FM Nirmala Sitharaman to meet chiefs of PSU Banks today. Here’s what is expected

Finance Minister Nirmala Sitharaman is scheduled to meet managing directors of public sector banks (PSBs) in order to review their performance on the back of the global financial sector stress due to the failure of a few banks in the US, and Credit Suisse in Europe. 

Besides this, this will be the first full review meeting after the presentation of Budget 2023-24 and banks would be asked to focus on the areas highlighted by the Budget including credit flow to productive sectors. 

The meeting is going to take a stock of the progress made by banks in achieving targets set for the various government schemes, including Kisan Credit Card (KCC), Stand-Up India, Pradhan Mantri Mudra Yojana (PMMY), and emergency credit line guarantee scheme (ECLGS) to help businesses affected by COVID-19, a PTI report said. 

FM Nirmala Sitharaman is expected to review the financial inclusion, credit growth, asset quality, and capital raising and business growth plan of banks for the next financial year. Besides, non-performing assets (NPAs) of Rs 100 crore with the leading banks and the recovery status would also be discussed. 

Various reforms undertaken by the government have resulted in significant improvement in the asset quality of public sector banks, with the gross NPA ratio declining from the peak of 14.6 per cent in March 2018 to 5.53 per cent in December 2022. 

Policymakers and experts have claimed that the Indian banking system is in a good shape and can handle the situation caused due to inflation and monetary tightening. 

The Narendra Modi-led government implemented a comprehensive 4R strategy of Recognising NPAs transparently, Resolution and recovery, Recapitalising PSBs, and Reforms in the financial ecosystem. Major banking reforms over the last eight years ensured credit discipline, responsible lending and improved governance, besides the adoption of technology, amalgamation of banks, and maintaining general confidence of bankers. 

All PSBs are in profit with an aggregate profit of Rs 66,543 crore in 2021-22, and that further increased to Rs 70,167 crore in the first nine months of the current financial year. 

At the same time, resilience has increased with the provision coverage ratio of PSBs rising from 46 per cent to 89.9 per cent in December 2022. The capital adequacy ratio of PSBs improved significantly from 11.5 per cent in March 2015 to 14.5 per cent in December 2022. 

The total market capitalisation of PSBs (excluding IDBI Bank, which was categorised as a private sector bank in January 2019) increased from Rs 4.52 lakh crore in March 2018 to Rs 10.63 lakh crore in December 2022.  

On Friday, the Finance Bill 2023 was passed in the Lok Sabha with over 45 amendments. Now capital gains from debt mutual funds will be treated as short-term capital gains, bringing it at par with fixed deposits. 

The amendment in the Financial Bill 2023 stated: “Specified mutual fund means a mutual fund by whatever name called where not more than 35 per cent of its total proceeds is invested in equity shares of the domestic companies.”

Sitharaman also proposed setting up a committee under the Finance Secretary on the pension system in order to address the issues of employees as well as maintain fiscal prudence. 

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