Informist, Friday, Sep 6, 2024

--Central Bk MD: Need consistent 8% growth to be a developed nation

--CONTEXT: Central Bank MD Rao at FIBAC 2024 conference
--IDBI Bank MD: Need financial inclusion to be a developed nation
--CONTEXT: IDBI Bank MD Rakesh Sharma at FIBAC 2024 conference

--IDBI Bank MD: Need inclusive growth to be a developed nation

--NaBFID MD: Infra funding needs to come more from domestic savings

--CONTEXT: NaBFID MD Rai at FIBAC 2024 conference

--IDBI Bk MD: Senior citizens' deposits growing faster than others

--IDBI Bank MD: Potential for deposit growth remains, need new pdts

--Central Bank MD: Up to banks to make deposits more attractive

--NaBFID MD: PSU bks playing catch-up with pvt peers in terms of tech

--NaBFID MD: PSU banks have to re-look at the way they adopt tech

MUMBAI – India needs to achieve consistent growth of 8% annually to transition into a developed nation by 2047, Central Bank of India Managing Director Matam Venkat Rao said today at FIBAC 2024 conference. "To achieve the dream of 2047 as a developed nation, we should grow consistently 8% over the years, so that we can have, and we can realise the dream of a developed nation," he said.

He added that this growth would help absorb additional job creation, which is estimated to increase by 6 mln per year until 2030 and 3 mln per year thereafter.

Rao further added that as innovation continues to evolve, product development always follows suit. He said that to cater to this, the banks are now becoming a one-stop shop for a variety of financial products, including deposits, insurance, and investments, making them accessible to everyone.

"Banks are becoming the one-stop shop where you will have deposit products, you have insurance products, you have investment products, and all these products are within the reach of all people," he said. He emphasised that technology acts as a great equaliser, removing distinctions between rural, urban, and semi-urban areas and people of all age groups use technological tools to access banking services.

"Going forward, much more innovations are going to happen on the financial products that will be made available across the country without any difference in the geography," Rao added.

Managing Director at IDBI Bank Rakesh Sharma highlighted the importance of financial inclusion and inclusive growth for India to become a developed nation. He highlighted the goal of achieving a $30 trln economy by 2047, underlining that inclusive growth is crucial. However, achieving the target requires collaborative efforts across the banking sector, with various banks offering specialised products to meet diverse needs, Sharma added.

"If we want to achieve that level, $30 trln economy, all of us have to work together. As far as competition is there, there is a lot of space, a lot of unexploited space is still there. And, of course, most of the banks will come out with their various niche products," Sharma said.

He also pointed out that senior citizens' deposits are growing faster than others, suggesting an untapped potential for deposit growth. New products aimed at this segment could further boost deposit growth rates.

Managing Director of National Bank for Financing Infrastructure and Development Rajkiran Rai emphasised that the future of infrastructure funding in India must rely more heavily on domestic savings. "Domestic savings are good enough to take the country forward," he said.

He acknowledged that many infrastructure projects over the past two decades have struggled with viability, discouraging private investments. To attract capital, there is a need for a fresh approach, with proper governance structures to assure investors that their money is being used effectively. In this context, he stressed that domestic savings could play a crucial role in driving long-term development in the country, especially with infrastructure lending rates averaging around 8.75% in recent years.

On deposits, IDBI Bank's Sharma highlighted the need for innovative products to drive deposit growth in India's banking sector. He said that the current deposit trends, especially in rural and semi-urban areas, have remained stable, but there was a potential for growth with increased financial literacy and targeted banking products.

"New and new products will have to develop. Ultimately, I think, deposits somewhere go to the other parts, but deposit potential will not," he said. Sharma sees opportunities for deposit growth through the development of new products tailored to different demographics, such as joint family banking products and salary-linked benefits like insurance.

On this, Central Banks's Rao said that it is for banks to ensure how they can make deposits more attractive. NaBFID managing director also spoke about the slow pace of technology adoption in public sector banks. Rai said that state-owned banks lag their private peers when it comes to innovation in technology and its adoption.

Rai suggested that state-owned banks should take a step back and re-think the way they work with new technology and they should also look to innovate technology rather than adopting existing use cases, he said. End

Reported by Sachi Pandey and Sourabh Kumar

Edited by Akul Nishant Akhoury

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