Finance Minister Arun Jaitley on Monday said India has the potential to become the fifth-largest economy in the world by next year, and urged banks to support the country’s growth.

“Banks are the lifeline of the economy and it is in the interest of the economy that banks are strengthened,” Jaitley said through videoconferencing at the Annual General Meeting of the Indian Banks’ Association.

Given the high investments and economic activity in the country, the Finance Minister also asked banks to prepare a blueprint for long-term growth.

“The role of banks will be vital and they must uphold professionalism,” he said.

While expressing hope of higher-than-estimated growth, the Minister noted that there are several external challenges to the economy, and the problems in the banking sector are a key domestic challenge.

“The desire to have a high growth rate must be accompanied by strong macroeconomic fundamentals.”

Sacrificing the fundamentals for a temporary spurt in growth is not desirable, he stressed, adding that growth with fiscal prudence is necessary.

He added that indiscriminate lending done in the past created funding of projects, which were not able to service those debts.

Jaitley also cautioned banks that the onus is on them to ensure that frauds are avoided as such stray incidents raise questions and take away the focus from the good work they are doing.

Noting that the creation of the Insolvency and Bankruptcy Code has redefined the creditor-debtor relationship, Jaitley said there is a need to expedite the process and augment the capacity of the NCLT.

With the passage of amendments to Section 29A of the Prevention of Corruption Act, bankers and civil servants can take honest and credible commercial decisions without worrying about any future consequences outside the IBC process, he added.

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