Despite huge thrust on financial inclusion and high economic activity, there are several Indian districts which does not have any banking presence yet, Union Finance Minister Nirmala Sitharaman said. The finance minister directed lenders to get their act together and open either a full-fledged brick-and-mortar branch or an outpost rendering banking services.
For over a decade, policymakers have been focusing on financial inclusion and also had set a target of ensuring banking presence in every village with a population of over 2,000 people.
Sitharaman, who was speaking at the 74th annual general meeting (AGM) of the industry lobby group Indian Banks’ Association (IBA), said, “Even today, there are very many districts in which even big panchayats don’t have a physical bank…there are very many districts in which not even one banking institution is physically present.”
She directed IBA members to digitally map all the districts to find out which areas have low coverage and accordingly make provisions for either a physical branch or an outpost.
She questioned, “You should be able to see the centres of economic activity. Be it a completely rural pocket but if the economic activity is strong there, wouldn’t you think there should be some kind of presence?”
Applauding the work done by the Pradhan Mantri Jan Dhan Yojana, in which millions of new accounts were opened, she pointed out her wish for higher quantum of loans to be given in eastern India and added that lenders have to move beyond looking at such regions as a source of low-cost deposits.
In a statement released after the finance minister’s speech, largest private sector lender HDFC Bank said it will be doubling rural reach to 2 lakh villages in the next two years and hire 2,500 people in the next six months.
Meanwhile, Sitharaman asked all to desist calling the National Asset Reconstruction Company (NARCL) as a ‘bad bank’ as similar institutions are called in other countries like the US.
She also said that the banks’ books are much cleaner now and this will help the government as the recapitalisation requirements go down.
Reminding the ambitious target of USD 2 trillion in exports by 2030 and USD 400 billion for the ongoing FY22, she said meeting this aim is possible only if banks are nimble and understand the needs of every business.
(With inputs from agencies)
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