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Finance Minister, Nirmala Sitharaman, conducted a review of public sector banks’ (PSBs) financial health and resilience in light of the recent global financial scenario, which originated from the failure of some international banks in the US and Europe. Meeting with the Managing Directors and CEOs of PSBs, she held an open discussion on the global scenario, including the failure of the Silicon Valley Bank (SVB) and Signature Bank (SB), as well as the issues leading to the crisis in Credit Suisse.

Sitharaman urged the banks to remain vigilant about interest rate risks and regularly undertake stress tests, while emphasising that they should adhere to regulatory frameworks by focusing on risk management and diversification of deposit and asset bases. She also exhorted PSBs to use this opportunity to frame detailed crisis management and communication strategies.

The meeting, which was attended by Minister of State for Finance Bhagwat Karad, Financial Services Secretary Vivek Joshi, and other senior officials, also discussed developing and immediate external global financial stress from both short and long-term perspectives.

The chiefs of PSBs apprised Sitharaman that they follow the best corporate governance practices, adhere to regulatory norms, ensure prudent liquidity management, and focus on robust asset-liability and risk management. They also informed her that they are vigilant of developments in the global banking sector and are taking all possible steps to safeguard themselves from any potential financial shock.

Sitharaman stressed that PSBs must leverage the full potential of branches opened in International Financial Services Centres in GIFT City Gujarat to identify international opportunities, including prospects related to Persons of Indian Origin (PIOs). She also asked banks to take focused measures to attract deposits, enhance business presence in new and emerging areas like One District One Product (ODOP), e-NAM, and drones, and focus on credit outreach in states where the credit offtake is lower than the national average, particularly in the northeast and eastern parts of the country.