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Abstract
India quickly adopted and leveraged developments in information and communications technology, in some cases leapfrogging intermediate stages of development. This enabled the quick scale up of new paradigms of distribution and service delivery in a range of areas. Domestic consumption has been driven by the growth of the services sector, which in a way provides the economy a strong cushion against any global slowdown. The central objective of the study is to empirically investigate a role of Indian banks in capital formation and economic growth. Research is based upon the secondary data which provide the findings on Indian banking system and how it is helpful in economic development. It is therefore recommended that efforts should be made by the monetary authorities to effectively manage the banks maximum lending of banks. This policy thrust will most likely result into increased investment activities which will enhance the capital formation in India.