Union Finance Minister Nirmala Sitharaman said on Sunday that despite the huge push on financial inclusion and high economic activity, there are districts in the country with no banking presence at all.
She urged lenders to pull themselves together and open either a full-fledged physical branch or an outpost offering banking services, wondering how banking presence escapes even pockets with high economic activity.
It can be noted that policy makers have focused on financial inclusion for more than a decade and have also set themselves the goal of ensuring a banking presence in every village with more than 2,000 inhabitants. A few years ago, the RBI liberalized branch opening standards for banks.
“Even today there are many, many districts in which even the large panchayats do not have a physical bank… meeting (AGA) of the Indian Banks’ Association (IBA) industry lobby group.
She urged IBA members to digitally map all districts to see areas with poor coverage for themselves and accordingly make arrangements for a physical branch or outpost.
“You should be able to see the centers of economic activity. Whether it’s a completely rural pocket but if the economic activity is strong there, don’t you think there should be some kind of presence?” -she asks.
Making it clear that she is not against digitization, which has brought huge financial benefits to lenders in terms of reach, Sitharaman wondered how there could be parts of the country that didn’t even have one. physical branch.
The minister cited the case of a very persuasive lawmaker who made calls for a bank branch in an area witnessing agriculture-related commercial and wholesale activity and reports that locals have to travel miles for their needs banking.
Appreciating the work of Pradhan Mantri Jan Dhan Yojana, in which millions of new accounts have been opened, the Minister of Finance also reiterated her wish for a higher amount of loans to be granted in East India. and added that lenders need to go beyond looking at these areas as a source of low cost deposits.
In a statement released after the finance minister’s speech, the largest private sector lender, HDFC Bank, said it would double the rural reach to 2 lakh villages over the next two years and hire 2,500 people over the next two years. next six months.
Meanwhile, Sitharaman urged everyone to refrain from calling the National Asset Reconstruction Company (NARCL) a “bad bank,” as similar institutions are called in other countries like the United States.
She also said banks’ books are now much cleaner and that will help the government as recapitalization requirements decrease.
Recalling the ambitious goal of $ 2 trillion in exports by 2030 and $ 400 billion for the current fiscal year 22, she said meeting this goal is only possible if banks are nimble. and understand the needs of each business.
The legal framework for the establishment of a development finance institution (DFI) is currently in place, she said, adding that “we need such entities both in the private sector and in the one supported by the government to meet our development aspirations “.
She hoped for strong competition between private and state-run DFIs, saying that only this could ensure a lower cost of borrowing for projects.
Sitharaman paid tribute to bank workers who died during the pandemic, appreciating their efforts to keep the financial system running even as infections raged everywhere.
She also advised banks to improve their corporate communication function for a better flow of essential information to the general public.
She said the government’s only goal from now on is a reset of our minds.
(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)