Union finance minister Nirmala Sitharaman on Thursday (July 6) chaired a meeting to review the performance of public sector banks (PSBs) and asked the banks to focus on risk management and diversification of business.
She asked PSBs to ensure that there is a fair and transparent recognition of NPAs as per the extant guidelines of the regulator and banks should periodically review it internally to ensure that there is proper recognition and reporting of the stressed assets.
The finance minister noted that while the overall Priority Sector Lending (PSL) has exceeded the mandated target, the PSL targets in the sub-categories should also be met, including, agriculture — particularly the small & marginal farmers, and the micro-enterprises.
Sitharaman advised PSBs to ensure an increase in rural, agriculture, and sectoral credit to meet PSL norms and further ensure that the PSL targets are achieved across all sub-categories.
Further, the finance minister asked the PSBs to meet the targets for the credit to street vendors under PMSVANidhi and the momentum of disbursals gained under PMSVANidhi should be sustained.
During the review meeting, discussions were held with the heads of PSBs on the positive macro trends, improved business sentiments, ‘Twin balance sheet advantage’, and performance of PSBs.
All the major financial parameters namely credit deployment, profitability, asset quality, capital adequacy, etc indicate that the performance of PSBs has significantly improved. They are adequately capitalised, resilient, and have sound financial health.
It was noted that the asset quality of PSBs has improved significantly with gross NPAs at 4.97 percent and net NPAs at 1.24 percent in March 2023. During FY23, PSBs earned a record aggregate net profit of around Rs 1.05 lakh crore, almost triple from net profits earned in FY14.
Strengthened by high capital adequacy of 15.53 percent CRAR, clean balance sheets supported by a healthy provision coverage (90.68 percent), and improved resilience, PSBs are well positioned to support the credit needs of the productive sectors of the growing economy.
Sitharaman will chair meetings in the month of July-August 2023, in different regions of the country to review the functioning of the Regional Rural Banks (RRBs) along with their sponsor banks, with a special focus on the status of technological upgradation of the RRBs.
The review of the RRBs would commence on July 21, 2023, at Tripura, in which the finance minister will conduct a review of the functioning of the RRBs in the northeast.
Meetings to review the functioning of the RRBs, along with the corresponding sponsor bank, will then be held by the finance minister region-wise in the North, West, South, East, and Central parts of the country.
The meeting was attended by Union minister of state for finance Dr Bhagwat KisanraoKarad; finance secretary and secretary expenditure Dr T.V. Somanathan; financial services secretary, Dr Vivek Joshi; DIPAM secretary Tuhin Kanta Pandey and public enterprises secretary Ali Raza Rizvi.
Also, corporate affairs secretary Manoj Gohil; revenue secretary Sanjay Malhotra; housing and urban affairs secretary Manoj Joshi; chief economic advisor Dr V Anantha Nageswaran; State Bank of India Chairman Dinesh Khara; MDs and CEOs of public sector banks, besides senior officials of DFS attended the meeting.