FM asks PSBs to step up deposit mobilisation, deepen corporate lending

Business Standard

21 hours ago

Union Finance Minister Nirmala Sitharaman on Friday told public sector banks (PSBs) that sustained efforts are needed to improve deposit mobilisation to support ongoing credit growth. She also emphasised the need to deepen corporate lending in productive sectors while maintaining robust underwriting and risk management standards.
The finance minister chaired a high-level meeting in New Delhi to review the performance of PSBs for FY2024–25. Key areas discussed included financial parameters, credit offtake, financial inclusion, customer service, grievance redressal, digital banking, and cyber security. The meeting was attended by Union Minister of State for Finance Pankaj Chaudhary; Secretary, Department of Financial Services, M Nagaraju; managing directors of PSBs; and senior officials of the Department of Financial Services (DFS).
'PSBs were advised to undertake special drives, make effective use of their branch networks, and deepen outreach in semi-urban and rural areas,' the finance ministry said.
The finance minister also directed banks to ensure faster grievance redressal, offer simplified digital platforms, and provide multilingual services both online and offline.
'Maintaining clean, customer-friendly physical branches and expanding in metro and urban centres to keep pace with urbanisation was also highlighted,' the finance ministry added.
During the same period, net non-performing assets (NPAs) of PSBs declined sharply from 1.24 per cent to 0.52 per cent. Net profit increased from ₹1.04 lakh crore to ₹1.78 lakh crore, and dividend payouts rose from ₹20,964 crore to ₹34,990 crore.
Sitharaman was also apprised that PSBs are adequately capitalised, with their capital to risk-weighted asset ratio (CRAR) standing at 16.15 per cent as of March 2025.
She highlighted the importance of adequate staffing in banks, stressing that all existing and arising vacancies must be filled promptly to improve service delivery. Banks were also encouraged to scale up branch expansion in underserved areas such as the North-east. The finance minister underlined the need to strengthen the Business Correspondent (BC) network to ensure last-mile access to banking services, especially in rural and remote regions.
Sitharaman was briefed on the progress under the New Credit Assessment Model for MSMEs, launched on 6 March 2025, under which 1.97 lakh MSME loans amounting to ₹60,000 crore have already been sanctioned. Banks were instructed to scale up implementation of the model to broaden access to capital and expedite credit flow to small and medium businesses.
'The finance minister has asked banks to increase aggressive lending following the interest rate cuts. Banks should provide loans to as many people as possible and focus on higher lending compared to last year,' a source said.
Banks were also advised to expand their presence in GIFT City to support India's ambitions in international financial services, explore global opportunities, and increase participation in the India International Bullion Exchange (IIBX).
On Thursday, Sitharaman chaired a meeting in Gandhinagar, Gujarat, with officials of GIFT City and the International Financial Services Centres Authority (IFSCA).
'Lending to the energy sector, particularly in renewable and sustainable areas, was underscored as a national priority to advance India's green growth agenda. In line with the Budget 2025–26 announcement to develop indigenously designed small modular nuclear reactors (SMRs), banks were advised to develop credit models to support this critical sector,' the finance ministry added.