"PSBs (public sector banks) have collectively made an operating profit of Rs 34,967 crore this year, but after allowing for the provisioning for bad loans, among others, net operating profit works out to Rs 222 crore," Jaitley told reporters following a performance review meeting here with heads of state-run banks and financial institutions.

Many state-run banks had reported huge losses for the first quarter ended June, owing to a sharp rise in provisioning for NPAs (Non Performing Assets) on account of an asset quality review ordered by the Reserve Bank of India (RBI).

In this connection, Jaitley pointed to the steel and infrastructure as the main sectors that provoked the asset quality review.

"The major contributors to the banks' situation have been the steel and the infrastructure sectors," the minister said.

"However, with the imposition of the MIP (minimum import price - to check cheap imports) the big steel companies' balance sheets have started turning," he added.

Noting that many of these long-troubled companies, have started paying the interest on their borrowings, Jaitley said: "Till the interest dues are paid, the asset is considered non-performing and deemed as such in the bank books."

Jaitley held a quarterly performance review meeting with the Chief Executive Officers and Managing Directors of PSBs and financial institutions here. The government last month announced infusion of Rs 22,915 crore capital for 13 PSBs, as part of the first tranche of capital infusion for the current fiscal.

Jaitley also said "greater initiative" is needed by PSBs in cases where it is difficult to find buyers or "alternative promoters" for assets that have accumulated bad loans.

"One of the challenges which the banks did mention that they are facing is to find alternative promoters or buyers. They have been making efforts to do that," he said.

"The broad picture is that PSBs still face the challenge of high NPAs. Detailed discussions have taken place in this regard, while the new RBI norms and changes in legislation like the new Bankruptcy Code and the DRT (Debt Recovery Tribunal) law have helped to empower the banks," Jaitley said.

He described the NPAs situation as being "not static or permanent"."There has been a lot of provisioning on account of NPAs. With an uptick in the sectors a large part of these would become de-provisioned and the accounts themselves would get upgraded," he added.

Gross NPAs of the PSBs have surged from 5.43 per cent of the total advances (Rs 2.67 lakh crore) in 2014-15, to 9.32 per cent (Rs 4.76 lakh crore) in 2015-16.

The Finance Minister also said four state-run banks are probing whether the money in some financial inclusion scheme Jan Dhan accounts was deposited by the account holders themselves, or by business correspondents to keep the number of zero-balance accounts low, Arun Jaitley said on Friday.

"In case of few accounts, this issue has arisen and there are names of four banks. We have asked them. The banks are investigating from their branches whether account holders have put in money or business correspondents have done it," Jaitley told reporters.

"After that the banks will give their report to the Department of Financial Services," he added.

Jaitley said there are 24 crore Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts, while Rs 42,000 crore has been deposited in them.

"Those 24 crore accounts mostly have people from weaker sections. Now those people have deposited Rs 42,000 crore in these accounts. The figure of Rs 42,000 crore cannot be arrived at by adding Re 1," he said.

He was responding to a question on recent media reports citing specific instances where Re 1 or more was deposited by bankers themselves to lower the number of zero-balance accounts.