Banks to play crucial role in achieving vision of Viksit Bharat, says Finance Minister

Finance Minister Nirmala Sitharaman on Thursday said the banking sector will have to play a crucial role in driving the agenda of making India a developed nation or Viksit Bharat by 2047.

The Finance Minister was speaking at an event to mark the 90th Foundation Day of the Bank of Maharashtra, a public sector lender.

She said the vision of a Viksit Bharat by 2047 has key pillars of economic growth, social progress, environmental sustainability, and good governance.

"Banks will have to play a crucial role in driving the agenda set by the vision of the Prime Minister and by your role, we are going to give greater momentum to achieving this dream," she said.

The vision of Viksit Bharat, Sitharaman added, envisages providing strong momentum in infrastructure; ensuring availability of need-based funding to MSMEs; bringing the unbanked population under the ambit of formal banking channels; and providing insurance net to all citizens.

The minister further said technology is reshaping India’s banking landscape and it provides a secure, easy-to-navigate digital banking experience to customers. The system needs to be robust, reliable and user-friendly.

However, she added that "you (banks) cannot have a digital system which somewhere gets hacked, and the entire system and the trust which is laid on it getting compromised. So you need to have a robust and resilient system for which every now and then you need to make sure that the firewalls are adequate, any emergency drill which you need to do, what if situation so you know to handle if there is an emergency in terms of digital insecure incidents".

The finance minister also said the fintech's growth is also going to help.

Unified Payments Interface (UPI), the real-time payment system launched in April 2016 by NPCI, has played a significant role in the growth of retail digital payments.

"Today, approximately 45 per cent of all real-time digital payments in the world happen in India. Banks should look at prospects to expand it," she said.

Sitharaman said so far, UPI has been launched in seven countries - Bhutan, France, Mauritius, Nepal, Singapore, Sri Lanka and the UAE.

She emphasised that the digital footprints which are being generated should be fully tapped.

"As we use technology to our advantage, we also need to get well-equipped to mitigate the risks," she added.

Citing the Reserve Bank's June Financial Stability Report, she said it indicates that the Indian economy and the financial system remain robust.

The Gross Net Performing Asset (NPA) ratio of the banking sector (private and public) fell to a multi-year low of 2.8 per cent and the NNPA ratio to 0.6 per cent.

Speaking at the occasion, financial services secretary M Nagaraju said banks should follow approach of growth in topline with profitability.

He asked banks to focus on improving client satisfaction level and introduce systems and processes which are customer-friendly.

Banks should also raise adequate capital to meet future growth requirements.

Bank of Maharashtra Managing Director Nidhu Saxena said customer centricity and innovation are going to be the important focus areas. Saxena also announced that the bank plans to add another 1,000 branches to its network in the next five years.