NEW DELHI: Finance Minister Nirmala Sitharaman has instructed public sector banks to increase their lending to the agriculture sector, particularly to small and marginal farmers and micro-enterprises. She chaired a meeting to assess the performance of public sector banks in terms of financial health for the year 2022-23, focusing on positive macro trends, improved business sentiments, the "twin balance sheet advantage," and the overall performance of state-owned banks.

Sitharaman emphasized the need for sponsor banks of regional rural banks (RRBs) to ensure timely technological upgrades for RRBs and continuously monitor their operations to enhance efficiency and effectiveness. This initiative aims to benefit rural communities significantly. Additionally, she urged banks to address business model risks by implementing robust risk management practices and efficient asset liability management.

Furthermore, Sitharaman directed the banks to take measures to improve deposits and prioritize the ease of services and customer protection. Notably, the asset quality of banks has shown significant improvement, with gross non-performing assets (NPAs) at 4.97% and net NPAs at 1.24% as of March 2023.

In the fiscal year 2022-23, public sector banks achieved a record aggregate net profit of approximately Rs 1.05 lakh crore, nearly triple the net profits earned in 2013-14. The banks are well-positioned to support the credit requirements of productive sectors in the growing economy, backed by a high capital adequacy ratio of 15.53% (comparable to major economies worldwide), clean balance sheets, a healthy provision coverage of 90.68%, and improved resilience.

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