Take swift action against frauds, wilful defaulters, FM to PSBs

Finance Minister Nirmala Sitharaman has asked public sector banks (PSBs) to take swift action in cases concerning fraud and wilful defaults to reduce bad loans and take steps to accelerate growth momentum, sources said. Banks have written off Rs 11.17 lakh crore bad loans from their books in the last six years till the financial year 2021-22. The non-performing assets (NPAs), including those in respect of which full provisioning has been made on completion of four years, are removed from the balance sheet of the bank concerned by way of write-off. In a recent meeting with heads of PSBs, the Finance Minister urged them to put in place strong risk management practices and focus on mitigating cyber security risks. Sources said that it was also emphasized during the meeting that banks should have a robust internal audit framework and follow the warnings of internal policies.

Some of the challenges highlighted during the meeting included declining market share in advances and raising low-cost deposits. It was also pointed out that PSBs should prepare for increased competition for deposits due to the merger of HDFC Limited with HDFC Bank. Now home loan customers of HDFC Limited will be tapped by HDFC Bank for retail banking.  Another area of ​​concern was the pressure on net interesBanks have been asked to focus on high-yield advances categories with due risk management and raise fee income.t margin of PSBs due to higher interest rate regime. Banks have been asked to focus on high-yielding advance categories with proper risk management and enhancing fee income.