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Finance Minister to review PSBs performance amid banking crisis in US, EuropeOfficial sources said the impact of the banking crisis in US and Europe on the Indian banks would be discussed during the meeting
Gyanendra Keshri
DHNS
Last Updated IST
Nirmala Sitharaman. Credit: PTI photo
Nirmala Sitharaman. Credit: PTI photo

Finance Minister Nirmala Sitharaman is likely to meet heads of public sector banks (PSBs) on Saturday to review their performance in the backdrop of brewing crisis in the global banking system triggered by the failure of Silicon Valley Bank (SVB) and Signature Bank in the US and liquidity crisis in Swiss banking giant Credit Suisse, sources said.

While it is part of a regular review of PSBs’ performance done by the finance minister, the meeting assumes special significance in view of the global banking crisis.

Official sources said the impact of the banking crisis in US and Europe on the Indian banks would be discussed during the meeting even though it is unlikely to be officially on the agenda.

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Officially, the agenda of the meeting is likely to be to review the progress of public sector banks in achieving the targets set for them related to various social welfare schemes including Jan Dhan, MUDRA Yojana, Kisan Credit Card and emergency credit line guarantee scheme.

PSBs asset quality and balance sheet are reportedly to be the main focus of the meeting. The issue of capital requirements of PSBs are also likely to be discussed during the meeting, which will be the last one of the financial year 2022-23.

According to a parliamentary committee report presented in Rajya Sabha on Thursday, PSBs share a disproportionate burden of NPAs. The gross non-performing assets of private banks are in the range of 0-5 per cent while in the case of PSBs it is in the range of 5 to 10 per cent and above, the committee noted, referring to a research report by Bank of Baroda.

Noting that the NPAs affect operational efficiency of banks which in turn affects profitability and liquidity, the committee recommended that the government should “suitably advise the PSBs through the regulator ie RBI to monitor the health of the promoters and the projects properly”.

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(Published 24 March 2023, 03:28 IST)