FM asks public sector banks to improve deposit growth
Tribune News Service
Chandigarh, August 19
Union Finance Minister Nirmala Sitharaman on Monday asked heads of public sector banks to make concerted efforts to garner deposits by conducting special drives as mobilisation of deposits could further be improved to fund the credit growth sustainably.
She made the remarks at a meeting in New Delhi to review performance banks
Notably, deposits growth have been lower than the credit growth in the past few months, creating an asset-liability mismatch for banks.
Earlier this month, the finance minister had said there was a mismatch between deposit and lending growth. Even RBI Governor Shaktikanta Das earlier asked banks to mobilise deposits through innovative products and services by leveraging their vast branch network.
This is the first review meeting after the presentation of Budget 2024-25 to review the performance of public sector banks.
During the meeting it was noted that during FY24, the PSBs performed well across all financial parameters as evidenced by improved asset quality with Net NPAs (NNPAs) declining to 0.76 per cent, sound capital adequacy of the banks at 15.55 per cent, Net Interest Margin (NIM) of the banks at 3.22 per cent, and highest ever net aggregate profit of Rs 1.45 lakh crore with the dividend of Rs 27,830 crore to the shareholders.
Improvements over various parameters have also enhanced the ability of PSBs to raise capital from the markets. Banks were also instructed by Sitharaman to focus on further increasing credit flow to eligible beneficiaries under various Union Government initiatives like PM Surya Ghar Muft Bijli Yojana and PM Vishwakarma Yojana.
On Cybersecurity issue, the minister advised that issues of cyber security should be seen from a systemic perspective and emphasised that a collaborative approach between banks, government, regulators and security agencies is needed to put in place necessary mitigants against cyber-risks.
Sitharaman also held a performance review meeting with Regional Rural Banks (RRBs) and directed them to increase their share in ground-level agriculture credit disbursement.
Given the crucial role of RRBs in supporting the rural economy, the minister urged RRBs — with the active support of their Sponsor Banks — to also put greater thrust on the clear identification of beneficiaries while sanctioning loans under various schemes.
She also exhorted all the RRBs to devise suitable MSME products aligning with their cluster activities and leverage personal and local connect to increase banking penetration.
Small Industries Development Bank of India was directed to assist RRBs in exploring co-lending and risk-sharing models.
