Economic Survey 2024: Banks and Financial Sector Play a Stellar Role
The Economic Survey for 2024 highlights the stellar performance of India’s banking and financial sectors in mobilizing funds to fuel economic growth and drive financial inclusion.
According to the survey, double-digit and broad-based growth in bank credit, coupled with gross and net non-performing assets (NPAs) at multi-year lows, underscores the government’s commitment to maintaining a healthy and stable banking sector. "Improvement in bank asset quality reflects the successful implementation of policies aimed at strengthening the sector", the survey notes.
Primary capital markets have played a crucial role, facilitating capital formation amounting to Rs 10.9 lakh crore during FY24, approximately 29% of the gross fixed capital formation of private and public corporates during FY23.
The survey also highlights a significant surge in the market capitalization of the Indian stock market, with the market capitalization to GDP ratio now the fifth-largest in the world. This growth showcases the robustness of India's financial markets.
The strategy for financial inclusion has been comprehensive, focusing on a target-based approach, market development, infrastructure strengthening, innovation, technology, last-mile delivery, consumer protection, and financial literacy. The survey emphasizes the increased use of accounts for direct benefit transfer (DBT) flows and the promotion of digital payments through RuPay cards and UPI.
Despite these achievements, the survey cautions that commercial banks and insurance companies must balance their market penetration efforts with the need to address financial literacy, avoid over-lending, and prevent mis-selling. Addressing grievances is essential to maintaining a healthy financial cycle.
As India’s financial sector undergoes a critical transformation, the survey stresses the need for vigilance against potential vulnerabilities, whether global or local. The government and regulators must remain agile and ready to intervene with policy and regulatory measures as required.
