Finance Minister Nirmala Sitharaman to meet chiefs of public sector banks to review financial performance

Finance Minister Nirmala Sitharaman will be holding a meeting with the chiefs of public sector banks (PSBs) and reviewing their financial performance on Thursday. The heads of the banks will also apprise the Finance Minister regarding the public sector banks' performance in the recently-concluded first quarter of the current financial year. As per sources, the finance minister is likely to ask the chiefs of public sector banks to focus on the areas highlighted by the Budget, including credit flow to productive sectors.

Apart from financial performance review, sources added that the Minister will also take stock of the progress made by banks in achieving targets set for the government schemes like Kisan Credit Card (KCC), Stand-Up India, Pradhan Mantri Mudra Yojana (PMMY) and emergency credit line guarantee scheme (ECLGS) to help businesses affected by Covid-19.

This will be the first review meeting after the 2022-23 financial results, where the public sector banks cumulatively posted a record profit of Rs 1.04 lakh crore, and the market leader State Bank of India (SBI) accounted for nearly half of the total earnings.

The public sector banks have come a long way from posting a total net loss of Rs 85,390 crore in 2017-18, to recording a profit of Rs 1,04,649 crore in 2022-23.

The finance minister would review credit growth, asset quality, and capital raising and business growth plan of banks for the next financial year, the sources said, adding non-performing assets (NPAs) of Rs 100 crore and the recovery status would also be discussed.

As per the latest Financial Stability Report (FSR), the gross non-performing assets ratio for banks fell further to a ten-year low of 3.9 per cent as of March 2023. The central bank said the GNPAs are expected to improve further to 3.6 per cent in the baseline scenario.

Last week, the finance minister said banks need to "build on laurels" by following the best corporate governance principles.

"Banks should not sit back and revel in success. They should 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," she said, stressing that the Indian economy has moved away from the 'twin balance sheet problem' to 'twin balance sheet advantage'.

(With Agency Inputs)