As far as the long-term future is concerned, he said that it is going to be largely driven by digital processes and a sustainable future for the Indian banking industry requires a seamless and interconnected digital system.
“Although I said that in the amalgamation process, your systems talked to each other, there was no problem of amalgamating those banks. And, I remember Rajiv Kumar, then banking secretary, who told me that We have ensured that the amalgamating banks have their systems in place in such a way that they align with each other,” she said.
The mega consolidation was announced in 2019 when Kumar was the Financial Services Secretary, but was implemented by his successor Debasish Panda Effective April 2020.
As part of the mega consolidation exercise, Oriental Bank of Commerce and United Bank of India were merged into Punjab National Bank; Syndicate Bank in Canara Bank; Andhra Bank and Corporation Bank in Union Bank of India; and Allahabad Bank in Indian Bank.
After consolidation, there are now seven large public sector banks and five smaller banks. There were 27 public sector banks (public sector banks) in 2017.
Kumar, who is now the Election Commissioner of India, was instrumental in laying a digital pipeline that was used during the pandemic to transfer money to the accounts of crores of vulnerable and needy with the click of a button.
The Finance Minister said that banks, whether public or private, cannot operate in digital silos and the system should talk to each other.
“So, I think this is one of those areas in which you will spend some more time and make sure the bridge is crossed,” she said.
Appreciating the efforts of the bankers for smooth consolidation during the challenging times of the pandemic, the Finance Minister said that it did not cause inconvenience to the customer and there was no disturbance.
“Ultimately, amalgamation is an important exercise, even important for the Indian Banks’ Union because of the way the economy is shifting to a different plane altogether, with the way the economy simultaneously with industry. -is looking at different different things together. Ways to adapt to the post-pandemic era…”, she said.
Stating that the driving force for the amalgamation was to build up, Sitharaman said India needs a lot more banks and a lot of global sized banks.
“India needs at least four different SBI sized banks. So, one of the driving forces for integration was that we need to scale up banking.
“We need to scale up banking to meet the new changing and growing requirements, but it was thought of even before the pandemic. Now, why would we need four or five more SBIs in this country,” he said .
Paying tribute to the bankers who lost their lives in the line of duty during the pandemic, the Finance Minister urged the IBA to help and support the families of the deceased.
“I offer my humble tributes to those who have served but also suffered due to the pandemic but unfortunately could not escape it. I am sure IBA will do everything it can to support their families and keep them enthusiastic and motivated. Will have to maintain morally sound because the loss is irreparable,” she said.
IBA came into existence in 1946, which has grown to 244 members from public, private, foreign, co-operative banks besides 22 member financial institutions and NBFC.
Noting that many organizations or associations do not have the fortune to run their course and life span running parallel to their own countries, Sitharaman said, “many of your milestones match Indian economic history”.
Going forward, he said that IBA is going to reap the benefits of a more vibrant economy, to which India is contributing equally.