India’s financial sector has demonstrated remarkable resilience and growth in the first nine months of the 2024-25 fiscal year, according to the Economic Survey tabled by Union Finance Minister Nirmala Sitharaman in Parliament. The report highlights steady credit expansion, improved asset quality in banks, robust capital markets, and increasing financial inclusion as key drivers of economic progress.
The banking sector has shown strong profitability, with Scheduled Commercial Banks (SCBs) witnessing a decline in gross non-performing assets (GNPAs) to a 12-year low of 2.6 percent by September 2024. Bank deposits continue to grow at a double-digit rate, with aggregate deposits rising by 11.1 percent year-on-year as of November 2024. Credit to micro, small, and medium enterprises (MSMEs) has outpaced lending to large corporations, reflecting a push toward inclusive economic growth. The profitability of banks has also surged, with profit after tax (PAT) increasing by 22.2 percent year-on-year in the first half of FY25.
Rural financial institutions have also experienced positive changes, with regional rural banks (RRBs) improving their asset quality. The net non-performing assets (NPAs) of these banks have declined from 3.2 percent in FY23 to 2.4 percent in FY24, while their credit-to-deposit ratio has increased from 67.5 percent to 71.2 percent over the same period. The consolidated net profit of RRBs rose significantly from ₹4,974 crore in FY23 to ₹7,571 crore in FY24, indicating healthier financial performance in rural banking.
The Reserve Bank of India (RBI) has maintained a balanced approach to monetary policy, keeping the policy repo rate steady at 6.5 percent throughout the year. This decision has helped ensure price stability while supporting sustainable economic growth. The liquidity situation remained comfortable, with system liquidity in surplus during October-November 2024.
Financial inclusion efforts continue to yield results, with the RBI’s Financial Inclusion Index rising from 53.9 in March 2021 to 64.2 in March 2024. Development Financial Institutions (DFIs) have played a critical role in infrastructure financing, contributing to long-term economic development. The expansion of digital financial services and targeted government policies have further improved financial accessibility, particularly in rural areas.
India’s capital markets have also performed well, driven by strong corporate earnings, institutional investments, and growing investor participation. The number of investors in capital markets has more than doubled in four years, rising from 4.9 crore in FY20 to 13.2 crore by the end of 2024. The total resource mobilization from equity and debt markets reached ₹11.1 lakh crore from April to December 2024, reflecting a 5 percent increase over the previous year. India has also emerged as a global leader in initial public offerings (IPOs), with its share in worldwide listings rising from 17 percent in 2023 to 30 percent in 2024.
The insurance and pension sectors continue to expand, with total insurance premiums growing by 7.7 percent in FY24 to reach ₹11.2 lakh crore. However, insurance penetration remains at 3.7 percent, below the global average of 7 percent, highlighting significant room for growth. The pension sector has also seen substantial progress, with total subscribers under the National Pension System (NPS) and Atal Pension Yojana (APY) reaching 783.4 lakh by September 2024, marking a 16 percent year-on-year increase.
The Economic Survey also underscores the success of the Insolvency and Bankruptcy Code (IBC), which has strengthened the financial sector by resolving distressed assets and reducing NPAs. Out of the 12 large accounts referred by the RBI for resolution, 10 have been successfully addressed. Since its implementation, 28,818 cases involving defaults worth ₹10.2 lakh crore have been withdrawn before admission, demonstrating the effectiveness of the IBC framework.
The role of independent regulatory bodies (IRBs) such as RBI, SEBI, IRDAI, and PFRDA remains crucial in ensuring financial stability and fostering growth. These institutions maintain regulatory oversight while adapting to emerging trends, including financial technology innovations like UPI, Open Credit Enablement Network (OCEN), and faster settlement cycles.
Cybersecurity has become a key focus area as digital financial services expand. India’s ranking in the Global Cybersecurity Index (GCI) 2024 reflects its strong position, with a score of 98.49 out of 100, placing it among the world’s top nations in cybersecurity preparedness. Strengthening cyber resilience is now a priority, ensuring that financial digitalization does not compromise system security.
Overall, the Economic Survey paints a positive picture of India’s financial sector, highlighting sustained growth, improved regulatory frameworks, and expanding investor participation. As digital innovation and financial inclusion continue to shape the sector, India is poised to strengthen its position as a global economic powerhouse.
