Public Sector Banks recorded highest ever aggregate net profit of Rs 1.41 lakh crore in FY24

The government has been actively supporting the banking ecosystem while prioritizing the welfare of both businesses and employees to ensure stability, transparency, and growth. In 2015, the Reserve Bank of India (RBI) launched an Asset Quality Review (AQR) to identify and tackle stress within the banking system.

As part of this review, banks were required to transparently recognize their stressed assets and discontinue the special treatment of restructured loans. Consequently, these stressed accounts were reclassified as Non-Performing Assets (NPAs), and the expected losses on these loans, which had not been accounted for previously due to the special treatment, were now acknowledged.

This resulted in a surge of NPAs, which reached their highest level in 2018. Higher NPA and necessitated provisioning deeply impacted the financial parameters of banks and impeded their ability to grow and lend to productive sectors of the economy.

Since 2015, the Government implemented a comprehensive 4R strategy of Recognising NPAs transparently, Resolution and Recovery, Recapitalising PSBs, and Reforms in the financial system to address the challenges faced by PSBs. As a result of the Government’s overarching policy reforms, the financial health and robustness of the banking sector including of PSBs, has improved significantly.

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The Gross NPA ratio of PSBs declines to 3.12% in Sep-24 from 4.97% in Mar-15 and from a peak of 14.58% in Mar-18. CRAR of PSBs improved by 393 bps to reach 15.43% in Sep-24 from 11.45% in Mar-15.

During FY2023-24, PSBs have recorded the highest ever aggregate net profit of Rs 1.41 lakh crore against a net profit of Rs 1.05 lakh crore in FY2022-23 and recorded Rs 0.86 lakh crore in the first half of FY2024-25. During the last 3 years, PSBs have paid a total dividend of Rs 61,964 crore.

The gross advances of Scheduled Commercial Banks grew from Rs. 8.5 lakh crore to 61 lakh crore during 2004-2014, which has significantly increased to Rs.175 lakh crore in March 2024. The Government of India (GoI) has consistently supported the MSME sector in terms of the flow of credit at affordable rates through various initiatives. The MSME advances registered a CAGR of 15% during the last 3 years. Total MSME advances as of 31.03.2024 stood at Rs. 28.04 lakh crore, posting an annual growth of 17.2%.

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