“Today the burden on banks is less as the books are clean,” the finance minister said. “As a result they will be able to mobilize and raise funds from the markets. I have a full interest in suppressing this particular aspect because I think the burden on the government to recapitalize you will be much less.
Sitharaman said the country would need four or five big lenders like State Bank of India to meet the challenges of the economy and industry.
It had earlier said the center would guarantee $4.2 billion of security receipts issued by its new bad bank, in a fresh effort to clean up one of the world’s biggest bad loans. NS National Asset Reconstruction Company Ltd., run by the government and owned by private sector lenders, will hold stressed assets that can be sold at reduced prices to investors.
“There can be no business without credit and I am sure you understand better than I understand,” Sitharaman said.
Sitharaman said many districts in the country lack banking presence despite high levels of economic activity in those areas, prompting lenders to step up efforts to deepen their presence.
Giving lenders the option to decide which locations need a banking presence through a brick-and-mortar model and where a step-down presence would help, Sitharaman clarified that she is not against digitization and efforts Huh.
The finance minister also said that the upcoming National Asset Reconstruction Company should not be called a “bad bank” as it is called in the US.
He said banks should be agile and understand the requirement of each unit to achieve the export target of $400 billion.