Finance Minister Nirmala Sitharaman on Friday, September 16, said IBA's trajectory is aligned with free India's trajectory. She was addressing members of the Indian Banks' Association (IBA) at its 75th annual general meeting.
She told members of the IBA that she was glad that they have come out of their difficult patch and appreciated their work during the COVID-19 pandemic. "I have a sense of gratitude for banks," she said.
Sitharaman said the amalgamation processes were taken without much friction. "You have gone through the test of fire," she said.
She said the economy is looking up at present and the "respiration of health of the banks is well-recognised.”
"The biggest role to make India a developed country by 2047 is of the banking sector," she said. The finance minister said the days of crony background are over. "Our government has ensured that no instructions are given to the bank. Banks are moving towards professionalism," she said.
She said she always insisted on not giving funds to the banks. "I said let the banks go to the market and get funds. The banks did that," she said.
She added that the law enforcement agencies are making sure that banks get back the money which was taken away from them fraudulently. Sitharaman is looking forward to the banks ‘Amrit Kaal.’
"This is the best time for the banks to focus on the next 25 years," she said.
She said the banking sector should work on making itself more accessible to the youth of the country. The FM also wondered if banks are communicating with the women of the country and catering to their needs. "Are your banks
She said the use of artificial intelligence (AI) should be a priority for the banks as this would help them detect frauds during an early stage. "Cyber protection is the next step. Do banks have enough cyber protection as this is of extreme importance," she said.
Sitharaman said it bothers her when the staff of public sector banks do not speak the local language or look down on Hindi. "I am learning Hindi. How difficult is it to learn the language! The effort has to be made to learn the local language," she said.
The finance minister said that even today, some parts of the country do not have the adequate banking coverage. "Get more women business correspondence, this will help your business," she told the IBA members.
She added that bankers have to look at the North East with a special treatment approach.
"Private and PSU banks have to focus more on insurance coverage for government schemes. Regional banks have to be given more support," she said, adding that rural regional banks have to be given support and attention for digitisation, following which slowly cooperative banks can be strengthened.
With the upcoming festive season in mind, the FM said people may spend more this year. "Banks have to ensure that customers’ credit requirements are met on time," she said.
She said in 2019, bankers were concerned whether their decisions would be questioned by the CAG, if the CBI would come after them, would the CBIC do something. "Now we have resolved all that, now you all have to deliver," she said.
Banking sector comfortable
"The banking industry is placed very comfortably today. The sector played a big role in post-pandemic economic recovery," said Sanjay Malhotra, Secretary, Department of Financial Services.
He said credit growth has increased and is now 15 percent per annum.
"Over the years, the credit to the industries has decreased, partly because of a shift from the banking to the bond market and because of structural shift with services increasing," Malhotra said, adding that credit to MSMEs is an area that should be focused more on.
Rebuilding role
"The recent geopolitical developments have caused a surge in energy and food prices, leading to worldwide inflation, making economic growth hard. India too has faced challenges. Our GDP growth was 8.7 percent in FY22," said Bhagwat Karad, Minister of State for Finance.
He said the banking sector has played a major role in rebuilding India's economy, adding that in FY22, all PSU banks turned profitable. "The scheduled commercial banks had credit growth of 9.6 percent, deposit growth of 8.9 percent in the 2021-22 fiscal year," he said.
He also added that the banks had increased lending in the MSME and agriculture sectors.
