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Text of the Speech of Union Finance Minister delivered during the meeting with CEOs of PSBs and FIs
June, 13th 2012
                        PRESS INFORMATION BUREAU
                          GOVERNMENT OF INDIA


                                                    New Delhi: Jyaistha 22, 1934
                                                                  June 12, 2012

      Following is the text of the speech of the Union Finance Minister,
Shri Pranab Mukherjee delivered during his meeting with the CEOs of
Public Sector Banks (PSBs) and Financial Institutions (FIs), here today:-

      "I am happy to be with you today for reviewing the performance of the Public
Sector Banks and Financial Institutions during 2011-12 and setting the agenda which
needs to be pursued in the next few months.
       The 2011-12 was challenging year. The world economy did not revive to the
desirable level and crude oil and commodity prices remained at persistently high
levels. The sovereign debt crisis of the Euro area added to the uncertainty. Tepid
growth in our exports led to higher than expected balance of trade and current
account deficits. On the domestic front the focus was on tackling inflation.
Consequently, in 2011-12, Indian economy has grown at 6.5% which is lower than
that expected.

       We are taking several measures to kick-start the economy. The Government
is committed to ensure faster project clearances, attracting new investments, both
domestic and foreign, fixing regulatory issues, etc to boost investors' confidence.
After the reduction of the repo rate by RBI, the banks have liberalized their lending
rates. The State Bank has last week further lowered the interest rates on deposits.
Fiscal management is also a high priority. Regular tariff revisions and focusing of
subsidies to the needy shall have to be given necessary attention. All of this I am
sure will revive growth in the Indian economy.

       I congratulate all the Public Sector Banks on achieving a healthy growth in
both deposits and advances. As compared to last year the deposits showed a growth
of 14.4% and now aggregate to over Rs 50 lakh crore. The advances showed an
even higher growth of 17.7% over last year and now aggregate close to Rs. 40 lakh
crore. Net Profits of PSBs has also gone up from Rs 44,900 crore to over Rs. 49,500
crore in 2011-12 despite a difficult economic scenario.
       I am also very happy to note that the target for agriculture credit of Rs
4,75,000 crore for the year 2011-12 has been exceeded and more than Rs 5 lakh
crore credit was extended to the farmers. I am sure that by your sustained efforts you
would help achieve the agriculture credit target of Rs.5,75,000 crore in 2012-13.

       The banks have also taken up an ambitious task of converting the Kisan
Credit Card into an ATM Card linked to the bank account of the farmer as per the
new KCC scheme circulated by NABARD and RBI. I would urge that this be taken up
on a mission mode, as this can be a game changer in the manner agriculture credit
is accessible to farmers.

       I am happy to note that outstanding results have been attained on Financial
Inclusion. `SWABHIMAAN', was the campaign I had announced in 2010 for reaching
out to all villages with a population of over 2000 persons, and that did not have a
bank branch. I am very happy that you and your team of dedicated officers have
been able to provide 74,194 such villages with a banking facility. You now need to
establish an Ultra Small Branch in each such village with a bank official visiting them
at least once a week. The entire gram panchayat area of such villages should be
provided dependable banking services through this network.

       Another important milestone towards financial inclusion is to provide every
family with at least one bank account. As per Census 2011, nearly 3 out of every 5
households were already availing banking services. I am told that the banks have
already launched a campaign for opening one account of each family. This would
enable us to directly credit the benefits of various schemes into the bank accounts of
the beneficiaries through Electronic Fund Transfer.

      I am happy to note that 80 of the 82 RRBs have successfully migrated to core
banking system. The performance of RRBs is showing distinct improvement. They
have also joined the payment systems of the parent public sector banks and are in
process of installing their own ATM. The Government has last week approved
extension of the scheme of recapitalization of RRBs by 2 years.

      I am happy that banks have taken up the challenge to reduce NPA's and
made a record recovery against prudential write off in the last quarter ending March
2012. This has resulted in reduction in gross NPAs from the level of 3.18% in
December 2011 to 3.10% in March 2012. This momentum has now to be kept up
and timely action in this direction would ensure the sound financial health of the
banking sector.

