New Delhi: Major financial parameters such as credit deployment, profitability, asset quality, and capital adequacy, indicate that the performance of Public Sector Banks (PSBs) has “significantly improved”, the Finance Ministry stated after a review of the PSBs on various financial health parameters for the financial year 2022-23 by the Finance Minister Nirmala Sitharaman, here today.
During the review meeting, discussions were held with the heads of PSBs on the positive macro trends, improved business sentiments, ‘Twin balance sheet advantage’ and performance of PSBs.
It was noted during the meeting that the Asset quality of PSBs has improved significantly with gross Non-Performing Assets (NPAs) at 4.97% and net NPAs at 1.24% in March 2023.
During FY 2022-23, PSBs earned a record aggregate net profit of around ₹1.05 lakh crore, almost triple from net profits earned in FY 2013-14. Strengthened by high capital adequacy of 15.53%, the Capital to Risk Assets Ratio (CRAR) comparable to major economies of the world, clean balance sheets supported by a healthy provision coverage (90.68%), and improved resilience, PSBs were well positioned to support the credit needs of the productive sectors of the growing economy. Bankers expressed confidence in withstanding macroeconomic shocks due to the strong financial health of the PSBs.
Sitharaman emphasised banks’ adherence to the regulatory framework by focusing on risk management, and diversification of business base. “The business outlook is progressively improving in spite of the headwinds from recent global banking sector developments,” she said.
While the overall Priority Sector Lending (PSL) have exceeded the mandated target, the Finance Minister said the PSL targets in the sub-categories should also be met, including agriculture, particularly the small and marginal farmers, and the micro-enterprises.
As, Secretary of the Ministry of Housing and Urban Affairs, Manoj Joshi, highlighted the progress on PMSVANidhi Scheme and said that around 33 lakh beneficiaries were digitally active and further efforts were being taken to improve the adoption of digital payment tools, Sitharaman asked the banks to lead a special campaign to ensure the onboarding of the PMSVANidhi beneficiaries on digital payment systems. On improving lending under PMSVANidhi, it was decided that Union Minister of State (Finance), Dr Bhagwat KishanraoKarad will ensure a special drive for expanding the coverage of PMSVANidhi, with the assistance of the Urban Local Bodies (ULBs).
The Union Finance Minister further advised PSBs to—
- Ensure an increase in rural, agriculture and sectoral credit to meet the Priority Sector Lending (PSL) norms and further ensure that the PSL targets are achieved across all sub-categories.
- Meet the targets for the credit to street vendors under PMSVANidhi and the momentum of disbursals gained under PMSVANidhi should be sustained.
- Ensure that there is a fair and transparent recognition of NPAs as per the extant guidelines of the regulator and banks should periodically review it internally to ensure that there is proper recognition and reporting of the stressed assets.
- The sponsor banks of the Regional Rural Banks (RRBs) should ensure a time-bound technological upgradation of the RRBs and continuously monitor their functioning to make them more efficient and effective, which will immensely benefit the people living in rural areas.
- Address associated business model risk with robust risk management practices and have efficient and optimum Asset Liability Management;
- Take steps to improve the deposits and adopt a focussed approach on ease of services and customer protection.
The Finance Minister said she would chair review meetings on the functioning of the Regional Rural Banks (RRBs) in different parts of the country in July-August 2023.
– global bihari bureau