The Finance Ministry on Monday reviewed the operating and financial performance of public sector banks (PSBs) for 2021-22 while taking a deep look at the status of implementation of various government sponsored financial inclusion, MSME and agricultural support schemes.

The day-long meeting was chaired by Bhagwat Karad, Minister of State for Finance. “Today’s meeting was a general performance review and no specific directions came from the DFS Secretary or the minister,” said a chief executive of a PSB who did not want to be quoted. The PSB performance on government schemes also covered the first two months of the current fiscal.

At the first half of the meeting, attended by chief executives and executive directors of all PSBs, the operating performance of each bank was assessed against the benchmark of best performing private sector bank from the standpoint of credit growth, NPA management, deposits growth etc, sources said.

It maybe recalled that last fiscal most public sector banks had done well with strong growth in operating profits as well as bottomline growth. Most of the banks had high provision coverage ration and had almost fully provided for their non performing assets (NPA), giving them some cushion in meeting future slippages. Given their high provision coverage ratio, most of the recoveries as and when they happen are expected to go directly to their profit and loss account, sources said.

On the capital raising front, sources said capital raising is not an issue for most PSBs this year. “Capital is not an issue for any PSB for growth this year. PSBs are adequately capitalised to even take care of credit growth of 15-20 per cent. There is adequate growth capital available for banks,”  the source said.

EASE 5.0 reforms

The meeting also discussed the progress on bank specific agenda under EASE 5.0, launched by Finance Minister Nirmala Sitharaman on June 8. Under Enhanced Access and Service Excellence (EASE) 5.0, there would be a common PSB reforms agenda and also bank specific strategic 3-year roadmap (based on individual bank’s business priorities).

It is still early days for each bank to draw its own three-year roadmap and get it approved, sources added. EASE 5.0 will focus on digital customer experience, and integrated and inclusive banking with emphasis on supporting small businesses and agriculture.

The meeting also saw discussions around establishment of 75 digital banking units; recommendations of working group on business correspondents and coverage of unbanked villages with brick and mortar branches.

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