'Banking sector must grow 3-3.5 percentage points faster than nominal GDP to achieve Viksit Bharat'

Mumbai (Maharashtra) [India], August 25 : For India to meet its 'Viksit Bharat' targets, banking assets need to grow at 3.0-3.5 percentage points faster than its nominal GDP, according to a report by Boston Consulting Group (BCG) in association with FICCI and Indian Banks' Association.

The report emphasises that India is at a critical inflection point in its development trajectory, where the next two decades could transform today's momentum into sustained global leadership.

The growth of India's banking assets has been in tandem with its nominal GDP growth over the last 15 years, with the ratio of banking assets to nominal GDP hovering around 0.9x. The drive to Viksit Bharat requires a multiplier of 1.5x, it asserted.

Viksit Bharat goals will hinge on the evolution of a robust, innovative, and resilient banking and financial sector, capable of supporting India's aspirations for sustainable, inclusive growth, the report said.

"Currently, economies and their banking sector operate in a complex, multipolar world with volatile trade flows, shifting supply chains and geopolitical risks. The combined disruption of AI/ GenAI and shifting consumer expectations is unfolding at a scale never seen in the last few decades," the report said.

The Indian banking industry is poised to reach for leadership - it is profitable, well capitalized and highly valued.

For India to achieve its long-term Viksit Bharat ambitions, the report further suggested that the corporate sector will play a key role. Banks must re-engage in corporate credit, especially in infrastructure, manufacturing, and renewables that will define the nation's future.

"The ability of our banking system to fund growth while safeguarding stability will be central to India's journey toward a Viksit Bharat," said Jyoti Vyij, Director General, FICCI.

AI/ GenAI promises transformational capabilities for Indian banking sector. With mature deployment, 35-40 per cent of current low value activities can be automated, the report said.

CS Setty, Chairman of Indian Banks' Association, said, "India's Digital Public Infrastructure has revolutionized access through Aadhaar, UPI, and Jan Dhan, and the next frontier lies in DPI 2.0 platforms like Account Aggregator and Unified Lending Interface (ULI). To unlock their full potential, banks must go beyond transactions and deliver seamless, end-to-end digital experiences to the customers that combine trust, simplicity, and omni-channel support leveraging GenAI as well. By doing so, banks can deepen inclusion, strengthen customer relationships, and create a truly world-class digital banking ecosystem."

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