information registry would be constructed to serve as the central repository for financial and ancillary data.

* In March 2023, India Post Payments Bank (IPPB), in collaboration with Airtel, announced the launch of WhatsApp Banking Services for IPPB customers in Delhi.

Banking Industry Report

The Banking industry in India has historically been one of the most stable systems globally, despite global upheavals. The government has consistently strived to promote financial inclusion through various initiatives targeted to bring the country’s underbanked population under the banking gamut.

Indian Fintech industry is estimated to be at US$ 150 billion by 2025. India has the 3rd largest FinTech ecosystem globally. India is one of the fastest-growing Fintech markets in the world. There are currently more than 2,000 DPIIT-recognized Financial Technology (FinTech) businesses in India, and this number is rapidly increasing.

The Indian banking system consists of 12 public sector banks, 21 private sector banks, 46 foreign banks, 43 regional rural banks, 1,534 urban cooperative banks and 96,508 rural cooperative banks in addition to cooperative credit institutions. As of October 2023, the total number of micro ATMs in India reached 15,30,287. Moreover, there are 1,25,969 on-site ATMs and Cash Recycling Machines (CRMs) and 93,771 off-site ATMs and CRMs. Banks added 2,796 ATMs in the first four months of FY23, against 1,486 in FY22 and 2,815 in FY21. 100% of new bank account openings in rural India are being done digitally.

India's digital lending market witnessed a growth of CAGR 39.5% over a span of 10 years. The Indian digital consumer lending market is projected to surpass US$ 720 billion by 2030, representing nearly 55% of the total US$ 1.3 trillion digital lending market opportunity in the country.

In 2023 (till December 1st, 2023), total assets in the public and private banking sectors were US$ 1,688.15 billion and US$ 1,017.26 billion, respectively. In 2023 (till December 1st, 2023), assets of public sector banks accounted for 58.32% of the total banking assets (including public, private sector and foreign banks).

Public sector banks accounted for over 57.48% of interest income in 2023 (till December 1st, 2023). The interest income of public banks reached US$ 102.51 billion in 2023 (till December 1st, 2023). In 2023 (till December 1st, 2023), interest income in the private banking sector reached US$ 70.07 billion.

According to the BCG Banking Sector Roundup Report of 9M FY23, credit growth is expected to hit 18.1% in 2022-23. BCG predicts that the proportion of digital payments will grow to 65% by 2026.

According to RBI’s Scheduled Banks’ Statement, deposits of all scheduled banks collectively surged by a whopping Rs.1.75 lakh crore (US$ 2,110.87 billion) as of December 1st, 2023.

According to data released by the National Payments Corporation of India (NPCI), UPI transactions reached 10.241 billion until August 30th, 2023.

In December 2023, ICICI Prudential Life Insurance and Ujjivan Small Finance Bank forged the Bancassurance Partnership.

In October 2023, AU Small Finance Bank announced the acquisition of Fincare Small Finance Bank in an all-share deal and to merge it with itself.

In September 2023, Hitachi Payment Services launched India's first-ever UPI-ATM with NPCI.

In September 2023, the Reserve Bank of India is likely to bring in CBDC in the call money market.

In July 2023, Mahindra and Mahindra acquires minority stake in RBL Bank.

In July 2023, State Bank of India to acquire 100% stake of SBI Capital in SBICAP Ventures for US$ 85.25 million (Rs. 708 crore).

In June 2023, State Bank of India to acquire entire 20% stake of SBI Capital Markets in SBI Pension Funds.

In April 2023, HDFC Bank to acquire 20% or more in Griha Pte subsidiary of HDFC Investments.

According to SBI Chairman, credit demand remains robust, to clock about 14% growth.

RBI has decided to set up Public Credit Registry (PCR), an extensive database of credit information, accessible to all stakeholders. The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 Bill has been passed and is expected to strengthen the banking sector. Microfinance industry’s gross loan portfolio (GLP) by 10% in FY22 to Rs. 2.85 trillion (US$ 36.42 billion).

The Government of India has been supportive of the banking sector in the country, especially on the financial inclusion agenda. A flagship program, the Pradhan Mantri Jan Dhan Yojana (PMJDY), was launched in August 2014 which aims to provide universal banking services to the unbanked by setting up bank accounts for them and issuing payment cards to all. As of 2023-24, the number of bank accounts—opened under the government’s flagship financial inclusion drive ‘Pradhan Mantri Jan Dhan Yojana (PMJDY)’—reached over 51.11 crore beneficiaries and deposits in the Jan Dhan bank accounts totalled over US$ 25.13 billion till December 15th, 2023.

