The government's Chief Economic Adviser K.V. Subramanian said that India's banking system is proportionately smaller than the size of the economy and it needs to grow for the country to become a $5 trillion economy.

Giving the Bandhan Bank's Anniversary Lecture, Subramanian said that the reason for the slowdown in the economy which started last year was due to problems in the banking sector, rather than the fallout of demonetisation and GST.

"For the size of its economy, the banking sector in India is very small. In order for India to be a $5 trillion dollar economy, the banking sector needs to be proportionate… at least proportionate to the size of its economy if not bigger than the proportionality," he said.

About the problems in the banking sector, he said that the major issues in the sector are bad loans, risk aversion and corporate lending.

He also emphasised on the use of technology by banks and said that the banks with low IT adoption were more prone to bad loans.

On the crisis brought about by the pandemic, the CEA said: "I feel every crisis is an opportunity. So I see this situation as an opportunity.".