Finance Minister Nirmala Sitharaman is scheduled to meet with the heads of public sector banks (PSBs) on August 25 to review the financial performance of lenders and their progress in financing the economy affected by the COVID-19 epidemic.
Given the importance of the banking sector in generating demand and increasing spending, sources said a meeting with the MD and PSB management was considered important.
Recently, the Minister of Finance said the government was ready to do whatever it took to revive and support economic growth affected by the COVID-19 epidemic.
“Growth will be given its importance. Growth will be pushed by the Reserve Bank and us …,” he said.
Interestingly, this will be the first physical review meeting since the outbreak in March last year.
The meeting is expected to focus on the banking sector, which is progressing with the restructuring of the 2.0 plan announced by the Reserve Bank of India (RBI), sources said, adding that banks could be forced to encourage credit growth in the manufacturing sector.
The revised Emergency Credit Line Guarantee Scheme (ECLGS) will be reviewed during a possible meeting in Mumbai, sources said.
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In addition, the Minister of Finance was expected to take stock of a critical loan or non-performing assets (NPA), and discuss various ways to repay banks, they said.
As a result of the government’s plan for adoption, resolution, housing reconstruction and transformation, NPAs have since declined to Rs 7,39,541 crore on March 31, 2019, Rs 6,78,317 crore on March 31, 2020 and on to Rs 6,16,616 crore as of March 31, 2021 (temporary data).
At the same time, comprehensive measures were taken to control and procure NPAs, enabling the PSBs to recover Rs 5,01,479 crore over the past six years, and the government recently informed Parliament.
With regard to the growth in debt of organized commercial banks (SCBs), it remains stable for 2020-21 despite a reduction in GDP (-7.3%) due to the COVID-19 epidemic.
Loans and development – the balance of SCBs has increased from Rs 109.19 lakh crore from March 31, 2020 to Rs 113.99 lakh crore from March 31, 2021. Agriculture and co-operatives, small and medium enterprises, houses and vehicles have proven to grow annually by 12.3 percent, 8.5 percent, 9.1 percent and 9.5 percent, respectively, during the year.
Despite the economic downturn caused by the epidemic, the PSBs were able to raise the record of Rs 58,700 crore from the market in 2020-21 through debt consolidation and equity to develop the capital.
As a result of the estimated net income inflation increased to 14.04 percent from March 31, 2021, contrary to the regulatory requirement of 10.875 percent to increase the ability of PSBs to continue to increase lending.
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As a result, PSBs collectively recorded a profit of Rs 31,816 crore, the highest in five years, although there is 7.3 percent in the economy by 2020-21.
The main reason for PSBs to send such Rs 57,832-crore money from the loss of rs 26,015 crore in 2019-20 to a combined profit of rs 31,816 crore was the end of their bad loan problem.
