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Mumbai (Maharashtra) : Union Finance and Corporate Affairs Minister Nirmala Sitharaman on September 26, 2021, said that India needs four or five more banks like SBI. She said that we need to scale up banking to meet the changing requirements in light of shifting recent realities of economy and industry.
“The way in which the economy is shifting to a different plane altogether, the way in which industry is adapting, so many new challenges keep arising. To address these challenges, we need not just more, but bigger banks, Sitharaman shared this point of view with the banking community, during her keynote address at the 74th Annual General Meeting of the Indian Banks’ Association (IBA) in Mumbai on September 26., 2021.
The Finance Minister exhorted the industry to imagine how Indian banking has to be in the immediate and long-term future. “If we look at post-Covid scenario, India’s banking contour will have to be very unique to India, where there has been an extremely successful adoption of digitisation. While banks in many countries could not reach out to their clients during the pandemic, the level of digitisation of Indian banks helped us to transfer money to small, medium and big account holders through DBT and digital mechanisms,” Sitharamn said, according to a PIB release
Sitharamn underlined the importance of seamless and interconnected digital systems in creating a sustainable future for Indian banking industry. “Long-term future of Indian banking is going to be largely driven by digitised processes.” The benefits of digitisation notwithstanding, the Finance Minister observed that there are wide disparities as well in access to financial services. She said there are parts of our country where brick-and-mortar banks are necessary. The FM asked IBA to improve access of banking in every district through a rationalised approach and optimal utilisation of digital technologies.
To achieve this, the Union Minister advised IBA to carry out digitised location-wise mapping of all bank branches for every district of the nation. “Almost two-thirds of nearly 7.5 lakh panchayats have optical fibre connection, IBA should consider this and conduct an exercise and decide where banks should have a physical presence and where we are able to serve customers even without physical branch. IBA should take the initiative and complement government’s efforts for financial inclusion and enhancing access to financial services, especially in unserved and under-served areas.” “Be nimble, agile, adaptive, it is a must for attaining 1 trillion dollar export target for 2030,” she added.
The Finance Minister reminded bankers of the need to adapt in line with fast changes in technology. “What we think is latest today will be outdated in a year or so, we have to thus acquire resources to constantly update ourselves,” the FM said and added such nimbleness and agility are especially important in India’s being able to achieve the ambitious export targets we have set for ourselves, she said.
“We have given ourselves an export target of $ 2 trillion by 2030, $ 1 trillion in merchandise exports and $ 1 trillion in service exports. In an age of rapid change post the pandemic, there are going to be a lot of challenges in how we look at customers. These challenges cannot be addressed unless banks are going to be nimble, with sound understanding of various businesses and sectors. Hence, the banking industry needs specialists to understand the unique business requirements of diverse sectors and many businesses who are rapidly relocating to India,: Sitharaman said.
The Finance Minister said that UPI needs to be strengthened. “In the payment world today, Indian UPI has actually made a very big impression. A RuPay card which was not as glamorous as a foreign card is now accepted in so many different parts of the world, symbolic of India’s futuristic digital payment intentions,” she added.
The Minister underlined the importance and need for Development Finance Institutions, even in the private sector. ”Govt. is coming up with a Development Finance Institution, at the same time, we have made enough provisions for DFIs to come up in the private sector as well. We hope there is going to be good competition between public and private sector DFIs, so that money is available at competitive prices,” Sitharam said.
Earlier, Chairman of Indian Banks’ Association (IBA) Rajkiran Rai G. welcomed the gathering, while Chief Executive, IBA, Sunil Mehta gave a presentation on the 75-year journey of the Association.