Banks must not distance customers: Finance Minister Nirmala Sitharaman

Banks must not distance customers: Finance Minister Nirmala Sitharaman

November 11, 2020

Sitharaman urges bankers not to shy away from lending, but take commercially justifiable decisions

Banks must not shy away from lending, especially when the economy is facing major challenges, Finance Minister Nirmala Sitharaman said on Tuesday. Lenders should also offer all Indian customers the Rupay card first, discourage non-digital payments, and link every account with the customer’s Aadhaar number by March 31, 2021, she added.

“The pandemic has created distance among us, but I hope it is only that distance to keep the virus away, not our customer[s] away,” Ms. Sitharaman said at the Indian Banks’ Association annual general meeting. Bankers, she asserted, no longer needed to fear the three Cs (CBI, CVC and CAG) and must not hesitate in taking decisions.

“We are keen that the fear that was voiced when we came in 2014 about the 3Cs has to go away from your mind. No more fears of the 3Cs… the CVC himself is developing your training courses, so you can take commercially justifiable decisions and you need not fear taking decisions, that came into your mind during some unfortunate period,” she said.

‘Principal business’

Department of Financial Services Secretary Debasish Panda reminded banks that lending is their principal business and they must lend after undertaking prudent risk management rather than avoid lending altogether.

“You cannot pay your depositors unless you lend and make money. You cannot enhance the wages of your employees if you don’t earn sufficient profits. Your shareholders will have no interest in you if you don’t give them dividend,” he said.

“A variety of steps have been initiated, including by the CVC, the RBI and the government that ensure there is no reason for you to be worried if there is prudent lending, properly risk-managed,” Mr. Panda said, suggesting that banks use more technology so that ‘no discretionary scope is available that could be questioned.’

While India now had 42 crore Jan Dhan bank accounts, the Minister told banks that work remained to widen financial inclusion.

Aadhaar link push

“You still have so many out there who don’t have a bank account that is Aadhaar-seeded. I do not want to hear from any bank that they can do DBT [direct benefit transfer] because the government wants me to do it, but I still cannot tell from that how many accounts are not Aadhaar-seeded,” Ms. Sitharaman said.

“This is giving me a feeling that we may have some duplication, some form of unverified accounts and we are not really sure about each of these accounts. I don’t think, beyond December 31, I can even be patient to hear that there are accounts in banks that are not yet Aadhaar-seeded,” she added, setting March 31, 2021, as the outermost deadline for the process to be completed.

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