Nirmala Sitharaman is scheduled to have a meeting with the heads of the Public Sector Bank (PSB) on Monday, June 20. The meeting is expected to encourage banks to credit growth.
Finance Minister Nirmala Sitharaman, has scheduled a meeting with heads of PSBs on June 20. This meeting will review the performance of banks and decisions will be made for further progress. The meeting will also discuss the bank’s performance in different Government launched schemes. The agenda for the meeting also includes a discussion of actions to be taken with the rising inflation.
Lenders will be encouraged to sanction loans, especially in the productive sector. After the Russia Ukraine war’s effect on the economy, these actions will prove to be fruitful. Last week the finance ministry successfully implemented actions of on-the-spot loan sanctioning. This was done through outreach programs across the country. Providing loans at a faster rate will help the economy and maintain a good cash flow. After the recent action of the Reserve Bank of India (RBI) of increasing the repo rate, banks would get additional benefits from effective credit provisions. Extension of credit limits for the long term will also be discussed.
The performance tracking of banks will include; the stock of quality assets, the business growth plan of banks, the credit facilities, and their growth. The addition of Non-Performing Assets (NPA) upto 100 crores is also on the agenda of discussion. The implementation and progress of various schemes like Kisan credit Yojana, Pradhan Mantri Jan Dhan Yojana, the Emergency Credit Line Guarantee Scheme (ECLGS), etc will be tracked.
In the recent budget, the ECLGS was revised and an extension is provided till May 2024. The scope was also expanded for the hospitality industry, tourism, and civil aviation.
Public Sector Banks (PSBs)
PSB is the bank owned by the state or national Government of India. They contribute nearly 40 percent of the banking sector. Currently, there are 12 state-owned banks: State Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank, Union Bank of India, Bank of India, Indian Bank, Central Bank, Indian Overseas Bank, Bank of Maharashtra, UCO Bank and Punjab Sind bank. Initially, there were 18 public sector banks but after mergers, there are currently 12 in the country.
These banks had shown collective losses for 5 straight years from 2015 to 2020. The highest loss was recorded in the year 2017-18 at ₹85,370 crores. Merger actions were implemented after that. But in the past 2 years, the banks have collectively recorded profitability. In FY21 the profit was ₹31,816 crores. In FY22 the profit showed an increase of 110 percent resulting in the amount of ₹66,539 crores. Amidst the pandemic, the performance of these twelve banks has helped the economy.
The progress of these banks was seen after the implementation of the 4 Rs strategy by the Government. Recognition, Resolution, Recapitalization, and Reforms for non-performing assets. This strategy was followed strictly by all banks with Government’s support. In the last five financial years, the government has infused ₹3,10,997 crores into the recapitalization of these banks. The progress of these banks is commendable and has helped the Government to implement new schemes for the citizens.
The PSB meeting will be attended by officials of all state-owned banks with Nirmala Sitharaman. The decisions taken during the meeting will help the lenders and borrowers to proceed with further actions. Considering the rising inflation, these actions will help maintain a healthy cash flow in the economy.
