Banking push: FinMin asks PSBs to boost MSME, farm credit; focus on deposits, asset quality and AI-led innovation
Chairing a performance review meeting with bank chiefs, Department of Financial Services (DFS) Secretary M Nagaraju urged state-owned lenders to combine prudence with innovation and deepen their focus on customer-centric banking.
“Banks must lead India’s financial transformation guided by prudence, inclusion, and innovation,” the ministry said in a statement summarising the discussion, PTI reported.During the meeting, PSBs presented updates on digital banking, mobile app advancements, and customer outreach.
Nagaraju stressed the need to ensure cybersecurity, operational resilience, and faster grievance redressal, calling for a balanced approach between digital expansion and inclusivity.
He also encouraged banks to use artificial intelligence and data analytics responsibly to improve customer experience and lending efficiency.Banks were asked to step up credit disbursements under key government initiatives, including PM Surya Ghar Muft Bijli Yojana, PM Vidya Lakshmi Yojana, PM Vishwakarma Yojana, and JanSamarth digital lending, with a focus on faster loan processing and extended support through business correspondents.The review also covered progress on flagship financial inclusion schemes such as PM Jan Dhan Yojana (PMJDY), PM Jeevan Jyoti Bima Yojana (PMJJBY), PM Suraksha Bima Yojana (PMSBY), Atal Pension Yojana (APY), PM Mudra Yojana (PMMY) and PM SVANidhi.
Nagaraju asked banks to expand outreach in aspirational and underserved districts under the government’s Aapki Poonji, Aapka Adhikar campaign and ensure effective implementation of the integrated unclaimed asset portal.On the asset quality front, PSBs reported continued improvement with gross NPAs declining to 2.30% and net NPAs to 0.45% as of September 2025.
Recoveries have also gained traction, with the National Asset Reconstruction Company Limited (NARCL) acquiring bad loans worth Rs 1.62 lakh crore in the first half of FY26.Banks were advised to make better use of digital tools such as BAANKNET for transparent resolutions and to strengthen early warning systems.
The meeting also highlighted the need to prepare for the shift to the Expected Credit Loss (ECL) accounting framework through data-driven provisioning and robust risk models.Public sector banks posted a combined net profit of Rs 93,675 crore in the first half of FY26, reflecting steady year-on-year growth.
Aggregate business stood at Rs 261 lakh crore, with advances growing 12.3% and deposits 9.6% year-on-year.The DFS said PSBs are expected to scale up lending to emerging sectors such as renewable energy, food processing, tourism, and data centres, aligning with the government’s Viksit Bharat 2047 vision.“The ministry’s focus is clear — growth must be inclusive, digital, and sustainable,” an official familiar with the meeting told the news agency.
