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Indian Economy

Annual Meeting of IBA

  • 11 Nov 2020
  • 4 min read

Why in News

Recently, the Indian Banks’ Association (IBA) has held its 73rd annual general meeting virtually. In the meeting, the Finance Minister of India suggested the banks to bring new reforms and implement the existing ones in a timely manner.

Key Points

  • On Linking Aadhar:
    • Aadhaar-seeded bank accounts are needed to reach people by Direct Benefit Transfer (DBT).
    • Banks should link every account with the customer’s Aadhaar number by 31st March 2021 in order to stop the duplication of accounts as well as verify the unverified accounts.
  • On Widening Financial Inclusion:
    • Even though there are 42 crore Jan Dhan bank accounts in India, there is a need to widen financial inclusion by adding more people.
    • Banks should promote RuPay cards over others now that the card network has become global and also make sure that all Indian customers have it.
      • RuPay is the first-of-its-kind domestic Debit and Credit Card payment network of India.
      • It was launched by the National Payments Corporation of India (NPCI), an umbrella organisation for operating retail payment and settlement systems in the country.
  • On Digitisation:
    • Unified Payments Interface (UPI) should be a common parlance word in all the banks.
      • UPI is a single platform that merges various banking services and features under one umbrella, established by the NPCI together with the Reserve Bank of India (RBI) and IBA.
    • Non-digital payments should be discouraged in order to give impetus to the Digital India Initiative.
  • On Amalgamation of Banks:
    • There is a need for more large banks that can finance large projects and for that more amalgamation as big as State bank of India (SBI) are needed.
      • Amalgamation should not just remain as an exercise to bring two or three banks together, it should now become an organic mechanism to grow, and to grow to such scales that the new demands from the industry, economy, and businesses can all be met up in a changing world.
    • Large banks are also needed as much as the smaller finance companies, smaller banks, and Non-Banking Financial Companies (NBFCs).
      • While India has only about 500-600 banks, including the regional rural ones, the USA has around 26,000 banks with a fourth of India’s population.
      • There is only one Indian bank (SBI) in the top 100 globally, against 18 in China.
  • On Lending:
    • Banks must not shy away from lending, especially when the economy is facing major challenges and as lending is their principal business and they must lend after undertaking prudent risk management rather than avoid lending altogether.

Source: TH

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