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Informist, Friday, Sept. 12, 2025

 

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--Govt source: Aim to have at least 2 globally competent Indian bks by 2047
--Fin min source: PSU banks need to seriously work on improving CASA ratio
--Fin min source: PSU banks need to push up credit to agri, MSMEs
--Govt source: Mulled PSU bk board rejig needs to boost autonomy, governance
--Govt source: No discussion held on further PSU bank consolidation
--Govt source: Bks need to diversify ops to counter global uncertainties
 

 

NEW DELHI – The finance ministry has asked state-owned banks to seriously work on improving their current account and savings account ratio, a senior official said Friday. On the first day of the two-day-long 'Manthan' organised by the Department of Financial Services, the government raised concerns about the dwindling CASA ratio of public sector banks.

 

The meeting was chaired by Department of Financial Services Secretary M. Nagaraju along with other senior ministry officials and top executives of public sector banks including State Bank of India Chairman Challa Sreenivasulu Setty and Punjab National Bank Chief Executive Officer Ashok Chandra.

 

The public sector lenders have seen their CASA ratio dropping over the last one year, which is putting their net interest margins under pressure, the official said. Even the largest lender of the country, SBI, saw a sharp fall in its CASA ratio in the June quarter to 39.36% from 40.70% last year and 39.97% a quarter ago. Similarly, Bank of Baroda's CASA ratio fell 64 basis points quarter-on-quarter to 39.33% in the June quarter.

 

The official said boosting CASA deposits will also help banks in their lending to key sectors of the economy. During the meeting, the public sector banks were nudged to ramp up their credit to agriculture sector as well as job-generating micro, small and medium enterprises.

 

During the meeting a host of other topics related to banking sector were also discussed, including the effect of reform measures taken by the government in the last few years. To address the issue of stress in the banking system the Reserve Bank of India initiated asset quality review in 2015 resulting in non-performing assets peaking in 2018 and declining thereafter. However, there is still scope for further improving the asset quality and efforts must be made by banks to keep the NPA ratio low, the official added.

 

Collectively, the 12 public sector banks, including SBI, reported a net profit of INR 442 billion for Apr-Jun, up 10.6% on year. Public-sector banks collectively posted a record net profit of INR 1.78 trillion for 2024-25 (Apr-Mar), up 26%.

 

Although there were no discussions over further consolidation of PSU banks, the government conveyed to them that the aim is to have at least two globally competent banks by 2047. According to S&P Global Market Intelligence, SBI is the 43rd largest banks by assets in the world. Private sector lender HDFC Bank is the second Indian bank in the top 100 largest banks, at 73rd place. Diversifying operations to gain expertise in other segments of the banking sector may also help PSU banks to become globally relevant and gain prominence, the official said.

 

Discussions were also held on giving further autonomy to the board of banks in order to achieve efficiency and improve governance. Challenges related to information technology, cyber-security, customer service and grievance handling were also deliberated upon.

 

The finance ministry had organised a similar event in 2017 and had called it 'Gyan Sangam'. During the two-day event, separate groups were formed - similar to this time - to brainstorm on banks' non-performing asset management, restructuring (mergers and acquisitions), credit growth, technology and risk management. After the meeting, former finance minister Arun Jaitley had said that bankers had supported the proposal of consolidation in order to have strong banks rather than having a numerically large number of banks.  End

 

Reported by Priyasmita Dutta

Written by Sagar Sen

Edited by Ashish Shirke

 

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