The Indian banking sector is poised to become the world's third largest in asset size over the next 14 years.

"The domestic banking industry is set for an exponential growth in the coming years with its assets size poised to touch USD 28,500 billion by the turn of the 2025 from the current asset size of USD 1,350 billion (2010)" says an IBA-Ficci-BCG report, titled "Being five-star in productivity--Roadmap for excellence in Indian banking, prepared for the Indian Banks Association.

The report was released on the eve of the three-day IBA-Ficci-BCG (Indian Banks Association, Ficci and Boston Consultancy Group) bank summit beginning tomorrow here. The summit will be launched by Reserve Bank Governor D Subbarao and will be attended by heads of banks and the four RBI deputy governors among others.

The report further says China will overtake the US as the world's largest banking industry by 2015, when it is expected that the asset size of Chinese banks will be nearly USD 30,000 billion, while that of the US will be around USD 28,000 billion. By 2025, the Chinese banks will have an asset size of over USD 1,15,000 billion, while that of the US it will be around USD 1,00,000 billion.

Releasing the report, Bank of Baroda chairman and IBA chief M D Mallya said, "the global banking crisis has highlighted the perils of irresponsible banking and through this theme of productivity excellence, we wanted to focus on the tremendous scope for our banks to improve their productivity and consequently, their profitability."

The report sets out an action agenda for banks, based on insights from an extensive productivity benchmarking exercise conducted across 40 banks which highlights that banks have to strive for excellence on five dimensions: branch sales and service, new channels, lean operations, organisational design and bad debt management.