SME Times News Bureau | 20 Apr, 2019
Vice President M. Venkaiah Naidu said that the Indian
banking sector urgently requires systematic reforms.
Addressing the gathering at the celebration of the 125th
Foundation Day of the Punjab National Bank (PNB) recently, the Vice President called
for systemic reforms in the Indian banking sector in light of mounting Non
Performing Assets (NPAs).
He spoke of the need to have an effective and efficient
system of checks and balances in place so that the loop holes in the system are
not taken advantage of.
Naidu said that India’s financial institutions
have been commended globally for being resilient and for having withstood
global downturns and recessions well.
He opined that banks were no longer just about
strong lockers and a good interest rate on deposits. ‘They have transcended
their conventional mandates and are now at the forefront of India's development
story’, he added.
Saying that banks played a central role in
India’s quest for financial inclusion and inclusive growth, he expressed his
firm belief that India’s banking sector was poised for robust growth as the
rapidly growing business and commerce in India would turn to banks for credit
and other financial services.
He cited a number of factors such as the upwardly
mobile middle class and the digital revolution as the thrust factors behind
these growth prospects.
Citing the gains made by India in digital
technologies for banking such as India’s Immediate Payment Service (IMPS),
RuPay and the Unified Payment Interface (UPI), and the Bharat Interface for
Money (BHIM), a mobile app based on UPI, the Vice President asked banks to
further harness digital growth to scale up to the level of world-class
He also spoke about new and innovative business
models such as the Payment banks and small finance banks.
The Vice President pointed towards a number of
challenges being faced by the banking industry such as the rising Non
Performing Assets in the banking system that has the capacity to affect banks’
He said that the accumulation of bad loans
happened over a long period of time, and now, it threatens to hamper economic
growth by weakening the credit supply channel of the economy.