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Prime Minister Modi Points To Banking Reforms Achieved, Seeks Greater Digital Inclusion

The banking sector has recovered in the last seven years owing to the government's efforts, Prime Minister Narendra Modi said.

<div class="paragraphs"><p>Narendra Modi, India's prime minister. Photographer: Robert Perry/EPA/Bloomberg</p></div><div class="paragraphs"><p><br></p></div><div class="paragraphs"><p><br></p></div>
Narendra Modi, India's prime minister. Photographer: Robert Perry/EPA/Bloomberg

The Indian banking sector has recovered in the last six-seven years owing to efforts by the government, according to Prime Minister Narendra Modi.

Banks now have a strong capital base, good liquidity and no provisioning backlog for non-performing assets, he said at the concluding session of a two-day conference, "Creating Synergies for Seamless Credit Flow and Economic Growth", at the Ashok Hotel in Delhi on Thursday. Representatives from ministries, industries, banks and financial institutions attended the event.

The government, Modi said, has addressed various challenges faced by banks since 2014, including NPAs and recapitalisation. It has initiated reforms in the Insolvency and Bankruptcy Code, set up a dedicated stressed asset management vertical during the Covid-19 pandemic and a debt recovery tribunal. It has recovered over Rs 5 lakh crore in bad debts from its predecessor, with another Rs 2 lakh crore in stressed assets expected to be resolved soon, he said.

Jan Dhan Scheme

Nearly 44 crore accounts were opened under the Pradhan Mantri Jan Dhan Yojana in the past seven years, according to Finance Ministry data. Modi said banking research has revealed a correlation between higher number of Jan Dhan Accounts and reduced crime rate in many places. The scheme was also regarded as one of the greatest examples of financial inclusion in the world, he said.

He urged banks to each bring in at least 100 fully digital clients of considerable size, which will help push forward the Digital India mission.

Modi also said he has instructed banks, urban ministries and mayors to include more street vendors into the digital ecosystem and teach them to transact digitally on mobile phones, under the PM SVANidhi scheme. This would in turn create their digital histories, he said, making them better candidates for small-sized loans.

'Lend To Agriculture'

The prime minister also said that with the government offering authenticated property ownership documents to villagers, more banks should come forward to help them as it would be “safe to offer loans to villagers and the youth there”. He suggested banks lend to the agriculture sector, namely the food processing industry, agricultural machinery and solar projects.