India needs more global-scale banks for 2047 vision: DFS Secy M Nagaraju

Large banks also play a crucial role in the stability & growth of the global economy, with the resources & expertise to absorb shocks & manage risks better, ensuring stability in the financial system

India needs more global-scale banks with a robust financial, talent, and technological profile to fund large-scale projects, generate employment, and help realise the aim of Viksit Bharat by 2047, said M Nagaraju, secretary, Department of Financial Services.

 

“We need multiple globally competitive large banks with a presence across the globe, facilitating access to global funds, top talent, and technical expertise. Currently, only two Indian banks — State Bank of India and HDFC Bank — feature in the top 100 global banks by total assets. This is not enough compared to banks from China and the US, which dominate the top 10 global bank lists,” he said while delivering the 14th RK Talwar Memorial Lecture in the city. The lecture was organised by the Indian Institute of Banking & Finance.

 

The secretary in the Union finance ministry said current banking conglomerates need to expand their origin, extend operations into global financial hubs, and utilise green bonds, sustainability-linked loans, and foreign debt markets to fund domestic trade expansion. This size and scale would enable these transformed banks to go global and fund large projects spanning infrastructure and manufacturing, which would entail setting up peripheral industries and projects, thereby catalysing job creation and urbanisation.

 

Large banks also play a crucial role in the stability and growth of the global economy, with the resources and expertise to absorb shocks and manage risks better, ensuring stability in the financial system. From an innovation perspective, they are preferred as they invest in financial technologies, promoting innovation that leads to more efficient and accessible financial services. Moreover, large banks ensure that both businesses and individuals have access to reliable and efficient financial services as information costs for banks decline, making them more efficient, Nagaraju added.

 

“Our aspirations for Viksit Bharat 2047 aim to increase India’s gross domestic product (GDP) to $30 trillion from the current $3.89 trillion and raise per capita income to $18,000–20,000 by 2047 from the current $2,700,” the secretary said.

 

The goal is also to increase credit as a percentage of GDP to 130 per cent from the current 56 per cent and achieve 100 per cent financial literacy by 2047, he added.

 

Referring to the enabling environment and capacities for banks, he said that given the importance of the banking system in supporting economic growth, the constraints the sector faces need to be addressed in time. The foremost constraint for Indian banks is having a strong capital base. Banks would need to raise a sizeable amount of capital to support the country’s economic growth.