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Informist, Thursday, Feb. 20, 2025

 

By Priyasmita Dutta

 

NEW DELHI – The finance ministry is expected to hold a meeting with senior management of public sector banks before the Parliament's Budget Session resumes on Mar. 10, multiple ministry officials aware of the development said. "Recently there have been quite a few developments which impact the banking sector. There was Budget, rate cut, financials earnings, the meeting is to take stock of implications of these on banking sector," one of the officials cited above told Informist.

 

The meeting with top executives of all public sector banks will happen in Delhi, and will likely be chaired by Department of Financial Services Secretary M. Nagaraju, and include senior officials of the ministry and management of state-owned banks.

 

The Union Budget for 2025-26 (Apr-Mar) had a host of announcements regarding lending to small borrowers, in which PSU banks are expected to take a lead. Finance Minister Nirmala Sitharaman's announcements included significant enhancement of credit availability with guarantee cover for micro, small, and medium enterprises and the introduction of customised credit cards with a INR 500,000 limit for micro enterprises registered on Udyam portal.

 

Sitharaman had also enhanced the provisions of the existing financial inclusion plans like the PM-SVANidhi, while also announcing development of 'Grameen Credit Score' framework by banks. "Each banker will have a different view on these announcements, based on bank's own focus and strengths...those will be discussed," another official said.

 

Just after the Budget was presented, a key development for banks has been the Reserve Bank of India's policy decision to reduce the repo rate by 25 basis points to 6.25?ter almost five years. Moreover, at the press conference following the policy outcome, RBI Governor Sanjay Malhotra had said that the much-talked about Liquidity Coverage Ratio norms – originally expected to kick in from Apr. 1 - will not be implemented until at least March 2026. This came as major relief to banks that were bracing for a liquidity hit.

 

The net profit of PSU banks in the first nine months of FY25 rose 31.3% to INR 1.29 trillion, the highest-ever for the period. The aggregate deposits of the 12 public sector banks rose 9.8% and credit grew 12.4% during this period. The growth was led by 16.6% rise in retail credit, 12.9% increase in agricultural credit, and 12.5% rise in micro, small and medium enterprises credit, the finance ministry had said compiling the data.  End

 

Edited by Ashish Shirke

 

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