FM Nirmala Sitharaman
Credit: Reuters File Photo
New Delhi: Finance Minister Nirmala Sitharaman on Friday asked public sector banks to accelerate lending momentum, especially to micro, small and medium enterprises (MSMEs), and focus on improving customer services.
In a review meeting, Sitharaman directed the government-run banks to strengthen the implementation of the new credit assessment model for MSMEs to broaden access to capital and expedite credit flow to small and medium businesses.
Under the new credit assessment model, launched in March this year, the Public Sector Banks (PSBs) have been directed to build their in-house capability to assess MSMEs for credit, instead of relying on external assessment.
According to a statement released by the Union Finance Ministry, 1.97 lakh MSME loans amounting to Rs 60,000 crore have already been sanctioned under the new credit assessment model.
Sitharaman directed the PSBs to participate actively in the upcoming 3-month Financial Inclusion saturation campaign, beginning July 1, 2025, covering 2.7 lakh Gram Panchayats and Urban Local Bodies.
This campaign would also focus on assisting the citizens with respect to KYC, re-KYC and unclaimed deposits.
“Banks were directed to ensure focused outreach, adequate manpower deployment, and effective publicity of this special campaign to further deepen financial inclusion under schemes such as PM Jan Dhan Yojana, PM Jeevan Jyoti Bima, PM Suraksha Bima Yojana, etc,” the ministry said.
The Finance Minister also directed PSBs to fill all existing and arising vacancies as soon as possible to deliver better service.
Enhancing customer experience remains a key priority, and banks were directed by the Finance Minister to ensure faster grievance redressal, offer simplified digital platforms, and provide multilingual services both online and offline.
“Maintaining clean, customer-friendly physical branches and expanding in metro and urban centres to keep pace with urbanisation was also highlighted,” the Finance Ministry said.
Total business of PSBs jumped to Rs 251 lakh crore in 2024-25 from Rs 203 lakh crore in the previous year.
Net combined profits of the government-run lenders increased from Rs 1.04 lakh crore in 2023-24 to Rs 1.78 lakh crore in the year ended March 2025. Net non-performing assets (NPAs) of the PSBs declined sharply from 1.24% in FY 2023-24 to 0.52% in 2024-25, as per data shared by the Finance Ministry after the review meeting.