Jaitley to review PSBs' show

To address Indian Banks' Association on September 1

The Union finance minister Arun Jaitley will review the performance of public sector banks on September 16 for the quarter ended June.

Meanwhile, Jaitley will be in Mumbai, financial capital of the country, on September 1, to address the annual general meeting of Indian Banks' Association. A public sector bank executive said the finance ministry had communicated a short agenda for a stock-taking session at New Delhi, covering business and net profit for the June quarter.

This would be followed by discussions with bank chief executives on work done on financial inclusion.

Loans to the agricultural sector on the back of good monsoon, and education and Mudra loans would figure in discussions, the executive said. Mudra is Micro Units Development and Refinance Agency.

With large amounts to be set aside as provisions for bad loans, listed public sector banks as a group posted a net loss in the June quarter, the third such in their loss-making run.

The net combined loss for the 25 listed public sector banks was Rs 1,193 crore in the June quarter, as against a net profit of Rs 9,449 crore in the same period of 2015.

Loan growth has been lukewarm for many quarters, affecting interest income; and a surge in slippages is causing huge provisions and reversal of interest income.

The only saving grace in the June quarter was healthy growth in non-interest income (39 per cent over a year), mainly revenues from treasury operations that benefited from rising bond prices. Other income rose from Rs 16,572 crore in April-June 2015 to Rs 23,039 crore in April-June 2016.

Sequentially, public sector banks trimmed their combined net loss, from Rs 23,493 crore in the March quarter, the final one of 2015-16. They had a combined net loss of Rs 10,794 crore in the December quarter.

The provisions (mostly for non-performing assets) and contingencies almost doubled to Rs 35,969 crore in the June quarter, from Rs 18,784 crore a year ago. Sequentially, provisions came down from Rs 71,344 crore in January-March 2016.