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Banking for a Viksit Bharat

Ruchin Goyal Hardik Shah Deep Narayan Mukherjee Suhail Bhansali Anshuman Upadhyaya Dipayan Chakraborty Ankit Shrivastava Shree Karthikeyan Swesha Venkateshwaran Shobhit Mittal Karan Bhardwaj Nishi Shah

India is taking strides towards becoming a developed nation by the 100th year of independence. The agenda is ambitious – $30 Tn GDP by 2047. The banking sector has a multiplier effect on the economy and will need to be stable, resilient, and achieve sustainable profitability to enable this ambition.
The report, launched in association with FICCI and IBA at the FIBAC 2024 event, outlines that with its strong foundation, the Indian banking industry provides an ideal launchpad for the Viksit Bharat mission. On this path, the industry needs to work on five structural themes.
Households’ behaviors are changing, and they are becoming net borrowers from the banking industry – driving pressure on margins and liquidity. Banks will need to reimagine their value proposition to continue driving sustainable deposit growth. Retail lending has been the crown jewel of the banking industry. However, pockets of high leverage are emerging, and conventional wisdom is being challenged. Data and technology will need to be leveraged further. The formalization of MSMEs and credit expansion is progressing at a massive scale. Lenders have an opportunity to leverage advanced analytics and reimagine MSME lending. If done well, it can become the profit driver for the next decade. Over the past decade, costs have risen faster than income. This has been driven by a rapid increase in technology spending and is expected to continue rising faster. Employee productivity gains have lagged cost increases. Banks will need to completely reimagine operation models. With respect to digital maturity, select Indian banks are in the league of the global best. Overall, banks need to capitalize on the opportunity presented by India's world-class digital public infrastructure. Lastly, banks need to be future-ready and fully embrace future capabilities – Operation & Tech Resilience, ESG, AI & GenAI.
In summary, achieving the Viksit Bharat mission will require sustained momentum in the banking industry. Regulatory and government action will further play a critical role in accelerating these efforts. The banking sector’s success is instrumental in making India a developed nation.