Finance Minister Nirmala Sitharaman has urged public sector banks to ramp up lending following the RBI’s 50-basis point repo rate cut to 5.5 per cent. During a performance review, she lauded record FY25 profits of Rs 1.78 lakh crore and low NPAs. She also stressed enhancing financial inclusion .
FM Nirmala Sitaraman
India’s Finance Minister Nirmala Sitharaman on Friday asked public sector banks (PSBs) to take advantage of the Reserve Bank's jumbo 50 basis points rate cut to increase lending towards productive sectors of the economy.
The Reserve Bank of India earlier on June 6 slashed its benchmark repo rate by 50 basis points, lowering it to 5.5 per cent, marking it as their steepest move since the emergency. The RBI, while making the move, also lowered the cash reserve ratio (CRR) by 100 basis points in tranches starting September. The decision to slash the repo rate was made in a meeting headed by Governor Sanjay Malhotra.
As reported by PTI, during a meeting to review the financial performance of PSBs, Sitharaman asked their chiefs to maintain profitability momentum in FY26, sources said.
Cumulative profit of 12 PSBs rose to a record Rs 1.78 lakh crore in FY25, registering a growth of 26 per cent over the previous year. The year-on-year increase in profit in absolute terms was about Rs 37,100 crore in FY25.
According to sources, the finance minister also expected that PSB credit growth should improve post the 50-bps rate cut by the RBI. Banks were also directed to try to maintain the FY25 credit growth level or increase it during the current financial year.
Along with slashing their benchmark repo rate, the RBI also cut the cash reserve ratio by 100 basis points to 3 per cent in tranches that will add Rs 2.5 lakh crore to already surplus liquidity in the banking system.
Nirmala Sitharaman also emphasised that banks should onboard more customers onto government schemes in a bid to increase financial inclusion.
A comprehensive review of various segments and progress in government schemes, including Kisan Credit Card, PM Mudra and three social security schemes – Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, and Atal Pension Yojana (APY) – was done during the meeting.
Nirmala Sitharaman, while addressing the reduced repo rates, also advised the banks to work on ways to garner more low-cost deposits.
On the asset quality side, the finance minister appreciated the low level of non-performing assets in the banking sector and exuded confidence that the top management will ensure it remains at that level.
(With PTI Inputs)
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