A day before RBI Governor Raghuram Rajan's take on monetary policy, Finance Minister Arun Jaitley on Monday held a meeting with CEOs of public sector banks to discuss the rising bad loans issue in the banking sector.

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These are the five key points discussed during the meeting:

1. Arun Jaitley during the meeting said that the cumulative losses of Rs 18,000 crore suffered by public-sector banks last fiscal which were mainly on account of higher provisioning for bad loans.

2. Jaitley pointed out that PSBs actually made operating profits of Rs 1.40 lakh crore in 2015-16, indicating that their performance was not as bad as being projected.

"The overall operational profit of the PSBs last year was quite significant. It was in the access of 1.40 lakh crore... It is on account of the provisioning that overall the PSBs declared a net loss of about Rs 18,000 crore and a significant amount of provisioning having been made in the last two quarters of the fiscal," Jaitley said.

3. Jaitley said the government had earmarked Rs 25,000 crore for recapitalisation of the state-owned banks and would provide more funds if needed.

Jaitley said, "Banks should be empowered and protected so that they can reach settlements on bad loans."

4. The meeting reviewed the progress of financial inclusion schemes like Stand-up India, Mudra, Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Surkasha Bima Yojana (PMSBY) and Atal Pension Yojana,  credit flow to the industry and expansion of the banking sector. 

5. Jaitley said that the government as of now is looking only at SBI merging 5 subsidiaries as well as Bharatiya Mahila Bank with itself and a decision on this will be taken soon. 

"We are looking at SBI (proposal) at the moment. It is with the government and (it) will respond. The government's policy by and large supports consolidation. I have indicated that in the budget itself," Jaitley said.

According to a PTI  report, Jaitley on Sunday had said "We are looking at a stage where the banks have now been making provisioning for the possible NPAs. We have empowered the banks sufficiently to recover the dues and I am sure some of these dues will become performing assets in course of time in view of all the steps which we have taken. But the banks have to maintain their credit lending facilities so that lending for growth continues," he said.

Lastly, on Tuesday, RBI will hold its bi-monthly monetary policy review. When asked about government's expectation from the RBI, Jaitley refused to make any direct comment but said government was trying to improve the health of the banks so that they can support the "growth" of the economy.

"It's an important function of the RBI. We do not comment on it before the RBI announces the policy," Jaitley told PTI.