Union Finance Minister to meet CEOs of Public Sector Banks

Union Finance Minister Smt.Nirmala Sitharaman will meet CEOs of Public Sector Banks (PSBs) on 25th August 2021 to review the financial performance of the banks and progress made by them to support the COVID-19 hit economy.

Recently, the Union Finance Minister announced that the government is ready to do everything required to revive and support economic growth hit by the COVID-19 pandemic. Sources say the banking sector plays a vital role in generating demand and boosting consumption. Hence, the meeting with the MD and CEOs of PSBs is considered a crucial one. This meeting would be the first physical review meeting since the outbreak of the pandemic in March 2019.

The sources say that in this meeting, the ministry is expected to take data of the banking sector, progress on the Restructuring 2.0 scheme announced by the Reserve Bank of India (RBI), and may nudge banks to push loan growth in productive sectors. Also, the revamped Rs 4.5 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) would be reviewed during the meeting.

Besides, the Finance Minister expected to take figures of the bad loan or non-performing asset (NPA) situation and discuss various recovery measures by banks. The government’s strategy of recognition, resolution, recapitalisation and reforms resulted in the decline of NPAs as follows:

  • Rs 7.39 lakh crore on 31st March 2019
  • Rs 6.78 lakh crore on 31st March 2020
  • Rs 6.16 lakh crore as of 31st March 2021 (provisional figures)

Also, the government recently informed the Parliament that they took comprehensive steps to control and recover the NPAs, which enabled PSBs to recover Rs 5.01 lakh crore over the last six financial years.

As far as credit growth of Scheduled Commercial Banks (SCBs) is concerned, it has remained positive for 2020-21 despite a contraction in GDP due to the COVID-19 pandemic. Also, the gross loans and advances outstanding in SCBs increased from Rs 109.19 lakh crore as of 31st March 2020 to Rs 113.99 lakh crore as of 31st March 2021.

Despite economic disruptions caused by the pandemic, PSBs have managed to raise Rs 58,700 crore from markets in 2020-21. As a result capital to risk-weighted assets ratio rose to 14.04% as of 31st March 2021, as against the regulatory requirement of 10.87% boosting the ability of PSBs to increase lending further. As a result, PSBs recorded a profit of Rs 31,816 crore, which is the highest in five years.

For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@cleartax.in

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