Future of Indian Banking would be driven by digital processes: Finance Minister

Mumbai: Union Finance and Corporate Affairs Minister Nirmala Sitharaman expressed the need of four or five more banks like SBI to meet changing requirements of Indian Economy.

The finance minister asked the need to scale up banking to meet the changing requirements in light of shifting recent realities of economy and industry.

“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.” The union minister shared this point of view with the banking community, during her keynote address at the 74th Annual General Meeting of the Indian Banks’ Association (IBA) in Mumbai today.

FM asks bank association to improve access to financial services pan India through scientific digitized mapping

The finance minister exhorted the industry to imagine how Indian banking has to be in the immediate and long-term future. Minister said

“If we look at a 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.”

The Union Minister underlined the importance of seamless and interconnected digital systems in creating a sustainable future for the Indian banking industry. “Long-term future of Indian banking is going to be largely driven by digitized processes.”

The benefits of digitization notwithstanding, the Finance Minister observed that there are 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 IBA to improve access of banking in every district through a rationalized approach and optimal utilization of digital technologies.

To achieve this, the Union Minister advised IBA to carry out digitized location-wise mapping of all bank branches for every district of the nation. “Almost two-thirds of nearly 7.5 lakh panchayats have optical fibre connection, IBA should consider this and conduct an exercise and decide where banks should have a physical presence and where we are able to serve customers even without a physical branch. IBA should take the initiative and complement government’s efforts for financial inclusion and enhancing access to financial services, especially in unserved and under-served areas.”

“Be nimble, agile, adaptive, it is a must for attaining 1 trillion-dollar export target for 2030”

The Finance Minister reminded bankers of the need to adapt in line with fast changes in technology. “What we think is the latest today will be outdated in a year or so, we have to thus acquire resources to constantly update ourselves.”

Such nimbleness and agility are especially important in India’s being able to achieve the ambitious export targets we have set for ourselves, she said. “We have given ourselves an export target of $ 2 trillion by 2030, $ 1 trillion in merchandise exports and $ 1 trillion in service exports. 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 a sound understanding of various businesses and sectors.