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While delivering Bandhan Bank<\/a>\u2019s annual anniversary lecture, Subramanian said that the reason for the slowdown in the economy which started last year was due to problems in the banking sector, rather than the fallout of demonetisation and GST.<\/p>\n He said that the Indian banks, especially those in the public sector category controlling two-third of the sector’s loan assets, have turned risk averse following a spate of large defaults by private sector promoters and entrepreneurs.<\/p>\n He also noted that India’s credit penetration as a ratio of GDP<\/a> remains low, despite being the fifth largest economy in the world. Banking sector credit growth considerably weakened during the first half of 2019-20, sliding down further to 5.9% by March 2020 and remained muted up to early June 2020 due to covid-related disruptions.<\/p>\n He also emphasised on the use of technology by banks and said that if Indian banks used data analytics in times of corporate lending, many defaults could have been avoided, also the right model for large corporate lending would have spurred investment. Banks internationally today are more like fintech<\/a> companies, using data science and artificial intelligence<\/a> in their dealing with customers, he added.<\/p>\n<\/div>\n