FM to discuss bad loans taken over by NARCL with PSBs, RRBs on Monday

At a meeting scheduled with public sector lenders on Monday, Union Finance Minister Nirmala Sitharaman is expected to review the current status of accounts acquired or being acquired by the National Asset Reconstruction Company Limited (NARCL), including the action taken and the way forward, according to a senior banker. 

The FM could also look at the performance under schemes such as PM Awas Yojana, PM Surya Ghar, and PM Vishwakarma. Digital payments, the issuance of Viksit Bharat cards and cybersecurity, too, would be among the focus areas.

The meeting between the bank chiefs and the FM has been called mainly to discuss the performance of public sector lenders in relation to deposit growth, credit-to-deposit ratio (CD ratio), and asset quality. Performance of regional rural banks (RRBs) will be assessed as well on key financial parameters such as ground-level credit (GLC) for agriculture and status of technology upgradation, it is learnt.

Sitharaman had last chaired a meeting with heads of PSBs in December 2023.

PSBs posted a 16.1 per cent year-on-year (Y-o-Y) growth in net profit, reaching approximately Rs 39,974 crore during the June 2024 quarter. While net interest income (NII) showed subdued growth of 7.1 per cent, provisions and contingencies declined by 10.5 per cent Y-o-Y. This helped the bottom line show steady growth. Sequentially, net profit declined by 6.7 per cent from Rs 42,847 crore in the March quarter, according to data compiled by BS Research Bureau for 12 listed PSBs. 

As of March 31, 2023, there were 43 RRBs sponsored by 12 scheduled commercial banks, with 21,995 branches in operation. There were 305.3 million deposit accounts and 29 million loan accounts across 26 states and three union territories (Puducherry, Jammu & Kashmir, and Ladakh).

PSBs are ramping up their accounts in less-explored areas such as healthcare and housing societies. They are also planning to offer lucrative deals with salary as well as women accounts to increase their deposit growth.