Aggregate deposits in the private banks in June 2019 grew at 16.3 per cent, which was only 6.7 per cent for the PSU banks.
Finance Minister Nirmala Sithraman will meet the representatives of private banks and other financial institutions today evening. The meeting is seen as an extension of the steps taken in recent past, to provide momentum to the slowing economy. Prior to today’s meet, the Finance Minister met the heads of PSU banks last Thursday. The government is aiming at improving the conditions of banks as the Indian banking industry has a huge potential to pump liquidity into different sectors of the economy, by offering more credit to industries. From cooperative to nationalised, banks in India are the lifeline of the economy and that is further explained by the fact that as of September 2019, over 500 banks are permitted to operate mobile banking facility in India.
Specifically, the private banks play a very important role in boosting growth in the economy as they try to innovate new products avenues such as new schemes, services, etc, and make the industries to achieve expertise in their respective fields by offering quality service and guidance. The business of private sector banks is growing at more than double the pace of its PSU counterparts. Aggregate deposits in the private banks in June 2019 grew at 16.3 per cent, which was only 6.7 per cent for the PSU banks, according to RBI. Similarly, bank credit given by private banks rose by 17.5 per cent, which grew 8.7 per cent in the public sector banks in the same period.
The private banks have introduced new technology in the banking service such as the introduction of computerised operations, credit card business, ATM service, etc, which have also lead the other banks in various new fields to grow by adapting to those technologies.
Meanwhile, the FM is likely to announce new measures to provide support to the private banks as she has done for other financial institutions before. In some of the major announcements in the recent past, Nirmala Sithraman provided cushion to the stressed PSU banks by recapitalising them by Rs 70,000 crore and provided additional liquidity support of Rs 30,000 crores to Housing Finance Companies (HFCs).