Text of statement of FM at the media briefing

 
The following is the text of statement made at the Press Conference by the Finance Minister, Shri Pranab Mukherjee after his meeting with the Chief Executives of Public Sector Banks here today: 

“An interactive meeting of Finance Minister with Public Sector Banks (PSBs) was organised on 10th June 2009 at Vigyan Bhawan Annexe, New Delhi. The objective of the meeting was to review the performance of the PSBs during 2008-09 and communicate the areas of focus of the Government where involvement of Bank is required. It was discussed that as a result of various pro-growth measures announced by the Government and RBI there are expectations about achieving a fairly decent growth in the current financial year. 

The overall business of PSBs, including the advances, grew by about 26% during 2008-09 at a time when the credit growth of both private sector banks and foreign banks was declining and resources from non-bank financial resources were contracting. The net profit growth of PSBs has showed a robust growth of 27% in 2008-09. 

The Government has clearly announced that it wants to re-capitalise PSBs to enable them achieve CRAR of 12%. This will ensure that credit growth of PSBs will not suffer from capital constraints and the PSBs would continue to meet the increased credit demands of a growing economy. It was emphasised that the PSBs should look at consolidation as a serious option in order to reduce risk to financial stability and to face competition. Any consolidation initiative in the banking sector would be viewed positively and Government, as a majority shareholder, would continue to play a supportive role in this process. In the context of the global financial crisis, there is an emerging consensus that growth will be sustainable only if it is an inclusive growth. The Government policy is to focus on public spending in employment oriented growth sectors and development of rural sector including infrastructure and development of labour intensive MSME sector. 

The financial inclusion initiatives undertaken by PSBs, including technological innovations, need to be intensified as there are unexplored opportunities and funds available for this. The Government has constituted Financial Inclusion Fund and Financial Inclusion Technology Fund to support the financial initiatives in the country, which may be accessed in greater measure to make a noticeable impact.”