Due to our government’s policy response to recognition of stress, resolution of stressed accounts, recapitalisation and reforms in banks, the financial health and robustness of public sector banks (PSBs) have improved significantly since 2014, finance minister Nirmala Sitharaman said on Friday.
During FY24, PSBs recorded the highest-ever aggregate net profit of `1.41 trillion, almost 4 times higher than `36,270 crore in FY14. “We’ve turned banks from being ‘NPA-laden nightmares’ into ‘Pillars of Jan Kalyan’,” said the FM
Net NPAs of PSBs declined to 0.76% in March 2024 – from 3.92% in March 2015, and from a peak of 7.97% in March 2018, the FM said.
Gross NPA ratio of PSBs declined to 3.47% in March 2024 – from 4.97% in 2015 and from a peak of 14.58% in March 2018. Bank credit growth (non-food) was 16% in FY24, the highest in the last ten years. “This would not have been possible without a significant improvement in the banking sector’s health.” Resilience has increased, with the provisioning coverage ratio (PCR) increasing to a healthy 92.99% in March 2024 from 46.04% in 2015. Capital adequacy has improved significantly, with CRAR improving to 15.53% in March 2024 from 11.45% in March 2015, the FM said.
Macro stress tests for credit risk indicate that banks are well-capitalised and all banks comply with the minimum capital requirements even under adverse stress scenarios, she said.Also, due to reforms, PSBs’ ability to raise capital (equity and bonds) has improved. PSBs have mobilised capital of Rs 4.34 trillion from the market between FY15 to FY24. We will continue to take decisive measures to strengthen and stabilise our banking system, ensuring banks’ support India’s growth path to Viksit Bharat by 2047, the FM said.