PSBs are showing clear profits; have come out of PCA, says Sitharaman

Finance Minister Nirmala Sitharaman, while addressing the media after the conclusion of her two-day Mumbai visit, said she had a detailed annual review with public sector banks. She said Department of Finance Services Secretary Debasish Panda had also joined in for a detailed discussion on the PSBs' performance. The FM, during her Mumbai visit, also reviewed actions taken by public sector banks on the previously announced schemes.

She said the PSBs have been asked to have detailed discussions with exporters and industry bodies. The banks have also been advised to provide better credit flow to the exporters and export-oriented companies, she said. They have also been directed to interact regularly with Federation of Indian Exporters Organisation so the exporters don't have to shuttle between various bankers, she said.

Sitharaman said collectively, PSBs are out of the Prompt Corrective Action, and are in a position to raise growth capital from the market. She also said bank mergers initiated before the pandemic hit India have now completed seamlessly.

She said she has asked banks to understand the needs of the sunrise sectors. "From inputs given by  officers from Tax administration, it emerged that Banks need to understand the special requirements of the sunrise sector. e.g. Fintech, one such sector can provide technological help to banks as well as benefit from help from the banking sector," said the FM.

Also read: Bank employees’ pension payouts hiked to 30%

She also said CASA deposits are piling up in the PSBs of Eastern states of Bihar, West Bengal, while credit is shrinking in the region. "Banks need to explore credit expansion in those regions. I have requested banks to have regional interaction with export promotion agencies and industry chambers to meet the needs of exporters," she added.

Sitharaman said she has nothing to say on bank privatisation right now. "We see the economic revival happening. Waiting for revival signals to be clearer."

The FM also said the government will launch credit outreach in every district from October this year to provide a liquidity boost. "Banks will participate in the credit outreach programme. This is in addition to the stimulus that the government has given," she said.

Also read: FM Sitharaman launches EASE 4.0 for institutionalising smart banking

DFS Secretary Debasish Panda said PSBs' contribution for employee pensions under the National Pension Scheme has been hiked to 14 per cent from 10 per cent earlier. He said the proposal for enhancement of family pension has also been approved by the FM. The benefits would now accrue to family pensioners.

"Cap on pay is removed and a uniform slab of 30 per cent will be in force. Pension can go as high as Rs 35,000," he said.

On inflation, DFS Secretary said the government feels once crops will come out, inflation will come down. "We have cut duties on edible oils and pulses to increase supply, our estimation is that inflation will be in the 4-6 per cent band." On PSBs' performance over the last year, he said they are now raising their own resources after gaining investor confidence. Over Rs 12,000 crore of fundraising is in process, he added.

Also read: Support emerging sectors like fintech, Sitharaman tells PSBs