India's banking sector needs to grow for becoming $5 trillion economy: CEA

CEA Krishnamurthy Subramanian

The government's Chief Economic Adviser K.V. Subramanian on Sunday said that India's banking system is proportionately smaller than the size of the economy and it needs to grow for the country to become a $5 trillion economy.

Giving the Bandhan Bank's Anniversary Lecture, Subramanian said that the reason for the slowdown in the economy which started last year was due to problems in the banking sector, rather than the fallout of demonetisation and GST.

"For the size of its economy, the banking sector in India is very small. In order for India to be a $5 trillion dollar economy, the banking sector needs to be proportionate... at least proportionate to the size of its economy if not bigger than the proportionality," he said.

About the problems in the banking sector, he said that the major issues in the sector are bad loans, risk aversion and corporate lending.

He also emphasised on the use of technology by banks and said that the banks with low IT adoption were more prone to bad loans.

On the crisis brought about by the pandemic, the CEA said: "I feel every crisis is an opportunity. So I see this situation as an opportunity."



(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel