Lenders welcome Modi's call for banking sector reforms

PM Modi

The banking sector has seen several significant improvements in the last few years but there is room for more reforms, specifically in the digital segment, bankers said.

Prime Minister Narendra Modi, in an exclusive interview with Moneycontrol, said that the Indian banking sector has seen several changes.

"Over the last many years, the world has been keenly watching India’s growth across many sectors. Our economic, banking and other reforms have been hailed by international organisations and domain experts," Modi said.

Additionally, bankers said that there have been several new reforms introduced in the sector that have helped banks reach to the last-mile customer.

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"We have seen lots of reforms in the last few years, schemes such as Pradhan Mantri Jan Dhan Yojana (PMJDY), Jan Suraksha schemes, Mudra, Svanidhi, etc, have helped a lot in improving financial inclusion," said Ajay Kumar Srivastava, managing director and CEO (MD and CEO), Indian Overseas Bank.

Another MD and CEO of a bank, who asked not to be identified, echoed his sentiments on the steps taken so far but added that the task is incomplete.

"Digital expansion opens the field for banks to explore immense opportunities. Here, reforms for fintech companies and banks can be worked upon," this person said.

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Similarly, Srivastava said: "On the digital front also, lots of initiatives have taken place. It is an ongoing journey and many new products and services will be visible going forward. We at PSBs (public sector banks) are doing everything possible to provide quality banking experience to people."

Joydeep Dutta Roy, executive director, Bank of Baroda, told Moneycontrol that India's G20 presidency has been a defining period not just for showcasing a new world order but also for highlighting India's leadership and excellence in different areas.

"Our PM Modi ji has very succinctly elaborated the above and India's financial system robustness coupled with the gigantic strides made by the country on the digital and payments ecosystem are great examples of how financial sector reforms and investments in technology can be great levers for a country's growth and economic development right up to the last mile," said Dutta.

Suresh Khatanhar Deputy Managing Director (DMD), IDBI Bank said: "The banking sector has seen a sea change in the past 9 years with government’s major focus on digitization, promotion of efficiency and improved banking regulations

The introduction of new reforms consisting of recognition, resolution and recovery value for non-performing assets, recapitalising of PSBs has helped deal with challenges pertaining to bad loans, and slowing of credit flow that were negatively affecting the economy."

Recent reforms

The last few years were witness to new programmes like mass usage and adoption of the JAM trinity (Jan-Dhan, Aadhaar and mobile), issuance of licences to payments banks and small finance banks (SFBs).

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With SFBs playing a key role in promoting financial inclusion, the banking sector has seen financial services reaching to every part of the country in some form or the other.

Additionally, Khatanhar said: "Inspite of increasing global inflationary trends, we foresee stable growth in India’s economy, and consequently in the banking sector leading to improved asset quality, strong credit growth and decline in non-performing loan ratios."