What measures are being taken by FM for Public Sector Banks during COVID 3rd Waive

Smt. Nirmala Sitharaman, Union Minister of Finance and Corporate Affairs, conducted a virtual assessment of the performance of Public Sector Banks (PSBs) with their Chairmen and Managing Directors (CMDs/MDs) in New Delhi today. Union Minister of State for Finance Dr Bhagwat Kisanrao Karad and Secretary, Department of Financial Services (DFS), Shri Debasish Panda, as well as senior DFS officials, attended the review meeting.

During the review meeting, Smt. Sitharaman evaluated PSBs’ progress in implementing pandemic-related measures undertaken by the Government of India and the Reserve Bank of India (RBI), as well as their readiness to deal with potential future disruptions caused by the continuing COVID-19 pandemic.

While praising ECLGS’ accomplishments, the Finance Minister stated that “it is not yet time to rest on our laurels,” and that “our combined efforts must aim to support industries that are experiencing disruption because to the ongoing COVID-19 pandemic.” Smt. Sitharaman also urged bankers to continue helping the agriculture, farming, retail, and MSMEs sectors.

Despite the difficulties from global development and the Omicron spread, Smt. Sitharaman stated that the business picture is gradually improving. The Finance Minister stated that contact-intensive industries may require more assistance in combating the pandemic.

On the credit demand front, the Finance Minister stated that loan demand is projected to increase as a result of increased retail sales, improved overall macroeconomic prospects, and improved borrowers’ financial health.

During the review discussion, bankers stated that PSBs had noticed an improvement in the country’s payback culture.

PSBs have performed well and, with the help of various policy initiatives, have given the necessary push for the economy to emerge from the grip of pandemic-induced stress.

Performance of Public Sector Banks (PSBs) —

1. In FY 2020-21, PSBs had a net profit of Rs 31,820 crore, the highest in the prior five years.
2. For the first half of FY2021-22, the net profit was Rs 31,145 crore, practically identical to that of FY 2020-21.
3. During the last seven financial years, PSBs have recovered Rs 5,49,327 crore.
4. PSBs are appropriately capitalised, with a CRAR of 14.4 percent as of September 2021, compared to a regulatory threshold of 11.5 percent (including CCB).
5. PSBs’ CET1 was 10.79 percent in September 2021, compared to the regulation level of 8%.
6. As of September 2021, PSBs reported 11.3 percent year-on-year credit growth in personal loans, 8.3 percent in agriculture loans, and 3.5 percent overall credit growth.
7. PSBS has sanctioned a total loan amount of Rs. 61,268 crore under its Credit Outreach Program, which began in October 2021.
8. PSBs have done effectively in numerous government initiatives such as ECLGS (introduced in May 2020 to provide relief to the MSME sector amidst the COVID-19 pandemic), LGSCAS, and PM SVANidhi during the COVID-19 pandemic.
9. 64.4 percent, or Rs 2.9 lakh crore, of the government’s enhanced ECLGS limit of Rs 4.5 lakh crore has been sanctioned until November 2021. Due to ECLGS, over 13.5 lakh small businesses survived the epidemic, saving MSME loans worth Rs 1.8 lakh crore from becoming non-performing assets and preserving the livelihood of around 6 crore people.

Bankers are satisfied that PSBs are appropriately capitalized, and that banks are prepared for any potential stress scenarios, according to their assessment of the overall situation.

The Finance Minister also praised the bankers for their unwavering support for the country since the outbreak of COVID-19. She credited ECLGS’ achievement to the banking community’s combined efforts. Smt. Sitharaman urged the banking community to follow COVID-19 best practices for the protection of their employees and their families, and to guarantee that everyone is vaccinated.

Union Minister of State Dr Bhagwat Karad addressed the bankers, saying that PSBs are the power engines of our economy and congratulating them on their performance throughout the epidemic. Banking, according to Dr. Karad, has grown more open and customer-centric as a result of technological advancements.

Earlier, at the commencement of the review meeting, the SBI Chairperson gave the Finance Minister an in-depth presentation on the pre-pandemic and current state of banking operations. Later, CMDs/MDs of various PSBs discussed their perspectives on the banking industry as a whole and offered various proposals for its overall growth.