In September 2023, IREDA partners with banks to boost renewable energy projects in India.

In March 2023, India Post Payments Bank (IPPB), in collaboration with Airtel, announced the launch of WhatsApp Banking Services for IPPB customers in Delhi.

In October 2022, Prime Minister Mr. Narendra Modi inaugurated 75 Digital Banking Units (DBUs) across 75 districts in India.

In Union Budget 2023, a national financial information registry would be constructed to serve as the central repository for financial and ancillary data.

In Union Budget 2023, the KYC process will be streamlined by using a 'risk-based' strategy rather than a 'one size fits all' approach.

Meanwhile, to respond to the impact of COVID-19, the government implemented various policies in order to aid the banking sector. 

Rising income is expected to enhance the need for banking services in rural areas, and therefore, drive the growth of the sector.

India is the world's largest market for Android-based mobile lending apps, accounting for ~82% of all online lenders worldwide. India currently has 887 active lending apps.

The digital payments revolution will trigger massive changes in the way credit is disbursed in India. Debit cards have radically replaced credit cards as the preferred payment mode in India after demonetisation. In December 2022, Unified Payments Interface (UPI) crossed 7.82 billion transactions worth Rs. 12.82 trillion.

The RBI has launched a pilot to digitalize KCC lending in a bid for efficiency, higher cost savings, and reduction of TAT. This is expected to transform the flow of credit in the rural economy.

Digital modes of payments have grown by leaps and bounds over the last few years. As a result, conventional paper-based instruments such as cheques and demand drafts now constitute a negligible share in both volume and value of payments. In November 2022, RBI launched a pilot project on central bank digital currency (CBDC). The platform is called NDS-OM CBDC. The Central bank stated that the use case for the wholesale digital rupee is for the “settlement of secondary market transactions in government securities“ as it would reduce transaction costs.

Digitalization of Agri-finance was conceptualized jointly by the Reserve Bank and the Reserve Bank Innovation Hub (RBIH). This will enable delivery of Kisan Credit Card (KCC) loans in a fully digital and hassle-free manner.

Related News

The RBI seeks to improve retail user access to the e-rupee through collaboration with non-bank payment system operators, such as PhonePe, Google Pay, and Paytm.

NBFCs saw a 6% y-o-y rise in loan sanctions in third quarter of FY24, fuelled by robust consumer, gold, and personal loans.

Credit card transactions rose 11% to US$ 111.4 billion (Rs. 9.30 trillion) during June-December 2023, outpacing sluggish debit card usage.

Prime Minister, Mr. Narendra Modi emphasized India's strategic need to enhance economic self-sufficiency in the coming decade, enabling resilience against global crises and elevating the international prominence of the Indian rupee.

Union Minister for Finance and Corporate Affairs, Ms. Nirmala Sitharaman, stated that the stability of government securities yields has enhanced the overall resilience of the financial markets and bolstered investor confidence in the Indian economy.

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India will contribute 2.2% to the world's digital payments market by 2023, while the value of such transaction is expected to reach US$ 12.4 trillion globally by 2025.

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IMF Working Papers

Financial sector and economic growth in india.

Author/Editor:

Margaux MacDonald ; TengTeng Xu

Publication Date:

July 8, 2022

Electronic Access:

Free Download . Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

India’s financial sector has faced many challenges in recent decades, with a large, negative, and persistent credit to GDP gap since 2012. We examine how cyclical financial conditions affect GDP growth using a growth-at-risk (GaR) approach and analyze the link between bank balance sheets, credit growth, and long-term growth using bank-level panel regressions for both public and private banks. We find that on a cyclical basis, a negative shock to credit or a rise in macro vulnerability all shift the distribution of growth to the left, with lower expected growth and higher negative tail risks; over the long term, the results indicate that higher credit growth, arising from better capitalized banks with lower NPLs, is associated with higher GDP growth.

