A day after RBI Governor Raghuram Rajan said the government should “endeavour to keep the competitive playing field level by compensating banks for activities it wants undertaken in the public interest”, SBI chairman Arundhathi Bhattacharya said the Centre should think about “ways and means” to sustain social schemes like Pradhan Mantri Jan-Dhan Yojana in the long run and compensate public sector banks (PSBs) to make such initiatives commercially viable.
“The government wants that it (PMJDY) should be a sustainable kind of initiative… that we should not do it and then allow it to die because it is not commercially viable. So obviously, the government will have to think of ways and means to ensure that these accounts, once they come in, become commercially viable accounts,” she told reporters here. “We are already working on it with the government. I don’t think the government intends not to give anything. But we are working on what it should be,” she added.
“Given that many PSBs have higher overall costs than private sector banks performing similar activities, there is some scope for cost rationalisation even while improving the pattern of compensation. At the same time, we should recognise that PSBs undertake public interest activities (like the rollout of accounts under the Jan Dhan Yojana) that are not always fully compensated,” Rajan had said in the RBI Annual Report.
SBI chairman Arundhathi Bhattacharya said there is a cost involved in opening PMJDY accounts and these costs will have to get amortised over a period of time till the time these accounts turn viable. “These will turn viable as the DBT comes in, as more and more of these programmes, which the poor will be able to afford, are launched, and we see actually see activation in the accounts,” Bhattacharya said.
According to Bhattacharya, once there is an improvement in financial literacy, access to finance, higher number of products focusing on such people are launched and as the DBT comes, these accounts will start becoming viable. “Yes, maybe it is not paying for itself today, but I think with such a huge initiative that has been taken, we need to be a little more patient,” she added.
In SBI, at least 45 per cent of the total Jan Dhan accounts are active. “The number is lower for us because first of all we have large base and second we have some of the most backward districts as we are the SLBC (State Level Bankers’ Committee) leader in all the backward districts of the country, and therefore we have a more of a handicap than some other banks,” she noted.
With PTI inputs