The Economic Survey 2024-25 highlights India’s monetary and financial sector developments, showcasing strong banking performance, financial inclusion progress, capital market resilience, and policy reforms that are shaping India’s economic trajectory. As businesses and investors navigate the evolving financial landscape, it is crucial to understand key trends, emerging risks, and opportunities in India’s monetary and financial sectors.
1. Strengthening Banking and Credit Growth
- Banking sector profitability has improved as gross non-performing assets (GNPAs) fell to a 12-year low of 2.6% (September 2024).
- Capital adequacy of banks is strong, with the capital-to-risk weighted asset ratio (CRAR) at 16.7%.
- Bank credit is growing steadily, aligning with deposit growth, ensuring healthy liquidity.
- Digital financial inclusion has expanded, with the Financial Inclusion Index rising from 53.9 (2021) to 64.2 (2024).
Banking Sector Performance
| Year | GNPA (%) | CRAR (%) |
| FY18 | 11.2 | 12.9 |
| FY19 | 9.1 | 13.3 |
| FY20 | 8.2 | 13.7 |
| FY21 | 7.3 | 13.9 |
| FY22 | 5.8 | 14.3 |
| FY23 | 3.9 | 14.8 |
| FY24 | 2.6 | 16.7 |
2. Capital Markets – Resilience & Growth
- Indian stock markets reached record highs, outperforming many emerging markets despite global uncertainties.
- IPO activity surged, with the number of IPOs increasing sixfold between FY13 and FY24.
- Equity-based financing is rising, attracting new retail and institutional investors.
- The bond market remains underdeveloped, with 97% of corporate bonds concentrated in AAA-AA rated instruments.
Capital Market Performance
| Year | IPO Count | IPO Fund Raised (₹ Cr) |
| FY20 | 85 | 45,000 |
| FY21 | 110 | 75,000 |
| FY22 | 145 | 95,000 |
| FY23 | 196 | 1,53,987 |
| FY24 | 259 | 2,10,500 |
3. Monetary Policy & Inflation Control
- The Reserve Bank of India (RBI) maintained the repo rate at 6.5% for most of 2024, before shifting its stance to “neutral” in October 2024.
- Inflation was moderated by controlled money supply, with M3 money supply growth slowing to 9.3% in 2024 from 11% in 2023.
- CRR was reduced from 4.5% to 4% in December 2024, injecting ₹1.16 lakh crore liquidity into the banking system.
Money Supply Growth
| Year | M3 Growth (%) | M0 Growth (%) |
| FY20 | 10.3 | 5.2 |
| FY21 | 11.8 | 6.5 |
| FY22 | 9.6 | 7.1 |
| FY23 | 11.0 | 6.3 |
| FY24 | 9.3 | 3.6 |
4. Financial Inclusion & Rural Credit Expansion
- Rural Financial Institutions (RFIs) and Regional Rural Banks (RRBs) have expanded access to credit for small businesses.
- Government recapitalization efforts (₹10,890 crore) boosted RRB performance, reducing gross NPAs from 7.3% (FY23) to 6.1% (FY24).
- Credit-to-deposit ratio increased to 71.2%, reflecting strong rural credit expansion.
5. Digitalization & AI in Banking
- Banks are integrating Artificial Intelligence (AI) and Machine Learning (ML) for risk assessment, fraud detection, and customer services.
- RBI is working on AI regulations to balance efficiency with data security and transparency.
- The banking sector is exploring blockchain for secure transactions and automated credit underwriting.
6. Regulatory Developments in the Financial Sector
- The RBI increased capital requirements for unsecured lending and NBFCs, tightening regulations on consumer loans and credit cards.
- Foreign Currency Non-Resident (FCNR) deposit interest rates were revised, allowing banks to attract more foreign inflows.
- The Insolvency and Bankruptcy Code (IBC) 2016 continues to streamline debt resolutions, reducing corporate debt stress.
7. Infrastructure & Development Finance
- Development Financial Institutions (DFIs) like NaBFID and IIFCL are financing long-term infrastructure projects.
- NaBFID sanctioned ₹1.3 lakh crore in loans, primarily for renewable energy, roads, and ports.
- IIFCL has co-financed 780+ infrastructure projects, including highways and power plants.
Final Thoughts
The Economic Survey 2024-25 paints a positive picture of India’s monetary and financial sector, with strong credit growth, financial inclusion, capital market expansion, and infrastructure financing. Businesses must align their strategies with emerging trends in digital finance, AI-driven banking, and sustainable credit growth to stay competitive in India’s evolving financial ecosystem.
What strategies are you implementing to navigate India’s financial landscape in 2024-25? Share your insights in the comments! 🚀📈
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Published on: January 31, 2025