PIB Summary- 16th December, 2024 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Public Sector Banks: A Resurgent Force

Context

In FY 2023-24, Public Sector Banks (PSBs) in India achieved record profits, reflecting significant improvements in asset quality, with a sharp decline in non-performing assets (GNPA).

PSBs have also contributed to financial inclusion through key government schemes.

The government has supported these banks through reforms like the EASE framework.

Introduction: Public Sector Banks’ Achievements

• Public Sector Banks (PSBs) in India achieved a record net profit of ₹1.41 lakh crore in FY 2023-24, marking their highest-ever aggregate profit.
• The sector saw a significant improvement in asset quality, with the Gross Non-Performing Assets (GNPA) ratio declining to 3.12% in September 2024.
• PSBs also recorded a net profit of ₹85,520.6 crore in the first half of 2024-25 and paid a total dividend of ₹61,964 crore over the past three years.
• These achievements reflect improved operational efficiency, stronger capital base, and better asset quality.

Decline in GNPA: Strengthening Resilience

• The GNPA ratio of PSBs dropped from a peak of 14.58% in March 2018 to 3.12% in September 2024.
• The Reserve Bank of India (RBI) initiated the Asset Quality Review (AQR) in 2015, which helped in transparent recognition of NPAs and increased provisioning.
• To address banking stress, the Government introduced a comprehensive 4R’s strategy (Recognition, Resolution, Recapitalisation, and Reforms).
• The Capital to Risk (Weighted) Assets Ratio (CRAR) of PSBs rose by 3983 basis points to 15.43% in September 2024, indicating enhanced stability.

Expanding Financial Inclusion

• PSBs continue to drive financial inclusion, with 54 crore Jan Dhan accounts and 52 crore collateral-free loans under various schemes.
• The number of bank branches increased from 1,17,990 in March 2014 to 1,60,501 in September 2024, with most branches in rural and semi-urban areas.
• As of September 2024, the Kisan Credit Card (KCC) scheme supported 7.71 crore accounts, with an outstanding loan of ₹9.88 lakh crore.
• MSME advances grew at a CAGR of 15% over the past 3 years, totaling ₹28.04 lakh crore in March 2024.

Strengthening PSBs through the EASE Framework

• The Enhanced Access & Service Excellence (EASE) framework promotes incremental reforms focusing on governance, risk management, technology, and data-driven banking.
• Key reforms have led to improved financial health and better banking services.

Conclusion: A Stronger Banking Sector

• PSBs have made significant progress in financial health and contributed to India’s economic growth.
• The decline in GNPA and improved CRAR reflect sound risk management.
• The EASE framework has facilitated reforms, and the focus on financial inclusion has expanded banking access. PSBs are now well-positioned to drive inclusive economic growth.