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Business Standard
30-06-2025
- Business
- Business Standard
Finance Ministry urges PSBs to expand branches amid private sector growth
Amid rising competition from private and small finance banks, PSBs have been asked to scale up physical infrastructure and cover over 200 unbanked population clusters New Delhi The Union Finance Ministry has directed public sector banks (PSBs) to identify potential areas and expand their branch networks amid intensifying competition from private banks, according to a senior government official who spoke on condition of anonymity. 'Banks have been asked to compete with the aggressive branch expansion by private sector banks and Small Finance Banks. PSBs need to scout for potential areas and open new branches,' the official said. During FY 2024–25 (till 31 December 2024), PSBs opened 1,391 new branches—271 in metropolitan areas, 311 in urban, 539 in semi-urban, and 270 in rural regions. In comparison, private sector banks led the expansion with 1,552 new branches: 545 in metropolitan, 466 in urban, 318 in semi-urban, and 223 in rural locations. Digital progress noted, but physical expansion emphasised The finance ministry has acknowledged the progress made by PSBs in enhancing digital capabilities. However, officials have made it clear that this must not come at the cost of physical presence. 'A strong physical presence helps build personal connections with customers, enhances service delivery, and plays a crucial role in mobilising deposits,' the official said. Earlier this month, Union Finance Minister Nirmala Sitharaman said India's financial future would be 'phygital'—a blend of physical and digital services. 'It is important to leverage the reach of technology as well as maintain physical presence to serve customers better and build trust over time,' Sitharaman said at the Digital Payments Awards 2025 in New Delhi. Private banks dominate branch expansion in FY25 Major private banks continued their aggressive branch rollout in FY 2024–25. HDFC Bank led with 421 new branches—137 in metropolitan areas, 168 in urban, 98 in semi-urban, and 18 in rural. ICICI Bank followed with 249 branches (83 metropolitan, 91 urban, 36 semi-urban, and 39 rural). Axis Bank added 337 branches, including a notable 107 in rural areas. Kotak Mahindra Bank opened 72 branches, primarily in urban and semi-urban zones, while Mahindra Bank added 13. Other private banks contributed 460 branches. Focus on financial inclusion in North Eastern region The finance ministry has also asked PSBs to expand banking infrastructure in the North Eastern region, where population density is lower but financial inclusion remains a priority. 'Two hundred and fifteen clusters with populations exceeding 3,000 and no bank branches have been identified,' the official said. In Phase 1, branches will be opened in 51 clusters with populations above 8,000. These locations have already been allotted to banks. In Phase 2, the remaining 164 clusters will be covered. Strong performance by PSBs in business, profitability Between FY 2022–23 and FY 2024–25, total business of PSBs rose from Rs 203 lakh crore to Rs 251 lakh crore. During the same period, net non-performing assets (NPAs) declined from 1.24 per cent to 0.52 per cent. Net profit increased from Rs 1.04 lakh crore to Rs 1.78 lakh crore, while dividend payouts grew from Rs 20,964 crore to Rs 34,990 crore.
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Business Standard
24-06-2025
- Business
- Business Standard
PSL norm easing provides limited room for SFBs to make gains: CareEdge
The Reserve Bank of India's move to ease priority sector lending (PSL) targets may free up around Rs 41,000 crore for Small Finance Banks (SFBs). However, these banks may have limited scope to realise short-term gains by offloading excess exposure due to the low premium for such certificates, according to CareEdge Ratings. The banking regulator has reduced the overall PSL target for SFBs from 75 per cent to 60 per cent, effective from FY26, marking a significant shift in their lending obligations. In a statement, CareEdge said the lower PSL requirement would create opportunities for SFBs to sell priority sector lending certificates (PSLCs) or offload excess exposure to other market participants. However, the immediate impact on profitability may be muted. The revised 60 per cent target is seen as more attainable. It reduces the regulatory burden, particularly during periods of rapid growth or economic stress, easing compliance pressures and lowering the risk of penalties for falling short of mandated lending. Sanjay Agarwal, senior director at CareEdge Ratings, said the revised PSL guidelines represent a strategic inflexion point for Small Finance Banks. 'By reducing the overall PSL target while maintaining operational flexibility, the RBI has created a more balanced and practical regulatory framework,' he said. The RBI's easing of PSL norms for SFBs follows two recent regulatory developments in the priority sector space. First, in March 2025, the RBI expanded the range of exposures eligible for PSL classification. Second, in June 2025, it reduced the qualifying asset threshold for non-banking finance companies working as microfinance institutions (NBFC-MFIs) from 75 per cent to 60 per cent.
