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Informist, Monday, Aug. 25, 2025

 

NEW DELHI – India's banking sector needs to grow 3.0-3.5 percentage points quicker than nominal GDP to help the country meet its goal of becoming a developed economy by 2047, a report released Monday said. 

 

"Many emerging and developed economies have seen banking asset growth outpace nominal GDP growth," a report by Boston Consulting Group said. "For India, banking assets need to grow 3.0-3.5 percentage points faster than its nominal GDP. This is not happening today and is a clear risk to India's Viksit Bharat ambition."

 

Over the past 15 years, India's banking assets has risen in tandem with its nominal GDP growth, the report, prepared in association with the Federation of Indian Chambers of Commerce and Industry and Indian Banks' Association, said. The ratio of banking assets to nominal GDP was around 0.9 times, the report said, adding that a multiplier of 1.5 times is needed for the developed economy goal.

 

The Indian banking industry is profitable, well-capitalised, and highly valued, the report said. The sector will need to seize this opportunity by unlocking credit growth, driving productivity, digital maturity, and embedding resilience, it added. 

 

"There is a need to expand into untapped credit segments, unlock productivity with AI/GenAI, deliver world-class digital experiences, and embed a deep risk culture. Only then can banks become the driving force behind India's economic rise", the report said. 

 

Banks need to leverage alternate data for underwriting and build capabilities to manage emerging risks, the report said. Regulators need to provide greater flexibility to banks in providing corporate credit and promote world-class utilities for climate, cyber and fraud risks, the report added. The government also needs to fast-track implementation of the second phase of the digital public infrastructure and standardise know your customer norms across financial products, it said.  End

    

 

Reported by Shubham Rana

Edited by Deepshikha Bhardwaj 

 

 

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