India needs four or five SBI like ‘big banks’ to meet the changing requirements of economy and industry, said Union Finance Minister Nirmala Sitharaman while stressing on improving digital processes for a long term banking future.

India needs to scale up banking to meet the changing requirements. “The way in which the economy is shifting to a different plane altogether, the way in which industry is adapting, so many new challenges keep arising. To address these challenges, we need not just more, but bigger banks.” the Union Minister said while addressing the 74th Annual General Meeting of the Indian Banks’ Association (IBA) in Mumbai on Sunday.

“If we look at post-COVID scenario, India’s banking contour will have to be very unique to India, where there has been an extremely successful adoption of digitization,” she said. While banks in many countries could not reach out to their clients during the pandemic, the level of digitization of Indian banks helped us to transfer money to small, medium and big account holders through DBT and digital mechanisms, the Minister added.

She underlined the importance of seamless and interconnected digital systems in creating a sustainable future for the Indian banking industry. “Long-term future of Indian banking is going to be largely driven by digitized processes.”

“She asked bankers to improve access to banking in every district through a rationalized approach and optimal utilization of digital technologies. There are wide disparities in access to financial services,” she added.

The Finance Minister also asked bankers to carry out digitized location-wise mapping of all bank branches for every district of the nation. “Almost two-thirds of nearly 7.5 lakh panchayats have optical fibre connection, IBA should consider this and conduct an exercise and decide where banks should have a physical presence and where we are able to serve customers even without a physical branch,” the Minister said.

The Finance Minister also spoke of the benefits of the recently formed Account Aggregator Framework. “If the framework is put to good use, we would not need specialized credit outreach. Govt. together with RBI has been helping with protocols and frameworks, helping banks attain more through the digital systems in the industry,” she said.