The government’s contemplation to raise the foreign direct investment (FDI) limit in public sector banks (PSBs) from 20 per cent to 49 per cent is a significant policy pivot that could reshape India’s banking landscape.
In contrast, credit growth at private banks slowed to 9.5%, the weakest since FY21, said a research report by the State Bank of India (SBI).
Public sector banks (PSBs) in India have shown significant financial improvement, as their dividend payouts increased by 33 per cent to Rs 27,830 crore in the financial year 2023-24.
The Finance Ministry is set to review the development of variousfinancial inclusion schemes as it has called a meeting of heads of Public Sector Banks (PSBs) on Wednesday.
Public sector banks (PSBs) showed strong performance in the first half of current fiscal (FY25) with 11 per cent annual growth as their aggregate business stood at Rs 236.04 lakh crore in the April-September period, the government said on Tuesday.
The report, titled ‘Coronavirus fallout will leave banks with capital shortages again’ predicted that asset quality will deteriorate, led by retail and small business loans.
In the video conference, the minister also directed the participants to try meeting the credit requirements of other businesses.
The scheme is the biggest fiscal component of the Rs 20-lakh crore Aatmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman last month.
Kotak Mahindra Bank whole-time director and president Gaurang Shah said the retail, a low-cost liability base, is key sustenance factor of the banks.
State-owned banks launched an emergency credit line to provide funds to its existing MSME and corporate borrowers in the last week of March, soon after the lockdown was announced.
