BFSI sector must lead infra and manufacturing funding, says Shaktikanta Das

At the Business Standard BFSI Insight Summit 2026, Shaktikanta Das called on banks and financial institutions to boost funding for infrastructure, advanced manufacturing, green finance and MSMEs

The banking, financial services and insurance (BFSI) sector must take the lead in financing large infrastructure projects and advanced manufacturing to support India's ambition of becoming a developed economy by 2047, Shaktikanta Das, Principal Secretary-2 to the Prime Minister, said at the Business Standard BFSI Insight Summit 2026.

 

Speaking on the topic ‘The BFSI sector: Securing India’s aspirations’, Das said financial institutions must move beyond conventional corporate lending and focus on long-term capital formation, including funding infrastructure, semiconductors, advanced electronics and defence production.

 

“The BFSI sector has a crucial role to play in this transformative journey through its intermediation in the allocation of financial resources to the productive sectors of the economy,” he said.

 

 

Das outlined six areas where the sector must step up its engagement to support the goal of Viksit Bharat, including infrastructure financing, advanced manufacturing, green finance, credit for micro, small and medium enterprises (MSMEs) and farmers, financial inclusion, and digital public infrastructure.

 

The sector must help meet a significant share of the financing needs of the national infrastructure pipeline through structured consortiums and an expansion of the corporate bond market, he said.

 

Financial institutions must also channel credit towards strategic sectors to accelerate domestic manufacturing in areas such as semiconductors, advanced electronics and defence production, Das added.

 

Green finance, MSME lending among priorities

 

He said the BFSI sector must take a leading role in green and transition finance by supporting digital carbon markets, sovereign green bonds, green hydrogen and renewable energy infrastructure.

 

He also called for bridging credit gaps for smaller businesses and farmers, saying, “The MSMEs and agricultural engines of our economy have to be empowered.”

 

This would require greater use of alternative digital records, including goods and services tax (GST) data and account aggregation, to enable faster, technology-based credit assessments. The full-scale rollout of the Reserve Bank of India's Unified Lending Interface (ULI) could be a game changer in this regard, he said. 

 

India remains resilient amid global uncertainty

 

Das said the BFSI sector had emerged stronger despite successive global shocks, including the Covid-19 pandemic, the war in Ukraine, high global inflation, synchronised monetary policy tightening and the West Asian crisis, which has affected energy and commodity prices.

 

“In this turbulent backdrop, the role of the BFSI sector has become even more crucial for macroeconomic stability and growth,” he said.

 

He said the Indian banking sector had moved beyond a period of high non-performing assets (NPAs) and low capital adequacy to develop healthy balance sheets, strong profitability and rising credit growth. India's gross NPA ratio fell to a multi-decadal low of 1.8 per cent in March 2026, while net NPAs declined to 0.4 per cent, Das said. Banks have also recorded multi-decadal-high capital adequacy levels, while profitability indicators have remained healthy.

 

Non-banking financial companies (NBFCs), which account for around 14 per cent of outstanding credit to the commercial sector, recorded credit growth of 16.6 per cent, mainly driven by retail and services. Their asset quality has also improved across major economic sectors, he added.

 

Das further said India remained among the fastest-growing major economies despite global uncertainty, supported by domestic demand, structural reforms and a large domestic market. The economy grew 7.8 per cent in the first quarter of FY27, while the International Monetary Fund raised its growth forecast for India to 7 per cent for FY27 from 6.4 per cent earlier.

 

He added that India was within striking distance of 8 per cent growth, supported by macroeconomic stability, structural reforms and policy initiatives to build domestic capacity in sectors where the country remains heavily dependent on imports.

 

Stronger corporate balance sheets support credit growth

 

Das said the financial health of companies and households was crucial for economic growth and financial stability. Stronger balance sheets among non-financial companies and financial institutions have helped support India's domestic financial stability.

 

The interest coverage ratio, which measures companies' ability to service debt, rose to 6.5 per cent in the fourth quarter of FY26. Bank credit to industry grew around 20 per cent year-on-year in July 2026, indicating a possible revival in private corporate investment, he said. Sales growth among listed private non-financial companies accelerated to 19.4 per cent year-on-year in the first quarter of FY27, while operating profit margins improved across major sectors, Das said.

 

Household demand has remained a key driver of the economy, with borrowing for consumption and investment expanding at double-digit rates over the past decade. Although household liabilities have risen, net financial worth remained above 90 per cent of GDP. Households have also increased their holdings of equities, retirement funds and small savings, he added.

 

Das said consumption-related household borrowing required careful and consistent monitoring, even as indicators of credit stress had improved compared with the pre-pandemic period.

 

Deeper credit, bond and pension markets needed

 

Das said India's financial architecture must deepen as the country's economic weight in the global economy expands. Strengthening financial institutions' balance sheets, investing in human capital, building buffers, maintaining monetary-fiscal coordination and improving regulatory and supervisory capabilities would remain important.

 

He identified five developmental priorities for the financial sector: expanding the size and scale of credit markets, deepening the corporate bond market, developing municipal bonds, achieving insurance for all by 2047, and building a pensionable society through asset-backed pension schemes.