Page 55 - Banking Finance April 2025

ARTICLE

New Age Risks in

2025: Bumpy Road

Ahead for Indian

Master Abhishek
Banking Sector Union Bank Knowledge Centre
Chief Manager - Faculty

Bengaluru

India's banking sector, one of the fastest-growing in the world, is witnessing rapid changes driven
by technology, regulatory reforms, evolving customer demands, fintech fuel etc. As per the Reserve
Bank of India (RBI) Annual Report 2024, India's banking sector is sufficiently capitalised and well-
regulated. The financial and economic conditions in the country are far superior to any other country
in the world.

I ndia's banking sector, one of the fastest-growing in the hanced India's financial inclusion significantly and helped fuel
the credit growth in the country.
world, is witnessing rapid changes driven by technol-
ogy, regulatory reforms, evolving customer demands,
fintech fuel etc. As per the Reserve Bank of India (RBI) However, with the growth comes the risk. These advance-
Annual Report 2024, India's banking sector is sufficiently ments bring a new set of challenges and risks that must be
capitalised and well-regulated. The financial and economic addressed to ensure resilience and sustainable growth.
conditions in the country are far superior to any other coun-
try in the world. The studies related to three major risks; In this article, we will be glancing through the new age
credit, market and liquidity; suggest that Indian banks are threats which will welcome Indian Banks in the new year
generally resilient and have sufficiently withstood the glo- 2025.
bal downturn well as we have seen GFC 2007-2008,
COVID19 etc. Macroeconomic Uncertainty
India's banking sector is closely tied to the broader
The banking sector has recently witnessed the rollout of economy, which remains susceptible to global shocks and
innovative banking models like payments, small finance domestic challenges. In Q2-FY2025, India's GDP growth
banks, neo banks etc. Government of India; through vari- slowed to 5.4% due to various factors. Further, Addition-
ous government-initiated schemes like Pradhan Mantri Jan ally, the high burden of non-performing assets (NPAs), which
Dhan Yojana, PMJJBY, PMSBY etc.; is pressing very hard to stood at 5.3% of gross advances in March 2024, continues
make banking easily available to common public and under- to strain the sector.
privileged strata of the country. Schemes like these coupled
with major banking sector reforms like digital payments, Global events like the ongoing Ukraine-Russia war, escalat-
neo-banking, a rise of Indian NBFCs and fintech; have en- ing China trade war, and Israel's regional conflict have dis-

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