Speaking about the banking situation in the country, Subramanian said the Insolvency and Bankruptcy Code (IBC) is a major achievement and resolution is beginning to happen in a way that never happened before.
Chief Economic Adviser Arvind Subramanian has said that India should have more private sector lenders but fewer banks in all.
In an interview to Times of India, Subramanian said that a healthy system is where the country has 3-5 public sector banks, 3-4 private sector banks and one or two foreign banks.
Speaking about the situation of banks in the country, Subramanian said the Insolvency and Bankruptcy Code (IBC) has been a major positive and cases of stressed assets started getting resolved like never before.
While the government is investing a lot of money in recapitalising these lenders, more reforms are required to improve governance in both weak and strong banks and to increase private sector participation, he said.
The Chief Economic Adviser will get back to research and academics again in the US in September this year, leaving behind a rich policy footprint in areas of taxation, banking, and financial inclusion, among others.
Subramanian said the Reserve Bank of India (RBI) did the right thing by increasing interest rates as inflation has edged upward, oil prices are higher and the external environment is tricky.On GST, Subramanian said a three-tier structure under Goods and Services Tax (GST) is possible while a single-rate tax system is not.