Pune: Calling for an end to “lazy banking”, Prime Minister Narendra Modi on Saturday said he is against any political interference in functioning of banks but supports necessary “intervention” in the public interest.
Calling upon the banking sector to establish banks which rank among the top banks of the world, Modi said that banks need to be run professionally and assured them that there would be no interference.
“But accountability is essential,” Modi said while addressing top executives of public sector banks and other financial institutions here on the last day of a two-day bankers’ retreat, ‘Gyan Sangam’.
Modi said the government had no vested interest, and public sector banks can derive strength from this fact. Stating that India is a democracy, Modi said he is against political interference, but supports political intervention, in the interest of the people.
He said “political intervention will enable the voice of the common man to reach such institution”.
Modi also called for an end to “lazy banking” and said that banks need to take a proactive role in helping the common man.
The Prime Minister asked the banks to develop dedicated teams to fight cyber crime and also highlighted the issue of poor financial literacy in the country.
Emphasising on the need for Indian banks to reach top of the global lists, he said, “The banking sector of a country mirrors its economic rise. Japan and China had banks in the top ten banks of the world during their economic rise.”
The two-day retreat is being attended by top bankers including SBI Chairman Arundhati Bhattacharya and was addressed by Finance Minister Arun Jaitley as well as Reserve Bank Governor Raghuram Rajan.
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“As part of Corporate Social Responsibility, banks should take up one sector each year to play a positive role,” he said adding banks should redefine parameters for success and prioritise loans to enterprises that generate more employment. For public sector banks, Modi said with 81% of branches and 77% of deposits, their net profits should improve from current levels of 45%.
Emphasising on the need for developing common strengths among the 27 public sector banks, he suggested infrastructure sharing in areas such as software and advertising.
Giving the example of number portability in the telecom sector, he said PSU banks, as a team, should also be conscious of the direction in which the country is moving, and work towards simplifying procedures to help common man.
Meanwhile,Â Reserve Bank Governor Raghuram Rajan made a strong case for cleaning up bad debts of banks and restructure other possible NPAs within a year to put theÂ economyÂ back on track.Â He also favoured channelising “full savings” of the households into the financial system so that requisite resources for growth are made available.
“In the short term (up to 12 months) there is need to clean up the NPAs and then restructure other stressed loans so as to put the economy back on the track,” Rajan said at the two-day Gyan SangamÂ in Pune. Total GrossÂ Non Performing AssetsÂ of public sector banks stood at over Rs 2.43 lakh crore as on end-September 2014. The top 30 NPAs account for Rs 87,368 crore or 35.9% of total gross NPAs of PSBs.
Rajan said the bona fide mistakes made by the bankers while taking commercial decisions should be protected by the government. “If the officers are hauled up for such decisions this would to lead to delay in good decisions because of avoidance of risk,” he said.