Finance Minister Urges Public Sector Banks to Boost Lending Following RBI Rate Cut

Encouragement for Increased Lending

On Friday, Finance Minister Nirmala Sitharaman urged public sector banks (PSBs) to capitalize on the Reserve Bank of India's significant interest rate cut of half a percent to enhance lending to productive sectors of the economy.

During a meeting aimed at reviewing the financial performance of PSBs, Sitharaman also encouraged bank leaders to maintain their profit growth trajectory for the fiscal year 2025-26.

In the fiscal year 2024-25, the total profit of 12 PSBs surged to a record ₹1.78 lakh crore, marking a 26 percent increase year-on-year. This period saw an annual profit increase of approximately ₹37,100 crore.

Sources indicate that the Finance Minister is optimistic that the RBI's interest rate reduction will lead to an improvement in loan growth for PSBs. She emphasized the importance of banks engaging more customers in government schemes to enhance financial inclusion.

The meeting included a comprehensive review of various sectors and government initiatives, such as the Kisan Credit Card, PM Mudra, and three social security schemes: the Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, and the Atal Pension Yojana (APY).