FM Sitharaman meets PSBs’ chief, asks to identify stress points amid banking crisis in US, Europe

Finance Minister Nirmala Sitharaman in a meeting with the heads of public sector banks underlined that PSBs "must look at business models closely to identify stress points, including concentration risks and adverse exposures".

Finance Minister Nirmala Sitharaman chaired a meeting on Saturday to review the performance of Public Sector Banks (PSBs) on various financial health parameters.

Sitharaman also exhorted PSBs to use "this opportunity" to frame detailed crisis management and communication strategies.

During the review meeting, an open discussion was held with the MDs and CEOs of PSBs on the global scenario consisting of the failure of the Silicon Valley Bank (SVB) and the Signature Bank (SB) along with issues leading to the crisis in Credit Suisse. Sitharaman reviewed the exposure of PSBs to this developing and immediate external global financial stress from both the short and the long-term perspectives.

Union Finance Minister Smt. @nsitharaman chaired a meeting to review the preparedness of Public Sector Banks #PSBs in wake of the stress in banking systems in the US and Europe

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— Ministry of Finance (@FinMinIndia) March 25, 2023

After detailed deliberations, Finance Minister advised PSBs to remain vigilant about the interest rate risks and regularly undertake stress tests.

Sitharaman also said that PSBs "must leverage the full potential of branches opened in International Financial Services Centres in GIFT City (Gujarat International Finance Tec-City) Gujarat to identify international opportunities, including prospects related to Persons of Indian Origin (PIOs)".

The meeting was attended by Union Minister of State for Finance Bhagwat Kishanrao Karad; Secretary, Department of Financial Services (DFS) Vivek Joshi; and MDs and CEOs of PSBs.

Sitharaman emphasised preparedness along with due diligence through adherence to the regulatory framework by focusing on risk management, diversification of deposits and assets base.

The MDs and CEOs of PSBs appraised the finance minister that they follow "best" corporate governance practices, adhere to regulatory norms, ensure prudent liquidity management and continue to focus on having robust asset-liability and risk management.

Further, they also informed Sitharaman that PSBs are vigilant of developments in the global banking sector and are taking all possible steps to safeguard themselves from any potential financial shock. All the major financial parameters indicate "stable and resilient PSBs with robust financial health".