Days before Budget 2019, Piyush Goyal says public sector banks will turn profitable; here's why

Newly appointed interim Finance Minister Piyush Goyal believes that the public sector banks (PSBs) will become more profitable in the days to come.

Goyal told reporters after his first meeting with the heads of PSU banks. (Image: PTI)

New Delhi: Newly appointed interim Finance Minister Piyush Goyal believes that the public sector banks (PSBs) will become more profitable in the days to come. Goyal said this after conducting a review meeting with the lenders on Monday, days before the interim budget is to be presented. Goyal’s statement came in the backdrop of collections of over Rs 1 lakh crore in the three-quarters of the current fiscal due to the Insolvency and Bankruptcy Code (IBC) and he thinks that the situation will make them more profitable in the future. “We have discussed how working of IBC has helped them recover larger amount of money both through the IBC mechanism and NCLT (National Company Law Tribunal), and in many cases without having going to NCLT through the pressure that is built upon the large borrowers,” Goyal told reporters after his first meeting with the heads of PSU banks after taking over as interim finance minister. Goyal also exhorted the state-run banks to step up the lending procedure for micro, small and medium enterprises, agriculture and housing sectors and also assured these lenders of all kinds of support. The interim Finance Minister further stated that the meeting also discussed the internal mechanism to resolve cases under the RBI guidelines and within the framework set in the bankruptcy court and see how there can be a faster resolution so that both businesses and banks can turnaround. The minister also said that banks have had discussions on various matters with RBI Governor Shaktikanta Das. "They have also discussed various ways in which the operations of the banks can become more efficient, customer friendly and profitable, besides ensuring that the stated goals of this government are directed towards reaching financial inclusion of every Indian anywhere in the country," he added. As per reports, even Das addressed the PSB chiefs earlier in the day to take stock of the liquidity situation, especially in non-banking financial companies (NBFCs). Reports also suggest that the RBI Governor has asked the banks to make provision for bad loans. Das highlighted the importance of PSBs for the economy at all times and especially at the present juncture in helping meet broader economic goals. He also lagged the need for further strengthening various aspects of banking, including underwriting standards, capacity building, use of technology and governance.