Strengthening PSBs: Six working groups set up to propose ways and submit report by December 2022

To improve the digitalisation of public banks and strengthen their balances, six working groups have been set up to suggest ways and urges to submit their respective reports by December, according to a senior banker, a PTI report said.

Finance Minister Sanjay Malhotra, who attended the meeting, recently asked banks to explore long-term profitability strategies and apply a more customer-centric approach.

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The senior banker who attended the recently concluded Manthan 2022 – a meeting of the top PSU bankers – said the six working groups would examine how public banks (PSBs) work and suggest ways to improve customer service, digitalisation, HR incentives, corporate governance and collaboration.

The working groups are expected to submit their respective reports before the end of the year, the banker said. The groups will have regular meetings and periodic reviews to track the progress of each panel, another banker said.

Manthan was held on April 22 to brainstorm with the top management of public sector banks and unlock next-generation reforms as he continued his EASE journey. The last such exercise was held in 2019. The first PSB Manthan took place in 2014.

Public banks have turned around in 2020-21, after posting losses for five years due to various measures taken by the government. It should be noted that no PSBs have faced losses in the April-December period 2021-22 and had a total net profit of Rs 48,874 crore during this period.

They earned a total net profit of Rs 31,820 crore in 2020-21. However, there were collective losses for five years in a row during 2015-16 to 2019-20.

The highest net loss was recorded in 2017-18 at Rs 85,370 crore, followed by Rs 66,636 crore in 2018-19; Rs 25,941 crore in 2019-20; Rs 17,993 crore in 2015-16 and Rs 11,389 crore in 2016-17. During 2009-10 to 2014-15, the PSBs made a profit on their books.

To improve the financial health of PSBs, the government implemented a comprehensive 4R strategy – transparent recognition of defaulted assets (NPAs), dissolution and recovery of value from stressed accounts, recapitalization of PSBs and reforms of PSBs and the broader financial ecosystem – for a responsible and clean system.

Extensive steps were taken under 4R’s strategy to reduce NPAs for PSBs.

As part of the strategy, the government has provided Rs 3.10.997 crore to recapitalize banks during the last five financial years – from 2016-17 to 2020-21, of which Rs 34.997 crore was raised through budget allocation and Rs 2, 76,000 crore through issuance of recapitalization bonds to these banks.

(With PTI inputs)

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