Mint
20-06-2025
- Business
- Mint
6 government schemes that offer higher returns than FDs
Fixed deposits (FDs) are a great way to keep your money safe. With the rising cost of living, investing your money in low-yield schemes can reduce your purchasing power. Instead, you can turn to other government-backed schemes. These options are low-risk and can be aligned with specific goals like: Stable monthly income Securing a child's future Retirement savings And most importantly, some of them even offer interest rates higher than 5-year FD returns from all banks (excluding Small Finance Banks). Here are 6 such schemes that help you protect your capital and beat inflation: For those who want a stable only income without having to dip into their principal savings, POMIS is a reliable option. Current interest rate: 7.4% p.a. (revised quarterly) Interest payout: Monthly (starts a month after initial investment) Lock-in: 5 years Premature withdrawal: Allowed after 1 year with a penalty Minimum investment: ₹ 1,000 1,000 Investment cap: ₹ 9 lakh (single) or ₹ 15 lakh (joint) 9 lakh (single) or 15 lakh (joint) Taxation: Interest earned is taxable per the individual tax slab The interest earned is the monthly income. While your principal stays untouched until maturity. However, POMIS is only for adult Indian residents; NRIs are not eligible. Comparing this with the SBI Annuity Deposit Scheme (ADS): It pays both interest and principal monthly, which means your initial investment keeps shrinking, and as a result, so does your interest income. Additionally, SBI ADS currently offers around 6.5% p.a. POMIS beats that with higher stability and capital protection. For retired people (over 60 years of age) looking for a steady income, SCSS may be one of the best government-backed options, especially if your parents have received a lump sum amount, such as a retirement gratuity or final settlement. Current interest rate: 8.2% p.a. (revised quarterly) Interest payout: Quarterly Lock-in: 5 years (extendable for 3 more years) Premature withdrawal: Allowed with penalty Investment limit: ₹ 1,000 to ₹ 30 lakh 1,000 to 30 lakh Taxation: Interest earned is taxable per the individual tax slab It's simple, you invest once and get returns every quarter for 5-8 years. All the while, your principal stays untouched. However, even if you do not claim the quarterly interest, it does not earn any additional interest. Again, compare this with SBI ADS (for senior citizens), which returns part of your principal every month. As the principal shrinks, so does the interest income. Even at 7.5% p.a., the yield is lower over time. Meanwhile, SCSS keeps your money intact and your returns steady. As a parent to a girl child, you can use SSY to build a long-term financial cushion for her education and/or marriage. The scheme offers high interest and full tax exemption, making it one of the most rewarding options for goal-based savings. Current interest rate: 8.2% p.a. (compounded yearly; revised quarterly) Maturity: 21 years from the date of investment or when she gets married (after turning 18) Contribution period: 15 years Premature withdrawal: Allowed For the medical treatment of life-threatening diseases of the girl child In the event of the guardian's death Investment limit: ₹ 250 to ₹ 1.5 lakh p.a. (either lump sum or in multiple instalments) 250 to 1.5 lakh p.a. (either lump sum or in multiple instalments) Taxation: Completely tax-free You can open an account at any time before your daughter turns 10 years old, and you only need to contribute for the first 15 years. However, the account continues to earn interest until maturity. The returns are fully tax-free. In contrast, returns from minor FDs are taxed as per the guardian's slab. You can easily open it at your nearest Post Office, State Bank of India (SBI), or any public sector bank. Note: If you miss the minimum deposit in any financial year, the account will be treated as 'Account under Default'. It offers predictable growth without market risk. So, if you are an Indian individual over the age of 10 looking for a fixed-return investment option, NSC may be ideal for you. Current interest rate: 7.7% p.a. (compounded yearly; revised quarterly) Payout: At maturity Premature withdrawal: Not allowed except in case of the holder's death or under a court order. Minimum investment: ₹ 1,000 1,000 Where to invest: Post offices across India Taxation: Interest earned is taxable per the individual tax slab Unlike FDs, there's no TDS at maturity. Your full maturity value is received without deductions. Compared to 5-year bank FDs (currently lower yielding) and evenKisan Vikas Patra (KVP) at 7.5%, NSC delivers better returns. It can also be used as collateral for loans. For fixed income and capital safety, NSC is a clear step above traditional options. This is for the investors who want to grow their savings steadily, without worrying about market volatility. It offers guaranteed returns and your full principal back at maturity. Interest rate: 7.1% p.a. (compounded annually) Tenure: 15 years (extendable in 5-year blocks) Investment limit: ₹ 500 to ₹ 1.5 lakh per year 500 to 1.5 lakh per year Tax status: Fully tax-exempt (EEE) You can invest a small amount yearly (min. ₹ 500 or the account is discontinued), let it grow tax-free, and extend the account even after maturity. PPF does not require asset allocation or monitoring. It suits conservative investors who prefer simplicity and guaranteed returns over complexity and stock market risk. NPS is designed for long-term retirement planning. It helps you build a diversified portfolio across equity, corporate bonds, and government securities. Additionally, it helps you stay disciplined with regular contributions. Expected returns: 10–14% p.a. (market-linked) Lock-in: Until age 60 Minimum contribution: ₹ 1,000 per year 1,000 per year Who can invest: Indian citizens (residents and NRIs) aged 18–70 Investments are made across asset classes: Scheme E: Equity (maximum 75% exposure) Scheme C: Corporate bonds Scheme G: Government bonds Scheme A: Alternate assets At maturity, 60% of the corpus can be withdrawn as a lump sum (tax-free). The remaining 40% is used to buy an annuity that gives you post-retirement income (this is taxable as per the individual tax slab). Unlike PPF, NPS isn't tax-free when withdrawn. But it offers broader exposure and higher return potential if you can handle some market volatility. It works best for disciplined investors who want long-term growth, not just capital protection. Source: Finology When it comes to money, safety is paramount. However, it's not enough. You also need your money to grow. These 6 government-backed schemes offer both: capital protection and inflation-beating returns. Each serves a specific purpose: income generation, child-focused savings, or retirement planning. Choosing the right one depends on your goal and time frame. But when selected wisely, they offer a safer path to wealth preservation. However, for those aiming to grow beyond preservation, long-term wealth creation needs a different approach: Finology 30. It's a carefully curated list of high-quality businesses, selected after thoroughly researching their financial strength, governance, and long-term potential. Built for investors who want to stay ahead. Finology Research Desk advocates a practical approach: separate good and bad debt, restructure when needed, and stay still, if you are not sure where you stand? Try Finology Financial Health Check-up to assess your debt situation and start correcting course. Finology is a SEBI-registered investment advisor firm with registration number: INA000012218. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
