The apex bank also underlined the need for bringing down the 23 per cent mandatory SLR (Statutory Liquidity Ratio) holding for banks.
"The banking sector needs to match up the likely acceleration in the credit-to-GDP ratio as the economy expands," the RBI said in its annual 'Trends and progress of banking in 2012-13' report.
The banking industry needs to grow to an estimated Rs 288 trillion by 2020 to support the economic growth envisaged in the 12th Plan (2012-17), it said.
The regulator said it is necessary to reduce banks' requirements of investing in government securities in a calibrated way. "It is recognised that the scope for such reduction will increase as Government finances improve."
The current SLR limit (proportion that lenders must buy into Government securities) is 23 per cent, but banks on an average hold more close to 27 per cent.
The RBI said there is a need to change the present structure to enable the banking system to grow in size, resources, efficiency and inclusively.
"Reserve Bank has initiated a debate on reorienting the banking structure in the country to better serve the needs of the real economy. As the economy expands, more resources will be needed for supporting the growth process."
Further, as the penetration of other financial institutions, such as pension funds and insurance companies increases, it will be possible to reduce the need for commercial banks to invest in government securities, it added.