IN NEW DELHI, the Ministry of Finance has requested that public sector banks investigate prospects for co-lending and collaborations with fintech companies in order to grow their businesses.
According to reports, the recently ended performance evaluation of PSBs conducted by the Finance Ministry requested that lenders place a greater emphasis on technology and data analytics in order to increase their lending.
In addition, the Ministry of Finance issued a call to action to the CEOs of public sector lending institutions, urging them to improve their information technology (IT) security systems and cybersecurity.
According to the sources, banks were reportedly requested to authorise loans for productive sectors in order to expedite the resuscitation of the economy, which is now battling headwinds such as the war between Russia and Ukraine.
According to the most recent statistics provided by the RBI, the annual growth rate of PSB lending shot up to 7.8 percent in March 2022 from 3.6 percent in the same month the previous year. Some of the PSBs had growth of 26% over this time period.
At the end of March 2022, the total amount of gross advances reported by Bank of Maharashtra (BoM) had increased by 26 percent, reaching Rs 1,35,240 crore. The State Bank of India and the Union Bank of India came in second and third, growing their businesses by 10.27 and 9.66 percent, respectively, after it.
At the end of March 2022, the Bank of Maharashtra, which has its headquarters in Pune, had accumulated Rs. 2,02,294 crore in deposits and had seen a gain in deposits of 16.26 percent. Indian Bank reported a 10 percent increase in deposits, bringing the total to Rs 5,84,661 crore, while Union Bank of India came in second place with an 11.99 percent increase (Rs 10,32,102 crore).
According to the sources, the banks have been ordered to hasten the resolution of non-performing assets (NPAs) and to concentrate on the recovery of bad loans.
The non-performing assets (NPAs) of Rs 100 crore and the recovery status were also reviewed at the meeting, according to the sources. The discussion took stock of the asset quality as well as the business expansion objectives of the banks.
It is important to remember that the meeting took place against the backdrop of all PSBs having made a profit for the second fiscal year running in a row prior to the meeting. They have seen a rise in their net profit to the tune of Rs 66,539 crore in the current fiscal year. In financial year 21 (FY21), the total profit made by the nation’s 12 state-owned banks was Rs 31,820 crore.
Nevertheless, there were overall losses for five consecutive years, starting in 2015–2016 and continuing through 2019–2020.
The amount of net loss that was recorded in 2017–18 was the largest ever, coming in at Rs 85,370 crore. This was followed by losses of Rs 66,636 crore in 2018–19, Rs 25,941 crore in 2019–20, Rs 17,993 crore in 2015–16, and Rs 11,389 crore in 2016–17.
The government has implemented a comprehensive strategy known as the “4Rs” to improve the financial health of public sector banks (PSBs). These 4Rs include the transparent recognition of non-performing assets (NPAs), the resolution and recovery of value from stressed accounts, the recapitalization of PSBs, and reforms in PSBs and the wider financial ecosystem. This will result in a responsible and clean system.
In accordance with the 4Rs approach, extensive efforts were taken to cut down on the number of NPAs and PSBs.
In accordance with the plan, the government has contributed a total of Rs. 3,10,997 crore to the recapitalization of banks over the course of the most recent five fiscal years, which span from 2016–17 to 2020–21. Of this total, Rs. 34,997 crore came from budgetary allotment, while Rs. 2,76,000 crore came from the issuance of recapitalization bonds to these banks.