Ministry of Finance on Sunday released net profit of Indian Public Sector Banks (PSBs) which is highest-ever recorded. According to the release there has been net profit of Rs 1.41 lakh crore from PSBs in the financial year 2023-24.
The Gross Non-Performing Assets (GNPA) ratio steeply declined, dropping to 3.12 per cent in September 2024.
Demonstrating continued momentum, the PSBs have registered a net profit of Rs 85,5206,000 crore in the first half of 2024-25.
In addition to their stellar performance, PSBs have contributed significantly to shareholder returns, paying a total dividend of Rs 61,964 crore over the past three years.
This remarkable financial growth underscores the sector’s operational efficiency, improved asset quality, and stronger capital base, the Ministry said adding that this landmark achievement reflects the sector’s robust turnaround, underpinned by a significant improvement in asset quality.
The Finance Ministry added that beyond their financial achievements, these banks have played a key role in promoting financial inclusion. They have implemented crucial government schemes like the Atal Pension Yojana and Pradhan Mantri Jeevan Jyoti Bima Yojana, to name a few.
These efforts have ensured that vital benefits reach underserved sections of society. The government of India has actively supported the sector with reforms, welfare measures, and strong policies.
This has strengthened the banking system, fostering greater transparency, stability, and inclusivity.
The Gross NPA ratio of Public Sector Banks (PSBs) has witnessed a remarkable improvement, declining to 3.12 per cent in September 2024 from a peak of 14.58 per cent in March 2018. This significant reduction reflects the success of targeted interventions aimed at addressing stress within the banking system.
A turning point came in 2015 when the Reserve Bank of India (RBI) initiated the Asset Quality Review (AQR). This exercise aimed to identify and address hidden stress in banks by mandating the transparent recognition of NPAs.
It also reclassified previously restructured loans as NPAs, resulting in a sharp increase in reported NPAs.
The heightened provisioning requirements during this period impacted the financial parameters of banks, restricting their ability to lend and support productive sectors of the economy.
Another indicator of the improved resilience of Public Sector Banks (PSBs) is their Capital to Risk (Weighted) Assets Ratio (CRAR), which rose by 3983 basis points to 15.43 per cent in September 2024, up from 11.45 per cent in March 2015.
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This substantial improvement not only highlights the renewed stability and robustness of India’s banking sector but also positions PSBs to better support economic growth. Notably, this CRAR far exceeds the Reserve Bank of India’s (RBI) minimum requirement of 11.5 pere cent, underscoring the strengthened financial health of these institutions.
