Union minister of state for finance Jayant Sinha said on Friday that banks must evolve business strategies and business models as the economy grows from the current $2 trillion. “We must have a range of products and services and banks must innovate for India in India,” Sinha said while delivering the keynote address at the FE Best Banks Awards.
“To be in the banking space today is heaven,” the minister said, adding that if the economic growth is a non-inflationary 7-8%, “banks’ earnings can grow at 25-30%”. The Reserve Bank of India, the minister pointed out, was opening up the banking sector for differentiated players such as payments banks and small finance banks. “Once we have differentiated licences the landscape will evolve tremendously,” he said.
Sinha said that once the economy reached a size of $4-5 trillion, India should have three or five global-sized banks. “These banks should be on par with the world’s top banks in the US, Europe and Japan,” he said.
The government’s Jandhan Yojana, the minister said, had made it possible for almost every household in the country to have a bank account. “We are trying to see how schemes such as the Swavalamban scheme can be improved. Currently, the government matches every R12,000 with a sum of R1,000. And we are hoping to rope in corporates as well,” the minister said.