Talking to reporters after a meeting with Union Finance Minister Yashwant Sinha to review the performance of public sector banks, Jalan said the over 130-per cent growth in net profits achieved by the PSBs is indicative that the sector is in good health.

He said the achievement has been partly due to the strict regulation of the sector. "But the high level of non-performing assets is a cause of concern for the central bank. The RBI has also stressed that the PSBs should try to reduce their transaction costs."