India Needs More Risk Capital to Achieve $5 Trillion Economy Goal: Kamakodi

quick Summary

• Issue Highlighted: N Kamakodi, MD and CEO of City union Bank, stated that India lacks adequate risk capital to achieve its USD 5 trillion economy goal despite having the necessary overall capital.
• Context: Kamakodi spoke at the launch of a banking and finance helpdesk at MCCI, stressing India’s low per capita income as a challenge due to its high population.
• Funding Models Compared: He highlighted Germany’s dependence on debt and the US’s reliance on equity for economic funding, suggesting India’s need to build a robust risk capital pool for long-term goals.
• Role of Entrepreneurs and Banking Support: Entrepreneurs should lead growth initiatives while banks play a supporting role. Chambers of commerce were identified as critical drivers of economic progress.
• Strengths in Indian Banking: According to SBI General Manager (Network-II) Sanatan Mishra, Indian banks are currently strong enough to fund growth due to improved capitalization. mishra praised UPI as transformative for low-ticket transactions and enhancing financial inclusion.

Indian opinion Analysis

India’s ambition toward becoming a USD 5 trillion economy reflects aspirations for rapid economic expansion. However, N Kamakodi’s observations underline structural challenges such as limited availability of risk capital needed for entrepreneurial ventures and long-term development projects. Comparisons with established funding ecosystems in Germany (debt-focused) and the US (equity-driven) suggest alternative approaches India could explore.

Sanatan Mishra’s remarks emphasize an optimistic outlook regarding the strength of indian banks in financing growth-notably through innovations like UPI fostering inclusivity-but highlight dependencies on private sector credit absorption capability. This balance between available financing options versus effective utilization serves as both challenge and chance.

India may need collaborative innovations between entrepreneurs, bankers, chambers of commerce, policymakers, and existing institutions like UPI systems to bridge gaps between ambition and execution more effectively.

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