Tag: nirmala

India needs 4-5 SBI-size banks to meet growing needs of economy: Sitharaman

Banking & Finance

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India needs at least four or five different State Bank of India (SBI) size banks to meet the growing needs of the economy, said Finance Minister Nirmala Sitharaman. She also urged Indian Banks’ Association (IBA) to develop a digitised district-wise map of bank branches so that locations with no banking presence are identified to ensure that they either have a physical or digital footprint.

“One of the driving forces for the amalgamation (of banks) was that we need to scale up banking to meet the new changing and growing requirements of the economy. But that was thought of even before the pandemic. Now all the more reason why we would need four or five SBIs in the country,” Sitharaman said at the 74th AGM of the Indian Banks’ Association.

SBI is India’s largest bank with total deposits of ₹37.20 lakh crore and gross advances of ₹25.23 lakh crore as at June-end 2021.

“Amalgamation is a very important exercise because the way in which the economy is shifting to a different plane altogether, the way in which the economy, together with the industry, is also looking at various ways of adapting to a post-pandemic era, there are ever so many challenges. And, in fact, even before the pandemic, one of the driving forces for the amalgamation was that India needs a lot more banks, a lot more big banks,” she said.

Financial inclusion

On the need to expand banking to achieve financial inclusion, Sitharaman said, “Even today, there are very many districts in which even big panchayats don’t have a physical bank. I am not saying that everywhere you need to have physical, brick-and-mortar banks. Digitisation has saved a lot of cost for you even without compromising on the service you provide. But even then there are such parts of this country which cannot but have at least one brick and mortar [bank],” Sitharaman said.

The minister observed that almost two-thirds of the panchayats have already been given optical fibre connections under the government’s optical fibre connectivity programme.

However, there are heavy economic activity dominant areas in which not even one bank prevails. The minister asked the bankers to closely look at the centres of economic activities, even if they are completely in rural areas.

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LS okays amendment in General Insurance Business (Nationalisation) Act

Banking & Finance

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The Lok Sabha on Monday approved amendments to General Insurance Business (Nationalisation) Act, 1972. This will help the government shed its shareholding in public sector general insurance companies.

Meanwhile, Finance Minister Nirmala Sitharaman has assured that the amended Bill will not take away the rights of anybody. This remark is in response to the allegation that the government is privatising insurance companies that will be against the interest of employees and policyholders.

Also read: Govt moves to shed stake in a general insurance co

“All these allegations are baseless. The government is not taking away rights of anyone. Private sector insurance companies are raising money from public and with the help of that, providing insurance products at lower premium,” she said while responding to allegations on the Bill from the opposition bench. Later the Bill got passed with voice vote.

Earlier on July 30, while introducing the Bill, Sitharaman had categorically said that apprehensions mentioned by the members are not well-founded at all. “What we are trying to in this is not to privatise. We are bringing some enabling provision so that the government can bring in public participation, Indian citizens, the common people’s participation in the general insurance companies,” she had said.

The amendment is a follow-up to the Budget announcement in which Sitharaman proposed ‘privatisation’ of one general Insurance company in the current financial year. On July 30, she said a public-private participation in general insurance industry will help get more resources which will bring in better technology infusion and also enable faster growth of such companies.

Three amendments

The Bill proposes three amendments. First one aims “to omit the proviso to section 10B of the Act so as to remove the requirement that the Central Government holds not less than 51 per cent. of the equity capital in a specified insurer”. The second one will insert a new section 24B “providing for cessation of application of the Act to such specified insurer on and from the date on which the Central Government ceases to have control over it.”

And the third one will insert “a new section 31A providing for liability of a director of specified insurer, who is not a whole-time director, in respect of such acts of omission or commission of the specified insurer which has been committed with his knowledge and with his consent.”

“With a view to providing for greater private participation in the public sector insurance companies and to enhance insurance penetration and social protection and better secure the interests of policy holders and contribute to faster growth of the economy, it has become necessary to amend certain provisions of the Act,” statement of objects and reasons of the Bill said.

As on date, there are four general insurance companies in the public sector – National Insurance Company Limited, New India Assurance Company Limited, Oriental Insurance Company Limited and the United India Insurance Company Limited. Now, Besides these, there is one re-insurer, General Insurance Corporation and one specialised one for agriculture insurance.

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