Working Paper No. 2022/137

Bank credit Credit Debt financing External debt Financial institutions Financial statements Money Public financial management (PFM) State-owned banks

9798400216404/1018-5941

WPIEA2022137

Please address any questions about this title to [email protected]

• Publications

Trend and Progress of Banking in India

Indian banking sector: blockchain implementation, challenges and way forward

• Original Article
• Published: 11 May 2020
• Volume 4 , pages 65–73, ( 2020 )

Cite this article

• Aarti Patki   ORCID: orcid.org/0000-0001-8400-6984 1 &
• Vinod Sople 2  

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This study is aimed at covering the application of blockchain technology (BCT) in the Indian banking sector and its benefits in banking operations. This paper covers the challenges it faces in implementing blockchain technology. The paper highlights how BCT is addressing key issues such as speedily and securely transmission of data, value to and from various transaction partners, cost of processing payments, new products, and services creation. The paper also covers various advantages brought out by BCT such as automate verification process and eliminating the need for multiple parties to confirm manual validity of transactions. With the advent of BCT, India’s banking and financial systems can be expected to transform the banking process to a new level. This study covers the field investigation as to how existing BCT is helping banks to effectively and efficiently monitor and control the banking process. The respondents were leading banking institutions and FinTech firms in the country. The study result shows that some of the Indian banks have already started their journey in using BCT and they got the benefits. However, they are facing certain challenges in the adaptation and implementation of this new technology. The legal and standardization issues need to be looked into with regards to jurisdictions in cross border transactions and interoperability between different BCT systems. Banks are currently using permission based BCT solutions for very defined (small) eco-system because of the data security reasons. It is like but not exactly the ‘WhatsApp’ group system wherein an administrator decides on membership of the group. However, for each bank, the considerations will differ for the ecosystem required to deploy the BCT solution. The study covers only leading banks and FinTech companies in the country and smaller players in the banking sector. In India financial institutions are at various stages of BCT adoption. They have already seen the benefits of BCT in some processes where BCT is put into use. With time to come with full implementation, BCT will change the picture of banking in India. With BCT the banking processes will be more transparent, faster and cost-effective with elimination of intermediaries. The key benefits will be decentralisation, trust, and security in transactions.

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Know Your Customer is the process of a business verifying the identity of its clients and assessing their suitability, along with the potential risks of illegal intentions towards the business relationship. The term is referred to as financial institution’s regulations. Banks and other financial institutions are increasingly demanding that customers provide detailed due diligence information. For example; KYC requirements for opening a bank account are to submit an Aadhaar and PAN as proof of identity, address and registered income-tax payer receptively together with a recent photograph. KYC policies framework of a bank, in general, incorporate the following four elements such as; Customer Acceptance Policy; Customer Identification Procedures; Monitoring of Transactions; and Risk management.

Bitcoin is a cryptocurrency. In other words it is a decentralized digital currency without a central bank or single administrator that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries. Each bitcoin is a computer file that is stored in a 'digital wallet' app on a smart device (phone/computer). People can exchange/transact bitcoins and every single transaction is recorded in the blockchain.

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Aarti Patki

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Patki, A., Sople, V. Indian banking sector: blockchain implementation, challenges and way forward. J BANK FINANC TECHNOL 4 , 65–73 (2020). https://doi.org/10.1007/s42786-020-00019-w

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Received : 06 November 2019

Accepted : 24 April 2020

Published : 11 May 2020

Issue Date : April 2020

DOI : https://doi.org/10.1007/s42786-020-00019-w

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Economic conditions outlook, March 2024

Executives’ latest views on the global economy and their countries’ economies lean much more positive than they did at the end of 2023.

In the latest McKinsey Global Survey on economic conditions, 1 The online survey was in the field from March 4 to March 8, 2024, and garnered responses from 957 participants representing the full range of regions, industries, company sizes, functional specialties, and tenures. To adjust for differences in response rates, the data are weighted by the contribution of each respondent’s nation to global GDP. the outlook on domestic conditions in most regions has become more hopeful, despite ongoing shared concerns about geopolitical instability and conflicts. In a year brimming with national elections, 2 Katharina Buchholz, “2024: The super election year,” Statista, January 19, 2024. respondents increasingly see transitions of political leadership as a primary hazard to the global economy, particularly in Asia–Pacific, Europe, and North America.

Furthermore, respondents now view policy and regulatory changes as a top threat to their companies’ performance, and they offer more muted optimism than in December about their companies’ prospects.

