Public sector banks doing well, their net profit almost tripled: Nirmala Sitharaman

The Finance Minister also asked banks to adhere to regulatory norms and focus on robust asset liability and risk management elements.

New Delhi: Union Finance Minister Nirmala Sitharaman on Saturday said that the Indian economy has moved away from the twin-balance sheet problem of banks and corporates to twin-balance sheet advantage because of the concerted efforts of the Narendra Modi-led government.

The Finance Minister also noted that the profit of public sector banks increased to Rs 1.04 lakh crore in 2022-23, tripling from what it was in 2014. Sitharaman made the remarks after inaugurating the corporate office of Punjab & Sind Bank in the national capital.

The twin-balance sheet problem refers to the deterioration in the financial health of banks and corporates at the same time. "As a result (of various initiatives of the government) I'm glad to say the problems of twin-balance sheets have gone away like the Reserve Bank observing it is a twin-balance sheet advantage that the Indian economy is benefiting from,", Sitharaman said.

She further said the term twin-balance sheet was heard after a long time and according to the Reserve Bank, the Indian economy is now benefiting from the twin-balance sheet advantage.

Sitharaman also stressed that banks should follow best corporate governance practices and ensure prudent liquidity management. She also asked banks to frequently run drills for digital safety and ensure adequate firewalls around their systems. The Finance Minister also asked banks to adhere to regulatory norms and focus on robust asset liability and risk management elements. Despite a stable rating outlook, some global banks collapsed, she said, adding that Indian banks are doing well because of professionalism in management.

She also said the performance of public sector banks has improved on account of various initiatives taken by the Narendra Modi government since 2014. There was an improvement in all critical parameters like return on asset, net interest margin, and provisioning coverage ratio, she added.