At the ‘FIBAC 2024’ event, jointly organized by the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Indian Banks’ Association (IBA), M. Nagaraju, Secretary of the Department of Financial Services, Ministry of Finance, highlighted the critical role of India’s banking sector in achieving the government’s vision of a “Viksit Bharat 2047” — a developed India by 2047.
Nagaraju noted that India’s robust banking system is preparing to support this ambitious goal. He emphasized the need for commitment and belief in the potential and talent of the Indian people, as outlined in the Union Budget, which focuses on empowering women, youth, and farmers.
He pointed out that banks remain the primary source of funding for India’s economy, playing a crucial role in promoting inclusive growth. The government has implemented schemes such as the Pradhan Mantri Jan Dhan Yojana (PMJDY) to include all segments of society in the economic growth process. He also highlighted the importance of extending financial services to underserved populations, supporting small and medium-sized enterprises (MSMEs), and facilitating key initiatives in areas like healthcare.
Nagaraju observed the diminishing distinction between the traditional financial sector and the fintech industry and encouraged banks to leverage fintech innovations to reach underserved areas.
He highlighted the success of the “India Stack” — a set of digital public goods aimed at making India’s financial ecosystem more inclusive — but also urged caution regarding cybersecurity threats. He advised banks to strengthen their systems to mitigate operational risks.
Reflecting on the changes since India’s economic liberalization in 1991, he noted that digital infrastructure has helped bridge divides and connect people. However, a significant portion of the population remains in the middle- and low-income brackets. With aspirations rising due to increased connectivity, he emphasized that the banking sector is fundamental to achieving the 2047 goals.
He urged banks to build robust credit systems and create a strong foundation for growth, ensuring that all sectors receive adequate capital and infrastructure development. Nagaraju particularly focused on the MSME sector, noting that while there are about 40 million registered MSMEs in India, only 40% are part of the formal financial system. He suggested that increasing this to 80% would have a substantial impact.
He also stressed the need to educate young people about entrepreneurship early on to sustain the startup ecosystem. Encouraging banks to support the younger generation, he noted the importance of fostering dreams and ambitions among the youth.
Nagaraju also called for greater focus on green financing and urged all sectors to consider climate change when building their portfolios. He reiterated the importance of empowering small and medium-sized enterprises (SMEs), given their significant role in employment.