        I am also very happy to see that the banks are very proactively responding to
the problems so that NPAs are avoided. Recent decisions on restructuring of loans in
the textile sector and DISCOMS of the power sector are good examples of NPA
management. I urge you to deploy various tools at your command for containing and
rolling back NPAs in accordance with the guidelines of the Reserve Bank of India
        The Department of Financial Services is working on implementation of an
Action Plan to bring our banking payment structure at par with global standards. I
am very happy to note the recent decision taken by Oriental Bank of Commerce to
waive all charges for all net based RTGS / NEFT transactions up to Rs 1 lakh. I am
confident that all the public sector banks would follow this excellent initiative. I would
also urge upon Reserve Bank of India to proactively work on this front and to see
that all electronic banking transactions should be possible without any charges being

        The use of debit cards to the point of sale without any transaction charges at
least for micro and small transactions should be our next objective. The farmers
should be able to buy their agricultural inputs by using their KCC-cum-debit cards at
point of sale machines, without the use of cash. All fair price shops should be
similarly covered. I would request all stakeholders to work in this direction so that use
of cash could become less important.

       Human Capital is our most precious resource. While we undertake expansion
of banking services, use of technology and manpower in the best possible manner is
necessary. There is an urgent need of building capacities in new areas. Succession
planning and talent management to groom the future leaders is necessary. All the
bank staff has to be sensitized towards good customer interface. I must also
compliment the banks for the excellent work done by them in eliminating the backlog
for SCs/STs, OBCs and a person with disabilities through the special recruitment
drives undertaken by them for these categories of employees.

        Banking is predominantly a service oriented business. With enhanced
competition amongst banks, customer service becomes the sole differentiating factor
to forge ahead in the business. Banks should look at grievances and suggestions
from their customers as an opportunity to improve the internal systems, thereby
retaining customers and improving profitability and competitiveness. I am happy to
note that the Department has recently circulated a draft for standardizing and
improving the system to handle grievances and for bringing in customer centricity in
the services rendered by the public sector banks. I am sure that you would respond
to this with your full enthusiasm and commitment.

       During the last five years, the amount of educational loans has increased by
two and half times and the number of students beneficiaries under the scheme has
more than doubled. Such loans can help create a huge base of knowledge workers
which would help our economy and this country tremendously. I do ask all of you to
put in place a system where no meritorious student is deprived of an opportunity to
get higher or vocational education, and also that these loans are provided in a timely
and hassle free manner.
      Public Sector Banks have made significant improvement in rapid expansion of
the housing finance market. I am happy to note that budget of 1% interest
subvention was fully utilized in 2011-12. The Scheme has been extended to 2012-
13 also. I would urge banks to make maximum use of 1% interest subvention,
ISHUP and Credit Guarantee Fund to give special focus to housing loan, to low and
medium income households.

        Adequate finance for MSMEs not only has potential to revive the economy but
also helps in achieving our cherished goal of inclusive development. We have
changed the orientation of SIDBI to fill the gaps in MSME eco-system. Banks have
the most crucial role to provide finance and banks should focus on entrepreneurs of
this target group particularly those requiring micro finance.

       Credit to the minority communities is one of the main priorities of the Prime
Minister's new 15- Point Programme for the Welfare of Minorities. The amount of
credit outstanding to these communities has doubled in the last 3 years. Their share
in the priority sector lending is now close to 15%. I would ask the banks to not only
continue their performance, but to improve this even further.

       In order to encourage voluntary savings for pensions the Government had
introduced a `Swavalamban' scheme, under which government contributed Rs
1,000 per annum for an annual savings of Rs 1,000 to Rs 12,000 made by workers.
The Government contribution shall be available for 5 years. I am happy to note that
number of subscriptions have increased to 6.44 lakh during 2011-12 as compared to
3.09 lakh a year earlier.

       I am very happy to note that public sector banks are taking an active role in
spreading the scheme to all their customers. I am told that so far 18 banks have
applied with PFRDA to become an aggregator and 10 banks have already been
made aggregators. It is also heartening to note that 60 RRBs have also applied to
become an aggregator and 5 of them have already been appointed as aggregator. I
request all the Banks to become an aggregator and take up this scheme at the

.      I look forward to active deliberations on these issues today I will conclude by
stating that before you lies the opportunity to make available the services of the
financial sector for the rapid economic development of the country. In this endeavor
there is a need to identify the opportunities and recognize the challenges to work
towards a sustainable and inclusive growth supported with greater penetration of the
formal financial sector for the groups that are at the base of the pyramid."

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