FM Nirmala Sitharaman asks banks to access core strengths before scaling up operations

By: |
November 23, 2019 9:40 PM

Sitharaman said if a financial institution in the present situation has a name ending with 'Bank' doubts are raised on the functioning of it and heaped praise that City Union Bank has been functioning steadily for the last 115 years. 

FM Nirmala Sitharaman, bank, core strength, industry news, banking news, Tamil NaduFM Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on Saturday said banks should assess their strength and weakness before planning to scale up of operations. “Institutions like banks should understand their core strengths and offer benefits to people like providing value- added features like phone banking facilities or rolling out of chat bots to serve customers and should not take up unnecessary scaling up of operations”, she said, at the 116th Foundation Day celebrations of Tamil Nadu-based City Union Bank here.

“Scaling up (of operations in banks) is becoming like a disease. (There is a trend) that every body should scale up, tomorrow I should be three times the current size. Today, I am in this state and in six states. I am planning to expand presence across the country. Whether it will add to my core or make it weak. That is the assessment banks should do”, she said.

To check whether the banks have the ability to scale up operations, then the regulators like Reserve Bank of India come into play, she said. Sitharaman said if a financial institution in the present situation has a name ending with ‘Bank’ doubts are raised on the functioning of it and heaped praise that City Union Bank has been functioning steadily for the last 115 years. Stating that even a small error caused by an employee would raise questions on the functioning of a bank, she said,

“Even if there is a corruption complaint against a cooperative bank, sometimes questions are raised on whether the public money is safe there”. Referring to a recent media report on City Union Bank MD and CEO N Kamakodi comments that the bank’s focus area was on providing ‘consistency’ and ‘stable’ operations and having ‘people’s trust’, she said, “it is good principle (for the bank)”. She said banks speaking about ‘consistency’ is a good quality and added that banks should run on stable operations.

“If there is no stability, then the economic activity surrounding it will get affected,” she said and added having people’s trust is very important because if a bank loses people’s trust then it is bad for the bank and also to the country.

Earlier, Sitharaman released the bank’s chat-bot facility that would help bank customers enable to transfer funds, block cards or take up any other banking service.

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