Some NBFCs could convert into banks to support GDP growth: DFS Secy

Core Insights - India aims to become a developed country by 2047, necessitating the extension of more bank licenses to non-banking finance companies (NBFCs) and universal bank licenses for small finance banks (SFBs) [1] - The transition to digital credit offtake is expected to be significant by 2047, highlighting the need for new banks to cater to diverse segments and industries [2] - Compliance standards must be prioritized by lenders as they grow larger in size, with NBFCs and SFBs being potential sources for new banks [3] Regulatory Environment - Indian NBFCs operate under different regulatory standards compared to banks, with many large NBFCs being run by major corporate groups, such as Bajaj Finance and Tata Capital [4] - The Reserve Bank of India restricts corporate groups from owning bank licenses due to conflict of interest concerns, and many large NBFCs do not possess deposit-accepting licenses [4] Economic Goals - To achieve the vision of Vikasit Bharat by 2047, India's GDP must expand to $30 trillion, with per capita income increasing to $20,000-$22,000 [5] - Banks are required to grow credit at an average annual rate of 13%, while GDP must grow by 9.3% each fiscal year to meet these economic targets [5] - There is a need for banks to focus on providing loans for agriculture, micro, small and medium enterprises, and education to support GDP and per capita income growth [5]