The government has ordered state-owned banks to submit their business plans up to 2026-27 by the end of this month, officials said, adding that these plans will be evaluated quarterly by the government-appointed directors on the banks’ boards. .
The business plans will cover strategies to increase low-cost deposits, raise capital, resolve bad loans, improve cyber security and achieve financial inclusion, a senior government official said.
“Apart from the quarterly audit of the government candidate, there will be mid-year and annual audits by the finance ministry to assess the performance of the lenders and ensure proper course correction,” said the official, who did not wish to be identified. .
The government also wants lenders to build long-term strategies to address concerns raised by the regulator, the Reserve Bank of India (RBI), on issues such as outsourcing of critical services, including technology services, a bank executive aware of the discussions said.
“In the past, the RBI has raised issues such as innovative methods used by financial institutions to hide the real status of stressed loans and aggressive unsecured lending without backtesting slips. We will present our individual strategies on how to have a systematic approach to deal with such issues,” said the executive on condition of anonymity.
Earlier this month, ET reported that the finance ministry had ordered state-owned banks to review gold loan processes amid fears of risky debt given a rise in the price of the metal. In January 2024, finance minister Nirmala Sitharaman asked state-owned banks to make a greater effort to make recoveries from willful defaulters and accounts declared fraudulent. Lenders were also asked to step up the acquisition of stressed accounts by the government-sponsored National Asset Reconstruction Co. Ltd., Sitharaman also called for a performance review of counsel representing public sector banks (PSBs) to ensure better legal outcomes. Another banker said. the government has pushed state-owned banks to collaborate on various initiatives, such as a joint PSB cloud, a joint e-auction platform eBkray and a joint agricultural side on-boarding and monitoring platform. “The roadmap will also touch on these issues and the banks’ strategy to coordinate with other banks, security agencies and regulatory bodies,” the executive said.