PSBs need to work on deposit mobilization: FM

Union Finance Minister Nirmala Sitharaman chaired a meeting on Monday to review the performance of Public Sector Banks (PSBs), focusing on key financial parameters, deposit mobilization, digital payments, and cyber security frameworks.

The meeting also addressed access to credit under financial inclusion and other emerging banking issues.

During the meeting, it was observed that PSBs had shown strong performance across all financial metrics in the fiscal year 2023-24. Key highlights include a significant improvement in asset quality, with Net Non-Performing Assets (NNPAs) declining to 0.76 percent, a robust capital adequacy ratio of 15.55 percent, and a Net Interest Margin (NIM) of 3.22 percent.

Additionally, PSBs recorded their highest-ever net aggregate profit of Rs 1.45 lakh crore, distributing a dividend of Rs 27,830 crore to shareholders. These improvements have bolstered the banks’ capacity to raise capital from the markets.

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The Finance Minister emphasized the need for increased efforts to enhance deposit growth, particularly in light of the rising credit demand. She urged banks to conduct special drives to attract deposits and to foster stronger relationships with customers, especially in rural and semi-urban areas.

The Finance Minister also highlighted the importance of innovative products to boost deposit mobilization, urging PSBs to focus on their core business operations.

PSBs were directed to enhance credit flow to eligible beneficiaries under various government initiatives, such as the PM Surya Ghar Muft Bijli Yojana and the PM Vishwakarma Yojana. Sitharaman also stressed the importance of adhering to the Reserve Bank of India’s guidelines regarding the timely handover of security documents to customers upon loan closure, ensuring there are no delays.

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 She urged banks to swiftly implement recent Budget announcements, including the introduction of a new credit assessment model for MSMEs based on digital footprints and cash flows.

Sitharaman further encouraged PSBs to explore collaborations and share best practices in emerging areas, ensuring that they are well-equipped to adapt to the evolving banking landscape.

Discussions also extended to digital payments and the cyber security framework, with Sitharaman stressing the importance of a systemic approach to cyber security. She called for collaboration between banks, the government, regulators, and security agencies to implement necessary safeguards against cyber risks.

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