Minister wants to see digitalized financial institutions
Finance Minister Nirmala Sitharaman has told banks to professionalise and cut off crony background as India works towards becoming a developed country over the next 25 years.
Noting that the banks are the biggest catalysts to growth, she said, “Professionalise your decision-making boards, there is no way banks can any longer run with a crony background, our government has ensured that there are no instructions given or interference made in the functioning of the banks.
“We need to take professionalism at a faster pace. We are conscious of the need to let the banks be, and let them run by professionals, with a purely banking perspective in mind.”
The Minister exhorted the banks to plan for the next 25 years. “You need to have strategies to meet the aspirations of the youth of India in the next 25 years.
“You need to make your portfolios so that they are attractive to the young as well and make yourselves accessible to them. Are you communicating to the youth, to women, are you offering products to them?”
Addressing the 75th Annual General Meeting of Indian Banks’ Association in Mumbai on 16 Sept 2022, Sitharaman questioned the banks on technology. “Are you digitally savvy? Are your staff digital savvy?”
“Are you comfortable in being a digital institution? How much training goes into this? Do your systems talk to each other?
It will be a big missed opportunity if these bridges between banks are not built, she pointed out.
“IBA should plan to make sure that all systems in all banks, whether private or public, should be talking to each other for the purpose of the customer.”
She underlined the need for technologies that bring in benefits such as detecting fraud, tracking of wrong money, detecting unusual transactions, alerting yourself and the government.
“Use of Web3, data analysis, Artificial Intelligence, deep dive into data – all of these should have some coordination by the IBA. Leveraging AI should be an immediate priority for the banks, especially in fraud detection and generating early warning signs about something going wrong.”
The Minister highlighted the importance of cyber protection for the banks. “Are you all geared to have adequate firewalls? Are you protected against hacking and Black Swan events which bring down your systems?”
The Minister underlined the importance of having staff who can speak local language, considering the diversity of the nation. “Show inclusivity in your staff, in the way you speak to your customers. When you have staff who do not talk the regional language and who demand citizens to speak in a particular language, you have a problem.”
She told the banks, “Please review the people getting posted at branches, people who cannot speak local language should not be assigned to roles dealing with customers. You must have a lot more sensible ways of recruiting people.”
The Minister pointed out that there are still some areas of the country which do not yet have brick-and-mortar banks. “If there is a way you can provide ATMs or Business Correspondents in such areas, I would welcome that. The more Business Correspondents are women, the better it would be for your business.
“Please look at the regions which have not had enough coverage and where we can bring in digital technology. Please look at what can be done. Yardsticks applicable to other areas would not apply to the North Eastern Region. We need banks there. We need financial inclusion for the region as well.”
The Minister continued, “As we move towards greater professionalism of banks, we should realise the need for banks to stand up on their own and raise their own capital.
“No fraudulent account will be left without being taken to the court, fraudsters have no place in the country, banks will not suffer for money taken away by fraudsters.
“This is the kind of support with which we want to work with banks. I would love to see banks now plan for the Amrit Kaal. Your money is coming back, you have got the opportunity to bring more professionals.
“If you are able to keep yourselves available for phone banking and digital systems, you are available for everybody.”
She pointed out that maximum saturation has to be attained in government schemes such as MUDRA Yojana. She asked all banks to work on improving insurance coverage.
The Minister also pointed out the importance of upgradation of Regional Rural Banks. “RRBs need a lot more assistance in digitalization, sponsoring banks need to give more attention to RRBs, including in bringing them to Account Aggregator Framework and in disbursal of agricultural credit.”
The Minister told the banks that they should facilitate the customers in meeting their finance needs, with an energy of positivity.
“You are in a better position now. You are not afraid of taking decisions now. I want you to now say that you are ready for good business, that we are ready to serve you, be proactive and convey to the customers that you will meet them wherever they want and do business with them, keeping your norms intact.
“So, you end up serving the nation. Keep yourself aligned with national priorities.”
Last, Sitharaman also expressed satisfaction that the banks as they have come out of their troubles in earlier times and are able to stand up on their strengths, in the service of the nation.
“I appreciate, particularly, the work done by banks during the COVID-19 pandemic. The participation with the sense of dedication by each and every bank has become a golden certificate given to you by the people. You went to the villages and delivered to the customers, despite the challenges of the pandemic.”
The Minister said that she always has a sense of gratitude to the banks, also for undertaking the amalgamation processes during the pandemic, with minimal friction.
“You have gone through the tests of fire, and also met the demands made by the government in terms of higher credit to the economy.” fiinews.com
