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HDFC merger poses increased competition in deposits segment for PSBs

July 11, 2023

HDFC merger poses increased competition in deposits segment for PSBs
The finance ministry had apprised PSBs of rising competition in deposits segment from the recent merger of HDFC as the housing loan customers will be tapped by HDFC bank for retail banking.

The direction came during a meeting chaired by Finance Minister Nirmala Sitharaman on Thursday where the PSBs were told to take swift actions in fraud and willful defaulters cases and build a strong internal audit framework with a focus on having robust risk management practices.
 
According to an official present at the meeting, the finance ministry has raised concerns for the PSBs on the declining market share in total advances and CASA. “They were advised to focus on high-yield advances, CASA acquisition and strengthen sources of fee income as the avenues for profitable growth.” 
 
“The PSBs have been told to strengthen their underwriting norms by recalibrating internal credit rating systems and robust risk reporting structure. The banks were advised to leverage analytics to increase coverage of early warning signs which will help in identifying  and reaching out to high-risk borrowers, he added.
 
Sitharaman advised public sector banks (PSBs) to ensure that there is a fair and transparent recognition of Non-Performing Assets (NPAs) as per the extant guidelines of the Reserve Bank of India.
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