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Five questions FM Arun Jaitley may ask public sector bankers today

Finance Minister Arun Jaitley is slated to meet with public sector bankers on Monday for a review of their performance so far. According to reports, the status of bad loans and the upcoming monetary policy review by the Reserve Bank of India are likely to be the top agenda of the meeting. 

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Finance Minister Arun Jaitley
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Finance Minister Arun Jaitley is slated to meet with public sector bankers on Monday for a review of their performance so far. According to reports, the status of bad loans and the upcoming monetary policy review by the Reserve Bank of India are likely to be the top agenda of the meeting. 

Here are five important questions that Jaitley may ask public sector bankers today. 

1) Why are non-performing assets out of control?

The NPAs situation requires special focus in banks like Bank of India, IDBI, Indian Overseas Bank, Bank of Maharashtra, UCO Bank, and United Bank of India. Minister could ask about recovery efforts.

Status - Gross NPAs have increased by 25.19% (YoY) from Rs. 2,51,011 crore to Rs.3, 14,230 crore, constituting 5.64% of the total lending.

ALSO READ: FM Arun Jaitley to review performance of PSBs today; NPA, rate cut top agenda

2) Why are interest rates not coming down despite rate cuts from RBI?

Most banks, despite a surprise 50 bps rate cut from RBI in the last bi-monthly monetary policy review, have not yet slashed their interest rates. This means, the complete benefit of a rate cut has not been passed onto the customer.

Status - Most of PSBs have cut the base rate but it has not appropriated as expected.

3) Why is the credit growth so low? 

The Finance Minister is expected to discuss the various steps being taken to improve credit growth. 

Status - Government banks have failed to achieve the average credit growth rate of 8.4% in September 2015. The credit portfolio of public sector banks has only moved to 6.3%.  

4) Why are you competing with each other?

Instead of going up against each other, banks have to start specialising in some specific banking sector, like retail, SME, Project Finance, and so on.

Status - So far, bank boards have given some strategy about this. 

5) Why are your profits shrinking?

PSBs net profit and asset quality are stressed. The Finance Minister may ask how the banks plan to improve their profitability. 

Status - The net profit for public sector banks has reduced by 19.66% (YoY) for the half year ended September 2015 from Rs 21,314 crore to Rs 17,124 crore. 

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