Transformative reforms undertaken:

1. Consolidation in the public sector banking space
2. Emergence of private banks
3. Specialised non-banking financial companies (NBFCs)
4. Emerging fintech ecosystem have increased the diversity quotient of the financial sector and made it inclusive.
5. The legacy issues of non-performing assets (NPAs) have been left behind by banks.
6. Internal accruals have become a source of growth capital. 
7. The loan growth is expected to be healthy as the credit costs are bottoming out.
8. Transformed finance through universal coverage of banking through Jan Dhan Yojana and products like mobile banking applications, retail electronic fund transfers, UPI, Aadhaar e-KYC, Bharat Bill Payment system, scan and pay and digital pre-paid instruments.

Challenges:

1. New channels of delivering financial services have led to several concerns such as mushrooming of unregulated digital lending apps, crypto-currencies and cyber-attacks.
2. Climate change as a major challenge for banks.
   1. With the effort of “equal but differentiated responsibility” and initiatives for decarbonisation efforts has led to opening up of new business opportunities in renewables, city gas distribution, green hydrogen, etc.,
   2. Since banks are expected to become major financiers in the fight against climate change, risk management practices of banks have to account for this new risk.
3. Quality of human resources.
   1. With a dynamic and rapidly changing environment, the skill gap is widening which requires banks and financial institutions to attract, train and retain talent.
   2. The need for employees to be flexible, agile, open to new technologies and proactively pick up new skills to remain useful has become imperative. 
   3. Thus, capacity building upskilling and reskilling of human resources will be a sine qua non to face the emerging challenges.
4. Need of financial services sector to invest in research.
   1. The financial services sector has to develop out-of-box ideas for seamless service delivery and hyper-personalisation of products.
   2. In-house data science labs or sandbox environments have to be developed to test out innovative ideas.

SOURCE URL: SBI chairman writes: The banking sector is leading the journey towards an Atmanirbhar Bharat|The Indian Express|