Obviously, finance is the blood vessels of an economy. No economy can function well without a stable and healthier financial sector. This is perhaps why the incumbent have been taking various steps with banknotes changes being the latest.
The demonetization that comes this week according to economists and the government will help curtail illicit money transfer and control huge chunk of money outside the banking industry. In fact, the move will improve saving and deposit while increasing bank users. Setting cash withdrawal limit, the lifting of various restriction on banking industry have been among the measures put in place to stabilize the macroeconomy.
In fact, the number of banks and their branches have seen uptick in recent years, but the rise in the number of banks and branches does not necessarily implies the growth of the sector. The financial industry is yet to be competitive in terms of integrating technologies and new services.
There is growing number of bankable population in the country. There is a potential market in the country, but the industry demands smart intervention, banks are expected to devise systems that fit the realities on the ground. The ways and means of financial inclusivity need also to take into consideration the fact that the majority of the population dwells in rural areas.
On the other hand, expanding mobile banking is thought to be the long term solution to curb money laundering and illegal transaction. And the bank industry needs to rejuvenate itself to improve its share in the GDP.
The number of mobile subscribers is increasing in the country yet mobile banking is very low. Improving internet infrastructure, creating awareness and coming up with innovative and simple mechanisms will help expand mobile banking in the country.
The financial sector must be led by professionals and good leaders who can make a big difference in the sector, as to the Economist.
The sector has indispensible role to play in changing the livelihood of the people through channeling investment but its actual performance depends on the policy of the state and how much it incentivizes the sector. Along with the expansion of services, banks need to exert maximum efforts to increase the efficiency in terms of service delivery and adjust themselves to the dynamics in the global banking industry.