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Govt has a clear vision for India’s financial sector: PM Modi

By Priyanka Verma 
Updated Date

Prime Minister Narendra Modi on Friday said his government has a clear vision regarding the financial sector in this country and that there are “no ifs and buts” as he reaffirmed its stance on strengthening the public sector. “To strengthen the public sector, equity capital infusion is being stressed on. A new ARC structure is also being made to take care of NPAs (non-performing assets),” PM Modi said while addressing a webinar on budget proposals.

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He said that although the government’s endeavour is to promote the private sector, the public sector still needs to have their presence in banking and insurance to support the poor.

Speaking at a webinar on Budget announcements on Financial Services, Modi said to help medium and small businesses during the COVID pandemic, 90 lakh Micro, Small and Medium Enterprises (MSMEs) were given credit worth ₹2.4

“Supporting MSME and startups and expanding credit flow to them is necessary. The government has undertaken reforms and opened up sectors like farm, coal and space. Now it’s the responsibility of the financial sector to understand the aspirations of rural and smaller cities and make them the strength of Aatmanirbhar Bharat.

PM Modi insisted that not every decision taken by the government has bad intentions, adding that the country’s financial and banking sector had been weakened due to aggressive lending in the past, which was brought in control by his government. “The country’s financial and banking sector was weakened in the name of aggressive lending about 10 years ago,” he said.

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PM Modi stressed the steps taken to do away with non-transparent trading culture, adding that insolvency and bankruptcy codes brought by his government helped foster trust and belief for lenders and borrowers. Reinforcing his previous stance on promoting the private sector, he said, “Our endeavour is to promote private sector business but public sector banks and insurance sector have an important role in the country”.

He talked at length about the recent privatization bids for two public sector banks, raising the foreign direct investment ceiling in the insurance sector, and the Initial Public Offering of LIC. “There is still great scope for the banking and insurance sectors in our economy. Keeping this in mind, we have taken many steps in this budget — be it our decision to privatize two PSBs, raising FDI limit to 74% in insurance or our decision to bring LIC IPO,” he said.

PM Modi also outlined the role sovereign wealth funds, pension funds, and insurance companies are expected to play in the country’s future and said that the government has made asset creation a priority in this year’s budget. “Sovereign wealth funds, pension funds, insurance companies are being encouraged to get involved in infrastructure projects,” he said.

Elaborating on the Budget proposal of setting up of an Asset Reconstruction Company (ARC), Modi said the ARC will address the bad loans in a “focused manner” and this will help strengthen PSBs and increase their lending capability.

He said 130 crore people have Aadhaar cards and 41 crore have JanDhan Account holders, of which 55 per cent are women.

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Stressing on use of technology in financial inclusion, he said on an average ₹4 lakh crore worth transactions are being undertaken through UPI platform every month and there are 60 crore RuPay card holders.

Modi said today all sections of society have access to credit and ₹15 lakh crore have been extended through MUDRA Yojana. Around ₹1.15 lakh crore have been deposited in 11 crore farmer families through PM Kisan Swanidhi Yojana.

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