The UPA government has formally started the process of seeking the supports of other political parties in Parliament to push through several financial sector legislative proposals including Insurance Amendment Bill, said finance minister Pranab Mukherjee on Sunday.
?The cost of banking intermediaries in India is high and bank penetration is limited to only a few customer segments and geographies,? Mukherjee said. ?We are trying to address this in collaboration with the Reserve Bank of India, and with the active participation of the banking and non-banking financial entities,? he added.
On finalisation of the licensing norms for the new private sector banks, the FM said that the RBI has prepared the draft norms and ministry of finance (MoF) is examining them. However, he denied any rift between MoF and RBI over the issue of permissible FDI in the new banks. ?Both RBI and MoF are parts of the government and no difference is there. Any difference of stands is a matter of media speculation.” he said.
Replying to a few queries on higher tax on certain industries, which are already facing higher taxes, Mukherjee said any raise in the tax for certain industries has been done to facilitate the implementation of Goods & Services Tax (GST).
?If I reduce taxes in certain segments, no state government will support me to implement GST. I need their support to implement GST. I appeal to different chambers of the industries to create awareness on convergence of views on GST which is good for the economy and am sure industries want it,” said Mukjerjee.
However, expressing concern over high costs and limited reach of banking services, Mukherjee said that the government was working in collaboration with RBI to address these concerns. The cost of banking intermediaries in India is high and bank penetration is limited to only a few customer segments and geographies, Mukherjee added..
?We are trying to address this in collaboration with the RBI , and with the active participation of the banking and non-banking financial entities,? he added.
Mukherjee also said that there was a need to reflect upon possible flaws in our system and address them to withstand adversities.
?We need to make our financial sector more competitive by enhancing efficiency and transparency. While greater competition is welcome, we have to guard against the competitive race to the bottom,? he said, while expressing hope that this perspective would guide the growth of Indian banking system in the coming years.
?There is a case for the policy makers and other stake holders to re-strategise the financial policies that are meant to reach the un-reached and the unbanked sections of our country,? he added.