Mumbai :Finance Minister Arun Jaitley today praised State Bank of India saying it has become the market leader despite the constraints which a state-run institution faces as against the freedom enjoyed by the private sector.
“They (the state-run banks) ought to have a particular mechanism which follows the test laid down by the various judicial pronouncements. Erroneous decision… can follow penal consequences whereas private institutions can operate free from these fears hanging on their heads.
“Therefore, obviously the state institutions have a more defensive style of functioning and yet with these constraints to become a market leader in the banking industry is no mean achievement,” Jaitley said after launching SBI mobile wallet app ‘Buddy’ here.
State-run institutions find it very challenging to compete with the private sector because the former have a more bureaucratic decision-making process, while the latter have a better, quicker and easier process, he said.
“… the chairperson of the State Bank has been repeatedly making a point that some of these attachments to public sector institution creates serious difficulties and challenges in performance. They can’t go down and recruit the very best from university campuses, which a private institution can,” the finance minister noted.
SBI Chairwoman Arundhati Bhattacharya has been demanding that the bank should be able to recruit directly from the university campuses.
Jaitley also said that SBI’s reach among various social segments is very large, and it is unquestionably the market leader.
“Besides commercial transactions, even (for) the various social and other economic programs of the states, it’s always been the principal performing bank. It’s been a trend-setter and the steps and initiatives which it takes, bulk of the banking industry follows,” Jaitley said.
“When you have millions and millions of people who bank with the State Bank, who no longer have to rely on traditional concept of passbook, where brick-and-mortar branches will gradually become redundant, where cheque will become outdated institution… that (is) always going to be now the changing face of business, trade, commerce and finance,” he said.
With the introduction of Internet and mobile-based apps and services by the banks, cash transactions will increasingly become fewer and fewer, and more people will come into the banking fold, the finance minister said.
“It is not only going to make expenditure much easier, it is going to make accounting for that money much easier. It is probably going to bring in a lot more money within the official net as habits of consumers itself (are) going to change,” he said.