Money & Banking

Banks catalysts of economic revival: FM

Our Bureau. Mumbai | Updated on September 09, 2020

Finance Minister Nirmala Sitharaman   -  PTI

Banks are the catalysts for reviving the economy, which has entered the ‘unlock’ phase amid the Covid-19 pandemic, according to Finance Minister Nirmala Sitharaman.

In this regard, she emphasised that Banks should address every expectation of their customers within the prudential norms.

Sitharaman asked public sector bank (PSB) chiefs to ensure that the economic revival is speedy and speedier.

She addressed PSB chiefs and Executive Directors at the inauguration of “PSB Alliance -- Door Step Banking” service. The event was organised by the Indian Banks’ Association (IBA).

The Indian economy contracted by a massive 23.9 per cent in the first quarter of FY2021 as the pandemic hit it.

To mitigate the burden of debt servicing brought about by disruptions on account of the fall-out of the COVID-19 pandemic, the Reserve Bank of India (RBI) allowed Banks to offer a moratorium on term loans and defer of interest on working capital facilities (both from March 1 till August 31, 2020) and eased working capital facilities.

Further, the central bank allowed one-time restructuring under the “resolution framework for COVID-19-related stress”.

Undertake govt schemes

While PSBs should not forget their core activity of lending money and earn out of it, Sitharaman underscored that they also have to play their part in undertaking government schemes.

She asked PSB chiefs to ensure that their staff know details of all the government schemes offered through the branches.

Penetration of Banking Services

The Minister asked PSB chiefs to introspect on the issue of penetration of banking services in some states, including some parts of developed states, not being up to the mark.

While banking service penetration has reached a saturation point in Tier-I, Tier-II and Tier-III cities, she highlighted that states such as Meghalaya, parts of Jharkhand and Chhattisgarh, and even parts (hilly/ forested districts) of developed states such as Tamil Nadu and Gujarat having limited access to banking services.

Sitharaman suggested that Banks can reach their services to the inaccessible parts of the country via ‘Bank Mitras’ and mobile banking. They don't need to have a physical presence in such areas.

Published on September 09, 2020

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