The Ministry of Finance asks banks to strengthen their balance sheets and raise capital on the market

The Ministry of Finance on Friday urged public sector banks (PSBs) to strengthen their balance sheets by raising capital in the market.

The strengthened capital would help banks expand their business and stimulate credit growth in productive sectors.

During the meeting with PSB senior leadership at Manthan 2022, Financial Services Secretary Sanjay Malhotra expressed confidence that public sector banks will continue to strive and perform better on all metrics, including profitability.

RBI Governor Shaktikanta Das had also urged banks to take proactive steps to build their resilience and lending capacity by raising capital.

Malhotra urged banks to further strengthen their balance sheets and raise capital in the markets.

He further suggested that PSBs should explore more collaboration among themselves and that big banks should share their best practices with smaller lenders and guide them in areas where they need more expertise.

Manthan 2022 was organized to brainstorm with the most senior leaders of public sector banks and unlock next-generation reforms while continuing the EASE journey, the Association of Indian Banks (IBA) said in a statement. The last such exercise took place in 2019. The first PSB Manthan took place in 2014.

Malhotra also suggested banks should explore long-term profitability strategies and a more customer-centric approach.

As a result, six groups have been formed to research and suggest action in key areas including customer service, digitalization, HR incentives, governance and collaboration.

Earlier, the Chairman of the Association of Indian Banks, Atul Kumar Goel, welcomed the participants and expressed the hope that this Manthan will bring about a turnaround in the industry.

IBA Managing Director Sunil Mehta also expressed hope that this initiative will help share best practices while seeking innovative solutions.