According to estimates of the International Monetary Fund (IMF), global GDP is expected to decelerate from 5.0 per cent in 2007 to 4.1 per cent in 2008 and further to 3.9 per cent in 20091.In the face of slowing down of the global economy in 2007-08, India and China remained the main drivers of global growth backed by strong productivity gains and progressive integration into the global economy. The Indian banking sector is growing at a fast pace, outperforming the Indian economy with a CAGR of 7% from 2000 to 2008. The total assets of the scheduled commercial banks has increased by 25% from Rs. 3,459,946 crore in 2007 to Rs. 4,326,469 crore during 2008, while the deposits collected by the banks during the same period has increased by 23%. According to the sources of Economist Intelligence of India, deposits as a percentage of GDP is expected to grow from the estimate of 62.5% in 2004 to 82.7% during 2013, at the same time, the total financial assets as a percentage of GDP are expected to grow from 365.8% to 563.1% during the same period. According to a study conducted by FICCI, the penetration of banking services stands at 35% in India, which is much lesser than other countries. Thus, with the background of lower penetration level when compared to other developing/developed nations, India has a significant potential for improvement given the vibrant economy.
Banking & Financial system of the country plays a substantial role in promoting the long term growth of the economy. The major segments of the Industry are Banking, Insurance and Mutual Funds. Banking and Insurance sector contributed 6% of GDP during the year ended 2008. Sector's contribution to GDP during the period 2001 to 2008 has grown at a CAGR of 11.5% in real terms.