Reserve Bank of India (RBI) deputy governor M. Rajeshwar Rao, at the 31st annual management convention of Thrissur Management Association today, said amid the challenges and uncertainties prevailing over the past three years, Indian economy and financial system has shown "remarkable resilience and strength".
He said banks must continue to innovate and adapt to changing times to meet the evolving needs of the economy. "Despite the downward revision, the growth estimate for FY23 for India is higher than for almost all major economies," he said.
IMF estimates India to be one of the top two fast-growing significant economies in 2022, said the RBI deputy governor. "Despite protracted global headwinds and tighter monetary conditions, India is still expected to display healthy growth and it is a testament to India’s underlying economic resilience and of our ability to recoup, renew and re-energise the growth drivers of the economy."
The first advance estimates, released by the National Statistical Office (NSO) on January 6, 2023, placed India’s real gross domestic product (GDP) growth at 7% year-on-year (y-o-y) for 2022-23, driven by private consumption and investment.
"The government has continued on the path of fiscal consolidation in the Union Budget 2023-24 by reprioritising expenditure mix. The fiscal deficit is estimated to be 6.4% for the current fiscal and is likely to fall to 5.9% in the next fiscal. Tax revenues have remained buoyant with monthly GST collections crossing ₹1.5 lakh crore in January 2023," says Rao.
This, he said, makes India the fastest-growing economy in the world and today, it is referred to as a ‘bright spot on a dark horizon’. "Banking services have been made accessible to every village within a 5 km radius in 25 states and 7 Union Territories covering 99.94 per cent of villages. This has been supplemented by a few important developments which got a fillip during covid. The first noteworthy development is the increasing use of technology in finance."
The second important development was the emergence of new partnerships between fintech companies and banks. "Banks are seen leveraging technological partnerships with FinTechs in various ways to provide better products and better serve their customers. In this partnership, FinTechs can contribute their technology expertise, while banks bring their domain expertise."
He said the third important development was the reinforcement of our focus regarding the importance of inclusiveness. "India’s payment systems are among the best in the world with our real-time fast retail payment system, UPI, enabling transactions of about ₹12 lakh crore per month in value and almost 26 crore transactions in daily volume." He also said that the fourth development post-pandemic is a reminder to the regulators, to keep financial stability as the prime point of focus.
On future challenges and opportunities, Rao said the huge gap in the availability and utilisation of financial services between urban and rural India is one such challenge. Compliance with applicable regulations and ensuring customer-centricity are two non-negotiable principles for entities functioning in the financial sector and the same must flow from the top, he said.