Prime Minister Narendra Modi on Friday asked private players in the financial services sector to roll out innovative products for the self-help groups (SHGs), which have great capability from manufacturing to services sector.

“SHGs have had a great credit discipline. Private sector should, through SHGs, look at investment opportunities in rural infrastructure. This is not about welfare programme, but can prove to be a good business model”, Modi told a webinar on implementation of Budget announcements relating to the Department of Financial Services (DFS) in the Finance Ministry.

India attracted $2.7 billion in fintech investment in 2020: KPMG

The Prime Minister noted that it is the responsibility of financial sector to support rural units to become Aatmanirbhar. He also said that government is taking measures to make the financial services sector vibrant, proactive and strong.

SHGs, MGNREGS help rural population sustain during lockdown

Modi also urged financial services players, including banks, to develop new specialised financial products for fintechs and other start-ups. “Our fintech start-ups are doing a great job and are exploring to do well in newer areas. I am told that the strong deal momentum one saw last year in Indian start-up ecosystem will continue this year as well. You must support these start-ups in terms of enhanced credit flow. India’s fintech market could become ₹6 trillion in next five years”, he added.

He stressed the need to improve credit flow to businesses to meet the needs of a fast recovering economy. Modi asserted that government would stand by all business decisions taken with the right intent.

Financial empowerment

Modi highlighted that the country is now moving from financial inclusion towards financial empowerment. The government will, wherever possible, encourage private sector, he said, adding that steps will also be taken to strengthen public sector banks through capital infusion and strengthening of balance sheet. Although the government endeavour is to promote the private sector, public sector presence and role is important in areas like banking and insurance, he noted.

“Various steps to strengthen financial services were announced in the Budget. Public and private sector will have to take forward reforms undertaken in Budget. A proactive approach from all stakeholders is necessary to take India to new heights”, he added.

Modi said the proposed Asset Reconstruction Company (ARC) structure announced in the Budget will address the issue of non-performing assets (NPAs) in banks and help strengthen the balance sheets of public sector banks. “There won’t be any need to hide any of the non-performing assets under the carpet as was done before”, he added.

Towards transparency

He noted that the Budget had announcements around having a new development financial institution (DFI) to meet the long-term infrastructure financing needs of the country. There is also a new backstop facility that is being introduced for aiding the development of corporate bond market.

Modi felt that both depositors and investors should experience transparency when dealing with the Indian financial system and this is the focus of the government. People should have trust that their capital is safe and it will grow and government wants to remove the non-transparent credit culture.

“In the name of aggressive lending a decade ago we have seen how damage was done to our financial services sector”, he added.

Related Topics
comment COMMENT NOW