Post by : Badri Ariffin

New Delhi: India is on the path to establishing prominent, world-class banks that can accommodate the capital requirements of its rapidly developing economy. Finance Minister Nirmala Sitharaman announced on Thursday that the government is in active discussions with the Reserve Bank of India (RBI) and commercial banks to craft the next stage of banking reforms.

At the 12th State Bank of India Banking and Economics Conclave in Mumbai, Sitharaman stated, “India requires several large banks of international caliber.” She signified that conversations regarding the forthcoming steps have already commenced.

The government is considering various options, such as merging existing banks and forming new institutions, to create more robust banks that can finance infrastructure initiatives and enhance credit accessibility. Over the last decade, India has already seen significant consolidations within its public banking sector. In 2017, SBI merged with its affiliate banks, and in 2019, ten public sector banks were consolidated into four, shrinking the total from 27 to 12 state-managed banks.

Beyond just consolidation, Sitharaman stressed the significance of cultivating a supportive banking environment. She underscored the importance of maintaining a “human touch” in customer service, advocating for staff who are proficient in local languages. Furthermore, she called for streamlined loan processes for MSMEs, arguing for local insights to drive credit decisions rather than depending excessively on paperwork and external credit ratings.

On the tech front, the finance minister articulated India's measured approach towards regulating artificial intelligence (AI), aiming to balance the need for innovation with national security. The government’s ₹1 trillion Research, Development, and Innovation (RDI) fund is set to further enhance private sector innovation, complementing the wider banking reforms.

This initiative to cultivate more formidable banks comes at a time of rising optimism regarding India's economic future, buoyed by recent GST reforms and increasing private sector investments. By establishing financial institutions that meet global standards, India aims to sustain its economic growth and reinforce ambitious infrastructure and credit expansion initiatives.

#Global News #Tech News #AI