Public Sector Banks (PSBs) in India have recorded a strong performance in the first half of the fiscal year 2024-25, showing an impressive 11% year-on-year (YoY) growth in aggregate business. This success is attributed to extensive banking reforms under Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman, aiming to strengthen and streamline India’s banking sector.

Key Reforms and Initiatives

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Over recent years, significant reforms, including the Enhanced Access and Service Excellence (EASE) initiative, implementation of the Insolvency and Bankruptcy Code (IBC), establishment of the National Asset Reconstruction Company Ltd. (NARCL), a strengthened governance framework, and the amalgamation of PSBs, have transformed the banking landscape. Under regular monitoring by the Union Finance Minister, review meetings with PSB Chief Executives have addressed pressing challenges and boosted reforms across credit discipline, asset resolution, responsible lending, governance, and financial inclusion.

Key highlights of PSB performance

Aggregate Business: Total business for PSBs reached Rs. 236.04 lakh crore, marking an 11% YoY growth.
Credit and Deposits: The global credit portfolio rose by 12.9% YoY to Rs. 102.29 lakh crore, while deposits grew 9.5% YoY to Rs. 133.75 lakh crore.
Profits: Operating profit for H1 FY25 stood at Rs. 1,50,023 crore (14.4% YoY growth), and net profit was Rs. 85,520 crore (25.6% YoY growth).
Asset Quality: Gross Non-Performing Assets (NPA) declined to 3.12% (down by 108 basis points YoY), while Net NPA stood at 0.63% (a 34 basis point drop).
Capital Adequacy: The Capital to Risk-weighted Assets Ratio (CRAR) stood at a strong 15.43%, well above the regulatory requirement of 11.5%.

Digital transformation and customer service

PSBs are making strides in digital innovation by adopting cutting-edge technologies like artificial intelligence, blockchain, and cloud computing.