In June 2025, Union Minister Nirmala Sitharaman, Ministry of Finance (MoF) and Ministry of Corporate Affairs (MoCA), chaired a high-level meeting to review the performance of Public Sector Banks (PSBs) across various areas of banking sector such as: financial parameters, credit offtake, financial customer service, grievance redressal, digital banking and cyber security.
- Union Minister of State (MoS) Pankaj Chaudhary, MoF; M. Nagaraju, Secretary of Department of Financial Services (DFS), MoF; Managing Directors (MDs) of PSBs; and other senior officials of DFS were present at the meeting.
Key Points:
i.Union Minister Nirmala Sitharaman acknowledged the robust financial performance of PSBs in recent years and particularly in Financial Year 2024-25 (FY25), where they registered a record-high net profit of Rs 1.78 lakh crore (compared to Rs 1.04 lakh registered in FY23).
ii.During the meeting, it was highlighted that the total business of PSBs increased from Rs 203 lakh crore (FY23) to Rs 251 lakh crore (FY25).
iii.The Net Non-Performing Assets (NNPAs) of the PSBs decreased from 1.24% (FY23) to 0.52%(FY25), showing improved asset quality and risk management.
- During the same time period, dividend payouts increased from Rs 20,964 crore to Rs 34,990 crore.
iv.PSBs are well capitalised, with a Capital to Risk-Weighted Assets Ratio (CRAR) of 16.15% as of March 2025.
v.She also directed the PSBs to participate actively in the upcoming 3-month Financial Inclusion saturation campaign, starting from July 01, 2025.
- The campaign will cover 2.7 lakh Gram Panchayats (GPs) and Urban Local Bodies (ULBs).
- It will provide guidance to the citizens with respect to Know Your Customer (KYC), re-KYC and unclaimed deposits, alongside promoting schemes like: PM Jan Dhan Yojana(PMJDY), PM Jeevan Jyoti Beema Yojana (PMJJBY), among others.
Key Focus Areas:
i.Prioritize Renewable Energy (RE) sector: She also underscored lending to the energy sector, particularly in renewable and sustainable areas as national priority to drive India’s green growth agenda.
ii.Strengthen Financial Inclusion Schemes: Banks were directed to scale up efforts under key financial inclusion (FI) schemes such as: Pradhan Mantri Micro Units Development and Refinance Agency Yojana(PMMY), PM Vishwakarma, PM Vidyalaxmi, and the Kisan Credit Card (KCC) scheme.
iii.Focus on Agri-credit: PSBs were encouraged to focus on Agri credit in the 100 low productivity districts to be identified under the PM Dhan-Dhaanya Krishi Yojana, as announced in the Union Budget 2025-26.
iv.Review the New Credit Assessment Model for MSMEs: Union Minister Sitharaman reviewed the progress under the New Credit Assessment Model for Micro, Small and Medium Enterprises (MSMEs), launched on March 06, 2025, with nearly 2 lakh (i.e. 1.97 lakh) loans sanctioned worth Rs 60,000 crore.
v.Loans/Applications Sanctioned under key schemes related to MSME sector: It was highlighted during the meeting that 2.28 lakh loans worth Rs 51, 192 crore have been sanctioned under the Stand Up India scheme.
- Similarly, total 6,682 applications worth Rs 1,751 crore have been sanctioned under the PM Vijay Lakshmi scheme.
Other Key Points:
i.Addtionally, banks were advised to expand their operations in Gujarat International Finance Tec-City(GIFT City) to tap into global financial opportunities and increase participation in the India International Bullion Exchange (IIBX).
ii.Directed the banks to ensure faster grievance redressal, offer simplified digital platforms, and provide multilingual services both online and offline.
Important Terms:
i.Net-Non Performing Assets (NNPAs): It refers to the total NPA or bad loan after deducting the provision for unpaid or doubtful debts from the loan defaulted sum. It indicates the actual financial impact of bad loans on the bank’s books.
ii.Capital to Risk-Weighted Assets Ratio (CRAR): It is the ratio of a bank’s capital relative to its risk-weighted assets and current liabilities. It is used to measure the ability of banks to withstand losses.
About Ministry of Finance (MoF):
Union Minister- Nirmala Sitharaman (Rajya Sabha- Karnataka)
Minister of State (MoS)- Pankaj Chaudhary (Constituency- Maharajganj, Uttar Pradesh, UP)
