August 4, 2025

India is on a transformative journey aiming towards a USD 5 trillion economy, yet it faces a pressing challenge: a deficiency in adequate risk capital to fuel this growth, according to N Kamakodi, the Managing Director and CEO of City Union Bank. Speaking at the launch of a banking and finance helpdesk at the Merchants' Chamber of Commerce & Industry (MCCI), Kamakodi outlined the hurdles India must overcome to realize its economic ambitions. Despite India securing its position as the world’s fourth-largest economy, low per capita income continues to be a concern due to its vast population. Kamakodi emphasized the importance of entrepreneurs in driving economic progress, stating, "Entrepreneurs should lead and bankers should support." He asserted that chambers of commerce play a crucial role in spurring economic development, highlighting the collaborative efforts needed from both sectors. Differing global economic models were discussed, with Kamakodi noting that while Germany primarily leans on debt and the United States favors equity financing, India must concentrate on enhancing its pool of risk capital. This strategy is essential for meeting the long-term economic goals set for the country. In alignment with Kamakodi’s insights, Sanatan Mishra, General Manager (Network-II) at State Bank of India, shared his perspective on India's banking landscape. He stated that Indian banks, currently positioned robustly, are fully equipped to fund growth effectively. "UPI has emerged as a game changer for low-ticket transactions, providing inclusive financial access," he remarked. This digital payment infrastructure has significantly transformed the way transactions are conducted, fostering increased financial participation among the masses. Mishra highlighted the preparedness of banks to finance capital expenditures, provided that the private sector exhibits the capacity to absorb such credit. This readiness reflects a supportive banking environment that can assist in realizing India’s economic aspirations, assuming there is adequate demand from entrepreneurs. Both leaders called for a united effort between the banking sector and entrepreneurial entities, urging collaboration to harness the potential of the Indian economy fully. The focus now shifts towards building a sustainable ecosystem that encourages risk-taking and investment. As the Indian economy marches forward, the emphasis on nurturing risk capital is paramount. The collaboration between banks and entrepreneurs will be vital in tackling the challenges posed by low per capita income while also unlocking the economic potential that lies within India’s populace. With the right support mechanisms, India can pave the way for a prosperous future, eventually transforming aspirations into reality. This discussion at the MCCI serves as a reminder of the potential challenges and opportunities India faces. The commitment of bankers to support growth alongside innovative entrepreneurs can catalyze India’s journey towards its economic objectives, leading to a more equitable distribution of wealth and an elevated standard of living across the country.

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Tags: India economy, Risk capital, Banking sector, Entrepreneurship, Financial inclusion,