Union Finance Minister Arun Jaitley said on Friday that payments banks have the potential to change banking habits in the country as more and more people entering formal banking network would act as a game-changer for the economy.
“Payments banks will change the banking habits of people, it will chang+e the way they think, it will change the way they keep the money, where they keep their money, it will change the way they pay,” Mr. Jaitley said on Friday at an event to mark the Indian Bank Foundation Day.
Earlier this week, the Reserve Bank of India granted an in-principal approval to 11 applicants for launching such niche banks within next 18 months.
The Finance Minister also said that going ahead, banking is going to be more of technology-enabled and effort is now on to expand banking to every unbanked corners of the society. “...using banks for all transactions, small and middle will become a habit of the people…More and more outside of the regular economy will get into the economy...And this itself is going to be a big game-changer as far as the Indian habits and Indian economy is concerned.”
Bad loansHe also said that though, on one hand, the banking network is expanding across the country, a lot of work still remained to be done as the bad loans of public sector banks have reached an ‘unacceptable’ level.
“NPAs [Non Performing Assets], which have reached to the present level are unacceptable…They reached this level partly because of indiscretion, partly because of inaction and partly because of challenges in some sectors of the economy, which were evident through the high NPA levels in these sectors.”
Gross NPAs of PSU banks stood at Rs.2.67 lakh crore at the end of last fiscal ended March 31, 2015, accounting for over 86 per cent of the gross NPAs for the entire banking industry.
The Finance Minister, however, expressed confidence that banks would be able to address these challenges over the next few quarters.
