Lok Sabha Question No. 225 (UNSTARRED), answered on 2021-11-29
Subject: Requirement of Banks
Ministry: FINANCE
Asked by: Jaswantsinh Sumanbhai Bhabhor, Parbatbhai Savabhai Patel, Naranbhai Bhikhabhai Kachhadiya

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION NO. †225

TO BE ANSWERED ON THE 29 TH  NOVEMBER 2021/ AGRAHAYANA 8, 1943 (SAKA)

## Requirement of Banks

## †225 . SHRI JASWANT SINGH BHABHOR: SHRI NARANBHAI KACHHADIYA: SHRI PARBATBHAI SAVABHAI PATEL:

Will the Minister of FINANCE be pleased to state:

(a) whether India needs four to five more banks like State Bank of India to meet the changing needs of the Indian economy, if so, the details thereof;

(b) whether it has also come to the notice of the Government that the long term future of Indian banking system will be driven by the digital processes;

(c) if  so,  the  details  thereof  along  with  the  efforts  being  made  by  the  Government  in  this regard; and

(d) the details of the efforts  being made by the Government to ensure that the people can also take advantage of the digital and convenient banking facilities in the country including rural and tribal areas of Gujarat?

## ANSWER

## THE MINISTER OF STATE FOR FINANCE (DR. BHAGWAT KARAD)

(a): Amalgamation of Public Sector Banks (PSBs) has aimed at creating strong and competitive banks, serving as catalysts of growth and with improved risk profile of the banks equipped to harness scale and synergy benefits. The benefits to the thirteen banks amalgamated into five in FYs 2019-20 and 2020-21 have started flowing in as a result of wider reach and distribution network, and has enabled them an increase in flow of credit through greater financial capacity, wider  offerings  with  enhanced  customisation  for  customer  benefit,  cost  efficiencies  for investment in technology and digitalisation, and a robust capital adequacy and improved ability to raise funds from market.

(b)  to  (d):  With  regard  to  the  long  term  future  of  Indian  banking  system  driven  by  digital processes, the Government through its unique JanDhan-Aadhar-Mobile (JAM) trinity initiative, has linked a billion-plus accounts, biometric identity and mobiles to enable financial transactions on unprecedented scale and ease. These are underpinned by rapid digitalisation of a continent-scale  economy,  an  integrated  GST  Network  leveraged  for  credit  access  to  small businesses, the new Account Aggregator framework for unlocking access to data on consumer consent basis,  regulatory  sandboxes  created  by  the  payments  and  insurance  regulators,  and  a deep commitment to financial inclusion for unlocking value at the bottom of the pyramid.

A  number  of  steps  have  been  taken  to  facilitate  digital  banking  including, inter-alia ,  the following:

1. Under the Public Sector Banks (PSB) EASE Reforms Agenda, -
- i. Enhanced  access  to  mobile  banking  and  Internet  banking  has  been  enabled through an increase in the PSB average for the number of services offered (43), customer-friendly features (135) and regional languages available on the customer interface (8);
- ii. End-to-end  automated  digital  lending  has  been  introduced  in  larger  PSBs  for unsecured  personal  loans  (in  five  PSBs),  loans  to  microenterprises  ('Shishu Mudra',  in  five  PSBs)  and  renewals  of loans  to  micro,  small  and  medium enterprises (in three PSBs);
- iii. Digital retail loan request initiation through digital channels has been enabled in all  the  seven  large  PSBs,  with  retail  disbursements  from  loan  requests  so initiated in the financial year (FY) 2020-21 amounting to Rs. 40,819 crore;
- iv. Customer-need-driven, analytics-based credit offers have been given an impetus, resulting in Rs. 49,777 crore of fresh retail loan disbursements by the 7 larger PSBs in FY2020-21.
2. Government's  Jeevan  Pramaan  initiati ve  for  pensioners  has  enabled  pensioners  the facility to update their annual life certificate online.
3. Initiation of digital lending has been made contactless through psbloansin59minutes.com, using triangulation of credit bureau, income-tax and goods and services tax (GST) data, to provide online in principle approval for loans to Micro, Small and Medium Enterprises (MSMEs), home loans, personal loans and automobile loans. As on 31.10.2021, 2,62,475 loan applications amounting to Rs. 51,709 crore have been sanctioned on this platform.
4. Online bill discounting for MSMEs has been enabled on a competitive basis through on boarding of PSBs onto the Trade Receivables Discounting System (TReDS) platform.
5. Institution of comprehensive, automated Early Warning Systems (EWS) in banks, with ~80  EWS  triggers,  use  of  third-party  data  and  workflow  for  time-bound  remedial actions, to proactively detect stress and reducing slippage into NPAs.

As a result, nearly 72% of financial transactions of PSBs are now done through digital channels, with customers active on digital channels having doubled from 3.4 crore in FY2019-20 to 7.6 crore in FY2020-21, and the rapidly expanding credit reach has en abled improvement of India's rank on 'Getting credit', as per World Bank's Ease of Doing Business Index, from 42 to 25.

Further in respect of the rural and tribal areas of Gujarat, in addition to the steps/initiatives taken as mentioned in para above, as per inputs received from State Level Bankers Committee, Gujarat, the robust network of 10,000 branches and 10,500 business correspondents, including 6,000  and  6,500  in  rural/tribal  areas  of  the  state  respectively,  have  enabled  opening  of  1.02 crore of PMJDY accounts in rural/tribal areas with these customers been offered debit cards and all  other  facilities  like  UPI,  AePS,  mobile  and  Internet  banking,  etc.  to  transact  digitally. Government of Gujarat has signed an MoU with Bank of Baroda for installation of ATMs in tribal areas and more than 30 ATMs, covering 242 tribal villages, have been operationalised and for awareness and penetration of digitalisation in rural/tribal areas of the state financial literacy camps have been organised