Finance Minister Nirmala Sitharaman convened a crucial meeting with the heads of public sector banks to evaluate their financial performance. In a comprehensive discussion, cybersecurity concerns took center stage, reflecting the growing risks faced by the financial sector.
Issues pertaining to fraud, wilful defaulters, and the progress of the National Asset Reconstruction Company Ltd (NARCL) were also on the agenda. This meeting holds particular significance as it is likely the last full review session before the presentation of Budget 2024-25 and the impending general elections.
On the financial front, public sector banks exhibited commendable performance, securing a net profit of approximately Rs 68,500 crore in the initial six months of the current fiscal year. The report highlighted the robust growth of banks’ balance sheets in the preceding fiscal year, marked by accelerated growth in both deposits and credit.
A noteworthy achievement was the Gross Non-Performing Assets (GNPA) ratio of Scheduled Commercial Banks (SCBs), which reached a decade-low of 3.9% by the end of March 2023 and further reduced to 3.2% in September. This improvement in asset quality, a trend initiated in 2018-19, persisted into 2022-23, with the GNPA ratio standing at 3.2% in the April-September period.
The discussion also delved into the National Asset Reconstruction Company Ltd (NARCL), a government entity established in 2021. Majority-owned by Public Sector Banks (PSBs) with private banks holding the balance, NARCL operates as a registered asset reconstruction company under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
Emphasizing a proactive approach to bad assets management, the finance ministry, in a recent review meeting with PSB heads, directed them to monitor all cases, with particular attention to the top 20 Insolvency and Bankruptcy Code cases. Financial Services Secretary Vivek Joshi urged managing directors and CEOs of PSBs to conduct monthly reviews of these cases for timely resolution.
As the financial landscape evolves, the Finance Minister’s engagement underscores the government’s commitment to ensuring the resilience and security of the banking sector against emerging challenges.