Finance Minister Nirmala Sitharaman on Friday directed banks to "professionalise" their decision making boards, making it clear that they cannot be run with a "crony background".
Addressing the 75th Annual General Meeting (AGM) of Indian Banks' Association (IBA) in Mumbai, Sitharaman said: "Professionalise your decision-making boards, there is no way banks can any longer run with a crony background, our government has ensured that there are no instructions given or interference made in the functioning of the banks. We need to take professionalism at a faster pace. We are conscious of the need to let the banks be, and let them run by professionals, with a purely banking perspective in mind."
She also asked banks to be more tech-savvy and directed the IBA to ensure that their systems are in sync with each other or should be "talking to each other".
"Are you digital savvy? Are your staff digital savvy?" she sought to know from the banking community during the course of her speech.
"Are you comfortable in being a digital institution? How much training goes into this? Do your systems talk to each other? It will be a big missed opportunity if these bridges between banks are not built. IBA should plan to make sure that all systems in all banks, whether private or public, should be talking to each other for the purpose of the customer...."
Sitharaman further asked the banks to plan for the next 25 years leading to the year 2047.
"You need to have strategies to meet the aspirations of the youth of India in the next 25 years. You need to make your portfolios so that they are attractive to the young as well and make yourselves accessible to them. Are you communicating to the youth, to women, are you offering products to them?"
The Finance Minister said that technologies like Artificial Intelligence and Web3 help a great deal in detecting frauds and tracking wrong money.
"Use of Web3, data analysis, Artificial Intelligence (AI), deep dive into data, all of these should have some coordination by the IBA. Leveraging AI should be an immediate priority for the banks, especially in fraud detection and generating early warning signs about something going wrong," she noted.
Emphasising on the need for the importance of cyber protection for the banks, she sought to know from the association, if they are "all geared to have adequate firewalls? Are you protected against hacking and Black Swan events which bring down your systems?"
She further asked the banking sector to play a lead role in realising the dream of a developed India by 2047.
The Finance Minister observed that the next 25 years which the Prime Minister refers to as Amrit Kaal has taken off very well, with the auspicious beginning of India becoming the fifth-largest economy of the world.
"We have so much more to do... The banking industry needs to serve the Amrit Kaal, we have to see how best we can lift ourselves to meet the aspirations of a growing India. The Prime Minister has said that we need to be the developed country we deserve to be, by 2047. It is the banking sector which has to make a big contribution towards this," she said.