Finance Ministry Asks Banks To Strengthen Balance Sheet, Raise Capital From Market

The Finance Ministry on Friday exhorted public sector banks (PSBs) to strengthen their balance sheets by raising capital from the market.

The enhanced capital would help banks expand their business and push credit growth in the productive sectors.

During the meeting with top executives of PSBs at Manthan 2022, Financial Services Secretary Sanjay Malhotra exuded confidence that public sector banks will continue to strive and perform better on all metrics, including profitability.

RBI Governor Shaktikanta Das had also asked banks to take proactive measures to strengthen their resilience and lending capacity by raising capital.

Malhotra urged banks to further strengthen balance sheets and raise capital from the markets.

He further suggested that PSBs should explore more collaboration amongst themselves and that large banks should share their best practices with small lenders and guide them in areas where they need more expertise.

Manthan 2022 was held to brainstorm with the top leadership of public sector banks and unlock next-generation reforms while continuing with the EASE journey, the Indian Banks Association (IBA) said in a statement. The last such exercise was held in 2019. The first PSB Manthan took place in 2014.

Malhotra also suggested that banks should explore strategies for long-term profitability and a more customer-centric approach.

Accordingly, six groups were formed to look and suggest measures for key focus areas including customer service, digitization, HR incentives, governance, and collaboration.

Earlier, Indian Banks' Association chairman Atul Kumar Goel welcomed the participants and expressed hope that this Manthan is going to bring about a turnaround in the industry.

IBA chief executive Sunil Mehta also expressed hope that this initiative will help to share best practices while looking at innovative solutions.