New Delhi: In a report by the Reserve Bank of India (RBI), India’s banking sector is deemed well-capitalized and meticulously regulated, surpassing global counterparts in financial and economic conditions. The study affirms the resilience of Indian banks amid global challenges.

The Indian banking landscape has witnessed pioneering models such as payments and small finance banks. Initiatives like Pradhan Mantri Jan Dhan Yojana and Post Payment Banks have extended the sector’s reach, while digital reforms, neo-banking, and fintech innovations bolster financial inclusion.

India’s Fintech industry, estimated to reach US$ 150 billion by 2025, boasts the world’s third-largest fintech ecosystem. The nation, a frontrunner in Fintech growth, hosts over 2,000 DPIIT-recognized Fintech businesses.

With a robust digital payments system, India leads the way, achieving the highest level in the Faster Payments Innovation Index. The Unified Payments Interface (UPI) has revolutionized real-time payments, aiming for global prominence.

As of March 2023, India’s banking system comprises 12 public sector banks, 22 private sector banks, 46 foreign banks, and a vast network of cooperative institutions, with the total number of ATMs reaching 14, 74,548.

The digital lending market in India has witnessed a remarkable CAGR of 39.5% over a decade, reflecting the dynamic growth in the sector.

In a significant development, Hitachi Payment Services launched India’s first UPI-ATM in September 2023, marking a milestone in banking technology. Government initiatives, including PMJDY, and collaborations like IREDA’s partnership with banks for renewable energy projects, underscore India’s commitment to financial inclusion and sustainability.

The Union Budget 2023-24 emphasizes the rapid growth of digital banking, payments, and fintech innovations. Proposals include setting up 75 Digital Banking Units and exploring the introduction of a digital rupee, a Central Bank Digital Currency (CBDC), using blockchain technology.

Looking ahead, increased infrastructure spending, project implementation speed, and ongoing reforms are expected to propel the banking sector’s growth. The fusion of technology with banking services is enhancing customer experiences, positioning India for continued banking sector expansion.

Fintech and microfinancing have seen a surge, with digital lending estimated to reach US$ 1 trillion by FY23. The Indian fintech market, attracting substantial funding, is projected to reach Rs. 6.2 trillion (US$ 83.48 billion) by 2025, reflecting the nation’s vibrant and evolving financial landscape.

References for this story have been taken from: Reserve Bank of India, Press Information Bureau, www.pmjdy.gov.in and Union Budget 2023-24.