RBI has cut interest rates drastically, and now Finance Minister Nirmala Sitharaman will meet public sector banks on June 27

After the Reserve Bank of India (RBI) cut interest rates drastically, Finance Minister Nirmala Sitharaman will meet the heads of public sector banks on June 27 and review their financial performance.

After the Reserve Bank of India (RBI) cut interest rates drastically, Finance Minister Nirmala Sitharaman will meet the heads of public sector banks on June 27 and review their financial performance. Apart from this, the Finance Minister will also discuss major government schemes.

This will be the first major review meeting after the RBI cut the policy repo rate by 50 basis points to 5.5 percent and cut the cash reserve ratio (CRR) by 100 basis points to 3 percent.

The cut in CRR will be implemented in different phases and is expected to bring Rs 2.5 lakh crore into the banking system, which will increase cash, as well as encourage lending. Five out of six members of the Monetary Policy Committee were in support of a jumbo cut of 50 basis points in the repo rate.

The rate cut aims to boost economic growth, which has come down to a four-year low of 6.5 percent in FY25. According to the report, the Finance Minister will assess the financial position of public sector banks in this meeting to be held on June 27 and new targets will be set for the current financial year.

The rate cut aims to boost economic growth, which has come down to a four-year low of 6.5 per cent in FY25. According to the report, the Finance Minister will assess the financial position of public sector banks in this meeting to be held on June 27 and new targets will be set for the current financial year.

Finance Minister Sitharaman is also expected to urge banks to increase credit flow to productive sectors to support the slowing economy. Key government initiatives such as the Kisan Credit Card Scheme, Pradhan Mantri Mudra Yojana and three social security programmes (Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana and Atal Pension Yojana) may be reviewed in the meeting.

This review is being done at a time when public sector banks are reporting record profits. In FY25, the combined profit of public sector banks grew 26 per cent to an all-time high of Rs 1.78 lakh crore from Rs 1.41 lakh crore in FY24. All 12 public sector banks reported profits for the year.

The country's largest lender State Bank of India (SBI) posted a net profit of Rs 70,901 crore in FY25, a 16 percent increase over the previous year. SBI alone contributed more than 40 percent to the total income of public sector banks.