India's finance minister Nirmala Sitharaman called for expansion of banking services in the country, stating that there are still many districts without any bank branches. At the same time, she said that there was a need for four to five banks the size of State Bank of India (SBI), given the size of the Indian economy and growth of corporates.
“There are very many districts in which not even one banking institution is physically present. Even with optimum use of digital, there are still areas that need your presence,” said Sitharaman, addressing the 74th annual general meeting of the Indian Banks’ Association (IBA) in Mumbai.
Sitharaman urged the IBA to conduct a digital mapping of bank branches by district and identify those that do not have any branch. She said that she has been approached by a member of Parliament who highlighted an area of high economic activity but where the public had to travel long distances to get to a bank branch.
The FM said even before the pandemic, the need for several large banks the size of SBI was felt and this was the driving force behind the amalgamation of public sector banks (PSBs). She appreciated the efforts of PSBs for the smooth conduct of the amalgamation exercise and regular banking activities during the Covid period without inconveniencing the public.
Sitharaman, who had earlier asked banks to embark on a credit outreach programme from October 2021, said that the same can now be done digitally using the account aggregator platform. She added that banks must collaborate with fintechs to gain further advancement in digitalisation.
IBA chairman & Union Bank CEO Rajkiran Rai said that FY21 had seen muted growth due to the pandemic. However, all key economic indicators have started showing improvement. “Performance improvement is visible across banks. In terms of asset quality, gross NPA has come down from 8.4% in FY20 to 7.5% in FY21 and net NPA from 2.9% to 2.4% in the same period,” he said.
