India’s banking sector has made significant progress, but sustaining the country’s next phase of economic growth will require certain reforms. The return on equity of India’s banks rose from just 0.78 per cent in FY20 to over 14 per cent in FY25. Bad loans fell from 8.21 per cent to 2.21 per cent, the lowest in decades.
As such, RBI and the banks have done a remarkable job of keeping the sector in good health. However, the present scenario warrants a shift in gears. The big question is how soon the sector can enable our goal of becoming a $7 trillion+ economy. There is scope to strengthen the sector further for the next phase of growth.
