Vice President Addresses 125th Foundation Day Celebrations of Punjab National Bank

New Delhi: The Vice President of India, Shri M. Venkaiah Naidu has said that financial inclusion and inclusive development are the needs of the hour. He called for ‘Antyodaya’ and stated that development held no meaning until its benefits reached the most deprived groups of people. He was addressing the gathering at the celebration of the 125th Foundation Day of the Punjab National Bank (PNB), here today.

The Vice President paid rich tributes to Shri Lala Lajpat Rai, one of the most prominent and inspirational leaders of India’s struggle for independence and felicitated the members of his family.

Shri Naidu called for systemic reforms in the Indian banking sector in light of mounting Non Performing Assets (NPAs). He spoke of the need to have an effective and efficient system of checks and balances in place so that the loop holes in the system are not taken advantage of.

The Vice President said that India’s financial institutions have been commended globally for being resilient and for having withstood global downturns and recessions well. He opined that banks were no longer just about strong lockers and a good interest rate on deposits. ‘They have transcended their conventional mandates and are now at the forefront of India’s development story’, he added.

Saying that banks played a central role in India’s quest for financial inclusion and inclusive growth, he expressed his firm belief that India’s banking sector was poised for robust growth as the rapidly growing business and commerce in India would turn to banks for credit and other financial services. He cited a number of factors such as the upwardly mobile middle class and the digital revolution as the thrust factors behind these growth prospects.

Citing the gains made by India in digital technologies for banking such as India’s Immediate Payment Service (IMPS), RuPay and the Unified Payment Interface (UPI), and the Bharat Interface for Money (BHIM), a mobile app based on UPI, the Vice President asked banks to further harness digital growth to scale up to the level of world-class businesses. He also spoke about new and innovative business models such as the Payment banks and small finance banks.

The Vice President pointed towards a number of challenges being faced by the banking industry such as the rising Non Performing Assets in the banking system that has the capacity to affect banks’ lending capabilities. He said that the accumulation of bad loans happened over a long period of time, and now, it threatens to hamper economic growth by weakening the credit supply channel of the economy.

Shri Naidu instructed banks to maintain strict vigilance during pre- and post-sanction procedures of loans and told them to never make compromises in the due diligence processes. ‘Banks must constantly strengthen their internal processes to effectively monitor funds and maintain strict discipline in lending’, he added.

The Vice President suggested that banks can make use of technology and data analytics to identify the early warning signals of loan defaulting and evolve robust mechanisms to identify the hidden NPAs. He said that banks must focus on nurturing internal skills for credit assessment and undertake forensic audits to understand the intent of the borrower.

Expressing concern about the increasing cases of wilful defaults and frauds that have recently been in the news, Shri Naidu said that no efforts in bringing these individuals and entities to speedy and exemplary justice. He opined that India must enter into more treaties for exchange of information and intelligence on financial fraud and bank accounts and work with international agencies in bringing defaulters to justice. He questioned the need for existence of tax havens and said that India must enter into many more strong extradition treaties.

The Vice President also asked banks to adhere strictly to the principles of business ethics and good corporate governance at all times. Observing that a bankers’ role was one of stewardship based on trust, he cautioned that banks have a duty to lend customers’ money responsibly.

‘Ethical considerations should form an important part of risk-taking activities. The welfare of customers and other stakeholders in good times and bad should be a major concern in any business proposition’, the Vice President said quoting Mahatma Gandhi who said that “Commerce without morality” was one of the seven deadly sins.

Saying that this was a period of disruptions in the banking sector caused due to factors ranging from technology to innovative new business models, he urged banks to make bold moves and initiate major transformations to take advantage of them.

The Chairman, Punjab National Bank, Shri Sunil Mehta, the MD and CEO, Punjab National Bank, Shri Ashok Pal Singh, the Member (Planning and HRD), Postal Services Board and other dignitaries were present at the occasion.


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