Economy

Finance Minister Nirmala Sitharaman asks Public Sector Bank to dentify stress points

Union Minister for Finance and Corporate Affairs Nirmala Sitharaman chaired a meeting on Saturday to review the performance of Public Sector Banks (PSBs) on various financial health parameters, and the resilience of PSBs in light of the current global financial scenario emanating from the failure of some international banks in the USA and Europe.

During the review meeting discussion was on the global scenario comprising of the failure of the Silicon Valley Bank (SVB) and the Signature Bank (SB) along with issues leading to the crisis in Credit Suisse. Sitharaman reviewed the exposure of PSBs to this developing and immediate external global financial stress from both the short and the long-term perspectives.

During the PSB review meeting, the Finance Minister emphasized on preparedness along with due diligence through adherence to the regulatory framework by focusing on risk management, diversification of deposits and assets base.

The Finance Minister underlined that PSBs must look at business models closely to identify stress points, including concentration risks and adverse exposures. Smt. Sitharaman also exhorted PSBs to use this opportunity to frame detailed crisis management and communication strategies.

Finance Minister advised PSBs to remain vigilant about the interest rate risks and regularly undertake stress tests. Smt. Sitharaman also highlighted that PSBs must leverage the full potential of branches opened in International Financial Services Centres in GIFT City Gujarat to identify international opportunities, including prospects related to Persons of Indian Origin (PIOs).

Finance Minister advised PSBs to:

• Take focused steps to attract the deposits given the steps taken by the Government to reduce the tax arbitrage in some debt instruments;
• Pivot their strengthened financial position to support credit needs of the growing economy;
• Focus on credit outreach in States where the credit offtake is lower than the national average, particularly in North-East and Eastern parts of the country;
• Enhance business presence in new & emerging areas like One District One Product (ODOP), e-NAM, and drones;
• Aim to increase brick & mortar banking presence in border and coastal areas;
• PSBs should promote the Mahila Samman Bachat Patra announced in the Budget 2023-24 through special drives and campaigns.

 

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