The Union Finance Minister Nirmala Sitharaman is scheduled to meet with the managing directors of public sector banks PSBs on March 25 for a performance review on the back of the failure of few banks in the US and the crisis faced by Credit Suisse, as per a report.
According to sources, the meeting will look at the progress made by banks in achieving targets set for 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, according to PTI.
This is 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.
According to the sources, Sitharaman would review credit growth, asset quality, capital raising and business growth plan of banks for the next financial year. Non-performing assets NPAs of Rs 100 crore and the recovery status will also be discussed in the meeting.
The meeting comes in the wake of global concern over failure of banks due to aggressive monetary tightening.
The US Fed hiked interest rates by 25 basis points to tame high inflation despite the banking crisis. The Fed has increased rates from zero to 5.75 per cent in just one year to fight the persistent hot inflation.
The Indian banking system is in good shape and can handle the situation caused by tightening, according to policymakers and experts.
Various reforms undertaken by the government have resulted in a significant improvement in 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.
All PSBs have a profit of Rs 66,543 crore in 2021 -- 22 and that increased to 70,167 crore in the first nine months of the current financial year, as per PTI.
At the same time, the provision coverage ratio of PSBs increased from 46 per cent to 89.9 per cent in December 2022. The capital adequacy ratio of PSBs increased from 11.5 per cent in March 2015 to 14.5 per cent in December 2022.
In January 2019, the total market value of PSBs excluding IDBI Bank went from Rs 4.52 lakh crore in March 2018 to Rs 10.63 lakh crore in December 2022, according to the total market value of PSBs excluding IDBI Bank.
The 4 R strategy of Recognising NPAs transparently, resolution and recovery, recapitalising PSBs and reforms in the financial ecosystem has been implemented by the government.