India needs 4-5 more banks like State Bank of India: Finance Minister Sitharaman

Agency, Kathmandu, Sept 28. India needs four or five more banks like the State Bank of India (SBI) to meet the economy’s changing requirements, Finance Minister Nirmala Sitharaman has said.

“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,” she said on Sunday.

She was delivering the keynote address at the 74th Annual General Meeting of the Indian Banks’ Association (IBA) in Mumbai.

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 digitization. While banks in many countries could not reach out to their clients during the pandemic, the level of digitization of Indian banks helped us to transfer money to small, medium and big account holders through DBT and digital mechanisms,” she pointed out.

The Finance Minister 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 digitized processes,” she said.

The minister, however, observed that there were 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 the IBA to improve access of banking in every district through a rationalized approach and optimal utilization of digital technologies.

‘Be nimble, agile, and adaptive’

Sitharaman 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 “What we think is latest today will be outdated in a year or so, we have to thus acquire resources to constantly update ourselves.”

Nimbleness and agility were particularly important in India’s being able to achieve the ambitious export targets we have set for ourselves, she said. India had set an export target of $ 2 trillion by 2030 – $ 1 trillion in merchandise exports and $ 1 trillion in service exports, she noted.

“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 the many businesses who are rapidly relocating to India,” she observed.

The Finance Minister also 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 pointed out.

FinTech understands that UPI is its backbone, you have to give it its flesh and blood, you have to strengthen UPI, the Minister advised bankers.