A lead indicator is the sizeable expansion already underway in domestic bank lending to households and small and medium industrial and service enterprises which are poised to emerge as the new growth drives of financial sector activity.
For the Indian financial system, the biggest challenge is how to extend itself and innovate to meet these new demands for financial inclusion and respond adequately to new opportunities and risks. Innovative channels for credit delivery for serving the new credit needs have to be developed, perhaps with greater use of information technology and intensified skills development in human capital.