In light of the present global financial situation brought on by the collapse of several foreign banks in the US and Europe, Finance Minister Nirmala Sitharaman assessed the performance of public sector banks (PSBs) on key financial health metrics on Saturday.
She advised the banks to frequently conduct stress tests and to be watchful of interest rate risks.
A two-hour meeting with the MDs and CEOs of PSBs included an open discussion of the worldwide situation in the wake of the collapse of Silicon Valley Bank (SVB) and Signature Bank (SB), as well as the problems that contributed to the Credit Suisse catastrophe.
According to a formal statement, prominent officials including Minister of State for Finance Bhagwat Karad, Secretary of Financial Services Vivek Joshi, and others also attended the meeting.
She also covered both the short- and long-term views on the current and imminent external global financial hardship.
She emphasized at the PSB review meeting that banks should exercise due diligence and abide by the regulatory framework by putting a strong emphasis on risk management and diversifying their deposit and asset bases.
According to the statement, the finance minister emphasized that PSBs must carefully examine their business models to spot stress points, such as concentration risks and harmful exposures, and urged them to take advantage of this time to develop comprehensive crisis management and communication plans.
The heads of PSBs informed Sitharaman that they uphold regulatory requirements, adhere to best practices in corporate governance, guarantee prudent liquidity management, and continue to put a strong emphasis on asset-liability and risk management.
She was also told by the PSBs that they are keeping a close eye on developments in the international banking industry and are doing all they can to protect themselves from any potential financial catastrophe. According to the statement, all of the key financial indicators point to PSBs that are stable, resilient, and in good financial health.
The minister emphasized that PSBs must make the most of their branches that have been established in International Financial Services Centers in GIFT City Gujarat in order to find possibilities abroad, especially those involving People of Indian Origin (PIOs).
Given the initiatives made by the government to decrease the tax arbitrage in various debt instruments and use their enhanced financial position to support the credit requirements of the expanding economy, she urged banks to take targeted actions to draw deposits.
The minister urged banks to concentrate on credit outreach in regions of the country where credit offtake is lower than the national average, particularly in the northeast and eastern regions, and to increase business presence in cutting-edge fields like drones, e-NAM, and One District One Product (ODOP).
She advised PSBs to concentrate on boosting brick-and-mortar banking presence in border and coastal regions while also promoting the Mahila Samman Bachat Patra, which was announced in the Budget.
