Bangalore, Dec 29 (IANS) Union Finance Minister P. Chidambaram Saturday expressed concern over the lack of consensus on carrying out more financial reforms to ensure and sustain high GDP growth.
“If India has to grow at nine percent plus continuously, its financial sector has to be modernised, with a slew of reforms in the banking, insurance and pension sectors,” Chidambaram said after unveiling the new logo of the state-owned Canara Bank at a function here.
Referring to the long delays in increasing the FDI (foreign direct investment) limit to 49 percent from 26 percent in the insurance sector, giving statutory powers to interim pension regulator and more voting rights for foreign agencies in private banks, the minister said the UPA government was keen to push ahead with financial sector reforms, as it had only 15 months left in power.
“If these key sectors remain undeveloped, backward, rigid, out of sync with the demands of the modern economy, it will be difficult to sustain the GDP growth at nine percent or more,” Chidambaram said.
Though the GDP grew at 9.4 percent last year and has the potential to grow at 10 percent and above, the minister said the reforms were imperative in the insurance and pension sectors, as the banking system accounted for a small part of financing, forcing the other two sectors to share the burden of financing.
“The growth of every player in the financial sector has to be commensurate with that of GDP. Ironically, those who want the high growth story to continue are, however, opposed to the changes in the structure of these key sectors,” Chidambaram quipped.
Earlier, the minister said the state-run banks should reach out to farmers, students and women to drive the economic activity further.
“Only half the country’s billion population has bank accounts. The public sector banks have the responsibility to tap these sections and finance the economic growth,” he asserted.
Calling upon the state-run banks to compete for creating a niche market, Chidambaram said socio-economic activities had to be financed to maintain nine-to-ten percent growth rate.
Bank chairman and managing director M.B.N. Rao said the new brand identity would overhaul the image of the bank in line with the banking sector’s role in the future.
“It is imperative to rebuild our brand to attract the new customers while retaining the existing customer base,” Rao affirmed.
The bank also launched an online loan application form for students pursuing higher education and an e-ticketing model for Indian Railways as part of its corporate social responsibility.