Government wants lenders to assess next generation reforms

The Ministry of Finance on Saturday asked public sector banks (PSBs) to further deepen the government’s financial inclusion initiatives and work on next-generation reforms, as it reviewed their performance in carrying out several official programs, sources told FE.

In a meeting with heads of various PSBs, Financial Services Secretary Sanjay Malhotra asked lenders to provide information on ways to further strengthen the performance of key programs including the Pradhan Mantri Jan Dhan Yojana, the Pradhan Mantri Suraksha Bima Yojana and the Pradhan Mantri Jeevan Jyoti Bima Yojana. .

Similarly, progress made under credit-related schemes, such as Rs 5 trillion emergency line of credit guarantee scheme, Pradhan Mantri Mudra Yojana, Stand Up India scheme and PM SVANidhi scheme for street vendors, were discussed.

The secretary also provided an update on the readiness of banks to ensure the establishment of 75 digital banking units in the country as announced in the FY23 budget, one of the sources said. The growth of digital transactions was discussed at the meeting, with a focus on potential steps to make them more lucrative.

The meeting was part of the government’s two-day deliberations with PSOs not only to review their financial performance and future strategies, but also to come up with ideas for introducing next-generation reforms in various financial inclusion programs.

On Friday, the Ministry of Finance asked public banks to further strengthen their balance sheets and raise capital in the markets, thereby reducing their dependence on public capital.

The Financial Services Secretary had expressed optimism that lenders, having recorded good profitability in the first three quarters of FY22, would continue to perform well on relevant metrics in coming years. This will allow PSOs to stimulate lending and satisfy the credit appetite of a rapidly recovering economy.

Several financial inclusion programs have performed better than expected despite the pandemic blues. Although the disbursement of Mudra loans – aimed at budding small entrepreneurs – has slowed down somewhat over the past two years, it still remained well above the annual average of Rs 2.66 trillion until the FY20. In FY21, the disbursement of Mudra Loan was Rs 3.12 trillion and up to March 11 of this FY, it touched Rs 2.79 trillion.

From 38.3 crore in FY2020, the number of Jan Dhan accounts increased to 44.9 crore till March 9 and covered all unbanked households.

Cumulative enrollment under the Pradhan Mantri Jeevan Jyoti Bima Yojana, a universal social security scheme for the poor, increased from 6.96 crore in March 2020 to 10.27 crore through March 2021 and 12.13 crore to January 26, 2022.

Similarly, the Pradhan Mantri Suraksha Bima Yojana, a scheme that provides cover for death/disability due to accident, saw enrollment drop from 18.54 crore in March 2020 to 23.26 crore through March 2021 and 27.26 crores as of January 26, 2022.

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