Finance Minister P Chidambaram has said crucial financial sector reforms are required if India has to maintain a seven per cent growth rate, listing out banking, insurance, pension and capital markets as immediate priority areas.
"Without financial sector reforms, we cannot maintain a growth rate of about seven per cent and our government will carry them forward in the next six months," Chidambaram said in Dusseldof, Germany.
Addressing members of the Indo-German Chamber of Commerce, the finance minister said even as the government had taken steps to liberalise the banking sector, Indian banks required to provide resources for meeting growing demand of trade.
"If India has to have a seven per cent growth rate, India must also provide the credit required for foreign trade, which is growing at about 24 per cent a year. Indian banks would have to raise about $10 billion of additional capital in next 2-4 years," he said.
Chidambaram said the Indian banking sector was, however, far ahead of China.
"As of March 31, 2005, non-performing loans of our banks were a shade below three per cent. This year, our intention is that this should go down below two per cent. In China, non-performing loans stand as much as 40 per cent," the finance minister said.