India needs to take a quantum leap in the scale and size of the financial institutions to achieve the aspiration of becoming a developed nation by 2047, RBI Deputy Governor M Rajeshwar Rao has said.

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He was speaking at 'High-Level Policy Conference of Central Banks in the Global South' organised by the Reserve Bank of India (RBI) as a part of commemoration of its 90th year here last week.

"As we retrospect, we observe that the regulatory developments and policy measures initiated in the past have led to development of a robust, resilient and strong financial system in India which has weathered several crises.

"But the goals we have for our nation require us to take a quantum leap in the scale and size of the financial institutions," he said.

This will also possibly expose the entities and their users to an increased amount of risk.

In view of this, robust governance and effective risk management are going to be the dual anchors that will keep our financial institutions afloat and help them grow sustainably, the Deputy Governor said.

"From a macro-perspective, our national aspiration to become a developed economy by year 2047 still requires a stronger foundation of financial institutions in a complex and rapidly evolving financial landscape," he said.

Besides banks, the existing entities would require easier access to robust capital markets to fund their growing asset books along with access to deep financial markets that would enable them to hedge the associated risks on their balance sheets, he said.

Further, there will be entry of new players, products, and services (private credit) to meet the growing credit needs, the senior RBI official said.

Therefore, an enabling regulatory system would have to be put in place to meet these challenges and safeguard financial stability without hindering the process of innovation, Rao added.

He also emphasised that there are not many central banks in the world which have a mandate as broad-based as that of the RBI.

The RBI, he said, is a full-service central bank with a mandate spreading across functional areas such as monetary policy, currency management, regulation and supervision, payment system, financial inclusion and management of forex reserves.

Despite this humongous responsibility, the nine illustrious decades of RBI's existence and 75 years of experience as a regulator and supervisor have built a foundation of a strong financial sector which could support the country in fulfilling its developmental aspirations, Rao added.