The 73rd annual general meeting of the Indian Banks’ Association (IBA)—a collection of Indian banks and financial institutions founded on 26th September 1946—was recently held virtually. During this gathering, India’s Finance Minister recommended that the banks implement new reforms and ensure timely enforcement of existing ones. The EASE (Enhanced Access and Service Excellence) Reforms Agenda, introduced in January 2018, is a prime example of such measures put into effect via IBA.
Importance of Linking Aadhaar
Aadhaar-seeded bank accounts are necessary for the successful implementation of Direct Benefit Transfer (DBT). To prevent account duplication and verify uncertified accounts, the Finance Minister proposed that each account be linked to the holder’s Aadhaar number by March 31, 2021.
Bridging the Financial Inclusion Gap
Despite the existence of 42 crore Jan Dhan bank accounts in India, there is still a significant need to broaden financial inclusion by incorporating more individuals. To this end, banks were encouraged to promote RuPay cards, especially given its newfound global acceptance; and to ensure all Indian customers have these cards. Launched by the National Payments Corporation of India (NPCI), RuPay is India’s first domestic Debit and Credit Card payment network.
Push Towards Digitisation
The Finance Minister also stressed the importance of Universal Payments Interface (UPI). To instigate a shift towards digitisation, non-digital payments were discouraged, thus supporting the Digital India Initiative. UPI—an initiative by NPCI, Reserve Bank of India (RBI), and IBA—provides a single platform that encompasses various banking services and features.
Bank Amalgamation
Another point raised at the meeting was the need for larger banks capable of financing substantial projects, which necessitates more amalgamations akin to the State Bank of India (SBI). The amalgamation should not be merely an exercise of uniting two or three banks, but should serve as a mechanism for growth capable of meeting new demands from the industry, economy, and businesses in a rapidly evolving world.
The Need for Increased Lending
Highlighting the need for more proactive lending amidst economic turmoil, the Finance Minister encouraged banks to not recoil from their principal business. To keep the economy’s wheels turning, lending is paramount; however, it must be carried out with prudent risk management instead of altogether avoiding it.
The 73rd IBA meeting underscored the importance of extensive financial inclusion, digitisation, and a more robust banking sector in driving economic growth and development.
