India needs more global sized banks to achieve 5 trillion economy: K.V. Subramanian, the Chief Economic Adviser, on Sunday said that India needs more global sized banks in order to achieve $5 trillion economy by 2024-25.
The country’s banking system is smaller when compared with the size of the economy that India wants.
Subramanian is sad about the fact that only one Indian bank represents India in the top 100 global bank list while other countries, much smaller in size than India, have more such banks.
State Bank of India (SBI), the only Indian bank, is at the 55th position in the top 100 global bank list. Other countries like China has 18 banks on the list while the U.S. has 12 on the list.
Explaining his thoughts, K.V. Subramanian said: “India is the fifth-largest economy in the world. So, if the Indian banking sector was proportional to the size of its economy, India should have been where South Korea is, which has six banks in the global top hundred. But in contrast, India has only one bank in the global top hundred.”
Other countries which are much smaller in size than India like Austria, Belgium, Denmark, Finland, Norway holds at least one bank in the top 100 global bank list. While Sweden and Singapore have three banks on the global list.
Subramanian connected the Indian banking system with cricketer M.S. Dhoni by saying “like cricketer M.S. Dhoni who had shown the country how to win in the foreign shores, the Indian banking system also needs to scale up to global standards.”
Besides an increase in the number of global banks Subramanian also said India needs more banks. He compared the number of banks in India with that of the U.S. He said the U.S. is one-third of India in terms of population but it has 20 times more banks than India.
More banks in the economy will increase competition in the system. Thus, the consumer’s cost will be cut down, he added.