FM urges PSBs to focus on financial inclusion & innovation

Union Minister for Finance Nirmala Sitharaman on Friday chaired a high-level annual review meeting with the Managing Directors and CEOs of Public Sector Banks (PSBs) in New Delhi. Meeting focused on financial strength, inclusive lending, cyber security, and customer-centric innovation. The meeting was attended by Union Minister of State for Finance Pankaj Chaudhary, Secretary of the Department of Financial Services, M. Nagaraju, and senior officials, alongside PSB leadership. Sitharaman commended the PSBs for their robust financial performance, particularly in FY 2024–25, where they recorded a record net profit of Rs1.78 lakh crore. Over the period from FY 2022–23 to FY 2024–25, the total business of PSBs grew from Rs203 lakh crore to Rs251 lakh crore, while net Non-Performing Assets (NNPAs) dropped to a multi-year low of 0.52%, reflecting improved asset quality and risk management. Dividend payouts also rose significantly, from Rs20,964 crore to Rs 34,990 crore, with the Capital to Risk-Weighted Assets Ratio (CRAR) standing strong at 16.15% as of March 2025.
The Finance Minister emphasized the need for sustained deposit mobilization to support ongoing credit growth, urging PSBs to leverage their branch networks and deepen outreach in semi-urban and rural areas through special drives. She also directed banks to identify emerging commercial growth sectors for the next decade to boost profitability and to deepen corporate lending in productive sectors while maintaining stringent underwriting and risk management standards. Lending to the energy sector, particularly in renewable and sustainable areas, was highlighted as a national priority, with banks advised to develop credit models to support indigenously designed small modular nuclear reactors (SMRs) as announced in the Union Budget 2025-26.
 Sitharaman directed PSBs to actively participate in a three-month saturation campaign starting July 1, covering 2.7 lakh Gram Panchayats and Urban Local Bodies. To enhance customer experience, banks were directed to ensure faster grievance redressal, offer simplified digital platforms, and provide multilingual services both online and offline. Maintaining clean, customer-friendly branches and expanding in metro and urban centers to keep pace with urbanization were also emphasized. Sitharaman stressed the importance of filling all existing and upcoming vacancies promptly to improve service delivery and encouraged banks to expand their presence in underserved areas like the Northeast and strengthen the Business Correspondent network for last-mile banking access.