Finance Minister Nirmala Sitharaman is scheduled to meet with PSBs 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.
This will be the first full review meeting after the presentation of Budget 2023 -- 24 and banks will be asked to focus on the areas highlighted by the Budget, including credit flow to productive sectors.
The meeting is going to take a 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 the PTI report.
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. Non-performing assets NPAs of Rs 100 crore with leading banks and recovery status would also be discussed.
Various reforms undertaken by the government have resulted in a 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.
The Indian banking system is in a good shape and can handle the situation caused by inflation and monetary tightening, according to policymakers and experts.
The 4 R strategy of Recognising NPAs transparently, resolution and recovery, recapitalising PSBs and reforms in the financial ecosystem was implemented by the Narendra Modi-led government. Major banking reforms over the last eight years ensured credit discipline, responsible lending, and improved governance, along with the adoption of technology, amalgamation of banks, and overall confidence of bankers.
The aggregate profit of the PSBs was 66,543 crore in 2021 -- 22, and increased to 70,167 crore in the first nine months of the current financial year.
The provision coverage ratio of PSBs increased from 46 per cent to 89.9 per cent in December 2022, increasing the resilience of the PSBs at the same time. The capital adequacy ratio of PSBs increased from 11.5 per cent in March 2015 to 14.5 per cent in December 2022.
The total market value 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.
The Finance Bill 2023 was passed in the Lok Sabha with 45 amendments on Friday. Capital gains from debt mutual funds will be treated as short-term capital gains, bringing it to par with fixed deposits.
The amendment in the Financial Bill 2023 stated that a mutual fund is a mutual fund by whatever name it is, where not more than 35 per cent of its total proceeds are invested in equity shares of domestic companies. Sitharaman also proposed establishing a committee under the Finance Secretary to address the issues of employees as well as maintain fiscal prudence.