“Today, India is becoming an engine of global growth with a 15% share of the total,” Modi said at the 90 th Foundation Day of the RBI. “Efforts should be made to make the rupee more accessible and acceptable all over the world.”
The RBI has lately pioneered the digitisation of payments through the Unified Payments Interface (UPI), a platform many developing and developed nations are keen to use. It has also helped improve the asset quality of Indian lenders through a determined clean-up drive, aided by a revamped bankruptcy law.
Mint Road has also begun the Central Bank Digital Currency (CBDC) pilot for retail users, being among the first few in the world to do so. But, by contrast, it has been conservative with the rupee’s role beyond India’s water margin. Although the Indian rupee’s exchange rate with other currencies is determined by market forces, barring the periods of major volatility, there is no free movement of the currency as capital beyond the Indian frontier. “The RBI can take India’s growth to the global stage,” Modi said.
“The entire Global South can be helped.” PM Modi highlighted many of the above achievements in his speech. India has reached several milestones in the past decade on exploiting digital technologies and other financial services products, the PM said. In the next 10 years, India should see the use of artificial intelligence and machine learning to push the frontiers of growth, including funding space projects and aspirations of youth, the prime minister said. He also urged the RBI and the banking industry to be prepared to fund the growth of many emerging sectors, such as tourism and space, which are finding new entrants, but are not necessarily equipped with funds.
“New sectors are coming up… the space sector is opening up… so is Indian tourism,” said Modi. “The world wants to know India, understand India. We have to see there is readiness to provide financial support. New sectors are being created and we should brainstorm on how to build expertise in these sectors.” Indian banking and sectoral regulations have moved from a position of weakness to a position of strength in the past 10 years, the PM said, as sustained fiscal and regulatory focus helped lenders ditch bad assets and derisk the broader financial system through a determined clean-up drive. FUNDING STATE-RUN BANKS
“In 2014, when I attended the programme for the completion of 80 years of the RBI, the entire banking sector of India was struggling with problems and challenges,” said Modi. “The situation was so bad that public sector banks were not able to provide the necessary speed. We started from there. Today, our banking system is seen as strong and sustainable. This change came about because we had clarity in our ‘niti, niyam and nirnay’ (policy, norms and decisions).” North Block had invested more than `3.5 lakh crore in capitalising state-run banks then hobbled by bad loans.
Nonperforming loans have since fallen to a decadal low of less than 3%, from more than 10% at the peak. Despite the record of opening Jan Dhan accounts and the surge in digital payments, there is a need to use modern tools to widen the availability of credit, the PM said. “There is a need to form policies that facilitate ease of banking and people get access to credit,” said Modi. “We should take advantage of machine learning and AI.” He underscored the Centre’s commitment to banking reforms by referring to the introduction of the Insolvency and Bankruptcy Code (IBC), which some lobby groups have blamed for assetvalue erosion. “There is something that is important for Indians to know… more than 27,000 applications with an underlying default of `9 lakh crore were resolved before admission in IBC,” said Modi.
“This shows how powerful the code is.” While many milestones have been attained in the past decade, a lot more needs to be done to lift the Indian economy. “India’s economic independence is set to increase in the next 10 years,” said Modi. “What happened in the past 10 years is the trailer.”