KOLKATA: Indian banking sector is going through challenging times, characterized by low credit, impairment of assets and low profitability, RBI deputy governor H R Khan said on Sunday.

"The last two years had been challenging for the banking sector. Low credit growth, impairment of asset quality and lower profitability were the main issues," Khan said at the inauguration of Bandhan Bank here.

He said return on equity and assets were falling while bad loans were rising.

"On top of that,Indian banks are to meet the global capital requirements. The government's Rs 75,000 crore capital infusion program will help towards that," he said.

Khan said that the banking space would become more competitive adding that RBI will give licence to small finance banks later next month.

RBI last week awarded in-principle approval to 11 entities to launch Payments Banks within 18 months.

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