Finance Ministry to Hold PSB Manthan Summit on August 17-18 to Review Bank Performance

The Finance Ministry will convene a PSB Manthan summit on August 17 and 18 to review public sector bank performance and set the direction for the next phase of banking reforms, according to officials in the Department of Financial Services. The two-day meeting will bring together chiefs of India's public sector banks along with senior officials from the ministry.

PSB Manthan is the Finance Ministry's periodic forum for reviewing how the eleven surviving public sector banks are performing against targets set in earlier editions of the summit, and for setting new benchmarks on credit growth, asset quality and recovery. Previous editions of the summit have shaped decisions ranging from recapitalisation timelines to targets for reducing non-performing assets, making it one of the more consequential recurring exercises in the Department of Financial Services' calendar.

This year's agenda is built around five themes: attracting foreign investment into public sector banks, deposit mobilisation at a time when bank deposit growth has trailed credit growth in several quarters, expanding MSME credit, scaling lending to agriculture and horticulture, and steps to support rupee stability amid currency volatility. Each of these themes is expected to be discussed in a dedicated session with bank chiefs presenting bank-specific data.

The deposit mobilisation theme is likely to draw particular attention, since public sector banks have faced a persistent gap between credit and deposit growth over the past two years, forcing several lenders to rely more heavily on certificates of deposit and other bulk borrowing to fund loan books. The summit is expected to review what individual banks have done to widen their deposit franchise, including through revised interest rate structures and expanded semi-urban and rural outreach.

On foreign investment, the ministry is expected to examine the scope for public sector banks to raise capital from overseas investors without diluting government control below the statutorily mandated 51 percent, a constraint that has limited how much capital PSBs can raise compared with their private sector peers. Officials said the discussion would also cover the pace at which individual banks have been meeting priority sector lending targets for agriculture and MSMEs.

PSB Manthan sessions typically conclude with a set of action points that banks are expected to report against at the next edition of the summit, giving the exercise a degree of continuity that distinguishes it from a one-off review meeting. The Finance Minister has chaired previous editions of the summit, and senior officials from the Reserve Bank of India have also participated in past sessions where regulatory issues were discussed. Bank chiefs are expected to present quarter-wise data on credit growth, deposit mobilisation and asset quality at the summit, allowing the ministry to compare performance across the eleven public sector banks in a single sitting.

The August 17-18 summit follows a financial year in which public sector banks have collectively reported improved profitability, aided by lower provisioning for bad loans compared with the stress years earlier in the decade. Officials in the Department of Financial Services said the two-day format, split roughly evenly between plenary sessions and theme-specific breakout discussions, has been retained from earlier editions of PSB Manthan because it allows bank chiefs more direct engagement with ministry officials than a single-day review permits. The outcomes of this edition are expected to feed into the ministry's targets for public sector banks for the remainder of the financial year.