He said the government’s priority is to ensure that depositors and investors have trust in the financial sector by making it transparent.
“The old ways and old systems of banking and non-banking sectors are being changed,” said Modi, adding the government has taken steps to free the country from non-transparent credit culture.
The banking sector was severely harmed 12 years ago due to aggressive lending practices. He said now, instead of brushing the non-performing assets (NPAs) under the carpet, it is mandatory to report even one-day NPA.
Emphasising the government's committed to strengthening the banking sector, he said reforms in the sector would continue.
The Union Budget, too, presented a road map for strengthening the financial sector along with expanding participation of the private sector, and strengthening public sector institutions, Modi said.
On the new Public Sector Enterprises policy, he said it includes the financial sector, and banking and insurance sector has a lot of potential.
Private enterprises are being promoted wherever possible, but effective participation of the public sector in banking and insurance is needed, Modi said.
Pointing out the importance given to equity capital infusion, he said it is being done to strengthen public sector banks.
The government has allocated Rs 20,000 crore each for the current and next financial year as infusion in public sector banks.
Modi said an asset reconstruction company is being created to keep track of banks’ NPAs, and will address loans in a focussed way. “This will strengthen public sector banks,” he said.
He urged the sector to come up with innovative financial products for farmers and fishermen, among others, to free them from clutches of informal lending. Lauding the Self Help Groups, he said they have capabilities in manufacturing and services, and have good credit discipline.
Their financial discipline makes them an ideal channel for investment in the rural infrastructure which can turn out to be good financial model for the sector, he said.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.