• Fri. Jun 14th, 2024

Finance Minister Nirmala Sitharaman chairs meeting to review Public Sector Banks

Union Minister for Finance and Corporate Affairs Nirmala Sitharaman chaired a meeting to review the performance of Public Sector Banks (PSBs) on various parameters, in New Delhi, on Saturday.

The meeting was also attended by Union Minister of State for Finance Dr Bhagwat Kishanrao Karad; Dr Vivek Joshi, Secretary, Department of Financial Services; Heads of Public Sector Banks besides senior officials of the Department of Financial Services.

The progress on the acquisition of accounts by the National Asset Reconstruction Company Ltd (NARCL) was also deliberated. The Finance Minister directed that the acquisition of stressed accounts by NARCL needs to improve further, and necessary efforts must be made in this direction. It was advised that NARCL and banks should hold regular meetings to expedite the on-boarding of stressed accounts.

In addition to the above measures,  Sitharaman emphasised the importance of mobilising deposits, urging PSBs to innovate and offer attractive deposit schemes to enhance their deposit base, which will also enable them to extend more credit.

During deliberations on the fraud related matters, the Union Finance Minister, while expressing satisfaction at the improved performance of the Public Sector Banks, stated that bank frauds pose a critical threat to the security of both individual customers and the financial institutions themselves, which can lead to financial losses and reduced public trust in the banki.

Sitharaman asked PSBs to concentrate on fraud prevention activities concerned with both large corporate frauds and wilful defaults, as well as on actions that defraud individual customers. The Union Finance Minister instructed the banks to adopt advanced fraud prevention and detection mechanisms and ensure that the customers are further educated about safe banking practices.

The Union Finance Minister directed Banks to undertake consumer education measures for protection from malicious fraud calls and to make efforts for timely identification of accounts as fraud and their subsequent investigation. Banks were also advised to put more effort into recovery from accounts declared as fraud and willful default. The Union Finance Minister also asked banks to monitor the early warning signals to check potential frauds.

Recognising that the effectiveness of legal action against defaulters before courts and tribunals largely depends on effective representation by lawyers and attorneys assisted by bank officials, the Union Finance Minister called for a performance review of counsel representing PSBs to ensure better legal outcomes.

Sitharaman stated that the willful defaults not only strain the banks’ financial health but also hamper the flow of credit in the economy and urged the PSBs to adopt responsible lending practices across the board. The Union Finance Minister instructed the PSBs to enhance due diligence before loan disbursement ensure regular monitoring of large loan accounts, and undertake swift and thorough legal action in cases of such default.

Sitharaman also exhorted the banks to take strict administrative action against the conniving officials of the banks who enable fraud and wilful defaults.

Other issues related to cyber security were also deliberated in the meeting. The preparedness of all the PSBs in addressing cyber security risks was reviewed by the Union Finance Minister and PSBs were directed to ensure privacy of customer data.

Finance Minister Sitharaman stated that issues of cyber security should be seen from a system perspective as a small vulnerability can be used by nefarious elements to create system-wide risks.

Further, the Finance Minister noted the need to adopt proactive cybersecurity measures and implement stringent security protocols to protect sensitive financial information and systems from cyber-attacks and exhorted the banks to adapt to the evolving digital landscape, ensuring that the integrity of domestic financial systems remains uncompromised.

The Union Finance Minister also emphasised the importance of collaboration and mutual learning among the PSBs and coordination between banks, security agencies, regulatory bodies and technology experts to create a more resilient financial ecosystem against potential cyber-security threats.

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