FM meets heads of PSBs and reviews financial performance

Finance Minister Nirmala Sitharaman recently convened a crucial meeting with heads of public sector banks to assess their financial performance. Among the key concerns deliberated were cyber security threats and risks associated with the financial sector.

The discussions also encompassed issues related to fraudulent activities, wilful defaulters, and the progress of the National Asset Reconstruction Company Ltd (NARCL). This comprehensive review marks one of the final assessments before the presentation of Budget 2024–25 and the impending general elections next year.

Performance evaluation

The performance evaluation highlighted that PSU banks collectively accrued a net profit of approximately Rs 68,500 crore in the first half of the current fiscal year. Notably, during 2022–23, these banks experienced significant growth in both deposits and credit, fostering a robust balance sheet expansion.

The report also highlighted a remarkable improvement in the asset quality of banks over recent years. The Gross Non-Performing Assets (GNPA) ratio for Scheduled Commercial Banks (SCBs) plunged to a decade-low of 3.9 per cent by March 2023, further reducing to 3.2 per cent by September of the same year. This trend towards better asset quality persisted during the April–September period of the current fiscal year.

Monitoring the cases

NARCL, established in 2021 with a majority stake held by public sector banks (PSBs), operates as a government entity registered under the Reserve Bank of India. Tasked with asset reconstruction, it plays a pivotal role in managing distressed assets within the banking system.

Earlier engagements by the finance ministry urged PSBs to intensively monitor all cases, especially the top 20 Insolvency and Bankruptcy Code cases, to effectively manage their non-performing assets. Financial Services Secretary Vivek Joshi directed PSBs to conduct monthly reviews of these significant cases, reinforcing the government's commitment to tackling bad debts and promoting financial prudence.

(with PTI inputs)