The Indian banking sector is certainly going through a tough time but concerns that it is stuck in a logjam are unfounded, according to NITI Aayog Vice Chairman Rajiv Kumar.
“The banking sector has already started giving out money,” Kumar told BloombergQuint in an interaction. “Credit growth to industry and non-food growth has started growing. So the fear that the banking sector has been caught in a logjam or frozen, I think that's not there.”
Both public and private sector banks should check their governance, compliance and regulatory frameworks, he said, highlighting the need for looking into the PJ Nayak Committee recommendations once again.
He added that there is “smart growth in certain private sector banks” as retail loans are growing especially for buying trucks, tractors, automobiles and two-wheelers. “The nature of banking credit has changed from being very focused on project lending to retail lending, and going forward to agriculture lending,” Kumar said.
He’s optimistic of hitting double-digit growth by 2022 and an 8.5 percent gross domestic product growth, on average, from 2019-2022. “For the first time the economic system is much more transparent, cleaner and formal,” he said.
Watch the full interaction here.