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The government pulled out of private banks because of their low share in schemes such as Jan Dhan Yojana and insurance against social security. The ministry also reportedly asked banks to increase their share of credit to the industry and informed the government that the banks would be investigated and rated based on their customer service.
Financial Services Minister Sanjay Malhotra speaking to heads of public and private sector banks at the 75th session of the Association of Indian Banksth AGM has said, “While private banks have a share of more than 40% in credit, they account for only 3% in Jan Dhan Yojana. Their contribution to PM Jeevan Jyot Yojana and PM Suraksha Bima Yojana is only 4%. In Atal Pension In the case of Yojana and Kisan Credits, it is 7%.
Malhotra made a business case for fulfilling social obligations, “This is a period of rural economic growth and even regional rural banks are growing again. Today’s Jan Dhan Yojana account is not a zero balance account. The balance is 4000 rupees on average.”
Referring to the ministry’s plans to survey and rate banks’ customer service, he added, “The needs of customers are also changing. They are not just looking at banking; they are looking for banking at the click of a button. So, we must all embrace technology, and it’s not just for big banks or banks in the public and private sectors.”
Turning to the industrial sector, Malhotra added that in this sector, MSMEs contribute a third to the economy, while their share of credit is between 16% and 17%.