Finance Minister Nirmala Sitharaman Spurs Public Sector Banks: ‘Push Credit, Prioritize Inclusion, and Innovate’

Image Source: Khabar India

Finance Minister Nirmala Sitharaman recently chaired a meeting of the high-level review with the heads of India's public sector banks (PSBs) and urged them to drive credit expansion, improve financial inclusion, and implement innovative strategies in a slowing economy.

Key Highlights:

•⁠ ⁠Strong Balance Sheets: PSBs have recorded an all-time high net profit of ₹1.78 lakh crore in FY 2024–25, while business volumes have grown from ₹203 lakh crore to ₹251 lakh crore during FY 2022–23 and FY 2024–25.

•⁠ ⁠Improved Asset Quality: The net non-performing assets (NNPAs) reduced to a multi-year low of 0.52%, reflecting good risk management and improved asset quality.

•⁠ ⁠Dividend Boom: Dividend disbursements increased from ₹20,964 crore to ₹34,990 crore during the same time period, with the Capital to Risk-Weighted Assets Ratio (CRAR) remaining robust at 16.15% as of March 2025.

•⁠ ⁠Credit Growth Push: With credit growth rate dipping below 10%, Sitharaman asked banks to step up lending, particularly to MSMEs and to sectors such as renewable energy.

•⁠ ⁠Financal Inclusion Campaign: The banks have been directed to do a saturation campaign within three months from July 1, covering 2.7 lakh Gram Panchayats and Urban Local Bodies, on KYC, unclaimed deposits, and schemes like PM Jan Dhan Yojana and Kisan Credit Card.

•⁠ ⁠Innovation Focus: The New Credit Assessment Model for MSMEs has already sanctioned 1.97 lakh loans of ₹60,000 crore since March 2025.

Prospects: Sitharaman's directions indicate a fresh thrust towards growth, innovation, and inclusive banking, with PSBs set to be at the forefront of India's economic transformation and digital revolution.

Sources: DD News, Business Standard, CNBC TV18