Banks are Indian Economy’s strength: Gurumurthy-Times of IndiaCHENNAI: The core strength of the Indian economy is banks, according to corporate advisor and commentator S Gurumurthy.
"In USA, nearly 55% of the American families hold shares. In India only one per cent of our savings gets into the stock market. Even during the bull run, this moved up to 5%. The strength of the Indian economy is that it is bank driven economy," Gurumurthy said. He was delivering the inaugural address of the Triennial Conference of the Indian Overseas Bank Officers' Association in the city on Saturday.
Dwelling on the biggest fear posed to the banking system worldwide, Gurumurthy said that shadow banking was a huge threat. "In USA, nearly 35% of financial activities are routed through shadow banking and shadow banking is also rising in China," he said.
With Asia generating 75% of the world's savings, importance of the banking and insurance sector cannot be ignored in India, Gurumurthy said. Citing a Golman Sachs report he said that by 2020, 60% of India's savings would be in banks, 24% of savings would be in insurance with Indians putting 14% and 6% of their savings in pension funds and stocks respectively. "The credit led growth led to the collapse of the stock market in 2008," he added.