President of India
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In Hindi


Mumbai, 23rd December, 2010


Ladies and Gentlemen,

I am happy to inaugurate the Centenary Celebrations of the Central Bank of India founded on 21st December 1911, as a "swadeshi bank" in the backdrop of the freedom struggle of India. It was the outcome of the vision of Sir Sorabji Pochkhanawalla who by focusing on the needs of the ordinary people, sought to work for the economic independence of India. I am happy to learn that the Bank has since then, modeled its growth on the lines of its visionary founder, catering with great care to the needs of its customers. At the outset, let me congratulate the Central Bank of India, its Management and Board of Directors, its staff, present and past, on the completion of 100 years of the Bank.

The banking sector in India, apart from meeting the banking requirements of the country, has played an important role in our socio-economic development. Moreover, our financial sector weathered the global downturn rather well, demonstrating its resilience and strength and earning well deserved appreciation. The global crisis that erupted in 2008 required a massive and coordinated stimulus. For this, major economies of the world worked together in the G-20. With these efforts, a serious collapse of the world economy was averted. We can take comfort from the fact that the global economy has moved out from an unstable zone, but it still requires a strong and sustainable growth pattern to stabilize. It is in this context, that India is advocating the importance of persevering with international coordination, and avoiding resort to protectionism.

Our country's performance in the last few years has scripted our considerable achievement in building a strong economy, that is more integrated with the world economy, but yet able to cope with external disturbances. Therefore, our economic recovery was quicker. This fiscal year, we are confident that our nation's economy will grow at about 9 percent and next year, we should be on a sustained growth path of 9 to 10 percent. Banks will continue to play an important role in this phase of growth, as also when India becomes an even larger economy over the next few decades. Banks must fulfill their basic function of keeping money in circulation, in a responsible and regulated manner, as also become partners in national schemes and programmes to improve the lives of the people.

The first priority of the Indian banking system must be to strengthen itself to support a vibrant and inclusive economy. No doubt, the banking system in the country has grown, but it has enormous possibilities of expansion considering that it is still to reach the unbanked areas, and make banking services available to all individuals. Currently, just about 45 percent of the Indian population has access to banks accounts, and there is a low ratio of one bank branch for 16,000 people. The number of branches per lakh of population was 6.33 this March, as compared to 25 to 45 for developed countries. Banking coverage of the large population living in 6 lakh villages in the country is particularly low. All these facts indicate the extent to which and the many areas where banks can make a difference. Initiatives like the Unique Identification Document project, will go a long way to ease the concern of banks pertaining to basic information about their customer and thus, giving a boost to banking inclusion.

Banks must have financial inclusion plans in their future strategies, but should aim for a holistic approach that meets the different financial needs of the target customers. In rural areas for example, there are a number of Government schemes which would greatly benefit from a banking presence, like the Mahatma Gandhi National Rural Employment Guarantee Scheme and Kisan welfare and pension schemes, for which payments can be channeled through the banking system. Banks should design products and financial services, as well as develop a business plan to encourage talent that exists in rural areas. Financial inclusion will lead to surplus rural income being converted into investment funds for the economy. However, issues like preferential interest rates for the poor and Self Help Groups in rural areas, as well as extended loan tenures that help them stay invested should be looked into. Also, Self Help Groups and small artisans in villages find it difficult to market their produce in cities and towns. Banks can think of encouraging people to make investments in markets and showrooms, which will be helpful in generating income in rural areas. I am glad that the Central Bank will be adopting 100 villages, as part of its financial inclusion plan, and I hope it will look into these various aspects of rural banking.

I take this opportunity to speak about the importance of upholding the highest standards of probity in banking. The causes, impact and lessons of the global financial crisis must never be forgotten. People put their hard earned money into the banks and therefore, banks are obliged not to take unbridled risks with that money. Bankers and money managers have a responsibility to follow principles of prudence and risk management. Some recent odd aberrations in India should be a caution for all banks, to look into their procedural and monitoring mechanisms, to ensure that these do not occur. All procedures and due diligence, consistent with approved guidelines, must be adhered to, while approving loans by competent authorities. Banks play a very important role in building transparent and accountable systems of financial dealings. This, in turn, can greatly contribute to preventing financial improprieties including dealing with corruption in some cases.

The banking industry should be customer friendly and customer centric in its conduct and business practices. Banking is a service - the more efficient it is, the more it will expand. Customer care, the principles of reasonableness in pricing, customer appropriateness, confidentiality, and effective grievance redressal machinery are essential. There is scope for improving efficiency, reducing transaction costs of banking, providing necessary counselling and advisory services to all those who are in need, such as young entrepreneurs, women and senior citizens. Banks must use technologies to provide their customers better facilities, whether it is ATMs or Internet Banking, through which clients can transact their banking business at a convenient time from the comfort of their homes or offices. Operating in an inter-woven global economy should spur Indian banks to attain high standards, so that they can compete with the best in the world in providing customers services. I look forward to the time when Indian banks are among the top global players in the world.

I conclude by saying that the Central Bank of India has an impressive track record. As it completes 100 years and prepares for another century, I convey to all associated with it, my very best wishes for greater success.

Thank You.

Jai Hind!

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