Smt. Nirmala Sitharaman, the Union Minister for Finance and Corporate Affairs, presided over a meeting today to assess how Public Sector Banks (PSBs) performed for the fiscal year 2022–2023 on key financial health metrics.
Additionally present at the meeting were Union Minister of State for Finance Dr. Bhagwat Kisanrao Karad, Finance Secretary, and Secretary Expenditure Dr. T.V. Somanathan, Secretary, D/o Financial Services (DFS), Shri Vivek Joshi, Secretary, DIPAM, Shri Tuhin Kant Pandey, Secretary, D/o Public Enterprises, Shri Ali Raza Rizvi, Secretary, M/o Corporate Affairs, Shri Manoj Gohil.
Discussions on the “Twin Balance Sheet Advantage,” improved business sentiment, good macro trends, and PSB performance took place with the heads of PSBs during the review meeting.
All of the key financial metrics, including capital sufficiency, asset quality, profitability, and loan deployment, show a considerable improvement in PSB performance. They have strong financial standing, are resilient, and have ample money.
With gross NPAs at 4.97% and net NPAs at 1.24% in March 2023, it was noted that the asset quality of PSBs had greatly improved. A record aggregate net profit of over 1.05 lakh crore was made by PSBs during FY 2022–23, nearly tripling the net earnings from FY 2013–14. PSBs are in a strong position to meet the credit needs of the productive sectors of the expanding economy thanks to their high capital adequacy of 15.53%CRAR (similar to major countries of the globe), clean balance sheets underpinned by a robust provision coverage (90.68%), and increased resilience.
According to bankers’ assessments of the overall situation, the country is well-positioned to absorb any macroeconomic shock because of its strong financial standing.
By putting an emphasis on risk management and business base diversification, Smt. Sitharaman stressed banks’ adherence to the regulatory framework. Despite the challenges brought on by recent events in the global banking sector, the business environment is steadily improving.
While the overall Priority Sector Lending (PSL) has above the stipulated target, the Union Finance Minister underlined that the PSL targets in the sub-categories, including, inter alia, agriculture, particularly the small & marginal farmers, and the micro-enterprises, should also be reached.
In July–August 2023, the Regional Rural Banks (RRBs) and their sponsor banks will be reviewed along with how far along they are in terms of technological advancement, according to the Union Finance Minister. She will also serve as the meeting’s chair. Beginning on July 21, 2023, in Tripura, the Union Finance Minister will conduct an evaluation of how the RRBs are operating in the Northeast. The Union Finance Minister will then host conferences in the North, West, South, East, and Central regions of the nation to examine how the RRBs and their associated sponsor banks are operating.
Through a presentation, Secretary MoHUA highlighted the PMSVANidhi Scheme’s advancements. Approximately 33 lakh beneficiaries, according to him, are digitally active, and efforts are being made to increase the adoption of digital payment instruments. The Union Finance Minister requested that the banks spearhead a particular drive to ensure that PMSVANidhi recipients are included in digital payment systems.
In order to improve lending under PMSVANidhi, it was determined that Dr. Bhagwat Kishanrao Karad, Union Minister of State for Finance, would oversee a particular campaign to increase PMSVANidhi’s coverage with the help of Urban Local Bodies (ULBs). Before September 1, 2023, Dr. Karad will make six separate trips to various parts of the nation as part of a special outreach campaign on PMSVANidhi.
Additionally, the Union Finance Minister asked PSBs to
To satisfy the Priority Sector Lending (PSL) standards and further ensure that the PSL targets are met across all sub-categories, ensuring a rise in rural, agricultural, and sectoral credit.
Meet the goals set forth in PMSVANidhi for the credit provided to street vendors, and maintain the momentum of payments made thus far.
Make sure that NPAs are recognized fairly and openly in accordance with the regulator’s current standards. Banks should also frequently examine these criteria internally to make sure that stressed assets are recognized and reported correctly.
The sponsor banks of the Regional Rural Banks (RRBs) should ensure that the RRBs undergo a time-bound technical upgrade and regularly evaluate how they are operating in order to increase their effectiveness and efficiency, which would be extremely beneficial to the population of rural areas.
Take initiatives to improve the deposits and adopt a focused approach to the convenience of services and consumer safety. Address associated business model risk with solid risk management practices.