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Digital processes will drive the future of banking: FM

India needs four or five more banks like the State Bank of India, said Finance Minister Nirmala Sitharaman.

Finance Minister Nirmala Sitharaman

During her keynote address at the 74th AGM of the Indian Banks’ Association in Mumbai on Sunday, the FM said India needs to scale up banking to meet the changing requirements in light of the shifting realities of the economy and industry. “We need not just more, but bigger banks,” she added.

“If we look at the post-Covid scenario, India’s banking contour will have to be very unique to the country, where there has been an extremely successful adoption of digitization. The level of digitization of Indian banks helped us to transfer money to small, medium and big account holders through DBT and digital mechanisms,” the FM noted.

Underlining the importance of seamless and interconnected digital systems in creating a sustainable future for the banking industry, the FM said that the long-term future of Indian banking is going to be largely driven by digitised processes.

Nirmala asked the Indian Banks’ Association to improve the access of banking in every district through a rationalised approach and optimal utilisation of digital technologies, and to carry out digitised mapping of all bank branches in every district of the country. “Almost two-thirds of nearly 7.5 lakh panchayats have optical fibre connections. The IBA should consider this and conduct an exercise to decide where banks should have a physical presence and where we are able to serve customers without the presence of a branch. The IBA should complement the government’s efforts to achieve financial inclusion by enhancing access to financial services, especially in unserved and under-served areas,” she further said.

The FM reminded the bankers to be nimble, agile and adaptive. “What we think as the latest today will be outdated in a year or so. Hence, we have to acquire resources to constantly update ourselves. Such nimbleness and agility are especially important for India to be able to achieve the ambitious export targets of $2 trillion by 2030, $1 trillion in merchandise exports and $1 trillion in service exports. The banking industry needs specialists to understand the unique business requirements of diverse sectors and the many businesses that are rapidly relocating to India. The eastern region of the country has more than adequate CASAs (current account savings account), but there are no takers for credit. You need to address this issue and see how you can lend in those regions, in states like Bihar,” she told bankers.

The FM commended the amalgamation of the banks during the pandemic, without causing any disruption in services to customers. She called for a reimagination and sprucing up of banks’ corporate communications in line with the changing realities of the new digital and connected age.

All banks have to make special efforts in implementing the EASE 3.0 and 4.0 reforms. Chairman of IBA Rajkiran Rai G welcomed the gathering, and Chief Executive Sunil Mehta gave a presentation on the 75-year journey of the IBA.

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