FM Sitharaman to banks: Link all A/Cs with Aadhaar by March 2021

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November 11, 2020 3:15 AM

Highlighting the need for more large banks that can finance large projects, Sitharaman said: “There is a lot of amalgamation happening and I can always wish to have each of the amalgamated bank to be as big as SBI.”

As for the Aadhaar-seeding of bank accounts, the minister said this should be done ideally by December and “if not then, then by March 31, 2021”.As for the Aadhaar-seeding of bank accounts, the minister said this should be done ideally by December and “if not then, then by March 31, 2021”.

Finance minister Nirmala Sitharaman on Tuesday directed banks to link all accounts with Aadhaar numbers of respective customers latest by March 31, 2021.

Addressing the 73rd annual general meeting of the Indian Banks’ Association, the minister impressed on banks to focus on digital transactions and asked them to promote RuPay cards over others now that the card network has become global.

“UPI (unified payments interface) should be a common parlance word in all our banks,” she said. “Whoever needs a card, RuPay will be the only card you would promote and I would not think it is necessary today in India when RuPay is becoming global, for Indians to be given any other card first than RuPay itself,” she added. There were more than 600 million RuPay cards as of January.

India’s financial inclusion story, which has witnessed fast progress in recent years, isn’t over yet and it needs further push, the minister said. Digital transactions will have to be focused on and non-digital ones discouraged.

As for the Aadhaar-seeding of bank accounts, the minister said this should be done ideally by December and “if not then, then by March 31, 2021”.

“The financial inclusion story is not over and you still have inclusion to carry forward. You still have so many out there who do not have a bank account. When I say bank account, it is Aadhaar-seeded and do not want to hear from any bank that it can do direct benefit transfer (DBT) because the government wants it to do but does not know how many accounts are not Aadhaar-seeded,” said Sitharaman.

Highlighting the need for more large banks that can finance large projects, Sitharaman said: “There is a lot of amalgamation happening and I can always wish to have each of the amalgamated bank to be as big as SBI.”

“We want large banks as much as we want smaller finance companies, smaller banks, NBFCs because they can reach out. I am glad that the RBI has already worked out the co-origination rules for you all to function,” the minister said.

Speaking at the Idea Exchange programme of the Indian Express Group last week, chief economic adviser Krishnamurthy V Subramanian had for the entry of more banks in the financial system to ensure greater competition as well as credit penetration. While India has only about 500-600 banks, including the regional rural ones, the US houses some 26,000 banks even while having a fourth of India’s population, he pointed out.

Although only half a dozen large banks dominate the American financial system, the smaller ones act as lenders to mostly MSMEs, thus, assuming an important role in the economy. Also, there is only one Indian bank (SBI) in the top 100 globally, against 18 in China.

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1FM Sitharaman asks banks to ensure all accounts are linked with Aadhaar by March next year