The country needs to double credit growth to 15 per cent to become a USD 5 trillion economy by 2024-25, say bankers. The country has recorded high double-digit credit growth in the past and is capable of achieving similar growth now as well, they added.
"If you want to reach a USD 5 trillion economy, the outstanding credit, which is around Rs 95-98 trillion, it will have to be doubled, which means we need to grow (credit) at around 15 per cent," State Bank of India's Chairman Rajnish Kumar said at an IBA event.
Echoing his views, Union Bank of India's Managing Director and CEO Rajkiran Rai G said for a USD 5 trillion economy, credit growth has to be more than 15 per cent per annum.
"To sustain that kind of credit growth, we need to build a robust risk management system so that we don't repeat the mistakes of past. The sourcing, process, monitoring have to be evolved and technology will play a major role in it," Rai said.
Banks' credit growth has been hovering at around 7 per cent, currently.
Prime Minister Narendra Modi on Thursday underlined the need for working together to make India a USD 5 trillion economy, while stressing that the government has been able to maintain macroeconomic stability amid tough global environment.
"Let's move ahead with the resolve to make India a USD 5 trillion economy," he said while replying to a debate on Motion of Thanks to President for his address to Parliament.
Kumar said one important sector where India needs huge amount of investments is infrastructure.
He said globally the norms around capital are getting tighter.
"There is demand for providing more for the risk, which restricts capital for growth," he said.
Kumar said the country needs huge capabilities in project financing.
To enhance its project financing capabilities, SBI has done a lot of policy modification. He said the Indian Banks' Association (IBA) is also working on resolving issues surrounding consortium lending.