Winning Bizness Desk

Mumbai. In a crucial review meeting held on Monday, Finance Minister Nirmala Sitharaman met with senior officials of public sector banks to discuss a range of significant issues impacting the banking sector. The meeting underscored the importance of bolstering deposit growth, enhancing digital payment infrastructure, strengthening cyber security measures, and optimizing credit products and schemes.

Key Issues Addressed

During the meeting, Finance Minister Sitharaman emphasized the need for public sector banks to focus on increasing deposits. Recognizing the pivotal role of deposits in sustaining the financial health of banks, she urged the banks to adopt more aggressive strategies to attract and retain deposits, especially in the context of rising competition from private sector banks and digital platforms. The discussion also covered the growing importance of digital payments and the need to safeguard the banking sector against cyber threats. Sitharaman directed the banks to collaborate more closely with government bodies, regulatory authorities, and security agencies to enhance fraud prevention and cyber security protocols.

Focus on Customer Service and Rural Outreach

A significant portion of the meeting was dedicated to customer service, with the Finance Minister highlighting the importance of catering to customers in rural and semi-urban areas. She stressed that public sector banks should prioritize these regions to ensure inclusive financial growth and access to banking services for all sections of society.

Sitharaman also urged the banks to swiftly implement the budget announcements, particularly focusing on the **PM Surya Ghar Free Electricity Scheme** and the **PM Vishwakarma Yojana**. These schemes, aimed at providing sustainable energy solutions and supporting traditional artisans, respectively, are seen as key components of the government's broader socio-economic agenda.

Improvements in Asset Quality and Profitability

Expressing satisfaction with the performance of public sector banks in the financial year 2024, Sitharaman noted that the asset quality of these banks has significantly improved, with net non-performing assets (NPAs) reducing to 0.76%. The financial health of these banks is reflected in their collective net profit of ₹1.45 lakh crore, alongside the distribution of ₹27,830 crore in dividends. Moreover, Sitharaman highlighted the successful capital-raising efforts by these banks and commended their robust credit growth. However, she reiterated the need for accelerated efforts to boost deposit growth, which is essential for sustaining long-term lending capacity.

Adherence to RBI Guidelines and Loan Documentation

In her concluding remarks, the Finance Minister reminded banks to adhere strictly to the Reserve Bank of India's (RBI) guidelines, particularly concerning customer service. She emphasized the importance of promptly providing loan closure documents to customers, a critical aspect of maintaining trust and transparency in banking operations. The meeting was attended by Secretary Vivek Joshi, M Nagaraju, and heads of all public sector banks, along with officials from the Department of Financial Services. The discussions reaffirmed the government's commitment to strengthening the public sector banking framework to ensure financial stability and economic growth.