Finance Minister Nirmala Sitharaman Holds Annual Review Meet with Public Sector Banks Focusing on Deposit Growth, Loan Recovery, and Cybersecurity
June 27, 2025 | Edited by ET Now Digital
In a high-profile annual review meeting held on June 27, 2025, Finance Minister Nirmala Sitharaman convened the heads of all 12 Public Sector Banks (PSBs) to deliberate on key issues impacting the banking sector and the broader economy. The meeting gathered top government officials including Minister of State for Finance Pankaj Chaudhary, the Secretary of the Department of Financial Services (DFS), and Managing Directors and Chief Executive Officers of the PSBs.
Key Focus Areas: FY25 Financial Performance and Beyond
The agenda underscored several critical themes centered around the fiscal year 2025 (FY25) performance of PSBs. The discussions prominently featured assessment of deposit growth, enhancement of loan recovery mechanisms, boosting credit flow to productive sectors, and strengthening cybersecurity infrastructure in banks.
This strategic review was particularly significant as it was the first since the Reserve Bank of India (RBI) enacted a substantial monetary policy easing earlier this month. The RBI’s Monetary Policy Committee, led by Governor Sanjay Malhotra, had cut the benchmark repo rate by 50 basis points to 5.5%, and reduced the cash reserve ratio (CRR) by 100 basis points down to 3%, thereby infusing an additional Rs 2.5 lakh crore of liquidity into the banking system. These measures aim to bolster credit availability and stimulate economic growth.
Calls for Enhanced Credit Flow and Economic Revival
According to sources familiar with the event, the Finance Minister stressed the urgency for PSBs to intensify their lending efforts, especially targeting productive sectors that can contribute to reversing the slowdown in India’s economic expansion. India’s GDP growth had dipped to a four-year low of 6.5% in FY25, making the role of banks in financing economic activities all the more vital.
"We expect public sector banks to play a catalytic role in revitalizing credit demand, particularly by extending substantial loans to sunrise sectors and infrastructure projects," the Finance Ministry indicated through insiders. Additionally, the emphasis on deposit mobilization aims to improve banks’ liquidity positions further.
Digital Infrastructure and Cybersecurity: Strengthening the Backbone
Another crucial aspect of the discussion was advancing digital infrastructure within banks and reinforcing cybersecurity protocols. As PSBs enhance their digital ecosystem to meet growing customer expectations, securing these platforms against cyber threats becomes an imperative priority.
Performance Highlights: PSBs Set Profit Records in FY25
The meeting also reviewed the audited financial results of FY25. Public Sector Banks registered a landmark cumulative net profit of Rs 1.78 lakh crore, marking a robust 26% increase compared to Rs 1.41 lakh crore in FY24. This translates to an absolute profit rise of approximately Rs 37,100 crore year-on-year.
The State Bank of India (SBI) emerged as the top contributor, accounting for over 40% of the total PSB profits with a net profit of Rs 70,901 crore—up 16% from Rs 61,077 crore the previous fiscal. Other PSBs also posted notable gains, with Punjab National Bank recording the highest net profit growth rate of 102%, reaching Rs 16,630 crore. Punjab & Sind Bank followed with a 71% increase to Rs 1,016 crore. All PSBs reported gains, reflecting improving operational efficiencies and better asset quality.
Review of Government Schemes and Social Security Initiatives
The Finance Minister’s review extended to the progress and impact of government-backed financial schemes facilitated through PSBs. These include the Kisan Credit Card for farmers, the Pradhan Mantri Mudra Yojana supporting micro and small enterprises, and key social security schemes such as:
- Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)
- Pradhan Mantri Suraksha Bima Yojana (PMSBY)
- Atal Pension Yojana (APY)
These programs are integral to the government’s financial inclusion agenda, and their performance and outreach continue to be closely monitored.
Outlook and Way Forward
With the RBI’s recent policy easing and the government’s push for accelerated credit flow, the annual meeting set an ambitious tone for the PSBs to fuel India’s economic growth. Finance Minister Nirmala Sitharaman’s directives highlight the critical role of public sector banks in driving credit expansion, strengthening deposit bases, and safeguarding the banking system against emerging cyber risks.
As India aims to rejuvenate its economy amid global uncertainties, the collaborative approach between the government, RBI, and PSBs will be pivotal in ensuring a resilient financial sector capable of meeting national development goals.
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