Underlining that public sector banks’ (PSBs) balance sheets are in good health, Finance Minister Nirmala Sitharaman on Thursday advised the chief executives to step up credit to the small and marginal farmers and micro enterprises besides taking measures to meet the credit targets set for street vendors under PMSVANidhi scheme.
At a review meeting with PSB chiefs, Sitharaman said PSBs are now well positioned to meet the credit needs of the productive sectors of the growing Indian economy. Discussions were held with the heads of PSBs on the positive macro trends, improved business sentiments, ‘Twin balance sheet advantage’ and performance of PSBs.
Priority sector lending
Sitharaman noted that while the overall priority sector lending (PSL) has exceeded the mandated target, the PSL target in the sub-categories should also be met especially in agricultural towards small and marginal farmers, and the micro enterprises.
She also urged bank chiefs to meet the targets for the credit to street vendors under PMSVANidhi and advised that the momentum of disbursals gained under PMSVANidhi should be sustained.
It maybe recalled that PSBs in aggregate posted record net profits of around ₹1.05-lakh crore, almost triple from net profits earned in FY14.
It was noted that the asset quality of PSBs has improved significantly with gross NPAs at 4.97 percent and net NPAs at 1.24 per cent in March 2023.
At the same time, Sitharaman wanted banks to ensure that there is a fair and transparent recognition of NPAs as per the extant guidelines of the regulator. Banks should periodically review it internally to ensure that there is proper recognition&reporting of the stressed assets, she added.
Sitharaman also advised banks to address associated business model risk with robust risk management practices and have efficient and optimum asset liability management. She also wanted them to take steps to improve the deposits.
PMSVANidhi coverage
On improving lending under PMSVANidhi, it was decided that Union Minister of State (Finance), Bhagwat Kishanrao Karad will ensure a special drive for expanding the coverage of PMSVANidhi, with the assistance of the urban local bodies (ULBs).
Karad will visit different regions of the country in six phases before September 1, 2023 for the special credit outreach drive on PMSVANidhi.
The Finance Minister asked the banks to lead a special campaign to ensure the onboarding of the PMSVANidhi beneficiaries on digital payment systems.