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The Economic Survey released on Monday states that India’s banking and financial sectors have displayed a stellar performance in FY24 in mobilising funds to fuel economic growth with financial inclusion. 

“Double-digit and broad-based growth in bank credit, gross and net non-performing assets at multi-year lows, and improvement in bank asset quality highlight the government’s commitment to a healthy and stable banking sector,” according to the survey.

It points out that primary capital markets facilitated capital formation to the tune of Rs.10.9 lakh crore during FY24 (approximately 29 per cent of the gross fixed capital formation of private and public corporates during FY23).

The survey highlights that the market capitalisation of the Indian stock market has seen a remarkable surge, with the market capitalisation to GDP ratio being the fifth-largest in the world.

The strategy for financial inclusion has been a target-based approach, market development, strengthening infrastructure, innovation, and technology, last-mile delivery, consumer protection and financial literacy and awareness, it adds.

It points out that the financial inclusion strategy in the country has placed emphasis on the usage of accounts by enhancing direct benefit transfer flows through these accounts, promoting digital payments using RuPay cards, UPI etc.

However, at the same time it points out that commercial banks and insurance companies, even as they aim to achieve greater market penetration, must keep in mind levels of financial literacy in the country, avoid over lending mis-selling and address grievances, such that the financial cycle stays healthy as long as possible.

It also points out that as India’s financial sector undergoes critical transformation, it must brace for likely vulnerabilities originating globally or locally, the government and regulators have to be agile and flexible to intervene with policy and regulatory levers, as required.