Govt., RBI working to lower banking costs, expand reach: Mukherjee

March 27th, 2011 - 4:42 pm ICT by ANI  

Pranab Mukherjee Mumbai, Mar 27 (ANI): Expressing concern over the fact that bank penetration is limited to only a few customer segments and geographies, Union Finance Minister Pranab Mukherjee on Sunday said that the government was working in collaboration with the Reserve Bank of India (RBI) to address these concerns.

“The cost of banking intermediaries in India is high and bank penetration is limited to only a few customer segments and geographies,” said Mukherjee, while speaking at Sir Sorabji Pochkhanawala Memorial Lecture 2011 here as part of the centenary celebrations of Central Bank of India.

“We are trying to address this in collaboration with the Reserve Bank of India, and with the active participation of the banking and non-banking financial entities,” he added.

Hoping that this perspective would guide the growth of Indian banking system in the coming years, Mukherjee said: “While greater competition is welcome, we have to guard against the competitive race to the bottom.”

Mukherjee further said that PSU banks were playing a very important role in India’s economic growth and that they constitute over 72 per cent of the banking sector assets.

“While they are expected to improve their outreach and scalability for sustaining high growth of the economy, they are second to none in retail banking practices and profitability. There are, however, several concerns that need to be fully addressed,” he said.

Asserting that newer perspectives and approaches towards financial inclusion are the need of the hour, Mukherjee said: “However, as I said, the outcomes of these efforts are yet to show the desired results.”

” There is a case for the policy makers and other stakeholders to re-strategize the financial policies that are meant to reach the un-reached and the unbanked sections of our country,” he added. (ANI)

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