Mumbai, Jun 6: India is poised to become the third largest domestic banking sector by 2050 after China and the US, a survey by a leading global accounting and consultancy firm, said
China could overtake the US in terms of the size of their domestic banking sector around 2023, while India's rate of growth, by contrast is expected to overtake that of China's in the long run, as it has more catch-up potential and its working-age population growth will be much stronger in the long-term, the survey by PriceWaterHouse Coopers said.
The combined domestic banking assets of the 'E7' emerging economies of China, India, Brazil, Russia, Mexico, Indonesia and Turkey will exceed those in the G7 countries like USA, Japan, Germany, the UK, France, Italy and Canada, sooner than predicted before the financial crisis, the survey said.
These emerging economies' banking sectors are expected to outgrow those of the developed economies by an even greater margin than PwC had originally projected before the financial crisis. As per PwC's latest survey, by 2050, E7 countries could have domestic banking assets and profits exceeding those of G7 countries by around 50 per cent.
"China and India could have a combined share of around 35 per cent of global banking assets by 2050. The US, Japan and Western Europe are all projected to see large falls in their share of global banking assets in the coming decades," PwC's leader for banking industry, Harsh Bisht said.
India's share of global GDP in US dollar terms could increase from only two per cent in 2009 to around 13 per cent in 2050 after allowing also for potential real exchange rate increases. This makes it one of the most rapidly growing economies over this time period.
"A fundamental shift in the geography of the world economies will take place during the working lifetime of those at the start of their career with huge implications for job creation, language learning and financial systems. The GDP of the E7 countries is currently well behind that of their G7 counterparts but we'll see them at level pegging within the next two decades and well ahead within the next four," PwC's chief economist, John Hawksworth, said.
"In the banking world, this shift is happening even faster than anticipated and appears to have been accelerated by the financial crisis as emerging market banks have been relatively shielded from the effects of declining asset values. We could now be talking about global banking assets quadrupling to around USD 300-trillion by 2050, with banks around the world fighting for a share," he said. PTI