PSB Manthan, PSBs, finance secretary, banking reforms, credit growth, loan growth, EASE

PSB Manthan: A two-day "PSB Manthan" is scheduled to begin today, September 12, 2025, under the leadership of the Finance Secretary to foster reforms and discuss strategies for Public Sector Banks (PSBs). The session will involve top management from all public sector banks (PSBs) and aims to continue the Enhanced Access & Service Excellence (EASE) journey, focusing on next-generation reforms for the banking sector.

According to sources, the brainstorming session will likely include discussions on the credit and loan growth of banks and strategies for competing with private and international banks.

Credit growth insights:

As of June 30, 2025, credit outstanding in banking stood at Rs 183.4 lakh crore, registering a growth of 9.9 per cent year-over-year (y-o-y), compared to 18.8 per cent in Q1 FY25. The slowdown in overall credit offtake was mainly due to a slowdown in the growth of non-banking financial companies (NBFCs), wherein credit growth to the NBFC segment dropped sharply from 8.5 per cent in Q1FY25 to 2.6 per cent in Q1FY26.

Additionally, credit growth in the services and personal loan segments declined significantly, decelerating from 17.4 per cent to 9.0 per cent and from 25.6 per cent to 12.1 per cent in Q1FY26, a year earlier.

FDI regulations:

Foreign Direct Investment (FDI) in India’s private banking sector is allowed up to 74 per cent, with 49 per cent permitted through the automatic route. However, in public sector banks, the FDI limit is 20 per cent. While foreign entities can own up to 74 per cent in private banks, individual foreign entities are typically capped at owning 15 per cent, unless an exception is made by the Reserve Bank of India. 

Last Manthan highlights:

The last PSB Manthan was held in April 2022 under the leadership of PSBs and guidance of the Department of Financial Services (DFS). The session discussed reforms like enhanced digital customer experience and operational efficiency to build globally competitive institutions. The insights from this meeting led to the EASE reforms, including the EASE 5.0 and 6.0 frameworks. It focused on areas like cloud adoption, account aggregators, and data-driven banking solutions to create more responsive and responsible banks.