Bandhan Bank will fund lakhs of small and medium entrepreneurs, create jobs and act as a response to agrarian poverty, Finance Minister Arun Jaitley said on Sunday.
"A great institution is being born in West Bengal," he said while inaugurating Bandhan Bank in Kolkata.
Bandhan Bank launched its operations with 501 branches in the country. The company, which started operations as a micro finance institution, got final approval from RBI in June to launch commercial banking operations.
Jaitley said Bandhan Bank Chairman and Managing Director Chandra Shekhar Ghosh has said that the priority area of the bank will be small and medium enterprises (SMEs).
"It is a landmark initiative in the service of country and state. It is these entrepreneurs in SMEs, many of them in unorganised sector, who today form the backbone of Indian economy.
"Small entrepreneurs, from shopkeepers to hawkers, they are generating almost 11-12 crore jobs in this country. The large organised industry is able to generate only a small fraction of that," Jaitley said.
He said if private sector initiatives like Bandhan Bank join this effort of funding at the grass-root level, then the small enterprises can grow on their own feet.
"All over the eastern parts of the country, in states like West Bengal, if we are able to create small entrepreneurs in lakhs we can then see it as a response to agrarian poverty that is building up," Jaitley said.
The objective is to extend over Rs 1 lakh crore worth funds to SMEs across the country, Jaitley said, adding that SMEs usually repay what they borrow and the banks' NPAs are not because of lending to this sector.
"If funding of unfunded sector continues, it is they who generate jobs and it is they who take very little assistance from the state and go back and return what they borrow. The problem of NPA, certainly this segment is not responsible for them," he said.
Jaitley also said that the Centre has set up a MUDRA agency which will slowly evolve as MUDRA Bank and the main purpose is to fund the unfunded.