India’s ambition of becoming a developed economy will require a larger and more robust financial sector, with consolidation across banking and non-banking segments emerging as a key priority, said M Rajeshwar Rao, former deputy governor (DG) at the Reserve Bank of India (RBI).
Rao said the scale of economic expansion envisaged, targeting an economy of around $30 trillion, would necessitate a commensurate, if not faster, expansion in the financial sector. This, in turn, calls for larger institutions with stronger balance sheets, greater capital, and the ability to deploy technology at scale.
Speaking at a conference organised by Assocham, he said: “We need players with heft, and for this, besides the access to growth capital, the option of consolidation in the financial services industry will also have to come into play. To my mind, in the financial services game, consolidation will be a challenge which needs to be addressed up front in the times to come. As I said, size will matter in the financial services sector in the coming years.”
