Finance Minister P Chidambaram on Sunday urged the public sector banks (PSB) to brace up for funding the Indian economy in an era of high growth by ensuring financial inclusion and expanding their reach in the countryside.
Addressing bankers at the valedictory function of Vijaya Bank's platinum jubilee in Bangalore, he said with India set to emerge as the world's third largest economy, the banks would have to strive hard to meet the financial requirements of diverse sectors ranging from agriculture, manufacturing and services to the deprived citizens for an inclusive growth.
"Though the banking industry has contributed substantially to fuel economic growth, still about 50 per cent of the GDP (gross domestic production) growth is left out of institutional finance. As the engine of economic growth and credit as the oil that keeps the engine of the economy move, banks will have to mobilise funds to finance the growing GDP," Chidambaram said.
Regretting that 48 per cent of all households, 51 per cent of farm households and 78 per cent of the rural non-farm households still did not have access to either banking services or institutional finance. He said the banks had a long way to go in achieving financial and social inclusion.
"Apart from financing the growth sectors spawning industry, services and infrastructure, banks will have to spread their customer base to women, students, self-employed, small entrepreneurs and artisans through micro-credit and micro-finance," Chidambaram asserted.
Reminding the PSBs of the growing competition and challenges ahead, the finance minister said unlike the private and foreign banks, the state-owned banks had social responsibility to empower the less privileged to become financially independent and democratise wealth creation.
"Through consolidation and convergence, the PSBs will have to play a larger role by increasing their customer base, expanding their services and product portfolio to emerge as financial supermarkets and compete with global banks", Chidambaram pointed out.
Lauding Vijaya Bank for serving the farming and plantation sectors and remaining focused on rural/semi-urban areas, the finance minister said: "The bank currently has a business of Rs 5,100 billion as against Rs 7 billion in 1981, when it celebrated its golden jubilee. By the time it celebrates its centenary, it should become one of the giant banks in the subcontinent."
Union Minister of State for Finance Pawan Kumar Bansal, Karnataka Chief Minister HD Kumaraswamy and Karnataka Lok Ayuktha Justice Santosh Hegde also addressed the gathering.