India to Emerge as Third Largest Banking Hub by 2040

(From Bernama.com – June 26, 2007)

Banking sector growth in the major emerging economies of the world would outstrip that in the developed nations before 2050 and India is pegged to take the third place as a banking hub after China and the United States by 2040, a report said. The banking sector will grow significantly faster than gross domestic product (GDP) in the E7 group of emerging economies, consisting China, India, Brazil, Russia, Indonesia, Mexico and Turkey, according to a projection by accounting firm PricewaterhouseCoopers. Total profits from domestic banking in the E7 could be around half those in the G7 - US, Japan, Germany, UK, France, Italy and Canada - by 2050 and larger than in the G7 before 2050, the firm said in its report titled "Banking in 2050: How big will the emerging markets get?" India can rise from relatively low levels today to emerge as the third largest domestic banking market in the world by 2040 and in the long run it could grow faster than China, PTI reported Wednesday quoting the report, as saying here. "While China will continue to grow somewhat faster than India over the next 5 to 10 years but, after that, Chinese growth will be held back by its rapidly ageing population and diminishing returns to its investment-led strategy," PwC Executive Director Jairaj Purandare said. The new report also forecasts that the domestic credit in India would grow to US$ 23 trillion (US$1=RM3.45) in 2050 from US$ 0.4 trillion in 2004, driven by growing middle class in cities and private banks gaining market share in the state run dominant industry. The report examines the possible changes in the scale of the banking sector till 2050 and highlights the pace of change along with challenges for banks world over.