Prime Minister Narendra Modi on Sunday attributed India’s sustained economic growth to the efforts of the BJP government to replace pre-2014 ‘phone banking’ with ‘digital banking’.
Referring to the previous UPA regime, he said under ‘phone banking’, instructions were given on phone to banks regarding whom they had to lend to and at what terms and conditions.
“The economy of any country is as progressive as its banking system is strong,” the Prime Minister said after dedicating 75 Digital Banking Units (DBUs) to the nation via video-conference.
Observing that the country has shifted from the pre-2014 ‘phone banking’ system to digital banking in the last eight years, he said “as a result, India’s economy is moving forward with a continuum.”
Modi said before 2014, the banks used to get phone calls to decide their functioning, and added “phone banking politics had made the banks unsafe and made the country’s economy insecure by sowing the seeds of thousands of crores of scams.”
The BJP-led government came to power in May 2014.
The Prime Minister further said the present government has transformed the banking system with a focus on transparency.
“After bringing transparency in the identification of NPAs, lakhs of crores of rupees were brought back into the banking system. We recapitalized banks, took action against willful defaulters, and reformed the Prevention of Corruption Act,” he noted.
Moreover, he added, the enactment of the Insolvency and Bankruptcy Code (IBC) has helped in resolution of the non-performing assets (NPAs) of the banking sector in a transparent and scientific manner.
The Prime Minister said a new self-driven mechanism has been created for the banking system through new initiatives like Digital Banking Units and innovative use of fintech.
“There is as much autonomy for the consumers, there is also the same convenience and transparency for the banks,” he said.
Recalling the traditional ways of the past where people had to go to the bank, the Prime Minister said this government transformed the approach by bringing the banks to the people.
“We have given top priority to ensure that banking services reach the last mile,” he said.
The Prime Minister urged the small business owners from villages to completely move towards digital transactions. He also asked banks to connect 100 merchants with them for going totally digital for the benefit of the country.
“I am sure, this initiative will take our banking system and economy to a stage which will be future-ready, and will have the capability to lead the global economy,” he said.
The banking system, Modi said, has gone beyond financial transactions and has become a medium of ‘good governance’ and ‘better service delivery’.
“Digital economy today is a great strength of our economy, of our startup world, of Make in India and of self-reliant India,” he said.
The combination of technology and economy has helped in eliminating the digital divide as well as corruption, he said, adding the government has transferred Rs 25 lakh crore directly to beneficiaries via the Direct Benefit Transfer (DBT) scheme.
He also said another installment under the PM-KISAN scheme will be transferred on Monday.
Under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme, a financial benefit of Rs 6,000 per year is provided to the eligible farmer families, payable in three equal installments of Rs 2,000.
Referring to the government’s decision to launch a digital currency based on blockchain technology, the Prime Minister said “be it digital currency in the coming times, or digital transactions in today’s time, apart from the economy, many important aspects are associated with them.”
The initiative, he said, would result in savings, reduction of physical currency and preservation of the environment.
Noting that currently paper and ink used for currency printing are imported, Modi said that “by adopting a digital economy we are contributing to a self-reliant India while also benefiting the environment by reducing the consumption of paper.”
Speaking on the occasion, Finance Minister Nirmala Sitharaman said deploying technology to achieve development goals is the hallmark of the government led by Prime Minister Modi.
When in 2014 the Jan Dhan Yojana was launched, it was followed by mobile and Aadhaar integration, leading to DBT, Mudra and many other initiatives. Financial inclusion was deepened and furthered through the flood of digital payments options, she said.
The Prime Minister further said United Payments Interface (UPI) has opened up new possibilities for India.
“When financial partnerships are combined with digital partnerships, a whole new world of possibilities opens up. A huge example like UPI is before us. India is proud of this as it is the first technology of its kind in the world,” he said.
Stressing that the focus is to harness the benefits of technology and innovation in the banking space, RBI Governor Shaktikanta Das said the establishment of DBUs is a step to further augment the digital infrastructure in the country.
“This will act as an enabler in the digital ecosystem and will improve customer experience by facilitating seamless banking transactions. The DBUs will augment our efforts to promote financial inclusion by providing banking services in a paperless, efficient, safe and secure environment,” he said.
The specific financial services to be provided by the DBUs include savings, credit, investment and insurance. On the credit delivery front, to start with, the DBUs will provide end-to-end digital processing of small ticket retail and MSME loans, starting from online applications to disbursals. The DBUs will also provide services related to certain identified government sponsored schemes.
The products and services in these units will be provided in two modes — self-service and assisted modes, with self-service mode being available on 24X7 and 365 days basis, Das said, adding the banks are also free to engage the services of digital business facilitators and business correspondents to expand the footprint of the DBUs.
Speaking about the DBUs, Sitharaman said these units will enable people who do not have a personal computer or even a smartphone to access banking services digitally and without a paper in hand.
As part of the Union Budget 2022-23, the finance minister had announced the setting up of 75 DBUs in as many districts of the country to commemorate 75 years of India’s independence.