 "Finance Minister Nirmala Sitharaman")
Finance Minister Nirmala Sitharaman on Saturday directed National Asset Reconstruction Company Ltd and Public Sector Banks to coordinate closely for expediting the on-boarding of stressed accounts, in a review meeting of PSBs' performance on various parameters.
A total of 10 Public Sector Banks (PSBs) have transferred Non-Performing Assets of over Rs 11,617 crore to NARCL between January and November this year, according to a written reply to a question in the Rajya Sabha by Minister of State for Finance Bhagwat Karad.
The Finance Minister, during the review meeting, also asked the banks to put more effort into recovery from accounts declared as fraud and wilful default while also monitoring early warning signals.
The FM also urged the public sector banks to innovate and offer attractive deposit schemes to enhance their deposit base, which will in turn enable them to extend more credit.
Sitharaman also instructed the banks to adopt advanced fraud prevention and detection mechanisms and ensure that the customers are educated about safe banking practices. She asked the banks to concentrate fraud prevention activities on both large corporate frauds and wilful defaults as well as on actions that defraud individual customers.
Also Read
“Wilful defaults not only strain the banks’ financial health but also hamper the flow of credit in the economy,” the FM said.
The number of frauds reported by banks has gone up from 7,263 in 2020-21 to 13,576 in 2022-23, data from a Reserve Bank of India (RBI) report shows. However, the total amount of frauds reported by banks declined to a six-year low while the average amount involved in frauds was the lowest in a decade, according to the data.
The Finance Minister called for a performance review of counsel representing public sector banks to ensure better legal outcomes. Sitharaman instructed the PSBs to enhance due diligence before loan disbursement, ensure regular monitoring of large loan accounts, and undertake swift and thorough legal action in cases of such default.
The FM also discussed the preparedness of all the PSBs in addressing cyber security risks and directed them to ensure complete privacy of customer data.
“The Finance Minister noted the need to adopt proactive cybersecurity measures and implement stringent security protocols to protect sensitive financial information and systems from cyber-attacks,” a press statement by the Finance Ministry said.
In November this year, the RBI had issued guidelines related to Information Technology for regulated entities including banks and finance companies, which will come into effect from April 1, 2024.
The meeting was also attended by Minister of State for Finance Bhagwat Kishanrao Karad, Vivek Joshi, Secretary, Department of Financial Services; heads of PSBs along with senior officials of the Department of Financial Services.
