Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman, chaired a meeting on August 19, 2024, to review the performance of Public Sector Banks (PSBs) in New Delhi. The meeting focused on key financial parameters, deposit mobilization, digital payments, and cyber security. Attendees included Secretary of the Department of Financial Services, Dr. Vivek Joshi, Secretary-Designate Shri M. Nagaraju, Heads of PSBs, and senior DFS officials.
Financial Performance
The review highlighted that PSBs demonstrated strong performance in FY24. Key indicators included a notable decline in Net NPAs (NNPAs) to 0.76%, a solid capital adequacy ratio of 15.55%, and a Net Interest Margin (NIM) of 3.22%. The banks achieved their highest ever net aggregate profit of ₹1.45 lakh crore and paid a dividend of ₹27,830 crore to shareholders. These improvements have enhanced PSBs’ ability to raise capital from the market.
Deposit Mobilization and Credit Growth
The Finance Minister emphasized the need for better deposit mobilization to support sustained credit growth. Although credit growth has improved, the meeting stressed the importance of banks making concerted efforts to enhance deposit collection through special drives. Sitharaman advised PSBs to strengthen customer relationships and reach out to customers in rural and semi-urban areas to improve service delivery.
Digital Payments and Cyber Security
The meeting also addressed issues related to digital payments and cyber security. Sitharaman highlighted the need for a systemic approach to cyber security, calling for collaboration among banks, the Government, regulators, and security agencies to mitigate cyber risks. She emphasized that IT systems should be reviewed periodically from a cyber security perspective to prevent breaches.
Implementation of Budget Announcements
Sitharaman urged banks to swiftly implement recent Budget announcements, including a new credit assessment model for MSMEs based on digital footprints and cash flows. Banks were directed to increase credit flow to beneficiaries under government initiatives such as the PM Surya Ghar Muft Bijli Yojana and the PM Vishwakarma Yojana.
Compliance and Governance
The Finance Minister also stressed the importance of compliance with RBI guidelines regarding the handover of security documents post-loan closure. She directed that there should be no delays in returning these documents to customers.
Review of Regional Rural Banks (RRBs)
In addition to the review of PSBs, Sitharaman chaired a separate meeting with all 43 Regional Rural Banks (RRBs). The focus was on business performance, upgrading digital technology services, and supporting MSME clusters. Sitharaman urged RRBs, with the support of their Sponsor Banks, to enhance their identification of beneficiaries and increase their share in agriculture credit disbursement. She highlighted the importance of up-to-date technology and the role of digital banking services in challenging regions like the North East and hilly areas.
Conclusion
The review meetings underscored the ongoing efforts to improve the performance and efficiency of both PSBs and RRBs. Sitharaman’s directives aim to ensure better service delivery, enhanced financial inclusion, and robust governance in the banking sector.
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