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Modi urges bankers to be ‘partners in growth’
“You must shun the feeling that you are an approver and the person in front of you is an applicant, and banks must adopt the partnership model,” Modi said.
Prime Minister Narendra Modi on Thursday urged bankers to shun their age-old “approver-applicant” attitude, make customers their partners in progress, proactively reach out to small entrepreneurs, and help in the country’s inclusive economic development.
Addressing a conference on “Creating Synergies for Seamless Credit Flow and Economic Growth”, organised by the Union finance ministry in the Capital, the PM said the Indian banking sector was robust due to several reforms undertaken in the last six-seven years, but bankers need to become proactive, and approach people who need funds instead of waiting for customers to visit them.
“You must shun the feeling that you are an approver and the person in front of you is an applicant, and banks must adopt the partnership model,” Modi said.
Recalling an experience from his school days, when banks were not nationalised, he said that private bankers would visit his school a couple of times every year to explain the importance of opening a bank account to children. Why should branches of public sector banks not approach at least 10 local micro, small and medium enterprises in their vicinity offering financial help and advice, Modi asked.
“This is the time when banks should act as wealth creators and job creators, which will help in enhancing the country’s balance sheet,” he said.
He also gave the example of the production-linked initiative (PLI) scheme where the government gives incentives to Indian manufacturers for scaling up their production capacity to compete with global firms.
“Banks can play a big role in making projects viable through their support and expertise,” said Modi. The government has launched a ₹1.97 lakh crore PLI scheme for 13 sectors, including pharmaceuticals, telecom, speciality steel, white goods and solar modules.
Listing some of the key financial reforms taken by the government, Modi underscored that government schools have helped provide immediate relief to millions of poor people though instant transfer of money in their Jan Dhan accounts. According tothe finance ministry, over 438 million beneficiaries have banked through Jan Dhan accounts, started in 2014, and these accounts have a combined balance of ₹1.48 lakh crore.
“The initiative paid dividends during the pandemic as it ensured that no poor person is left hungry,” he said.
The Covid-19 pandemic led to a 68-day hard nationwide lockdown starting in March 2020. During this period, the government released free food grains and financial assistance to about 315 million beneficiaries, according to official data. The financial assistance went directly to the Jan Dhan accounts of the beneficiaries.
Modi stressed that financial inclusion has direct impact on society as it unlocks the productive potential of citizens, and said states where more Jan Dhan accounts are opened have found that crime rates have reduced. “Whether it is a public sector or private sector bank, the more we invest in citizens the more jobs we will create,” he said.
Other steps taken have created a strong capital base, he said, adding that now banks have sufficient liquidity, and non-performing assets (NPAs) in public sector banks are at the lowest in the last five years.
The government reforms not only unearthed hidden NPAs but also recovered about ₹5 lakh crore from wilful defaulters, and stressed assets worth another ₹2 lakh crore will be resolved through recently created National Asset Reconstruction Company Ltd (NARCL), Modi said.
The company, also called a “bad bank”, will aggregate and consolidate stressed assets for their subsequent resolution. The Union government in September 2021 gave a guarantee of ₹30,600 crore to back security receipts issued by NARCL.
Modi said the government has strengthened banks by recapitalising them and transparently resolving their NPA issues that included transformative legislation -- the Insolvency and Bankruptcy Code (IBC). “Today, Indian banks have become so strong that they are capable of energising the economy of the country, to give it a big push. They can play a big role in making India self-reliant,” he said.
After a transparent Asset Quality Review (AQR), undertaken in 2015, gross NPAs of public sector banks (PSBs) soared from ₹2,16,739 crore on March 31, 2014, to ₹8,95,601 crore on March 31, 2018, according to government data. But the “4 R” approach – recognition, resolution, recapitalisation and reforms – from 2016, brought this down to ₹6,16,616 crore on March 31, 2021.
Modi underscored the importance of using data to enhance business and improve services. He gave the example of Goods and Services Tax (GST) data that capture financial history of an entrepreneur, which banks should leverage to proactively reach out to scrupulous businessmen who may need funds to further expand their businesses.
Modi said the government’s “Atmanirbhar Bharat” [Self-reliant India] initiative has opened “doors of new opportunities” giving amazing growth opportunities to corporate and start-ups. “Friends, there is no other better time to fund and invest in India’s aspiration -- and our banking sector must understand – this is the time to invest in ideas... this is the time to support start-ups,” he said.
