Banks have been instrumental in nation-building by showing the courage to lend to key sectors and it is crucial to make sure they do not ‘lose that courage’, former SBI chairman Arundhati Bhattacharya has said.

“If we look at some of our roads and if we look at power generation today, if we look at the ports and the amount of cargo coming in there, all of this was built because the bankers had the courage to lend. Today, we must not do anything for them to lose that courage," Bhattacharya said.

Bhattacharya was speaking at the CNBC-TV18’s India Business Leader Awards 2018 presented by Standard Chartered in New Delhi on 6 April where she received the Lifetime Achievement Award. Banks have also been instrumental in opening Jan Dhan accounts and implement the direct benefit transfer scheme for the government, she added.

Her comments come at a time when investigating agencies are probing allegations of financial irregularities in some banks, while the government and the Reserve Bank of India (RBI) are taking several steps to deal with about $10 trillion of toxic assets in India’s banking sector that has affected their ability to finance new projects.

The steps taken by the government include reforms in bankruptcy law to ensure quick turnaround of failed businesses and wherever not possible, to recover the value of assets before it erodes and redeploy it productively in the economy.

Banks have been instrumental in opening Jan Dhan accounts and implement the direct benefit transfer scheme for the govt, says Bhattacharya -

Banks have already taken several large defaulters to bankruptcy court and are exploring turnaround possibilities.

Another set of changes to the bankruptcy code is in the making to fine tune the law based on experience since 2016 when the current code became fully operational.

When asked whether banks should now focus more on corporate governance in the next few years, Bhattacharya said that applied to all businesses, including banks.

“Overall in India, we need to see an improvement in corporate governance. Actually, in India, a lot of things have been done on an informal basis. A lot of people have treated their businesses as their own instead of considering that they are trustees of a business. A business is a separate entity. It is not the same as the owner of a business. That is where corporate governance comes in. And that is true of all businesses as well as banks. And banks deal in trust. Trust is the biggest resource that we have. Therefore, we cannot possibly have that trust break," she said.

Bhattacharya said this is not the best of times to introduce oneself as a banker, at least in India.

“But that is something that makes me very sad. Because while we in India have a habit of concentrating on the negatives, we forget the very many positives that are there and what the banking system has done for the country," she said

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