FinMin ask banks to step up credit to MSMEs, agri while sustaining growth in low-cost deposits

New Delhi, Nov 12 (PTI) The finance ministry on Wednesday asked state-owned banks to focus on accelerating credit to MSMEs and the agriculture sector while sustaining growth in low-cost deposits and strengthening risk management.

Department of Financial Services (DFS) Secretary M Nagaraju while chairing a review meeting urged banks to further strengthen risk management, underwriting practices, and operational resilience to sustain profitability in an evolving financial environment.

Addressing CEOs of public sector banks here, he asked them to sustain financial discipline, deepen customer-centricity, and lead India’s banking transformation with prudence, innovation and inclusion as guiding principles, a ministry statement said.

During the meeting, Public Sector Banks (PSBs) also showcased advancements in digital banking and mobile app services.

Nagaraju emphasised that digital banking must remain inclusive and secure, urging banks to enhance cyber resilience, ensure operational continuity and improve the quality and timeliness of grievance redressal.

He encouraged banks for adoption of responsible AI and data analytics to improve customer service delivery.

Banks were advised to strengthen implementation of PM Surya Ghar Muft Bijli Yojana, PM Vidya Lakshmi Yojana, PM Vishwakarma Yojana, and JanSamarth digital lending initiatives, with emphasis on reducing application turnaround time and expanding assisted journeys through Business Correspondents and SLBC coordination, it said.

The Secretary also reviewed performance under financial inclusion programmes such as PMJDY, PMJJBY, PMSBY, APY, PMMY and PM SVANidhi, and emphasised the importance of the ongoing “Aapki Poonji, Aapka Adhikar” campaign, it said.

Directions were given to the CEOs to ensure seamless implementation, enhance public awareness of the integrated unclaimed asset portal and intensify outreach in underserved and aspirational districts.

On the asset quality front, it was noted that PSBs continued to register improvement in recoveries. The National Asset Reconstruction Company Limited (NARCL) has acquired debt aggregating Rs 1.62 lakh crore and achieved significant recoveries during the first half of the year.

Banks were advised to leverage digital platforms such as BAANKNET for faster and transparent resolutions and to maintain focus on strengthening early warning systems, it said.

In alignment with the government’s vision of Viksit Bharat by 2047, PSBs presented progress under sectors such as renewable energy, green infrastructure, food processing, tourism and data centres.

Banks were encouraged to scale up credit in these sectors, adopt sustainable financing practices and enhance preparedness for the transition to the Expected Credit Loss (ECL) framework through robust models and data-driven provisioning, it said.

PSBs reported a net profit of Rs 93,675 crore during H1 FY 2025–26, reflecting steady year-on-year growth.

Aggregate business stood at Rs 261 lakh crore as of September 2025, with advances growing by 12.3 per cent (y-o-y) and deposits by 9.6 per cent (y-o-y).

The Gross NPA ratio of PSBs declined to 2.30 per cent and Net NPAs to 0.45 per cent, indicating continued improvement in asset quality. The Return on Assets was 1.08 per cent while the cost of funds improved to 4.97 per cent, reflecting better efficiency and profitability. PTI DP DP ANU ANU