Finance Minister Reviews Performance of Public Sector Banks (PSBs) for Fiscal Year 2022-23. The meeting witnessed the presence of esteemed officials, including Dr. Bhagwat Kisanrao Karad, Union Minister of State for Finance, and several secretaries and CEOs of PSBs.
Reviewing PSB Performance: Meeting chaired by Finance Minister Nirmala Sitharaman
The meeting convened by Finance Minister Nirmala Sitharaman aimed to assess the performance of PSBs across multiple financial parameters. Discussions were held with the heads of PSBs, focusing on positive macro trends, improved business sentiments, the “Twin balance sheet advantage,” and the overall performance of PSBs. The meeting provided a platform to analyze credit deployment, profitability, asset quality, and capital adequacy, showcasing the progress made by PSBs.
Positive Financial Parameters and Improved Asset Quality
The review meeting revealed significant improvements in the financial health of PSBs. All major financial parameters, including credit deployment, profitability, asset quality, and capital adequacy, exhibited substantial progress. PSBs were found to be adequately capitalized, resilient, and possessing sound financial health. Remarkably, Public Sector Banks (PSBs) witnessed a substantial improvement in asset quality, with gross Non-Performing Assets (NPAs) recorded at 4.97% and net NPAs at 1.24% as of March 2023.
PSBs’ Record Net Profit and Resilient Financial Health
During the financial year 2022-23, Public Sector Banks (PSBs) achieved an unprecedented aggregate net profit of around ₹1.05 lakh crore, nearly tripling the net profits earned in the fiscal year 2013-14. This success can be attributed to their high capital adequacy ratio (15.53% CRAR) comparable to major economies worldwide, clean balance sheets supported by a healthy provision coverage ratio (90.68%), and enhanced resilience. These factors position PSBs effectively to meet the credit needs of the productive sectors of the growing economy.
Prioritizing Priority Sector Lending and Technological Upgradation of RRBs
During the meeting, Finance Minister Sitharaman stressed the significance of complying with the regulatory framework while emphasizing the importance of risk management and diversification of the business portfolio. She emphasized meeting priority sector lending (PSL) targets, particularly in sub-categories such as agriculture, small and marginal farmers, and micro-enterprises. Furthermore, the Finance Minister announced her intention to chair meetings across different regions of the country to review the functioning of Regional Rural Banks (RRBs) and their sponsor banks, with a specific focus on the technological upgradation of RRBs.
Transparent Recognition of NPAs and Monitoring Stressed Assets
To ensure fair and transparent recognition of Non-Performing Assets (NPAs), Finance Minister Sitharaman advised PSBs to strictly adhere to the extant guidelines provided by regulators. Banks were encouraged to periodically review their NPAs internally, guaranteeing accurate recognition and reporting of stressed assets. This approach promotes a healthy banking sector and effective risk management.
