FM Nirmala Sitharaman Urges PSBs To Boost Deposits, Reviews Cybersecurity And Fraud Risks In Review Meeting

The PSU banks' net profit has crossed Rs 1.4 lakh crore in the financial year ended March 2024, recording a growth of 35 per cent over the previous year on a high base of Rs 1 lakh crore.

iMAGE Credit: @FinMinIndia/X

New Delhi: FM Nirmala Sitharaman held a performance review meeting with the heads of public sector banks on Monday, urging them to enhance their deposit growth.

However, the deposits have been growing 300-400 basis points below credit growth, leading to an asset-liability mismatch for banks in recent months. According to sources, FM Sitharaman assessed the financial performance of the banks and the progress of key government schemes, including PM Awas Yojana, PM Surya Ghar, and PM Vishwakarma Yojana. 

She also reviewed deposit growth, the credit-to-deposit (CD) ratio, and asset quality. She urged bank leaders to prioritize core banking operations and accelerate deposit growth by introducing innovative products. 

Union Finance Minister Smt. @nsitharaman chairs the meeting to review performance of Public Sector Banks #PSBs on various parameters, in New Delhi, today.

The meeting is also being attended Dr. Vivek Joshi, Secretary @DFS_India along with incoming Secretary Shri M. Nagaraju;… pic.twitter.com/VhmAZS7JZR

— Ministry of Finance (@FinMinIndia) August 19, 2024

Earlier this month, the finance minister had said there is a mismatch between deposit and lending growth. "Growth in lending is higher...I will be meeting banks (on August 19) for various reasons and in that process, I will be talking to them about the importance of deposit collection," she had said.

The RBI has given them liberty in terms of interest rate, she had said, adding that using that liberty, banks should make deposits more attractive.

Echoing a similar view, RBI Governor Shaktikanta Das had asked banks to mobilise deposits through innovative products and services by leveraging their vast branch network.

"Banks are taking greater recourse to short-term non-retail deposits and other instruments of liability to meet the incremental credit demand. This, as I emphasised elsewhere, may potentially expose the banking system to structural liquidity issues," he had said.

During the meeting, concerns related to cyber security and the risks to the financial sector were also discussed, sources said. Issues related to fraud and wilful defaulters and progress on the National Asset Reconstruction Company Ltd (NARCL) also came up for discussion, they added. This is the first review meeting after the presentation of Budget 2024-25.

On the performance front, PSU banks' net profit has crossed Rs 1.4 lakh crore in the financial year ended March 2024, recording a growth of 35 per cent over the previous year on a high base of Rs 1 lakh crore. The 12 Public Sector Banks (PSBs) together had earned a net profit of Rs Rs 1,04,649 crore in 2022-23.

Out of the total profit of Rs 141,203 crore earned during the FY24, market leader State Bank of India (SBI) alone contributed over 40 per cent of the total earnings, as per the published numbers on exchanges. SBI earned a profit of Rs 61,077 crore 22 per cent higher than the previous financial year (Rs 50,232 crore). (With Inputs From PTI)