RBI Deputy Governor M. Rajeshwar Rao claims that the Indian financial system is stronger than it has ever been and that the nation’s economy is an anomaly that is expanding consistently despite significant challenges to the global financial system.
“India’s real GDP growth in 2023–24 soared to its highest since 2016–17, exceeding estimates if we omit the post–COVID rebound in 2021–22. During this time, the growth trajectory changed from an average of 7% before 2020 to an average of 8% or more during the following period, mostly due to domestic reasons.
According to current forecasts, inflation will average 4.1% in 2025–2026 and 4.5% in 2024–2025, the speaker stated in a recent speech at the J P Morgan India Leadership Series Lecture.
Therefore, he continued, “these macroeconomic conditions could strengthen the investment climate, improve consumption conditions, enhance external competitiveness, and lay the foundation for sustainable future growth.”
He noted that strong macroeconomic fundamentals and business confidence have enabled the Indian banking sector, in particular, to show notable progress in important indicators including capital adequacy, asset quality, and profitability. Credit expansion has been steadily increasing, mostly due to loans to the services sector and personal loans.
The nation’s banks have demonstrated excellent performance across a number of metrics by achieving a multi-year low in their gross non-performing assets (GNPA) ratio of 2.8% and net non-performing assets (NNPA) ratio of 0.6%. As of March 31, 2024, banks’ Return on Equity (RoE) was 13.3% and Return on Assets (RoA) was 13.8%, indicating that they were still profitable.
As of the end of March 2024, non-banking financial businesses (NBFCs) as a whole likewise maintained strong health metrics, he noted, with a CRAR of 26.6%, GNPA ratio of 4.0%, and RoA of 3.3%.
Additionally, Rao emphasized that India has demonstrated a resolute dedication to this cause, as seen by its attainment of the highest climate change performance index (CCPI) score among G20 nations in 2024.