Optimism builds over global and domestic conditions

Respondents share much brighter assessments of the global economy and conditions in their countries than they did at the end of 2023, and views of the global economy are the most positive they’ve been since March 2022 (Exhibit 1). In the December survey, respondents were equally likely to say the global economy had improved and worsened. Today, respondents are twice as likely to report improving rather than deteriorating conditions. Looking ahead to the next six months, respondents are also more optimistic than they were last quarter. Forty-six percent expect the global economy to improve—nearly double the share expecting worsening conditions—while 37 percent expected improvement in the previous survey.

Likewise, respondents offer hopeful views when asked about the most likely near-term scenario for the global economy, suggesting confidence in central banks. They are more likely to expect a soft landing overall—with either slowing or accelerating growth compared with 2023—than a recession (Exhibit 2). The largest share of respondents expect a soft landing, with slowing growth relative to 2023.

Respondents’ views on their own economies have also become more upbeat. Nearly half of respondents say economic conditions at home are better now than they were six months ago, up from 41 percent in December, while just 22 percent say conditions have gotten worse. Respondents in Europe—who offered the most negative assessments of any respondents in September and December—are now nearly twice as likely as in December to say conditions have improved in the past six months, though it is unclear what has prompted that change and whether it is a durable finding.

McKinsey’s original survey research

More than half of respondents expect their economies to improve over the next six months. It’s the first time in two years that a majority of respondents have said that. In most regions, larger shares of respondents express optimism about economic conditions at home now than in December (Exhibit 3).

Geopolitical instability remains top of mind as concerns over political transitions rise

Geopolitical instability and conflict continues to be the most cited risk to global growth, selected by two-thirds of respondents for the second quarter in a row (Exhibit 4). Yet in this first quarterly survey of 2024—a year in which more than 60 countries will hold national elections 3 Katharina Buchholz, “2024: The super election year,” Statista, January 19, 2024. —transitions of political leadership have jumped from the fifth-most-cited to the second-most-cited threat to the world economy. The share of respondents in Europe reporting political transitions as a top threat is 2.4 times the share in December, while the shares in North America and Asia–Pacific have nearly doubled. 4 Prior to the latest survey, respondents in Mexico were included in Latin America in analyses but are now included in North America. We see a smaller uptick in concern about supply chain disruptions, which is cited as a threat by the largest share of respondents since December 2022.

Looking at risks to growth in respondents’ countries, geopolitical instability and conflict remains the top perceived threat, cited by a larger share than in any quarter since March 2022. Uneasiness about domestic political conflicts and transitions of political leadership, now the second- and third-most-cited risks, have overtaken concerns about inflation, which was the second-most-cited risk in December. Among respondents in North America, transitions of political leadership are cited nearly twice as often as in December (Exhibit 5). In Greater China, multiple risks now appear to carry equal weight, whereas in December, inflation was the top concern.

Policy and regulatory changes top the list of cited threats to companies’ growth

As respondents’ concerns about inflation as a domestic threat wane, the survey results suggest that companies are holding off on price increases. For the first time since we began asking about companies’ prices in September 2022, less than half of private-sector respondents in the latest survey—45 percent—say their companies increased the price of their goods or services over the past six months, down from 56 percent in December.

For five quarters, respondents’ most cited risk to their companies’ performance in the next 12 months was weak customer demand. Now, they most often point to policy and regulatory changes as a threat. In December 2023, policy and regulatory changes weren’t even one of the top five perceived risks. This increased wariness of policy changes cuts across most regions, though we see the largest increase in Europe.

Even though weak demand is no longer the most cited risk for companies, optimism over expected demand has tapered  since December. Fifty-one percent of respondents expect an increase in customer demand over the next six months, down from 57 percent in December. Yet expectations about profits remain upbeat: about six in ten respondents expect increasing profits in the months ahead, in line with expectations in much of 2023.

The survey content and analysis were developed by Jeffrey Condon , a senior knowledge expert in McKinsey’s Atlanta office; Krzysztof Kwiatkowski , a capabilities and insights expert in the Boston office; and Sven Smit , chair of insights and ecosystems, chair of the McKinsey Global Institute, and a senior partner in the Amsterdam office.

They wish to thank Jan Mischke for his contributions to this work.

This article was edited by Heather Hanselman, a senior editor in the Atlanta office.

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