Nirmala Sitharaman Reviews PSBs Performance Amid Stress In US Fin Systems The report stated that the minister advised the banks remain vigilant about the interest rate risks and regularly undertake stress tests
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Finance minister Nirmala Sitharaman, on Saturday, has chaired a meeting to review the performance of public sector banks (PSBs) on various financial health parameters and their resilience in the wake of the current global financial scenario emanating from the failure of some international banks in the US and Europe, according to a PTI report.
The report stated that the minister advised the banks to remain vigilant about the interest rate risks and regularly undertake stress tests.
In an open discussion with MDs and CEOs of PSBs, during the review meeting, the global scenario amid the failure of the Silicon Valley Bank (SVB) and Signature Bank (SB), along with the issues leading to the crisis in Credit Suisse, were put forward.
According to an official statement released, the meeting was also attended by Minister of State for Finance Bhagwat Karad, financial services secretary Vivek Joshi and other senior officials.
During the review meeting, the finance minister significantly pointed out that the banks should undertake due diligence and adhere to the regulatory framework by focusing on risk management and diversification of deposits and asset base. The minister further emphasized that the PSBs must look at business models closely to identify stress points, including concentration risks and adverse exposures, the statement said, adding that she also exhorted PSBs to use this opportunity to frame detailed crisis management and communication strategies, as per the report.
Furthermore, the report added that Sitharaman was also informed by the PSBs that they are vigilant of developments in the global banking sector and are taking all possible steps to safeguard themselves from any potential financial shock. In this context, the finance minister advised PSBs to take focused steps to attract the deposits given the steps taken by the Government to reduce the tax arbitrage in some debt instruments.
"The banks should pivot their strengthened financial position to support credit needs of the growing economy and focus on credit outreach in States where the credit offtake is lower than the national average, particularly in North-East and Eastern parts of the country," said Sitharaman in the statement.