FM Sitharaman to Meet PSB Chiefs on June 20, Check What’s Expected

Finance Minister Nirmala Sitharaman is expected to meet with heads of public sector banks (PSBs) on June 20 to take stock of the performance of lenders.

During the meeting, banks could be asked to sanction loans to productive sectors to accelerate economic recovery in the face of headwinds including the Russian-Ukrainian war.

It is highly likely that FM Sitharaman will provide an update on the banks’ credit growth, asset quality and business growth plan. Additionally, it can discuss the non-performing assets (NPA) of 100 crore and recovery status.

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A comprehensive review of various segments and the progress of government programs including the Kisan Credit Card and the Emergency Credit Line Guarantee (ECLGS) program could be discussed during the meeting.

In Budget 2022-23, the government extended the ECLGS by one year to March 2023. In addition, the scheme’s warranty coverage was extended by 50,000 crore to $5 million.

Apart from this, the credit limit for eligible borrowers has been increased to 50% of their outstanding funds-based credit from 40% previously. However, the enhanced limit is subject to a maximum of 200 crore per borrower.

This meeting takes place in a context where all PSBs have recorded a profit for the second consecutive year. PSOs more than doubled their net profit for 66,539 crore in FY’22. The data indicates that the collective profit of 12 public banks together was 31,820 crore in FY21.

For five consecutive years from 2015-2016 to 2019-2020, there have been collective losses. The highest amount of net loss was recorded in 2017-2018 at 85,370 crore, followed by 66,636 crores in 2018-19; 25,941 crores in 2019-2020; 17,993 crore in 2015-16 and 11,389 crores in 2016-17.

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Citing ongoing collective losses, the government has implemented a comprehensive 4Rs strategy – transparent recognition of NPAs, resolution and value recovery of distressed accounts, recapitalization of PSBs, and reforms of PSBs and the wider financial ecosystem – for a responsible and clean system.

The government has also infused 3,10,997 crore to recapitalize banks over the past five years – from 2016-17 to 2020-21, of which 34,997 crore was funded through budget allocation and 2,76,000 crore by issuing recapitalization bonds to these banks.

With entries from PTI.

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